China Stock Markets Weather Changing Temperatures of US-Iran War

China's stock markets have largely managed to keep their heads above water amid continuing global supply-chain disruptions from dueling US and Iranian blockades of oil tankers and other merchant vessels transiting through the Strait of Hormuz.

The benchmark Shanghai Composite Index lost 0.33 percent on Friday but wrapped up the week with a gain of 0.7 percent despite the vital oil-traffic Strait of Hormuz in the Gulf remained mostly closed.

The Shenzhen Component Index ended with an increase of 0.4 percent in the past five trading days, and ChiNext, which focused on tech-heavy companies, slipped 0.3 percent.

"Chinese shares seemed increasingly nonchalant toward what is taking place in the Middle East," said Dai Qing, an analyst with Changjiang Securities. "But that doesn't mean companies can ignore the impact of the war."

As hopes for a peace agreement are raised and then dashed, oil prices have climbed above US$100 a barrel again due to serious disruptions in supplies of crude and natural gas. In China, reports are surfacing of higher production costs related to oil and petroleum refined products.

"Companies may have to prepare for a long-haul energy supply disruption, which was not expected at the start of the war," said Du Jian, an analyst at GF Securities. "It's lucky is that China has taken a lead in shifting to green energy."

Shares in Zijin Mining, one of China's largest producers of gold, copper and zinc, rose 2.4 percent on Tuesday after the company said first-quarter net profit nearly doubled to 20.1 billion yuan (US$3 billion) on higher ore output and solid commodity prices. But the stock fell 1.5 percent for the week.

China Telecom shares in Hong Kong fell 0.8 percent on Thursday after the nation's second-largest wireless carrier reported first-quarter profit fell 17 percent to 7.4 billion yuan (US$1 billion) on a 2.3 percent decline in revenue to 131.4 billion yuan, as growth in its traditional telecom business slowed amid intensifying competition.

Shares in Aluminum Corporation of China (Chalco), one of the world's biggest producers of the metal, gained 3.7 percent on Friday after the company signaled that first-quarter profit will rise up to 58 percent from a year earlier to 5.3-5.6 billion yuan.

Tech companies remained a highlight for investment. Shares in Semight, a Suzhou-based maker of chip-related test and measurement instruments, surged 875 percent from their offer price in their trading debut on Shanghai's tech-focused STAR Market on Friday. It was the strongest debut since the IPO of MetaX last December.

It was a big week for AI as Chinese startup DeepSeek and US-based OpenAI released their new large language models, invigorating investor sentiment in the industry. However, concerns persist about the impact of AI on jobs, after Meta and Microsoft this week announced potential combined staff cuts of 20,000 to offset rising costs of AI development. According to the website Layoffs.fyi, more than 92,000 tech workers have been laid off so far this year, bringing the total since 2020 to almost 900,000.

Asian markets ended the week mixed. Hong Kong's Hang Seng Index slid 0.7 percent, while Japan's Nikkei rose 2.12 percent and South Korea's Kospi surged 4.4 after strong first-quarter earnings from memory-chip maker SK Hynix.

On Wall Street, the S&P 500 and Nasdaq closed at record levels on Friday on reports that US envoys would meet with Iranian Foreign Minister Abbas Araghchi in Pakistan to explore the possibility of renewed peace talks. The markets were also buoyed by signs that chipmaker Intel was in a turnaround, sending its shares up 24 percent, the best day since 1987. However, benchmark Brent crude futures closed the week above US$100, ending at US$105.33 a barrel.