Iran Conflict Enters Fifth Week, Market Impact Remains Uncertain

According to Jin10, a research report by China International Capital Corporation (CICC) highlights the ongoing complexity of the Iran conflict, now in its fifth week. The situation has evolved beyond initial market expectations, with a resolution still distant and the path to de-escalation fraught with potential setbacks. Investors are primarily concerned with whether the market has reached a bottom. To address this, it is crucial to assess whether the situation will escalate further. Even amid uncertainty, asset pricing can be evaluated for adequacy. Additionally, pricing differences across various assets and industries can lead to distinct value propositions. CICC identifies April as a critical period to determine if financial market disturbances will translate into tangible economic impacts. In terms of asset pricing, bonds, gold, and copper are viewed pessimistically, while equity markets generally underprice pessimistic scenarios. The report advises a strategic approach: investing in adequately priced assets, holding beneficial assets without chasing high prices, and using low-volatility dividends or reducing positions to hedge against market fluctuations.