Hang Seng Falls to Two-Month Low on Iran War Fallout

The Hang Seng lost 292 points, or 1.1%, to close at a two-month low of 25,768 on Tuesday, extending declines from the prior session amid broad sector declines. Sentiment weakened as U.S. stock futures tumbled, with investors assessing the repercussions of U.S.–Israel action against Iran, which has expanded beyond strikes on Iranian territory as Tehran launched missiles and drones at U.S. targets across the Middle East. Mainland markets also came under pressure ahead of February PMI releases, reversing recent strength that lifted the benchmark to a decade-high. Still, losses were partly cushioned by reports that U.S. and Chinese officials will meet in Paris next week to discuss business agreements ahead of an April summit between Presidents Trump and Xi Jinping. Among underperformers were Zijin Gold Intl. (-8.7%), Pop Mart (-5.9%), Xiaomi (-4.4%), and SMIC (-4.3%). In contrast, energy stocks jumped, including ENN Energy (4.0%), Hong Kong & China Gas (1.6%), and Kunlun Energy (1.2%).

Hong Kong stocks slipped 124 points, or 0.5%, to 25,941 in early Tuesday trade, marking declines for the second straight session and hovering around a six-week low. Weak U.S. futures weighed on sentiment as surging oil prices—driven by Middle East tensions and Tehran’s threat to shut the Strait of Hormuz—stoked inflation fears. Adding to the bearish momentum, Chinese automakers posted steep February sales drops, reflecting Lunar New Year disruptions. All sectors in the city traded in the red, mirroring a retreat in mainland equities following recent gains, ahead of China’s PMI release that will be due Wednesday. Still, investors held out hope that this week’s parliamentary meeting in Beijing would unveil fresh support measures for the slowing economy. Notable laggards included Zijin Gold Intl. (-6.3%), Laopu Gold (-5.3%), China Hongqiao Group (-3.0%), Xpeng (-2.4%), Cathay Pacific Airways (-2.2%), and ZTO Express (-2.0%).

The Hang Seng slid 571 points, or 2.1%, to close at 26,060 on Monday, erasing prior gains and hitting a six-week low amid broad sector weakness. A sell-off in U.S. futures pressured sentiment as Middle East tensions escalated, with President Trump warning the conflict could last another four weeks and pledging continued strikes until U.S. objectives are met. Risk appetite also faded as Chinese automakers reported sharp sales declines in February, reflecting Lunar New Year disruptions in the world’s largest auto market. Caution also mounted ahead of China’s February PMI and Hong Kong’s January retail sales data later this week. Still, losses were partly offset by strength in mainland stocks on expectations that Beijing may step in to stabilize markets ahead of a key parliamentary meeting. Meanwhile, investors rotated into Chinese energy firms as oil prices surged. Major laggards included Xiaomi (-5.2%), SMIC (-4.7%), Meituan (-4.6%), Cathay Pacific (-4.2%), and Longfor Group (-2.3%).