Soochow: Beware of the chain reaction brought by the "prolonged conflict". It is suggested to divide the technology + energy holdings into three response paths.

Soochow releases research report stating that based on historical reviews since 2015, the impact of geopolitical events on major asset classes is often short-term disturbance, which can be fully absorbed by the market on a weekly basis and will not become the core factor influencing the trend of major asset classes. However, the Russia-Ukraine conflict in 2022 broke this common rule, with the conflict evolving beyond expectations into a "prolonged war," causing oil prices to rise in the medium term and subsequently forming a new transmission path for A-shares: rising oil prices - input-type inflation expectations - marginal tightening of Federal Reserve policy - deteriorating US dollar liquidity - downward pressure on A-shares. The transmission path of this conflict to A-shares may have some similarities with the Russia-Ukraine conflict. Soochow's main points are as follows: The trends in the technology industry and liquidity environment in 2026 are somewhat similar to those in 2022. In terms of industry trends, during the Russia-Ukraine conflict in 2022 and the escalation of the Middle East situation in 2026, both core technology growth tracks faced the pressure of growth momentum not matching capital expenditure. The new energy industry transitioned from a period of rapid growth to maturity in 2022, with a slight weakening in prosperity. The penetration rate of AI Agents is rapidly increasing, but the downstream application in the real economy has not yet been scaled, the complete commercial cycle has not been fully implemented, and investors question whether the high expenditure on upstream computing hardware can realize profits. In terms of liquidity, 2022 and 2026 are both in a transitional period of switching to a high level of liquidity. 2022 marked the start of the Federal Reserve's rate hike cycle, shifting from extremely loose to rapid tightening of liquidity. This was primarily due to the excess liquidity brought about by the massive fiscal subsidies in the United States after the epidemic, coupled with the impact of the Russia-Ukraine conflict on energy and food supply driving inflation to rise "accelerated." In 2026, at the tail end of an easy cycle, absolute interest rates remain high. The high fiscal deficit exerts continuous upward pressure on inflation, while geopolitical factors will further disrupt inflation expectations, or even directly lead to a pause in the rate-cutting process. How did the market evolve in 2022? What insights does it bring? At that time, the core of the market evolution in 2022 can be divided into three stages, and the market evolution rhythm in 2022 can provide important insights for the present: First, if the impact of this oil price change on inflation can be compared to that of 2022, then the upward trend in oil prices may trigger a reexamination of the logic of technology growth stocks in the market, putting pressure on them. Second, the transmission of the upward trend in oil prices to inflation expectations and rate hike expectations is not "immediate." Coupled with the complex impact of multiple factors specific to the A-shares market, the market's trading based on this logic may present stages of focus and retracement. In this process, the direction of industrial trends may still give rise to temporary excess return opportunities due to structural logic, such as the market trends of energy metals and photovoltaic inverters in May-June 2022. Current market stage, core contradictions, and response strategies From a medium to long-term perspective, it is necessary to be vigilant about the chain reactions brought about by the "prolongation of conflict." The complexity of this round of situation has exceeded expectations, the actual direction of the war may exceed the expectations of the US, as well as the mainstream judgment of the market before. Therefore, it is necessary to consider in advance a possibility: what impact will a long-term conflict like the Russia-Ukraine war have on the market? Especially considering the industry trends and liquidity environment in which the current market is located, sharing many similarities with 2022, it is even more important to be vigilant about the cumulative disturbances and potential risks that may be brought about by this long-term conflict. Of course, this is only the most malignant scenario, not necessarily the benchmark judgment. The core is still to make risk assessment and response preparations in advance. Drawing parallels with 2022, oil prices will become the core pricing contradiction in the subsequent market. In the past, the market was in an environment of a weak US dollar, optimism about rate cuts, and clear industry trends. If oil prices continue to rise in the future, it will break the pattern of a weak US dollar, and even force policies to tighten again. If the US dollar returns to an upward trend, it will exert significant suppression on the market, especially on growth stocks. At present, although Trump has publicly stated his expectations to stabilize oil prices, and as the US midterm elections approach in the second half of the year, the tolerance for further inflation is low, the actual control over the situation and the determination and energy to control oil prices still need to be observed. In the medium term, the fluctuation of this core variable of oil prices has not yet converged, so it is necessary to pay close attention to the war situation and the changes in oil prices. In terms of strategy response, the core is to observe the trend of oil prices, and it is recommended to divide it into three paths: 1) Neutral strategy using technology + energy hedging. If the conflict does not get out of control and oil prices remain volatile, the "HALO trading" at both ends is expected to have advantages, namely focusing on AI industry hard technology "new infrastructure" and resource sectors. 2) Hedge strategy reduces the proportion of technology allocation. If the prolonged conflict leads to continued blockage of the Strait of Hormuz and high oil prices, it will break the pattern of a weak US dollar. Coupled with the pressure of growth momentum not matching capital expenditure faced by the AI industry, technology stocks may face adjustments. 3) The aggressive strategy maintains the technology position. If oil prices rise rapidly and it is expected that the United States will "take action to suppress," then a strategy of "oil price fallrestoration of rate cut expectationstechnology rebound" can be pursued. Risk warning: Economic recovery pace slower than expected; policy implementation slower than expected; geopolitical risks; overseas policy uncertainties, etc.