Oil price shock for one month: Why are Chinese assets more "resilient"?

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The conflict in the Middle East has now lasted a full month. Brent crude spot prices have soared 50% from pre-war levels to $110 per barrel, sharply worsening the global dilemma between growth and inflation.

However, amid the largest oil supply disruption in history, Chinese assets have shown notable relative resilience—A-shares have only fallen 4%, and in risk-adjusted Sharpe ratio terms, they have performed significantly better than their emerging market peers. According to Goldman Sachs, deep transformation of China's energy structure, ample oil reserve cushions, and ongoing breakthroughs in AI technology are together constructing a "shock-absorbing defense line" for Chinese assets.

Goldman Sachs maintains its "overweight" rating on both A-shares and H-shares. The 12-month target price for the MSCI China and CSI 300 is cut by 5% and 4% respectively, corresponding to potential 12-month returns of up to 24% and 12%.

Analysts suggest focusing on three main themes: First, years of China’s energy diversification strategy are effectively absorbing external shocks, with policy dividends being realized at an accelerated pace. Second, China’s PPI deflationary cycle is expected to end 6 to 9 months ahead of previous forecasts, providing implicit support to corporate profits through an upward revision of nominal GDP. Third, China’s agentic AI, represented by "OpenClaw," is quietly rising and is becoming the next core theme to be repriced by the market.

Energy Structural Moat

During this global oil price shock, China's energy structure has become the most important buffer.

Data shows that in 2024, oil and liquefied natural gas will account for only 28% of China’s primary energy consumption—one of the lowest levels among major global economies. Meanwhile, nuclear, wind, solar, and hydropower now account for 40% of China’s electricity generation, a sharp rise from 26% a decade ago.

In terms of supply security, China’s strategic and commercial oil reserves are ample; even if crude imports drop to zero, consumption needs could be met for over 110 days. Additionally, China’s energy imports are highly diversified, with countries outside the Middle East such as Russia, Australia, and Malaysia providing reliable alternative supply channels.

Because of these structural advantages, Goldman Sachs believes that the macro cost China bears in this shock is the lightest among major economies.

PPI Turning Positive 6 to 9 Months Ahead

An easily-overlooked but thought-provoking signal is emerging: soaring global energy prices may help China exit its deflationary cycle earlier.

Goldman Sachs economists’ latest forecasts suggest China's PPI could end its 41-month-long year-on-year decline as early as March 2026, 6 to 9 months earlier than previous expectations. Triggered by the Middle East conflict, Goldman also raised its forecast for China’s nominal GDP growth by 0.8 percentage points.

Historical data shows that despite investors’ general skepticism toward cost-push inflation, PPI increases have historically been strongly positively correlated with improving corporate earnings and positive stock market returns—even during cost-driven inflation periods such as 2011, 2017/18, and 2021. Theoretically, a decline in real interest rates will also boost capital spending by companies and promote a shift of household assets from cash/savings to equities.

Stable Bull Market Logic for A-shares Unchanged

Since the outbreak of war, A-shares and H-shares have corrected along with global equities, but their value as diversified allocations has been fully demonstrated. Since Feb 28, the CSI 300 and MSCI China have fallen 4% and 7% respectively (year to date -3% and -8%), roughly in line with the MSCI World Index and modestly ahead of emerging markets outside China.

More importantly, over the past month, A-shares and H-shares have significantly outperformed peer assets on a risk-adjusted basis: the Sharpe ratio for A-shares was -0.7 and for H-shares -0.6; the 52-week rolling correlations with the S&P 500 were just 0.2 and 0.3 respectively, highlighting their unique "low correlation" and diversification value.

Currently, foreign investors account for only 3% of A-shares’ market cap. Coupled with the recent return of "national team" buying as policy support and still-undervalued stock valuations relative to domestic rates, the logic for a "steady bull market" in A-shares remains intact, consistently providing strong alpha opportunities for cross-strategy investors.

"OpenClaw" Bursts Onto the Scene: Oil Prices Steal China's AI Spotlight, but the Story Isn’t Over

The Middle East conflict has objectively overshadowed another major milestone for China’s AI sector—the rise of agentic AI.

If the "DeepSeek moment" proved that China has the capability to produce world-class AI models under technology export restrictions, the explosive growth of "OpenClaw" (with around 336,000 GitHub stars) and the surge in token usage in recent months are powerful evidence of China’s broad AI adoption and strong commercial potential.

Strategically, this shift from chatbots to agentic AI shows the key conditions for China’s AI to stay competitive in the global ecosystem: a vast user base, open-source and capable LLMs, highly competitive token costs, robust AI infrastructure, and manufacturing capacity in physical AI applications among the world’s best.

Goldman’s basket of potential "OpenClaw" beneficiaries has fallen 8% year-to-date, but since 2025 has outperformed the MSCI China Index and Goldman’s broad China AI basket by 44 and 14 percentage points respectively—this excess return demonstrates that the AI theme has not lost its power amid geopolitical turmoil.

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The above highlights are from Zhuifeng Trading Desk.

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Risk Disclaimer and Exemption ClauseThe market carries risks, and investing requires caution. This article does not constitute personal investment advice, nor does it take into account any user's specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their own circumstances. Invest accordingly at your own risk. ```