Haitong International's Chief Economist Zhang Yidong stated on March 25th that the most severe phase of the Iran conflict's impact on global capital markets has likely concluded. The period of sharpest valuation compression is over, with a genuine truce potentially achievable as early as April.
Zhang analyzed that the global market's pricing logic is shifting from efficiency-based pricing to security-based pricing amid ongoing international order restructuring. He characterized the current era as a "modern Warring States period," where security considerations are paramount for asset valuation.
Regarding the Iran situation, Zhang suggested the highest-risk phase for markets has passed. He believes the most probable scenario is the formation of a true ceasefire, which he refers to as TACO, potentially by April. A less likely alternative would involve large-scale U.S. ground troop deployment, potentially escalating the Hormuz Strait crisis into a semi-annual or annual affair. In such a crisis mode, China would remain a relative safe haven among global asset classes.
Zhang projected that global asset pricing will see a rise in "hardcore assets" – those emphasizing security, manufacturing strength, and technological capability through a SMART strategy framework. He highlighted that traditional energy will maintain strategic importance over the next 5-10 years, while alternative energy sources and energy technology chains will undergo systematic revaluation.
On gold, Zhang indicated current prices present a tactical and strategic buying opportunity, unless a global financial crisis emerges. He clarified that gold's bull market stems from premium pricing due to international financial order restructuring, rather than dollar movements or U.S. real interest rates.
Despite recent volatility in A-shares and Hong Kong stocks, Zhang views the adjustment as consolidation before an upward move. He expects both markets to potentially reach new yearly highs in the second half of the year.
Zhang advised maintaining balanced positioning before any truce – staying proactive during market pessimism to acquire quality Chinese assets, while avoiding chasing rallies during overseas market rebounds. If a April ceasefire materializes with U.S. troop withdrawal, risk appetite would significantly improve, favoring technology and growth-oriented assets.
Before any truce, Zhang recommends prioritizing safety assets like gold and energy resources. Should a ceasefire occur between April and June, investors could shift focus toward high-tech and advanced manufacturing assets while retaining gold exposure.
Zhang concluded that China's equity markets have decoupled correlation with U.S. markets, enhancing their appeal to global allocators seeking non-correlated assets. He anticipates potential foreign capital inflows post-conflict, supporting China's structural long-term growth story.