How will the Middle East situation impact the market? Top 10 brokerage strategies revealed

Caixin March 1: Next week, the “Two Sessions” will be held, coinciding with the sudden escalation of Middle East tensions this weekend. How will the markets perform next week? The latest strategies and views from the top ten securities firms are now available, detailed as follows:

CITIC Securities: Expect continued upward trend driven by price increases in March

Narrative-driven and price-boosting catalysts remain the main drivers of the market. CITIC Securities has developed quantitative indicators to distinguish whether recent market movements in different sectors are driven by sentiment or fundamentals. Some sectors with high gains are classified as sentiment-driven, such as precious metals, charging and power equipment, bulk chemicals; others with modest gains are also sentiment-driven, like intelligent driving, media and gaming, humanoid robots, and white wine; sectors with very high gains are classified as fundamentally driven, such as rare earths and minor metals, wind power, and chip design. Additionally, some sectors with moderate gains but high discussion volume, like North American AI computing power and cement materials, are considered fundamentally led. From a market perspective, whether driven by event catalysts or signals from volume and price (CITIC Securities has built a quantitative monitoring framework), the clues from price increases and AI narratives remain in the safe zone. The outbreak of Iran’s geopolitical risks and the rising expectations for “anti-involution” policies around the Two Sessions may further strengthen the price increase signals.

In terms of allocation, the combination of AI exposure and supply constraints equals an expectation of rising prices. It is expected that the upward trend driven by price increases will continue in March.

BOC Securities: Short-term A-shares may be affected by geopolitical volatility and risk aversion, but external shocks are limited

In the short term, A-shares may be influenced by geopolitical tensions and risk aversion, but the impact of external shocks is limited. Focus on resource commodities and domestic AI computing power.

The US and Israel launched military strikes against Iran on the 28th. Subsequently, Iran launched missile attacks on Tel Aviv and other locations in Israel. Multiple US military bases in the Middle East were also targeted. According to real-time data from international oil tanker traffic monitoring systems, by the evening of the 28th, ships near the Strait of Hormuz had generally reduced speed to zero, indicating shipping in the region has stalled. Several major oil companies and traders have suspended shipments through the Strait to avoid safety risks from escalating tensions.

The impact of this escalation on global markets and asset prices depends on the targets and duration of the actions.

Scenario 1: If the US and Israel’s actions aim for a short-term, focused effort to accelerate negotiations—limited strikes on Iran with a subsequent easing stance—this would mean no sustained disruption to regional oil production or transit through the Strait of Hormuz. The impact on assets could resemble the June 2025 Iran conflict: initial strong risk aversion with declines in risk assets, rising oil and gold prices, followed by rapid volatility contraction once it’s clear the Strait remains unaffected, and as oil prices eliminate event risk premiums, stocks would recover.

Scenario 2: If the US aims to overthrow Iran’s leadership, this could trigger sustained risk aversion and increased cross-asset volatility. Currently, calls from Trump for “regime change” and Iran’s attacks on US bases in the Gulf could escalate the conflict’s complexity and duration. In such chaos and prolonged conflict, investors may price in broader conflicts and longer-term oil supply disruptions, leading to increased volatility and higher central prices for oil.

Gold prices are likely to receive further support. Both the current Middle East tensions and the repeated shifts in Trump’s tariffs add short-term uncertainty to markets. This risk aversion will strongly support short-term precious metals prices.

In the short-term, A-shares will focus on domestic fundamentals, with resource sectors in the spotlight. Looking ahead, global risk asset volatility may increase, with gold and oil prices accelerating upward. For A-shares, the impact is mainly on risk appetite; medium-term, the market will revert to domestic fundamentals and policy expectations. Next week’s domestic Two Sessions will be a key catalyst, with domestic market shocks likely smaller than overseas, and macro policy releases and post-holiday resumption of work being key concerns. As noted on February 25, rising external uncertainties may catalyze resource sector rallies. In the first quarter, external factors like Middle East developments and US trade uncertainties will likely support precious metals prices. Under the influence of both internal and external catalysts, cyclical resource allocations are timely.

Zhongtai Securities: Recommend a strategy centered on “tech offensive, utilities稳健” (steady)

1. The tech sector remains cyclical, but differentiation continues. Fields like AI, robotics, energy storage, and commercial aerospace are experiencing policy support, technological breakthroughs, and scenario applications, making them suitable for medium-term allocation. However, valuations for AI applications and large models have been overly priced in, and without performance verification, short-term risks of capital withdrawal exist.

2. Compared to others, infrastructure for computing power (optical communications, liquid cooling, storage) has more tangible order flow and prosperity data, and commercial aerospace is catalyzed by the 14th Five-Year Plan, providing more solid fundamentals. These areas offer a relatively favorable risk-reward profile within the tech sector. If the government’s work report during the Two Sessions emphasizes “AI+”, AI application sectors may see a recovery rally, worth关注.

3. The logic for resource and utility sector allocations is likely to strengthen next week. The escalation of Middle East tensions over the weekend boosts safe-haven narratives for precious metals. Meanwhile, RMB appreciation continues, and blue-chip valuations may rise. If the government work report emphasizes expanding domestic demand and stabilizing growth more than expected, cyclical resource sectors like non-ferrous metals, chemicals, and steel could benefit directly, with further confirmation of price increase logic.

4. In utilities, sectors like power benefit from actual demand growth driven by AI computing expansion and price mechanism reforms. Their defensive and reform-flexibility features are worth noting in a market shifting toward balanced styles.

Overall, under the backdrop of steady macro policies and strengthened structural policies, the market may continue to show sector differentiation. A balanced portfolio focusing on “tech offensive, utilities稳健” (steady) can seize phased opportunities brought by policy windows.

Everbright Securities: Overall A-shares likely to continue oscillating mildly strong in March; spring rally unaffected fundamentally

In the first week of the Year of the Horse, A-shares showed a rebound with all three major indices rising.

One key focus is the upcoming national Two Sessions. Historically, A-shares tend to show a pattern of “rise before, oscillate during, and rebound after” around the Two Sessions. This year’s Two Sessions, as the first implementation window for the 14th Five-Year Plan, may have more sustained policy effects on industries.

Another focus is the escalation of Middle East tensions. Given that the market has already priced in this event, short-term impacts are likely emotional. In the medium term, the real impact depends on whether the situation escalates beyond expectations. If not, the disturbance to A-shares should gradually subside, and the market will refocus on domestic policies and fundamentals.

Overall, A-shares in March are expected to continue oscillating mildly upward, with the spring rally’s fundamental continuity intact. The key variables are the policy implementation from the Two Sessions, which will be the main market catalyst, and the Middle East tensions, which are short-term emotional factors unlikely to alter the medium-term trend.

In terms of allocation, focus on structural opportunities aligned with policy themes: first, core areas of new productive forces, such as AI full industry chain, commercial aerospace, semiconductors, brain-computer interfaces—benefiting from policy support; second, cyclical sectors like non-ferrous metals, chemicals, petrochemicals, oil transportation—benefiting from inflation driven by commodity price increases; third, sectors related to expanding domestic demand, such as consumer services, power grid equipment, and energy storage, which may see marginal signs of fundamental recovery driven by policies to boost consumption and stabilize investment.

Huaxi Securities: Entering “Two Sessions” rally, A-shares mainly characterized by “stability”

As the “Two Sessions” approach, A-shares mainly show a “stability” feature. Escalating overseas geopolitical conflicts may trigger short-term safe-haven and inflation trades globally. The duration of these conflicts will be a key variable affecting the market. Domestically, early March’s Two Sessions will likely focus on expanding domestic demand and new productive forces, with the draft of the 14th Five-Year Plan anchoring medium- and long-term industry directions. Historically, markets tend to be stable during the Two Sessions, with a higher probability of rally after they conclude, and policy focus industries often perform repeatedly throughout the year.

Guojin Securities: China is HALO, physical assets are Ark

We have long emphasized the importance of physical assets, which are now gaining catalysts and entering the global investment spotlight. Facing technological challenges and regional conflicts that threaten the global order, physical assets that have been overlooked during periods of order prosperity will become systemically important. China’s assets, closest to physical production globally, are also undergoing revaluation. Recommendations include: 1) Copper, aluminum, tin, crude oil, oil transportation, rare earths, and gold—assets less likely to be replaced by AI and benefiting from AI development and increased overseas government focus on resources; 2) China’s export chains with global comparative advantages and bottomed-out cycles—power grid equipment, energy storage, engineering machinery, wafer manufacturing; and domestic manufacturing bottom-reversal sectors—petrochemicals, dyeing, coal chemicals, pesticides, polyurethane, titanium dioxide; 3) Capital inflow, easing of balance sheet shrinkage, and inbound personnel trends support consumption recovery—airlines, duty-free, hotels, food and beverages; 4) Benefiting from market expansion and bottomed long-term asset returns—non-bank financials.

China Galaxy Securities: Around the Two Sessions, A-shares may show “policy hot-spot rotation and rapid style shifts”

Before and after the Two Sessions, the A-share market may be driven mainly by policy catalysts, with capital competing around policy-guided industry themes and opportunities, showing “policy hot-spot rotation and rapid style shifts.” In late March, the market logic will gradually shift from “policy expectations” to “performance realization,” with annual reports of 2025 and Q1 2026 disclosures serving as anchors. Stocks exceeding expectations are likely to attract capital. Long-term, the release of the 2026 government work report and subsequent 14th Five-Year Plan will outline a clear investment blueprint, supporting stable long-term market operation.

For allocation, focus on: first, the “anti-involution” concept driven by improved supply-demand and industry profit recovery, along with valuation-safe dividend assets; second, sectors benefiting from geopolitical uncertainties—such as non-ferrous metals (precious metals), petrochemicals, basic chemicals, steel, cement, construction materials, and financials—especially as rising oil prices and safe-haven assets attract capital; third, technology growth sectors—semiconductors, AI, new energy, military industry, aerospace—especially as the evolving global landscape accelerates structural shifts. Additionally, under the policy-driven expansion of domestic demand, consumer sectors with low valuation and solid earnings are also worth attention.

Guoxin Securities: Past years show high probability of market rise before and after Two Sessions, with cyclicals favored

Reviewing market performance from 2005 onward around the Two Sessions, there are calendar effects: higher probability of gains before the sessions, more subdued during, and again rises afterward. Style-wise, small-cap stocks tend to outperform before the sessions, but growth and value styles show less clear differentiation. Post-Two Sessions, the probability of small-cap gains drops to 50%, but value stocks tend to outperform growth. Sector-wise, cyclicals like resources perform better before and during, with resource sectors such as steel, non-ferrous metals, utilities, and basic chemicals ranking high in gains since 2005; consumer sectors tend to be more resilient during and after. Real estate and related sectors often see increased gains post-Two Sessions.

HuaChuang Securities: Pre-holiday adjustments likely complete; high Sharpe ratio with slow gains and quick declines becoming more evident

Pre-holiday market adjustments seem complete, with trading sentiment warming post-Chinese New Year. The recent spring rally started around Nov 25 with the Shanghai Composite near 3,800, peaked at 4,190, then retraced to about 4,000 in early February. Previously, declines caused by external shocks and liquidity tightening followed a pattern of “two steps down, one step back,” which this cycle has largely matched. Sentiment indicators show that before the holiday, the market at 4,000 points had a “temperature” similar to around 3,800 in late November, but after the holiday, sentiment quickly improved: on Feb 2, 130 companies hit limit down (more than the 107 in Nov 21), reaching near half-year lows; the number of limit-down stocks decreased rapidly, with only 1 on Feb 27. Total market turnover and turnover rate dropped from peak levels (~4 trillion yuan/3.2%) to pre-holiday levels (~2 trillion/1.6%), then rebounded to 2.5 trillion/2.0%. Margin financing net outflows before the holiday reached 74.7 billion yuan, exceeding Nov 25/11’s 40 billion and approaching April’s 103.2 billion during tariff adjustments. Post-holiday, inflows recovered to 22.2 billion. We believe the sharp decline caused by liquidity and external shocks has been adjusted, and market sentiment has rebounded significantly, making large-scale retracements unlikely.

Dongwu Securities: Two Sessions market is essentially a game between policy expectations and actual implementation

The “Two Sessions” market closely follows the “spring rally.” Before the sessions, indices tend to rise, small-cap styles outperform, and TMT sectors see excess returns; during and after, the market revolves around stabilizing growth and industrial policies, with indices poised to regain upward momentum and style rebalancing. However, simple historical statistics cannot fully capture annual differences. The core of the Two Sessions rally is a game between policy expectations and actual policy implementation. Combining macro environment and policy guidance, one can classify past Two Sessions to further explore seasonal effects.