UBS expects energy prices to remain high for a longer period, with oil prices potentially reaching $130 per barrel

UBS published a report indicating that the Chinese stock market has recently fluctuated due to the closure of the Strait of Hormuz. Over the past month, the correlation between the Chinese stock market and the MSCI AC World Index has risen from a historical average of 0.6 to nearly 0.8. The bank believes that even if the strait can be reopened, energy prices may remain elevated for a longer period. The bank is approaching a bearish scenario forecast, assuming the disruption continues until the end of April, with oil prices potentially reaching $130 per barrel, which could lead to a 10% to 12% decline in the S&P 500 Index.

In this context, UBS has listed several stock selection indicators, including stocks with upward revisions in earnings forecasts but declining share prices, a list of analyst preferred stocks, and stocks expected to have surprising or disappointing performance. The bank's strategy portfolio includes a more diversified stock allocation to address the uncertainties in the global energy market.

UBS has downgraded the consumer and real estate sectors to "underweight," citing that rising inflation will limit further room for interest rate cuts. It also pointed out that if oil prices remain high, Chinese oil producers will benefit. The bank estimates that the average pricing of Chinese oil stocks reflects an oil price of $65 per barrel, significantly lower than its forecast of $90 to $100 per barrel.

UBS's recommended stock ratings and target prices are detailed in the table below:

Stock | Investment Rating | Target Price

JD.com - SW (09618.HK) | Buy | HKD 187

Baidu Group - SW (09888.HK) | Buy | HKD 165

Fuyao Glass (03606.HK) | Buy | HKD 93

Huatai Securities (601688.SH) | Buy | RMB 27.36

Zijin Mining (02899.HK) | Buy | HKD 60

North Huachuang (002371.SZ) | Buy | RMB 570

Tencent Holdings (00700.HK) | Buy | HKD 780

GDS (GDS.US) | Buy | USD 62

CATL (300750.SZ) | Buy | RMB 500

Shengyi Technology (600183.SH) | Buy | RMB 85

Dongfang Electric (01072.HK) | Buy | HKD 68

InvoTech (002837.SZ) | Buy | RMB 160

CNOOC (00883.HK) | Buy | HKD 37.8

BYD Company (01211.HK) | Buy | HKD 128

WuXi AppTec (02359.HK) | Buy | HKD 154

Tianshan Aluminum (002532.SZ) | Buy | RMB 23

Muyuan Foods (002714.SZ) | Buy | RMB 60.3

Dongfang Cable (603606.SH) | Buy | RMB 78

Satellite Chemical (002648.SZ) | Buy | RMB 36.8 Zijin Mining International (02259.HK) | Buy | HKD 297

Keda Industrial Group (002850.SZ) | Buy | RMB 268