Huatai: It is recommended to continue controlling positions and maintaining defensive allocations while waiting for a confirmation signal on the right side.

Huatai Securities believes that the recent increase in volatility in the AH market is directly attributable to the escalation of Middle East geopolitical tensions last week and the hawkish signals released by the US Federal Reserve during the FOMC meeting. The spread of "panic" sentiment has formed a negative feedback loop under the circumstances; at a deeper level, since Q4 2014, major asset classes have been on the rise under loose global financial conditions, and the market has not fully priced in the risk chain of "high oil prices leading to global stagflation leading to liquidity tightening" after the US-Iran conflict erupted, resulting in asymmetric risks in both directions. As of Monday, Huatai's A-share sentiment index has once again touched the panic zone, while the Hong Kong stock sentiment index remains in the pessimistic zone. Following a relatively full release of short-term sentiment, there may be oversold rebounds; it is recommended to continue to control positions and maintain defensive allocations until geopolitical tensions gradually clear up and the volatility and correlation of major asset classes return to normal levels, waiting for the right signals.