By Jiaxing Li
China stocks closed largely flat in choppy trading on Monday, while Hong Kong shares tumbled, as the escalating conflict in the Middle East continued to dent risk appetite in broader Asia markets.
The Shanghai Composite Index .SSEC lost as much as 1% before recouping losses and closing 0.2% higher at 3,923.29.
The blue-chip CSI 300 Index .CSI300 dipped 0.2%.
Hong Kong’s benchmark Hang Seng Index .HSI fell 0.8%. The Hang Seng Tech Index .HSTECH lost 1.9% to its lowest level since April 2025.
Broader Asian equities declined, with MSCI’s Asia ex-Japan stock index .MIAPJ0000PUS weaker by 1.8% and Japan’s Nikkei index .N225 closing down 2.8%.
Hopes of Gulf peace talks were overshadowed by uncertainties as the U.S. builds up ground troops, while attacks on Israel by Yemen’s Iran-aligned Houthis further complicated the war.
“With Middle East tensions rising over the weekend, markets now face headwinds from both geopolitical risks and weak technical signals, making a sharp turnaround unlikely for the near term,” analysts at Nanhua Futures said in a note.
Still, expectations of supportive domestic policy measures provide a floor, and downside is limited following previous corrections at the beginning of the year, Nanhua analysts added.
The benchmark Shanghai Composite Index has slipped 6.7% so far in March, which has largely wiped out all the year-to-date gains and put the index on track for the worst monthly drop since January 2024.
However, Chinese equities still prove to be more resilient compared with other markets in the region, and that relative outperformance is set to become increasingly pronounced as the war drags on, analysts at BNP said in a note.
The bank said it maintains its preference for China’s materials, industrials, and technology sectors within the medium- to longer-term.
Among best performers, the gold sector index .CSI931238 added 3.4%, the defences sector index .CSI399973 climbed 1.4% and the semiconductor sector .CSI931865 added 2%.
The CSI New Energy Index .CSI399808 declined 1.8%.
(Reporting by Jiaxing Li in Hong Kong; Editing by Varun H K)
