Chinese Markets Weather Iran War Turmoil Better Than Asian Peers

Chinese markets have held up better than their Asian peers during the global market selloff caused by the war in Iran.

have fallen around 1% this week, compared with a more than 6% decline across Asian markets, even as analysts warn about the war’s impact on the region, including for China, a major oil importer. The yuan posted the smallest drop against the dollar among major Asian currencies, and Chinese sovereign bonds have also outperformed major peers amid the selloff.

In a week marked by mounting geopolitical risks and sharp swings across global markets, Chinese assets have emerged as a comparatively stable corner within Asia. This reflects a mix of factors, including Beijing’s emphasis on policy continuity and economic support at the National People’s Congress.

China’s equity markets can serve as “a shelter for global investors seeking diversification during global political instability,” while also offering exposure to the country’s artificial intelligence push, said Marco Sun , chief financial markets analyst for China in MUFG Bank’s global markets division.

The same applies to Chinese bonds and the yuan, he said, adding that this year’s economic targets set at the NPC meeting have buoyed sentiment.

China’s 10‑year government bond yield fell by around two basis points this week to 1.79% on Friday, compared with a roughly 20 bps rise in comparable US Treasury yields and increases of more than 20 bps in French bonds.

The onshore yuan slipped about 0.6% but still outperformed most Asian peers, with South Korean won and Philippine peso both dropping more than 2%.

Chinese government bonds and the yuan are “serving an a solid anchor” for the region, said Wee Khoon Chong , a strategist at BNY in Hong Kong. He added that the bank’s investor data showed continued demand for Chinese stocks this week, helped in part by policy support from Beijing, even as foreign investors from other regional markets.

Premier Li Qiang struck a in his address to lawmakers on Thursday at the country’s highest-profile political gathering since the US and Israel struck Iran. He emphasized stability and higher-quality growth, while pledging to extend fiscal support, maintain an accommodative monetary stance and strengthen domestic demand.

China has also moved to conserve fuel to blunt the war’s impact. Authorities instructed top Chinese oil refiners to of diesel and gasoline as the Middle East conflict disrupts crude arrivals, Bloomberg News reported.