Market Resilience: Asian Stocks Bounce Back Amid Middle East Conflict Concerns

Amid fears of the Iran conflict impacting global markets, Hong Kong and China stocks initially dropped but later recovered some losses due to bargain hunting. The Hang Seng and Shanghai Composite indices showed resilience, supported by significant inflows from mainland investors and policy optimism despite global economic concerns.

Asian stock markets proved resilient on Monday as earlier losses spurred by fears surrounding the Iran conflict were partially recouped due to bargain hunting. Hong Kong's Hang Seng Index, despite dipping to a six-month low in the morning, rebounded to close the day down just 1.4%.

In mainland China, the CSI300 and Shanghai Composite Indexes also reduced early declines to finish the session less than 1% down. This recovery was underpinned by strong inflows from mainland investors via Stock Connect, despite broader concerns about economic ramifications from potential sustained Middle East tensions.

Despite geopolitical uncertainties, strategists like Deng Lijun maintain a positive outlook on China's long-term market trends, citing policy support and corporate earnings growth. Energy stocks in Hong Kong saw gains, contrasting with declines in financials and shipping sectors.