The conflict in Iraq has escalated suddenly, causing a geopolitical shockwave in the capital markets!

Israel launched a surprise attack on Iran's nuclear facilities and ballistic missile bases early on June 13. Iranian Islamic Revolutionary Guard Corps commander Hossein Salami was killed in the attack, and Tehran immediately vowed to retaliate against the Israeli government and the United States with severe strikes. This sudden Middle East crisis quickly crossed geopolitical boundaries, causing violent turbulence in global capital markets - Brent crude oil futures surged more than 13% in a single day, cryptocurrencies and global stock markets plummeted collectively, and safe-haven assets such as gold soared in response, with energy and financial markets experiencing continued chain reactions. In the Asian market, Hong Kong stocks became the direct target of geopolitical risks. The Hang Seng Index opened lower and fluctuated downwards, ultimately closing down 0.59% at 23,892.56 points. The Hang Seng TECH Index extended its decline to 1.72%, with technology stocks weakening across the board, and leading stocks like Alibaba falling by more than 1%. However, the energy and gold sectors bucked the trend, with CNOOC and PetroChina rising by over 2%, Chifeng Jilong Gold Mining surging by 10%, and Shandong Molong Petroleum Machinery skyrocketing by 160% due to expectations of increased orders for oil and gas equipment. Southbound funds defied the trend with a net purchase of HK$3.997 billion, showing mainland funds' long-term confidence in quality assets in the Hong Kong stock market. Early analysis by experts pointed out that the impact of geopolitical risks on Hong Kong stocks shows structural characteristics: shipping stocks dependent on the Middle East supply chain are under pressure, while defensive sectors such as oil and gas exploration and gold have become safe havens for funds. Energy arteries impacted, oil prices perform a "geopolitical jump scare" As the gateway for 20% of global oil flow, the Strait of Hormuz's maritime security risks instantly heightened market panic. After the attack, Brent crude oil futures prices surged, shifting market focus from supply-demand fundamentals to Iran's retaliatory measures potentially threatening transportation routes. Charu Chanana, Chief Investment Strategist at Shengbao Bank, warned that if Iran blocks the strait or interrupts 2.1 million barrels/day of exports, oil prices could surpass $80 per barrel. However, OPEC+ production increase plans pose risks of oversupply in the autumn. Rystad Energy stated that out of Iran's current production of 4 million barrels/day, purchases by China are a key support, while Westpac Bank believes this attack resembles more of a "strategic deterrence." If Iran retaliates against Israel's mainland with missiles over the weekend, oil prices may break January highs, but they maintain a bearish long-term outlook, expecting oil prices to dip into the $60-65 range in the third quarter. The shipping market has already reacted. Oil Brokerage data shows that the Gulf region concentrates 15% of the world's ultra-large crude oil tanker fleet, with escalating geopolitical risks directly increasing insurance costs and route expenses. Based on historical models, Zhi Sheng Futures estimated that short-term oil prices may have a $3-5 upside; Guotou Anxin Futures recommended investors hedge extreme risks by buying low-cost call options and then wait to short after the situation clarifies, reflecting the cautious attitude of the market in the face of black swan events. Risk assets "bleeding" collectively, safe-haven wave sweeping financial markets Geopolitical crises have triggered global investors' risk-off sentiments, with Bitcoin falling over 3% to below $103,000, Ethereum dropping nearly 7%, and small-cap cryptocurrencies broadly declining over 10%. Caroline Moron, co-founder of Orbit Markets, pointed out that the short-term trend in the crypto market is completely dominated by geopolitical news, with $101,000 as a key technical support for Bitcoin. At the same time, US major stock index futures plunged significantly, funds flowed into US bonds and other safe-haven assets, and gold prices surged to $3,450, challenging the $3,500 mark. "Traders significantly reduced their risk exposure before the weekend, waiting for more news on potential Iranian responses, and risk sentiment could deteriorate further," said IG market analyst Tony Sikamole. Data shows that as of 9:40 AM Singapore time, Bitcoin was trading at $103,130, while global stock markets and high-yield bond markets were under pressure, highlighting the divergence in the performance of safe-haven and risk assets amid market concerns over geopolitical uncertainty. Incremental demand in the arms market emerges, focus on the Middle East procurement landscape As a global hub for the arms trade, the Middle East accounted for 36.87% of global arms imports from 2013 to 2022, with Saudi Arabia, Egypt, and four other countries among the top ten importers globally. Orient pointed out that since the India-Pakistan conflict, Chinese equipment's cost-effectiveness in actual combat has been internationally recognized. In the context of escalating geopolitical conflicts, high-cost-effective equipment is expected to further increase its market share in emerging markets in Southeast Asia and the Middle East. China Post Securities also emphasized that geopolitical tensions will drive military expenditure in various countries. In addition to end-use equipment, the export demand in the core supply chain may accelerate, boosting the performance of relevant companies. Experts debate on the retaliatory path as the focus of the market on the conflict boundaries with Iran Chinese Foreign Ministry spokesperson Lin Jian stated during a routine press conference on the 13th that China highly concerns about the Israeli attack on Iran and is deeply worried about the serious consequences it may bring. China opposes any actions that violate Iran's sovereignty and security or escalate conflicts, as the sudden escalation in the regional situation is not in the interest of any party. China calls on all parties to do more to promote regional peace and stability, and avoid further escalating tensions. Andrea Stricker, a researcher at the Foundation for Defense of Democracies, pointed out that destroying Iran's deeply buried nuclear facilities would require sustained bombing, with Iran possibly targeting civilian cities for retaliation; Nicole Grajewski of the Carnegie Endowment for International Peace expressed concerns that if the attack results in a large number of civilian casualties, Iran may cross the "equal retaliation" red line. However, former Singaporean diplomat Bilahari Kausikan believes that the conflict may be limited to the regional level. Although Iran may attack non-military targets in Saudi Arabia, the UAE, and Gulf shipping, the probability of a "catastrophic end of the world" is low. The current market is waiting for the specific direction of Iran's retaliatory actions - this military conflict originating in the Middle East has taken on a new and unpredictable dimension.Through the linkage effect between energy and financial markets, the logic of global asset pricing is being redefined. Analysts point out that short-term fluctuations in oil and gold prices will closely revolve around the safety of navigation in the Strait of Hormuz, while the evolution of geopolitical games in the medium to long term may introduce new variables for the restructuring of the military trade market and energy supply chain."Bonjour, comment a va ?" "Hello, how are you?"