Shanghai stocks hit 10-year highs while Hong Kong crypto ETFs fall

Shanghai’s benchmark index climbed to its highest level in a decade on Monday, as Chinese investors flocked to energy, gold and defense stocks in the wake of the Iran conflict, which also highlighted why Chinese capital continues to flow from cryptocurrency markets.

The rise, which coincides with Beijing tightening its grip on domestic liquidity ahead of this week’s National People’s Congress, has reduced the likelihood of Chinese capital getting into cryptocurrencies anytime soon.

A tale of two markets

The Shanghai Composite Index closed 0.5% higher at 4,182.6 points on March 2, its highest level since June 2015, even as most Asian markets came under geopolitical pressure. China’s high liquidity index CSI300 rose 0.4%.

The rally was driven by a surge in energy stocks and safe havens. Shares of CNOOC, PetroChina and Sinopec jumped sharply after oil prices posted their biggest rise in four years. An index tracking Chinese gold stocks rose 7%, and defense stocks also advanced. Shipping stocks, including Nanjing Tanker and COSCO Shipping, reached the daily limit of a 10% increase.

In contrast, Hong Kong — the only regulated gateway for Chinese investors seeking exposure to Bitcoin exchange-traded funds — has been a different story. The Hang Seng Index fell more than 2% to a two-month low, with the technology, health and tourism sectors among the hardest hit. Hong Kong-listed Bitcoin funds fell collectively, with ChinaAMC Bitcoin ETF (3042.HK) down 2%, Bosera HashKey Bitcoin ETF (3008.HK) down 2.3%, and Harvest Bitcoin Spot ETF (3439.HK) down 2.4%. Ether funds have also decreased.

Why is this important for cryptocurrencies?

The gap between Shanghai and Hong Kong highlights a structural problem in digital currency adoption among Chinese capital pools.

Chinese investors are still on the mainland Forbidden From direct access to Bitcoin and Ethereum ETFs in Hong Kong. Possible pathways — including a QDII program and a cross-border wealth management linkage system in the Greater Bay Area — have been discussed by industry and legal experts, but none has turned into concrete policy. The expansion of the connected wealth management system in the Greater Bay Area in January 2025 raised hopes, but did not explicitly include digital currencies.

Pushing stocks higher in Shanghai – supported by expectations of supportive policy ahead National People’s Congress That will be held on March 5 – to further reduce the incentives for Chinese capital to seek alternative assets such as digital currencies.

Beijing has a long history of supporting domestic markets during external crises, while Hong Kong, which is open to global capital flows, usually bears the brunt of those crises. Monday was a typical example. The same geopolitical shock that lifted energy and defense stocks in Shanghai pushed the Hang Seng Index lower. Cryptocurrency funds have also fallen with it. If the conflict escalates further, gold will likely remain Safe haven preferred For Chinese investors, while Bitcoin will face more downside pressure.

The NPC job

The annual parliamentary meeting in Beijing this week added an extra layer to the equation. The National People’s Congress is expected to set a GDP growth target for 2026 at 4.5%-5% and implement the 15th Five-Year Development Plan, focusing on domestic demand, self-sufficiency in technology and stimulating consumption.

This policy framework reinforces the narrative that Beijing wants capital to circulate within its internal financial system—in domestic stocks, government bonds and state-directed investment vehicles—rather than flow to volatile assets.

Historical records show that geopolitical shocks have had a limited and short-lived impact on Chinese domestic stocks. Beijing’s policy tools—from sovereign fund purchases to trade restrictions—are designed to protect domestic markets from external volatility, and the pre-NCP period reinforces this path.

Fundamentals for cryptocurrencies point in the wrong direction. The local stock market is performing well, political support is coming, and Beijing’s capital controls remain tight.

Bitcoin is caught in the crossfire

Bitcoin has struggled to act as a safe haven during the Iranian conflict. After falling to 63,000 on Saturday following the US-Israeli attacks, BTC briefly recovered to more than 68,000 amid reports of Supreme Leader Khamenei’s death before stabilizing around 66,000 – roughly the same trading levels as before the strikes.

Coinshares Data reported that outflows from global cryptocurrency funds have now extended to five consecutive weeks, with total withdrawals reaching $4 billion. The last week alone saw $288 million in redemptions, while trading volumes fell to $17 billion, the lowest since July 2025. Bitcoin has fallen 23% since the beginning of the year and is down about 48% from its high of 126,000 in October 2025.

The Chinese stock market is absorbing local liquidity, Hong Kong markets are under pressure, and cryptocurrencies are behaving more like risk assets than digital gold, making the possibility of influential Chinese capital flowing into cryptocurrencies seem very slim – at least for now.