The conflict between the United States and Iran is causing global disturbances. The A-shares demonstrate resilience with a "putting ourselves first" attitude. Institutions are optimistic about the two main themes.

With the continuous escalation of the US-Iran conflict, the security risks of the global energy artery, the Strait of Hormuz, have significantly increased. The central oil prices have risen, the pace of interest rate cuts by major central banks has been hindered, and global stock markets are generally under pressure. In the turmoil, what impact will the A-share market face? Which industries are worth investing in this year? According to the latest analysis of several securities firms, the US-Iran conflict has evolved from the short-term "panic trading" stage to the "stagflation expectations trading" stage of pricing high oil prices and their long-term impact on the economy and policies. Despite continued external shocks, the upward trend of A-shares remains unchanged. Currently, it is in the accumulation period transitioning from the first stage of upward movement to range fluctuation, preparing for the second stage of a comprehensive rally. In terms of allocation, the two main themes agreed upon by institutions are the prosperity of technology and cyclic Alpha. Investors can position themselves along two strategies at the current juncture: finding sectors where prices are linked to oil prices and stand to benefit from rising oil prices, and finding varieties that are less affected by rising oil prices and have independent prosperity. Global market concerns about "stagflation" are warming up, while A shares demonstrate resilience The escalation of geopolitical conflicts directly impacts global risk appetite. Similar to historical experiences, at the beginning of this round of conflict, the market quickly priced in rising commodity prices and safe-haven assets, with crude oil, gold, the US dollar, and US Treasury bonds all rising, while major global stock indices were generally under pressure. However, as the situation becomes deadlocked, the market is beginning to realize that high oil prices may be sustained for a longer period, leading to a significant shift in trading logic. Xingzheng Securities pointed out that two major changes are occurring at the core of market pricing: the shift from the intensity of conflict to the repetition of negotiations, and the beginning of pricing the impact of high oil prices on the economy and policy orientation. If oil prices remain high for an extended period, it will push up global inflation pressure, tighten monetary policy expectations, and fundamentally change the operating logic of asset prices. In this context, the policy certainty advantages of the A-share market are being highlighted. Xingzheng Securities believes that China's current consumer prices are still low, policy interest rates are at historically low levels, and there is a high tolerance for input inflation caused by rising oil prices, with ample policy space for intervention. Domestic policies are likely to continue to focus on "maintaining growth," maintaining reasonably ample liquidity, which will be the core support for the resilience of A shares in this round of external shocks. Shenwan Hongyuan Group Securities also emphasized that the impact of changing relative strengths between countries on asset pricing is undergoing subtle changes. China is no longer a passive recipient of input inflation, showing a stronger proactive response and external adaptation capacity in geopolitical scenarios. A shares are adapting to this environment, with pricing based on the medium to long-term "competitive landscape," naturally showing resilience. A-share accumulation phase remains unchanged for mid-term upward movement, the second phase of the rally may start in the second half of 2026 Despite short-term external disturbances, the outlook for the mid-term trend of A shares is not pessimistic according to brokerage reports. Shenwan Hongyuan Group maintains the judgment of a "two-stage rally," believing that A shares are currently in the high range of the first stage of the rally, gradually transitioning to range fluctuations, which is the stage of accumulating energy for a comprehensive upward movement in the second stage. During the consolidation phase, the adjustment amplitude may be limited but the duration may be in quarters. Shenwan Hongyuan Group's analysis shows that historical experience indicates that there is usually a consolidation period between the first and second stages of an upward move to digest valuation and price-to-earnings ratio issues. Currently, overall valuations of all A shares are at historical highs, and the space for exploring new directions is limited, with the characteristic of the market being "focused on reality, less on narratives." Regarding the timing of the start of the second stage of the upward move, Shenwan Hongyuan Group Securities also made a clear prediction, suggesting that the new rally may start in the second half of 2026 and extend until the first half of 2027. This will be a market resonating with non-linear changes in fundamentals and accelerated inflow of incremental funds. From a fundamental perspective, A-share profits from non-mother entities are expected to increase by 12.9% year-on-year in 2026, showing a trend of increasing profits quarter by quarter. From a fund perspective, the profitability of residents' asset allocation migration is at a critical point, and once a new round of profit-making effects emerges, fund inflows will accelerate again. Chengtong Securities also considers that from both fundamental and fund perspectives, the mid-term upward trend of A shares remains unchanged. Structural opportunities of A shares remain prominent in different conflict scenarios, and the key is to grasp the benefit chains and independent economic directions affected by rising oil prices. Focus on two main themes: "Prosperity in Technology" and "Cyclic Alpha" In the face of a complex geopolitical environment, research reports generally suggest that investment opportunities in 2026 present the characteristics of "clear themes and structural differentiation," and long-term investors need to abandon the mindset of "universal growth" and focus on high-prosperity paths and quality stocks. In the background of high oil prices, the logic of rising prices has become a market consensus. Shenwan Hongyuan Group explicitly points out that the two types of inflation assets of the times, new economy and strategic resources, constitute the main sources of prosperous investment. In the context of great power competition, the controllability of strategic resource security is essential, with increased mining costs, new economy demand contributions, a weak US dollar, and controllability of major power strategic resources jointly supporting the logic of resource revaluation. China Securities Co., Ltd's review pointed out that industries whose own prices or profits are expected to be linked to rising oil prices will be important clues for the "price increase chain" in the future. Historical data shows that industries with a strong correlation with oil prices are mainly concentrated in non-ferrous metals, coal, petroleum and petrochemicals, chemicals, steel, machinery, new energy, and agriculture. In these sectors, the direct beneficiaries of rising oil prices are upstream profits in crude oil extraction, oilfield services equipment, and oil transportation, while coal, coal chemicals, and new energy will also benefit from the energy substitution logic. In the field of technological growth, the long-term logic of the AI industry chain is still clear, but the investment focus is shifting along the industrial chain. China Securities Co., Ltd. Securities believes that AI and advanced manufacturing, backed by industry trends and policy support, are less affected by rising oil prices in the short term and are expected to benefit from independent prosperity in the future after being discounted by the geopolitical risks. Since the beginning of the year, the main directions of profit forecasts continuous upward revisions are mainly focused on AI hardware and advanced manufacturing. Shenwan Hongyuan Group proposes that during the recharging phase, high-elasticity investment opportunities primarily come from the extension of main assets and expansion of macro narratives. In terms of extending main assets, it is important to continue exploring new segments of the AI industry chain and cyclic Alpha. Along the industry line from the "first stage of the rally (AI hardware)" to the "second stage of the rally (AI applications)," the current emphasis should be on the inflation segments of the hardware end such as light modules and PCBs, as well as the penetration of gas turbines into the global supply chain; subsequently moving towards the application end, focus on "selling shovels" (cloud computing, edge-side, Siasun Robot & Automation) on the application end and opportunities for domestic AI chains to lead in the future. This article is from "Cailianshe," authored by Chen Junlan, GMTEight editor: Chen Siyu