GF Securities: Aside from the US-Iran relationship and high oil prices, which industries will be able to maintain high levels of independence and prosperity in the future?

GF SEC released a research report stating that the current overseas AI chain, such as optical communication, will deepen its visibility by 2027, and it is still a definite prosperous direction and the main position of current institutions. However, it is relatively linked to the changes in the Middle East war, and short-term volatility is still difficult to control. Referring to the experience of the science and technology network, if the economic trend is relatively insensitive to geopolitical tensions and high oil prices, then regardless of how the US-Iran situation unfolds, there should be a configuration advantage. Therefore, from the perspective of controlling portfolio volatility and hedging, the bank recommends that in addition to overseas computing power, continue to allocate two fundamental directions that are trending upwards and less affected by oil prices: energy storage chain (inverter/lithium battery chain), and domestic AIDC chain (especially byte chain). GF SEC's main points are as follows: 1. 1999-2000: The impact of the Kosovo War on the science and technology network In last week's report, the bank focused on discussing the impact of the 1999 Kosovo War - oil price increase - US inflation - US Fed rate hikes on the US market and the science and technology network. The key conclusion is that the rise in oil prices brought about by the war boosted inflation, with the Dow Jones Industrial Average being temporarily suppressed in the third quarter of 1999, and falling after reaching its peak in January 2000. Meanwhile, the Nasdaq technology network showed stronger performance, without being affected by tightening, and the peak of the bubble lagged behind the US Fed's first rate hike by 9 months. 2. 1999-2000: Historical evidence that independent industries with high prosperity can temporarily overcome high oil prices and rate hikes (1) Denominator: The Kosovo War triggered liquidity tightening In early 1999, OPEC cut production + the Kosovo War (March 1999-June 1999) caused oil prices to rise from $10 per barrel to over $30; the US Fed resumed its rate hike cycle in June 1999, raising rates 6 times by May 2000, resulting in tightened liquidity in US stocks. (2) Numerator: High prosperity expectations supported by the Y2K computer turnover tide The Y2K narrative fermented from 1996 to 1998, with mainstream media propaganda, US Congress records, presidential speeches, financial, medical, military, and government systems prioritizing the repair of hardware and system bugs, resulting in a boom in orders for the science and technology network industry chain in 1998-1999. The corresponding performance of the science and technology network in 1999: Dell's net profit growth rate was 55%, Microsoft 73%, IBM 22%, Intel 21%, all maintaining high growth or significantly accelerating from 1998. There was market expectation that with the arrival of 2000, the turnover tide brought about by system crashes would continue. (3) Market performance in 1999: High growth of fundamentals, overcoming liquidity tightening, bubble valuation of the science and technology network The EPS growth rate of the Nasdaq 100 index (leader) in 1999 was 60%, corresponding to a PE (TTM) of 95x and a dynamic PE of 65x. 1999 was a year of increased bubbleization in the science and technology network, due to expectations that the arrival of the millennium would further drive the turnover cycle of small businesses/individuals. The prosperity of the science and technology network's performance overcame the impact of rising interest rates, and the Nasdaq hit a new high. (4) Market performance in 2000: When fundamentals deteriorate, the last straw can also break the camel's back The Y2K bug did not occur, and the media accused it of being a "century hoax" fabricated by technology companies. The peak of the science and technology network in March 2000, apparently burst by the "Microsoft antitrust" issue, was actually a negative spiral of fundamentals. Companies early investment in turnover/system upgrades depleted the industry demand for the next 2-3 years, resulting in a large number of misses in the financial data disclosed by the heads of the science and technology network in March-April 2000, and some .com companies began to go bankrupt. By the end of 2000, the inventory of US computer and electronic products had reached historically high levels, further suppressing future performance. By 2001, the profit growth rate of the Nasdaq 100 index had dropped from 60% in 1999 to -50%, and the myth of the science and technology network came to an end. 3. Back to the present: Apart from geopolitical tensions and high oil prices, which industries are likely to maintain independent high prosperity in the future? Currently, overseas AI chains such as optical communication will deepen their visibility by 2027, and they are still a definite prosperous direction and the main position of current institutions. However, they are relatively linked to the current changes in the Middle East war (oil prices US interest rate environment US AI domestic supply chain), and short-term volatility is still difficult to control. Referring to the experience of the science and technology network in the past, it is currently seeking industries that can maintain independent high prosperity in the future. If the economic trend is relatively insensitive to geopolitical tensions and high oil prices, then regardless of how the US-Iran situation unfolds in the next stage, there should be a configuration advantage. Therefore, from the perspective of controlling portfolio volatility and hedging, the bank recommends continuing to allocate two fundamental directions that are trending upwards and less affected by oil prices, in addition to overseas computing power: the energy storage chain (inverter/lithium battery chain) and the domestic AIDC chain (especially the byte chain). Risk warning: Geopolitical risks, overseas inflation risks, low expectations for domestic stable growth policies, etc.