Saudi Arabia slashed the price of crude oil sold to markets such as Europe, the far East and the US on Saturday by the biggest discount in more than two decades. At the same time, Saudi Arabia has privately told market participants to increase production if necessary, even reaching a record level of 12 million barrels a day.

Affected by related events, the Saudi stock market fell 7.15% on March 8, with the opening of Saudi Aramco, the world's largest company by market capitalization and oil giant. At the same time, the Kuwaiti stock index fell more than 10%, and the market suspended trading. Dubai's DFM index fell nearly 8 per cent and Cairo's EGX30 index fell nearly 4 per cent.

In the early hours of Monday, US and Brent crude oil opened sharply lower, Brent crude oil fell 31%. WTI crude oil fell more than 27%, and Asian stock markets plummeted.

At a time when the global capital market is in turmoil, how much impact does the "black swan" have on the Chinese market?

BoCom International Hong Hao: the collapse of oil will cause a chain reaction, pay attention to "recessionary easing"

Hong Hao believes that the oil slump will cause a series of chain reactions, the most direct reaction is to do oil futures and assets with oil positions may burst.

The impact of the oil crisis is first reflected in the collapse of US junk bond prices, the increased risk of stability of the US financial system, and the increasing expectation of deflation to increase the difficulty of monetary policy.

Looking at oil abroad, oil price has always been one of the most important indicators of inflation expectations. If oil prices fall, market deflation expectations will soar. Today we have seen 30-year treasury bonds fall below 1% and 10-year Treasurys below 0.5%, all of which are signs of a very serious deflationary expectation. When deflationary expectations are formed, the Fed's monetary policy fails. Imagine if the Fed now expects to cut interest rates by at least another 50 basis points, one percentage point in a row within a month. If the crisis worsens further, it will become a negative interest rate. The Federal Reserve is a global bank, which is a very worrying thing. I think the more serious shock is that the Fed has also entered negative interest rates, which is the real global crisis.

For some stocks that have risen now, the debt burden is too heavy and need to be issued to repay the debt, or the profit prospect is not optimistic. But these stocks have more than doubled in the past month.

In fact, China's interest rates are falling, and the market liquidity is very abundant. The central bank has not operated in the open market for 14 consecutive days, and the withdrawal and reduction of funds in the market for 14 consecutive days have neither increased nor decreased, which shows that the whole market is sufficiently liquid. But this is "recessionary easing", because after the whole is nearly shut down, the demand for credit and lending will decrease. But now there are some companies with worrying fundamentals that are rising a lot. Another indicator is that, for example, the turnover rate of the gem returned to the level of April 2015 last week, which we think is risky.

Zhongda Futures Jingchuan: the opportunity of China's Strategic Reserve appears

As the second largest consumer of crude oil in the world, once the price of crude oil runs to a low level, it is an important time window for the timely establishment of strategic reserves. We think this window will gradually open when the oil price is below $40.

According to data released by the General Administration of Customs at the beginning of this year, China's crude oil imports exceeded 500m tons for the first time in 2019, reaching 506 million tons, an increase of 9.5 per cent over the same period last year. Judging from the import volume in recent years, although the crude oil import volume has increased year after year and the base continues to expand, the annual import growth rate has been stable at about 10% compared with the same period last year. Some people in the industry estimate that for every US $10 in oil prices, Chinese enterprises and residents will save 107 billion yuan.

Starting from the transaction cost, it should be a good choice to make full use of futures and options for market pricing. When the price of crude oil falls to the predetermined area, we can first buy virtual options in different months, exercise the right futures contract as scheduled after expiration, and purchase physical crude oil in the spot market after the futures contract expires through delivery or hedging. After the completion of these three stages, due to changes may have taken place, lower operating costs and longer time are conducive to the preparatory work of strategic reserves.

Guojin Machinery and military Industry: national Energy Security is not transferred by the rise and fall of Oil prices

Wang Huajun, chief analyst of Guojin Machinery and military Industry, believes that the core logic of oil service is national energy security, which is not transferred by the rise and fall of oil prices. Since the beginning of 2018, we have recommended the entire oil service sector represented by Jerry, the leader of private oil service enterprises. We are optimistic that the core logic of oil service is the national energy security strategy. In recent years, China's oil and gas gap has continued to expand, with crude oil and natural gas shortages of nearly 70% and 45% respectively. Excessive import dependence poses a certain threat to national energy security.

Investment suggestion: under the background of national energy security, the logic of the oil service industry remains unchanged, and continue to be optimistic about the development of China's oil service industry in the next 2-3 years. Selected global competitive high-quality leader, focusing on shale gas fracturing equipment. Key recommendation$Jerry shares (002353.SZ) $、$COSL (601808.SH) $、$Offshore Oil Engineering (600583.SH) $Pay attention to$Petrochemical Machinery (000852.SZ) $、$petrochemical service (600871.SH) $等。

Sino-Thai Light Industry, Guojin Petrochemical:Pay attention to the industries that benefit from the industrial chain

Sino-Thai Light Industry team:With the fall in oil prices, the plastic and rubber products industry chain downstream of oil is expected to usher in the opportunity to release cost pressure, and plastic packaging is expected to benefit significantly. Zhongtai Securities said that for the light industrial manufacturing industry, it is believed that the drop in oil prices is mainly good for packaging companies. As oil-based plastics, rubber and other products, the drop in oil prices is expected to lead to a decline in product prices, while the packaging industry enterprises downstream of plastic and rubber products are expected to release cost pressure driven by the downward price of raw materials.

Guojin Securities Petrochemical team:Optimistic about the opportunities of the large refining and chemical industry under the "iron bottom" verification, it is pointed out that the current scenario is a substantial expansion of capacity on the supply side (about 50 million tons in full production, 10 million tons in PX and nearly 5 million tons in PTA in the past 4 months), and a drop in superimposed demand cliff (Sino-US trade frictions and COVID-19 led to a near interruption of domestic demand, production and marketing at an all-time low, inventory increased significantly). When extremely rare and pessimistic scenarios such as the collapse of oil prices occurred at the same time, the price gap of the large refining and chemical industry chain did not fall, and it remained for more than four months and rebounded against the trend, indicating that the "iron bottom" range of the industrial chain price gap has fully withstood the test.

Taking into account the sharp decline in the growth rate of the supply side of the industry after the epidemic, and the gradual pick-up of cyclical demand after the epidemic, the verification of the bottom of the long-cycle price spread in the refining and chemical industry, subsequent volume and price increases, long-term profits continue to be upward. Maintain a "buy" rating on the refinery industry and recommend the portfolio as follows:$Hengli Petrochemical (600346.SH) $，$Hengyi Petrochemical (000703.SZ) $，Tongkun Co. (601233.SH) $，$Rongsheng Petrochemical (002493.SZ) $。

Tianfeng Securities:Pay attention to the investment opportunities in the industrial chain brought about by the signal of oil price bottoming out.

It is recommended to pay attention to the signals of the current round of oil price bottoming and the investment opportunities brought about by the bottoming of oil prices. Tianfeng Securities pointed out that given that global crude oil inventories are not high at present, if oil prices overfall in the future and see a rapid rise in cracking spreads, it should be an important signal of oil prices bottoming out.

The cracking price spread of refined oil bottomed out before the oil price, which is in line with the logic of the industry. The last round of double-dip oil prices was from the second half of 2015 to the beginning of 2016. As oil prices plummeted, the split spread rose rapidly to a high of about $15 a barrel, and oil prices bottomed out soon afterwards. Recently, in early January 2020, the Asia-Pacific split spread fell to a low of-4 US dollars per barrel. With the rapid fall in oil prices, it has now recovered to US $2-3 per barrel. If oil prices overfall in the future, or will see a rapid rise in cracking spreads, which should be an important signal of oil prices bottoming out.

By reviewing the last cycle of oil prices, it is pointed out that the stock price performance (relative earnings) of listed companies in the petrochemical sector can be roughly divided into three stages: the stock price performance of the refining and chemical company (Shanghai Petrochemical) is ahead of the oil price, mainly due to the self-repair of the refining supply and demand cycle and the repair of the price gap caused by the oil price falling to an absolute low; the stock price performance of the integrated company (two barrels of oil) is basically in step with the oil price. The share price of oil service company (COSL, CNOOC Engineering) lags behind the oil price. The share prices of the two oil service companies have seriously outperformed the market since 2014 until the domestic seven-year action plan began a new round of gains in 2019.