Author: Grandpa Cai, Editor: Xiaoshimei
The military conflict between Russia and Ukraine that broke out on Thursday caused investors' panic to rise sharply, and global stock markets fell sharply this week.
As a general decline, some industries have actually seen a counter-trend rise.
First of all, it is naturally the gold sector. As one of the most important safe-haven assets, gold prices are often prone to sharp rises in a panic environment, and the performance of gold manufacturers will naturally benefit.
In addition to gold, the most important resource products of all parties in the conflict have also brought short-term stimulation to the A-share market -related industries due to concerns about supply shortage in the tension.
For example, crude oil: Although Russia's oil production and reserves do not have an advantage in the world, it is the world's second largest oil exporter. In 2019, its oil export volume reached US$121.4 billion, accounting for 12.1% of the global oil export share, which has a huge impact on international oil prices.
This week, the Brent crude oil futures contract reached the USD 100/barrel mark, setting a new high since September 2014, driving the oil mining industry to rise sharply.
▲A-share oil and gas mining concept weekly chart, source: Tonghuashun iFinD
For example, potassium fertilizer : Belarus potassium fertilizer accounts for nearly 20% of the global potassium fertilizer exports, and in 2021, China's potassium fertilizer imported from Belarus account for 23% of China's total imports. However, as the object of Russia's game with the West, Belarus is also the target of sanctions by the West. If its exports are restricted in the future, domestic potassium fertilizer prices may rise further.
▲A-share potassium fertilizer concept weekly chart, source: Tonghuashun iFinD
For example: aluminum: Rusal is the largest electrolytic aluminum manufacturer outside China. In 2021, aluminum production accounts for 5.6% globally, and alumina production accounts for 10.7% globally. The recent price of London aluminum has hit a new high, which is related to the market's concerns about the US sanctions on Rusal, and has also stimulated the rise of domestic aluminum companies.
For example, agricultural products such as corn and wheat: Russia and Ukraine are both important agricultural products exporters in the world, among which Russia is the world's largest wheat exporter, with a global share of about 17%. Ukraine is the world's fourth largest corn exporter and the fourth largest wheat exporter, accounting for 16% and 12% of the global export share, respectively. Corn exported to China accounts for 27% of China's total corn imports. In addition, Ukraine's sunflower oil exports account for half of the world's total, barley exports account for 18% of the world's total, and 64% of China's sunflower oil imports and 28% of barley imports also come from Ukraine.
The conflict between the two important agricultural product exporters may have a certain impact on my country's agricultural product supply in the short term, and domestic related companies will also be stimulated to a certain extent.
As for , the conflict between Russia and Ukraine, whether will cause a greater impact on the global capital market in the future, it mainly depends on whether the situation will expand to a larger range. is obviously very low at present.
During the Cold War, the United States and other Western countries and the former Soviet Union also had confrontations between Cuban missile crisis and Berlin crisis , but in the end they showed enough restraint. The current environment has eased much more than when Cold War . The possibility of direct conflict between nuclear powers is even more vague.
In fact, the United States and NATO have stated that they will not send troops to Ukraine to fight against Russia. In the future, the possibility of a conflict between Russia and Ukraine is ending through negotiations is very high.
Historically, as long as it is not a full-scale war or a small-scale local conflict, the impact on global stock markets is actually not that great. Several local wars that have occurred since the 21st century, such as Afghanistan War , Iraq War , Syrian Civil War , etc., the global capital market has experienced a brief decline in the initial stage. The entire war stage generally has "more rises, less falls", and the median increase of in the stock market is far higher than that of the commodity market.
The most valuable thing is the last tension in Ukraine, which happened from January 9 to September 5, 2014.
In the initial stage of the outbreak of the conflict, the global capital markets experienced a certain degree of decline, while the crude oil, gold and commodity index showed a significant increase, but it took a long time to the entire Ukrainian crisis, that is, from the beginning of the conflict to the final peaceful resolution, the major stock market indexes performed well, A-share Shanghai and Shenzhen 300 rose 12%, Hong Kong stock Hang Seng Index rose 9%, US stock S&P 500 rose 9%, overall, performing better than conflict-benefiting industries such as commodity .
Since the overall impact of local conflicts is not great, it is still the factors that determine the trend of the capital market.
The US stock market has fallen a lot recently, which is fundamentally determined by its own economic cycle , currency cycle and valuation cycle.
The US stock market has experienced a long-term rise, and its current valuation is at a historical high, and there is a certain valuation bubble in itself; and the current high growth of the US economy is accompanied by high inflation , which belongs to the economic overheating stage. At the same time, it is also facing the pressure of tightening monetary policy , and may enter the stagflation stage with high inflation and low growth in the future.
In other words, US stocks face downward risks from both the valuation and profits. Even if there is no conflict between Russia and Ukraine, there is a greater risk of adjustment.
Compared with US stocks, after experiencing the decline at the beginning of the year, the current valuation advantages of A-shares are very obvious. Even if the economic growth rate may decline this year, it is still very prominent among major countries around the world. In addition, China's monetary policy is relatively loose, A-shares will be very attractive in the global capital market in the future.
In other words, China's major cycles are not synchronized with the United States. Even if the US stock market continues to decline sharply, A-shares will be less affected by it. If A-shares fall sharply across the board in the future due to international geopolitical conflicts or panic in the peripheral market, it may form an important "gold pit".
As Buffett said, the panic caused by bad news in is the best friend in the long run. Especially for those high-quality assets, the valuation is always high. Only when the market encounters a systemic crisis can investors be provided with better opportunities.
▲Wander A valuation trend, source: Wind
Central Document No. 1, released this week, , still focuses on ", rural issues, , rural issues, ", which is the 19th consecutive year of central document No. 1, which has focused on "agriculture, rural issues," since 2004.
This year's No. 1 document is to raise the strategic position of food security to a rare level. even gave specific digital evaluation indicators, showing some urgency of China in building food security.
Obviously, the decision-makers are clearly aware that the more complex and turbulent the international situation is, food security, as the foundation of national stability, will show its importance.
In the long run, as the strategic position of food security is increasing, investment opportunities in related industrial chains are also worthy of attention, especially the shortcomings in my country's grain production, which may have greater room for growth in the future.
For example, in the field of agricultural machinery, the gap between my country and abroad is very huge.
We use the data from before the epidemic to compare it. In 2019, John Deer, the world's largest agricultural machinery manufacturer, had revenue of more than US$37.3 billion and net profit of US$2.36 billion. In the same year, my country's large-scale agricultural machinery companies had revenue of 246.467 billion and industry profit of 10.339 billion. The total revenue of the six listed agricultural machinery companies was 11.39 billion and net profit was less than 1 billion.
In other words, according to the exchange rate in 2019, the revenue and profit scale of thousands of agricultural machinery companies in China is not as good as that of a company in the United States. The performance of A-share agricultural machinery listed companies is extremely huge compared with John Deere.
The same is true for the gap in seed industry.
In the revenue rankings of the top ten seed giants in the world in 2019, only Longping Hi-Tech was shortlisted, and its revenue of about US$500 million is less than 1/20 of Monsanto . Some people have estimated that the total sales revenue of about 5,800 local seed companies in China is only equivalent to that of Monsanto.
Ga gap means growth space, and huge gap means huge growth space.
China has a strong government, strong resource integration capabilities and policy execution capabilities, and has sufficient experience in catching up in economy and industry. We have sufficient reason to believe that China's backward situation in agriculture will gradually ease with the advancement of rural revitalization, and the food security problem will eventually be solved.
After the No. 1 file comes out, A-shares will enter the two sessions time next week.
From the current policy direction, in addition to food security, issues such as infrastructure, pension, fertility, digital economy are likely to become hot topics of this year's Two Sessions, and it is not ruled out that further favorable policies will be introduced.
Under the expectation of favorable policies, after the panic caused by the war gradually weakens, the market environment facing A-shares may improve significantly next week.
Disclaimer
This article involves content about listed companies, and is a personal analysis and judgment made by the author based on the information disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.); the information or opinions in the article do not constitute any investment or other business advice, and Market Value Observation shall not bear any responsibility for any actions arising from the adoption of this article.
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