Global Market | China’s an unlikely haven as oil roils markets

As the war in Iran sent oil prices soaring, one market holding up unexpectedly well is that of the world’s largest crude importer: China. Chinese stocks have fallen less than global peers since the conflict began, the yuan has held steady against the dollar and government bond yields have barely moved. Together, this amounts to surprising resilience in a crisis that, at first glance, appeared likely to leave the country vulnerable.

For decades Beijing has sought to insulate its economy from precisely this kind of shock. It poured investments into renewables, secured dominance across much of the clean-energy supply chain and promoted electric vehicles at a remarkable speed. The result is an economy still dependent on imported fossil fuels but less beholden to them than before – providing some protection as oil prices have jumped as much as 65% since the conflict.

“Chinese asset classes are something that is missed by global investors as a safe haven,” Cary Yeung, head of Greater China debt at Pictet Asset Management.

Global markets have been on a roller coaster since the war broke out late February. Stocks slid as crude – which briefly surged to almost $120 a barrel – threatened to stoke inflation and delay central bank easing, only to rebound on signals from Washington hinting at a possible end to the fighting.

Asian equities have taken the hardest hit, given the region’s heavy reliance on imported energy. Japan, Korea and India are down about 6%, 9% and 4%, respectively, since late February. European markets have lost around 5% and US stocks fell 1.4%. Yet China’s CSI 300 slipped just 0.3%. That means a Chinese investor have preserved more capital than in most major markets.