U.S. President Donald Trump announced on a social media platform, "I agree to suspend bombing and attacks on Iran for two weeks."
Haitong International Executive Committee Member and Chief Economist Zhang Yidong views this as likely a step for Trump to "extricate himself" ahead of the 2026 midterm elections. Before the 8 p.m. deadline on April 7 Eastern Time, he opted to accept the two-week ceasefire. Extending this ceasefire repeatedly in the coming months and focusing entirely on the midterm elections would be Trump's optimal strategy.
Previously, in reports released by Zhang Yidong's team in mid-March titled "Restructuring of International Order, Strategic Revaluation of China's Hard-Core Assets" and late March titled "Opportunities Amid Risks in International Order Restructuring, Long Bull Market for China's Hard-Core Assets Unabated," it was noted that a genuine TACO (Tactical Asset Configuration Opportunity) could emerge as early as April or as late as June, signaled by the withdrawal of U.S. aircraft carriers or a ceasefire agreement. Against the backdrop of midterm elections, time is Trump's adversary. At that point, investors may see a rise in risk appetite.
Regarding asset allocation, Zhang Yidong emphasized that China's hard-core assets will rise, with the core logic being the restructuring of the international order and a shift in asset pricing from efficiency premiums to safety premiums.
In terms of allocation priority, before a ceasefire, gold, energy, and resources are preferred. After a ceasefire, among safe assets, it is advised to retain only gold, while shifting focus more toward high-tech, hard-tech, and advanced manufacturing.
Zhang Yidong believes that China's hard-core assets will experience a systemic bull market lasting several years, similar to the core asset rally proposed in 2016, which lasted until early 2021. A decade later, the focus shifts to China's "hard-core assets" and the "SMART" stock selection framework.
This includes: - S: Security—covering areas such as finance, energy, resources, and defense, including gold, energy supply chains, resources (rare earths, minor metals, copper, aluminum, etc.), and defense (military technology, commercial aerospace, etc.). Currently, gold priced above $4,000 per ounce presents both tactical and strategic opportunities. - MA: Manufacturing Abroad—global leaders in machinery, power equipment, home appliances, automobiles and components, pharmaceuticals and healthcare, and petrochemicals that are deeply engaged in globalization. - RT: R&D Technology—high-tech and hard-tech sectors, including strategic emerging industries outlined in the 15th Five-Year Plan: semiconductors, high-end equipment, new energy, new materials, robotics, innovative drugs, aerospace; future industries: quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, 6G; as well as specialized and sophisticated "little giant" enterprises.
As China's hard-core assets will form the backbone of the strategic revaluation of Chinese equities, the volatility seen since the beginning of the year in both A-shares and Hong Kong stocks is akin to "innocent bystanders getting caught in the crossfire" and does not alter the medium- to long-term trend.
Barring a low-probability event such as a global financial crisis, core broad-based indices for both A-shares and Hong Kong stocks are expected to reach new yearly highs in the second half of the year.
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