Hong Kong stocks retreat as Middle East tensions raise inflation risk

Amjad Ali June 17, 2025

0 0 1 minute read

Hong Kong stocks retreat as Middle East tensions raise inflation risk

Hong Kong stocks dropped on Tuesday amid concerns that military conflicts in the Middle East could increase the global inflationary risk by straining oil supply.

The Hang Seng Index fell 0.2 per cent to 24,015.44 as of 11.26am local time. The Hang Seng Tech Index slipped 0.1 per cent. On the mainland, the CSI 300 Index and the Shanghai Composite Index retreated at least 0.1 per cent.

Chow Tai Fook Jewellery Group slumped 6.7 per cent to HK$12.82 on a plan to raise HK$7.85 billion (US$1 billion) in one of the city’s biggest convertible bond sales this year. PetroChina lost 4.5 per cent to HK$7.05 as the stock traded ex-dividend. Chinese electric-vehicle maker BYD slipped 1.2 per cent to HK$128.30, and peer Li Auto lost 1.1 per cent to HK$110.

US President Donald Trump called for the evacuation of Tehran in a social-media post and cut short his stay at the Group of Seven leaders’ summit in Canada, fanning speculation that Israel may launch a new round of attacks on Iran. Heightened hostilities in the Middle East could increase the risk of a slowdown in global growth or even a recession by fuelling inflationary pressure at a time when the US is deadlocked in tariff talks with most of its trading partners.

“The Middle East is once again the fulcrum of global market anxiety,” said Stephen Innes, managing partner at SPI Asset Management in Bangkok. “It’s smouldering in real time while traders nervously bet on whether it fizzles or detonates. That’s no longer symbolic warfare. That’s a direct hit on the arteries of global crude and [liquid natural gas] flows.”

Investors are also waiting for more policy signals from Beijing after a set of mixed economic data from May, when the downturn in property prices accelerated. Shanghai will kick off its annual two-day Lujiazui financial forum on Wednesday, in which top financial officials said new policies would be unveiled to bolster economic growth and push for reforms in the financial industry.

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