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Recently, the A-shares have experienced significant fluctuations, with the SSE Index closing below 4,000 points on March 20 and further dipping to the 3,800-point level on March 23, with a single-day decline of over 3%. The Shenzhen Index and ChiNext also fell simultaneously. In fact, with the escalation of the situation in the Middle East, not only A-shares but also global stocks and gold have been impacted. The stock markets in Japan and South Korea suffered heavy losses this Monday, with Japanese stocks dropping nearly 3.5% and South Korean stocks falling nearly 6.5%. Spot gold fell below $4,000 per ounce.
Many investors may be feeling anxious, wondering how long the decline will last and how severe it will be. What should they do now?
What happened?
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Currently, the U.S.-Iran conflict is affecting the changes in various global assets, and there has been no sign of easing in the latest developments. According to CCTV News, on March 21 local time, U.S. President Trump posted on social media, demanding that Iran fully open the Strait of Hormuz within 48 hours, or the U.S. would strike and destroy various power plants within Iran. According to The Paper, U.S. Treasury Secretary Mnuchin stated on the 22nd during an interview that the U.S. is destroying various facilities in Iran and mentioned that sometimes it is necessary to &#34;escalate first to de-escalate.&#34;
Geopolitical conflicts have led to a surge in oil prices, with international oil prices having risen over 40%, and WTI crude oil briefly returning above $100.
What is the core factor behind the recent rapid decline of A-shares? Qian Xin from Xingzheng Global Fund Management stated that the recent performance of A-shares is a reaction to the pricing of the U.S.-Iran conflict and rising oil prices. The stock markets in Japan and South Korea had already priced in these factors earlier than A-shares, experiencing significant declines in early March. However, A-shares and U.S. stocks are relatively unique, being in a later pricing phase, thus their reaction is relatively lagging. The reason is that non-U.S. markets like Japan and South Korea are more strongly impacted by dollar liquidity shocks. After geopolitical events, some non-U.S. investors may choose to sell their domestic stocks and turn to U.S. stocks for safety, which may partly explain the recent strength of U.S. stocks, especially the Nasdaq index. In contrast, the liquidity of A-shares is not as strongly correlated with the dollar as that of the Japanese and South Korean stock markets, so the pricing in of oil prices is relatively delayed.
How long will the impact last? Qian Xin stated that since the recent market fluctuations are due to external event shocks, it is difficult to predict when the most direct factor, the ceasefire, will occur, and thus it is also challenging to predict when the market will stop fluctuating. From the current public statements of both sides, the conflict is still escalating, and high oil prices may persist for a while. It is also hard to predict the extent to which the market will react. However, compared to other markets, China's energy structure is more diversified, and benefiting from the &#34;dual carbon&#34; strategy, the degree of electrification in our country has rapidly increased in recent years, leading to a lower dependence on oil
From a fundamental perspective, there has not been a fundamental change in China's economic fundamentals, so the impact on our financial market may be relatively smaller compared to other markets.
Subsequently, it can be observed that on the evening of March 23, the situation changed again with statements from the US and Iran, and the direction of the conflict continued to be in a state of high volatility, with the rise and fall of major assets responding quickly.
Should we panic?
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What should investors do in a highly volatile market?
Anxiety during declines or other fluctuating markets is often related to a phenomenon in psychology known as &#34;anticipated regret.&#34; Typically, regret is retrospective, a sense of regret and dissatisfaction about things that have already happened; whereas anticipated regret refers to the decision-maker's expectation of future regrets, a form of &#34;forward-looking regret,&#34; which prompts decision-makers to make choices to avoid potential future regrets.
After a period of asset decline, due to inertia and panic, many investors worry that the decline is persistent, and once a trend is established, it is difficult to reverse. Therefore, when they notice that the heavily weighted stocks in their funds have plummeted, it feels as if they are witnessing &#34;countless limit-downs&#34; in the future. However, in reality, the mechanism of stock price formation is a very complex system, with many factors influencing price fluctuations. The current decline may be due to issues with the company's fundamentals, an overall oversell in market panic, or individual stocks being wrongly punished due to emotional influences. The latter two causes of decline are often unrelated to changes in the company's quality and are usually unsustainable.
If this is not understood, then when the fund's net value declines, some investors with positions may imagine scenarios of losses due to not redeeming in time, leading to anticipated regret, and subsequently panic-selling, missing out on the subsequent rebound; while another group of investors without positions may, when deciding whether to buy, imagine missing the opportunity to bottom out, leading to impulsive entry, but they may also &#34;buy halfway up the mountain.&#34; Thus, the impulses to &#34;cut losses&#34; and &#34;bottom-fish&#34; are more or less derived from anticipated regret, and the main reason behind this anticipated regret is the obsession with guessing short-term market trends and the misestimation of the market after the fact.
Therefore, it is best for investors not to focus too much on short-term declines, but to look at the long term and observe whether long-term factors have changed.
A more cost-effective way to operate during declines
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Of course, many investors will ask, &#34;I don't know whether the decline will last for a month, three months, or half a year. Should I just do nothing during this period?&#34; Instead of doing nothing and waiting for the market to recover, it is a better choice to accumulate positions during the downturn and volatility periods. At this time, dollar-cost averaging may be a suitable approach for most ordinary investors.
The significance of dollar-cost averaging lies in diversifying the timing of purchases, smoothing investment costs, reducing volatility, and lowering the difficulty of market timing for investors, especially when investors are uncertain about the upcoming trends.
Historical data shows that in a volatile market, dollar-cost averaging performs better than a lump-sum investment. We selected a 12-month period of a volatile market (from 2023/9/30 to 2024/9/30), during which both A-shares and Hong Kong stocks experienced continuous ups and downs, followed by a surge in September 2024. We calculated the return differences between dollar-cost averaging and lump-sum investment during this period. It can be observed that during this volatile market period, the investment returns of A-shares, Hong Kong stocks, and equity fund indices under the dollar-cost averaging strategy were significantly higher than those of lump-sum investments.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/O1yt4rp1GuKKpMSb86yQexGYWOvkfaeR1Tfg0W9zs0_fEAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/O1yt4rp1GuKKpMSb86yQexGYWOvkfaeR1Tfg0W9zs0_fEAA/641"/>
Data source: Wind, 2023/9/30-2024/9/30.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OMqTQiOmrBCZQhWPridRuL8p170sCQpboRjrPKkJjI-BQAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OMqTQiOmrBCZQhWPridRuL8p170sCQpboRjrPKkJjI-BQAA/641"/>
Data source: iFind, 2023/9/30-2024/9/30. Simulation calculation method: Starting from 2023/9/30, invest 1,000 yuan on the 1st of each month. As of 2024/9/30, a total of 12 investments were made. Return rate = (latest assets - total investment) / total investment. Transaction fees are not considered. This calculation result is for reference only and does not represent actual returns, nor does it serve as an investment strategy recommendation or return guarantee. Historical data does not represent future performance and return commitments. Fund investments carry risks and should be chosen with caution.
Now, let's extend the time frame and see how the returns of dollar-cost averaging compare to lump-sum investments over the past five years. The table below selects the period from the beginning of 2021 to the end of 2025 for calculation, during which A-shares and Hong Kong stocks also experienced significant fluctuations. It can be seen that over a longer time frame, the return advantage of dollar-cost averaging compared to lump-sum investments is even more pronounced.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/O2lqG6Ss38t12tDIPbovYpYqvX557NiZEsPTKjIPJIl60AA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/O2lqG6Ss38t12tDIPbovYpYqvX557NiZEsPTKjIPJIl60AA/641"/>
Data source: iFind, 2021/1/1-2025/12/31. Simulation calculation method: Starting from 2021/1/1, invest 1,000 yuan on the 1st of each month. As of 2025/12/31, a total of 60 investments were made
Yield = (Latest Assets - Total Investment) / Total Investment. Transaction costs are not considered. This calculation result is for reference only and does not represent actual returns, nor does it serve as an investment strategy recommendation or guarantee of returns. Historical data does not represent future performance and return commitments. Fund investments carry risks and must be chosen with caution.
After 2021, the A-share market experienced a prolonged period of stagnation. Even if investors bought at the peak in 2021, if they persisted with regular investments during the subsequent downturn, their current returns would be better than if they had made a one-time investment and done nothing afterward.
Of course, regular investment is not a universal remedy for investing; it does not guarantee profits and has its applicable market phases. In a unidirectional rising market phase, the effect of regular investment is not as good as a one-time investment. Regular investment is simply a simpler and more executable investment strategy that can help investors establish investment discipline and maintain rationality.
The market always has ups and downs; short-term fluctuations or corrections are never a measure of investment value. Those driven by anxiety to &#34;cut losses&#34; or blindly &#34;catch the bottom&#34; often miss their original intentions in chasing highs and selling lows. What truly allows one to navigate market cycles is a clear understanding of macro trends, a firm adherence to one's investment logic, and a rational mindset that does not waver due to temporary fluctuations. Investing is like a long journey of cultivation; a long-term perspective and a rational core are the fundamentals that support us to reach the end.
Reference:
<ol>
<li>Zeelenberg, M 1999, &#34;Anticipated regret, expected feedback and behavioral decision-making&#34;, Journal of Behavioral Decision Making, vol. 12, pp. 93-106</li>
</ol>

02801

Recently, the A-share market has experienced increased volatility, with the SSE Index falling below 4,000 points, and the Shenzhen Index and ChiNext also declining simultaneously. The global market has also been affected, with significant drops in the Japanese and South Korean stock markets, and international oil prices rising by over 40%. The main reason is the conflict between the U.S. and Iran, with the market's reaction being delayed. Analysts believe that the escalation of the conflict and high oil prices will persist, making market fluctuations difficult to predict

How much longer will the volatility last?