A-share market midday report | Shanghai Composite Index closed steady in the morning without fear of external influences! Resources and safe-haven assets take the lead, key market variables are revealed.

The Middle East situation triggers global market fluctuations! Asian stock markets generally fell. Despite external influences, the A-shares three major indexes experienced wide fluctuations, with the Shanghai Composite Index briefly turning positive. By the midday close, the Shanghai Composite Index remained unchanged, the Shenzhen Component Index fell 0.75%, and the GEM Index fell 0.78%. The trading volume in the two markets exceeded 2 trillion yuan in the first half of the day, an increase of 487.2 billion yuan from the previous trading day. It is worth noting that key variables in the market are emerging. Although the Japanese transportation index fell by 4.2%, the Japanese mining index rose by 3.5%. The resource-strong Australian stock index, despite falling, only dropped by around 0.4%. According to a securities firm in China, this may indicate that the market has entered a risk-off mode, but systemic liquidity has not been a problem, and structural differentiation is beginning to emerge. Another analyst stated that intense military escalation will likely drive funds towards classic defensive sectors such as utilities and healthcare, which perform steadily in times of economic turbulence. At the same time, high-risk growth stocks and economically sensitive industrial and financial stocks may face selling pressure. In A-share trading, oil and gas stocks surged, with more than a dozen stocks such as Xinjiang Zhundong Petroleum Technology, Geo-Jade Petroleum Corporation, and Zhongman Petroleum And Natural Gas Group Corp., Ltd. hitting their daily limit up; shipping stocks also rose, with Nanjing Port and GH SHIPPING hitting their limit up or rising by more than 10%; the non-ferrous metal concept was active again, with Guangxi Huaxi Nonferrous Metal hitting the limit up, and Beijing Xiaocheng Technology Stock rising by over 10%; chemical stocks such as formaldehyde rose again, with stocks like HeBei Jinniu Chemical Industry, Shaanxi Xinghua Chemistry, and Sichuan Xinjinlu Group hitting their limit up; fiber optic and optical module concepts were active against the trend, with Fiberhome Telecommunication Technologies and GKG Precision Machine hitting the limit up; the commercial aerospace concept was volatile and rising, with Shaanxi Zhongtian Rocket Technology and Beijing LeiKe Defense Technology hitting the limit up; bank stocks rose in the short term, with Bank Of Ningbo rising by over 3%. On the downside, AI application concepts such as gaming and media weakened collectively, with stocks like Citic Press Corporation and LJSY falling by nearly 10%, and IReader Technology and Shanghai Fengyuzhu Culture Technology falling by over 7%; the photovoltaic concept was fluctuating downwards, with EGing Photovoltaic Technology and Shuangliang Eco-Energy Systems hitting the limit down; the retail, tourism, and hotel sectors were falling, with stocks like Shenzhen Wongtee International Enterprise and Caissa Tourism Group falling by over 7%; real estate stocks were fluctuating downwards, with Tianjin Hi-Tech Development hitting the limit down. This week will see the convening of the "two sessions," coinciding with the sudden escalation of the Middle East situation last weekend. Looking ahead, BOC International stated that A-shares may be affected by short-term geopolitical turmoil and risk-off sentiment, but the extent of external impact is limited, with a focus on resources and domestic AI computing power. Huaxi stated that as the market enters the "two sessions" season, stability will be the main feature of A-shares. Hot sectors 1. Oil and gas stocks surged Oil and gas stocks surged against the trend, with over a dozen constituent stocks hitting their daily limit up. Geo-Jade Petroleum Corporation had three consecutive limit up days, with Zhongman Petroleum And Natural Gas Group Corp., Ltd., Xinjiang Zhundong Petroleum Technology, and Shandong Molong Petroleum Machinery all hitting the limit up. Analysis: In terms of news, the conflict in the Middle East has blocked key straits. Analysts predict that if traffic in the strait of Hormuz is interrupted for a long period, Brent crude oil prices could exceed $120 per barrel. 2. Non-ferrous metal concept actively rebounds The non-ferrous metal concept rebounded actively, with Guangxi Huaxi Nonferrous Metal hitting the limit up and Beijing Xiaocheng Technology Stock rising by over 10%. Analysis: On the news front, COMEX gold broke through $5,400 per troy ounce, an increase of 2.92%. Tian Lihui, Dean of the Nankai University Institute of Finance Development, stated that gold is currently in a dual game of "safe-haven attributes" and "real interest rates." In the short term, the dominant factor is the need for safe-haven assets, with inflows of funds pushing up gold and silver prices. Currently, gold prices are in a "pulse" upward phase driven by geopolitical factors. Whether a long-term bull market can be initiated depends on whether the conflict evolves into a "paradigm shift" that subverts the global monetary system. 3. Shipping stocks and oil and gas stocks rose in sync Shipping stocks and oil and gas stocks rose in sync, with Nanjing Port and GH SHIPPING hitting the limit up or rising by over 10%, and China Merchants Energy Shipping and Ningbo Marine following suit. Analysis: Recently, the oil shipping market has been hot, with VLCC daily rental rates hitting record highs, exceeding $200,000 per day, the highest in nearly six years. The latest shipping report from CITIC Futures mentions that in terms of shipping, the Middle East region accounts for approximately 5% of global container shipping volume; the strait of Hormuz accounts for approximately 3% of global container throughput, with an average ship size of around 6,600 TEU. In the short term, the Middle East route will be most directly affected, with a relatively weaker impact on the Mediterranean route, and a longer transmission path for direct impacts on the European route. From the perspective of geopolitical risk premiums, all routes may see a halt in the short term and a return to growth. 4. Optical communication concept rose against the trend The optical communication concept rose against the trend, with Fiberhome Telecommunication Technologies, Shenzhen SDG Information, Hui Lyu Ecological Technology Groups, and others hitting the limit up. Analysis: Several research institutions have pointed out that the continued increase in capital spending by North American cloud vendors, coupled with the evolution of CPO architecture, is reshaping the technical foundation of computational interconnection. The core components and advanced packaging processes in the upstream of the optical communication industry chain are expected to undergo value reassessment and definitive growth. Institutional views Huaxi: As the market enters the "two sessions" season, stability will be the main feature of A-shares. As the market enters the "two sessions" season, stability will be the main feature of A-shares. The escalation of overseas geopolitical conflicts may trigger short-term global risk-off and inflation trade, with the duration of the conflict becoming a key variable affecting the market. Domestically, as the "two sessions" in early March are approaching, expanding domestic demand and new productive forces may become the focus for the year, with the draft outline of the "14th Five-Year Plan" anchoring the direction of medium to long-term industries. Historical analysis shows that the market tends to operate steadily during the "two sessions," with the market's chances of performing well increasing after the "two sessions," and industries mentioned in the policy direction often perform well throughout the year. CITIC SEC: The narrative drive and price hikes are likely to continue in March. Narrative drive and price hikes are still the main drivers of the market. CITIC SEC has constructed a quantitative index to distinguish whether recent market trends in different industries are driven by sentiment or fundamental expectations. Some typical industries with high price hikes have been classified as sentiment-driven, such as precious metals, energy storage and power equipment, and bulk chemicals; some industries with relatively low price hikes have also been classified as sentiment-driven, such as smart driving, media and gaming, humanoid Siasun Robot & Automation, and liquor; some industries with significantly high price hikes have been classified as fundamentally driven, such as rare earths and minor metals, wind power, chip design, etc.; there are also individual industries with average price hikes, but high discussion heat, classified as fundamentally-led, such as North American AI computing power, cement building materials. From a market perspective, whether event catalysts or signals at the quantity and price levels (CITIC SEC has constructed a quantitative monitoring framework), the narratives of price hikes and AI are still in the safe zone, and the outbreak of geopolitical risks in Iran and the heating up of "anti-internal overdraft" related policy expectations around the "two sessions" may continue to strengthen the price hike narrative. From a configuration perspective, AI exposure + supply constraints = price hike expectations, and it is anticipated that the market driven by price hikes will continue in March. BOC International: A-shares may be affected by short-term geopolitical turmoil and risk-off sentiment, but the extent of external impact is limited. A-shares may be affected by short-term geopolitical turmoil and risk-off sentiment, but the extent of external impact is limited. The focus is on resources and domestic AI computing power. Looking ahead, short-term global price volatility of risk assets may increase, with gold and oil prices expected to accelerate upwards. At present, the impact on A-shares is more concentrated in terms of risk appetite, and in the medium term, the A-share market will return to domestic fundamentals and policy expectations. The domestic "two sessions" will open next week, and the short-term impact on A-shares may be smaller than that of overseas markets, with post-holiday return-to-work conditions and the release of macroeconomic policies around the "two sessions" being key concerns for domestic investors. As we mentioned in our review on February 25th, the escalation of uncertainties abroad is expected to bring a new catalyst to this round of resource price rallies. In the short term, the evolution of the Middle East situation and the resurgence of U.S. trade uncertainty may provide strong support for precious metal prices. With catalysis from both internal and external factors in the first quarter, the timing is right for the allocation of cyclical resource industries. This article is reprinted from "Tencent Stocks." GMTEight Editor: Wang Qiujia.