Report Industry Investment Rating No relevant content found. Core Viewpoints - The price trend of the current oil and fat market is highly correlated with the evolution of the Middle East situation, forming the core logic that "the duration of the war determines the price level." The deterioration of the situation causes a surge in crude oil prices, which in turn affects oil and fat prices through multiple paths such as cost transmission, demand substitution, supply chain disruptions, and market sentiment. Before the war shows a clear end signal, the market will trade on the "conflict premium," and the price center is expected to rise. Once the war ends, oil and fat prices will face systematic downward pressure, but in the long term, supported by fundamental factors such as low inventory and weather, it is expected to turn into a relatively strong shock pattern [3]. Summary by Directory 1. Scenario Deduction: War Process Determines Short - term Path - **Scenario 1 (Quick End, 1 - 2 Weeks)**: The market will be volatile and weak. If the conflict ends quickly in the short term, the geopolitical risk premium will fade, leading to a rapid decline in crude oil prices. This will weaken the speculative sentiment in the vegetable oil market, and given the current fundamentals of the oil and fat market (such as seasonal production increase in major producing countries, flat demand, and high inventory), prices will follow the decline of crude oil [3]. - **Scenario 2 (Short - term Stalemate, About 1 Month)**: The market will be volatile and strong. If the war lasts for about a month, crude oil prices will be continuously supported at a high level. This will systematically increase the transportation cost of oil and fat and the supply uncertainty of imported oilseeds. More importantly, the continuously high crude oil prices will significantly enhance the economic attractiveness of palm oil and other oils and fats as raw materials for biodiesel, stimulating the marginal improvement expectation of industrial demand. Under the combined effect of cost - push and positive demand expectation, oil and fat prices are expected to gain phased upward momentum [4]. - **Scenario 3 (Prolonged War, 3 - 6 Months or More)**: The trend will be strong. If the conflict becomes long - term, its impact will deepen and spread. On the one hand, crude oil will remain at a high level or even continue to rise, continuously pushing up the costs of the entire industrial chain (transportation, fertilizers, production). On the other hand, the supply side will be blocked due to risks in key shipping lanes (such as the Strait of Hormuz), and poor logistics will intensify regional supply shortages. On the demand side, high oil prices will irreversibly promote the increase of the biodiesel blending ratio, bringing about unexpected growth in demand. Under the resonance of "high cost + weak supply + strong demand," oil and fat prices will enter a medium - to - long - term upward channel, and the main contract of vegetable oil may challenge the range of 10,500 - 13,000 yuan/ton or even higher [4]. 2. Post - war Outlook: Premium Reversal and Logic Switch - After the war ends, the "conflict premium" in the oil and fat market will experience a systematic reversal. The core negative logic will be concentrated: the resumption of shipping in the Strait of Hormuz will increase global crude oil supply, oil prices will fall; the speculative sentiment in vegetable oil will cool down, and shipping costs will decrease; the price difference between oil and fat and crude oil will widen, and the demand for biodiesel will weaken; the costs of fertilizers and other items will fall. The fundamental expectation will turn loose, and it is expected that oil and fat prices will experience a significant phased correction [4]. - After the conflict premium weakens, there are still medium - to - long - term supporting factors in the oil and fat industry. In terms of weather and supply, the transition process from La Nina to El Nino and its actual impact on the production of palm oil, soybeans, and rapeseed in Southeast Asia will become the core of pricing again. In terms of demand, the trends of global biodiesel mandatory blending policies will be the key to affecting the long - term demand structure. Currently, the global oil and fat inventory - to - consumption ratio is still at a historically low level, providing medium - to - long - term bottom support for prices [5].

Core Viewpoint - The article emphasizes the shift in global asset pricing logic from focusing on growth and policy to being influenced by conflicts and uncertainties, particularly in the context of rising geopolitical risks and their impact on investment strategies [3][4]. Group 1: Global Market Dynamics - Over the past decade, global asset pricing has primarily revolved around central bank policies, inflation trajectories, and economic growth, but this framework is changing due to prolonged geopolitical conflicts [4]. - The World Economic Forum's 2026 Global Risk Report identifies "geoeconomic confrontation" and "interstate conflict" as major long-term risks, indicating a heightened focus on tail risks among global investors [4][5]. Group 2: Impact of Geopolitical Risks - The changing landscape leads to three main impacts: asset prices becoming more sensitive to sudden events, increased risk premiums for safe and physical assets, and a decline in the effectiveness of relying solely on economic recovery and profit growth for asset allocation [6]. - The surge in gold prices above $5,000 per ounce and silver prices above $100 per ounce reflects the dominance of "conflict premium and safe-haven demand" in pricing, indicating a need for strategies that address both trends and uncertainties [6]. Group 3: China's Asset Advantages - China's assets are gaining recognition for their policy independence, which is particularly valuable in a high-uncertainty environment, as the country maintains a focus on stable growth and liquidity [9]. - This policy orientation suggests that Chinese assets are less exposed to external geopolitical conflicts, making them more attractive for long-term investors seeking stability and potential growth [9]. Group 4: Investment Reallocation - With the expiration of high-interest deposits and a low-interest environment, long-term funds are seeking new allocation directions, with potential flows into wealth management, insurance, public funds, and A-shares [10]. - The annualized return of the CSI 300 index at approximately 7.62% highlights the relative attractiveness of equity assets compared to other investment options, such as real estate and government bonds [10]. Group 5: Asset Allocation Strategy - A-shares are positioned as a core holding in investment portfolios due to their lower direct exposure to external conflicts and the potential for policy support [12]. - Satellite positions in portfolios should focus on commodities and macro strategies to enhance flexibility and mitigate risks associated with geopolitical uncertainties [12].