The real TACO has not arrived yet. Zhang Yidong's latest view: Hong Kong stocks A-shares have a chance to hit new highs for the year in the second half of the year.

Source: Zhang Yidong Strategy World

As the situation in the Middle East evolves in a complex manner, capital markets have begun to fluctuate dramatically, leaving many investors at a loss. On March 25, Zhang Yidong, a member of the Executive Committee and Chief Economist at Haitong International, clearly expressed his latest views on market trends and the current strategies to respond during a live broadcast on Sina Finance.

Zhang Yidong pointed out that the U.S. has been making continuous statements lately in an attempt to cool the situation and reassure capital markets, but the “marginal effect is diminishing.”

The real TACO has not yet arrived. A true ceasefire requires observing the domestic situations in the U.S., Israel, and Iran.

From the U.S. perspective, nearly 40% of the population still supports the war.

Military spending has not yet reached a point of depletion, and the adjustments in the capital market have not made Trump “desperate.”

From Iran’s perspective, the weapons stockpile is beyond expectations, and it is far from the time to sign a “capitulation agreement.”

From Israel’s perspective, Netanyahu’s unprecedented constraints on Trump have become a new uncertainty.

He believes that the real TACO could come as early as April or as late as June.

The indicators would be the withdrawal of U.S. aircraft carriers or the achievement of a ceasefire agreement, at which point investors may increase their risk appetite.

However, one must also be wary of low-probability events, such as the U.S. deploying large ground forces, which would escalate the crisis on a semi-annual or even annual scale.

Regarding asset allocation, Zhang Yidong emphasized that hard assets will rise, with the core logic being safety.

The strategic attributes of energy are systematically increasing.

Gold has entered a strategic opportunity period; at this price level, should one buy oil-related assets or gold-related assets?

There is no doubt that if considered today, it would definitely be gold.

Gold at over $4,000 per ounce presents an opportunity both tactically and strategically.

In addition, strategic minerals like copper, aluminum, and rare earths are trending towards increased reserves among various countries in the context of great power competition.

Zhang Yidong pointed out that whether in A-shares or Hong Kong stocks, the fluctuations since the beginning of the year belong to the category of “when the city gates catch fire, the fish in the moat suffer.”

This does not change the medium- to long-term trend, and there is hope for new highs in the second half of the year.

In terms of allocation priorities, before a ceasefire, gold, energy, and resources should be the top choices;

After a ceasefire, among safe assets, it is recommended to only retain gold,

While other options can consider high-tech, hard technology, and advanced manufacturing.

Investment Report (liulishidian) has compiled highlights from Zhang Yidong’s sharing as follows:

The U.S. keeps making statements

In an attempt to cool the situation

In recent days, the U.S. has been making various statements, trying to cool the situation.

To some extent, it is also an attempt to rescue the market with words; Trump has been posting various tweets.

One moment he says talks with Iran are going well, and the next he claims he is seeking congressional approval for an additional $200 billion in military spending,

And he even suggests the possibility of sending ground troops to attack Iran’s Khark Island,

It seems a bit contradictory; perhaps he wants to “pressure for peace.”

However, the real TACO, we believe, has not yet arrived.

We don’t just “listen to his words,” but more importantly, “observe his actions,”

In fact, we need to pay attention to what he hasn’t mentioned, which may be more important than what he has said.

This means that what Trump is saying now is all about calming the capital markets,

Giving everyone some imagination, trying to influence the capital markets through words, like in 2025.

But this scene shows “diminishing marginal effects,”

People are gradually getting used to Trump’s verbal TACO, considering him deceptive.

On the contrary, compromises that are put into action are what truly help investments in capital markets.

Real ceasefire signals

Need to observe the U.S., Israel, and Iran

So when might a real ceasefire occur, or when might there be some substantial cooling of the situation in the Middle East? We think several factors should be considered.

The first aspect is the pressure situation within the U.S.

Currently, nearly 40% of the U.S. population supports this war.

At the same time, we also see that U.S. military spending may continue for a while.

Even if the new $200 billion military spending is not approved, they can still fight for a while longer.

For the U.S., it is not yet at the point of depletion.

Now looking at the U.S. capital markets.

Although the decline over the past two weeks has been roughly equivalent to the decline during the tariff war in April 2025.

And what’s particularly bad is that the U.S. is experiencing a dual hit on both the stock and bond markets, unlike last year when it was a triple hit.

This time, the dollar is still relatively strong, but both U.S. stocks and bonds are adjusting.

This adjustment seems not to have made Trump feel desperate; it seems not yet to be the moment for him to take substantial action to retreat.

In the future, we can observe the political situation domestically in the U.S. and the negotiation between the two parties regarding this war,

Especially whether the House of Representatives can approve the $200 billion military spending.

If the House of Representatives vetoes it, it indicates that the anti-war sentiment among the American public has become dominant,

Then the high-intensity phase of the war may come to an end.

The second question is whether Iran can fight back?

Because a slap cannot make a sound alone.

If Iran backs down and is willing to accept the U.S.'s so-called 15-point ceasefire agreement,

Then it’s possible that the situation could cool quickly, oil prices would drop, and the Strait of Hormuz would reopen.

At this point, we believe that Iran is still far from backing down or surrendering; the likelihood is very low.

Moreover, we have seen in the past three weeks that Iran’s tactics have become increasingly strategic,

Not only can it accurately strike some strategic targets against the U.S. and its allies.

At the same time, some of its important weapons have unexpectedly been revealed.

It was initially thought that Iran lacked medium- and long-range missiles, but now it turns out they do exist and are well-hidden,

Some missile stockpiles are also beyond expectations.

Therefore, from a military perspective, it is not yet time for Iran to quickly sign a “capitulation agreement.”

Another point is to look at the domestic situation in Iran.

Under the strong pressure from the U.S. and Israel, it has instead united the Iranian people internally,

What was once a shaky and fragmented society and economy has turned into a situation where everything is for survival, and they are banding together.

In the current situation, it is difficult for the U.S. to easily subdue the Iranian people,

In other words, wanting to see it quickly fall apart is very difficult, although the possibility of the U.S. military making one last attempt cannot be ruled out.

So even if the U.S. and Iran have some contact through Pakistan, it may not quickly lead to peace.

In fact, there is a third direction; Netanyahu’s influence and constraints on the U.S. and Trump.

This factor is unprecedented in U.S. history.

Because in U.S. history, U.S. leaders have always acted independently and not looked at the faces of allies,

But this time, as reported in the news,

U.S. leaders say they want to discuss with Israel, which is a new variable,

Introducing new uncertainties into the U.S.-Iran conflict and the Iranian war.

As early as April

A real TACO may form

However, we believe that domestic factors in the U.S. and the political and economic situation will likely be the core variables for cooling this situation,

That is to say, if a large number of the public in the U.S. really rise up against this war, and Congress does not approve the funding, they won’t be able to fight.

Additionally, the mid-term elections are looming.

For Trump, the main issue this year is not the war,

After his intervention in Venezuela, he may feel that the investment-return ratio is too high, so he is somewhat inflated by considering striking Iran,

But now analyzing his tweets and recent statements,

It can be seen that for Trump, he actually wants to extricate himself and cool down.

It’s just that he is not yet willing to let go and wants to seize a big opportunity before leaving.

According to his 15 conditions for a ceasefire, Iran cannot possibly accept them all, thus there are many negotiations involved.

We believe that the earliest possible ceasefire could be in early April; I consider this ceasefire as the real TACO.

We think the earliest indicator of TACO would be the withdrawal of U.S. aircraft carriers or the appearance of a ceasefire agreement.

At that time, it would be suitable for investors to increase their risk appetite.

Investors could be more optimistic in their investments, but they should also pay attention to the occurrence of low-probability events.

This low-probability event has only one possibility, which I believe is the variable of Israel.

In conclusion, we believe that the most impactful phase for the global capital markets has already passed,

The most severe phase of devaluation has already passed; this is a high-probability scenario.

In the future, as early as April, there may be a real TACO.

However, we also mentioned that one should not predict lightly but rather use scenario analysis.

For low-probability events, one must remain cautious, such as a large-scale deployment of U.S. ground forces; in that case, it would be a crisis mode.

To briefly summarize why we believe TACO is still a high-probability event?

Because the mid-term elections are too important for Trump,

So ultimately he will choose to compromise. As the mid-term elections in November draw closer, the possibility of TACO will also increase.

Time is the enemy of the Trump administration.

Systematic Reassessment of Energy

Favorable for China’s New Energy

From the Iranian situation, we deduce that global macro asset pricing will see the rise of what we consider hard-core assets.

In the current framework, the strategic attributes of resources and energy will systematically increase.

First, energy prices have lingered at low levels for the past four years,

To the extent that the investments and capital expenditures of the entire oil and oil service enterprises are very low.

But now it’s different; this war has made everyone realize the importance of strategic petroleum reserves,

In the future, there must be an increase in the replenishment of strategic petroleum reserves, possibly at even higher levels.

The Strait of Hormuz has basically formed a de facto closure, and this year, or even next year, the global energy price center will see a significant increase.

Due to the existence of coal, China’s energy self-sufficiency rate is 85%,

Japan’s is only 16%, and South Korea’s energy self-sufficiency rate is merely 19%, less than 20%,

Europe’s energy dependence on external sources is also extremely high.

So after this war, one thing is certain,

Both Europe and Japan and South Korea will definitely increase investment in alternative energy, nuclear power, hydrogen energy, or clean energy like wind energy.

Another aspect is the construction of new power systems,

Moreover, some of China’s new energy going overseas may also be a trend opportunity.

For example, previously we sold photovoltaic products at a low price,

After the war, overseas demand for new energy is no longer about cost considerations but about life and death, about whether the entire manufacturing system can survive.

Therefore, we believe that this round of energy will see a systematic upgrade, including but not limited to crude oil.

New energy and energy technology, such as controllable nuclear fusion and energy storage chains, we believe are also undergoing a systematic reassessment.

The Oil Dollar System is Shaking

Gold’s Strategic and Tactical Opportunity Period

Another important part of safe assets is gold.

At this price level, should one buy oil-related assets or gold-related assets?

There is no doubt that if considered today, it would definitely be gold.

Earlier this year, we were somewhat skeptical about gold,

When it was $5,600 per ounce, we felt there was too much exuberance, a kind of irrational blind impulse,

The buying was quite crowded, and at that time, ETFs and various financial instruments were self-reinforcing.

But now, at over $4,000 per ounce, this presents an opportunity both tactically and strategically.

The logic of this gold bull market is not about looking at the dollar, nor the U.S. real interest rates,

The logic of gold pricing is actually the certainty premium of the reconstruction of the international financial order; it is determined.

The entire international order and financial order reconstruction is accelerating,

Especially with the oil dollar, following this event, the foundations of the oil dollar system have been violently shaken, even collapsing.

Recently, you can see that U.S. Treasury auctions have been lukewarm,

Whether for two-year or ten-year bonds, the entire yield on Treasury bonds is at a relatively high position.

Now that this war has occurred, we see that the U.S. cannot protect Saudi Arabia, cannot protect the UAE, cannot protect these Middle Eastern OPEC countries,

In that case, the foundations of the oil dollar are shaken.

On the other hand, in recent years, China has signed bilateral currency swap agreements with Saudi Arabia, the UAE, and other Middle Eastern countries.

Taking Saudi Arabia as an example, at the end of last year, when Saudi Arabia sold oil to other countries, it was all priced and settled in dollars,

Only when selling oil to China did a small portion use renminbi for pricing and settlement,

What was the percentage?

Less than 20%.

However, in just three months, by the end of March, the renminbi settlement for oil sold to China by Saudi Arabia has already reached 40%,

So we say there is opportunity amidst crisis; this round of oil crisis, to some extent, has shaken the foundations of the oil dollar.

Great Power Competition Era

Placing Greater Emphasis on Strategic Mineral Reserves

The third aspect is strategic resources,

Copper, aluminum, rare earths, tungsten, molybdenum, tin, etc.,

In the face of the trend of de-globalization, the risks of decoupling and severing supply chains must be prevented.

Therefore, both China and the U.S. are strengthening the development and reserves of strategic minerals,

In our 14th Five-Year Plan, we emphasize around 24 types of strategic minerals.

The U.S.'s critical mineral list involves 60 types.

Many of the 60 types, like rare earths, permanent magnets, copper, magnesium, nickel, aluminum, etc., are related to technology,

Because they are involved in electricity, the AI supply chain, and you will find that the demand for many such resources is rigid.

In the era of great power competition, countries will place greater emphasis on the reserves of strategic minerals.

A Wave of Foreign Capital Allocation is Expected

A-shares and Hong Kong Stocks May Reach New Highs in the Second Half

After this war, we can expect a wave of significant foreign capital allocation,

This is completely anticipated.

Of course, recently some self-media have been misleading by saying that money from the Middle East is flooding into Hong Kong; frankly, I haven’t felt this deeply.

We are at the front line,

And we should know best about the warming of the spring river, but it is not obvious.

Why?

This is very normal; in times of war, there is a need to hedge,

And making investments is a risk-taking behavior, especially buying stocks, which is a risk investment.

This will certainly happen after the war.

But what’s clear is that Haitong International has a Middle Eastern energy team, and Saudi and UAE listed companies are very willing to talk to us,

They are also willing to come to mainland China for exchanges, which are all good signs.

This indicates that China’s assets and capital markets are becoming increasingly attractive to overseas investors; this is an opportunity.

During this time, whether in A-shares or Hong Kong stocks, the fluctuations and adjustments since the beginning of the year can be said to be “when the city gates catch fire, the fish in the moat suffer.”

We have been affected by overseas events, but this does not stop the long-term trends in China.

So, I say that this period of fluctuation and adjustment is more like gathering momentum, and crouching down can actually allow for a higher jump.

Frankly, I believe that both A-shares and Hong Kong stocks have the hope of reaching new highs in the year’s second half.

Post-TACO

Prioritize High-Tech and Hard Technology

Before TACO, it is essential to remember first and foremost the principle of safety.

Therefore, increasing allocation to gold, including energy, I still believe is the top choice.

Energy, gold, and resources should be the focus.

If TACO happens, as early as April or as late as June.

Because I judge that Trump cannot choose to go down with the Iranians,

So normally, this war will not extend to the end of the year, nor will it extend to September or October.

Thus, working backward, the real TACO could come as early as April or as late as June,

Once there is a ceasefire agreement, once there is a troop withdrawal, everyone’s risk appetite will significantly increase.

If so, among safe assets, I suggest only retaining gold,

While other considerations can include high-tech, hard technology, and advanced manufacturing.

Especially the proportion of high-tech and hard technology could become 60-70%,

While manufacturing going overseas and gold might comprise around 20-30%.