Since Trump returned to power, the global political and economic situation is undergoing an unprecedented upheaval. Early of this year, Trump ordered to arrest Venezuelan President Maduro, following to launch a barrage of military actions against Iran. The turmoil of the geopolitical "hot war" is looming all over the world. This extreme uncertainty has directly led to a sharp correction in US and Hong Kong stocks. Indeed, the stock prices of many weighted blue-chips plummeted 15% to 30% from their record high, and global risk aversion is intensifying.
Hong Kong, as a highly outward-oriented financial center, is extremely sensitive to geopolitical risks. Trump's policies are unpredictable; he ordered bombing the Iran one month ago and may target to attack North Korea later. The future outlooks are 
unpredictable, and investors have been withdrawing funds from the market to reduce risks. Currently, Hong Kong blue chips were recorded double-digit declines, reflecting investors' pessimistic emotion to the future. Middle East wars are devastating to the economy. Corporate profits have been heavily hit, and funds flow to gold and the US dollar assets as safe havens. If the ceasefire agreement is still unimplemented between US and Iran, the investment sentiment will be hard to be improved. Investors prioritize capital preservation. Therefore, they will reduce their holdings of risky assets, leading to a sharp contraction in trading volumes in stocks and properties, causing downward momentum of assets prices.
The wars in the Middle East also had a negative impact on the property market. Energy price fluctuations triggered by geopolitical conflicts often drive-up inflation, making it difficult for the Federal Reserve to lower interest rates. Under the linked exchange rate system, Hong Kong's high-interest rate environment will last for a longer time, severely affecting both homebuyers and developers. More importantly, it will hit hard for investment sentiment. When the Middle East wars persist, citizens become cautious about big investments, increasing the number of potential property buyers adopting a wait-and-see approach. As a result, it will slow down the property's transaction volume.
Every move of Trump directly shakes the foundation of the global economy. In this "irrational" market environment, traditional technical analysis or fundamental forecasting often proves to be wrong. Faced with an unpredictable leader and the ever-present threat of hot war, the investment strategies in the second quarter of 2026 should prioritize capital preservation.
The market predicts Hong Kong stock and property markets will remain under pressure until the fog of war dissipates and geopolitical stability is restored. Investors should remain highly vigilant and avoid bottom-fishing hastily before the situation becomes clearer.
