China Securities Co., Ltd.: A shares welcome a repair market, short-term is expected to continue to show a volatile upward trend.

China Securities Co., Ltd. released a research report stating that this week A-shares welcomed a recovery market, behind which the reasons for the improvement were market risk appetite, liquidity and fundamentals. Looking ahead, although the rate of increase may slow down, the market is expected to continue to show an upward trend in the short term with fluctuations, and medium-term attention should be paid to external risks brought about by high oil prices. In April this year, the market will return to fundamentals again, and it is recommended to focus on first quarter reports and seize opportunities in prosperous industries. Industry allocation should focus on three directions: prosperous first quarter reports, marginal improvement in fundamentals, policy benefits + undervalued allocation + peak season prosperity. Key sectors to focus on include: resources (gold, energy metals, aluminum, minor metals), AI (optical communication, glass fiber, gas turbines), lithium batteries (batteries, lithium battery materials), oil transportation, chemical raw materials, securities firms, coal, general equipment, infrastructure construction, and service consumption. Main points of China Securities Co., Ltd.: Three factors driving the sharp rise in A-shares this week Three factors driving the sharp rise in A-shares this week: easing of the Middle East situation, reduction of war disturbances; weakening of the US dollar, appreciation of the RMB, leading to the strength of A-shares; economic recovery, the important turning point as PPI goes from negative to positive. Overall, A-shares welcomed a recovery market this week, the reasons behind which were the simultaneous improvement in market risk appetite, liquidity, and fundamentals. While the positive impact of the easing of the Middle East situation and RMB appreciation on risk appetite and liquidity may weaken, the bank emphasizes shifting the focus to fundamental factors, especially inflation rebound and validation and changes in corporate performance expectations. Looking ahead, although the rate of increase may slow down, the market is expected to continue to show an upward trend with fluctuations in the short term, and attention should be paid to external risks brought about by high oil prices in the medium term. Observing first quarter reports, which industries are prosperous? The market may surpass seasonal expectations in April and is expected to perform strongly overall. This is partly because the "spring market" started early and ended early this year, with the market clearly adjusting since March. The other reason is the current macroeconomic environment characterized by economic recovery and inflation rebound. The first quarter reports are expected to validate expectations of improved corporate earnings, so the market will focus on fundamentals again in April and it is recommended to pay attention to first quarter reports and seize opportunities in prosperous industries. Which industries have high performance growth expectations? For 2026, industries with high revenue and net profit growth expectations compared to the same period of the previous year, with positive changes in performance forecasts in the past 4 weeks include: Other electric power equipment II, precious metals, glass fiber, energy metals, batteries, refining and trading, components, minor metals, communication equipment, commercial vehicles, etc. Industries with moderate revenue and net profit growth expectations for 2026 but significant improvements in performance forecasts in the past 4 weeks include: shipping ports, chemical raw materials, securities II, coal mining. The three major prosperous trends in the first quarter report are: the rise in the price chain of resources, the AI computing power chain, and the lithium battery industry chain, which may become the focus of the market in the near future. Following the bank's investment shift towards fundamentals in April and its layout strategy focusing on the first quarter report and macroeconomic prosperity, the bank sees good prospects in three major directions for industry allocation: 1) Prosperous first quarter report on three major trends: rising price chain of resources (gold, energy metals, aluminum, minor metals), AI computing power chain (optical communication, glass fiber, gas turbines), lithium battery industry chain (batteries, lithium battery materials), etc. 2) Marginal improvement in fundamentals: shipping ports, chemical raw materials, securities II, coal mining, general equipment, etc. 3) Policy benefits + undervalued allocation + peak season prosperity: infrastructure construction and service consumption, etc.