Global capital markets were rattled this weekend following a surprise military strike by the United States and Israel on Iran. For investment and research professionals at numerous institutions, the weekend was dominated by monitoring the Middle East situation, analyzing geopolitical developments, and participating in a series of conference calls and roadshows.
Reviewing the event: on February 28th Beijing time, the US and Israel launched a joint military strike against Iran. On March 1st, multiple Iranian media outlets confirmed that Iran's Supreme Leader Ayatollah Ali Khamenei was killed on the 28th. According to reports from CCTV News on March 1st local time, an Iranian military source stated that Iran used its "Fattah-2" hypersonic cruise missile for the first time to attack US military bases.
How will capital markets react moving forward? Here are the latest interpretations from securities firms.
Roadshows Fully Booked! Analysts Provide Rapid Weekend Assessments A review on the Jinmen platform revealed that from February 28th onwards, various securities firms have scheduled or already held nearly 50 thematic conference calls focusing on the US-Iran conflict. These calls cover the entire industrial chain, including macroeconomics, strategy, crude oil, transportation, chemicals, metals, and defense.
It was learned that within 24 hours of the joint US-Israel military strike, these conference calls attracted significant attention from institutional investors. For instance, a Saturday evening call hosted by Oriental Securities reached the platform's maximum capacity of 2,000 participants. Since Saturday night, conference calls from firms including China Securities, CSC Financial, Western Securities, Caitong Securities, Soochow Securities, and Changjiang Securities have also each attracted over a thousand participants.
"Khamenei, as the core of the Iranian regime, his assassination will inevitably lead to a significant increase in complexity and uncertainty within Iran's domestic situation. However, it may not necessarily prevent a prolonged conflict or reduce the sustained impact on the United States," Xu Chi, Chief Strategy Analyst at Zhongtai Securities, stated. He believes that, similar to the situation with Venezuela, the key to the US achieving short-term success lies in its top-tier intelligence gathering and processing capabilities, enhanced by American AI (such as from Palantir and Claude). This event may fuel market expectations of an acceleration in the weaponization of AI.
Xu Chi analyzed that the market (precious metals, crude oil) had already anticipated and reacted to the possibility of a large-scale US-Israel airstrike on Iran. The current market focus is on whether this attack is similar to last year's "Twelve-Day War." If so, the market impact would be a one-off shock, meaning the sell-off would occur on the day of the attack, as seen mid-last year.
Xu Chi believes this attack is entirely different from last year's. The US has completely underestimated the stability of the Iranian regime, the subsequent retaliatory force and intensity, as well as domestic political opposition. The Middle East situation may escalate and broaden, and this conflict is unlikely to end quickly. Precious metals and crude oil will at least maintain their strength, potentially reinforcing global reflation expectations for major asset classes. In the medium term, however, this could further strengthen China's major power status and influence, constituting a positive factor for boosting medium-term risk appetite in the A-share market.
"The dual geopolitical impacts of the US-Iran and Russia-Ukraine conflicts are being fully priced into the global economic market, causing significant fluctuations in resources, supply chains, and broad financial sectors. The US and Israel have also escalated with further direct military strikes against Iran. Meanwhile, the zero-sum game between Russia and Ukraine over core territorial issues leaves no room for compromise, making a prolonged conflict almost certain," said Liao Bo, a member of the China Chief Economists Forum.
Liao Bo analyzed that Iran's negotiation stance focuses on nuclear issues and lifting sanctions, while the US insists that negotiations should expand to include missiles and regional influence. The fundamental differences between the two sides are difficult to bridge in the short term, suggesting the conflict may escalate or become normalized rather than being a single black swan event. From a geopolitical perspective, Iran now has Russia's political support and economic cooperation, which will undoubtedly give Iran more leverage in negotiations with the US, leading to a wider range of policy choices and reducing the extent of Iranian compromise and concessions to the US.
Energy Supply Becomes a Key Focus Liao Bo stated that the direction of US-Iran negotiations is directly related to Middle East stability and energy supply. The actual risk exposure lies in whether the supply chain through the Strait of Hormuz is substantially damaged. Should negotiations break down, Iran might restart high-level uranium enrichment activities, escalating regional conflict risks and significantly dampening risk appetite. Historical events like the 1979 Iranian Revolution, the two Gulf Wars, and the Libyan civil war led to production losses lasting years, but what truly alters oil price cycles is the collapse of regime and social order. The Strait of Hormuz transits approximately 19-20 million barrels of liquid fuels per day, accounting for about 19% of global supply. About 15 million barrels are crude oil, with the remainder being refined products and LPG (liquefied petroleum gas). Furthermore, alternative paths for this spare capacity are limited; the combined substitution capacity of Saudi Arabia and the UAE falls far short of covering the strait's transit volume.
"Iran's share of global crude oil production is not high, but the Strait of Hormuz is critically important," said He Ning, Chief Macroeconomic Analyst at Kaiyuan Securities. Although Iran has abundant oil reserves, its production is relatively low. As of the end of 2024, Iran's proven crude oil reserves were 208.6 billion barrels, accounting for about 13.3% of the global total, ranking third in the world. However, Iran's average daily crude oil production in 2024 was 3.26 million barrels, representing only 4.5% of global daily output. Additionally, while Iran also possesses rich natural gas reserves, due to high domestic consumption of oil and gas, the amount of oil Iran can actually export is not high, approximately 1.566 million barrels per day in 2024.
He Ning emphasized that Iran holds very strong practical influence and potential control over the Strait of Hormuz, giving it far greater impact on the global crude oil market than its own production volume suggests. According to EIA (US Energy Information Administration) estimates, the average daily oil trade through the Strait of Hormuz in 2024 was about 20 million barrels, accounting for over a quarter of global seaborne oil trade. Additionally, about 20% of global liquefied natural gas trade passes through the strait. In terms of direction, the crude oil transported through the Strait of Hormuz primarily flows to Asian markets. In 2024, China imported approximately 11 million barrels of crude oil per day, of which 4.78 million barrels per day (about 43.5%) came via the Strait of Hormuz.
Gold and Oil Rise Together, Risk Assets Under Pressure? How will the market perform in the short term? Most institutions generally believe the short-term market may exhibit a risk-off pattern characterized by "gold and oil rising together, while risk assets face pressure." Some analysts also mentioned that following the death of Iran's Supreme Leader, the market might anticipate a quicker resolution to the Iran conflict, potentially leading to a scenario next week where non-ferrous metals and energy chemicals surge initially before retreating.
Xu Chi believes that close attention should be paid to the intensity of Iran's retaliation, the reorganization of the Iranian regime, and its interactions with the US. If Iran's retaliation persists and intensifies, the market may begin to price in a prolonged Middle East conflict, potentially triggering a new round of price increases for related commodities. Coupled with accelerated commercial aerospace bidding and procurement post the 'Two Sessions' and the IPO listing of major memory chip companies, active market funds might directly fuel expectations of accelerated AI weaponization and informatization. In this scenario, commercial aerospace, semiconductor equipment, and leading AI application companies could benefit.
Tao Chuan, Chief Economist at Guolian Minsheng, interpreted that the sudden escalation of Middle East tensions directly impacts global risk appetite. In the short term, the market may display a typical risk-off pattern of "gold and oil rising together, while risk assets come under pressure." Reviewing market performance during past Middle East conflicts, this pattern has been repeatedly verified: gold, as a traditional safe-haven asset, attracts large-scale capital inflows, driving prices steadily higher. Regarding crude oil, as the Middle East is a major global oil-producing region, instability directly threatens global oil supply security. Combined with concerns over potential Strait of Hormuz blockades, oil prices may experience a short-term surge. In contrast, risk assets such as stocks and emerging market currencies may face阶段性回调 due to heightened risk-off sentiment.
He Ning, Chief Macroeconomic Analyst at Kaiyuan Securities, believes that expectations for crude oil supply disruptions are strengthening, potentially leading to sustained upward pressure on oil prices. The Middle East is one of the world's most important oil production and export regions. Geopolitical turmoil can disrupt local oil production and exports. Historical experience suggests that if this military action persists for an extended period, oil prices could rise further.
He Ning also stated that gold's safe-haven function is prominent, and its price may continue to rise in the long term. Historically, following military actions, gold might experience short-term 'buy the rumor, sell the news' pressure, leading to potential price declines. However, from a medium to long-term perspective, gold prices have consistently shown significant increases afterward. Furthermore, geopolitical conflicts suppress risk appetite, which is short-term positive for US Treasuries and negative for US stocks.