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<h1>■He Wan Nan</h1>
The geopolitical conflict in the Middle East has lasted for two weeks, and when it will end remains uncertain. Undoubtedly, the energy supply shock caused by the conflict has had a significant impact on global capital markets.
Over the past two weeks, New York crude oil has risen from $67.29 per barrel to $95.59 per barrel, a surge of 42%; meanwhile, gold has fallen from $5,296 per ounce to $5,093 per ounce, a decline of 3.9%.
As a result, global stock markets have experienced significant fluctuations, with the Japanese and South Korean markets being the hardest hit. Over the past two weeks, the Nikkei 225 index and the Seoul Composite Index have dropped by 9.3% and 12.13%, respectively; the European Stoxx 50 index has decreased by 6.36%; the Dow Jones Industrial Average has fallen by 4.3%, and the Nasdaq index has dropped by 1.6% (the U.S. and European stock markets are counted up to this Thursday). The only major market to rise globally is the Russian stock market, which increased by 3.1%.
Undoubtedly, the main reason for the decline in capital markets is the high dependence of Japan, South Korea, and Europe on energy. Japan and South Korea rely on foreign oil for over 90%, while Europe is around 60%, with a significant portion of oil needing to be transited through the Strait of Hormuz.
In contrast, the decline in the A-share market is not as severe. The Shanghai Composite Index fell by 1.6%, the Shenzhen Component Index dropped by 1.5%, and the ChiNext Index remained flat. The Sci-Tech Innovation 50 and Beijing Stock Exchange 50 saw deeper declines, falling by 7.8% and 9.2%, respectively. Over the past two weeks, among the 5,600 stocks in the market, only about 1,500 rose; over 3,900 fell, with more than 70% of the declining stocks.
Looking at industries and sectors, among the 56 industries classified by the China Securities Regulatory Commission, only 15 industries, including coal, electricity, and oil, saw gains; 41 industries experienced declines, with the largest declines in internet, non-ferrous metals, and aviation.
Why did the index not fall much while individual stocks plummeted? One important reason is that many large-cap stocks in sectors like banking, electricity, coal, and oil have a significant weight in the index. Data shows that 80% of retail investors' holdings are concentrated in the bottom 50% of stocks by market capitalization, which averaged a decline of over 3% during the U.S.-Iran conflict, while the average decline of weighted stocks was less than 0.5%. Notably, the long-dormant bank stocks have also become active, with the banking sector index rising by 3.2% over two weeks, and stocks like Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications, China Merchants Bank, Shanghai Pudong Development Bank, Hangzhou Bank, and Huaxia Bank all posting two weekly gains.
Additionally, high-performing stocks that have disclosed good annual reports have also performed well. Contemporary Amperex Technology Co., Ltd. (profit growth of 79%, valuation of 21 times) rose by 14.74%; Baofeng Energy (profit growth of 79%, valuation of 21 times) saw its stock price increase by 44.4% over two weeks; Daikin Heavy Industries (profit growth of 133%, valuation of 46.6 times) saw its stock price rise by 15.86%. Meanwhile, the dividend index has also increased by 4.1% over the past two weeks.
On the other hand, why did the Sci-Tech Innovation 50 and Beijing Stock Exchange 50 experience deeper declines? The reason lies in the combination of high valuations and external shocks, with the average price-to-earnings ratio of the Sci-Tech Innovation Board reaching 73.11 times and the average price-to-earnings ratio of the Beijing Stock Exchange reaching 62.46 times.
In a column I wrote last week, I pointed out that under the backdrop of escalating geopolitical conflicts, the &#34;electricity-related&#34; sector in A-shares has become a new main line. Last week, the electricity industry index rose by 4.6%, and this week it rose again by 3.34%;
The electrical equipment industry index rose by 1.82% last week and increased by another 4.45% this week. Moreover, the focus has expanded from &#34;involving electricity&#34; to sectors such as coal, green energy, electric construction, and chemicals. There are clues behind this.
Since crude oil prices have surged and there is significant uncertainty, relying on coal is essential to &#34;involving electricity.&#34; Additionally, media reports indicate that nearly one-third of global urea exports, 44% of sulfur exports, and nearly one-fifth of ammonia exports must transit through the Strait of Hormuz. The smooth operation of this golden waterway directly affects the global fertilizer industry chain, which in turn impacts food security. Monitoring data also shows that since the outbreak of conflict in the Middle East, international prices for urea, diammonium phosphate, and potassium chloride have continued to rise over the past two weeks due to shipping disruptions. Furthermore, with the peak demand for fertilizers during the spring plowing season approaching, rigid demand is being released. As a result, some fertilizer stocks with good performance have seen significant price increases. For instance, Chuanjinnuo has forecasted a growth of 144%—172%, and its stock price surged by 14.8% this Friday; similar cases include Chitianhua, Putailai, Jinniu Chemical, and Zhengdan Co., Ltd., among others.
At this point, I can't help but recall a stock market saying: &#34;Focus on momentum when prices rise, and on quality when they fall.&#34; It's often just talk, but when the time comes, one realizes how much investment experience is encapsulated in that classic phrase.
Editor | Wang Wei
Chief Editor | Qing Zixiu
Reviewer | Yuan Gang Third Review | Zhang Jing

601899

The geopolitical conflict in the Middle East has continued for two weeks, leading to significant fluctuations in global capital markets. New York crude oil prices rose by 42%, while gold fell by 3.9%. The stock markets in Japan and South Korea were severely impacted, with the Nikkei 225 index and the Seoul Composite Index dropping by 9.3% and 12.13%, respectively. The A-share market experienced a smaller decline, with the Shanghai Composite Index falling by 1.6%. Among 5,600 stocks, only about 1,500 rose, and out of 41 industries, 15 saw gains, primarily concentrated in coal, electricity, and oil sectors. Bank stocks were active, with the sector index rising by 3.2%

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He Wan-nan: "Involving Electricity" Hotspots Extend, Outstanding Performance of High-Quality Stocks