When will the nervousness subside? The time to stay alert is when the US-Iran conflict begins to ease — Minimalist Investment Research

Ask AI · How does the Iran-U.S. conflict shift toward negotiations affect global energy security?

The U.S.-Iran conflict has lasted for a month. From the initial “decapitation operation” to the current situation of fighting while releasing negotiation signals, the phrase “the world is once again a makeshift operation” is being brought to life.

The Russia-Ukraine and U.S.-Iran conflicts are enough to profoundly change the global energy landscape and the narrative logic. But precisely because there is “change,” there are investment opportunities.

The script repeats after four years

Looking back at the Russia-Ukraine conflict and the U.S.-Iran conflict, even though the details are different, the impacts and the response in the A-share market are highly similar.

First, after April of that year when the Russia-Ukraine conflict broke out, oil prices began to fall. Moreover, the oil-price trajectory and its structure at that time are highly similar to what we see now.

The Russia-Ukraine conflict seriously disrupted Europe’s energy security, and this U.S.-Iran conflict once again disrupts global energy security.

However, starting March 24, the U.S. side has been frequently releasing negotiation signals, suggesting that this Middle East geopolitical conflict is moving toward convergence.

Second, after the Russia-Ukraine conflict that year, global demand for new energy surged—especially energy storage—which is also almost identical to what we have now.

According to the view of Huaxin Securities, the escalation of Iran’s situation in this round has evolved from a traditional geopolitical conflict into a systemic shock to the global energy supply system. Energy-security logic has been significantly strengthened and has become the main pricing line for new-energy assets in the medium to long term.

So, we saw a big rebound led by the new-energy sector in late April 2022, and we also saw the recent strong surge of the lithium-ore sector.

The same script is repeating after four years, so I’m not worried about the rebound that comes next.

When will the “scared rabbit” mindset end?

Fluctuations in sentiment mainly come from marginal changes in information. The U.S. treats global media like a “friend circle” and releases all kinds of messages to manage expectations, which keeps everyone’s emotions tightly strung.

But you should know that the sources of excess returns are probably three pathways: information transmission, market rules, and industrial understanding.

Ordinary investors are always at the end of the information-transmission chain and are inherently at a disadvantage. If you focus too much on changes in information, it’s equivalent to actively putting yourself into a passive position.

From the perspective of market rules, this year’s sentiment cycle is “top-down.” That means the market will experience the first sentiment bottom of the year, and there are 2–4 sentiment cycles every year.

Another rule is support from the moving annual line. Historically, during the window when the Shanghai Composite Index is rising, the annual line has always been an important support level. Several major bottoms have been near the annual line. This time, the Shanghai Composite Index has also moved near the annual line, so I believe it will still play a strong-support role just like before.

Finally, from the perspective of industrial understanding, I mentioned earlier that the narrative logic for new energy has been reshaped. In addition, there are many industrial-knowledge opportunities in front of us.

1. Commercial space. With SpaceX’s IPO and the urgency on our side to catch up, there are signs of bottoming out and intrabottom fluctuations in some stocks in the commercial space segment recently.

2. Post-war reconstruction in Iran. In the short term, high oil prices may raise operating costs for the global economy, but in the medium term, the logic of post-war reconstruction—how could it not be a potential positive for our export trade?

3. Military trade replenishing inventories. Whether it is the later replenishment of military equipment by the parties involved in the conflict, or defense budget increases by other countries in the future, global military trade will have a massive incremental demand. Recently, intrabottom fluctuations have appeared in sub-sectors of land equipment in the defense industry direction—should we pay attention to that?

Besides that, very favorable industry choices like the high-optimism window for storage chips and strong financial reports from innovative drugs are all excellent options, and these directions have not deviated from the main thread of the “14th Five-Year Plan for 15 years” (“十五五”) framework.

(Second Brother Xia)

This article is for reference only and does not constitute an investment recommendation. If you trade based on it, you bear the risks yourself.

The Daily Economic News