Author: Ba Jiuling, Wu Xiaobo Channel

"Looking at the long term, the capital market will eventually become desensitized to regional conflicts and internalize the long-term effects of war as part of the macroeconomic data."

On April 12 in Islamabad, the US and Iran went their separate ways, and news of the "breakdown" subsequently swept the globe and continued to spread.

The good news is that the market has 24 hours to digest this shock; the bad news is that nobody knows whether 24 hours will be enough.

 News of Iran and the United States failing to reach an agreement made the newspapers.

More than 90% of geopolitical conflicts will fade from market view within two weeks, but the remaining 10% is enough to change the world.

Since the outbreak of the Iraq War, the market has been tormented for six weeks by the phenomenon of "a series of actions as fierce as a tiger, with rises and falls entirely dependent on Trump."

In March, major indices across A-shares, Hong Kong stocks, and US stocks generally corrected by more than 4%. Individual stocks fared even worse, with over 85% of A-shares falling, and a median decline of 11.5%, equivalent to each investor experiencing a limit-down day on average.

However, the market has recently begun to show signs of becoming less sensitive to war.

Based on this change, we have compiled the "April 2026 Wealth Growth Report" by combining the views of 11 financial experts and economists, attempting to find investment clues in the turbulent situation and provide a reference for asset allocation in the coming month.

This report, approximately 18,000 words long, mainly revolves around three core issues:

Is April a good time to "buy bargains"?

When will the Iraq War end? How much will it affect the market?

◎ How should investors allocate their assets under a "wartime economy"?

Is April a good time to "buy a bargain"?

On the investment calendar, April is a typical "decision-making moment" every year.

Unlike the data vacuum period in February and March, the macroeconomic data for the first quarter gradually became clear after entering April, and listed companies released their annual reports and first-quarter reports in a concentrated manner. The market also shifted from "expectation-driven" to "real-world pricing".

In other words, the market in April placed more faith in "what you see is what you get".

More importantly, despite the sharp decline, the market is not lacking in ammunition.

According to Dongwu Securities' calculations, in early April, the total turnover of the two stock exchanges remained above 1.6 trillion yuan, higher than for most of last year;

The outstanding balance of margin financing was 2.58 trillion yuan, only slightly lower than the high point in early March, indicating that leveraged funds have not withdrawn on a large scale.

Meanwhile, the total share of equity ETFs, which represent long-term market funds, remained at 2.10 trillion shares, down only 11.9 billion shares from the high point in early March, showing overall stability.

In addition, the number of new A-share accounts opened in March was about 4.6 million, which is still at a historical high, indicating that residents' enthusiasm for entering the market remains unabated.

This means that even under the impact of geopolitical conflicts, there is still ample potential buying interest in the market, and once a market reversal occurs, these funds are likely to quickly transform into new incremental funds entering the market.

So where will the funds flow first?

Most institutions believe that when market trends ease, companies that simultaneously possess "valuation repair potential, oversold rebound potential, and performance support" will be more likely to attract capital inflows.

The reason is that some high-quality assets often find a "good price" amidst the general market downturn.

In the report, we also invited nine experts to make predictions on the rise and fall of eight major assets: the Hang Seng Index, the CSI 300, Japanese and Korean stock markets, US stocks, the US dollar index, gold, first-tier city real estate, and crude oil. At the same time, we provided allocation suggestions for eight investment targets: the STAR Market 50 ETF, stocks with the concept of earnings turnaround or valuation repair, the Hang Seng Technology ETF, the Consumer ETF, gold, US Treasury bonds, HALO concept stocks, and money market funds.

Among them, the most favored market is the Hang Seng Index, with 7 people bullish and no one bearish. The most popular investment targets are the STAR Market 50 ETF and stocks with the concept of earnings turnaround or valuation repair, followed by the Hang Seng Technology ETF and gold.

Experts believe that Hong Kong stocks have fully priced in the impact of tightening liquidity and war. Therefore, after the extreme overselling, Hong Kong stocks are expected to usher in a "valuation correction" and become one of the markets with the greatest rebound potential in April.

Meanwhile, four experts who are bullish on the CSI 300 index also cited similar reasons, pointing out that the market has shown clear signs of being oversold given the strong domestic economic data in March.

When will the Iraq War end?

Despite the various assessments offered by experts, most emphasized that the recurring nature and long-term impact of war will continue to disrupt the market, and they generally advised investors to exercise restraint—"the later you enter the market, the greater the certainty."

So, according to experts, when will the conflict end? And how much will it affect the market?

The survey results showed that the 11 experts had significant differences of opinion: 4 believed that the war would be difficult to end in the short term, 3 believed that it would end relatively quickly, and 4 said they could not make a judgment.

Experts who believe the conflict will be protracted and recurring are primarily based on dissatisfaction with the "benefits" of the war on both sides, while those who believe the war will end quickly are more concerned with the costs (see table below).

However, regardless of whether the future involves "fighting and negotiating" or "negotiating and fighting," the experts' consensus is clear:

"Capital markets will eventually become desensitized to regional conflicts and internalize the long-term effects of war as part of their macroeconomic data."

In response, they suggest a more pragmatic investment strategy: instead of speculating when the war will end, accept it as a reality and repric it within the framework of a "wartime economy."

Within this framework, one of the most important changes is the rise in the central level of oil prices, and it is unlikely that they will fall back to pre-war levels in the short term.

In the Chinese market, on the one hand, rising oil prices will drive a "price increase trend," and on the other hand, the allocation status of Chinese assets may be further enhanced as a result.

In a wartime economy, a price surge is on the horizon.

Back in March, at the spring strategy meetings of major securities firms, two core themes were mentioned in unison: "AI narrative" and "PPI stabilization and rebound".

Since turning negative in October 2022, the PPI (Producer Price Index) has been in negative territory for 41 consecutive months until February 2026.

A recovery in PPI will directly benefit the profitability of upstream companies and provide support for the overall market. Historical experience shows that a systemic bear market typically does not occur in the early stages of a PPI rebound.

According to Yuekai Securities' analysis, before the geopolitical conflict, the fundamental driving force behind the PPI rebound stemmed from the continuous improvement in the supply and demand relationship: first, the rapid development of global artificial intelligence drove investment in computing power and energy; second, fiscal efforts boosted infrastructure investment; and third, "anti-involution" policies promoted the continuous optimization of market competition order.

Based on this, most institutions believe that the "price increase concept" brought about by the PPI rebound is likely to become one of the clearest investment themes this year.

Specifically, upstream price increases will put cost pressure on midstream and downstream industries. Therefore, in the early stages of PPI recovery, the market tends to allocate more to companies with price transmission capabilities, namely companies with brand, channel or supply chain advantages that can pass on costs to end users.

However, in March 2026, driven by soaring energy prices, the PPI rose by 0.5% year-on-year, turning positive "ahead of schedule".

According to Guolian Minsheng Securities' calculations, if oil price factors are excluded, the improvement in PPI is not significant, and there is a possibility of a surge followed by a decline in the third quarter. However, this price signal will still help change corporate behavior and consumer confidence under the previous low inflation.

At the same time, under the framework of "wartime economy," many institutions believe that the overall allocation value of Chinese assets is rising.

The reason is that in a global environment dominated by "supply shocks", capital tends to be deployed in the direction of security and efficiency. Therefore, China, with its stable energy supply, complete industrial system, highly resilient supply chain and mature industrial support, has significant advantages in these two aspects.

This means that Chinese assets, including A-shares and Hong Kong stocks, are expected to occupy a more important position in this round of global asset rebalancing.

Big Head Has Something to Say

Finally, here are the experts' detailed financial advice for April, for your reference.

Market irrationality often lasts longer than expected. Instead of guessing unpredictable turning points, it is better to make asset allocation and risk isolation plans in advance.

From a market perspective, I am optimistic about tech stocks. While valuations are indeed high, high valuations do not necessarily mean a bubble will burst. Unlike the dot-com bubble of 2000, today's market-dominating tech giants possess strong free cash flow, substantial real profits, and deep industry barriers, making them far more resilient to risks than they were back then. In fact, the premise for tech companies to maintain high valuations today is that profit growth or liquidity support has not reversed.

From the perspectives of time and space, this round of slow and long-term bull market is still in its first half.

Investors are advised to maintain confidence and patience, actively focus on high-quality stocks or funds that have been oversold, in order to seize the opportunity for the next market rally. In the bottoming area of ​​the market correction, do not easily lose quality shares.

At the same time, it should be noted that structural differentiation will continue, and the "new dumbbell strategy" can continue to be adopted this year: one end of the "dumbbell" is the leading technology stocks representing technological innovation, such as robots, semiconductor chips, computing power algorithms, commercial aerospace, solid-state batteries, and controlled nuclear fusion, which are the key areas mentioned in the "15th Five-Year Plan"; the other end is the traditional blue-chip stocks with heavy assets and low volatility, such as "HALO assets" such as power grid equipment, non-ferrous metals, coal, and oil and gas.

Overall, we are bullish on the market outlook. The next month coincides with the Q1 earnings season, so we recommend focusing on the performance of companies and paying particular attention to advanced manufacturing industries with stronger export attributes, namely, the two major directions of technology and cyclical industries.

In terms of timing, the market may still experience significant volatility before the impact of the US-Iran conflict completely subsides. Therefore, the later the entry point, the greater the certainty.

First, the core strategy is "adaptation." In the current environment, responding to change is more important than prediction. Don't panic and drastically cut your losses; doing so can easily lead to ruin before the dawn.

◎ Second, the practical advice is to maintain your position and shift your focus to defensive sectors. Hang Seng Tech has already bottomed out, and many good companies are oversold, so you can buy in batches to "pick up bargains." However, it is not recommended to have a heavy position at this stage because tech stocks are too volatile and too easily affected by market sentiment.

◎ Third, pay attention to the following opportunities: keep an eye on short-term US Treasury bonds, as their current yields are very attractive; gold is a steadfast hedging asset in the face of geopolitical risks.

Large fluctuations are actually a "litmus test" for good companies. Taking advantage of market chaos, you can pick out those high-quality companies that have been wrongly punished and make long-term investments.

Wars always involve alternating periods of fighting and negotiation. However, the market will gradually become less sensitive to Trump's initial "drawing of lines." For investors, the key is to invest, not gamble.

Given the still uncertain geopolitical situation, allocating some funds to broad-based indices such as the CSI 300 or CSI A500 is a good choice, as it offers both offensive and defensive advantages. Once the situation becomes clearer, the proportion of industry ETFs can be increased appropriately, while individual stocks should be kept under-allocated as much as possible.

In addition, short-term market fluctuations are difficult to predict, but the following may be expected:

First, the Q1 2026 financial reports will provide guidance for the full-year performance, so sectors that perform well or exceed expectations are likely to be favored by the market.

Secondly, we can focus on two logics: price increases and overseas expansion. The former is more concentrated in upstream non-ferrous metals and chemicals, while the latter is more concentrated in equipment and machinery companies. However, considering that the valuations of non-ferrous metals and chemicals are relatively high, the probability of rising in the machinery sector is higher.

Currently, the overall valuations of US stocks, A-shares, and gold are all at relatively high levels.

For individual investors, the current recommendation is to focus on absolute returns, prioritizing low-risk assets such as bonds and money market funds, while also moderately allocating to reasonably valued consumer sector ETFs and gold. For equities, pay attention to dividend-paying assets and broad market indices, while avoiding thematic and small-cap stocks that have already experienced significant gains. Avoid following trends and engaging in thematic investing; wait for the right opportunity.

In the short term, we are optimistic about the opportunity for a rebound in A-shares after a sharp decline, while in the medium term, we are optimistic about the consumption and real estate industry chains.

At the global market level, the valuations of US and Hong Kong tech stocks have fallen back to the bottom range of the past two years. The average valuation of large US tech companies has fallen below 25 times earnings, approaching 20 times earnings, while the valuations of large Hong Kong tech companies are generally below 20 times earnings.

These tech companies continue to see strong profit growth, supported by large-scale share buybacks. If they continue to adjust and their valuations fall to a lower level, it would present a good opportunity for medium- to long-term investors to buy on the dip.

Given the uncertain geopolitical situation, it is recommended that investors operate with half of their portfolio in the near term, or at most two-thirds of their portfolio.

In terms of sectors, I personally favor domestic substitution in the semiconductor and commercial aerospace fields, especially low-market-cap stocks and those that are leaders in specific areas. The US is currently considering a new round of unprecedented semiconductor control legislation, which will be a short-term boon to Nvidia and a medium- to long-term benefit to China's domestic semiconductor substitution. I anticipate the market will favor domestic semiconductor substitution stocks in April, creating opportunities for the STAR Market 50 ETF.

The war will have some impact on the market outlook, but it is a temporary factor, not a decisive one. The main part of the war is expected to end soon, but it will have a long-tail effect, impacting the Taiwan Strait and global supply chains for a considerable period. Investors can dynamically seize two opportunities: increasing allocations to oversold assets and realizing profits from beneficiary assets such as crude oil.

The allure of the capital market lies in the fact that even in extreme environments like war, there are opportunities to generate unexpected returns.

We recommend a relatively high allocation to the STAR Market 50 ETF and money market funds, firmly adhering to the main narrative logic of the national capital market. Additionally, April is the annual report season for A-shares; we suggest either holding no positions or selectively building small positions in high-performing stocks that have been unfairly punished by market downturns.