China Markets Yet to See Safe-Haven Rush Amid Escalating Middle East Conflict
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The escalating military conflict involving the U.S., Israel and Iran has triggered a regional equities sell-off and sent oil prices soaring, though asset managers say they have not yet seen a large influx of safe-haven capital into Chinese markets.
Global markets have come under intense downward pressure after the U.S. and Israel launched a military strike on Iran on Feb. 28, disrupting passage through the Strait of Hormuz. By March 9, both West Texas Intermediate and Brent crude futures had surged to nearly $120 a barrel, while major Asian equity markets suffered steep losses. Japan’s Nikkei 225 fell 5.2%, and South Korea’s KOSPI dropped 6%.
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- The U.S. and Israel's military strike on Iran on Feb. 28, 2024, caused a global equities sell-off and pushed oil prices to nearly $120 a barrel.
- Asian markets, including Japan’s Nikkei 225 (-5.2%) and South Korea’s KOSPI (-6%), saw steep losses; Hong Kong’s Hang Seng Index dropped 1.35%.
- Asset managers expect the oil price spike to be short-lived and have not seen significant safe-haven flows into Chinese markets.
- Pictet Asset Management
- Pan Jianhui, senior investment manager for Chinese equities at Pictet Asset Management, attributed a record net outflow via Southbound Stock Connect to a geopolitical panic sell-off. He prefers mainland A-shares over Hong Kong equities due to improved liquidity and earnings forecasts. Yang Xiaoqiang, co-head of emerging-market corporate debt, noted no large-scale refuge flows into Hong Kong or Chinese debt markets, though emerging-market bonds still attract international capital for diversification.
- BNP Paribas
- BNP Paribas, an investment bank, anticipates the military conflict to be short-lived, lasting weeks rather than months. Its clients in Hong Kong and Singapore are anxious about a prolonged crisis and underestimated damage to oil and gas infrastructure. They are also concerned about high energy prices curbing U.S. consumption and impacting the technology supercycle.
- Feb. 28, 2026：
- The U.S. and Israel launched a military strike on Iran, disrupting passage through the Strait of Hormuz.
- March 5, 2026：
- The Southbound Stock Connect program recorded an all-time net outflow of HK$27.7 billion.
- By March 9, 2026：
- Both West Texas Intermediate and Brent crude futures surged to nearly $120 a barrel; major Asian equity markets suffered steep losses (Nikkei 225 fell 5.2%, KOSPI dropped 6%).
- March 9, 2026：
- The Hang Seng Index briefly fell below 25,000 before recovering to close down 1.35% at 25,408; a record net inflow of HK$37.2 billion through Southbound Stock Connect was observed in Hong Kong, pushing total daily turnover to HK$392.3 billion.
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