Zhitong Decision Reference | The Middle East conflict has erupted again, and the market inertia will trend towards gold and oil prices

The US-China negotiations have come to a favorable pause, while new conflicts have erupted in the Middle East. The Hang Seng Index closed last week with a bearish doji star.

Currently, the conflict between Iran and Israel continues, with Iran's nuclear program headquarters being attacked and multiple locations in Israel being hit by Iranian missiles. The Iranian president stated that if Israel continues to attack, there will be no US-Iran negotiations.

This week, the market is focused on the Iran-Israel conflict. According to general expectations, both sides are not expected to escalate into large-scale conflict, as both the US and Russia are actively mediating behind the scenes. Trump and Putin had a phone call, stating that the Iran-Israel conflict must end. Putin emphasized the importance of preventing the escalation of the conflict and expressed Russia's willingness to mediate between the two countries. Trump pointed out that the US negotiating team is ready to resume talks with Iranian representatives. The current conflict is primarily driven by Israel, and the US also has motives to shift domestic contradictions. However, the duration of the conflict is difficult to predict, and attention should be paid to the 3.6% plunge in the Saudi benchmark index. The significant drop in the Saudi stock market indicates that investors are worried about the potential spread of the conflict. An important observation point is whether the Strait of Hormuz will be blocked, as this will determine the trend of oil prices.

On June 19, the Federal Reserve will announce its interest rate decision. The rise in oil prices has led to a sharp decline in expectations for a rate cut in June, so we will see how the dot plot and outlook will look at that time.

A market turning point may be observed at the Lujiazui Forum held in Shanghai from June 18 to 19. It is reported that leaders from the People's Bank of China, the National Financial Regulatory Administration, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and the Shanghai Municipal Government will speak at the forum. During the forum, central financial management departments will also release several major financial policies. The market has certain expectations for this, and we will observe whether there are any new developments.

In this uncertain phase, the market inertia will lean towards gold and oil prices. Of course, it is necessary to grasp the direction of the conflict.

In terms of hotspots, the 55th Paris International Air and Space Show (Paris Air Show) will be held from June 16 to 22, 2025, at the Bourget Exhibition Center in the Paris region of France. Pay attention to military orders.

The China-Central Asia Summit will be held on June 16-17 in Kazakhstan. Combined with the Lujiazui Summit, let's see if there will be any unusual movements in cross-border e-commerce.

State Council meeting: further optimize existing policies, and push harder to stabilize the real estate market. Last week, there was good news about Guangzhou fully opening up real estate, so we will see if there are larger policy pushes in the future.

【This Week's Golden Stock】

MicroPort Robotics (02252)

Futu expects that the company, driven by its core growth engine, the Toumai laparoscopic surgical robot, will achieve a compound annual growth rate of 43% in revenue from 2025 to 2030. MicroPort Medical Robotics is expected to: become the biggest winner in China's booming surgical robot market; rapidly expand into overseas markets with cost advantages and comparable functionality; and narrow the technological gap with the Da Vinci system through AI algorithm upgrades.

Toumai will become the biggest beneficiary of the imminent explosion in China's surgical robot market. Futu predicts that by 2030, the market for laparoscopic surgical robots in China (covering equipment, consumables, and services) will reach 11.2 billion RMB, with a compound annual growth rate of 21% over the next five years. With policy support, the procurement quota for surgical robots during the "14th Five-Year Plan" period will significantly increase from 225 units during the "13th Five-Year Plan" period to 559 units; It is expected that during the "14th Five-Year Plan" period, more than 1,200 units will be exceeded. Tumai may benefit the most due to: 1) its functions are comparable to the Da Vinci system; 2) from the perspective of hospital budget management, the payback period for the initial investment is only about 3.1 years (compared to about 6.5 years for the Da Vinci system); 3) actively expanding into overseas markets with cost advantages and comparable functions.

Currently, only about 2% of surgeries globally use robotic systems, and the market is mainly monopolized by Da Vinci. Tumai is steadily expanding overseas, relying on the global network established by its parent company, MicroPort, on one hand; on the other hand, it has cost advantages in non-U.S. markets. According to Jefferies' expectations, by 2030, Tumai's market share in non-U.S. markets will reach about 3%, with a five-year compound annual growth rate of 37%.

In addition, AI algorithm upgrades help narrow the technological gap with Da Vinci. With the rise of companies like DeepSeek, domestic large language models and AI algorithms are continuously upgraded, and their application advantages in vertical fields are becoming increasingly prominent. This helps Tumai further enhance its multimodal perception capabilities; improve intelligent decision-making and risk assessment capabilities, further assisting doctors in preoperative preparation; additionally, it narrows the gap through precise control and shortening the learning curve.

【Industry Observation】

Focus on the subsequent impact of the Israel-Iran situation on shipping stocks.

In terms of oil transportation: Depending on the intensity of the war, if Iranian crude oil exports are interrupted, its heavy oil may exit the market (about 1.8 million barrels/day, corresponding to a 5% demand increase), and VLCC freight rates will skyrocket; subsequent focus: 1) whether Iran's oil and gas will accelerate negotiations with the U.S. after being attacked; 2) Iran's nuclear weapons process; 3) U.S. intervention (the probability of the latter two is low).

In terms of bulk cargo, there are no major contradictions in supply and demand throughout the year. In the short term, the surge in Australian iron ore at the end of the fiscal year is coming to an end, and the spot market may experience a downward fluctuation.

In terms of container shipping, the sentiment catalyzed by the Israel-Iran situation is the main factor, with limited substantive impact, focusing on the impact of capacity returning to the U.S. routes.

In the Hong Kong stock market, key attention should be paid to COSCO Shipping Energy (01138) (oil transportation leader) and Seaspan Corporation (01308) (mainly container shipping).

【Data Monitoring】

The Hong Kong Stock Exchange announced that the total number of open contracts for the Hang Seng Index futures (June) is 118,978, with a net open interest of 46,919 contracts. The settlement date for the Hang Seng Index futures is June 27, 2024.

Israel's raid on Iran has triggered a Middle East crisis, as Iran is the world's third-largest oil exporter, so its decisions on oil production have an impact on global supply and demand. The U.S.-China trade negotiations have not provided details, with the index at 23,893 points, the bull certificate concentration area close to the central axis, and the bear certificate concentration area deviating. This week, the Hang Seng Index is bearish.

【Editor's Remarks】

Since the beginning of this year, as of June data, southbound funds have net inflows of over 600 billion yuan. Although there has been a recent slowdown, it is still a continuous net inflow. In terms of foreign capital, active foreign capital has still been in a net outflow state this year. However, with the continued weakening of the U.S. dollar, global funds are beginning to lose confidence in U.S. dollar assets. Against the backdrop of stability in the East and fluctuations in the West, the Hong Kong stock market is expected to become a new important allocation choice for global funds This is essentially similar to the nature of buying gold, which is to avoid the risk of dollar depreciation.

However, in the current Hong Kong stock market, sectors such as innovative drugs and new consumption have seen significant recent gains, and there is strong fund clustering, creating a need for adjustment. Due to the recent Israel-Palestine conflict, the Hong Kong stock market may experience fluctuations and adjustments, and these sectors that have previously risen significantly may see noticeable pullbacks. It is advisable to appropriately reduce positions to avoid risks