This week, the A-share market experienced divergent trends. Major broad-based indices generally closed lower. The SSE 50, SME 100, and Shanghai Composite Index saw relatively smaller declines, while the STAR 50, ChiNext Index, and CSI 500 recorded larger losses.
In policy developments, the Ministry of Industry and Information Technology issued recommendations for managing security risks associated with OpenClaw open-source intelligent agents. The Fourth Session of the 14th National People's Congress concluded, passing several resolutions and laws. The Governor of the People's Bank of China stated at an economic and financial experts forum that the central bank will continue to implement appropriately accommodative monetary policy in the next phase.
Economic data showed February's CPI rose 1.3% year-over-year, marking the highest increase in nearly three years. In the first two months, China's total goods trade import and export value reached 7.73 trillion yuan, up 18.3% year-over-year, with exports growing 19.2% to 4.62 trillion yuan. Internationally, G7 finance ministers issued a statement on March 9 indicating readiness to take necessary measures, including releasing reserves, to support global energy supply. On March 11, former US President Trump commented that there were "almost no targets left to strike" in Iran and that US military action would conclude soon.
Amid rising global stagflation concerns, market investment logic may shift from pro-cyclical growth toward inflation-resistant, stable growth, and high-certainty assets. For allocation, priority should be given to upstream resources that directly benefit from inflation and exhibit strong demand inelasticity—such as crude oil, coal, non-ferrous metals, and agricultural products—along with essential consumer goods like food and beverages, pharmaceuticals, and necessity retail as core holdings. Simultaneously, allocate to hard technology sectors with independent growth momentum and policy support—including semiconductors, aerospace, advanced equipment manufacturing, and AI computing—as well as government consumption areas like traditional and new infrastructure as tactical positions. Avoid midstream manufacturing and discretionary consumption sectors facing pressure from both cost increases and demand weakness to better navigate market volatility in a potential stagflation environment.
Looking ahead, external disruptions are expected to gradually diminish, with promising market performance anticipated. Although Middle East conflicts remain highly uncertain, the peak impact on domestic market sentiment has likely passed. Attention will shift back to domestic rhythms as the National People's Congress set a stable tone, laying a solid policy foundation for equity markets. The coming month will see intensive data releases and policy assessments. Combined with earlier annual report forecasts, economic and corporate earnings data are expected to support capital markets.
Overall, opportunities in equity markets continue to outweigh risks, with performance holding promise. Strategically, focus remains on hotspots: monitor Middle East developments short-term, while pursuing growth and pro-cyclical themes medium- to long-term. Should overseas economies enter stagflation, relevant beneficiary sectors warrant attention. Conflict impacts may boost safe-haven assets and resources short-term. Longer-term, growth sectors benefit from sustained industrial enthusiasm and rising risk appetite during spring rallies, particularly in humanoid robotics and AI. Pro-cyclical sectors gain from strong commodity prices and policy support, focusing on resources with sustained price momentum and offline services. Stagflation scenarios abroad would highlight corresponding beneficiary sectors.
Risk factors include: 1) slower-than-expected policy implementation; 2) significant deterioration in market sentiment; 3) economic growth substantially below expectations; 4) major deterioration in Sino-US relations; and 5) continued escalation of Middle East tensions.