[Iran Crisis] Shinhan International's Zhang Haoen: High oil prices continue to erode the global economy; concerns remain that the stock market adjustment is not yet complete

International oil prices have remained high recently. Zhang Haoen, head of personal and business banking investment at CITIC Bank (International), stated that although the rise in oil prices has not become a structural problem, U.S. President Donald Trump has postponed his visit to China until mid-May, which may lead to a conservative market trend in April.

Expect short-term impact of war on financial markets

He pointed out that last year’s better-performing asset classes, such as gold and Asian stocks, have recently experienced profit-taking, raising concerns that the global stock market adjustment is still not complete. At the same time, worries about the U.S. and the overall global private credit market, where redemption limitations are concerning, have cast more shadows over the market.

In addition, the rise in oil prices not only alters interest rate expectations but may also lead both the European and UK central banks to raise interest rates, tightening previously accommodative monetary policies.

He admitted that the ideal scenario would be for the conflict to end this week, with oil prices significantly dropping to $70 per barrel. However, the current situation is not ideal, and he expects high oil prices to continue to strain the global economy. He added that the impact of war on global financial markets is generally short-lived, lasting only a few months at most. After the resolution of the event, he anticipates that funds will flow into markets with relatively reasonable and low valuations, and this year, the relatively lagging Hong Kong stocks are expected to benefit.

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Zhang Haoen indicated that in April, the global market allocations for the U.S., Japan, Europe, and the overall Asia region will show slight reductions, while Hong Kong and mainland China will tend toward neutrality, believing that the adjustments in markets outside of Hong Kong and mainland China are not yet complete.

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