China Belt and Road Stocks Fall on Middle East War
China’s Stock Market Hit by Middle East Conflict
Conflict in the Middle East has cast a fresh cloud over China’s battered stock market, driving down exposed stocks – especially those linked with infrastructure projects in the region. Investors are expressing concerns about the fallout from the clashes between Israel and the Palestinian Islamist group Hamas, which have claimed more than 1,500 lives since Hamas’ surprise strike on Saturday. This has led to a rally in oil and gold prices and selling in riskier assets as global investors turn cautious that the conflict could spread.
Concerns Over Potential Disruptions
China’s benchmark index fell for a second session on Tuesday, despite signs of a domestic economic recovery and gains on Wall Street. Shares from steelmakers to railway builders are down on concerns over potential disruptions to their businesses. Infrastructure giants are suffering the heaviest losses due to worries that prolonged fighting would inflame regional tensions and put the brakes on projects planned as part of China’s decade-old belt and road initiative (BRI), though some aerospace and defense stocks rose.
China’s Muted Diplomatic Stance
China’s muted diplomatic stance, calling for de-escalation but stopping short of condemning Hamas, has drawn criticism from Israel and the U.S. This has added to investors’ nervousness about how the conflict could spill into geopolitics. The silence is seen as negative to the market, with investors worried about potential implications.
Investor Queries Flood Listed Companies
Chinese investors have flooded listed companies with questions related to the war on Shanghai and Shenzhen stock exchanges’ investor relations platforms. Concerns range from the impact on production plans to potential changes in business strategies. While some companies have responded and assured investors about their plans, confidence in the market has been rattled.
Shares Slump in “Belt and Road” Index
Shares in a “belt and road” index slumped more than 2%, with construction giants with business in the Middle East leading losses. State-owned China Communications Construction, China Railway Group, and China State Construction Engineering Corp are among the companies that have seen their stock prices decline. The war is expected to negatively impact these firms’ business in the Middle East.
Drone Maker Aerospace CH UAV Co Gains
Amid the overall decline, drone maker Aerospace CH UAV Co has seen its stock price rise by 6% in two days. Drones have been widely used in the conflict, and this has contributed to the company’s gain. The Middle East is one of its major markets, and investors are optimistic about its performance.
Defense Security Index Shows Positive Movement
The defense security index has risen 1.5% so far this week. This indicates that despite the overall market decline, investors are showing confidence in the defense sector. The ongoing conflict has increased the demand for defense-related products and services.