中国股票策略：地缘政治不确定性下，A 股情绪持续走弱-China Equity Strategy-A-Share Sentiment Continued to Decline Amid Geopolitical Uncertainties

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the A-share market in China and its sentiment amid ongoing geopolitical uncertainties. The sentiment has continued to decline, impacting the overall market outlook. Core Insights and Arguments 1. Market Sentiment Decline: The weighted MSASI (Morgan Stanley A-share Sentiment Indicator) fell by 5 percentage points to 41% as of March 25, 2026, indicating a negative shift in investor sentiment compared to the previous cycle [2][6][13]. 2. Turnover Trends: Daily turnover for ChiNext increased by 3% to RMB 559 billion, while A-shares rose by 7% to RMB 2,181 billion. However, equity futures open interest decreased by 12% to RMB 448 billion [2][3]. 3. Inflation Forecasts: The China Economic team revised the 2026 inflation forecasts upward, expecting a rebound in PPI (Producer Price Index) to turn positive by mid-2026 due to rising energy and commodity costs. However, this inflation is not expected to drive sustained demand growth [4][13]. 4. Sector Preferences: The report emphasizes a preference for upstream and real asset-linked sectors such as Materials, Energy, selected Industrials, and Semiconductors. The Energy sector was upgraded from equal-weight to overweight due to improved market dynamics [14][15]. 5. Demand and Supply Dynamics: There is a noted pressure on demand despite nominal price increases. A supply-side-driven price rebound may stall without a corresponding recovery in demand, especially as China faces a global macroeconomic slowdown [15]. 6. Earnings Challenges: Major index component companies are experiencing challenges in earnings and return on equity (ROE), particularly in the Internet/e-commerce sector, which is heavily represented in the MSCI China index and has been underperforming [15]. Additional Important Insights 1. Investor Behavior: The 30-day RSI (Relative Strength Index) declined by 6% over the reporting period, indicating weakening momentum in the market [2]. 2. Net Inflows: There was a net inflow of US$4 billion in southbound trading during March 19-25, contributing to year-to-date net inflows of US$25.5 billion [3]. 3. Earnings Revision Breadth: The consensus earnings revision breadth remains negative but has shown slight improvement compared to the previous week [2]. 4. Geopolitical Sensitivity: The A-share market is viewed as less sensitive to geopolitical uncertainties compared to offshore markets, which supports the preference for A-shares [13]. This summary encapsulates the key points from the conference call, highlighting the current state of the A-share market, investor sentiment, sector preferences, and macroeconomic factors influencing the market dynamics.