【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 Iran launch large-scale attacks, risk aversion rises. The Hang Seng Index once fell below 25,000 points this month, then rebounded, ending the week down 3.3% at 25,757 points. Dah Sing Bank’s Economic Research and Investment Strategy Department issued a report stating that the U.S.-Iran conflict continues to cause short-term market volatility. The blockage of the Strait of Hormuz may impact mainland China’s energy supply chain. Additionally, China lowered its economic growth target, adding 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. Resistance is 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. The bank 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 insurance companies benefit from strong growth in wealth management business. However, they caution that Chinese banks may face constraints due to weak credit demand.

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

At the same time, the bank is cautious on information technology and real estate construction sectors. It explains that mainland China’s AI models are more competitive due to lower costs, but competition within the 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 approval of high-end chips to China may ease some pressure, whether China will allow large-scale imports remains uncertain, potentially posing a threat to the mainland semiconductor industry.

Maintain neutral view on energy stocks

Regarding the “storm eye” energy sector affected by the blockage of the Strait of Hormuz, the bank maintains a neutral outlook 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 blockage of the Strait of Hormuz, along with Iran’s potential impact on oil production due to the conflict, could affect oil supply. Meanwhile, soaring freight costs also increase mainland China’s oil companies’ raw material costs, 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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