Late April may mark a critical turning point as the market further focuses on earnings certainty

Before the Qingming holiday, the A-share market exhibited a choppy and differentiated trend amid a blend of pre-holiday risk-averse sentiment and disruptions from the Middle East geopolitical conflict. In response to the frequent and recurring Middle East geopolitical conflict, this week’s institutional strategy outlook report judges that late April may become a key time window when conditions at home and abroad improve at the margin. Meanwhile, as capital’s sensitivity to marginal changes in the Middle East geopolitical conflict gradually weakens, the A-share market has most likely already bottomed out in the short term. Going forward, as listed companies’ annual reports and first-quarter reports are disclosed in large numbers, active capital is expected to gradually shift toward pricing based on fundamentals, finding opportunities with reliable expectations for business performance and industry momentum amid external uncertainty.

Late April may become a key time window

In its April A-share outlook report, CICC (China Merchants Securities) said that current external risks facing the A-share market have not yet been meaningfully alleviated, and that late April will be a key time window for marginal improvement in conditions at home and abroad.

Sparing Securities (Xingye Securities) also expects that around late April, an agreement between the negotiation sides of the conflict may be reached. In April, investors should focus more on opportunities to position at the market bottom, and—after the conflict eases—on the chance to start a “self-driven” (with us as the main driver) repair rally as the market gradually returns to normal.

Looking ahead to April, Everbright Securities believes that the market’s potential turning point may come from the following three directions: first is listed companies’ earnings exceeding expectations. In April, 2025 annual reports and 2026 first-quarter reports from listed companies will be released one after another. Based on the current situation, listed companies’ overall performance is likely to improve slightly, with structural highlights in science and technology innovation (STAR Market)-type and cyclical enterprises. Second is medium- to long-term funds entering the market. The market’s pullback earlier may again trigger medium- and long-term funds to enter the market. Finally, external risk factors may ease.

In the view of China Jianyin (CITIC) Securities (CITIC Construction Investment Securities), the next 2 to 3 weeks may still be a high-risk period with rapid changes in the Middle East geopolitical conflict. The market is waiting for a bargain-buying (bottom-fishing) opportunity, and there is strong short-term capital in a wait-and-see stance. At the same time, investors should re-focus on A-share domestic fundamental factors, as a series of data is jointly supporting the trend of improvement in the economy. With March economic data being released and the A-share earnings-report season approaching, the market’s focus will gradually shift to substantive verification of the strength of economic recovery and improvements in corporate profitability.

Unlocking reliable opportunities for mid-term industry momentum and earnings

In terms of specific allocation, institutions believe that in April, the key is to balance the configuration structure, avoid sectors where valuations are already high and where the earnings realization cycle is relatively long, and to seek reliable mid-term opportunities for industry momentum and earnings amid uncertainty.

Tianjin Securities (Taitai Securities) said that even if the Middle East geopolitical conflict eases afterward, the Strait of Hormuz—which is a core variable—will still be difficult to return to normal. Against this backdrop, the firm advises investors to focus on four main themes: first is the energy resources and integrated refining-and-chemicals theme. Domestic oil and natural gas production companies and coal-chemical enterprises will directly benefit from higher energy prices and increased demand for energy security. Second is the raw-material substitution theme, under which coal-chemical enterprises may obtain a strategic window. Third is the energy transition theme, where the new-energy equipment manufacturing industry will face stronger development opportunities; demand for wind and solar equipment, energy storage batteries, and other downstream areas will continue to grow. Fourth is the theme of independent and controllable supply. In areas with a relatively high dependence on imports—such as high-end chemical new materials, pharmaceutical intermediates, and electronic chemicals—will benefit from the acceleration of the independent-and-controllable process.

In a view from China Merchants Securities, the market focus in the first half to mid-late April is expected to shift to sectors with high growth in first-quarter report earnings. Based on current data, resource sectors such as nonferrous metals and petroleum and petrochemicals, as well as the new energy, optical communications, and semiconductor industry chains, are expected to become the industries with the most eye-catching earnings growth rates.

Bank of Beijing International (Bank of International) Securities recommends focusing on the innovative drug sector, arguing that it has both offensive and defensive attributes. On the defensive side, demand for innovative drugs is highly rigid; the industry logic is independent of the macro cycle; the chip (capital) structure is stable; and it has room for long-term imagination. On the offensive side, the sector’s fundamental support is solid: China’s innovative drug overseas BD business remains highly active, and when the market’s risk appetite is repaired, the innovative drug concept has notable upside elasticity.

Kaiyuan Securities’ outlook is even more optimistic. The firm believes that although the Middle East geopolitical conflict has not yet ended, the stage when market sentiment was at its lowest may be passing. Tech growth remains the direction most worth paying attention to. In the short term, tech categories that saw the largest declines earlier tend to benefit the most. In the long run, what is truly worth focusing on is still growth sectors whose earnings growth rates are continuously accelerating. If oil prices continue to fall and the market’s risk appetite is further repaired, then growth will remain one of the directions with the biggest repair upside elasticity.