APAC Market Wrap - Jul 6

China A-Shares

Shanghai Composite: +0.37% (4,043.64) | Shenzhen Component: -3.85% (15,498.81) | ChiNext: +0.07% (4,019.93)
STAR 50: Closed slightly lower as high-beta AI compute and semiconductor names extended their profit-taking run.
Turnover: Combined turnover tapered to RMB 3.21T across Shanghai, Shenzhen, and Beijing, with 3,804 advancing issues.
Summary: Market rotation from high to low valuations persisted. Cyclicals, gold, and small-cap resources strengthened across the board, weighing on crowded tech heavyweights and sustaining severe index divergence.

Hong Kong Equity Market

Hang Seng Index: +1.28% (23,350.03) | Hang Seng Tech Index: +1.00% (4,499.00)
Summary: Softening Fed rate hike expectations drove the index higher through intraday volatility. Precious metals surged on rebounding gold prices, while robotics and auto parts led gains; conversely, semiconductors and software retraced as high-level profit-taking continued. Southbound net inflows reached HKD 4.54B.

Japanese Equity Market

Nikkei 225: +1.47% (69,744.07)
Summary: Welcomed July's opening session with heavy volatility, erasing sharp morning losses to finish firmly in the green following a 40% first-half surge. Domestic pharma, retail, and transport machinery led the tape. Chip heavyweights Tokyo Electron, Kioxia, and Advantest retraced late gains, capped by modest yen depreciation.

South Korean Equity Market

KOSPI: +5.76% (8,088.33)
Summary: Staged a massive technical recovery, reversing a sharp morning dive into a one-way rally following the previous session's pullback. Previously battered memory names rebounded sharply, with Samsung Electronics gaining over 4% and SK Hynix finishing significantly higher. Long-term sentiment remains supported by Seoul’s multi-billion semiconductor cluster roadmap.

Australian Equity Market

S&P/ASX 200: -0.60% (8,722.90)
Summary: Precious metals and mining led the decline, tracking international commodity weakness. Local resource equities decoupled entirely from the early regional tech recovery, forcing capital to seek refuge in defensive consumer assets and utilities.

Singapore Equity Market

Straits Times Index: -0.73% (5,170.65)
Summary: Local real estate and mining counters lagged, while telecom and utility names provided minor downside insulation. Banks finished mixed as the broader tape drifted lower in narrow ranges, with capital consistently favoring high-dividend defensive utility assets.

Malaysian Equity Market

FTSE Bursa Malaysia KLCI: +1.04% (1,679.05)
Summary: Telecom, utilities, and domestic consumer equities drove the index higher, while gold and non-ferrous resource names saw minor pullbacks. The tape closed with a positive bias as trading volume moderately recovered, though it remained largely decoupled from the North Asian semiconductor rebound theme.

Key Events

South Korean Equities Primed to Heat Up in H2? Goldman Sachs: Rally Exceeds the Twin Chip Giants

Following a blistering first half, the South Korean stock market has experienced violent volatility, with the benchmark KOSPI sliding from multi-month highs. However, Goldman Sachs noted on Sunday that recent turbulence hasn't altered its bullish outlook, forecasting the KOSPI to extend gains into H2 while rotating into broader sectors.

The bank projects the KOSPI to hit 12,000 within the next 12 months—representing over 20% upside from current levels—though it cautions the path upward will be "zigzagged."

Goldman Sachs Bears on Yen to 165, Recommends as Carry Trade Funding Currency

Driven by persistent US-Japan interest rate differentials, Goldman Sachs revised its 12-month USD/JPY forecast from 155 to 165, placing the bank among the most bearish forecasters tracked by media surveys.

Goldman strategist Karen Reichgott Fishman noted that the revision reflects a triple whammy: Japan's fiscal strains, a "higher-for-longer" US Treasury yield environment, and an expectedly gradual rate-hiking path by the Bank of Japan.

Currency Depreciation Triggers Chain Reaction: SMB Bankruptcies Surge in Japan as "Reverse Knock-Out Options" Turn Lethal

As relentless yen selling plagues the FX market, the depreciation driven by the gaping US-Japan interest rate differential is rapidly spilling over into the real economy.

With the yen retesting fresh 40-year lows against the greenback, self-fulfilling bearish sentiment not only drove corporate bankruptcies to record highs in H1 but also primed a massive wave of structured derivative "landmines."

Institutional Perspectives

1. J.P. Morgan: Gold Constrained Near-Term, Targets $4,500 in H2 2026

The team notes that near-term gold prices will remain range-bound due to softening purchasing power in key physical demand sectors and a renewed sensitivity to real yields.

However, the bank maintains its structural medium-to-long-term bullish thesis, forecasting gold to advance to a quarterly average of $4,300/oz in Q3 2026 and $4,500/oz in Q4, driven by sustained central bank accumulation and long-term structural asset allocations.

2. Bank of America: US Equities Endure Largest Capital Outflows in Three Months

BofA reports that investors are shedding US equities at the fastest clip since March, citing EPFR Global data showing a massive $17.2B exodus from US equity funds for the week ending July 1.

Capital actively rotated into international cross-currents, giving Japanese equities their largest weekly inflow in seven weeks at $1.9B, while high-valuation anxieties dragged the Philadelphia Semiconductor Index down 11% over a two-day stretch.

3. Nomura: Global Memory Faces Severe Shortages; AI Structural Growth Has Not Peaked

The team emphasizes that the core narrative in global memory remains a severe supply deficit, declaring recent investor panic over capacity gluts as grossly exaggerated. Analysts point out that South Korea's massive KRW 4,800T investment pipeline will take 5 to 10 years to materialize into physical capacity, while HBM wafer consumption continues to cannibalize commodity memory supply.

Nomura underscores that Meta's compute-leasing model is not an inflection point for cooling hardware demand, but rather a catalyst to stabilize soaring per-token pricing.