The strongest start of the year! 20% limit-up in 1 minute! The entire sector surges collectively!

The first strong move of the year exceeded expectations!

On the first trading day of the Year of the Horse (February 24), the strongest sector was not artificial intelligence or robotics, but oil and gas. One minute after the opening, Tongyuan Petroleum hit the daily limit up by 20%. The entire oil and gas exploration sector surged collectively, with Zhunyou Shares, Zhongman Petroleum, Shandong Molong, and Intercontinental Oil & Gas all hitting the daily limit.

Analysts believe that currently, tensions between the U.S. and Iran are increasing geopolitical risks in the crude oil market, pushing Brent crude prices from $66 to $72 per barrel. Net long positions have risen to a two-year high, and January’s call option trading volume reached a historic peak. Markets worry that the conflict could escalate into a full-scale war, affecting oil supplies through the Strait of Hormuz, which drives short-term oil prices higher.

So, could the second phase of spring market volatility start with oil and gas?

Physical Assets Lead the Charge

During the holiday period, physical assets like oil, gold, and silver surged significantly, boosting related sectors in today’s A-shares. In the early trading session, oil and gas stocks soared across the board, with Tongyuan Petroleum, Zhunyou Shares, Zhongman Petroleum, Shandong Molong, and Intercontinental Oil & Gas all hitting the daily limit. Oil ETFs surged by as much as 7%.

Base metals also collectively soared, with sector gains exceeding 3%. Stocks like Xiaocheng Technology, Silver & Nonferrous Metals, Hunan Silver, and Jiangnan New Materials hit the daily limit or gained over 10%. China Railway Group and other nonferrous concept stocks also saw significant gains.

Guojin Securities believes that the current crude oil market is dominated by geopolitical risks. Tensions between the U.S. and Iran have pushed Brent crude net long positions and bullish options bets to historic highs. Short-term oil prices are highly volatile, and the trend is expected to remain prone to quick rises and slow declines over the next month. If the conflict escalates to full-scale war, oil prices could spike beyond expectations, but may then fall back due to weakening demand and shifts in monetary policy. If limited military strikes occur, oil prices could surge above $75 per barrel but with limited sustainability. A nuclear deal could reduce geopolitical risk premiums, leading to a decline in oil prices.

Looking at the declining sectors, sectors like artificial intelligence and robotics, which had high expectations during the holiday, opened high but then declined. Early in the session, A-share film and television stocks collectively fell sharply, with Guangxian Media, Bona Film, China Film, Hengdian Film, and Jinyi Film hitting the daily limit down. Shanghai Film and Wanda Film approached the limit down, and Happy Blue Ocean fell over 15%.

Is the Spring Market Entering the Second Phase?

This year’s physical assets leading the charge differ from market expectations. So, is the spring market entering its second phase?

Review shows that the probability of market gains increases gradually within 5, 10, and 20 trading days after the Spring Festival, with a style favoring small and mid-cap stocks over large caps, and growth stocks outperforming. The CSI 2000 index has higher gains and probabilities of rising. Industry-wise, technology and cyclical sectors are relatively favored. Open Source Securities notes that the spring rally is not a one-time event; in the past ten years, six times after a correction, a second wave of gains emerged, often more profitable than the first, closely related to the main market themes at the time.

In terms of timing, the Two Sessions are approaching. Historically, the style of A-shares around the Two Sessions varies. During this period, rotation tends to intensify, with funds competing around policy-driven industry themes and opportunities, but profit-making effects are not very prominent. After the Two Sessions, the market usually shifts focus to “earnings reports,” and trading sentiment gradually consolidates.

Additionally, recent external markets remain volatile. On one hand, U.S. dollar liquidity issues persist, with leverage loan indices and overnight reverse repurchase scales remaining low. Meanwhile, the AI narrative continues to impact the market. Nvidia’s earnings report is approaching, with bearish pressure mounting; on the other hand, tariffs and Middle East geopolitical shocks have caused gold, silver, and oil prices to surge again, which is not necessarily positive for growth stocks, especially AI. Under this environment, the spring rally may be more volatile than last year.

Guojin Securities’ Song Xuetao believes that global capital markets are undergoing a sharp correction from narrative premiums to actual valuation, with liquidity and risk appetite changes being the main sources of volatility. The AI industry chain is shifting from a “mutual promise” financing model to strict scrutiny of commercialization and financial authenticity, intensifying the divergence between the real economy in the U.S. and high-valuation tech narratives.

（Source: Securities Firms China）