China was ready for an oil shock and now investors are reaping the rewards

China's readiness for an energy shock has helped its financial markets to turn in a world-beating month and has global investors looking to boost their exposure as the Iran war drags on.

Oil ​stockpiles and resilient energy supply chains have been behind the performance in stocks, bonds and the yuan and money managers and dealers say it is starting ‌to drive a positive view about the economy and buying tech and consumer companies.

Since the US and Israel's war on Iran all but stopped the movement of oil and gas from the Persian Gulf late in February, soaring oil prices have upended global markets. Over that period, China's benchmark CSI300 equity index has fallen about 4.6%, compared with losses deeper than 10% in India, Japan and South Korea and an almost 8% decline for the S&P 500.

The ​yuan is the steadiest in Asia against the dollar - remaining flat through March - and China's debt market is without peer, holding firm as other credit markets have sunk.

By holding ​up in a month where there have been few places for investors to hide, the moves have added to the case for owning China ⁠as both a short-term shelter and longer-run ballast for global portfolios, which have taken a drubbing of late.

"The uniqueness of China's energy dependence is the differentiation factor," said Jacky Tang, chief investment ​officer for emerging markets at Deutsche Bank's Private Bank.

"Because of this, investors prefer to allocate to Chinese assets at this point relative to other markets ... they realised the resilience."

Tang said his portfolio ​was slightly overweight on China and that some clients were gradually switching some technology exposure to China from Japan and South Korea.

STEADY ECONOMY NOW LOOKS 'ROBUST'

Paradoxically, China is the world's largest importer of oil that passes through the Strait of Hormuz and also one of the best placed to weather the waterway's closure.

Domestic production, a freeze on fuel exports and a pipeline network allow it to diversify away from seaborne imports and source oil and gas from ​Russia, central Asia and Myanmar.

It also boasts an electric vehicle fleet about as large as the rest of the world's combined, oil stockpiles estimated at seven months of imports and an ​electricity grid that is almost insulated from imports thanks to domestic coal and renewables.

At the same time inflation is low - so the economy can absorb higher prices - while recent indicators have shown improvement. So relative to the ‌rest of ⁠the world, what had been a steady growth outlook is suddenly looking impressive.

"We feel (the) domestic China economy is going to stay robust, whatever happens," said William Yuen, a Hong Kong-based investment director at Invesco, who added some exposure to tech and consumer firms last month.

"It may have its little ups and downs, but comparing to a lot of other economies in the world, there will be some sort of buffer given how diversified, how self-sustaining the economy has become."

'SLOW BULL'

There are other attractive tailwinds and sectors. Investors have already scooped up stocks in China's renewables industry, a bet on worldwide ​demand for solar panels, batteries and green energy ​equipment to reduce dependence on fossil fuels.

The ⁠wall of household savings stashed in bank deposits has kept downward pressure on bond yields.

And investors say they believe Chinese authorities are standing by to keep things steady, citing a recent regulatory crackdown aimed at market stability and selling from state investment funds last year, leaving them ready to ​prop up stocks if they fall.

"The 'slow bull market' remains the mantra," said Christopher Wood, Jefferies' global head of equity strategy, in a note.

"The ​goal remains clear: For the ⁠stock market to replace the deflating property market as the main source of wealth generation."

To be sure, US-listed Chinese exchange-traded funds recorded outflows last month and the dollar has also had a strong month as a safe haven. Some investors have also sought shelter in the US, a net energy exporter, or pointed to Malaysia and Singapore as smaller markets in Asia that offer some protection.

But for those focused ⁠outside the ​US, China seems to be calling.

"If energy prices keep rising, the sensitivity within Europe and Japan, which are the ​other two big (pieces) in the global ex-US benchmark, could become a worrying point," said Rajiv Batra, head of Asia and co-head of global emerging markets equity strategy at JP Morgan in Singapore.

"That's where investors will try to close any negative ​or underweight positioning as soon as possible on China."