Middle East developments - Implications for Asian equities and fixed income

3 March 2026

The Asian Equities and Asian Fixed Income team assess the recent Middle East developments and implications for Asia asset classes.

Implications for Asian equities

Key points:

Energy import‑heavy equity markets (e.g. India, the Philippines, Taiwan, Korea) may face near‑term pressure, as higher oil prices could lift input costs, weigh on corporate margins, and delay expected monetary easing, particularly for transport, airlines, logistics, financials, and real estate sectors.
Chinese mainland’s equity impact may be more sentiment‑driven than fundamental, as strategic oil inventories could buffer near‑term supply risks.
Relative equity resilience may emerge in energy‑producing economies (e.g., Malaysia, Indonesia), while broader Asian equities may remain sensitive to the duration of elevated oil prices and any disruption to shipping through the Strait of Hormuz, which could raise logistics costs and amplify volatility.

Implications for Asian fixed income

Key points:

Higher oil prices may pose inflation and growth challenges for Asia as many economies are net energy importers, which could influence interest rates, currencies, and market sentiment.
Higher‑yielding bond markets are more sensitive to oil prices and currency weakness, while lower‑yielding markets have seen some safe‑haven support.
While underlying fundamentals for many Asian Investment Grade and corporate issuers appear broadly intact, credit markets may see near-term valuation adjustments, especially in higher-risk segments.

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