Recent instability in the Middle East has triggered significant volatility in global markets, leading to short-term corrections in both A-shares and Hong Kong stocks. However, news of eased tensions prompted a strong market rebound. While regional conflicts act as short-term disruptive factors, they do not alter medium to long-term market trends, though they intensify sector rotation and stock price fluctuations in the near term.
International oil prices have experienced sharp swings. Iran's blockade of the Strait of Hormuz nearly halted 20% of global oil shipments, driving prices from $73 to $118 per barrel. However, as the conflict evolved, Iran's firm retaliation and U.S. domestic pressures—including midterm elections, anti-war sentiment, rising inflation from high oil prices, and delayed Federal Reserve rate cuts—led to signals from the Trump administration about a swift end to the war. This suggests the conflict may conclude soon, causing oil prices to plummet. On the 9th, prices crashed 28% overnight from $118 to $85 per barrel, triggering significant profit-taking and a sharp decline in the previously surging oil and gas sector.
As overheated sectors pull back, technology stocks that had fallen sharply earlier are rebounding strongly. Areas like computing power, algorithms, humanoid robots, and semiconductors have seen substantial recoveries, indicating ongoing rotation among industry sectors.
Technology and resources remain the two primary investment themes for the year, exhibiting a seesaw effect where they take turns rising and falling, yet maintaining long-term value. Technology represents economic transformation and enjoys strong policy support, while resources—such as non-ferrous metals, crude oil, coal, and chemicals—are increasingly contested in the AI era, alongside precious metals like rare earths, gold, and silver, which hold long-term investment appeal despite short-term price volatility.
Although Middle East conflicts typically boost gold and silver prices, Iran's Strait of Hormuz blockade heavily impacted oil prices. Rising oil prices elevate global inflation, delaying Fed rate cuts, which negatively affects gold prices. Consequently, international gold prices have recently adjusted significantly rather than rallying. Nonetheless, allocating 20% of a portfolio to gold remains a sound long-term strategy. The fundamental driver of gold's rise is excessive USD issuance, compounded by rising U.S. government debt and higher future bond yields, which may undermine global confidence in the dollar and lift gold prices denominated in USD. Thus, the long-term upward trend for gold is expected to persist.
Despite short-term volatility in A-shares and Hong Kong stocks, markets are likely to resume a slow, upward trajectory—or even an independent bull run—once Middle East tensions ease or the conflict ends. The current bull market is not expected to be terminated by these events.
On the policy front, senior officials have reiterated support for capital market development, emphasizing ChiNext reform and enhanced backing for tech innovation listings through relaxed criteria and fast-track channels, which benefits new productive forces. Following successful reforms on the STAR Market, the ongoing ChiNext reforms hold significant importance.
Monetary policy, as outlined in the government work report, will remain appropriately accommodative, with low interest rates and ample liquidity unchanged. This may encourage a shift of household savings into capital markets, providing sustained incremental funding—a transition already underway.
Fiscal policy will see stronger measures to support consumption recovery and investment growth, improving economic fundamentals and laying a solid foundation for a slow bull market.
Future international competition will center on computing power and electricity. China is vigorously developing computing capacity in preparation for the AI era. Accelerating AI application, particularly in consumer sectors, may find an ideal outlet in robotics, which is expected to perform well this year. After earlier adjustments, the robotics sector is already showing signs of strength and is likely to remain a top performer annually. Meanwhile, as AI applications gradually materialize, many tech stocks will face earnings validation this year, moving beyond concept-driven speculation. Sustained stock performance will depend on delivered results, while purely speculative tech stocks may correct sharply.
Investors should prioritize fundamental analysis and adhere to value investing, avoiding chasing rallies, frequent trading, and speculative theme-based plays—which often lead to reversals. Selecting strong industries, companies, and funds based on operational excellence is key to capturing opportunities in this prolonged slow bull market.