The stock markets in China and Hong Kong concluded trading this week against the backdrop of global geopolitical tensions.
As the conflict in the Middle East continues to escalate, investors' risk appetite has noticeably decreased, putting pressure on the overall Asia-Pacific markets.
Stock Index Performance
The Shanghai Composite Index fell 0.8% on Friday, closing at 4095.45 points, marking a weekly decline of 0.7%.
The CSI 300 Index dropped 0.4% on Friday but managed a slight increase of 0.2% for the week. The ChiNext Index declined by 0.2%, while the STAR 50 Index decreased by 0.7%.
The Hong Kong market performed relatively weaker. The Hang Seng Index closed down 1%, with a cumulative weekly drop of about 1.1%, marking its third consecutive day of decline. The Hang Seng Tech Index fell about 1% on Friday, although it rose approximately 0.6% for the week.
Noticeable Sector Divergence
The defense sector was one of the largest decliners, with the CSI National Defense and Military Industry Index plunging 3.5%.
In contrast, the new energy sector showed strong performance. The CSI New Energy Index rose 6.3% this week, making it one of the few sectors to gain amid the downturn.
Macro Variables Remain Key
Market analysts point out that the core variables currently affecting the stock markets still stem from the global macro environment, including:
- The development of the Middle East conflict
- The trend of international oil prices
- The global inflation trajectory
- Monetary policy of major central banks
Meanwhile, upcoming macroeconomic data for January to February from China is also drawing market attention. A Reuters survey indicates that the value-added of industries above a designated size is expected to grow about 5% year-on-year, while fixed-asset investment may see a year-on-year decline of about 2%.
Until these uncertainties are resolved, the Chinese stock market may maintain a volatile pattern.
