Huatai Securities A-share strategy: Geopolitical situation fluctuates, wait for a right-hand signal.

Huatai Securities A-share strategy pointed out that last week, the fluctuation in the Middle East situation repeatedly affected the market, combined with capital flight before the Qingming Festival, the tracked A-share sentiment index is still in the "panic" range. In terms of structure, industries benefiting from geopolitics and high oil prices such as electricity, new energy, and coal have seen profit-taking due to high crowdedness, while low-correlated sectors like communication and innovative pharmaceuticals have shown strong performance. Better-than-expected financial performance in the earnings season has also become a new trading clue. The odds of a left-side layout may gradually increase, but it is not advisable to bet unilaterally before the geopolitical situation clears. It is recommended to continue waiting for right-side signals. In addition, despite the better-than-expected non-farm data, caution is still needed for the risk chain of rising oil prices inflation liquidity tightening. In terms of allocation, it is recommended to control positions, leave space, maintain a certain defensive and low-correlation asset allocation in the short term, such as dividends, AI computing power, and innovative pharmaceuticals, and position oneself around the electricity chain and economic indicators in the medium term on dips.