Galaxy Strategy: "15th Five-Year Plan" Sets Tone - Which Sectors Reflect A-Share Resilience?

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Source: Galaxy Securities

Core Views

This week’s A-share market: (1) From March 9 to March 13, 2026, the A-share market experienced volatility and adjustments, with major broad-based indices showing divergence. The All A Index declined by 0.48%. The STAR 50 and Beijing Stock Exchange 50 fell over 2%. Meanwhile, the ChiNext Index, Shenzhen Component, and CSI 300 rose, with the ChiNext Index up 2.51%. (2) In terms of style, the main market favored a growth style this week, with the CSI 300 (0.19%) outperforming the CSI 1000 (-0.42%). The five major style indices had mixed performances, with cyclical styles falling sharply by 1.72%, while stable styles rose by 3.16%. (3) Sector-wise, most primary industries declined this week, with gains in coal, electrical equipment, and construction decoration, while defense military, oil and petrochemicals, and comprehensive sectors declined.

Fund Flows This Week: (1) Trading activity in the A-share market slightly cooled. The average daily turnover was 2,498.7 billion yuan, down 145.9 billion yuan from last week; the average daily turnover rate was 2.1332%, down 0.11 percentage points. (2) As of Thursday, the margin financing and securities lending balance was 2,664.6 billion yuan, up 19.1 billion yuan from last week. (3) Among newly established funds this week, 21 equity funds were issued, totaling 19.824 billion units, up 14.59 billion units from last week, accounting for 54.93% of total units issued. (4) From March 5 to March 11, global funds net outflowed 3.615 billion USD from A-shares (previously net inflow of 1.471 billion USD). Among them, overseas funds net outflowed 1.035 billion USD from A-shares (previously net inflow of 1.144 billion USD).

Valuation Changes This Week: The PE (TTM) of the All A Index decreased by 0.44% to 23.33x, at the 94.22% percentile since 2010; PB (LF) fell 0.27% to 1.93x, at the 56.66% percentile since 2010. The bond yield spread of the All A shares was 2.4717%, near the 3-year rolling average (3.3177%) minus 1.63 standard deviations, at the 42.78% percentile since 2010.

Market Outlook for A-shares: Since the end of February, escalating conflicts between the US and Iran have repeatedly disturbed market sentiment, with oil price volatility pushing inflation expectations higher. The Fed’s rate cut expectations have been dashed, suppressing risk asset performance. Compared to the global equity markets, which are generally adjusting, the A-share market has shown strong resilience. The 2026 government work report emphasizes domestic demand-led growth, cultivating new drivers, and high-level technological independence. The 14th Five-Year Plan focuses on high-quality development, modern industrial systems, and strategic technological self-reliance, with an emphasis on expanding domestic demand. From a long-term perspective, this clarifies the investment logic of seeking “quality” in “new” growth. Supported by the market’s resilience and “my-own” core, the market will gradually shift from “emotion-driven” to “fundamentals-driven,” with performance becoming the key anchor in the next phase.

Allocation Opportunities: First, sectors related to price increases and risk hedging. Ongoing US-Iran tensions and Strait of Hormuz tensions drive energy and alternative demand, leading to repeated activity in related sectors, with potential increased volatility. Focus on chemicals, non-ferrous metals, coal, shipping ports, and oil & gas. Second, sectors benefiting from improved supply-demand dynamics and industry profit recovery, including value assets with safe valuation margins—such as basic chemicals, non-ferrous metals, steel, building materials, and financials (especially banks). Third, long-term themes of technological innovation remain key. Focus on power equipment, new energy, storage, computing power, consumer electronics, communication equipment, communication services, semiconductors, and military industries. For consumer sectors, focus on light industry, textiles, home appliances, and agriculture.

Risk Tips

External uncertainties; policy risks falling short of expectations; market sentiment instability and liquidity adjustments.

Main Text

1. Weekly Market Review

(1) Index Performance

From March 9 to March 13, 2026, the A-share market experienced volatility and adjustments, with divergence among major broad-based indices. The All A Index fell 0.48%. The STAR 50 and Beijing Stock Exchange 50 declined over 2%. The ChiNext Index, Shenzhen Component, and CSI 300 rose, with the ChiNext Index up 2.51%.

In terms of style, the main market favored growth this week, with the CSI 300 (0.19%) outperforming the CSI 1000 (-0.42%). The five major style indices had mixed results, with cyclical styles falling 1.72%, and stable styles rising 3.16%.

Sector-wise, most primary industries declined, with coal, electrical equipment, and construction decoration leading gains at 5.03%, 4.55%, and 4.12%, respectively. Defense military, oil & petrochemicals, and comprehensive sectors declined.

Secondary industry performance: top five sectors by return are wind power equipment, batteries, infrastructure, photovoltaic equipment, and coal mining; the lowest are minor metals, marine equipment II, aerospace equipment II, ground military equipment II, and aviation equipment II.

(2) Fund Flows

Market activity slightly cooled compared to last week. The average daily turnover was 2,498.7 billion yuan, down 145.9 billion yuan; the average daily turnover rate was 2.1332%, down 0.11 percentage points. The northbound funds’ average daily turnover was 310.5 billion yuan, down 33.7 billion yuan.

As of March 12, the margin financing and securities lending balance increased, with the total at 2,664.6 billion yuan, up 19.1 billion yuan. Margin financing was 2,645.9 billion yuan, up 182.7 billion; securities lending was 18.7 billion yuan, up 8.3 billion.

As of March 14, 30 new funds were established this week, totaling 36.088 billion units. Among them, 21 equity funds (including stock and hybrid funds) issued 19.824 billion units, up 14.59 billion units from last week, accounting for 54.93% of total units issued, an increase of 16.06 percentage points.

IPO and refinancing: one IPO raised 293 million yuan; five refinancing projects raised 2.513 billion yuan.

Next week, market fund outflows are expected to ease. A total of 42 companies’ restricted shares will be unlocked, totaling 1.988 billion shares, with a total value of 55.736 billion yuan. From March 16 to March 22, 33 companies’ restricted shares will be unlocked, totaling 819 million shares, with an estimated value of about 26.786 billion yuan based on March 13 closing prices.

According to EPFR data, from March 5 to March 11, global funds net outflowed 3.615 billion USD from A-shares (previously net inflow of 1.471 billion USD). Overseas funds net outflowed 1.035 billion USD, including active funds (-133 million USD) and passive funds (-929 million USD), which previously had net inflows.

On industry allocation, based on mainland Chinese companies’ listed stocks globally, the largest net inflow was into industrial goods at 1.304 billion USD, followed by commodities/materials and utilities. Tech sector saw significant net outflows, with continued outflows from energy, financials, healthcare/biotech, and real estate. Consumer goods also experienced net outflows. Overseas funds’ net outflow from energy was 15 million USD, industrials 15 million USD, infrastructure 5 million USD. Tech sector saw a large net outflow of 569 million USD, along with healthcare/biotech.

(3) Valuation Changes

As of March 13, the PE (TTM) of the All A Index decreased 0.44% to 23.33x, at the 94.22% percentile since 2010, at a relatively high level historically. The PB (LF) fell 0.27% to 1.93x, at the 56.66% percentile since 2010, near the median.

The 10-year government bond yield was 1.8143%, up 3.33 basis points from last week. The active 10-year treasury futures contract closed at 108.22, down 0.29. Based on this, the bond yield spread of A-shares was 2.4717%, near the 3-year rolling average (3.3177%) minus 1.63 standard deviations, at the 42.78% percentile since 2010.

Industry-wise, among 31 primary industries, 10 saw rising PE valuations. As of March 13, 22 industries had PE valuations above the 50% percentile since 2010, 6 industries between the 20%-50% range, and 3 below the 20% level. Real estate, retail, and computing had high PE percentile rankings at 98.01%, 92.57%, and 92.34%. Non-bank financials, food & beverages, and agriculture & forestry had low PE percentiles at 1.71%, 13.67%, and 17.19%.

2. Market Outlook for A-shares

Since late February, escalating US-Iran conflicts have repeatedly disturbed market sentiment, with oil price swings raising inflation expectations. The Fed’s rate cut expectations have been dashed, suppressing risk assets. Compared to the global equity markets, which are generally adjusting, the A-share market has shown strong resilience. The 2026 government work report emphasizes domestic demand-led growth, cultivating new drivers, and technological independence. The 14th Five-Year Plan emphasizes high-quality development, modern industrial systems, and strategic technological self-reliance, with a focus on expanding domestic demand. Long-term, this clarifies the investment logic of seeking “quality” in “new” growth.

Supported by market resilience and “my-own” core, the market will gradually shift from “emotion-driven” to “fundamentals-driven,” with performance becoming the key anchor. As 2025 annual reports and Q1 2026 reports are released, corporate earnings will become the core focus.

Allocation suggestions: First, sectors related to price increases and risk hedging. Continued US-Iran tensions and Strait of Hormuz tensions drive energy and alternative demand, leading to repeated activity in related sectors, with potential increased volatility. Focus on chemicals, non-ferrous metals, coal, shipping ports, and oil & gas. Second, sectors benefiting from improved supply-demand and profit recovery, including value assets with safe valuation margins—such as basic chemicals, non-ferrous metals, steel, building materials, and financials (especially banks). Third, as global upheavals accelerate, domestic economic logic shifts toward new productive forces, with technological innovation remaining a long-term key theme. Focus on power equipment, new energy, storage, computing power, consumer electronics, communication equipment, communication services, semiconductors, and military industries. For consumer sectors, focus on those with strong domestic and external demand, such as light industry, textiles, home appliances (with strong export prospects), and agriculture.

3. Risk Alerts

External uncertainties; policy risks falling short; market sentiment volatility and liquidity adjustments.