China Securities Co., Ltd. Major Asset Allocation Outlook for March: Short-term speculation in crude oil and gold, recommended US tech stocks.

China Securities Co., Ltd. released a research report stating that the recovery trades since the beginning of the year have been moderately reversed, with an increase in risk aversion. US Treasury bonds and precious metals have led the way, while crude oil has also received some support. US stocks, copper, and other risk assets have shown average performance. Geopolitical risks have become a core catalyst (US-Iran conflict), in addition to lower-than-expected US data, invalidation of IEEPA tariffs, questioning of AI technology impacting the tech sector, and concerns over the bankruptcy of UK financial institutions leading to worries in private credit, all of which have temporarily suppressed risk appetite. Looking ahead to March, there are signs of rebalancing among major asset classes in February. Previously lagging US Treasury bonds and crude oil have seen gains, gold and silver volatility has stabilized, and US tech stock valuation pressures have been relieved. Without major events, the market is expected to consolidate. However, the US-Iran situation has become a new source of volatility. Short-term speculation opportunities are seen in oil (insufficient pricing of US-Iran tail risks) and gold (time needed for gold catalyst post-geopolitical crisis). Additionally, US tech stocks are recommended as a left-hand opportunity with significant valuation pressure relief and great resilience after geopolitical easing. China Securities Co., Ltd.'s main points are as follows: 1. Review of major asset classes in February: Rebalancing under geopolitical disturbances The recovery trades since the beginning of the year have been moderately reversed, with an increase in risk aversion. US Treasury bonds and precious metals have led the way, while crude oil has also received some support. US stocks, copper, and other risk assets have shown average performance. Geopolitical risks have become a core catalyst (US-Iran conflict), in addition to lower-than-expected US data, invalidation of IEEPA tariffs, questioning of AI technology impacting the tech sector, and concerns over the bankruptcy of UK financial institutions leading to worries in private credit, all of which have temporarily suppressed risk appetite. 2. Important macro narrative clues (1) US-Iran situation: Escalation by both sides challenges the expectation of a short-term end to the conflict, with oil prices surging and Asia-Pacific stock markets leading the decline. (2) Invalidation of IEEPA tariffs: Limited short-term impact on economic trends, but demonstrates institutional constraints, reducing the risk of extreme Trump policies in the future (similar to the impact of last year's "tariff liberation day" in April), benefiting previously damaged assets like US bonds and the US dollar. (3) Mixed economic data, recurrence of banking risks with concerns about the recovery outlook and interest rate cuts. (4) Continuous questioning of AI, from capital expenditure to software ecosystems to employment impacts, leading to a combination of upward adjustment in profit expectations and downward compression of forward valuations in the US tech sector. 3. Outlook for major asset classes in March: Consolidation after volatility Overall trend: Looking ahead to March, signs of rebalancing among major asset classes have appeared in February, with previously lagging US Treasury bonds and crude oil making gains, gold and silver volatility stabilizing, and US tech stock valuation pressures being relieved. Without major catalyst events, the market may consolidate. However, the US-Iran situation has become a new source of volatility. The market's concerns about extreme scenarios have increased, with this weekend potentially being an important observation window. If there is a lack of clear signs of easing tensions, volatility may further amplify, and a moderately defensive strategy is recommended. Events to watch: Continued US-Iran conflict, Federal Reserve rate meeting, Trump's visit to China, post-Chinese New Year industrial demand (copper). Opportunities and suggestions: Crude oil: Market has priced in little of the tail risk of US-Iran conflict, allowing for moderate speculation. Gold: Limited price increase currently, but gold catalyst after geopolitical turmoil will take some time. US tech stocks: Left-hand opportunity with significant valuation pressure relief and great resilience after geopolitical easing.