China, HK stocks tumble most in a year as Iran war rattles markets

SHANGHAI: China and Hong Kong stocks plunged more than 3 percent on Monday, their biggest loss since US President Donald Trump’s “Liberation Day” tariff shock last year, as the escalating Middle East war triggered a global selloff.

Investors dumped stocks across the board in China, with sectors ranging from tech to travel to agriculture hit particularly hard as they’re seen as most vulnerable to potential stagflation caused by soaring oil prices and weaker demand.

China’s benchmark Shanghai Composite Index tumbled 3.6 percent in its worst day since April 2025. The blue-chip CSI300 Index lost 3.3 percent to a six-month closing low.

Hong Kong’s Hang Seng Index sank 3.5 percent, also the worst showing in nearly a year.

Wang Yapei, fund manager at Zijie Private Fund, slashed his stock holdings soon after Monday’s opening bell, judging the Iran crisis will deepen. “I don’t have a full picture of the battlefield … but when you see other markets behaving badly, you need to cut your positions,” said Wang.

On Sunday, Iran said it would strike the energy and water systems of its Gulf neighbours if US President Donald Trump followed through with a threat to hit Iran’s electricity grid, which would mark a major escalation in the war.

The US-Israeli war on Iran could spark “bad inflation” in China that threatens to squeeze already thin profit margins, piling pressure on jobs and wages, economists say.

In addition, if global demand weakens significantly due to the oil shock, “Chinese exports and growth would come under considerable pressure,” Goldman Sachs said.

Agriculture, tourism, and consumption stocks were among the biggest losers on Monday as they are seen to be most impacted by rising energy costs. Gold miners and tech shares dropped 7 percent and 5 percent, respectively, as the spectre of higher rates reduced their appeal.

But coal miners and oil refiners rose, on bets that they would benefit from a greater emphasis on energy security, and new energy stocks were among the least bruised.