As tensions in the Middle East escalated dramatically, rumors of US military action against Iran materialized. This geopolitical storm was not only to shock the international community but also rippled through global financial markets like a tsunami. Market risk aversion surged, with investors frantically selling off their stock assets.
The war triggered panic selling in global stock markets. The Asia-Pacific markets were also battered, with Hong Kong's Hang Seng Index recording four consecutive days of decline. On March 6th, the Hang Seng Index closed at 25,757 points, officially falling below the closing level of 26,338 points on the first trading day of this year. This signifies that all gains since the beginning of this year are wiped out, and the market's technical trend has been weakening.
This big slump in the stock market will lead to the "wealth effect" vanishing. As investors' stock assets' value shrinks significantly, consumer confidence is also being hit. This vicious cycle is further weakening the recovery momentum of the real economy. Last year, the Hang Seng Index rose 27.8% for the entire year; with such a rough start this year, the wealth effect brought by the stock market will be completely wiped out. As a major energy hub, the situation in Iran has directly triggered concerns about oil supply disruptions. The surge of international oil prices has broken through key resistance levels. High oil prices will not only increase production and transportation costs, but also significantly increase the likelihood of rising inflation.
If hyperinflation is truly induced by the war, the market expects the affected countries to be forced to maintain a high-interest rate 
environment or even further raise interest rates. Rising interest rates directly increase the debt burden of enterprises and compress the growth potential of economic activity.
For Hong Kong, the stock market and the property market are often intricately linked. Under the pressure of evaporation of wealth effect from the stock market, the upward trend in the property market, which initially showed signs of recovery, will be severely hampered. Facing the expensive monthly installment and the instability of the global economy, potential property buyers will adopt a wait-and-see approach, and it exerts intense pressure on the property market.
As a prospective buyer, it is crucial to closely monitor whether the situation in the Middle East war escalates to the point of disrupting the oil supply chain. If there is no urgent need to purchase a home for self-use, the potential buyer can adopt a wait-and-see strategy. Even with high rental costs, renting makes more financial sense than owning to avoid the risk of depreciating property values. If you must enter the market for self-use, you can use the war as a pretext to drive down the counter-offer price. If the investors purchase properties for rental income, the rental yield should be at least 4%. If the rental yield cannot outperform fixed deposits or US Treasury bonds, it lacks investment value.
