The Middle East, as the global center of energy supply and a region of intense geopolitical rivalry, means that a potential U.S.-Iran war would inevitably impact China's capital market through energy, financial, and sentiment channels. This paper systematically examines the transmission paths and heterogeneous sectoral reactions to the U.S.-Iran war on China's stock, bond, and foreign exchange markets. It naturally and appropriately constructs an "impact–transmission–feedback" analytical framework, centered on the transmission of geopolitical risk. The analysis yields clear and structured conclusions: the war would trigger a spike in crude oil prices, heightened risk aversion, and disruptions in cross-border capital flows, leading to sharp short-term volatility in the capital market, with pronounced divergence in returns across sectors such as energy, defense, and transportation. From this, practical implications for investor risk hedging and regulatory responses naturally emerge.
U.S.-Iran War; Geopolitical Risk; China's Capital Market; Transmission Mechanism; Sector Rotation.
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