Opening market volatility: Iran's situation exposes the weakness of the Asia-Pacific market, with a continuous wave of stop-loss orders.

Asia-Pacific investors are accustomed to reacting to overnight news, but the Iran conflict has made the opening of each trading day particularly nerve-wracking. Last Friday, the Australian benchmark bond yield closed at around 5%, but on Monday's opening, it jumped 18 basis points within minutes, directly reflecting the escalating situation in Iran and the volatile impact on the US Treasury market. Additionally, since February 27, Asian stock markets have fallen by 10%, significantly exceeding the US (4.3%) and Europe (9%), while the Asian currency index has fallen by 1.7%, highlighting the vulnerability of regional markets under the impact of the Iran conflict. Asia-Pacific market volatility core: Stop-loss tide and risk hedging under cash strategy "Traders are continuously being stopped out," said Amy Shee Patrick, a fund manager at the Australian asset management company Pendal Group. She was referring to situations where trades are forced to close due to reaching predetermined loss limits. "In the current market environment, cash is clearly king, and everyone wants to hold more cash," she added. To deal with market volatility, her fund has increased its cash holdings to over 20%. Asia-Pacific investors are struggling to adapt to this new normal, trying to understand the sharp volatility brought about by the rise in oil prices while the Iran conflict continues. Volatility in almost all asset classes has increased, with Asia at the forefront. Data shows that this month, the opening price volatility of Asian stock markets and major bond markets has reached the highest levels in the past year. At the opening this month, the average volatility of Australian 10-year government bond yields was nearly 6 basis points, while the MSCI Asia-Pacific index saw a volatility of 0.3%, more than twice that of February. Asia has been hit hard because trading in the region often follows the volatility of the US and oil markets, and given the region's high dependence on Middle East energy, investors face particularly pronounced risks. For example, this month, the Australian benchmark bond yield experienced fluctuations of 8 basis points or more at open five times, while during market volatility caused by US tariffs in April last year, this occurred only three times. "We are forced to adjust our risk exposure, sometimes even forced to sell," said Shunji Kunibu, Chief Investment Portfolio Manager of the Global Fixed Income Team at Sumitomo Mitsui DS Asset Management. "This may be the reason why market volatility is so intense this time - many investors are forced to stop-loss." The investment manager is building more bullish positions in the US dollar against the Japanese yen to hedge against the risk of further oil price increases, including during volatile opening trading periods. Differentiated strategies: The game of hedging and portfolio adjustments Investor strategies are differentiating: some choose to hedge associated stocks to maintain bullish positions rather than reduce risk exposure. For example, Jon Weisel did not sell semiconductor stocks, but maintained bullish positions by hedging associated stocks to reduce volatility. Jon Weisel, Head of Special Situations at Pictet Asset Management Asia, said one of the fund's core trading strategies is to buy shares in SK Square and short shares in SK Hynix, allowing it to avoid concerns surrounding memory chips. Others are adopting gradual adjustment strategies - Christopher Liow of Singapore's Principal Asset Management chooses to ignore most of the price noise at the opening. He prefers to stick to conviction trades - for example, reducing Indian and Indonesian stocks and increasing exposure to Hong Kong and Taiwan stocks - to protect his portfolio in the long run. "If you try to trade based on the prices displayed on the morning screen, those prices will not move smoothly and gradually," said Christopher Liow of Principal Asset Management, managing over $590 billion in assets. "Our portfolio adjustments are gradual and small, rather than major shifts or complete overhauls." However, as there are almost no signs of easing in the Iran conflict, the strategy of "gradual adjustment, ignoring opening noise" will face a severe test in the coming weeks. Future challenges: Escalation of conflict and market test US President Trump has hinted at delaying attacks on Iranian energy facilities, but an Iranian lawmaker ruled out the possibility of negotiations with the US. Reports suggest that Saudi Arabia and the United Arab Emirates have taken steps to join the war, indicating a further escalation of conflict. The Strait of Hormuz is a key channel for Middle East oil transportation, but as only a small number of ships pass through, the strait remains effectively closed, keeping oil prices high. Matthew Haupt, a hedge fund manager at Sydney-based Wilson Asset Management, chooses to reduce positions, with some positions shrinking to 50% of pre-war levels. As oil prices fluctuate sharply almost every day at the opening, he has also closed out short positions in Brent crude oil. "I keep trading, but it requires monitoring around the clock," Haupt said. "I'm reducing my bets as much as possible."