The A-shares continued to decline in the afternoon, with the downward momentum widening, and the Shanghai Composite Index fell below 4,000 points: combined trading volume of the two markets approached 2.3 trillion yuan.

The three major A-share stock indices opened with mixed gains and losses on March 20. Early trading saw divergence among the indices, with the Shanghai Composite briefly falling below 4,000 points. The sharp rise in the morning was not sustained into the afternoon, and instead, a one-sided decline emerged.

From the market perspective, concepts such as computing power leasing, financial technology, cybersecurity, AI applications, commercial aerospace, robotics, and memory chips all declined. Conversely, photovoltaic, lithium batteries, and CPO-related themes performed strongly against the trend.

By the close, the Shanghai Composite Index fell 1.24% to 3,957.05 points; the STAR 50 Index dropped 1.55% to 1,318.31 points; the Shenzhen Component Index decreased 0.25% to 13,866.2 points; and the ChiNext Index rose 1.3% to 3,352.1 points.

Wind statistics show that a total of 661 stocks across the two markets and the Beijing Stock Exchange rose, while 4,784 declined, with 43 remaining unchanged.

Total trading volume for the Shanghai and Shenzhen markets reached 2.286 trillion yuan, up 175.8 billion yuan from the previous trading day’s 2.111 trillion yuan. Among them, the Shanghai market’s turnover was 964.9 billion yuan, an increase of 29.6 billion yuan from 935.3 billion yuan; the Shenzhen market’s turnover was 1.3219 trillion yuan.

According to Dazhihui VIP, there are 51 stocks across the two markets and the Beijing Stock Exchange with gains over 9%, and 44 stocks with declines over 9%.

Electric power equipment surged significantly at one point, with oil and petrochemical sectors declining among the top losers.

In terms of sectors, electric power equipment surged sharply at one point, with stocks like Neng Electric (300827), Shouhang New Energy (301658), JNL Technology (300763), Haiyou New Materials (688680), Huabao New Energy (301327), Hema股份 (688032), and Zhongli Group (002309) hitting or exceeding 10% daily limit. Aijian Securities pointed out that the international environment in the energy sector remains complex and severe, with ongoing geopolitical conflicts. New energy sources like photovoltaics may become new breakthroughs to ensure national energy security. Some products, including photovoltaics, will see VAT export tax rebates canceled starting April 2026, which may temporarily boost domestic photovoltaic exports and, in the long term, help eliminate outdated capacity and optimize the industry structure. It is recommended to focus on related targets in solar storage.

Telecom stocks showed strong oscillation, with Guangku Technology (300620), Xinyi Sheng (300502), and others rising over 8%, and Zhongji Xuchuang (300308), Dingtong Technology (688668), and Zhongci Electronics (003031) rising over 5%.

Utility sector strengthened, with Jiuzhou Group (300040), Zhaoxin Shares (002256), Yin Xing Energy (000862), Huaneng Liaoning (600396), Shaoneng Shares (000601), and Huadian Energy (600726) hitting or exceeding 10% daily limit.

The computer sector led declines, with Guyao Technology (300551), Jiechuan Intelligent (301248), Hongjing Technology (301396), and Dongfang Guoxin (300166) hitting or exceeding 10% down.

Defense and military sectors declined notably, with Ganhua Chemical Industry (000576) hitting the daily limit, and Beidou Star (002151), Aerospace Development (000547), Xice Testing (301306), Guxiang Technology (301213), and Guanglian Aviation (300900) falling over 6%.

Oil and petrochemical sectors also declined sharply, with Heshun Petroleum (603353) hitting the daily limit, and Zhunyou Shares (002207), Qian Neng Hengxin (300191), Taishan Petroleum (000554), Beiken Energy (002828), Intercontinental Oil & Gas (600759), and Petrochemical Oil Services (600871) falling over 6%.

In the short term, confidence and capital-driven momentum in the A-share market still need to be strengthened.

CITIC Securities believes that the core pressure on the current market mainly comes from overseas. The escalation of Middle East tensions has triggered turbulence in global capital markets, and rising oil prices have raised concerns about stagflation, suppressing risk appetite. This has delayed the Fed’s rate cuts, increased fluctuations in U.S. Treasury yields, and put valuation pressure on global equities, especially high-valuation tech growth stocks. With the domestic macro policy tone becoming clearer, providing a solid bottom support for the market, the central bank has clarified its flexible use of RRR cuts and interest rate reductions to maintain ample liquidity; it also supports China’s State-owned Assets Supervision and Administration Commission (SASAC) to play a quasi-“stabilization fund” role, boosting market confidence. It is advised to closely monitor macroeconomic data, overseas liquidity changes, and policy developments.

Hualong Securities believes that as crude oil prices continue to rise and external markets undergo consecutive adjustments, the A-shares opened lower and accelerated downward. The Shanghai Composite broke below previous lows and closed near the 4,000-point mark, with all major moving averages showing a bearish alignment; the ChiNext remained relatively resilient, mainly supported by recent strength in large energy stocks. In the short term, attention should be paid to the 4,000-point support level of the Shanghai Composite and the potential for technical rebounds after the adjustment.

CaiXin Securities notes that technically, the Shanghai Composite is now at the lower end of a consolidation range, but due to repeated external macro shocks and the upcoming earnings season, short-term confidence and buying momentum remain fragile. If the market cannot recover quickly, it may break below the consolidation range and continue downward. It is recommended to control positions and wait for signs of market recovery. In the medium term, with continued loose fiscal and monetary policies, ongoing inflows of household savings assets into the market, improvements in corporate earnings, and breakthroughs in global AI technology, the foundation for the current A-share rally remains solid. The recent Middle East conflict is expected to only impact short-term sentiment and market rhythm, not change the overall market direction. Confidence in the medium- and long-term upward trend remains, and excessive worry is unwarranted.

Hualong Securities’ research report states that amid geopolitical disturbances, several favorable factors support stable market operation. First, the economy remains resilient. In the first year of the 14th Five-Year Plan, various sectors seized opportunities, pushing major projects forward and boosting investment. Second, policy expectations are stable. The 2026 Government Work Report proposes deepening reforms in capital market investment and financing, further improving mechanisms for long-term funds entering the market, and enhancing investor protection. Third, uncertainties are gradually being priced into the market.

Tianfeng Securities’ report notes that the last bull market ended with sector valuation divergence, with high valuation levels across many industries. Currently, many sectors are at high valuation, with nearly half already at elevated levels by Q3 2024. Ample liquidity continues to drive down risk-free rates, providing valuation support for the entire industry. Since mid-2024, growth stocks more sensitive to discount rates have outperformed value stocks. Looking ahead, liquidity is near historical highs, and the recovery of PPI and real economic demand is expected, which could further boost valuations and sector rotation toward “profit growth.” The current focus on price increases is because rising prices directly reflect profit growth.