Middle East conflict hits Asian markets hard; Chinese assets stand out, stocks, bonds, and currency collectively outperform!

``` During the global market selloff triggered by the Iran war, Chinese assets proved relatively resilient, becoming one of the few “stable” markets in Asia, with stocks, government bonds, and the renminbi all outperforming their regional counterparts this week. Asian markets generally fell more than 6% this week, while the CSI 300 in the A shares market dropped only about 1%. In foreign exchange, the renminbi slid about 0.6% against the US dollar, making it one of the smallest declines among major Asian currencies, and significantly better than the won and peso, both of which were down more than 2%. The bond market also reflected safe-haven and relative advantages. China’s 10-year government bond yield fell about 2 basis points this week to 1.79% on Friday, while the comparable US Treasury yield rose sharply by about 20 basis points, with French bond yields also rising more than 20 basis points. According to Bloomberg, the market attributes this performance to expectations of policy continuity, demand for allocation to Chinese assets, and a more “anchored” nature when faced with geopolitical shocks. This has allowed Chinese assets to attract incremental capital during the rapid cooling of risk appetite in Asia. Chinese stocks see much smaller pullback amid broad declines in Asia The CSI 300 fell about 1% this week, significantly outperforming the more than 6% decline in Asian markets overall. Although analysts warn that the Iran war will impact the Asia region, capital still views Chinese equities as one of the relatively stable allocation options during this volatile week. Marco Sun, Chief Financial Markets Analyst for China at MUFG Bank’s Global Markets Division, said that the Chinese stock market can provide a “safe haven” for global investors seeking diversification during periods of global political instability. Renminbi outperforms most Asian currencies, becomes a “stabilizer” in regional forex In the foreign exchange market, the onshore renminbi fell about 0.6% against the US dollar this week, but still outperformed the majority of Asian currencies. By comparison, the won and the Philippine peso both fell more than 2% this week. According to Xinhua, the fourth session of the 14th National People’s Congress opened at 9am on the 5th at the Great Hall of the People in Beijing. The government work report set the main economic development target for 2026 at 4.5%-5% growth, while striving for even better results in practice. Marco Sun believes that China’s economic targets set during this year’s NPC boosted market sentiment, an important factor supporting the performance of both the renminbi and Chinese bonds. Government bond yields decline, creating "relative appeal" compared to rising overseas rates In an environment of global asset selloff and heightened rate volatility, Chinese government bonds outperformed. China’s 10-year government bond yield dropped about 2 basis points this week to 1.79%, in contrast to the roughly 20-basis-point rise in US Treasury yields, and it also outperformed major peers like French government bonds. Policy also offered important support for market pricing. According to Xinhua, Premier Li Qiang, in the NPC meeting on Thursday, clearly stated: "Continue to implement a more proactive fiscal policy" and "continue to implement an appropriately accommodative monetary policy." Such policy stances also provided crucial confidence support for the market amid rising geopolitical risks. BNY strategist Wee Khoon Chong, based in Hong Kong, said that Chinese government bonds and the renminbi are providing solid anchoring for the region. He added that the bank’s investor data shows there was still sustained demand for Chinese stocks this week, partly due to policy support, while overseas investors withdrew from other regional markets. Risk Warning and Disclaimer The market involves risks, and investment should be cautious. This article does not constitute individual investment advice and does not take into account users' particular investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their specific circumstances. Investing based on this content is at your own risk. ```