Zheshang: The conflict between the U.S. and Iran may be a turning point for global capital flows. The Hong Kong market is expected to benefit from capital seeking refuge.

Zheshang released a research report stating that the US-Iran conflict may be a "watershed" for global capital flows, and the Hong Kong market is expected to see the benefits of global funds seeking refuge. Geopolitical weakening Dubai's status as a global financial center, rising oil prices amplifying the vulnerability of the Japanese and Korean stock markets. Factors such as the influx of family offices, Dubai funds expanding into Asia, the recovery of the Hong Kong property market, and the inflow of southbound funds are all interpreted at the micro level. Hong Kong stocks are undervalued globally, with a more diversified industry structure far exceeding that of Japan and Korea, such as high dividend stocks representing companies like HSBC. With the appreciation of the Renminbi, the backing of the vast mainland market, and the stability of the linked exchange rate system, Hong Kong is the preferred choice for overseas funds to invest. Zheshang's main views are as follows: Financial security: Under geopolitical competition, Hong Kong may welcome the benefits of capital refuge In early March, the Financial Secretary of the Hong Kong Special Administrative Region Government, Paul Chan Mo-po, stated that, driven by geopolitical tensions, American funds are flowing into Hong Kong for refuge, and the number of family offices in Hong Kong has significantly increased. From January to February 2026, the assets managed by private banks in Hong Kong increased by 18.5% year-on-year. Among the top twenty sovereign wealth funds globally, half are from the Middle East. In 2026, the cornerstone subscription ratio of Middle Eastern sovereign wealth funds in Hong Kong IPOs increased from 18% to 39.2%. The Dubai real estate index once plummeted by over 30% due to geopolitical impacts, while the Hong Kong property market had already stabilized and rebounded in Q2 of 2025, with rental-to-sales ratios higher than mortgage rates, a recovered sentiment in the Hong Kong stock market, and healthy leverage ratios for Hong Kong real estate companies collectively forming the basis for the stability of the property market. The 15th Five-Year Plan mentions the consolidation and enhancement of Hong Kong's status as an international financial, shipping, and trade center. As the world's largest offshore Renminbi center, Hong Kong handles about 80% of offshore Renminbi settlements globally. Undervalued: Global fund rebalancing Drive Recently, the famous global short seller Michael Burry publicly expressed optimism about Han Ji. As of March 16, 2026, Han Ji's PE TTM was 21.2 times, significantly undervalued compared to Korea's KOSDAQ index with a PE of nearly 120 times, and far below Nasdaq's PE of 38.6 times. In terms of global asset valuation, the undervaluation of Hong Kong stocks has increased the safety margin of allocation. China's energy self-sufficiency rate is 85%, much higher than the energy self-sufficiency rates of around 15% in Japan and Korea. This makes AH shares more resilient under the spillover effects of geopolitical issues. A shift in the center of oil prices may amplify the vulnerability of the high valuations of the Japanese and Korean markets. Recently, global capital has significantly reduced its holdings in the Korean stock market. China's relatively robust energy security and industrial system may become a "safe haven" for global capital. Quality core assets of Hong Kong stocks: Resonance of high dividends and new economy The diversification of industries in Hong Kong far surpasses that of Japan and Korea. The core assets of Hong Kong stocks are roughly divided into two categories: traditional high dividend blue-chip stocks represented by HSBC HOLDINGS, Henderson Land Development, which are the cornerstone of defensive allocation; and new economy leaders represented by Chinese tech giants. For example, the wave of Chinese tech self-reliance represented by the Huawei supply chain restructuring the global tech landscape, and the Hong Kong stock market is the core channel for international capital to share the dividends of this era. The success of Samsung in Korea is built on technological leadership and a globalized market. However, its domestic market is only 50 million people, which means it must heavily rely on external markets and the global supply chain. On the other hand, Chinese tech companies represented by Huawei and its supply chain have a unified market of 1.4 billion people behind them. Conclusion: The security value of Chinese assets is expected to be reevaluated With the backing of the vast mainland market, the stability of the linked exchange rate system, and the new strategy of "talent attraction + finance," Hong Kong has the potential to become the "ACR HOLDINGS center." The acceleration of family offices entering, the reassessment of Dubai funds in Asia, the early stabilization of the property market, and the undervaluation of Hong Kong stocks are all vivid interpretations at the micro level. Foreign capital still has pricing power over Hong Kong stocks, but against the backdrop of the Renminbi's appreciation cycle, overseas funds may prefer to invest in Hong Kong. Essential consumption and healthcare sectors may gradually improve, and the security value of Chinese assets will gradually be reevaluated. Risk warning Geopolitical conflicts exceed expectations; the pace of Fed rate cuts is slower than expected; domestic economic recovery is slower than expected.