The situation in the Middle East has rapidly escalated, with the United States and Israel conducting joint military strikes against Iran. Iran has announced a blockade of the Strait of Hormuz, a passage that handles approximately 30% of the world's seaborne crude oil trade. Due to the anticipated supply interruption, Brent crude oil's intraday gains once exceeded 12%, spot gold broke through previous highs, and major global stock index futures generally declined.
Market analysts state that disruptions in the energy supply chain directly raise inflation expectations and could interfere with the monetary policy paths of major economies. The intraday volatility range of the U.S. 10-year Treasury yield expanded to 40 basis points (bps), the VIX index rose over 20% in a single day, and global risk premiums widened significantly.
Sources close to regulatory authorities indicate that relevant departments are closely monitoring commodity prices and cross-border capital flows to prevent short-term shocks from transmitting to the financial system.
Shanghai Stock Market Under Short-term Pressure, Increased Sector Divergence
On the first trading day after the conflict, the intraday volatility of the Shanghai Composite Index widened, with the market volatility rising by about 80bps. There was a phase of net outflow of northbound capital, and risk appetite somewhat receded.
At the sector level, a typical "safe-haven-price rise" structure is evident. Oil and gas extraction, and oil service engineering sectors benefit from rising oil price expectations, with individual stocks generally recording double-digit gains. Precious metals followed international gold prices upward, and transaction volume in the defense and military sectors significantly expanded. Meanwhile, the airline transportation and some basic chemical enterprises faced pressure. Market calculations show that if the average oil price rises by 10%, the operating profit margin of airlines may decrease by 150 to 200bps.
Analysts point out that high-valuation growth sectors are under short-term pressure due to safe-haven sentiments, with some niche areas seeing a drop in the price-to-earnings ratio (P/E) of over 15%, indicating a shift toward value and cyclical sectors.
The Transmission of Oil Prices and Policy Space Game
The impact of rising oil prices on global inflation paths has become a market focus. If Brent crude oil averages stay at high levels, it may raise U.S. inflation expectations and reduce the space for interest rate cuts. Previously, the market priced in a rate cut of about 75bps for the year, but some institutions have now lowered their expectations to 50bps.
In China, the year-on-year CPI remains in a moderate range, with monetary policy maintaining independence. Market analysts suggest that policy independence forms a certain "stability premium" amid external liquidity disturbances, helping to counteract external shocks.
From a valuation perspective, the overall P/E ratio of the A-share market remains below the historical average. Some cyclical and resource sectors benefit from rising prices, with profit expectations showing marginal improvements. Funds are focusing more on profit certainty and cash flow security, with liquidity premium structures undergoing adjustments.
Three Main Investment Themes Emerge
Resource security has emerged as the primary investment theme. If the Strait of Hormuz remains restricted for an extended period, it would drive up oil transportation rates. Iran has high export shares in methanol, urea, propane, and other fields, with supply disruptions potentially leading to price increases for related products. Domestic companies with substitute production capacities see rising profit elasticity.
The second theme is national defense security. Global military spending has been increasing continuously since 2022. The escalation of conflicts reinforces the long-term logic of defense investments. The visibility of orders in the military electronics, satellite communications, and unmanned equipment fields has improved. Some leading companies have seen their order coverage increase to more than 1.5 times, providing visible growth in earnings.
The third theme is technological security. The deep involvement of AI and satellite systems in the conflict highlights the importance of autonomy and control. The domestic substitution process in computing infrastructure and semiconductor materials may accelerate. Some companies have increased R&D investment to more than 15% of revenue, with expectations for marginal improvements in policy support.
Reevaluating Safe Haven Attributes
Amid global risk asset pressure, the low correlation between RMB assets and USD assets is once again in the spotlight. Institutional estimates show that the correlation coefficient between the A-share market and the S&P 500 index is below 0.3 over the past three years. If external conflicts persist, the diversification value in asset allocation may be reassessed.
Market analysts state that the core of market pricing at the current stage lies in the duration of the conflict and the pace of energy supply recovery. If the situation eases, short-term risk premiums may decline; if the conflict spills over, the revaluation of global assets will accelerate.
Historical experience shows that geopolitical conflicts have more often resulted in structural adjustments rather than trend reversals in markets. Funds are refinancing the risk-reward ratio amid volatility. For the A-share market, external disturbances may accelerate the revaluation process in resource, security, and autonomy fields.
