Hong Kong stocks closed lower on Monday as escalating tensions in the Middle East sent oil prices to recent highs.
The Hang Seng Index down 0.8%, while the Hang Seng Tech Index down 1.8%.
In terms of star stocks, Knowledge Atlas up 10%; XPeng down 5%; Bilibili down 4%; Nio down 3%; Tencent, Alibaba, Xiaomi, Meituan down 2%.
Over the weekend, Yemen’s Iran-backed Houthi rebels launched attacks directly on Israel, which intensified strikes on Tehran. The US has also deployed additional military forces to the Middle East.
The escalation pushed up oil prices, with Brent crude jumping as much as 3.7 per cent to US$116.80 a barrel, its highest in more than a week, while West Texas Intermediate rose to US$101 a barrel.
Asia faces the greatest exposure among energy importers. In 2024, nearly 80 to 85 per cent of the oil and liquefied natural gas passing through the Hormuz Strait flowed to Asian markets, primarily China, India, Japan and South Korea, according to Lazard Geopolitical Advisory.
“The market is anxious that sustained high oil prices will deliver a significant shock to both the future economy and investment markets,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.
The Hang Seng Index has fallen 12 per cent from a late January high of 28,056.10. Its weakness had been driven largely by geopolitical friction in the Middle East and disappointing tech earnings, Ng said. But China’s stabilising economy could provide support for Hong Kong stocks, Ng added.
China’s exports surged 22 per cent in the first two months of the year compared with a year earlier, while the years-long property downturn showed signs of a tentative floor as new home prices in first-tier cities stabilised in February, halting a nine-month decline.
“Mainland A-shares have shown less volatility than Hong Kong,” Ng said. “This could offer some stability for the Hong Kong market.”
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