CICC Research: Short-term uncertainties still exist, but the medium-term support for the "steady progress" of the A-share market remains valid

On April 4th, China International Capital Corporation (CICC) released a research report. Since the outbreak of the Middle East conflict, global markets have experienced volatility and adjustments, with the A-shares demonstrating relative resilience. Industry performance mainly revolves around two main themes: “defensive hedging” and “energy substitution.” The upward movement of oil prices impacts A-shares, with short-term effects reflected in valuation suppression and medium-term effects on corporate profits. Historical experience shows that when oil prices remain above $80 per barrel, the return on equity (ROE) and profit margins of non-financial sectors in A-shares tend to face certain pressures. If the conflict persists and extends further, the pressure could spread along the industrial chain to global trade and inventory cycles, potentially triggering negative feedback from total demand and capacity contraction, thereby affecting the pace of global energy transition, reshaping industrial chains, and redistributing export shares. Looking ahead, we believe that although there are still uncertainties in the short term and risk appetite is unlikely to fundamentally rebound until the situation clarifies, the medium-term logic supporting a “steady progress” in the A-share market remains valid.