War Woes Weigh on China, Other Asia Stock Markets as Oil Price Rises

Fears of a prolonged war in the Middle East, which is curtailing global oil supplies, outweighed a slew of positive corporate results and better-than-expected China export figures as China's main stock markets fell in tandem with losses across Asia.

However, investor frenzy for OpenClaw-related stocks helped the tech-heavy ChiNext index in Shenzhen to buck the trend.

The Shanghai Composite Index lost 0.7 percent this week to end at 4,095, while the Shenzhen Component Index dropped 0.76 percent. Across the Asia Pacific, Hong Kong's Hang Seng Index dropped 1.1 percent this week. The Nikkei 225 index dived 3.2 percent, reflecting Japan's vulnerability toward oil shortages, and South Korea's Kospi lost 1.75 percent.

"It is a psychological tug-of-war, and investors are disturbed by daily news in the war that decides the oil price," said Zhang Weijun, an analyst in energy sector with Changjiang Securities.

Business executives at a forum on sustainable development hosted by Duke Kunshan University on Friday said the war may have a positive knock-on effect on development of renewable power sources like wind to replace fossil fuels.

"People need to have backup plans to cope with such unexpected shocks," said John Quelch, executive vice chancellor at the university located in Kunshan, Jiangsu Province.

But for now, oil prices dominate global attention. They shot back above US$100 a barrel as Iran stepped up attacks on Gulf energy supplies. Even coordinated efforts of 32 countries to release a combined 400 million barrels of oil from strategic stockpiles calmed prices only briefly this week. PetroChina shares continued to benefit from higher oil prices, rising 0.5 percent on Friday in Hong Kong.

Travel-related shares suffered the war's sting. Air China and China Eastern Airlines continued to fall following a sudden halt of flight resumption in the Middle East. China Eastern Airlines lost 2.7 percent in Shanghai trading this week, while Air China slid 3 percent. Hong Kong flagship carrier Cathay Pacific tumbled 5 percent on Friday, despite reporting 9.5 percent growth in 2025 profit this week.

On the home front, a Chinese export surge of more than 20 percent in dollar terms in the first two months of this year and the approval of China's growth-driven 15th Five-Year Plan by the National People's Congress helped stemmed deeper stock market losses.

Positive corporate earnings also stanched broader market declines. Contemporary Amperex Technology (CATL) rose 0.4 percent in Shenzhen trading on Friday. The battery-making giant reported this week that net profit surged 57 percent to 23.2 billion yuan (US$3.35 billion) on a 37 percent increase in revenue to 140.6 billion yuan. The Shanghai-listed shares of AI chip startup Cambricon, often called "China's Nvidia," rose 0.3 percent after the company reported its first-ever annual profit, which turned to net income of 2.1 billion yuan from a loss of 452 million yuan a year earlier.

On the Hong Kong exchange, shares in Chinese mainland carmaker Nio rose 0.2 percent on Friday after the company reported its first-ever quarterly profit, turning to net of 282.7 million yuan in the last three months of 2025 from a year earlier loss of 7.1 billion yuan. However, shares in Li Auto slid 3.2 percent after the Beijing-based company posted a 99 percent plunge in fourth-quarter profit to 20.2 million yuan.

The ChiNext index jumped 2.5 percent this week as the craze over OpenClaw led investors to buy shares in Chinese-related AI companies. Gloryview Tech shares surged 60 percent and Zhongying Tech jumped 45 percent.

European and US stock markets slid on Friday as the Middle East war enters its third week with no letup in sight. For the week, the broad S&P 500 index fell 1.6 percent, capping its first three-week losing streak in a year, and the Stoxx600 index in Europe lost 0.5 percent on Friday, adding to losses this week. Benchmark Brent crude closed at US$103.69 a barrel in New York.