Top 10 Funds Interpret Shanghai Index Retreating to 3800 Points: Market Pricing Already Quite Sufficient, Low-Volatility Asset Allocation Value on the Rise

Monday’s A-share market faces another correction.

On March 23, the three major A-share indices fell over 3%. The Shanghai Composite retreated below 3,800 points. At the close, the Shanghai Composite dropped 3.63%, the STAR 50 Index fell 4.31%, the Shenzhen Component declined 3.76%, and the ChiNext Index decreased 3.49%.

In the ETF market, Huatai-PineBridge CSI 300 ETF traded nearly 6.8 billion yuan on Monday, nearly doubling from the previous trading day; the E Fund ChiNext ETF, Southern CSI 500 ETF, Huaxia SSE 50 ETF, Southern CSI 1000 ETF, and GF Shanghai Stock Exchange Composite Index ETF all saw significant buying at the close. Specifically, the GF S&P Oil & Gas ETF and the Harvest S&P Oil & Gas ETF both hit the daily limit up; meanwhile, 14 gold-themed ETFs declined over 9%.

Regarding the cause of Monday’s unusual market volatility, Pelican News interviewed ten public fund managers after market hours. Many believe that the latest developments in US-Iran conflicts are the most critical marginal variable currently, but the decline in equity markets has clearly been an “overreaction.” The long-term valuation core of A-shares remains rooted in domestic fundamentals. Market allocation strategies favor low-volatility assets, and sectors with clear industry trends and prosperity are more resilient.

Caitong Fund: The core is high oil prices’ sustained impact on inflation, interest rates, and economic fundamentals

Monday’s broad decline in A-shares was mainly due to ongoing geopolitical risks and the macro impact of high oil prices. The US-Iran conflict over the weekend showed no signs of easing or resolution, raising concerns that high oil prices will continue to boost global inflation and suppress economic fundamentals, leading to a rapid decline in risk appetite. Meanwhile, the prolongation of the conflict keeps oil prices high, reinforcing inflation expectations and strengthening the dollar, which impacts gold sectors through profit-taking and leverage effects, further intensifying risk aversion and volatility.

Looking ahead, the progression of US-Iran tensions remains the key market variable. High oil prices mainly affect RMB assets through temporary pressure on exports and domestic demand, but domestic policies aimed at stabilizing growth and expectations may offset some effects. The overall situation is manageable, as the market is not purely trading on risk aversion or stagflation logic.

The current core trading logic is not about betting on a quick end to the conflict but on the duration of high oil prices’ impact on inflation, interest rates, and economic fundamentals. Sectors with clear industry trends and prosperity are more resilient, with AI remaining a key allocation focus. During turbulent times, performance certainty and the ability to realize earnings are fundamental; focusing on high-growth, high-profit quality stocks offers a better chance to navigate short-term geopolitical and macro fluctuations. Patience is advised.

Morgan Stanley Fund: Market pricing is already quite sufficient

The overall suppressive factor remains the stagflation risk from Middle East tensions, while domestically, rising costs pressure manufacturing profit margins. Relief depends on clarity in overseas developments. Recent trends show no significant improvement, and the impact exceeds expectations. Crude oil prices are approaching $110 per barrel again, adding inflationary pressure in many countries. Although the European Central Bank and Federal Reserve have held steady in recent months, sustained high oil prices could trigger rate hikes again, affecting global investments.

Currently, the domestic market is pricing in the global economic impact of overseas developments. With recent sharp declines, the market has already priced in much of this risk. Compared to other manufacturing powerhouses, China’s manufacturing advantage remains significant, and some export sectors may benefit, so excessive pessimism is unwarranted.

China Europe Fund: The value of low-volatility assets is gradually rising

Market risk appetite has sharply declined, driven by geopolitical conflicts increasing safe-haven demand. However, risk appetite declines tend to be trend-like. Early in macro shifts, markets often seek “beneficiary sectors” based on optimistic inertia. For example, last week’s overseas optical module conference boosted optical sector performance beyond expectations, with the Philadelphia Semiconductor Index and ChiNext attracting capital from both US and Chinese markets, while other sectors saw significant risk appetite drops. Under rising volatility, defensive assets focusing on dividend styles within stocks are favored due to PPI rebound expectations. If panic persists and causes larger swings, medium- to long-term growth certainty sectors should be monitored.

Global inflation and escalating geopolitical tensions will further drive cyclical commodities. As volatility rises, the value of low-volatility assets increases, focusing on three areas: traditional low-vol dividend stocks; chemical industry chains with profit margins likely to improve beyond expectations, such as coal chemical sectors; and oil & gas sectors benefiting from long-term product price increases.

Guotai Fund: Short-term market may collectively hedge for about two weeks

Since the outbreak of US-Iran conflict, its duration has significantly exceeded market expectations, causing large swings in oil prices. Despite efforts by developed countries to stabilize prices, effects are limited. Near-term oil prices remain stable, but longer-term prices are trying to eliminate discounts. This environment has heightened global inflation expectations, especially in countries already experiencing high inflation, reversing easing policies, raising bond yields, and damaging equity valuations. Continuous declines have also led some absolute return investors to reduce positions, accelerating the process.

Most of the current volatility stems from market panic. Under liquidity disruptions and risk appetite pressure, the market may collectively hedge for about two weeks. Medium-term, market styles are expected to recover, favoring large-cap growth, including AI hardware, power grids, energy storage, and photovoltaic industries.

Shangyin Fund: Equity market declines are clearly an “overreaction”

While concerns about energy prices dragging down economic growth are not unfounded, Monday’s declines in equities appear to be an overreaction. Looking ahead 1-3 months, key indicators of Middle East conflict include US ground troop movements, damage to oil infrastructure, and US-China summit timing. Also important are the extent of US stock declines and domestic attitudes toward the war. If liquidity risks continue to spread, the Fed may need to expand its balance sheet (FOMC meeting in May).

Therefore, a dual approach is recommended: first, in the face of macro uncertainty, wait for liquidity risks to subside—signs include a weaker dollar, stable gold, or market rotation; second, focus on sectors with rising energy prices and increased energy security, as well as segments benefiting from supply chain disruptions (semiconductors, fertilizers) and stable financial sectors.

Bosera Fund: A-shares’ long-term valuation remains rooted in domestic fundamentals

Looking ahead, short-term markets will likely be highly sensitive to geopolitical developments. The blockade of the Strait of Hormuz, potential attacks on energy facilities, and spillover effects to other oil-producing countries will directly influence oil prices and global inflation expectations.

In this highly uncertain phase, dividend sectors with high yields and stable cash flows have defensive value. In the medium to long term, the valuation core of A-shares remains domestic fundamentals—both the Two Sessions have set clear growth targets, and macro policies remain supportive. However, external risks are not fully priced in, so caution is advised. It’s prudent to control positions and wait for clearer developments.

Ping An Fund: Good opportunities for A-shares and Hong Kong stocks

From a medium- to long-term perspective, China’s economy remains resilient with structural opportunities. The Two Sessions have set annual growth targets, and fiscal and monetary policies continue to support growth, especially in technology sectors. Amid external shocks, it may present good opportunities to allocate to A-shares and Hong Kong stocks. Focus on sectors and stocks with strong fundamentals and promising long-term growth.

Key themes include: technology growth stocks benefiting from policy support and industrial upgrades; high-dividend assets with stable cash flows; upstream energy and commodities benefiting from rising resource prices.

Overall, short-term volatility may persist, but the long-term logic remains intact, and structural opportunities are still worth actively capturing.

Cinda Asia Fund: Global equity assets may continue to fluctuate

In the short term, the US-Iran conflict remains the core factor influencing global asset prices. Until geopolitical clarity emerges, global equities are likely to remain volatile. Close attention should be paid to developments in the US-Iran situation.

In the medium term, after recent adjustments, the Chinese market’s selling pressure may have eased. China’s stable and resilient characteristics are expected to show relative strength. Additionally, with the “14th Five-Year Plan” underway and policies aimed at steady progress and quality improvement through 2026, economic recovery and seasonal economic activity could support earnings recovery in A-shares.

Furthermore, as listed companies disclose 2025 annual reports and Q1 results, earnings factors may increasingly influence the market. High-quality growth themes are worth watching.

Yongying Fund: Balancing defense and growth opportunities

Future strategies should balance defense and growth. In the current macro environment of liquidity disruptions and risk aversion, a “HALO PLUS” approach is recommended. Defensive assets (HALO) focus on high-cash-flow, heavy-asset, high-threshold sectors with low TMT correlation, such as coal, utilities, and construction, to hedge macro risks. Offensive assets (PLUS) target low-valuation, interest-sensitive growth sectors like commercial aerospace, batteries, and solar energy. Additionally, military industry themes and sectors benefiting from self-reliance are also considered.

Manulife Fund: Weak risk appetite and valuation bottom features

Recently, global markets have been affected by central bank policies and geopolitical conflicts, with stagflation trading continuing and asset performance diverging. Domestically, risk appetite has weakened, and valuations are at lows.

In the near term, focus on undervalued, high-performance certainty sectors to avoid risks. Sector adjustments include upgrading the automotive sector from underweight to neutral, raising chemical stocks from neutral to overweight, and reducing computer stocks from neutral to underweight, as references for future allocations.