APAC Market Wrap - 31 Jul

China: At close, the Shanghai Composite fell 1.18%, the Shenzhen Component dropped 1.73%, and the ChiNext Index declined 1.66%. Despite the ChiNext Index gaining over 8% this month, the Shanghai Index lost the 3,600-point psychological level.

 

Total turnover for Shanghai and Shenzhen markets was 1.94 trillion yuan, up 91.7 billion from the previous session. Sectors like assisted reproduction, liquid-cooled IDC, IT innovation, and Huawei Ascend led gains, while steel, coal, non-ferrous metals, and film sectors saw the largest drops.  

 

Hong Kong: The major indices strengthened this month. At close, the Hang Seng Index rose 2.91% to 24,773.33 points, the Tech Index gained 2.83% to 5,453.14 points, and the State-Owned Enterprises Index increased 2.36% to 8,882.95 points.

 

Although the three major Hong Kong indices have seen three consecutive monthly gains, today's market performance was somewhat disappointing. At close, the Hang Seng Index fell 1.60%, the Tech Index dropped 0.69%, and the State-Owned Enterprises Index declined 1.72%.

 

SaaS, gaming, and casino stocks performed well, while steel, gold, solar, and auto stocks lagged.  

 

Japan Stock Market: After five consecutive days of declines, the Nikkei 225 rebounded 1.02%, closing at 41,069.82 yen, up 415.12 yen.

 

Among sectors, 27 industries including non-ferrous metals, insurance, glass and earth, and aviation rose, while metal products, transportation equipment, and steel fell across 6 sectors.  

 

South Korea Stock Market: The KOSPI index edged down 9.03 points, or 0.28%. By sector, entertainment, leisure equipment, display panels, and hotels/restaurants rose, while trading companies, autos, telecom equipment, and non-metallic minerals led declines.  

 

Australia Stock Market: The S&P/ASX 200 (XJO) fell 0.16% to 8,742.800 points. Sectors like aerospace, non-alcoholic beverages, semiconductors, and interactive media saw slight gains, while steel, metals and mining, building materials, and pharmaceuticals dropped significantly.  

 

Singapore Stock Market: The Straits Times Index declined 0.86% to 4,183.17 points. Industrial products, hardware, and furniture sectors rose slightly, while auto parts, utilities, building materials, and packaged consumer goods fell notably.  

 

Malaysia Stock Market: The FTSE Malaysia KLCI dropped 0.74% to 1,513.25 points. Tech, closed-end funds, and energy sectors saw minor gains, while industrial goods, financial services, and utilities declined.  

Key Events  

Thailand Expects U.S. Tariff Negotiation Outcome Soon

 

Thai Finance Minister Pichai stated that Thailand anticipates the U.S. will announce revised “reciprocal” tariff rates within hours, likely aligning with those set for neighboring countries. U.S. Commerce Secretary Luttig earlier confirmed trade agreements with Thailand and Cambodia.  

 

Malaysia PM Anwar Says Trump to Announce Tariff Rates on Friday

 

Malaysian PM Anwar, after a Thursday morning call with U.S. President Trump, said Trump will announce tariff rates on Malaysian goods on Friday. Trump is set to attend the ASEAN Summit in October.  

 

Lee Jae-myung: U.S.-Korea Trade Deal Reduces Uncertainty

 

South Korean President Lee Jae-myung said Thursday that the U.S.-Korea tariff agreement will ease uncertainties for the export-reliant Korean economy, relieved at overcoming a major trade hurdle. Earlier, Trump announced a 15% reciprocal tariff on Korea, 10 points below the proposed rate.  

Institutional Views  

Goldman Sachs: Fed May Restart Easing in Fall

 

Goldman Sachs Asset Management’s Chief Investment Officer for Public Investments, Ashish Shah, noted that as expected, Fed Governors Waller and Bowman dissented dovishly, while most FOMC members prefer to monitor summer inflation.

 

The next two months’ data are critical—if tariff-driven inflation proves temporary, the Fed may ease in fall.  

 

Barclays: Trump Tariff Threats Heighten Indian Rupee Downside Risk

 

Barclays Asia FX and Emerging Markets Macro Strategy Head Mitul Kotecha warned in a report that Trump’s 25% tariff threat on Indian goods could pressure the rupee further.

 

Post-threat, the rupee fell sharply, with USD/INR rebounding beyond expectations, facing strong resistance near 88.00 from February. Technically, it’s oversold short-term.  

 

CICC Macro: Fed Unlikely to Cut Rates While Inflation Gap Exceeds Employment Gap

 

CICC’s macro report states Powell remains concerned about stagflation risks. As long as the inflation gap exceeds the employment gap, rate cuts are unlikely.

 

The Fed flagged stagflation risks in June, reiterated in July, with Powell’s “inflation” worry outweighing “stagnation,” emphasizing current inflation above target and employment at target, justifying a moderately restrictive policy.

 

He needs to confirm tariff inflation impacts are fully reflected.