China Stocks Struggle as Iran War Weighs

The Shangai Composite Index decreased -33 points or 0.80 percent on Friday to close at 4096 points. The decline was led by Aluminum Corporation of China (-5.15%), China Molybdenum (-3.44%) and NARI Technology (-3.31%). On the upside, the strongest performers were Power Construction Corporation of China (9.94%), Hengli Petrochemical (2.31%) and Great Wall Motor (2.23%).

The Shanghai Composite fell 0.8% to close at 4,096 while the Shenzhen Component lost 0.65% to 14,281 on Friday, with mainland stocks struggling for traction amid uncertainties from the Iran war, which dampened risk sentiment. Defiant rhetoric from leaders in Tehran and Washington indicated that the conflict remains far from de-escalation after nearly two weeks of fighting. Oil prices also surged after Iran’s new supreme leader, Mojtaba Khamenei, pledged to keep the Strait of Hormuz effectively closed while Tehran intensified attacks on regional oil and transport facilities, raising inflation concerns. Still, Chinese stocks held up relatively well, supported by Beijing’s efforts to shield the economy from oil supply shocks through years of investments in renewables and strategic oil reserves. Notable losses were seen from Huagong Tech (-7.2%), China Energy Engineering (-1.6%), Zijin Mining (-2.7%), Beijing Teamsun (-10%) and Talkweb Information (-7.1%).

The Shanghai Composite shed 0.1% to close at 4,129 while the Shenzhen Component fell 0.63% to 14,375 on Thursday, with mainland stocks snapping a two-day advance as investors grappled with heightened Middle East tensions and surging oil prices. The US-Israeli war on Iran showed no signs of easing, with Iraq halting operations at its oil terminals after two tankers were targeted in Iraqi waters, underscoring elevated supply risks in the region. Meanwhile, the IEA approved its largest-ever emergency release of 400 million barrels of oil, though markets viewed the move as insufficient to offset potential disruptions. China remains relatively well positioned to weather the supply shock after years of prioritizing energy security by building strategic reserves and diversifying energy sources. Tech stocks led the decline, with sharp losses from Huagong Tech (-5.2%), Eoptolink Technology (-3.7%), Zhongji Innolight (-3.6%), Beijing Teamsun (-2.8%), and Talkweb Information (-3.3%).