CITIC Construction Investment: Panic Shock Weakens, Focus on Prosperity + Certainty Trading

CITIC Construction Investment Research reports that Middle East geopolitical conflicts have triggered short-term adjustments in global financial markets. The current sentiment in A-shares has declined sufficiently; if the situation does not escalate further, the market will quickly revert to the medium- and long-term trend dominated by domestic economy, policies, and liquidity. However, the long-term impacts of this conflict on energy, chemicals, shipping industries, and global inflation expectations warrant ongoing attention. The 2026 Two Sessions’ overall tone is “stability with progress, quality improvement, and efficiency enhancement.” Macro policies will continue to be proactive, with fiscal policies focusing on structural optimization and people’s livelihood consumption, and monetary policy emphasizing support for small and medium-sized enterprises and technology industries. Industry focus areas include smart economy, carbon peak, and service sector upgrades. Going forward, A-shares will focus on two main themes: prosperity and certainty. The prosperity theme benefits from accelerated AI computing power capital expenditure, favoring upstream materials and equipment such as storage chips, optical modules, gas turbines, and AIDC energy storage; the certainty theme centers on HALO trading, driven by geopolitical patterns and AI demand, leading to value revaluation in power grid construction, energy and chemical sectors, metals, and transportation infrastructure.

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CITIC Construction Investment: Panic Impact Weakens, Focus on Prosperity + Certainty Trading

Middle East geopolitical conflicts have caused short-term adjustments in global financial markets. A-shares have experienced sufficient downward sentiment; if the situation does not escalate further, the market will quickly return to the medium- and long-term trend led by domestic economy, policies, and liquidity. However, the long-term effects of this conflict on energy, chemicals, shipping industries, and global inflation expectations deserve continued attention. The 2026 Two Sessions’ guiding principles are “stability with progress, quality improvement, and efficiency enhancement.” Macro policies will maintain an optimistic stance, with fiscal policies emphasizing structural optimization and people’s livelihood consumption, and monetary policies focusing on support for small and medium-sized enterprises and technology industries. Industry focus includes smart economy, carbon peak, and service sector upgrades. Future A-shares will focus on two main themes: prosperity, benefiting from accelerated AI computing power capital expenditure, favoring upstream materials and equipment such as storage chips, optical modules, gas turbines, and AIDC energy storage; and certainty, centered on HALO trading, driven by geopolitical patterns and AI demand, leading to value revaluation in power grid construction, energy and chemical sectors, metals, and transportation infrastructure.

Recently, U.S.-Israel military strikes against Iran have caused turbulence in global stock markets, with adjustments seen in U.S., A-shares, Japanese, and European markets, more pronounced in the latter two. Reviewing seven major Middle East conflicts over the past 20 years, A-shares’ sentiment decline periods have been relatively short, and the current market adjustment is sufficient. Short-term panic impacts are expected to recover. However, attention should be paid to the long-term effects of ongoing conflicts on global inflation expectations and industries, including rising oil and natural gas prices, which benefit shipping companies’ profits, but also pose structural inflation risks in energy and chemical sectors. Policy-wise, the 2026 Two Sessions reaffirm the policy orientation of “stability with progress, quality improvement, and efficiency enhancement.” Macro policies will balance fiscal structural optimization and monetary transmission efficiency. Industry policies will focus on integrated circuits, biomedicine, and other smart economy fields, as well as carbon peak targets, gradually shifting investor attention from geopolitical conflicts to fundamentals and policy dividends.

In industry layout, the logic of HALO trading in U.S. markets is expected to extend to A-shares. Combining prosperity clues, two main directions are worth noting: first, the prosperity theme, where AI computing power capital expenditure accelerates realization, with giants like Meta continuously raising capital expenditure guidance, boosting demand for upstream components such as storage chips, PCB materials, optical modules, and liquid cooling; North American power shortages persist, benefiting gas turbines and AIDC energy storage industries. Second, the certainty theme, centered on HALO trading, with energy and chemical sectors driven by rising oil and gas prices due to Middle East tensions, with cost increases passing through the entire industry chain, benefiting basic and fine chemicals. Metals sectors benefit from geopolitical tensions driving central bank gold holdings, rare earth supply disruptions, and increased demand for copper and other minor metals driven by AI computing infrastructure. Power grid construction and transportation infrastructure also benefit from the value revaluation logic under HALO trading.

Key sectors to watch include: AI (storage price increases, liquid cooling, gas turbines, AIDC energy storage), oil and gas, coal, basic chemicals (coal chemicals), metals, and power grid equipment.

(Source: People’s Financial News)