[ET Net News Agency, 03 March 2026] On Monday (the 2nd), US stocks tumbled sharply in
early trade due to geopolitical fears, but as oil prices retreated from their intraday
highs and investors bought the dip in technology and defence stocks, both the Nasdaq and
S&P 500 managed to close higher, while the Dow only posted a slight loss. Supported by a
southbound capital inflow of HKD 16 billion yesterday, Hong Kong stocks opened higher and
rebounded this morning. Oil stocks continued to rally, and Mainland China banks rose in
anticipation of the "Two Sessions" policy direction. However, tech stocks remained
subdued, while biotech and domestic consumption sectors led the declines, causing the Hang
Seng Index to drop 76 points, or 0.3%, closing at 25,983 by midday, falling below the
26,000 mark, with mainboard turnover close to HKD 187.6 billion. The Hang Seng China
Enterprises Index stood at 8,675, down 26 points or 0.3%. The Hang Seng Tech Index
registered 4,938, down 50 points or 1%.

"Kwok Ka Yiu: HSI may test 25,000 if geopolitical tensions persist"

Although the war in the Middle East is ongoing, US equities staged a reversal overnight
after an initial plunge, but Hong Kong stocks remained volatile today, losing the key
26,000 support once more. Kwok Ka Yiu, the Director of Business Development at Harbour
Family Office, told ET Net News Agency that ongoing Middle East conflicts have resulted in
considerable uncertainty, with speculation that more Gulf countries could be drawn into
the conflict, and disruptions to the Strait of Hormuz continue to impact regional oil and
gas exports. The situation is unlikely to reverse in the short term. While the US holds
overwhelming military superiority and can destroy Iranian military bases in the strait,
Iran's use of drones still poses threats to oil tankers.
While the first day of US trading managed to digest the outbreak of war, Asia-Pacific
markets fell sharply today. Kwok Ka Yiu explained that as Middle Eastern oil and gas are
mainly supplied to key Asian economies like China, Japan, and Korea, the crisis impacts
regional markets more heavily. This is also partially due to profit-taking after Asian
stocks recently hit new highs.
Kwok Ka Yiu noted that even without the Middle East crisis, Hong Kong stocks have shown
overall weakness, with resistance observed earlier at the 27,000 level, dragged lower
mainly by weak tech stocks. For example, Alibaba (09988) has rolled out frequent corporate
updates, but these have failed to move the share price. The Hang Seng remains capped below
27,000 with no bottom in sight. Barring a dramatic turnaround in the Middle Eastern
situation, the HSI could very well test 25,000.

"Middle East tensions threaten Easter travel peak"

After the US and Israel attacked Iran, the latter retaliated against multiple countries
in the Persian Gulf, spreading the turbulence across the region. Since 28 February, the
UAE, Qatar, Iran, Israel, and other countries have successively closed their airspace or
imposed flight restrictions, virtually paralyzing the major hubs of Dubai, Abu Dhabi, and
Doha. These three airports typically handle around 2,000-2,500 flights and 400,000-600,000
passengers per day, but the sudden outbreak of war has left hundreds of thousands of
international travellers stranded.
According to the website of the Hong Kong Airport Authority, as of 11pm last night, 15
flights to or from Dubai, Abu Dhabi, Doha, and Riyadh have been cancelled at Hong Kong
International Airport. Cathay Pacific announced that, in light of the latest Middle East
developments, all flights to and from Dubai from 28 February to 5 March 2026 (inclusive)
have been cancelled; likewise, all flights to and from Riyadh from 28 February to 3 March
2026 (inclusive) have been cancelled.
Cathay Pacific's stock price fell by as much as 7% yesterday (the 2nd), before paring
losses to close down 4%, and it remains under pressure today. Kwok Ka Yiu believes that
the war in the Middle East has impacted major regional aviation hubs, affecting both
passenger and cargo revenues for Cathay Pacific, as the region is a key transit point
between Asia and Europe. Not only are flights to the area impacted, but flights to Europe
may also need to be rerouted, increasing costs. In addition, soaring oil prices are
another drag on Cathay Pacific's share price. He explained that while Cathay Pacific has
long practiced hedging to mitigate losses, persistently high oil prices will still
negatively affect operations.
US President Trump, in an interview with the New York Post, predicted the conflict could
last for four weeks and warned that ground troops may be sent to Iran if necessary. Kwok
Ka Yiu warned that if the fighting drags into the upcoming travel peak, such as the Easter
holidays next month, Cathay Pacific may face even more significant impacts. Furthermore,
after Cathay Pacific shares surged to a ten-year high last Friday (27 Feb), there has been
substantial profit-taking pressure. The recent pullback, however, has not been large
enough to make the stock attractive. Kwok Ka Yiu believes Cathay Pacific's shares will
only become appealing if they pull back to the 50-day moving average of around HKD
12.50-12.60.
As for Mainland China's three major airlines, after a sharp drop of 5-8% yesterday,
today's losses stabilized. Kwok Ka Yiu, however, cautioned that this does not mean their
declines have ended. Unlike Cathay Pacific, the three Mainland China carriers do not hedge
oil prices, so if high oil prices persist, the impact will be even greater for them than
for Cathay Pacific.