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What impact will the Omicron Virus have on the A-share market?

While the global epidemic is still not improving, new mutant strains of various new coronaviruses will become an important factor affecting the trend of financial markets. The Omicron virus mutant strain is one of these new coronavirus mutant strains. Its impact on the A-share market will mainly be reflected in changes in peripheral stock indexes and expected changes in some industries such as medicine and the service industry.

First of all, the spread of the novel coronavirus may prolong the strong cycle of "epidemic pharmaceutical stocks" in A-shares. Against the background of the increasing level of global vaccination, the prices of some "epidemic-related pharmaceutical stocks" have experienced a periodic correction trend after rising high. However, the emergence of new strains such as Omicron has also caused the prices of such pharmaceutical stocks to show an intermittent rebound trend. Therefore, the trend rhythm of some pharmaceutical stocks in A-shares will become more repetitive with the emergence of the Omicron virus. Of course, this kind of repeated seesaw performance will also increase the attention of investors across the market to pharmaceutical stocks.

Secondly, the emergence of the novel coronavirus may make the "contact service industry" stocks in A-shares even weaker. Under normal circumstances, we refer to stocks in industries such as retail, supermarkets, tourism, hotels, cinemas, and civil aviation transportation as "contact service industry" stocks. This type of stock has performed relatively weakly during the global epidemic cycle. After all, as the epidemic intensifies, various countries will tighten measures on population mobility, and stocks in the above-mentioned industries will be impacted by operations, performance and other aspects. Therefore, related varieties in A-shares are likely to be negatively affected by the negative expectations of the Omicron virus.

Thirdly, changes in the novel coronavirus may affect the trend of U.S. stocks, which in turn will have an indirect impact on the A-share market index. After the subprime mortgage incident, the U.S. stock market has continued its overall bull market for more than ten years, and many foreign institutions are predicting "what factors will trigger the black swan event that will trigger a correction in U.S. stocks." After the emergence of the Omicron virus, Wall Street and other foreign financial institutions listed this factor as one of the incentives affecting the trend of U.S. stocks. If the U.S. stock market is indeed affected by the corresponding virus mutation, then the market index in A shares may also be affected indirectly in a periodic manner.

In summary, the mutation and development of the Omicron virus will become one of the important factors affecting the financial market. Its impact on A-shares is also reflected in many aspects.