Middle East War Reignites, A-shares Plummet

Good morning, fellow investors! I believe everyone was scared by the "plunge" of A-shares last Friday - the three major indexes all plummeted, with over 4500 stocks falling.

The main culprit is the sudden outbreak of military conflict between Israel and Iran. This black swan came too suddenly and no one could have prevented it! However, veteran investors know that such sudden geopolitical crises often hide opportunities. Today, let's take a closer look at them.

1, Historical Law: The Wealth Code in War

Every time there is a war in the Middle East, A-shares are like a shortcut key pressed, and there are always a few sectors that will emerge first. Take the Russia-Ukraine conflict in 2022 as an example. On that day, the oil service, precious metals and military industry led the rise against the trend, which is exactly the same as this script.
Looking further ahead, in the 2003 Iraq War and the 2019 US Iran standoff, oil, gold, and military industries were all steadfast "safe haven three Musketeers". This time is no exception. With the escalation of the Iran Iraq conflict, Brent crude oil surged 8.39% in a single day, gold futures broke through $3400/ounce, and A-shares such as Shandong Gold and China National Offshore Oil Corporation directly hit the limit up.
There is actually a underlying logic here: if you go to war, you have to burn money, and military orders will definitely skyrocket; Once the oil transportation channel is blocked, oil prices will inevitably soar; Everyone panicked, and gold naturally became the 'hard currency'. Just like last Friday's sharp decline, the military industry sector rose more than 2% against the trend, and drone concept stocks such as Chenxi Aviation and Aerospace Rainbow directly hit the daily limit up.

2, Is this different? The opportunities in the three major sectors are more clear

However, there is a key variable in this conflict - the Strait of Hormuz. As a "throat passage" for global oil transportation, 17 million barrels of crude oil pass through here every day. Once blocked, oil prices may skyrocket to $120-130 per barrel.
Now Iran has announced that it will consider blockading the strait, and the opportunity for shipping stocks has come! Oil transportation leaders such as COSCO Shipping and China Merchants Shipping have already started early on Friday, and the profit elasticity brought by the increase in freight rates is visible to the naked eye.
In addition to the traditional safe haven sector, there is also a new opportunity this time - nuclear pollution prevention and control. After Israel bombed Iran's nuclear facilities, the International Atomic Energy Agency has detected radiation anomalies, leading to a surge in demand for nuclear protection equipment. Companies such as Jieqiang Equipment and Beihua Corporation, which produce protective clothing and testing equipment, have seen their orders increase several times recently.

3, How do I get there on Monday? 3365 or an excellent boarding point

After discussing so many opportunities, what everyone is most concerned about is the trend on Monday. Let me give you a peace of mind first: the resilience of A-shares far exceeds imagination!
Specifically, a low opening on Monday is a high probability event, especially for the consumer and technology sectors directly affected by the conflict, which may be under pressure. But the benefiting sectors such as military, oil, and shipping will rebound first, driving the index to stabilize. Based on the experience of technology stocks opening low and rising high in April, it is likely to replicate the trend of "first suppressing and then rising" this time.

4, Operation strategy: Don't panic! Focus on these two directions

①. Attack direction: Conflict benefits the three giants
- Oil and gas: China National Offshore Oil Corporation (CNOOC) (with a barrel oil cost of only $30 and a profit increase of $5 billion for every $10 increase in oil prices), Tongyuan Petroleum (with a 30% Middle East business).
- Military equipment: AVIC Shenyang Aircraft (supplier of J-35), Ruichuang Micro Nano (with a market share of 70% in infrared detectors).
- Shipping and logistics: COSCO Shipping (with the world's largest VLCC capacity) and Sinotrans (with a share of over 40% in China Europe freight trains).
②. Defense direction: Gold+nuclear protection
- Gold: Shandong Gold (with the largest domestic reserves), Chifeng Gold (with cost advantages in overseas mines).
- Nuclear pollution prevention and control: Jieqiang equipment (military procurement accounts for 60%), CGN nuclear technology (nuclear wastewater treatment technology landing in Iran).

The market never lacks opportunities, what it lacks is the eyes to discover them. Although the war in the Middle East is fierce, it also illuminates the structural opportunities of A-shares. Remember, every crisis is a touchstone for testing the investment system. As long as you grasp the rhythm well, driving low is actually an excellent opportunity to get on the road. Let's wait and see on Monday, waiting for market validation!