Investment Rating - The industry is rated as "outperforming the market," indicating an expected increase of over 10% in the industry index relative to the CSI 300 index over the next six months [14]. Core Insights - The A-share market experienced a rebound after an initial decline, with significant support at 3807 points for the Shanghai Composite Index, which closed at 3881.28 points, up 1.78% [3][7]. - Key sectors showing strong performance include non-ferrous metals, communication equipment, electricity, and power grid equipment, while sectors like rare earths, insurance, oil and petrochemicals, and coal showed weaker performance [3][7]. - The average price-to-earnings ratios for the Shanghai Composite and ChiNext indices are 15.79 times and 45.41 times, respectively, indicating a favorable environment for medium to long-term investments [3][13]. - The total trading volume for both markets was 20,962 billion, above the median of the past three years, suggesting robust market activity [3][13]. Summary by Sections A-share Market Overview - On March 24, the A-share market showed a pattern of initial decline followed by recovery, with the Shanghai Composite Index gaining support around 3807 points and ultimately closing at 3881.28 points [7]. - The trading day saw over 90% of stocks rising, with notable gains in sectors such as ground equipment, electricity, trade, environmental protection, and medical services [7]. Future Market Outlook and Investment Recommendations - The market is expected to maintain a volatile consolidation phase, with a focus on macroeconomic data, overseas liquidity changes, and policy developments [3][13]. - Short-term investment opportunities are recommended in sectors such as non-ferrous metals, electricity, communication equipment, and power grid equipment [3][13].

Summary of Key Points from Conference Call Records Industry Overview - **Energy Sector**: The focus has shifted from technology stocks to energy and resource sectors due to tightening liquidity and expectations of a single interest rate cut by the Federal Reserve in 2026 [1][2][3]. Coal Sector - **Investment Logic**: Companies with coal chemical assets are recommended due to their aggressive growth potential. The rise in oil prices is expected to increase chemical product prices, benefiting companies like Guanghui Energy and Yanzhou Coal Mining [1][4][5]. - **Market Dynamics**: Despite a year-on-year decline in coal prices in Q1 2026, the average price for the year is expected to remain stable or slightly increase compared to 2025. The presence of flexible supply from domestic and Indonesian mines will help stabilize prices [5]. Energy Storage and Lithium Battery - **Growth Projections**: The energy storage sector, particularly household and commercial storage, is expected to see a growth rate of 30%-50% in 2026. Companies like Deye Technology and Jinlang Technology are highlighted as key players [1][5][6]. - **Lithium Demand**: A projected increase of over 30% in lithium battery demand in 2026 is anticipated, driven by high oil prices and the growth of the energy storage market [6][7]. Offshore Wind Power - **Market Growth**: The domestic offshore wind power market is entering a high growth phase, with installed capacity expected to reach 8-10 GW in 2026 and 13-15 GW by 2027. European projects are also accelerating due to energy security concerns [1][8]. Oil and Gas Equipment - **Capital Expenditure**: High oil prices are driving capital expenditures in North America and the Middle East, benefiting companies like Jereh and Neway. These companies are positioned well for growth due to their exposure to international oil service markets [1][10][11]. Public Utilities - **Mature Sector**: The waste-to-energy sector is entering a mature phase with significant potential for dividend increases. Companies like China Everbright Environment are expected to see substantial growth in earnings and dividends [1][12][13]. Investment Strategies - **Neutral Hedging**: Given the geopolitical uncertainties, a neutral hedging strategy is recommended, increasing allocations to the energy sector to mitigate risks associated with holding technology stocks [2][3]. Key Recommendations - **Coal Sector**: Focus on companies with coal chemical assets such as Guanghui Energy and Yanzhou Coal Mining [1][5]. - **Energy Storage**: Companies like Deye Technology and Jinlang Technology are recommended due to their strong growth prospects in the energy storage market [5][6]. - **Lithium Battery**: Ningde Times is highlighted for its strong market position and expected growth in both battery and energy storage sectors [6][7]. - **Offshore Wind**: Recommended companies include Daikin Heavy Industries and Tianjun Wind Power, which are well-positioned in the growing offshore wind market [8]. - **Public Utilities**: China Everbright Environment and Green Power Environmental are recommended for their stable earnings and dividend growth potential [12][13]. Conclusion - The energy sector, particularly coal, energy storage, and offshore wind, presents significant investment opportunities amid current geopolitical tensions and market dynamics. Companies with strong fundamentals and growth potential are well-positioned to benefit from these trends [1][2][3][4][5][6][7][8][12][13].

Report Industry Investment Rating No relevant information provided. Core Viewpoints of the Report - The core variable in the current market lies in the Middle East. Until the geopolitical uncertainty decreases or the commodity price volatility declines, the market will continue to be affected by event narratives and liquidity, and may even fall into a game of long - term expectations. A - shares will maintain a volatile market, with more structural opportunities than overall opportunities [3][13]. - In the equity market, it is recommended to focus on energy sectors related to the Middle East situation, "three - low" sectors with low valuation, low volatility, and low consensus, and sectors that can maintain high - growth independently regardless of geopolitics and oil prices [3][13]. - In the bond market, short - term yields are down while long - term yields are up, and the yield curve is moving towards a bearish steepening. In the short term, it is recommended to maintain a neutral or slightly lower duration, and credit bonds may offer better value [4][14]. Summary by Directory 1. Weekly Market Observation 1.1 Equity Market Review and Observation - Last week, the A - share market showed a volatile downward trend, with significant fluctuations in market sentiment. The average daily trading volume of the entire A - share market was 2209.1 billion yuan, a decrease compared to the previous week [12]. - Due to the ongoing blockage of shipping in the Strait of Hormuz and the unresolved Middle East situation, global risk assets accelerated their decline. Funds shifted from cyclical sectors sensitive to macro - fluctuations to technology and manufacturing sectors with independent industrial logic and long - term growth potential [12]. - AI hardware industry chains such as memory chips, CPO, PCB, and computing power leasing attracted market attention, driven by multiple industry benefits. In contrast, resource - related cyclical sectors such as non - ferrous metals and chemicals faced pressure and declined [12]. 1.2 Pan - Fixed - Income Market Review and Observation - Last week, the bond market showed a significant differentiation between short - and long - term yields. The 1 - year Treasury yield decreased by 2.00BP to 1.26%, the 10 - year Treasury yield increased by 1.56BP to 1.83%, and the 30 - year Treasury yield increased by 2.16BP to 2.39% [4][14]. - The bond market is currently in a volatile pattern. Short - term yields have been declining due to extreme risk - aversion, while long - term yields are rising due to concerns about intensifying geopolitical conflicts and increased imported inflation expectations. The yield curve is moving towards a bearish steepening [4][14]. - The US Treasury yields increased across the board last week. The 1 - year US Treasury yield increased by 14BP to 3.80%, the 2 - year US Treasury yield increased by 15BP to 3.88%, and the 10 - year US Treasury yield increased by 11BP to 4.39% [15]. - The performance of REITs was differentiated. The CSI REITs Total Return Index fell 0.13% to 1021.78 points. Affordable housing and expressways had the highest gains, while warehousing and logistics, environmental protection, etc. had the highest losses [15]. 2. Fund Index Performance Tracking 2.1 Equity Strategy Theme - Based Index - **Active Equity Fund Selection**: The index selects 15 funds each period, with equal - weight allocation. The core positions select active equity funds based on performance competitiveness and style stability, and balance the style distribution according to the CSI Equity - Oriented Fund Index [19]. 2.2 Investment Style - Based Index - **Value Equity Fund Selection**: The index selects 10 funds with deep - value, quality - value, and balanced - value styles, with the CSI 800 Value Index as the benchmark [19]. - **Balanced Equity Fund Selection**: The index selects 10 relatively balanced and value - growth style funds, with the CSI 800 as the benchmark [22]. - **Growth Equity Fund Selection**: The index selects 10 funds with active - growth, quality - growth, and balanced - growth styles, with the 800 Growth Index as the benchmark [26]. 2.3 Industry Theme - Based Index - **Pharmaceutical Equity Fund Selection**: The index selects 15 funds based on the intersection market value ratio of fund equity holdings and the representative index, with the CSI All - Index Pharmaceutical and Healthcare Index as the benchmark [28]. - **Consumer Equity Fund Selection**: The index selects 10 funds based on the intersection market value ratio of fund equity holdings and the representative index, with the consumer - theme fund index as the benchmark [32]. - **Technology Equity Fund Selection**: The index selects 10 funds based on the intersection market value ratio of fund equity holdings and the representative index, with the technology - theme fund index as the benchmark [35]. - **High - End Manufacturing Equity Fund Selection**: The index selects 10 funds based on the intersection market value ratio of fund equity holdings and the representative index, with the high - end manufacturing - theme fund index as the benchmark [38]. - **Cyclical Equity Fund Selection**: The index selects 5 funds based on the intersection market value ratio of fund equity holdings and the representative index, with the CS Cyclical Index as the benchmark [40]. 2.4 Money - Market Enhancement Index - **Money - Market Enhancement Strategy**: The index aims for liquidity management, targeting a curve that outperforms money - market funds. It mainly invests in money - market funds and inter - bank certificate of deposit index funds, with the CSI Money - Market Fund Index as the benchmark [45]. 2.5 Pure - Bond Index - **Short - Term Bond Fund Selection**: The index aims for liquidity management, selecting 5 funds with stable long - term returns, strict drawdown control, and significant absolute - return capabilities, with a benchmark of 50% Short - Term Pure - Bond Fund Index + 50% Ordinary Money - Market Fund Index [47]. - **Medium - and Long - Term Bond Fund Selection**: The index invests in medium - and long - term pure - bond funds, aiming for stable returns while controlling drawdowns. It selects 5 funds, balancing coupon strategies and band - trading operations, and adjusting the ratio of credit - bond funds and interest - rate - bond funds according to market conditions [50]. 2.6 Fixed - Income Plus Index - **Low - Volatility Fixed - Income Plus Selection**: The index has an equity central position of 10%, selects 10 funds with an equity central position within 15% in the past three years and recently, with a benchmark of 10% CSI 800 Index + 90% ChinaBond New Composite Full - Price Index [53]. - **Medium - Volatility Fixed - Income Plus Selection**: The index has an equity central position of 20%, selects 5 funds with an equity central position between 15% - 25% in the past three years and recently, with a benchmark of 20% CSI 800 Index + 80% ChinaBond New Composite Full - Price Index [55]. - **High - Volatility Fixed - Income Plus Selection**: The index has an equity central position of 30%, selects 5 funds with an equity central position between 25% - 35% in the past three years and recently, with a benchmark of 30% CSI 800 Index + 70% ChinaBond New Composite Full - Price Index [56]. 2.7 Other Pan - Fixed - Income Index - **Convertible Bond Fund Selection**: The index selects 5 funds from a sample space of bond - type funds with a convertible - bond investment ratio meeting certain criteria, based on multiple evaluation indicators [60]. - **QDII Bond Fund Selection**: The index selects 6 funds with stable returns and good risk control based on credit and duration conditions, with underlying assets being overseas bonds [64]. - **REITs Fund Selection**: The index selects 10 funds with stable operations, reasonable valuations, and certain elasticity based on the underlying asset types of REITs [65].

Market Overview - A-shares experienced a significant adjustment on March 23, with the CSI 300 down 3.26%, the CSI 1000 down 4.81%, and the Northern Stock Exchange 50 down 5.48%, with over 4,800 stocks declining, resulting in a nearly 1:17 up-down ratio [2][3] - Only coal (+0.20%) and oil & petrochemicals (+0.06%) closed in the green, while sectors like social services, beauty care, electronics, and agriculture faced the largest declines [4] Key Downward Drivers 1. **Middle East Conflict Escalation**: The situation in the Middle East deteriorated unexpectedly, with heightened geopolitical risks leading to significant damage to energy facilities and increased oil price expectations [5] 2. **Stagflation Concerns**: Rising oil prices have intensified global inflation expectations, leading to a contraction in risk asset valuations as markets fear a combination of economic slowdown and high inflation [6] 3. **Federal Reserve's Hawkish Stance**: The Fed's recent meeting maintained interest rates but raised inflation outlooks, leading to a significant reduction in expectations for rate cuts this year, which has tightened liquidity for high-valuation growth stocks [7] 4. **Quarter-End Fund Behavior**: Approaching the quarter-end, public funds and insurance capital faced pressure to adjust portfolios and realize profits, leading to concentrated sell-offs in high-growth sectors [8] Sector Performance Insights - **Strong Defensive Sectors**: Coal and oil & petrochemicals benefited from rising oil prices and high dividend yields, becoming safe havens for capital [10] - **Moderate Defensive Sectors**: Utilities and electrical equipment showed stable cash flows and experienced smaller declines compared to the market average [10] - **Severely Affected Sectors**: High-elasticity consumer services, high-valuation tech growth, and cyclical sensitive sectors faced significant valuation reductions [10] Important Observations - The Shanghai Composite Index's 3,800 points serve as a key psychological and technical support level [11] - The total trading volume on the first day was 2.45 trillion, higher than the previous week's average of 2.21 trillion, indicating a need to monitor for stabilization signals [11] Fund Behavior - Recent ETF fund flows showed a clear trend of "risk aversion and reallocation," with significant net inflows into broad-based ETFs like CSI 300 and CSI 500, while sector-specific ETFs saw concentrated outflows, particularly in previously high-performing cyclical and resource sectors [13] Strategic Outlook - In the current market environment, characterized by external geopolitical shocks and internal quarter-end adjustments, a cautious approach is recommended, focusing on risk control and waiting for clear stabilization signals before re-entering the market [16] - High-dividend sectors are expected to provide strong allocation value, while domestic demand-related sectors may offer safety margins due to policy support and relatively low valuations [16] - Quality growth sectors, particularly in high-end manufacturing, technology, and pharmaceuticals, should be monitored for gradual re-entry opportunities following valuation corrections [16]

Quantitative Models and Construction Methods - **Model Name**: Convolutional Neural Network (CNN) for Price-Volume Data **Model Construction Idea**: The model leverages convolutional neural networks to analyze standardized graphical representations of price-volume data, aiming to predict future price trends. The learned features are then mapped to specific industry theme indices[76][78] **Model Construction Process**: 1. Standardize price-volume data into graphical formats for each stock within a specific time window[76] 2. Train a convolutional neural network to extract features from these graphical representations[76] 3. Map the learned features to industry theme indices, such as dividend low-volatility, banking, and real estate indices[76][78] **Model Evaluation**: The model effectively identifies industry themes based on price-volume patterns, providing actionable insights for sector allocation[76][78] Model Backtesting Results - **CNN Model**: Latest theme configurations include the following indices: 1. CSI Dividend Low Volatility Index (h30269.CSI) 2. CSI Banking Index (399986.SZ) 3. CSI 800 Banking Index (h30022.CSI) 4. CSI Mainland Real Estate Theme Index (000948.CSI) 5. CSI 800 Real Estate Index (399965.SZ)[78] Quantitative Factors and Construction Methods - **Factor Name**: Macroeconomic Indicators **Factor Construction Idea**: Macroeconomic factors are used to assess their impact on asset returns by identifying trends and significant events in historical data[51][52] **Factor Construction Process**: 1. Track 25 domestic and international macroeconomic indicators, such as PMI, CPI, PPI, and M2 growth rates[52] 2. Define four types of macroeconomic events: short-term peaks/troughs, continuous up/down trends, historical highs/lows, and trend reversals[52] 3. Use historical moving averages to classify macroeconomic trends (e.g., 3-month, 12-month averages) and analyze their impact on asset returns over the next month[54] **Factor Evaluation**: The approach identifies effective macroeconomic events that significantly influence asset returns, providing a robust framework for market trend analysis[52][54] Factor Backtesting Results - **Macroeconomic Factors**: 1. PMI (3-month moving average): Positive outlook for equities[55] 2. Social Financing Stock YoY Growth (1-month moving average): Neutral outlook[55] 3. 10-Year Treasury Yield (12-month moving average): Neutral outlook[55] 4. Dollar Index (1-month moving average): Neutral outlook[55]

Core Viewpoint - The article highlights the performance and management strategy of the Dongfanghong Strategy Selected Mixed A Fund, which has consistently delivered positive returns over the years, making it a suitable investment option for risk-averse investors seeking alternatives to bank deposits [3][20]. Fund Performance - The Dongfanghong Strategy Selected Mixed A Fund has been established for over 10 years, with an annualized return exceeding 6% and a total return of 77.95% since the current manager, Kong Lingchao, took over in August 2016 [3][4]. - The fund has only experienced a slight decline of 0.94% in 2022, while achieving positive returns in all other years, outperforming the CSI 300 index during bear markets and significantly beating performance benchmarks during bull markets [9][10]. Fund Management - Kong Lingchao manages a total of 9 funds, with the Dongfanghong Strategy Selected Mixed A being the best performer among them, currently holding assets of 13.35 billion [4][6]. - The fund maintains a conservative stock allocation of below 25% and a bond allocation of over 70%, with a focus on managing drawdowns effectively, keeping the maximum dynamic drawdown under 5% [11][14]. Asset Allocation - As of the end of 2025, the fund's asset allocation includes 58.6% in financial bonds, with medium-term notes, corporate bonds, and corporate short-term financing bonds making up 22.2%, 10.36%, and 7.46% respectively [15]. - The equity allocation is diversified, with the largest sector being media at 9.18%, followed by electronics, pharmaceuticals, basic chemicals, textiles, non-ferrous metals, and others, all within the 5%-9% range [15][16]. Institutional Interest - The fund has attracted significant institutional interest, with institutional holdings reaching nearly 90% during the weak market of 2022, and still maintaining a 56% share as of mid-2025 [12]. Investment Strategy - The fund's strategy includes a balanced approach to equity investments, with a focus on sectors that may recover from pessimistic earnings expectations, particularly in AI and traditional industries [20].

Equity Market Review and Outlook - The core variable affecting the market remains the Middle East, with both short-term trading logic and long-term "stagflation risk" expectations dependent on whether the geopolitical conflict can be resolved quickly [1][5] - Until uncertainties in the geopolitical situation decrease or commodity price volatility declines, the market will continue to be impacted by event narratives and liquidity shocks, leading to a focus on long-term expectations [5][6] - A-shares are expected to maintain a volatile trend, with structural opportunities being more prominent than overall opportunities; recommended sectors include energy-related stocks (oil, green energy, coal, coal chemical), low valuation and low volatility stocks (state-owned banks, utilities), and sectors that can maintain high prosperity independent of geopolitical and oil price influences (energy storage, domestic AIDC) [1][5][6] Fixed Income Market Review and Outlook - The bond market showed significant differentiation between short and long ends, with the 1-year government bond yield decreasing by 2.00 basis points to 1.26%, while the 10-year and 30-year yields increased by 1.56 basis points to 1.83% and 2.16 basis points to 2.39%, respectively [2][7] - The current bond market is in a volatile state, with extreme risk aversion driving down short-end yields, while long-end yields are rising due to escalating geopolitical conflicts and heightened inflation expectations [7][8] - The market sentiment is cautious, with a focus on short-end credit products showing strong allocation value; however, long-end yields have limited downward momentum, and liquidity may face certain shocks as the quarter-end approaches [2][7] Market Performance - The A-share market experienced a volatile decline, with average daily trading volume at 22,091 billion, a decrease from the previous week; the ongoing disruption in the Strait of Hormuz has led to a significant drop in global risk assets [4][5] - Funds are shifting from macro-sensitive cyclical sectors to technology manufacturing sectors with independent growth logic, driven by multiple industry benefits such as the overseas GTC conference and price increases in cloud computing and storage products [4][5] - Resource cyclical sectors like non-ferrous metals and chemicals are under pressure, primarily due to external macroeconomic impacts, including rising oil prices and concerns over the Federal Reserve's hawkish stance [4][5]

Investment Highlights - The report identifies a new theme of "high share transfers" as a right-side breakout opportunity [4][9] - The ongoing right-side trend is noted in the water and electricity sector [4][11] - The report highlights sectors showing bottom stabilization, including trust, financial opening, small base stations, and COVID-19 testing [4][16] - Bottom reversal opportunities are identified in animal vaccines, the pig industry, and innovative drugs [4][18] Theme Morphology Outputs - The report categorizes themes into four types: right-side breakout, right-side trend, bottom stabilization, and bottom reversal [4][8] - The right-side breakout theme includes high share transfers, photovoltaic inverters, chicken industry, propylene, and water electricity indices [4][9] - The right-side trend theme is focused on the water electricity index [4][11] - Bottom stabilization themes include trust index, financial opening index, small base station index, and COVID-19 antigen testing index [4][16] - Bottom reversal themes encompass CAR-T therapy, pig fever vaccine, animal vaccine index, monoclonal antibody index, pig industry index, and innovative drugs index [4][18]

- The report utilizes convolutional neural networks (CNN) to model the relationship between charted price-volume data and future prices, mapping learned features to industry thematic indices[74][75] - The thematic indices configured using CNN include the CSI Dividend Low Volatility Index, CSI Bank Index, CSI 800 Bank Index, CSI Mainland Real Estate Thematic Index, and CSI 800 Real Estate Index[75] - The CNN-based approach focuses on standardizing price-volume data into charts for analysis, as referenced in prior deep learning studies like "AI Recognition and Classification of Stock Price Trends Based on Convolutional Neural Networks"[74]

Market Sentiment Overview - As of March 20, the market sentiment indicator is at 1.7, up from 1.55 the previous week, indicating a neutral sentiment despite fluctuations throughout the week [1][4] - Multiple sub-indicators have shown a decline compared to the previous week, influenced by ongoing external political risks, suggesting a potential further drop in market sentiment [1][4] Sub-indicator Analysis - The price-volume consistency indicator has rapidly declined, reflecting a weaker correlation between price increases and market attention, indicating an overall bearish sentiment [7][9] - Total trading volume for the A-share market decreased by 12.49% week-on-week, with an average daily trading volume of 14,098.98 billion, further indicating reduced market activity [11] - The proportion of the STAR 50 index relative to the total A-share trading volume has consistently decreased, suggesting a decline in risk appetite [15] - The inter-industry trading volatility has been on the rise, reaching historical highs for 2023, indicating increased activity in switching funds between different sectors [16] - The industry trend indicator initially rose but later showed a downward trend, indicating a reduction in divergence among industry views and a slight increase in consensus on short-term value judgments [18] - The financing balance ratio has slightly decreased, indicating a reduction in market leverage and a decline in investor risk appetite [19] - The RSI indicator has penetrated the lower boundary, suggesting increased downward momentum and reduced buying power, reflecting an overall decline in market sentiment [20] - The net inflow of main funds has shown a downward trend, indicating weakened buying power and reduced enthusiasm from institutional investors [24] Industry Crowding and Trading Heat - The highest average crowding levels as of March 20 are in the utilities, basic chemicals, electrical equipment, construction decoration, and environmental protection sectors, while the lowest are in automotive, defense, social services, retail, and textiles [30][31] - The correlation between crowding and weekly price changes is near zero, indicating that high crowding does not necessarily lead to price increases, with sectors like construction decoration and environmental protection showing low price changes despite high crowding [32] Trend Scoring Model Insights - The short-term scoring model indicates that sectors such as coal, utilities, electrical equipment, communication, and construction decoration are leading in trend scores, with coal having the highest score of 93.22 [25][28] - The model suggests a preference for growth and large-cap styles, with the current signals indicating a strong preference for large-cap stocks [35]