Zhongjin: In April, there is a high probability that the situation in Iran will continue to fluctuate. It is recommended to respond at three different levels.

4;;1);2);3) China International Capital Corporation (CICC) released a research report stating that in the short term, especially in April, the situation is likely to continue to fluctuate; in the medium term, the situation is still not out of control as the baseline scenario. Without considering the situation in Iran, the second quarter is a weak phase in China's credit cycle. It is suggested to address this in three levels: 1) for light positions, assets that reflect pessimistic expectations, such as Hengke, gold, and innovative drugs, can be deployed on the left side; 2) for heavy positions, positions can be moderately reduced, or low-volatility dividend assets can be used to hedge fluctuations; 3) assets that benefit from trends such as energy storage and coal can be held, but it is not advisable to chase excessively due to consensus convergence and crowded trades. Here are the main points from CICC: 1. According to EPFR data (as of Wednesday), active foreign capital outflows from Hong Kong stocks amounted to US$90 million (compared to outflows of US$330 million the previous week), and outflows from A-shares totaled US$110 million (compared to outflows of US$90 million the previous week). Passive foreign capital outflows from Hong Kong stocks amounted to US$670 million (compared to inflows of US$370 million the previous week), and outflows from A-shares totaled US$970 million (compared to inflows of US$820 million the previous week). Source-wise, there were more outflows from funds focused on China and non-Japanese Asian regions. 2. Southbound: Still fluctuating, with outflows on Monday and Wednesday and inflows on Tuesday and Thursday, totaling inflows of HK$5.37 billion (compared to inflows of HK$25.1 billion the previous week), with daily inflows averaging HK$1.34 billion (compared to inflows of HK$5.03 billion the previous week). The largest inflows were from Tencent (00700) and Xiaomi (01810), while outflows were from CNOOC, Hengke, and Alibaba (09988). The situation in Iran has entered its sixth week. After the initial rapid release of emotions, the market seems to have entered a relatively "stable" period in the past one or two weeks, but this calmness can easily be disrupted. Firstly, there are less than two days until the April 7th deadline for Trump's earlier postponed attack. Secondly, as time goes on, if the market realizes that the impact will gradually shift from "speculative concerns" at the emotional and trading levels to the "actual impact" on production activities, it will need to be repriced. For example, since the conflict erupted, profit expectations for US stocks and A-shares have actually increased by 4% and 1.5%, respectively. The downward revision in profit expectations for Hong Kong stocks is mostly due to the structure dragging down the industry itself, rather than being dragged down by high oil prices. This indicates that the pricing of the impact of profits on oil prices has not yet surfaced, which is also one of the reasons why equity markets have not fully priced in the pessimistic scenario. Looking ahead, April is a key juncture. In addition to whether the situation itself will escalate, attention should also be focused on the Southeast Asian region. Based on normal navigation speed estimates, oil tankers from various parts of East Asia are expected to enter a "real cut-off" state in early April. It is important to observe whether production activities in Southeast Asia, which is considered a "weak link," will be affected. If so, the market may quickly shift to recession trading. The US non-farm payrolls report for March released last Friday once again significantly exceeded expectations. However, upon closer examination of the internal structure, the data did not appear as strong as it seemed: 1) the recovery was mainly due to the fading of strikes and weather factors; 2) employment in the financial and information industries continued to decline, reflecting the negative effects of AI on employment adaptability; 3) wage growth rates have both fallen compared to previous periods. Therefore, for the Federal Reserve's decision-making, the trend in oil prices is still the main contradiction, and the marginal impact of this non-farm payrolls report is limited. As long as the conflict does not persist into the second half of the year, maintaining the central price of oil above $100, the Fed can still cut interest rates.