【Major Bank View】Taishin Bank: U.S.-Iran Conflict Causes Market Fluctuations, Hang Seng Index May Test 24,000 Points, Maintain Neutral View on Energy Stocks

The US and Israel launch a large-scale attack on Iran, increasing risk aversion. The Hang Seng Index once fell below 25,000 points this month, then rebounded, ending the week down 3.3% at 25,757 points. A DCB Bank economic research and investment strategy report states that the US-Iran conflict will continue to cause market volatility in the short term. The blockage of the Strait of Hormuz may impact mainland China’s energy supply chain. Additionally, China has lowered its economic growth target, adding pressure on Hong Kong stocks. If the Hang Seng Index again falls below the 25,000-point psychological level in the short term, it may test the 24,000-point level. Resistance is at the February high of 27,400 points.

In terms of sectors, the bank is optimistic about financial and healthcare sectors. The bank explains that the Federal Reserve’s room to cut interest rates may be limited. Local banks’ net interest income is less affected, and local banks and insurers benefit from strong wealth management growth. However, they caution that Chinese bank stocks may be constrained by weak credit demand.

The bank also notes that benefiting from accelerated approval of new drugs and vaccines in mainland China, as well as strong performance in licensing and sales of original and innovative drugs, along with efforts to promote high-quality pharmaceutical retail development, could boost pharmaceutical stocks.

At the same time, they are cautious about the information technology and property construction sectors. The bank explains that mainland China’s AI models are more competitive due to lower costs, but competition within the industry is intensifying. US export restrictions on high-end chips and high-bandwidth memory components limit China’s computing power growth. Although export approval of high-end chips to China may ease some pressure, whether China will allow large-scale imports remains uncertain, potentially posing a threat to the domestic semiconductor industry.

Maintain a Neutral View on Energy Stocks

Regarding the “storm eye” energy sector affected by the blockage of the Strait of Hormuz, the bank maintains a neutral outlook on energy stocks. The recent rise in oil prices has largely reflected the impact of the US-Iran conflict. Short-term oil prices may still have room to rise. However, the blockage of the Strait of Hormuz, combined with Iran’s potential impact on oil production due to the conflict, could affect oil supply. Additionally, soaring freight costs increase the operating costs for mainland Chinese oil companies, which may offset some of the benefits from rising oil prices.

Financial Hot Talk

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