Amid the Middle East geopolitical situation, market concerns about global reflation are rising rapidly. Guotai Haitong (GTHT) recommends an overweight position in A-shares, H-shares, gold, crude oil, and industrial commodities for March. Multiple factors support the performance of Chinese equities.
First, an overweight position in A-shares is advised. The year 2026 marks the beginning of the 16th Five-Year Plan period, and economic policies are expected to become more proactive. The Renminbi is appreciating steadily, and China's monetary policy is stable with a tendency towards easing. Ongoing property support measures and domestic consumption stimulus policies, coupled with capital market reforms, are boosting risk appetite in the Chinese market.
Second, an overweight position in H-shares is recommended. Stable expectations for China's aggregate policies and reforms in the capital market system are enhancing market risk sentiment. The downward trend in China's domestic risk-free interest rate, along with an anticipated loosening of the US Federal Reserve's monetary policy, is conducive to maintaining ample and stable liquidity in Hong Kong. Global investors' expectations for the AI industry remain highly contested, which may periodically increase market volatility.
Key views from GTHT are as follows: Structural monetary policies may strengthen the allocation force towards government bonds. An imbalance between financing demand and credit supply persists, but with a trend of rising risk appetite, households and corporations may rebalance their asset allocations. The bond market has been subdued due to a lack of effective allocation demand; however, as structural monetary policies take effect, the willingness of allocation-oriented funds to purchase bonds could strengthen.
The US economy is slowing marginally but not stalling. The labor market is cooling gently, and slower wage growth helps reduce the stickiness of endogenous inflation. A Fed Chair nominee by Trump advocates for balance sheet reduction and a moderate cut in policy rates, suggesting US bond yields may decline gently. The Trump administration's hegemonic actions, disrupting international geopolitical order, have significantly weakened US sovereign credit, leading global central banks and large asset managers to trend towards reducing their holdings of US Treasuries. Amid geopolitical risk shocks, safe-haven funds might engage in defensive allocation, though this could be constrained by reflation trades.
With the global order restructuring at an accelerated pace, an overweight position in gold is recommended. The post-WWII global order is gradually disintegrating: the Trump administration's persistent hegemony, including unreasonable tariff impositions, territorial annexation threats, and military invasions, has severely undermined US international credibility. As the global order reshapes rapidly and geopolitical conditions trend towards deterioration, safety has again become a scarce resource, and gold serves as a tangible hedge against this uncertainty. Continued gold purchases by large asset managers and central banks support its long-term price floor, though speculative flows and heated reflation trades may increase short-term volatility.
Given the sharp deterioration of the Middle East geopolitical situation, an overweight position in crude oil is advised. Global crude demand remains relatively weak, and OPEC+ production policies are volatile. The recent acute worsening of Middle East tensions, with potential for further escalation, may provide periodic support for oil prices.
Against the backdrop of industrial expansion and revised demand expectations, an overweight position in industrial commodities is suggested. Industrial metals, represented by copper, may face periodic supply-demand imbalances. Construction, power grids, and electric vehicles are current primary demand drivers, while AI computing expansion and grid modernization introduce new structural demand. Meanwhile, rising development costs and complexity for copper, coupled with weakened investment willingness, could periodically push copper prices higher. Industrial commodities offer a relatively high risk-reward ratio compared to other major asset classes.
Risk提示: Analysis dimensions have limitations, model designs involve subjectivity, historical and expected data may deviate, market consensus expectations can adjust, and quantitative models have inherent limitations.
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