Securities Morning Meeting Highlights | Geopolitical and oil price upside risks remain the main contradictions in current pricing.

Last Friday, the market fluctuated throughout the day, with a rapid decline in the closing time and the Shanghai index fell more than 1% during the day. The trading volume of the Shanghai and Shenzhen markets totaled 2.4 trillion. In terms of sectors, the chemical industry, wind power, and controllable nuclear fusion concepts performed well in terms of growth. On the downside, concepts such as computing power leasing and non-ferrous metals and tungsten performed poorly. At the close, the Shanghai index fell by 0.81%, the Shenzhen Component Index fell by 0.65%, and the Growth Enterprise Index fell by 0.22%. At today's securities morning meeting, Huatai believes that geopolitical risks and rising oil prices are still the main contradictions in current pricing; China Securities Co., Ltd. believes that a significant increase in gas prices is good for new energy; CITIC SEC believes in focusing on the current investment value of the construction industry. Huatai: Geopolitical risks and rising oil prices are still the main contradictions in current pricing Last week, A-share trading volume fluctuated. From the perspective of market trading structure and fund behaviors, risk appetite overall cooled down, and geopolitical risks and rising oil prices are still the core contradictions in market pricing. Looking ahead, in macro terms, short-term risks have not yet been completely released, global stagflation concerns are rising, domestic broad liquidity is abundant, but the sustainability of improvement in import and export and inflation data needs to be verified. At the micro level, global investors still have concerns about the disruptive impact of AI, and the most important financial report season for A-shares is coming up, with a focus on the AI chain and resources. At present, both macro and micro perspectives have low visibility, and it is recommended that investors reduce their positions and be flexible in their response. In terms of allocation, dig into alpha in the electricity chain (batteries, traditional energy, and operators) and essential consumer goods. In addition, in the upstream hardware of the computing power chain where valuation pressures are gradually dissipating and there are short-term catalysts, it is recommended to buy the leaders with high risk-return ratios on dips. China Securities Co., Ltd.: A significant increase in gas prices is good for new energy Looking back at the Russia-Ukraine war and its impact on sectors, the conclusion of adding new energy and power equipment is very clear. Electricity prices (anchored to natural gas prices) are the core contradiction of demand, far outweighing other factors such as cost and interest rate influence; new energy is an important choice for energy independence and control, and the new energy sector (mainly household energy storage in 2022) has shown the strongest performance after the Russia-Ukraine war, outperforming the Shanghai and Shenzhen 300 Index by a wide margin; the war between Russia and Ukraine led to a short-term tenfold surge in electricity prices, sparking a frenzy of reserve inventory sentiment in the market, and after a long process of de-stocking, this round of European responses to extreme situations should be relatively full, overall electricity prices and demand should rise moderately, compared to the impact of the previous Russia-Ukraine war, this time is expected to be more moderate and stable, and we are optimistic about new energy directions such as energy storage and offshore wind. CITIC SEC: Focus on the current investment value of the construction industry During the downward cycle in the construction industry, on the one hand, the competitive landscape has been optimized, and on the other hand, there has been a continued increase in the layout of the second growth curve. During the "13th Five-Year Plan" period, the industry's total demand is expected to see a bottoming out and a reversal, and with the industry's valuation overall at a relatively low level, the current sector has a dual investment logic of attack and defense: 1) on the attack side, companies that have already fully laid out in the secondary main business in the past few years are expected to be the first to see a revaluation of their value; 2) on the defensive side, some companies have seen a counter-trend increase in dividend payout ratios, while dividend yields are at a relatively high level. Maintain an "Outperform the Market" rating for the industry. This article is reprinted from "Caixin Global". Editor: Chen Xiaoyi.