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Iran's armed forces warned that if the United States attacks its power plants, Iran will take four punitive measures, including a complete closure of the Strait of Hormuz, to ensure that the country's interests are not harmed. Trump previously threatened to strike Iran's power facilities within 48 hours.

Iranian officials stated that Iran has proposed six ceasefire conditions, including guarantees against future war, closure of U.S. military bases, and payment of compensation. Based on the current situation, Iran believes a ceasefire is unlikely in the near term, and military operations will continue. Iran has adjusted its tactics, shifting from defense to offense.

Vice Premier He Lifeng of the CPC Central Committee met with representatives from the National Committee on U.S.-China Business, emphasizing the importance of U.S.-China relations and expressing hopes for both sides to deepen friendly exchanges and economic and trade cooperation. The American side expressed continued optimism about the Chinese market and willingness to deepen cooperation.

On the evening of March 22, multiple listed companies in Shanghai and Shenzhen released important announcements: Zhongwei Semiconductor plans to increase capital by 160 million yuan to hold 20% stake in Zhuhai Boya; Tenya Precision Engineering plans to raise 120 million yuan through private placement for projects in Vietnam and other locations; Zhejiang Huaye invests 1.094 billion yuan to build the second phase of Mu'ao production base; Shandang Group actively expands into mining products and prepares larger-tonnage excavators; Xuefeng Technology's controlling shareholder plans to increase holdings of 150 million to 300 million shares.

Recently, Unitree Robotics Co., Ltd. submitted a Science and Technology Innovation Board IPO application to the Shanghai Stock Exchange, planning to raise 4.202 billion yuan. Nineteen A-share listed companies have expressed their intention to invest in the company, including Shiyida and others.

# Major Corporate Announcements from Shanghai and Shenzhen Stock Exchanges - Evening of March 22
**[Major Events]**
**Microchip Technology: Plans to Invest 160 Million Yuan in Zhuhai Boya to Acquire 20% Stake**
Microchip Technology (688380) announced on March 22 that the company plans to use its own funds of 160 million yuan to increase capital in Zhuhai Boya. Upon completion of the transaction, the company will hold a 20% stake in Zhuhai Boya. Zhuhai Boya is a chip design company founded by returnee PhDs, established in 2014, and is a national high-tech enterprise focused on NOR Flash and other memory chip R&D and design, a national specialized and sophisticated "little giant" enterprise, a Guangdong Province Doctor Workstation, and a Guangdong Province Engineering

Recently, hot money tycoons have successively "surrendered," defeated by quantitative capital, reflecting profound changes in the market ecosystem. Under tightening regulation and quantitative trading advantages, traditional hot money faces survival pressure. Some established hot money operations have successfully transformed, while the new generation of hot money focuses on professionalized and refined operations, demonstrating the shift in investment logic during market evolution.

# Report Summary
Market continues to confirm expectation gaps
The Middle East conflict has entered its third week, with intensity and spillover scope significantly expanding. It has evolved from a singular strike into a multi-dimensional risk covering energy facilities, shipping, and regional political structures. As we clearly stated in our March 2 report "The Biggest Expectation Gap in the US-Israel-Iran Conflict — Duration and the Strait of Hormuz," the market may be overly optimistic about a quick resolution to the US-Israel-Iran conflict: "Conflict duration and the Strait of Hormuz are likely the most obvious expectation gaps in the current US-Israel-Iran conflict."
Macro perspective: Under external shocks, position management is both a response and a source of excess returns
Since 2020, facing some public events that can trigger global equity asset resonance...

This week, the A-share market exhibited mixed performance, with the Shanghai Composite Index falling 3.38%, the Shenzhen Component Index dropping 2.90%, while the ChiNext Index increased by 1.26%. Several institutions forecast that the A-shares will remain volatile in the short term, advising focus on defensive assets and emerging industries such as electricity, energy storage, and AI. Geopolitical tensions and tightening global liquidity continue to influence the market, requiring investment strategies to balance risks and opportunities.

# Report Core Points
This report uses history as a guide by reviewing the causes of two episodes of stagflation in the 1970s and the performance of major asset classes, providing insights for asset allocation. It is important to emphasize the following:
First, we are discussing stagflation risks overseas (particularly in the United States). The U.S. economy itself faces elevated fiscal deficits that create certain upward pressure on inflation. Given shocks from rising oil prices, stagflation risks have increased. Meanwhile, the Chinese economy is in a phase of bottoming out and recovery, with high-quality development. The trajectory of economic operations is unlikely to be easily altered.
Second, we are not predicting that stagflation will necessarily recur. Rather, we are highlighting the asymmetry of potential risk and return: in a low-probability scenario, if oil prices rise to a 150-200 dollar range

Abstract
1. The Nature of Market Decline: US Dollar Rebound, Not Recession
All major asset classes globally faced widespread pressure this week. On the surface, this appears to be concerns about weakening demand, but the core contradiction lies in the escalating US-Iran conflict reversing the previous "weak dollar" narrative. Before the US-Iran conflict erupted: the US dollar was clearly weakening, capital was flowing out of dollar assets, US stocks underperformed globally, commodities showed leadership in higher per-unit value products, and countries/regions with high sensitivity to the US dollar index (measured by the beta of stock indices relative to the US dollar index) achieved higher gains from the beginning of this year until before the US-Iran conflict erupted; looking within US stocks, core technology stocks began to be outperformed by infrastructure and small-cap companies, and the US financial centralization process encountered

This week, A-share margin balance experienced volatility with net repayment of 10.741 billion yuan, among which non-ferrous metals and petroleum & petrochemicals showed significant repayment. Individual stocks such as Cambricon and Baofeng Energy demonstrated notable net margin buying, while tungsten industry stocks like Tongkun Group encountered net repayment. Investors are expecting the market next week to oscillate or decline, with technology and large-cap financial sectors receiving attention.

The military strikes by the United States and Israel on Iran have persisted for over three weeks. The Trump administration has begun preliminary negotiations through third parties, with plans to reach an agreement that includes provisions such as limitations on Iran's nuclear program. Iran, meanwhile, is demanding a complete cessation of hostilities and compensation, while expressing skepticism about the U.S.'s readiness for negotiations.

The direction of the Iran conflict and its market impact show huge expectation divergence. Behind different judgments, there are three core questions that are currently unverifiable and difficult to answer: First, after the conflict intensity declines, to what extent can shipping routes recover; Second, does the Federal Reserve place more weight on inflation indicators or actual employment conditions; Third, does China face a cost shock or an opportunity for supply chain order shifts. These questions may only become gradually clearer by April. Facing huge uncertainty, the market has shown some deleveraging behavior in the short term, with previously surging varieties declining more significantly recently. However, overall, most performance-driven and narrative-driven market trends have essentially returned to the same starting line in terms of returns from year-to-date. The first three months can be considered spring volatility.

I. On the macro front, the "stagflation" and "escalation of conflict intensity" currently being priced by the market may not be the ultimate outcome of this round of conflict developments.
This week, as the US-Iran situation showed no signs of easing, two major concerns triggered concentrated market adjustments and rapid structural rotation. On one hand, the market has begun pricing in expectations of prolonged conflict stalemate and higher oil price levels bringing "stagflation," along with the resulting liquidity tightening pressure from the Federal Reserve delaying rate cuts or even shifting toward rate hikes, becoming the main contradiction in pricing various assets recently. On the other hand, the market is also rapidly rotating its structure following marginal changes in conflict intensity, with defensive assets outperforming when conflict intensity heats up, and then shifting toward tech stocks leading the recovery when it cools down.
Regarding the market...

Investment Highlights
Reviewing history, high oil prices have a greater impact on overseas inflation, while stock markets are more driven by liquidity and fundamentals. (1) High oil prices have a notable effect on pushing up overseas inflation, especially during economic upturns. First, high oil prices push up inflation: initially, high oil prices have a significant effect on pushing up U.S. inflation, and this is more pronounced during economic recovery; additionally, high oil prices may lead to imported inflation in China, particularly reflected in rising PPI. Second, whether liquidity tightens is more determined by economic and inflation trends combined: initially, whether the Federal Reserve raises rates needs to comprehensively consider economic and inflation levels; additionally, whether China tightens liquidity mainly depends on whether the economy is overheating. Third, whether the economy experiences a downturn is not caused by high oil prices: initially, the U.S. economy