Resource Sector Continues to Heat Up, Institutions Recommend Seizing Main Trend Expansion Opportunities

Zhou Heng Charting

Over the past week, the A-share market has generally shown a pattern of oscillation and consolidation, with major broad-based indices performing divergently. Meanwhile, the ongoing geopolitical conflict in the Middle East continues to influence global markets, intensifying volatility across various asset classes.

Institutional strategy outlook suggests that although there remains some uncertainty about the future development of the Middle East situation, the A-share market’s resilience has significantly improved due to domestic policy certainty and a relatively loose liquidity environment. In the short term, energy security assets are likely to continue benefiting amid the rapid rise in international crude oil prices. In the medium to long term, the fundamentals of the technology industry, represented by AI, are less affected by the Middle East tensions and are expected to remain a market mainline once short-term disturbances subside.

A-share Market Demonstrates Strong Resilience

Recently, geopolitical conflicts in the Middle East have suppressed global risk appetite, leading to adjustments in worldwide equity markets. However, the A-share market has shown relative resilience. Shenwan Hongyuan Securities believes this reflects the A-share market’s adaptation to the macro environment characterized by frequent overseas geopolitical conflicts.

Shenwan Hongyuan states that looking ahead, the A-share market is progressing along its own path. The market is in a transitional phase from the “first upward stage” to a “consolidation zone,” with Middle East conflicts mainly confirming a phase shift. Historical experience indicates that the classic upward pattern of the A-share market often involves an initial structural rally followed by a broad market rally. Structural rallies occur when industry trends are not yet fully fermented, and the market anticipates prosperity, leading to valuation expansion. Broad market rallies happen after nonlinear earnings growth is realized, with the market assigning higher valuations in a bullish atmosphere. Typically, there is a period of consolidation between these two phases.

Guangfa Securities notes that in the short term, the evolving situation in the Middle East is uncertain. However, in the medium term, the impact is likely to be gradually absorbed by the market, and the technology industry cycle is unlikely to peak easily. While geopolitical conflicts may temporarily impact market liquidity, the more critical factor will be the fundamental changes in the tech industry. The logic of a strengthening global non-USD assets in 2026 is unlikely to be overturned by geopolitical tensions. Therefore, once short-term uncertainties are resolved, Chinese assets may present the best bottom-fishing opportunity of the year.

China Galaxy Securities analysis states that since late February, escalating conflicts in the Middle East have repeatedly disturbed market sentiment, with crude oil prices fluctuating sharply and inflation expectations rising. The Fed’s rate cut expectations have been dampened, and overseas risk assets have underperformed. In comparison, the A-share market has demonstrated strong resilience. Supported by its own resilience and intrinsic factors of “taking the lead,” the market is expected to gradually shift from “emotion-driven” to “fundamentals-driven,” with earnings becoming the core anchor in the next phase.

Technology Sector Focus Shifts Between High and Low

From sector performance, recent market activity has mainly been driven by “risk aversion,” with trading focus concentrated on energy and defensive sectors.

Looking ahead, institutional analysis suggests that energy security assets may continue to benefit in the short term, while the technology sector needs to avoid negative impacts from overseas mapped sectors. In contrast, niche areas driven by domestic industry cycles and capital market events offer more attractive allocation opportunities.

Industrial Securities states that policy certainty and ample liquidity are key supports for the resilience of the A-share market amid external shocks. Based on the current assessment that the most intense phase of Middle East geopolitical conflicts may be passing, while oil prices are expected to remain high for some time, they recommend two investment strategies: one, sectors whose prices can link to oil prices and benefit from rising oil; two, sectors with independent industry trends and less sensitivity to oil price increases, such as AI and advanced manufacturing, which combine industry trends with policy support.

Open Source Securities indicates that in the long term, technology remains the main market theme. However, within the sector, attention should be paid to the shift between high and low valuation segments, with the power equipment sector expected to perform strongly in 2026. Additionally, high-dividend assets are projected to outperform in 2026 compared to 2025.

Bank of China International Securities suggests investors focus on the diffusion opportunities within the main themes: first, the technology rally is gradually spreading from TMT sectors to advanced manufacturing; second, the trend of rising prices in industrial commodities (such as non-ferrous metals) has begun to extend toward energy and chemical sectors; third, the AI industry trend is unlikely to be significantly affected by Middle East tensions. Although overall sector valuations may face short-term downward pressure from risk aversion, core segments with strong earnings growth prospects are expected to withstand cyclical fluctuations.