Oil prices spiral out of control, indices break through support levels, capital is already fleeing into defensive positions

Reprinted from: Yangtze Evening News

Today, the A-shares gave the bulls a wake-up call, opening lower and falling all the way down, with the Shanghai Composite Index briefly breaking below 4,000 points, hitting a new low since 2026.

But by the end of the session, as you saw, oil and gas, and banks provided strong support, and the index recovered above 4,000 points, closing at 4006.55.

This isn’t a counterattack; it’s the activation of a defensive line.

The core of this pressure isn’t in the stock market but in oil prices.

Originally considered “controllable,” the geopolitical conflict suddenly escalated during Thursday’s Asian trading hours: international oil prices surged rapidly, inflation expectations rose, and global capital trading logic instantly shifted from waiting for rate cuts and buying growth stocks to preventing stagnation and reducing risk.

Many people were frightened by the index today, but a calm look at the structure shows: Japan and South Korea fell more sharply, while Hong Kong and A-shares retreated relatively controllably, with key levels supported by funds.

Because China’s economy has some buffer against high oil prices. Our energy imports are diversified—coal power, renewable energy systems are complete, and policy maneuvering space is larger. This means A-shares will adjust, but not collapse.

The key message from today’s market is that panic has appeared, but no stampede has occurred. The reasons are threefold: the valuations of CSI 300 and SSE 50 are still around the median, risk-free rates are low, dividend assets are attractive, and institutions have reduced positions earlier, holding large amounts of cash.

So you see, the index broke below support, but some dared to buy, and the late rally was driven by defensive funds.

When the market begins to stagnate, funds first seek assets that can hedge energy risks.

Sunrise Oriental (Risk warning: individual stocks are for knowledge sharing only and do not constitute investment advice) has a clear logic: on March 13, according to securities research reports, subsidies for heat pumps in Germany, the UK, and other countries are significantly higher than in 2021-2022. If natural gas prices surge again, it will likely boost sales of heat pump products and household storage in Europe. The conclusion is that rising natural gas prices are a clear positive for heat pump sales. Today, natural gas futures surged mainly due to news from Iran, which indicated plans to target neighboring countries’ natural gas facilities. Based on this, Sunrise Oriental also early benefited from the heat pump concept. If geopolitical conflicts are not effectively eased later, this trend remains worth monitoring.

(Data source: Tonghuashun. Historical data is for reference only and does not guarantee future returns.)

Many think that defense only means buying banks and oil & gas stocks. In fact, low-volatility technology stocks are also safe havens.

Meiliyun (Risk warning: individual stocks are for knowledge sharing only and do not constitute investment advice) plays a role: state-owned background, infrastructure-focused computing power and cloud resources, not involved in high-valuation speculation. During risk contraction periods, it functions more like a utility in tech.

Yesterday, we discussed Meiliyun, which has high recognition as a core in computing power. It was among the first to rise actively, with strong momentum. Oruide and other stocks were driven by news of Alibaba’s computing power price increase in the afternoon. Today, these two stocks also advanced together. Our judgment yesterday was that Meiliyun needed to strengthen and accelerate today, which was confirmed by its opening limit-up. Due to the overall market weakness, after an early rally, many stocks showed significant pullbacks. Whether Meiliyun can continue to strengthen tomorrow depends on the bidding situation of other stocks like Lianhua Holdings and Litong Electronics, which also hit the first limit-up. If the index remains weak, funds are likely to stick together, but the upward potential for Meiliyun still exists.

(Data source: Tonghuashun. Historical data is for reference only and does not guarantee future returns.)

If your mindset today is to watch the index break support, worry about a chain reaction of declines, and wonder whether to cut positions,

You need to change your perspective: the market is already telling you that the direction is not to escape but to shift.

When oil prices start to spiral out of control, the real winners are never the fastest to rush in.

They are those who have already moved into defensive zones.

This round, stop using offensive thinking and stubbornly hold through stagnation trades.

Author: Luna A1210623100001 Risk warning: Investing involves risks; choose carefully. This article is for knowledge sharing only and does not constitute investment advice. No guarantees are made regarding the accuracy or completeness of the content. Past performance does not predict future results; investments may lead to principal loss. Anyone making investment decisions based on this information bears the risk.

Source: Yangtze Wealth