CICC: It is recommended to take a contrarian approach and allocate to fully-priced assets, using low-volatility dividends or reducing positions to hedge against market fluctuations.

Golden Ten Data reported on April 4 that China International Capital Corporation (CICC) released a research report. The Iran conflict has entered its fifth week, with developments becoming more complex than initially expected by the market. There is still a considerable distance to true de-escalation, and the path to easing tensions is likely to experience repeated twists and turns. At present, the key question for investors is: has the market “bottomed out”? To answer this, firstly, one must observe whether the situation is escalating. Secondly, even if the outlook remains unclear, it is possible to assess whether asset pricing has become sufficiently adjusted. Furthermore, the pricing differences among various assets and industries will result in significantly different “value for money.” In our view, April marks a critical point to determine whether the “paper disturbances” in the financial market will evolve into “actual shocks” affecting real production. In terms of asset pricing, bonds, gold, and copper remain relatively pessimistic; equity markets, in general, have not fully priced in negative scenarios. In terms of allocation, we recommend positioning early in assets that have been sufficiently priced, holding beneficial assets without chasing highs, and hedging volatility with low-volatility dividends or by reducing positions.