Hong Kong banking stocks extended their losses, with HSBC HOLDINGS (00005) falling 4.02% to HK$119.5, STANCHART (02888) dropping 2.95% to HK$157.7, and BANK OF E ASIA (00023) declining 2.42% to HK$13.29 at the time of writing. The sell-off comes as Middle East tensions intensify following a U.S. ultimatum to Iran demanding the unconditional reopening of the Strait of Hormuz within 48 hours, threatening to destroy Iranian power plants otherwise. Iran responded by threatening to completely close the strait and target critical facilities of the U.S. and its allies. Notably, Citibank branches in Dubai and Manama were previously attacked by drones. J.P. Morgan noted in a report that recent adjustments in HSBC and StanChart's share prices reflect investor concerns over Middle East conflict impacts and private credit exposures. The bank estimates Middle East exposure could reduce HSBC and StanChart's profits by 10% and 14% respectively, with StanChart more sensitive to Middle East conflicts and HSBC having greater private credit risk exposure. However, J.P. Morgan believes current share prices have largely priced in potential downside scenarios, presenting accumulation opportunities.