Yuekai Securities Luo Zhiheng: A-Share Safety Premium Becomes Prominent, Recommends Focus on Two Key Directions

Why is AI HALO trading logic favored during geopolitical risks?

21st Century Business Herald Reporter Yi Yanjun

On February 28, 2026, the United States and Israel launched a joint military strike against Iran, followed by Iran announcing the closure of the Strait of Hormuz as a strategic countermeasure.

As of March 15, the US-Israel-Iran conflict has lasted 16 days. The potential chain reactions from the escalation—such as rising energy prices and increased global supply chain costs—have attracted widespread attention.

Tracing the root cause, the status of passage through the Strait of Hormuz has become a key variable affecting the global economy.

“If the US-Iran conflict cools down in the short term and the Strait of Hormuz reopens, the overall impact on the global economy will be limited. If the conflict becomes prolonged, the global economy will face stagflation risks, and asset prices and investment logic may undergo profound changes.” Luo Zhiheng, Chief Economist of Yuekai Securities and Director of the Research Institute, said in an interview with 21st Century Business Herald.

Under the assumption of a prolonged US-Iran conflict, Luo Zhiheng made the following judgments on key global assets: First, crude oil prices could surge significantly, with Brent spot prices possibly rising to $100–150 per barrel. Second, gold prices may remain high at $5000–5500 per ounce. Third, the “HALO” trading logic in global equity markets will strengthen. Fourth, equity markets in the US, Europe, and Japan may all adjust, with Japan being the most affected.

Luo Zhiheng also believes that the risk premium of A-shares relative to overseas markets is more prominent, and the market is expected to show strong resilience. Regarding specific allocations, he recommends focusing on two main directions: assets benefiting from improved supply-demand dynamics, strong inflation expectations, and profit recovery—namely “HALO” trading targets; and domestically controlled, self-reliant sectors such as domestic computing power, artificial intelligence, energy storage, commercial aerospace, and defense military industries.

21st Century: What are the deep-rooted causes of this escalation in US-Iran conflict?

Luo Zhiheng: The contradictions between the US and Iran are long-term and complex. However, this conflict has escalated to the most serious direct military confrontation since 1979.

The US-Iran conflict has deep historical and geopolitical roots. Since the Iranian Islamic Revolution in 1979, US-Iran relations have been long-standing adversaries, with conflicts spanning nuclear issues, regional security, energy, and economic dimensions.

On nuclear issues, the US-Iran agreement has failed, and their positions on nuclear matters are irreconcilable.

Regarding regional security, since 2025, attacks on the Red Sea shipping lanes have become frequent. The US has identified Iran as the behind-the-scenes supporter and has increased military deterrence, conducting multiple joint exercises with Israel, laying the groundwork for this conflict.

On economic confrontation, the US has long imposed economic sanctions on Iran, covering key sectors such as energy, finance, and shipping—including bans on Iranian oil exports, freezing Iranian overseas assets, and excluding Iran from the SWIFT payment system. The World Bank projects Iran’s real GDP growth to be -1.1% in 2025, with CPI inflation exceeding 50% in December 2025. The economic hardship has not forced Iran to compromise but has instead intensified its resistance.

The immediate trigger was that since April 2025, the US, during Trump’s second term, resumed negotiations with Iran with limited progress. In June 2025, the US and Israel launched airstrikes on Iran’s nuclear facilities, further escalating tensions. On February 17, 2026, negotiations in Geneva broke down, triggering this incident.

21st Century: What are the possible paths for the evolution of the US-Iran conflict?

Luo Zhiheng: Based on the current development trend, US-Iran demands, and their relative strengths, there are roughly two possible directions for this conflict, corresponding to different durations, intensities, and impacts.

The first is “short-term de-escalation” (ending within one month). Under the influence of rising oil prices affecting US residents’ lives, Trump’s domestic support, and the economies of Gulf and energy-importing countries, all parties may mediate to cool down the conflict within a month, with a relatively limited scope. The probability of this scenario is higher.

The second is “long-term warfare” (lasting over one month), where contradictions intensify, Iran adopts tough retaliatory measures, and the US-led coalition expands military strikes. The conflict could last over a month, potentially exceeding the oil storage capacity of Middle Eastern oil producers, with impacts spreading to other Middle Eastern countries. This scenario has a lower probability but still warrants caution.

The development of geopolitical conflicts is highly uncertain. Even if this US-Iran conflict temporarily eases, there remains a risk of renewed escalation. From a risk assessment perspective, it is essential to consider various potential scenarios and clearly define the extreme impacts and boundaries of such events.

21st Century: How will the US-Iran conflict affect the global economy and financial markets?

Luo Zhiheng: The core economic impact of the US-Iran conflict hinges on the passage status of the Strait of Hormuz. First, if the strait faces substantial blockade, it will lead to shortages in global energy and chemical supplies and increased supply chain costs. Second, if this persists, it will heighten global inflation risks and increase monetary tightening and economic slowdown pressures. Third, global financial markets will become more volatile, earlier and more intensely, as markets react to these risks, which may in turn influence global political and economic trends.

Specifically, if the conflict cools in the short term and the Strait of Hormuz reopens, the overall impact on the global economy will be limited.

1. Energy prices will decline. Global energy prices are mainly affected by geopolitical risk premiums, but if no substantial shortages occur, Brent crude oil prices could fall back to $70–80 per barrel as tensions ease, though the volatility center may remain above pre-conflict levels.

2. Global inflation and growth will experience mild disturbances. Short-term oil price spikes will slightly increase costs but are unlikely to significantly raise global inflation.

3. Global monetary policy will largely stay on its original course. The Federal Reserve is expected to cut interest rates 1–2 times in 2026 as planned, maintaining stable liquidity conditions.

Additionally, China’s overall economic impact is more controllable due to its neutral and pragmatic diplomatic stance towards Iran; China’s strong energy and chemical supply capabilities; and China’s resilience in inflation and economic stability.

Asset prices, if the conflict shortens, are expected to gradually stabilize, with key assets like crude oil and gold returning to normal levels. Equity markets will be less affected.

21st Century: If the US-Iran conflict becomes a “prolonged war,” what changes might occur in major assets like crude oil, gold, and equities?

Luo Zhiheng: If the conflict becomes prolonged, the global economy will face stagflation risks, and asset prices and investment strategies may undergo profound shifts. The economic impact includes rising stagflation risks, with China facing imported inflation, weakening external demand, and capital flow pressures that need to be carefully managed.

Regarding key global assets, our main judgments are:

1. Crude oil prices could surge significantly, with Brent spot prices possibly reaching $100–150 per barrel.

2. Gold prices may stay high at $5000–5500 per ounce, supported by ongoing bullish factors like central bank gold purchases and the potential long-term decline in dollar credibility. However, rising oil prices and inflation risks may delay Fed rate cuts or even prompt rate hikes, limiting short-term gains in gold, which may struggle to break above $5500.

3. The “HALO” trading logic in global equities will strengthen. This refers to investing in high-asset, low-obsolescence sectors such as energy, raw materials, and infrastructure—industries with high physical barriers and tangible assets. Sectors like non-ferrous metals, power equipment, basic chemicals, oil and petrochemicals, and coal are expected to become common themes in global equity markets.

4. Equity markets in the US, Europe, and Japan may all experience significant adjustments, with Japan being the most vulnerable. Japan’s economy, heavily dependent on Gulf energy and dominated by semiconductor stocks, will face severe shocks. US stocks will be affected by inflationary pressures driven by rising oil prices, increasing correction risks. European stocks will face more direct and prominent risks from energy price hikes, given Europe’s high dependence on external energy and sensitivity of industrial production and consumer spending to energy costs.

21st Century: Can you analyze specifically how the escalation of geopolitical conflicts will influence the A-share market?

Luo Zhiheng: The safety premium of A-shares relative to overseas markets is more prominent, and the market is expected to show strong resilience. In an era of frequent geopolitical events, China’s robust economic, military, and diplomatic capabilities provide security guarantees. Internally, a stable institutional environment and a complete industrial system form the foundation and confidence for long-term optimism in A-shares. On one hand, policy signals further reinforce the “tech revaluation bull” logic of A-shares. This year’s Government Work Report emphasizes “accelerating high-level technological self-reliance and self-improvement, seizing the opportunities of a new round of technological revolution and industrial transformation, and comprehensively enhancing independent innovation capabilities to support high-quality development.” On the other hand, the continuous improvement of the capital market system—such as reforms of the ChiNext and optimization of refinancing policies—highlight the focus on “supporting excellence and technology,” which will bolster this bull market.

21st Century: What are your investment suggestions for the A-share market?

Luo Zhiheng: Against the backdrop of long-term risks from the US-Iran situation, I recommend focusing on two main areas in the A-share market:

First, assets benefiting from improved supply-demand dynamics, strong inflation expectations, and profit recovery—such as “HALO” trading targets like non-ferrous metals, power equipment, basic chemicals, oil and petrochemicals, and coal. Non-ferrous metals and power sectors provide raw materials and energy for AI development, with strong demand support; oil and petrochemicals directly benefit from geopolitical conflicts and rising prices; coal, as an essential energy source alongside oil, also faces valuation reassessment. Domestically controlled, self-reliant sectors like domestic computing power, AI, energy storage, commercial aerospace, and defense industries may see repeated activity throughout the year. Particularly, the military industry sector benefits from geopolitical conflicts and overlaps with emerging productivity sectors like commercial aerospace and low-altitude economy, making it a key focus.