Overnight international oil prices declined, and Sinopec ETF Huaxia (159731) benefited from the reversal trend in the cyclical industry.

On March 26, the A-share market showed a mixed performance, with strong performances in concepts such as lithium battery electrolytes, power batteries, and lithium mines. The CSI Petrochemical Industry Index fluctuated and surged during the trading session, rising over 1.3% at one point, with constituent stocks like Satellite Chemical, Huafeng Chemical, and Salt Lake Industry leading the gains. The Petrochemical ETF Huaxia (159731) followed the index upward, highlighting its value positioning.

Traders weighed the prospects of a ceasefire in the Middle East conflict, and overnight international oil prices fell. The WTI May crude oil futures settlement price closed at $90.32 per barrel, down 2.2%; the Brent May crude oil futures settlement price closed at $102.22 per barrel, down 2.17%.

Zheshang Securities believes that although short-term demand in upstream industries is weakening, it is important to recognize that downstream sectors are depleting inventories. This portion of inventory consumed is likely to need replenishment after raw material prices decline, meaning that demand in upstream industries has not disappeared but has shifted to the future. Therefore, as long as oil prices fall from high levels within a quarter, the global economic recovery trend may not be disrupted, and the current market’s recession expectations could quickly reverse, thus driving a rapid rebound in cyclical industries.

The Petrochemical ETF Huaxia (159731) and its linked funds (017855/017856) closely track the CSI Petrochemical Industry Index, driven by both basic chemicals and oil & petrochemicals. They also encompass high-dividend and high-growth assets, with the development of emerging sectors such as energy storage, solid-state batteries, liquid cooling, robotics, and commercial aerospace highly linked to innovations in chemical materials within the petrochemical industry. Along with the release of policy dividends and optimization of supply and demand structures, the long-term narrative of the industry is improving.

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