Hong Kong banking stocks continued their recent downward trend. At the time of writing, DAHSING BANKING (02356) fell 4.73% to HK$11.89; HSBC HOLDINGS (00005) dropped 3.68% to HK$130.8; BANK OF E ASIA (00023) declined 3.35% to HK$13.84; and STANCHART (02888) decreased 0.62% to HK$176.9. The ongoing developments in the Middle East have increased uncertainties surrounding Asian banks' lending exposures in the Gulf region. Data shows that Asian and Chinese banks are major financial institutions in the Gulf, having extended over $15 billion in loans to the region last year, a record high and triple the amount from the previous year. The majority of these funds flowed to Saudi Arabia and the United Arab Emirates. A J.P. Morgan research report suggested that STANCHART could experience a more pronounced pullback, primarily due to its higher exposure to the Middle East. STANCHART's loan and revenue exposure to the UAE for 2025 is 2.5% and 5.6% respectively, while HSBC HOLDINGS disclosed its Middle East loan and revenue exposure as 2.3% and 3.8%. Considering that approximately 73% of STANCHART's loan exposure in the UAE as of the second quarter of 2025 is to government, public sector entities, or banks, the overall credit risk is deemed manageable.