Yesterday, Russia launched a “special military operation”, and the smoke of gunpowder rose sharply in Ukraine. The conflict between Russia and Ukraine not only triggered geopolitical turmoil, but also set off huge waves in the global capital market.
Affected by the escalation of the situation in Russia and Ukraine, the three A-share indexes fell across the board yesterday, and the gem index fell by more than 2%. However, the three indexes rebounded in varying degrees in the late trading. Affected by risk aversion, gold, crude oil and military concept stocks rose sharply. It is worth mentioning that the Russian stock market suffered a heavy blow yesterday. The Russian RTS index plunged 50% and closed down more than 38%. U.S. stocks rose after opening sharply lower. As of the close, the NASDAQ rose more than 3% and staged a major reversal in the session.
For the possible market impact of the Russian Ukrainian incident, securities companies also conducted a multi-dimensional analysis and interpretation. China Industrial Securities Co.Ltd(601377) pointed out that by summarizing the market performance after the occurrence of major geographical conflicts, it was found that the growth and cycle style were dominant in the short term, while the consumption performance was weak. With the passage of time, the consumption stabilized and the financial style was dominant. Western Securities Co.Ltd(002673) Yi Bin’s strategy team pointed out that several wars in the history of the resumption of trading can be found to have a limited impact on the medium-term trend of a shares. The dollar, gold and oil are more affected by the risk aversion before the war, which drives the price rise in the short term. In terms of time dimension, it is more the rise of asset prices in the brewing stage before and after the war, and then as the situation becomes clear, the prices of major categories of assets will return to the original trend.
China Industrial Securities Co.Ltd(601377) : short term growth and cycle style are dominant
From the perspective of historical law, in the first three trading days after the geographical conflict, the growth and cycle style usually performed better, while the financial and consumption style performed poorly. On the fifth trading day, the financial style began to dominate, the growth style gradually declined, and the cycle style continued to perform well.
Western Securities Co.Ltd(002673) : the war has a negative impact on the equity market in the short term and a limited impact on the medium-term trend
Resume the performance of five categories of assets during the seven wars since the Gulf War in 1990.
bonds: the long-term trend of US bond yields is basically consistent with the Fed cycle. Before and after the war, driven by risk aversion, the yield of 10-year US bonds was in the downward stage. In the long term, the trend of US bond yields ultimately depends on the Fed cycle.
equity: historical experience shows that the bull and bear that have not changed the equity market for a long time mostly have a negative impact on the equity market at the key nodes before and after the war. In terms of the impact on a shares, it is more conducted through US stocks → Asia Pacific market → A shares, and the impact of medium-term trend is limited.
US dollar, gold and oil: it is more affected by pre war risk aversion, which drives prices up in the short term. In terms of time dimension, it is more the rise of asset prices in the brewing stage before and after the war, and then as the situation becomes clear, the prices of major categories of assets will return to the original trend.
During the conflict between Russia and Georgia in 2008, asset prices had the following two characteristics:
1. In terms of impact degree, the impact on asset prices is more short-term impact, but the impact at the macro level is more significant. Compared with the other six wars, the Russian Georgian war lasted only one week, occurred suddenly, and had less and shorter impact on asset prices. In fact, because the Russian Georgian war was in the midst of the financial crisis, the macro impact was more significant.
2. From the perspective of asset impact differences, equity performance is more sensitive. The degree of influence is stock market > US dollar / gold / bulk. In terms of equity, Russia / US > A shares / Hong Kong shares. Russia and the United States, as the main participating countries and behind forces, are more affected by the war process; Hong Kong stocks and A-Shares were relatively limited. Russia and Georgia are in the process of financial crisis in 2008, but in the long run, the stock markets of all countries are in the process of bear market. The dollar, gold and crude oil continue their original trend more, and the risk aversion of war is not the main contradiction. Among them, the strength of the US dollar is more the “US dollar shortage” under the financial crisis; Gold is weakened in stages due to liquidity crisis; Behind the sharp decline in crude oil prices is the concern about demand in the context of the global financial crisis.
There are three characteristics of the stock market performance of bordering countries in the seven wars and conflicts since 1990:
1. The stock markets of neighboring countries have had negative impacts, mostly before and after the war and in the process of war. It can be understood that before the war, it has triggered regional unrest and had an impact on the economy and trade of neighboring countries, such as during the Syrian civil war.
2. The rise and fall of stock markets in neighboring countries are not closely related to the closeness of relations between major belligerents. The stock markets of neighboring countries do not show regular characteristics. One important possible factor is that even though the political relationship is relatively bad, the economic relationship is still relatively close due to the close proximity of regions.
3. The war trend is clearer and clearer, and the performance of the stock market is relatively obvious.
China Merchants Securities Co.Ltd(600999) : geopolitical factors will further exacerbate the global inflation trend
Russia launched large-scale military operations in Ukraine. In the short term, the global stock market will accelerate the shock, and the prices of safe haven assets such as gold, US dollar and Japanese yen will increase. International capital risk appetite declined, foreign capital withdrew from emerging markets, and the prices of stocks, bonds and foreign exchange in emerging markets suffered a greater impact. In the longer term, the current inflation situation is more similar to the oil crisis of the last century. Under the impact of supply, the risk of stagflation is higher after the continuous tightening of monetary policy.
At present, Russia has three demands on Europe and the United States: first, stop NATO’s eastward expansion and promise Ukraine not to join NATO; Second, implement the autonomy granted by Minsk agreement to Wudong region; Third, cancel the economic sanctions of western countries. Two of the above three demands are related to Ukraine. After the Zelensky government came to power, the contradiction with Russia on Ukraine’s accession to NATO and the autonomy of eastern Ukraine intensified.
Why did Putin choose to do it at this time? War needs money. After the covid-19 epidemic, global commodity prices rose sharply, and the CRB index hit record highs. As an important global exporter of energy, minerals and grain, Russia’s economy performed well after the epidemic. Its unemployment rate has fallen to the lowest point since the disintegration of the Soviet Union. In the third quarter of last year, GDP increased by 4.3% year-on-year, and the Russian central bank has raised interest rates by 100bp for three consecutive times Putin’s military superiority was quickly determined by his military strength.
Russia has both gains and losses on the Ukrainian issue, and there is no hope of the lifting of economic sanctions, but the security problem has been alleviated for the time being. Where is Putin’s phased goal? Ukraine’s return to the pro Russian position before the color revolution is at least the bottom goal of Russia’s big fight.
The situation in Russia and Ukraine is deteriorating rapidly. In the short term, the global stock market is bound to accelerate the shock, and the prices of safe haven assets such as gold, US dollar and Japanese yen will increase. With the decline of international capital risk appetite and the withdrawal of foreign capital from emerging markets, the price of stocks, bonds and foreign exchange in emerging markets is bound to be more impacted.
In the longer term, geopolitical factors will further exacerbate the trend of global inflation. The price of oil distribution has exceeded the $100 mark, and the price of natural gas has also risen sharply. Since the beginning of the year, the futures prices of oil and gas commodities have increased by nearly 30%, and Shenzhen Agricultural Products Group Co.Ltd(000061) prices are also accelerating. Europe bears the brunt of greater inflationary pressure, and the attitude of the European Central Bank may further turn eagle.
The U.S. inflation is also difficult to survive. Previously, the market had expected the global oil price to reach $120 this year, and the Federal Reserve will face greater inflationary pressure.
We believe that the current inflation situation is more similar to the oil crisis of the last century. Under the impact of supply, the risk of stagflation is higher after the continuous tightening of monetary policy. Europe and the United States are in a dilemma on the issue of sanctions against Russia.
Gf Securities Co.Ltd(000776) : geopolitical risk itself does not dominate the trend of the stock market
geopolitical risk itself does not dominate the trend of the stock market, but only has a structural impact. from the historical experience of geo risk on the stock market, if the original stock market trend is good, the adjustment caused by geo risk will bring buying opportunities. If the original stock market trend is negative, it will deepen the decline.
the two expectation differences in the “careful thinking and practice” of A-Shares have not been completely resolved in the medium term. 1) the tightening of the global liquidity gate is the main line of global assets this year. We are still relatively cautious about the Fed’s medium-term table reduction guidelines. The main goal of the United States this year is to reduce high inflation, and the geopolitical risks of Russia and Ukraine have even exacerbated global inflation expectations; 2) To give the market more confidence in China’s steady growth, we may need to solve two problems: will the real estate be greatly relaxed and whether there is a more positive attitude at the executive level? We believe that the stable growth sector has obtained an option similarly, and the bargain hunting layout is better. In the medium term, the strength of credit rebound is probably weak.
Is like 2016? the simple analogy of the crash without safety cushion at the beginning of the year is not comprehensive. What is more meaningful is that the market sentiment has changed from “excitement to freezing” (the three-year trend from 13 to 15 is similar to that of 19-21). After the crash in June 15, there was a rebound in the bull market in 15q4. After the circuit breaker in early 16, the fund issuance weakened, and the current round was cold in early 22 years. Since the issuance scale of funds usually lags behind the trend of a shares, if there is a lack of incremental funds in 22 years but the consumption of stock funds, we can draw a conclusion: the sharp decline in February this year is very different from that in February 21. Rising back requires greater marginal changes, and it will be more troublesome if the geopolitical risk deteriorates, It is also a good choice to wait for the logic of the difference between the two core expectations or the valuation to decline to a more attractive level. We maintain the view that the third quarter is the best time point of the year.
The year of 22 is a year when macro strategy drives the stock market. since the beginning of the year, the market has felt that the correlation between the changes of stock price and industry fundamentals is low. A shares are in line with the judgment of “the first pressure year of the slow bull on the financial supply side” in our annual strategic outlook. We did not include frequent geo risks in the benchmark scenario in our annual strategic outlook. The geopolitical trend dominated by the stock market will not accelerate, but it will not accelerate. In a market with stock consumption, new negative changes are easy to become a booster (the 18-year trade war boosted the deleveraging weak market).
geopolitical risks strengthen “careful thinking and practice”, and the rebound in the year of the tiger may die prematurely. if the situation in Russia and Ukraine eases periodically, it will provide a good opportunity to control portfolio risks. The geopolitical risks of Russia and Ukraine strengthen the “supply and demand gap” of global resources / raw materials. We transfer them into the portfolio to maintain the balanced allocation of high-low areas: 1 Resources / materials benefiting from the inflation logic of “supply and demand gap” (coal / aluminum / potassium fertilizer); 2. The intersection of “steady growth” and “double carbon new cycle” in low-lying areas (real estate / building materials / coal chemical industry); 3. Technology track stocks gradually agreed by PEG (new energy vehicle / wind power photovoltaic / digital economy).
Quick view of Figure 1: geopolitical conflict events and A-share trend in the 21st century
Taking history as a mirror: the impact of the six resumption wars on global asset prices, whether A-Shares have been affected?
Which A-share listed companies have business layout in Ukraine? Is it affected? Here comes the latest response
