3.1 Review, MY conflict, briefly sharing my personal opinion

The most significant news this weekend is the MY conflict. The main A-shares have a tradition of paying J fees. Tomorrow’s index will definitely open lower, but I personally believe that after experiencing the Russia-Ukraine conflict, last year’s trade war, and the MY conflict in June last year, there’s no need to panic about a low opening. Since the event occurred, the probability of small, medium, and large-scale conflicts varies. I think the medium-scale conflict is more likely, meaning Iran will retaliate fiercely in the short term, followed by mediation by neutral major powers, leading to a de-escalation and negotiations. The probability of prolonged large-scale fighting is very low, as it doesn’t benefit any party. Also, next week, our domestic major conference will be held, and the index needs stability; a sharp decline is unlikely. [Taogu Bar]

In terms of sectors, the hottest topics over the weekend are oil, precious metals, and shipping. Regarding precious metals and minor metals, they have already been heavily speculated on earlier. If this sector is at a low point, it is indeed a safe haven. However, the market has already anticipated this event, and after significant gains, a large opening tomorrow will likely trigger profit-taking. The top stocks may be hard to buy, and those bought later might surge then fall back, causing losses.

For oil, although Iran’s oil reserves account for over 9% of the world’s total, it is not a major oil exporter, with exports only making up about 3%. The event is not sudden; major countries have long anticipated it and have been stockpiling oil resources. Therefore, short-term oil prices might rise slightly, but long-term expectations for sustained growth are low. The real price increase logic may come from the blockade of the Strait of Hormuz, which handles over 40% of global oil transit. This benefits shipping-related sectors, but shipping stocks have also been heavily speculated on previously, so caution is needed to avoid a false breakout.

In chemicals, I believe the real beneficiaries are the chemical sector itself, especially in segments like methanol, ethylene, bromine, and urea. Iran is the world’s second-largest methanol exporter, with 80-90% of China’s methanol imports coming from Iran. During the June MY conflict, methanol was the second most affected sector after oil. JinNiu Chemical led a few stocks, and this sector hasn’t been heavily speculated on before, with relatively low positions and less heated sentiment. Tomorrow, it could be a low-positioned sector with positive expectations. Focus on JinNiu Chemical and Baofeng Energy. China Tianying should normally be a one-word limit stock now.

Military industry: The US’s targeted killing operation was very successful, demonstrating a new approach to ZZ. The focus was on satellite positioning to lock targets, highlighting the importance of space forces. This is a positive signal for the commercial aerospace sector. Additionally, SpaceX announced over the weekend that it plans to IPO in March, earlier than the previously expected June, by three months. The valuation has increased from 1.5 trillion to 1.75 trillion USD. Keep an eye on SpaceX’s related industry chain.

The above opinions are personal notes for reference only and do not constitute any investment advice.

$Intercontinental Oil & Gas (SH600759)$ $JinNiu Chemical (SH600722)$ $China Tianying (SZ000035)$