Confused! Funds are entering the market to buy the dip, but the market keeps "slapping" them in the face—what should retail investors do?

(Source: Business Observer)

Recently, the A-shares market has shown a clear pattern of volatility and divergence. While funds continue to enter for bottom-fishing, the market fluctuates repeatedly, causing many investors to face the dilemma of being caught when they buy in and rebounding when they exit. The sectors such as metals, wind power, and oil have taken turns surging and pulling back, making the overall trend appear chaotic.

1. Market Volatility Analysis: Range-bound consolidation between 4050-4150 points, dominated by multiple uncertainties

Currently, the A-share index remains within the 4050-4150 point range, showing a “bottoming and consolidating” pattern. This is the result of multiple global uncertainties acting together.

Externally, geopolitical tensions and global monetary policies are the main disturbances. Although the situation in Iran has not escalated further, risk aversion remains, and tensions in the Strait of Hormuz still influence market expectations; China-U.S. trade negotiations have entered a critical phase. On March 13, the Ministry of Commerce announced that the sixth round of talks would be held in France, and the market is awaiting results, with funds generally observing.

Additionally, the Federal Reserve’s interest rate decision draws much attention. According to Caixin on March 18, CME’s “FedWatch Tool” shows a 98.9% chance of holding rates steady this week, and a 78.1% chance of a 25 basis point cut in June. This policy uncertainty increases volatility in global capital markets and also affects capital flows in the A-share market.

It is important to clarify that the current volatility is fundamentally different from the bear market fluctuations of 2021-2024. Back then, the average daily turnover was only 500-600 billion yuan, with lows below 400 billion, and a lack of funds led to prolonged declines. Since 2025-2026, the daily trading volume has stabilized above 2 trillion yuan. Under the “housing not speculation” policy, a large amount of idle capital has flowed into stocks, providing sufficient liquidity support. Therefore, short-term fluctuations should not be overly feared.

From a global perspective, the U.S. stock market has been sideways for half a year. Its volatility has a transmission effect on the A-shares market. The current correction in A-shares is a normal response, and investors should view it rationally.

2. Sector trading logic: Funds rotate between commodities and technology, with differentiated hot spots

Recently, sector rotation has accelerated, essentially reflecting the tug-of-war between funds in the commodities and technology sectors, centered around “certain opportunities.” This can be understood from three aspects:

First, the consumer sector led by liquor brands is experiencing a phased recovery. Rumors that Maotai’s secondary market price fell below 1,499 yuan triggered panic selling, but the latest data shows its wholesale price for bottled liquor has fallen back to around 1,560 yuan. Market sentiment has improved, leading to a rebound. However, this is a valuation recovery after previous adjustments, not a trend reversal, so caution is needed against potential pullbacks.

Second, Hong Kong stocks have rebounded strongly, with clear signs of funds entering. Foreign short-selling institutions pointed out that the Hang Seng Tech Index is severely oversold. Middle Eastern funds have increased their holdings in Hong Kong stocks for risk hedging. Coupled with southbound funds net inflows exceeding 190 billion HKD this year, multiple factors are driving a stronger rebound than in A-shares. Essentially, the rebound in Hong Kong stocks is a valuation correction, with the index’s P/E ratio at a historic low, making it attractive for valuation.

Third, the impact of Iran’s conflict has weakened, leading to sector differentiation among commodities. Rumors of escalation over the weekend did not cause significant fluctuations in international crude oil prices, indicating market fatigue. However, short-term risks remain high, with sectors like oil, wind power, and metals experiencing “buy high, get trapped.” Only the coal sector remains relatively stable.

3. Practical guidance: Avoid short-term volatility, focus on long-term certain opportunities

In the face of market fluctuations, investors need to clarify their operational strategies, stay updated on the latest developments, and use macro and sector analysis to avoid risks and seize opportunities.

On the macro level, two key messages deserve attention:

First, the development of the Iran situation. Rumors suggest the U.S. may target Cuba, but no confirmation has been provided. Investors should not over-speculate on such uncertain events.

Second, China-U.S. trade negotiations. According to People’s Daily on March 13, the sixth round of talks is imminent. As this year is a “big year” for China-U.S. relations, dialogue to resolve differences will be the main theme. It is expected that relations will stabilize in the second quarter, providing a favorable environment for A-shares.

Regarding sector selection, it is recommended to gradually shift from commodities to technology and pharmaceuticals. Although commodities face obvious upward pressure, even with geopolitical catalysts, prices have not surged rapidly. Short-term strategies such as “buying dips for rebounds” are suitable, avoiding long-term holding.

Technology sectors have long-term certainty. U.S. tech giants maintain steady performance, domestic innovation policies are gaining momentum, and growth prospects are broad. Pharmaceuticals, as defensive sectors, are resilient during volatility and can be an important part of asset allocation.

The core logic of the current market is “consolidation and differentiation,” with funds focusing on certain opportunities. Investors should abandon chasing highs and selling lows, focus on long-term growth fields like technology and pharmaceuticals, manage positions reasonably, and be patient in layout. Meanwhile, remain vigilant about market risks and make decisions based on personal risk tolerance.

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