Weekend, a major plunge! Strait of Hormuz, breaking news!

【Introduction】A Turbulent Weekend

China Fund Reporter Taylor

Brothers and sisters, this weekend feels very turbulent, as if a major conflict is imminent! After Trump issued a final warning, if Iran does not reopen the Strait of Hormuz within 48 hours, the U.S. will attack its power plants. Iran responded by threatening to target U.S. infrastructure in the region.

Let’s take a look at the major Middle East events this weekend.

Major Middle East Events This Weekend

Iran Threatens to Strike Critical Infrastructure in Response to Trump’s “Final Ultimatum”

On Sunday, Iran warned that if U.S. President Trump follows through on his threat—destroying Tehran’s power plants unless the Strait of Hormuz is quickly reopened—Iran will attack key infrastructure in the Middle East.

The Iranian military’s operational command stated in a Sunday statement to Tasnim News Agency: “We have issued warnings before; if the enemy attacks Iran’s fuel and energy infrastructure, all energy, information technology, and seawater desalination facilities in the region that belong to the U.S. and its allies will become targets.”

Trump posted on social media that if Iran does not open the strait within 48 hours, he will “strike and destroy” Iran’s power plants, starting with the largest.

This statement on Truth Social marks a significant escalation in Trump’s rhetoric regarding the Strait of Hormuz. Just the day before, he said he was considering “gradually ending” military operations and that the responsibility for ensuring shipping safety through the strait would be borne by the countries relying on it.

Unlike attacks on other energy assets (such as the South Pars gas field), targeting Iran’s power sector alone would not immediately impact global energy supplies. Data shows Iran has 98 operational natural gas power plants, including large facilities like the Damavand combined cycle plant southeast of Tehran, the Ramin plant north of Ahvaz, and the Kermanshah plant in Chatrud.

Trump’s threat to strike Iran’s largest power facilities may also be a veiled reference to the Bushehr nuclear power plant.

Iran Vows: If U.S. Attacks Its Power Plants, It Will “Irreversibly” Destroy Infrastructure

Iranian Parliament Speaker Mohammad Bagher Ghalibaf posted on X (formerly Twitter) that if Iran’s power plants are attacked, critical infrastructure and energy facilities in the Middle East could be “irreversibly destroyed.” He stated that once Iran’s facilities are hit, regional infrastructure would become “legitimate targets,” and Iran’s retaliation would push oil prices higher and keep them elevated for a long time.

The semi-official Mehr News Agency published a map showing the distribution of power plants around the Persian Gulf and warned that if Trump fulfills his threat, “say goodbye to electricity.” The report said: “Even the slightest attack on Iran’s power infrastructure would plunge the entire region into darkness… 70-80% of large power plants are located along the Persian Gulf coast… all within Iran’s deterrence range.”

Nournews, affiliated with Iran’s Supreme National Security Council, stated that Trump’s threat is not a show of strength but rather exposes the fragility of U.S. claims of energy independence.

The outlet said: “Any escalation will trigger multi-layered Iranian retaliation, targeting regional assets and causing broader economic, social, and environmental crises.”

In another example of Tehran’s tough signals, the commander of Iran’s armed forces headquarters said: “Our military doctrine has shifted from defense to offense. A new ‘surprise’ is coming.”

Iran’s missile attacks on Israel escalate, dozens injured

As the conflict in the Middle East enters its fourth week, Iran’s strikes on Israel appear to be escalating, causing dozens of injuries and widespread destruction and chaos nationwide.

Late Saturday night, two ballistic missiles bypassed Israel’s missile defense system, hitting the southern cities of Arad and Dimona. Official figures report about 115 injuries, with 11 in serious condition.

The Israeli military said it is investigating the reasons for the interception failure, while rescue teams continue searching for people trapped inside buildings.

Prime Minister Benjamin Netanyahu described the event as “an extremely difficult night in our fight for the future.” Since the U.S.-Israel war began on February 28, Iranian missiles have killed 16 civilians in Israel.

According to government and NGO reports, the broader Middle East region has seen over 4,000 deaths, with more than three-quarters occurring in Iran. In Lebanon, Israel has intensified its attacks on Iran-backed Hezbollah militants, with casualties exceeding 1,000.

Iran Claims the Strait of Hormuz Is Open to All Countries Except Hostile States

An Iranian official stated on Sunday that despite recent attacks targeting ships navigating the strategic waterway, Iran allows ships that have coordinated with it and are not from hostile countries to pass through the Strait of Hormuz.

Ali Moussavi, Iran’s permanent representative to the International Maritime Organization, told Mehr News Agency, affiliated with Iran’s security agencies, that “the strait is open to everyone except Iran’s opponents.”

Data from commodity data provider Kpler shows that the number of ships passing through the strait has dropped to about 7 per week, down from around 100 before the conflict. Most of the ships now passing are Iranian oil tankers, along with vessels loading crude from the UAE bound for Pakistan.

Iran’s Revolutionary Guards: If Trump Fulfills His Threat and Attacks Iran’s Energy Facilities, the Energy Infrastructure of Countries with U.S. Bases Will Become “Legitimate” Targets

Iran’s Revolutionary Guard stated that if U.S. President Trump follows through on his threat to attack Iran’s energy infrastructure, the Strait of Hormuz will be completely closed.

Intensified Iran-U.S. Conflict, Stock Markets Plunge This Friday, Dow and Nasdaq Near Technical Correction

On Friday, markets experienced sharp volatility, with no signs of easing in the Iran-U.S. conflict, while oil prices continued to rise, leading to significant stock declines.

The Dow Jones Industrial Average fell 443.96 points, or 0.96%, closing at 45,577.47; the S&P 500 dropped 1.51%, closing at 6,506.48; the Nasdaq Composite declined 2.01%, ending at 21,647.61. The Russell 2000 small-cap index fell over 2% and entered a technical correction zone (a decline of 10% from recent highs). During the day, the Dow and Nasdaq briefly entered correction territory but ultimately closed just above the 10% decline threshold.

Bitcoin Falls Below $69,000, War Fears Drag Crypto Market Down

Amid escalating threats and conflicts between the U.S., Israel, and Iran, cryptocurrencies declined again.

Bitcoin dropped 3.3% on Sunday, reaching about $68,150, the lowest since early March. Other tokens saw even larger declines, with Ethereum falling nearly 5% to $2,050, while Solana, XRP, and Cardano also declined.

Since the U.S.-Israel attack on Iran in late February, Bitcoin has fallen approximately 20%. This correction reveals a long-standing limitation of the crypto market’s view—that Bitcoin can serve as a “safe haven” during crises.

During wartime, given the 24/7 trading nature of crypto markets, investors can observe potential trends before traditional markets open. Perpetual futures on major crypto derivatives platform Hyperliquid show that, as of around 9 a.m. New York time, contracts linked to oil rose over 2%, to about $98 per barrel, while contracts tied to the Nasdaq 100 and S&P 500 declined.

Top 10 Brokerage Firm Analyses

1. CITIC Securities: Divergence and Projections in Middle East Conflict

The trajectory and market impact of the Iran conflict are highly uncertain, with three core issues currently unverified: first, how much shipping can resume after the conflict subsides; second, whether the Federal Reserve prioritizes inflation indicators or employment data; third, whether China faces cost shocks or supply chain reallocation opportunities. Clarity on these may only emerge by April. Due to high uncertainty, some short-term profit-taking has occurred, with previously strong stocks declining recently. Overall, most performance-driven and narrative-driven market signals have returned to the starting line since early this year. The first three months reflect market rotations driven by expectations and narratives during spring’s volatility and cooling, not the full-year outcome. Broader PPI recovery, price transmission, and corporate profit restoration are the key directions for the year, with decisions expected in April.

2. CITIC Construction Investment Strategy: Rethink and Reposition

As the US-Israel-Iran conflict escalates, the global market is gradually pricing in the risk of prolonged war. The core liquidity logic of this bull market faces challenges, with a transition from valuation expansion to earnings focus, likely leading to a prolonged period of consolidation. Favorable sectors include those benefiting from high oil prices, stable cash flows, and certain growth opportunities that may be mispriced. Key sectors include: coal chemical industry, new energy (wind, solar, lithium batteries), energy storage, nuclear power, power grid, coal, hydropower, and AI (price increase chains, power shortage chains).

3. Shenwan Hongyuan Strategy: The Peak of Pressure?

The deadlock in US-Iran conflict continues, with risk appetite under pressure. Attention should be on the short-term decline in funds supporting the “first phase rally” (industry ETF scale shrinking, pension fund de-risking, “fixed income+” reducing positions and redemptions). This may be the most stressful phase currently. Stable policies are expected to support long-term stability, but structural differences and absolute return reduction may pose tail risks.

We still warn of underestimated medium-term uncertainties: 1. For China and the U.S., monetary tightening to combat imported inflation is likely counterproductive. Increasing inflation tolerance is probable. 2. The U.S. economy remains resilient; China has room to maneuver; recession is not the baseline. 3. Geopolitical deadlock may make China’s energy and supply chain security the global alpha. Even if US-Iran conflict persists intermittently, the impact on A-shares is likely to gradually weaken.

4. Guojin Strategy: The Illusion of the Dollar

This week’s market decline appears rooted in global stagflation and recession fears, but fundamentally, it reflects the redistribution of dollar liquidity in financial assets. Behind the dollar is the U.S.’s phased control over shocks. Notably, a turning point may be near.

Assets that previously underperformed during the decline (U.S. tech stocks) may be signaling market bottoms. We observe that the relatively strong U.S. stocks started to decline on Friday.

5. Huaxia Strategy: When Will the Healthy Adjustment End?

The US-Iran conflict remains unresolved, and inflation fears have prompted the Fed to turn hawkish. Domestic policy easing is unlikely given strong economic data. The market is expected to remain weak and volatile. In terms of allocation, short-term advantages may lie in dividend stocks like banks and utilities, and sectors with price increase catalysts such as chemicals, machinery, and storage. Growth remains the core mid-term theme, but short-term adjustments are ongoing. After correction, the market may enter a second phase of profit-driven bull market, so this is a “healthy correction.”

6. China Merchants Strategy: A-Share Adjustment and Bottoming Signals, Geopolitical Strategies

Recent market correction is essentially a liquidity spiral triggered by external shocks. From the peak, gold has already priced in profit-taking, and stabilization depends on the end of liquidity shocks. The Hark Island battle may become a key event to observe the US-Israel-Iran conflict’s development. Currently, further sharp declines in A-shares are limited; the key signal for a bottom is when the market’s stabilization mechanisms act substantively. After correction, core allocations include resource stocks, AI infrastructure, and new energy.

7. Everbright Strategy: Consolidation and Waiting for Breakthrough

External factors currently suppress A-shares: ongoing Strait of Hormuz tensions, global energy market turmoil, rising inflation expectations; and increased hawkishness from the Fed, putting pressure on global liquidity. However, positive factors include central bank statements, strong early-year economic data, and relatively limited impact from Middle East tensions domestically. Overall, expect the market to mainly fluctuate sideways.

8. Huaxi Strategy: Allocate to Banks and Wait for More “Market Stabilization” Policies

Focus on bank stocks and await more policies to stabilize the market. The ongoing US-Iran conflict and delayed easing expectations are intertwined, suppressing risk appetite globally. Compared to this, China’s policy environment is more certain, with clear signals from regulators to stabilize the capital market. Future policies like “stabilization funds,” structural support tools, long-term capital inflows, and counter-cyclical regulation are expected. Meanwhile, imported inflation has limited impact on domestic monetary policy, and loose liquidity will continue, supported by active fiscal measures to restore confidence.

9. Industrial Securities: When Will the Counterattack Sound?

Recent market adjustments mainly stem from two concerns: first, the risk of “stagflation”; second, the risk of “out-of-control escalation of conflict.” Neither may be the final outcome of this conflict. In the short term, escalation might create opportunities for de-escalation, meaning the market’s rally could quietly begin when sentiment is most pessimistic. Medium to long term, “stagflation” is the most pessimistic scenario but not the baseline. The current market’s pessimistic expectations provide a foundation for long-term recovery.

10. Zhongtai Strategy: How to Understand the Recent Sharp Drop in Precious Metals?

Recently, gold and oil prices have shown a strong inverse correlation: oil surged this week, while precious metals declined sharply. Generally, rising oil prices support gold via two channels: increased safe-haven demand due to geopolitical conflicts, and rising energy prices boosting inflation expectations, which enhances gold’s inflation hedge appeal. Thus, oil and gold often move together, especially when inflation expectations rise, increasing demand for gold.

However, this cycle shows that gold’s pricing logic is shifting. After a year of rising prices, gold’s asset attribute is evolving from “safe haven” to “traded risk asset.” On one hand, expectations of global liquidity easing, central bank gold purchases, and geopolitical risks drove large gains. On the other hand, persistent inflows have crowded the trading structure, making prices more sensitive to marginal liquidity. In this context, gold is less driven solely by fundamentals and more by liquidity and trading structures.

Proofread: Joey

Editor: Mu Yu