Yesterday, A-shares saw some minor, localized declines, but today it's a broad-based plunge. The CSI 500 index held firm yesterday, but then suddenly emptied its grip, falling 4.35%, a drop of 376 basis points. That translates to a loss of 75,000 yuan per lot on IC futures, and 1.5 million yuan for 20 lots. And that doesn't even include the losses from A-shares, Hong Kong stocks, and funds in my account…
Losing over a million yuan a day used to be uncommon, but now it happens every few days. I've figured there are two main reasons: First, bull markets often see long bearish candles; after a period of rising prices, a sharp, gaping drop will inevitably follow. Second, the base effect is larger after the market has risen. A drop of 376 basis points today would have been almost equivalent to a limit down two years ago when the CSI 3000 was over 4000 points. Damn, those drops hurt pretty much, especially considering I've already reduced my holdings.
Global stock markets plummeted today, with European markets generally down 2-4%, and Asian markets seeing South Korea drop 7% and Japan 3%. This sentiment has spilled over into our markets, causing panic among investors. Coupled with the sharp decline in gold and silver prices last night, and the pullback in the core non-ferrous metals sector, the situation became unsustainable.
Amidst the chaotic market downturn, those sectors that manage to hold up are those with clear benefits from the Iranian situation. For example, oil and gas exploration is expected to increase by 12%, and oil refining by 5%, which is something everyone anticipates. Iran is currently blocking the Strait of Hormuz, and will attack any unauthorized vessels attempting to pass, leading to a daily reduction of 15 million barrels of crude oil supply in the international market. Brent crude is currently priced at $83, up 14% from last Friday, and Goldman Sachs predicts that if the Iranian situation continues, oil prices could potentially rise to $120.
If it really reaches $120, then the oil and gas sector still has considerable room for growth. This is a gamble, but the advantage is that it is very transparent and fair, because the group of gamblers in China do not have the ability to get inside information about the US or Iran. You may lose your bet, but you won't be cheated.
Additionally, the gas sector rose 9.5% today due to the shutdown of gas production in Qatar, which caused European gas prices to surge by 50% last night. Like oil, this sector is directly affected by the situation in Iran. A Bloomberg news report today stated that the Chinese government has communicated with Iranian officials, urging them to avoid interfering with Qatari natural gas exports or attacking its energy export hubs (such as the Ras Lafan port). This is because Qatar supplies 30% of China's liquefied natural gas, and China is also Iran's largest buyer of oil exports; therefore, China's words carry considerable weight in Iran.
Not to mention the 4.8% increase in port and shipping revenue, the fact that Chinese state-owned enterprise merchant ships were still able to pass through the Strait of Hormuz in the past two days speaks volumes about their core competitiveness. I analyzed this over the weekend; the Houthi rebels have attacked nearly 200 merchant ships in the past, none of which were Chinese. This isn't a Wolf Warrior movie; the five-star red flag really works among Shiites.
Coal +3%, driven up by oil and gas.
Besides the above, the air raid shelter sector (banks, power, highways, railways) has also seen a slight increase in the past few days due to the inflow of safe-haven funds. This cannot be regarded as a style shift, but is entirely due to the squeeze caused by the sharp drop. As long as the market recovers later, these old sectors will most likely still be dragged down.
1. Natural gas prices continue to surge, rising from $31 to $44 yesterday and reaching $58 tonight, nearly doubling in two days. If prices don't fall back down later tonight, it will likely stimulate continued performance in the A-share natural gas sector.
2. The US special envoy for negotiations revealed details of the talks. The US proposed that Iran completely halt uranium enrichment within 10 years, in which the US would provide civilian nuclear fuel and cover the fuel costs. This proposal was rejected by Iran, leading the US to realize that Iran's aim was to retain its uranium enrichment capabilities for weaponization. The negotiations ultimately broke down.
3. The Financial Times published an article today detailing the assassination of Khamenei. It states that Israel had long possessed access to CCTV footage throughout Iran and, through data analysis, obtained a wealth of crucial intelligence. Khamenei had two fortified bunkers, but on Saturday he left one to attend a meeting at his office building. Before the attack, Israel consulted an Iranian informant in the US to confirm that Khamenei was indeed in a meeting before deciding to strike.
Simultaneously with the attack , Israel jammed approximately 12 mobile communication base stations around the target area, rendering any attempts to warn others futile. Israel launched 30 Sparrow missiles, capable of hitting a dining table from 1000 kilometers away.
Israel and the United States had the opportunity to kill Khamenei before, but Trump vetoed it at the time. This time, the decision to take action was based on political considerations on both sides, who believed that his death would be more beneficial to the situation.
4. Domestic SC crude oil futures contracts continued to hit the daily limit when they opened tonight, fuel oil contracts also hit the daily limit, methanol rose 8% in overnight trading, and other chemical products also rose significantly.
Today is the Lantern Festival, a traditional festival that I had a strong sense of childhood, but which has gradually faded and disappeared. Traditionally, the Lunar New Year celebrations weren't considered truly over until the Lantern Festival, but nowadays, most working people's holidays only last until the seventh day of the first lunar month, so the Lantern Festival becomes less important amidst their busy work lives.
When I was a child, there was an important event during the Lantern Festival: a grand parade of floats would be held in the county town. At the very front of the procession was a traditional dragon dance, followed by huge lanterns made by local businesses, which were then mounted on trucks and slowly drove by one after another. The procession started from Jinshan Road and ended at Huipu Road, circling the two main roads of Linhai City.
That night, the entire county town turned out in droves, with hundreds of thousands crowding the roadsides. People even climbed onto buildings and trees to see the lantern parade. Being in elementary school, I was too short, so to see the floats, I had to squeeze to the front, and several times I was pushed so hard I couldn't breathe. Looking back, it was really dangerous; the crowd was chaotic, and if someone had been pushed over, there probably would have been a stampede.
I asked Doubao to draw based on my description above. We went through four versions, and I offered some suggestions for improvement. The final drawing is 90% accurate in capturing my childhood memory. Did you have similar experiences when you were little?
I stared at the picture for a while, feeling so nostalgic. Happy Lantern Festival everyone! 
Original Article: View Chinese Version
