How China’s US$12.3 trillion stock market is insulated from Russia-Ukraine conflict while Hang Seng hits two-year low

Name: Ukraine invasion: Russian missiles strike Kharkiv; at least 10 killed and 35 injured
Uploaded: 2022-03-02T23:30:15.000Z
Duration: 1 min 51 s
Description: Ukraine invasion: Russian missiles strike Kharkiv; at least 10 killed and 35 injured

Only two companies among 4,400 – Great Wall Motor and Dezhou United Petroleum – have sizeable revenue linked to the conflict region

Shares of Great Wall have fallen 6.4 per cent in Shanghai since the invasion, while Dezhou advanced 33 per cent on the back of oil rally

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Mainland-listed stocks are insulated from deeper war-related losses given limited sales exposure in the region. Photo: Reuters

Zhang Shidong

Published: 7:30am, 3 Mar 2022Updated: 1:08pm, 9 Mar 2022

China’s onshore stocks are turning into a shelter for investors amid a sell-off in riskier assets triggered by the Russia-Ukraine war, as the bulk of listed companies have limited business exposure in the eastern European nations.

The Shanghai Composite Index has slipped 0.1 per cent since Russia invaded its neighbour on February 24, outperforming all major equity gauges in Asia-Pacific, according to Bloomberg data. The Hang Seng Index ranked as the worst with a 5.6 per cent loss.

Among the 4,400 companies trading on the Shanghai and Shenzhen exchanges, only two – Great Wall Motor and oil-drilling equipment maker Dezhou United Petroleum – have exports to Russia, where certain entities, individuals and the central bank are facing sanctions from the US and its allies.

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Ukraine invasion: Russian missiles strike Kharkiv; at least 10 killed and 35 injured

China’s US$12.3 trillion stock market is also better insulated from the global turmoil as traders bet China will step up efforts to shore up growth. The annual legislative and consultative meetings, or “the two sessions,” will take place this week. Policymakers in attendance are expected to endorse stimulus measures.

“Risk appetite will be dented in the short term,” said Wu Kaida, an analyst at Tebon Securities in Shanghai. “However, the geopolitical conflict isn’t going to have a big impact on China’s economy. Pro-growth measures will improve expectations, and stocks will rise again.”

Great Wall Motor, a carmaker based in northern Hebei province known for its Haval sport-utility vehicles, derived 3.2 per cent of its annual sales from Russia, according to Bloomberg data. Dezhou United generated 2.3 per cent of its sales from there.