【Major Bank View】Taishin Bank: U.S.-Iran Conflict Causes Market Fluctuations, Hang Seng Index May Test 24,000 Points, Maintain Neutral View on Energy Stocks

U.S. and Israel launch large-scale attacks on Iran, risk aversion increases. The Hang Seng Index once fell below 25,000 points this month, then rebounded, ending the week down 3.3% at 25,757 points. A report from Dah Sing Bank’s Economic Research and Investment Strategy Department states that the U.S.-Iran conflict continues to cause short-term market volatility. Blockades in the Strait of Hormuz may impact China’s energy supply chain. Additionally, China lowering its economic growth target adds pressure on Hong Kong stocks. If the Hang Seng Index again falls below the 25,000-point psychological level in the short term, it may test the 24,000-point level, with resistance at the February high of 27,400 points.

▲【Major Bank View】Dah Sing Bank: U.S.-Iran conflict causes market volatility; Hang Seng may test 24,000 points; maintains neutral outlook on energy stocks

In terms of sectors, the bank is optimistic about financial and healthcare sectors. It explains that the Federal Reserve’s room to cut interest rates may be limited, with minimal impact on local banks’ net interest income. Plus, local banks and insurers benefit from strong growth in wealth management business. However, it warns that Chinese banks may face constraints due to weak credit demand.

The bank also notes that benefiting from China’s accelerated approval of new drugs and vaccines, as well as strong performance in licensing and sales of original and innovative drugs abroad, along with China’s efforts to promote high-quality pharmaceutical retail development, could boost pharmaceutical stocks.

At the same time, it remains cautious on information technology and real estate construction sectors. The bank explains that China’s AI models are more competitive due to lower costs compared to overseas models, but competition within the Chinese AI industry is intensifying. U.S. export restrictions on high-end chips and high-bandwidth memory components limit China’s computing power growth. Although export approvals for high-end chips to China may ease some pressure, whether China will allow large-scale imports remains uncertain, potentially posing a threat to China’s semiconductor industry.

Maintain neutral outlook on energy stocks

Regarding the “storm eye” energy sector affected by the blockade of the Strait of Hormuz, the bank maintains a neutral view on energy stocks. The recent rise in oil prices has largely reflected the boost from the U.S.-Iran conflict. Short-term, oil prices may still have room to rise. However, the blockade of the Strait of Hormuz, along with Iran’s potential impact on oil production due to the conflict, could affect oil companies’ crude oil supplies. Meanwhile, soaring freight costs also increase the raw oil costs for mainland Chinese oil companies, which may offset some of the positive effects of rising oil prices.

▲【Major Bank View】Dah Sing Bank: U.S.-Iran conflict causes market volatility; Hang Seng may test 24,000 points; maintains neutral outlook on energy stocks

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