China Emerges as Safe Haven as Middle East Conflict Rattles Global Equities - Tekedia

Chinese equities are being seen as a relative safe haven amid a month-long Middle East conflict; J.P. Morgan named China its most preferred market in Asia this month and HSBC maintains an overweight stance on Chinese equities.

Crude oil prices surged nearly 50% from pre-war levels after the Strait of Hormuz closure; the strait handles roughly one-fifth of global oil and gas shipments.

Regional equity moves: Shanghai Composite down about 6% in March, Japan’s Nikkei 225 down around 13% over the same period, and South Korea’s KOSPI down roughly 18%.

BNP Paribas strategists expect China’s relative outperformance could become more pronounced if the conflict persists; Goldman Sachs estimates the shock will shave about 20 basis points off China’s GDP (versus about 40 bps for the U.S.).

China’s energy mix—oil and LNG at 28% of primary energy and alternative/renewable sources contributing about 40% of electricity generation—along with large strategic and commercial reserves and an estimated capacity to cover domestic demand for up to 110 days support its resilience.