Equity markets in China opened lower and declined throughout the trading session today, with losses accelerating in the afternoon, driven by escalating tensions in the Middle East and a global rise in risk-off sentiment. The Shanghai Composite Index narrowly held above the 3800-point mark, closing down 3.63% at 3813.28, while the Shenzhen Component Index fell 3.76% to 13345.51. More than 5000 stocks across the market ended in negative territory, with trading volume slightly higher than the previous session. Sector performance showed extreme divergence: energy sectors like coal and oil & gas exploration rallied against the market trend, catalyzed by a surge in international crude oil prices, whereas precious metals, consumer goods, and semiconductors experienced widespread significant pullbacks.
Market dynamics were primarily influenced by expectations of global "stagflation trading" triggered by risks in the Strait of Hormuz, which served as a core catalyst for today's volatility. Looking ahead, while current market sentiment is dampened by overseas uncertainties, domestic macroeconomic liquidity remains ample, systemic risks are controllable, and underlying support levels persist. In the short term, indices may require more time to establish a bottom, and investors are advised to patiently await clear signals of stabilization.
Recent repeated attacks on energy facilities in the Middle East have led to a sharp spike in international oil prices. Geopolitical conflicts have intensified global concerns regarding energy security. Against this backdrop of strengthening energy security logic and improving fundamentals, capital has once again flowed into the new energy sector. The ChiNext New Energy ETF (159387) has outperformed the market for two consecutive days, rising 1.30% month-to-date, reflecting strategic allocation demand for alternative energy sources.
From an industry fundamental perspective, micro-level data shows improvement. A significant rebound in production scheduling data and verified profitability of core industry leaders have greatly alleviated market concerns about cost pressures inhibiting demand. With post-holiday demand recovery, the sector is gradually entering an accelerated peak season. Data indicates that pre-scheduled production within China's lithium battery industry chain for March 2026 is expected to increase approximately 20% month-on-month and 40% year-on-year. April schedules continue to show marginal improvement, with the sustainability of fundamentals gradually dispelling market hesitation, and some segments have already begun pricing in expectations of price increases. Furthermore, overseas orders for AIDC (Artificial Intelligence Data Center) energy storage in North America are gradually materializing. The substantial power gap driven by AI computing expansion provides the energy storage sector with a new high-growth narrative and valuation premium.
Overall, against the backdrop of rising global energy security demands, diversified growth in overseas solar and storage demand, and new opportunities from the synergistic development of computing power and energy domestically, the long-term growth prospects for the new energy industry chain remain solid. Following deep adjustments over the past two years, the overall valuation of the new energy sector is relatively reasonable. From a risk-reward perspective, the sector also has a solid valuation floor, offering limited downside and providing a favorable margin of safety. Investors may consider appropriate exposure to the ChiNext New Energy ETF (159387) based on their individual risk tolerance.
Today, catalyzed by intensified Middle Eastern conflicts and global energy price linkage effects, the coal sector strengthened against the market trend. The Coal ETF (515220) closed up 0.78%, after gaining over 3% intraday. Driven by the dual logic of energy security premiums and incremental substitution demand, the Coal ETF saw three consecutive days of net capital inflows, totaling over 300 million yuan, reflecting strong allocation demand for this sector.
The underlying investment thesis for the coal sector has evolved from pure cyclical speculation to a defensive-asset-with-offensive-potential profile, akin to utilities. Recent sharp spikes in international oil prices due to regional geopolitical friction have quickly transmitted supply contraction expectations to the coal market, with the coking coal futures main contract surging by the 11% daily limit today. Rising oil and gas prices have significantly widened the oil-coal price spread, driving profit recovery in coal chemical industries like coal-to-olefins. The rigid substitution demand from coal power and coal chemicals further expands the incremental space for coal consumption. Additionally, against the macro backdrop of optimized supply-side policies and anti-internal competition, coal supply and demand remain tightly balanced. Stable expectations for medium-term coal prices ensure high profitability and strong cash flow for companies. In the current low-interest-rate environment, leading coal enterprises maintain high dividend payout ratios, with their high-dividend characteristics providing a solid margin of safety.
Looking forward, supported by global energy supply constraints and domestic macroeconomic stabilization, the coal sector's characteristics of high profitability, strong cash flow, and high dividends are expected to persist. Investors may consider the allocation value of the Coal ETF during market fluctuations as a tool for optimizing portfolio structure, while also objectively assessing risks related to energy price volatility and maintaining a rational investment approach.
The precious metals sector experienced a sharp correction today, with COMEX gold testing levels near $4100 per ounce.
Regarding geopolitical conflict, both Iran and Israel announced intentions to intensify strikes in the coming week, suggesting potential further escalation. Concurrently, statements from former US officials regarding the Strait of Hormuz added to tensions. Iran responded by threatening indefinite closure of the strait and strikes against specific infrastructure.
On the US Federal Reserve front, recent comments were perceived as hawkish, leading to a stronger US Dollar and a market shift from pricing in rate cuts to considering the possibility of hikes. Last week's FOMC meeting maintained the federal funds rate within the 3.5%–3.75% range. The accompanying dot plot indicated potential rate cuts in 2026 and 2027, but the distribution was viewed as more hawkish than expected. Other major central banks, including the Bank of England, Bank of Japan, and European Central Bank, also held rates steady, surprising markets by retaining the option to hike in response to energy-led inflation, contributing to the precious metals pullback.
In the near term, concerns about potential Fed rate hikes and liquidity disruptions may weigh on gold prices. However, over the medium to long term, the Fed's capacity for significant policy tightening might be more limited than markets anticipate. Constraints from US debt sustainability and weak underlying economic momentum could cap hiking potential. Furthermore, if conflicts persist and energy prices remain elevated, recessionary pressures could eventually outweigh inflation concerns, potentially prompting a more dovish pivot from the Fed, which would support gold. Systemic risks, including global sovereign debt levels and geopolitical instability, provide long-term underpinning for precious metal prices. Investors may continue to monitor opportunities presented by the Gold ETF (518800).
Investors should be fully aware of the differences between systematic investment plans and savings methods like lump-sum deposits. Systematic investing is a straightforward strategy for promoting long-term investment and averaging cost, but it does not eliminate the inherent risks of fund investing, guarantee returns, or serve as an equivalent substitute for savings. Equity ETFs/LOFs are securities investment funds characterized by higher expected risk and reward compared to hybrid funds, bond funds, and money market funds. Funds investing in stocks listed on specific boards carry unique risks related to investment targets, market rules, and trading mechanisms. Short-term performance figures are for illustrative purposes only and do not constitute guarantees of future performance or stock recommendations. The views expressed are for reference only and do not constitute investment advice or promises. Before investing, investors should assess their own risk tolerance and select suitable products accordingly. Investing involves risks.