Signs of de-escalation in Middle East tensions lifted global risk assets on Tuesday. U.S. President Donald Trump announced on March 23 that he had ordered a five-day pause on planned military strikes against Iranian power plants and energy infrastructure, contingent on progress in ongoing negotiations. The news sparked broad gains across major Asia-Pacific equity markets at the open, though many pared their advances through the session.
South Korea’s KOSPI index surged more than 4% at the open—the largest single-day opening gain in recent weeks—but gave back much of those gains intraday, closing with a more modest increase between 2.7% and 3.6%. Japan’s Nikkei 225 opened up nearly 1.7%, only to gradually relinquish part of its gains, ending the day with a rise ranging from 0.6% to 2%. Notably, discrepancies emerged among data providers regarding Korea’s opening move, with some platforms showing an actual dip of 0.25% at the open—highlighting information fragmentation amid heightened market volatility.
Hong Kong equities showed greater resilience, with all three major benchmarks closing higher. The Hang Seng Index rose 2.79% to 25,063.71 points, reclaiming the 25,000 mark; the Hang Seng Tech Index advanced 2.51% to 4,830.89; and the Hang Seng China Enterprises Index gained 2.31%. Technology, pharmaceuticals, and gold-related stocks led the rally: Meituan and Tencent both climbed over 3%, Alibaba added more than 2%, WuXi AppTec surged over 10%, Mixue Group rose nearly 6%, and Laopu Gold soared more than 16%. However, mainland investors adopted a cautious stance, with southbound funds recording net outflows of HK$27.3 billion—sharply reversing the previous day’s net inflow of HK$29.7 billion—as domestic capital took profits amid the rebound.
Mainland Chinese equities also rallied, with more than 4,500 stocks finishing in positive territory. Green energy and the “computing-power-electricity synergy” theme continued their strong performance, emerging as key drivers of the market. In contrast, oil and gas stocks underperformed due to a sharp drop in global crude prices. Earlier, fears over escalating Middle East conflict had sent Brent and WTI crude plunging more than 13% in a single day. Although prices partially recovered after Iranian officials denied any ongoing negotiations, energy shares remained under pressure.
Despite repeated circuit breakers triggered by safe-haven sentiment in Japanese and Korean markets recently, institutional views remain divided. Goldman Sachs maintains its bullish outlook on South Korea, arguing that the recent selloff primarily reflects short-term geopolitical shocks and that the country’s semiconductor and export-oriented sectors retain strong recovery potential. Guosen Securities, meanwhile, contends that the current correction is a normal fluctuation typical of the late stages of a bull market, with external disruptions acting more as amplifiers rather than decisive factors capable of reversing the broader trend.
