APAC Market Wrap - 23 Jun
China: China’s major A-share indexes all closed higher today. The Shanghai Composite rose 0.65% to 3,381.58, the Shenzhen Component gained 0.43% to 10,048.39, and the ChiNext Index edged up 0.39% to 2,017.63. Total trading volume across Shanghai and Shenzhen markets hit 1.1226 trillion RMB, up 54.9 billion RMB from last Friday.
Most sectors saw gains, with energy metals, mining, shipping ports, software development, oil, batteries, computer equipment, and internet services leading the pack. The liquor sector was the only notable decliner. Over 4,400 stocks rose, with more than 80 hitting their daily limit. Solid-state battery stocks surged, with Jinlongyu and others hitting the daily cap.
Hong Kong: Hong Kong’s major indexes all climbed. The Hang Seng Index rose 0.67%, the Hang Seng Tech Index gained 1.05%, and the $H-share Index increased 0.82%.
Tech and internet stocks mostly rose, semiconductors performed strongly, biotech shone, shipping and port stocks advanced, casino and gaming stocks rallied, and wind power stocks broadly gained.
Japan: Japan’s Nikkei index fell on Monday as U.S. strikes on Iranian nuclear facilities heightened risk-off sentiment, while rising oil prices pressured Japan’s economy and corporate earnings outlook.
The Nikkei 225 closed down 0.13% at 38,354.09. Chip stocks dragged, with Advantest and Tokyo Electron falling 1.23% and 1.17%, respectively, weighing heavily on the index. Oil and gas exploration stocks outperformed, with the TOPIX Mining sub-index up 1.49%, leading all 33 industry sub-indexes.
South Korea: The KOSPI index dipped 0.24% to 3,014.47. IT services, machinery, and finance sectors surged, while manufacturing and electrical equipment lagged.
Singapore: The Straits Times Index slipped 0.08%, down 4.17 points to 3,880.28. Furniture, alcohol, and medical equipment sectors rallied, while industrial, forestry products, credit, and software sectors declined.
Key events
Not Just Hormuz: BIMCO Warns of Rising Shipping Threats Around Arabian Peninsula
The Baltic and International Maritime Council (BIMCO), the world’s largest shipowners’ organization, has issued a fresh warning that while it’s unclear how Iran will respond to last Saturday’s U.S. strikes, threats to commercial shipping in waters around the Arabian Peninsula are escalating.
Beyond the Strait of Hormuz, risks are growing across other critical Middle East shipping lanes.
BIMCO’s Security Chief Jakob Larsen noted, “The threat from Houthi forces to shipping in the Red Sea and Gulf of Aden is also rising.” He added, “The Houthis are now threatening to target commercial vessels linked to Israel or the U.S., but attacks on ships tied to other nations can’t be ruled out.”
Middle East Conflict Fuels Inflation Risks, Japan’s Finance Ministry Slashes Long-Term Bond Issuance to Stabilize Yields
Japan’s Ministry of Finance sparked market attention with its announcement to significantly cut ultra-long-term bond issuance, exceeding expectations. The plan reduces 20-year, 30-year, and 40-year bond issuance by 3.2 trillion yen (about $22 billion) through March next year, double the reduction outlined in earlier draft reports.
Tariff Deadline Looms, South Korea’s Exports Surge 8.3% in First 20 Days of June
South Korea’s latest trade data shows early signs of economic resilience as the July deadline for U.S. tariff hikes approaches, with the government intensifying trade talks with the U.S.
Customs data released Monday showed South Korea’s exports grew 8.3% in the first 20 days of June, a sharp rebound from May’s full-month 1.3% decline. Imports rose 5.3% in the same period, yielding a $2.62 billion trade surplus.
Institutional Views:
BOC International: Expects continued consolidation in the jewelry retail sector, with Chow Tai Fook as the top pick.
BOC International’s research report noted recent industry data, such as May retail sales, showing a rebound in gold and jewelry sales in Q2. The firm expects performance to vary widely among brands and foresees ongoing industry consolidation.
High-end brands with strong identities are likely to keep attracting affluent consumers, while mass-market brands, facing product homogenization, may lose appeal and market share. Though more optimistic about leading brands, BOC remains cautious on the sector due to weak consumer confidence in the mass market, naming Chow Tai Fook as its top pick with a target price of HK$13.80.
Middle East Tensions Escalate, Analysts: STI May Face Continued Pressure
Dr. Han Wei, portfolio manager at Phillip Securities, said escalating Middle East tensions are fueling arbitrage and risk-averse sentiment, putting further pressure on the Straits Times Index (STI).
Looking ahead, with the U.S. having struck three key Iranian nuclear facilities and Iran potentially retaliating, Middle East tensions could intensify, adding uncertainty to Singapore, APAC, and global stock markets.
Han estimates that uncertainties like the Middle East conflict could deepen the STI’s pullback, with the possibility of accelerated declines. “If tensions ease and U.S. trade talks with partners progress smoothly, investor confidence could recover, potentially driving an STI rebound.”