China Indexes Drop 1% After Middle East Conflict Escalates

Li Chen
19 Apr, 2024
Hong Kong

Market indexes in Shanghai and Hong Kong declined on the final day of the week after tensions in the Middle East rose. 

Three explosions were heard near Isfahan City in western Iran, and other large explosions were confirmed in Iraq and Syria that are suspected Israeli retaliatory attacks. 

The conflict between Iran and Israel is now playing out in the open after six months of covert fights between the two warring nations, in parallel to the Israel-Hamas conflict. 

Israel's missiles are likely to target Iran's nuclear facilities in Isfahan City and weaken Iran's nuclear program, but that could also lead to more intense and deadlier attacks from Iran targeting Israel's military and nuclear installations. 

Asian markets fell in Friday's trading, and the Nikkei 225 Stock Average led the decliners with a loss of 3.3%.

Crude oil jumped 4%, gold advanced 0.6%, and the yield on 10-year U.S. Treasury yields edged down to 4.56% as investors sought safer assets in the time of rising geopolitical tensions. 

The CSI 300 index in Shanghai fell 1%, the ASX 200 index in Sydney dropped 1.5%, and the KOSPI index in Seoul decreased 2.8%. 

The CSI 300 index decreased 0.9% to 3,538.37, and the Hang Seng index dropped 1.2% to 16,184.02. 

This week, the CSI 300 index is up 1.8%, and the Hang Seng index is down 1.9%. 

In a broad sell-off, tech stocks, financial services providers, and automobile makers were among the leading decliners. 

Alibaba Group declined 1.9% to HK$66.60, Tencent Holdings fell 0.5% to $302.60, and Baidu dropped 1.4% to HK$92.20.

Energy companies traded higher, reflecting a 4% jump in crude oil prices. 

CNOOC jumped 2.1% to HK$18.78, China Petroleum and Chemical gained 1.4% to HK$4.65, and Sinopec China Petrochemical gained 4.2% to HK$1.04. 

Sands China declined 4.4% to HK$18.06, and Galaxy Entertainment Group fell 0.9% to $33.80. 

Electric vehicle makers fell sharply on the worries of a prolonged price war after Li Auto priced its latest model cheaper than Tesla's best-selling car. 

Li Auto declined 7% to HK$106.40, BYD dropped 2.4% to HK$200.40, and Geely Automobile Holdings fell 3.2% to HK$8.76.