[ET Net News Agency, 02 March 2026] The US and Israel launched attacks against Iran on
Saturday, bombing hundreds of military targets across the country. Iran's Supreme Leader
Khamenei and several senior military and government officials have reportedly died.
Asia-Pacific capital markets opened lower this morning, with Hong Kong stocks recording
the most significant declines. The financial and leading technology sectors plunged
sharply, causing the Hang Seng Index to fall by over 748 points at one stage to 25,882,
breaching the 26,000 level and coming within 200 points of this year's low. However,
defensive buying quickly returned to the market, and the HSI eventually closed the morning
session at 26,205, managing to hold above 26,000, down 424 points or 1.6%, with main board
turnover exceeding HKD 193.5 billion. The Hang Seng China Enterprises Index closed at
8,738, down 120 points or 1.4%. The Hang Seng Tech Index finished at 5,028, down 108
points or 2.1%.

"Nip Chun Pong: Financial markets react sharply on day one because of US-Israel action
against Iran"

Nip Chun Pong, the Chief Strategist at Solo Securities, told ET Net News Agency that the
participation of foreign capital in Hong Kong stocks is relatively high, so whenever
geopolitical tensions rise, capital outflows tend to be swift, resulting in larger
declines. Nip noted that since the Lunar New Year, Hong Kong stocks have been tracking the
performance of the US market more closely. Last Friday (27th), major declines in US
markets, in particular, sharp drops in tech stocks like Nvidia, dragged down the share
prices of Hong Kong tech names such as Alibaba (09988) and Baidu (09888). Furthermore,
after HSBC (00005) reached a new high following its results, the market reversal has
prompted some investors to take profits, leading to heavier selling pressure today.
Nip Chun Pong explained that since the beginning of January, the HSI's movements have
formed a head-and-shoulders pattern, and he does not rule out the possibility of the index
testing this year's previous low at 25,717. Although the Two Sessions will soon be held,
since early February, several major Mainland China enterprises have been summoned by
regulators for antitrust and business regulation talks, so the focus is unlikely to be on
surprising industrial upgrades, but rather on industry consolidation and healthy long-term
sector development. Therefore, it is difficult to expect the Two Sessions to deliver
strong positive news for the market. However, Nip pointed out that currently, Bull
certificates account for 70% of the outstanding CBBCs, and positions below 25,800 points
are not excessive. This suggests that there is limited motivation for forced downward
moves; even if the HSI momentarily touches 25,717, it should only be brief. He added that,
as today is the first trading day following US and Israeli military action against Iran,
the sharp reaction in financial markets is understandable. Still, he believes the conflict
will not escalate further and expects market volatility to stabilise over the next two or
three days.

"Oil prices spike but rally difficult to sustain"

Amid rapidly escalating conflict in the Middle East, Iran's Revolutionary Guard declared
that no ships have the right to pass through the Strait of Hormuz, halting traffic in this
key energy corridor. Situated between Oman and Iran, the Strait of Hormuz is the world's
most important oil shipping channel and the only sea passage from the Persian Gulf to the
Indian Ocean. It accounts for 20%-30% of global oil shipments and 20% of LNG shipments.
The Joint Maritime Information Center (JMIC) raised the threat level in the Strait of
Hormuz to the highest grade on 1 March, noting that three oil tankers had been attacked in
the preceding 24 hours. The agency stated that, although a formal legal closure of the
strait had not yet been declared, the operational environment indicates a clear risk of
attack in the area. In the past 24 hours, around 110 ships passed through the strait,
compared to the historical average of 138. Market forecasts indicate that some marine
insurance premiums in the Middle East could surge by up to 50% in the coming days, with
oil shipping rates also jumping. International oil prices surged by USD 8 at Monday's
open, with Brent crude reaching USD 82.37 a barrel and NYMEX WTI climbing to USD 80.82.
Nip Chun Pong commented that, although oil prices spiked at the open, New York crude
peaked at USD 75.33 per barrel before quickly pulling back to near USD 70, indicating that
the market is starting to digest the news. Though the Middle Eastern conflict may not be
easily resolved in the short run, oil prices are likely to remain volatile in the near
term. However, the overwhelming military advantage held by the US and Israel means Iran's
threat to regional shipping cannot last. Furthermore, OPEC+ partners have provisionally
agreed to a modest production increase of 206,000 barrels per day in response to the
current conflict, so it is unlikely that high oil prices can be sustained. Nip noted that
NYMEX crude rose 14% in January and gained another 2% in February; with the US and Israel
striking Iran at the start of March, oil prices have surged nearly 20% in three months.
Given the one-sided nature of the conflict, the upside stimulus for oil prices is limited
and there are still risks to buying at current levels. NYMEX settled close to USD 67 last
month and spiked to USD 75 today. Investors are advised to wait for a pullback to the USD
68-69 range to buy, as this entails lower risk. As for oil stocks, CNOOC (00883) has
posted 10 consecutive monthly gains, but despite today's high open and pullback, it
appears less attractive. Accumulating on dips towards HKD 24-25 would be safer.

Gold prices: Limited room for profit-taking at highs, gold miners more attractive

With the Middle East war situation intensifying, safe-haven demand for gold has surged,
causing the gold price to spike this morning. NY gold futures jumped in Asian trading,
briefly topping USD 5,400, marking a gain of over 2% for the day. Nip Chun Pong noted that
gold prices had already risen 1.8% last week. Although risk aversion is boosting gold, the
price chart is showing a doji, suggesting some investors may be taking profits around USD
5,400 per ounce. Nevertheless, gold remains firm overall, with little pressure for a major
pullback, though a mild correction is possible. Investors interested in gold are advised
to wait for a retreat to the USD 5,250-5,300 range, which would be a safer entry.
However, Nip also said that gold mining shares have outperformed bullion itself. For
example, Zijin Mining (02899) trades at a forward P/E of just 20x and grew net profit by
50% in the first three quarters of last year, so the share price still has potential
upside. Zijin Gold Intl (02259), a unit of Zijin, hit a high of HKD 268 at the end of
January and fell to HKD 228 today, measured from that January high, there is a potential
upside of 17%, offering better returns than physical gold. That said, Nip reminded that,
as Zijin Gold International has been listed for a relatively short time, it may carry
higher speculative risk. The parent company Zijin, on the other hand, has been listed
longer and its price trend is comparatively more stable.