APAC Market Wrap - 17 Jul 

China: Markets oscillated upward all day; by close, Shanghai Composite rose 0.37%, Shenzhen Component gained 1.43%, and ChiNext surged 1.76%, leading the gains. Sectors like CPO, military, PCB, and innovative drugs topped rises, while real estate, gas, banking, and power lagged.  

 

Hong Kong: Hang Seng indices were mixed; Hang Seng Index fell 0.08%, Hang Seng Tech rose 0.56%, and State-owned Enterprises Index dropped 0.09%. Sector-wise, tech stocks diverged, biotech rose, crypto concepts surged, innovative drugs climbed, and semiconductors advanced.  

 

Japan Stock Market: Nikkei average rebounded, up 237.79 points to 39,901.19 (volume ~1.6 billion shares). Twenty-six sectors, including other products, services, pharmaceuticals, and info-comms, rose, while mining, steel, oil/coal, and textiles fell.  

 

South Korea Stock Market: KOSPI rose 5.91 points, up 0.19%. Sectors like pharmaceuticals, healthcare, and aerospace/defense gained, while IT services, conglomerates, software, and oil/gas declined.  

 

Australia Stock Market: XJO S&P/ASX 200 climbed 0.90% to 8,639.00. Semiconductors, furniture, and building materials led gains, while aerospace, oil/gas, and industrial products lagged.  

 

Singapore Stock Market: Straits Times Index rose 0.71% to 4,161.43. Industrial products, non-alcoholic beverages, and transportation topped rises, while personalized services, agriculture/heavy machinery, and diversified media fell.  

 

Malaysia Stock Market: FBM KLCI gained 0.62% to 1,520.94. Construction, industrials/services, and comms/media saw slight gains, while closed-end funds and REITs declined.  

Key Events  

South Korea Outlines New Space Exploration Roadmap, Aims for Lunar Base by 2045  

 

South Korea’s Aerospace Agency (KASA) announced Thursday a new long-term space exploration roadmap, targeting a lunar base by 2045.

 

Unveiled at a hearing in Daejeon’s National Research Foundation, the plan divides exploration into Earth orbit, lunar, heliosphere, and deep space, with five core missions including low-Earth orbit/microgravity and lunar probes.  

 

Japan June Exports to U.S. Plummet 11.4%, Biggest Drop Since 2020 Amid Stalled Talks  

 

With U.S.-Japan talks stalled, Japan’s June exports to the U.S. crashed 11.4%, exceeding May’s 11% drop—the largest since 2020.

 

The auto sector bore the brunt, with car exports to the U.S. down 26.7% under 25% tariffs. Two months of declines heighten risks of a technical recession.  

 

Australia Unemployment Hits 4-Year High, August Rate Cut Seems Certain  

 

Thursday’s Australian Bureau of Statistics data showed June unemployment surging to a 4-year high, signaling near-stagnant job growth, bolstering the case for an August rate cut by the Reserve Bank.  

Institutional Views  

Citi: Targets Hang Seng at 25,000 by Year-End, Ups China Internet/Tech/Consumer  

 

Citi’s Asia stock strategy report notes Asia outpaces global peers despite macro volatility. U.S. tariffs cloud the short-term, but Citi sees a constructive mid-term outlook, projecting ~7% returns for MSCI Asia (ex-Japan) by mid-2026 at 14x P/E.

 

It favors China and Korea for better EPS revisions, valuations, and themes like AI and governance. Targets: Hang Seng at 25,000 (year-end), 26,000 (mid-2026); CSI 300 at 4,200 (year-end), 4,350 (mid-2026); MSCI China at 79 (year-end), 82 (mid-2026).

 

Ups consumer to overweight, prepping for stimulus; downgrades transport to neutral due to global freight risks. Recommends overweight on China internet, tech, and consumer.  

 

BofA: No Fed Rate Cuts Before 2026  

 

Bank of America notes improved market conditions this quarter. CEO Moynihan told analysts: “Our top research team predicts no U.S. recession, with modest growth—1.5% by year-end—and no Fed cuts before 2026.”

 

He cited sustained consumer spending and clarity from trade deals/tax bills shaping client behavior.  

 

Fitch: Fiscal Policy Key Risk to Japan’s Credit Rating  

 

Fitch analyst Krisjanis Krustins warned Wednesday that fiscal policy is the main risk to Japan’s credit rating as the Sunday Senate election nears, with calls for big spending and lower consumption taxes growing.

 

He noted Japan’s increasingly loose fiscal stance via subsidies to ease inflation’s household impact.  

 

Capital Economics: Tariffs, Hoarding to Weigh on Eurozone Exports, Sharp Drop Unlikely  

 

Capital Economics analysts say tariffs and prior hoarding will pressure Eurozone exports, though it’s unclear if declines will hit expected levels.

 

May exports fell 0.5% month-over-month, 5.3% below Q1 average. Still, no sharp drop is seen, even in tariff-hit sectors, compared to last year.