The Hong Kong stock market dropped sharply on Monday, closing at 2.12% down, following the US and Israel military strikes on Iran. Stocks in Chinese airlines dropped sharply, with China Eastern Airlines down at 8.11%.
Chinese investors, like investors everywhere, are trying to calculate the impact of the conflict on the market. For China, several areas stand to be the most affected—airlines, oil supplies and logistics. An estimated 15-20% of China’s oil comes from Iran. At the same time, the closure of the Strait of Hormuz and the shutdown of major airports in the Gulf States, dramatically disrupts supply chains.
China has a complex web of relationships in the Middle East, and this conflict impacts on all sorts of Chinese interests in the region. For example, a lot of Chinese investors have been looking at Dubai in recent years, but the possibility of missiles falling from the sky have an impact on business. China’s relationships with Israel, the US and Saudi Arabia are all part of the mix of the future, and all thrown into question in light of the developing situation.