Global Assets Plummet in Synchronized Decline! How to Navigate the "Chaos Era" of Financial Markets?

How does AI · Geopolitical Conflict change market pricing logic?

A safe haven is never just a single product or sector, but a set of asset allocation strategies that are unaffected by emotions, balancing extremes with equilibrium.

Today, let’s talk about this Black Monday.

Everyone knows how terrible it is—no need to list data.

What exactly is the market falling for?

Simply put: completely out-of-control expectations.

This recent Middle East geopolitical conflict initially led the market to believe it would be over in a couple of days, with at most a few days of financial market volatility, then returning to normal.

But everyone was wrong—completely wrong.

Unstable emotions from Trump—sometimes easing, sometimes issuing tough words, sometimes winning, sometimes vague.

The whole world follows these mood swings.

And Iran actually launched missiles.

What the market fears isn’t war itself, but uncertainty.

If it becomes a long-term war, all logic must be re-evaluated.

We’ve discussed before:

In a geopolitical storm, how should assets like gold, oil, A-shares, and others be invested?

War directly affects whether the Strait of Hormuz remains open. As long as navigation is blocked, global energy supply will face rigid tension.

There are no short-term substitutes for this impact. That’s the real risk—affecting market pricing logic.

When markets have long-term expectations, capital begins to withdraw:

First, sell risk assets, then tighten liquidity, and finally lower all valuations.

The full decline we see is backed by a clear chain:

Geopolitical conflict persists → Strait navigation uncertainty rises → Oil supply tightening expectations → Oil prices rise → Inflation increases → Easing expectations delayed → Growth pressure → Assets undergo a comprehensive revaluation.

Markets price in extreme panic in advance, which manifests as a sharp decline.

Under high oil prices, what assets can still be invested in?

History tells us everything.

Supply-driven oil price increases often go through several stages:

The first stage is panic trading, with risk assets falling across the board, and safe-haven assets temporarily strengthening;

The second stage is emotional recovery—if the situation doesn’t worsen further, the market may rebound from oversold levels;

The third stage is stagflation trading—high oil prices persist, inflation pressures become evident, central bank policies waver, growth assets come under pressure, and assets benefiting from inflation and defensive qualities start to outperform;

The fourth stage is a return to reality—once policy paths are clear, markets re-anchor to fundamentals.

In the early phase of this conflict, the market showed typical risk-averse trading with moderate intensity—risk assets like stocks declined broadly but remained manageable. This is muscle memory, an instinctive market reaction.

But as the situation continues, the main trading theme quietly shifts.

Oil prices soar, directly raising global inflation expectations. Investors worry that under high inflation, central banks will be forced to delay rate cuts or even tighten. Overseas economies are not yet stable, but interest rates may rise first.

And soaring oil prices put overseas central banks in a dilemma: on one hand, inflation pressures may force them to keep interest rates high; on the other, geopolitical conflicts damage the global economy and require easing policies to support growth.

This is the biggest source of current market uncertainty: are central banks fighting inflation or preventing recession?

No one can give an answer in advance.

Recent performance of global assets—including US stocks, A-shares adjustments, and gold shocks—is essentially trading this logic. It’s no longer just about “safe haven,” but a deeper concern about economic prospects.

Growth stocks face pressure because interest rate expectations are changing; cyclical stocks also struggle because growth expectations are declining. Facing both sides, funds are uncertain where to go.

After all, history has already warned us. The 1973–1975 oil crisis and the 1990 Gulf War both showed that high energy prices eventually suppress demand.

Once oil prices break through $160 per barrel, a global recession expectation will be triggered, with energy assets relatively resilient, while metals prices will plummet sharply. The divergence within commodities will be much more intense than now.

We can only adapt.

A safe haven is never just a product or sector, but a set of asset allocation strategies unaffected by emotions, balancing extremes with equilibrium.

In the short term, focus on controlling volatility, avoid high-volatility, high-valuation, high-leverage assets, increase holdings of bond funds, and assets with stable cash flow, reasonable valuations, benefiting from inflation or with essential attributes, such as low-dividend volatility.

Additionally, look long-term.

Every major geopolitical crisis in history is ultimately just a footnote in the long-term trend.

UBS’s “2026 Global Investment Return Yearbook” analyzed 126 years of geopolitical threat indices and stock market returns, finding that whether in the short term (one month) or long term (one year), there is almost no correlation.

Source: UBS “2026 Global Investment Return Yearbook”

Conflicts will eventually ease, emotions will settle, panic will subside, and economic laws, industry trends, and national resilience will once again become the main market drivers.

In the medium term, China’s complete industrial chain, stable energy supply, and emerging renewable energy industry may demonstrate unique cost advantages and competitiveness amid global stagflation.

After the storm, these long-term advantages will once again serve as pricing anchors.

Markets are never smooth; uncertainty is the norm.

Our lifetime investments are destined to pass through countless geopolitical conflicts, cyclical tides, policy shocks, and emotional fluctuations.

The true safe haven is never in market ups and downs, but in our understanding, perspective, and resilience.

If unsure, ask us.