CITIC Securities: Second Oil Shock Does Not Alter August Recovery Trend

CITIC Securities said this round of Middle East oil shock is no longer a smaller replay of the first round, but a second shock after the buffer has been exhausted. According to Jin10, the firm said the market’s most crowded trading structures were completely different across the two oil-price shocks, meaning the market will not simply repeat the second-quarter pattern.

CITIC Securities said the only relatively certain point is that the course of the Middle East war has become increasingly difficult to predict and the risk of prolonged conflict is rising, meaning the market will need to go through a period of lower risk appetite in the short term. It said negative events and narratives have already been reflected in the short-term, relatively extreme decline, and that the risk-de-rating process is nearing its end, with a high probability of broad rotation and recovery in August. It also remained constructive on convergence across three dimensions: upstream AI hardware and price-increase names versus downstream platform companies, domestic non-AI industrial stocks versus overseas peers, and technology versus non-technology.