APAC Market Wrap - August 5

China: Markets oscillated upward throughout the day, with the Shanghai Composite reclaiming above 3,600 points, hitting a new annual closing high. By the close, the Shanghai Composite rose 0.96%, the Shenzhen Component Index gained 0.59%, and the ChiNext Index was up 0.39%.

 

Sector-wise, PEEK materials, brain-computer interfaces, high-speed copper cables, and banks led the gains, while Tibet, traditional Chinese medicine, film, and ZhiPu AI lagged.  

 

Hong Kong: All three major indices closed higher. By the close, the Hang Seng Index ($800000.HK) rose 0.68%, the Hang Seng Tech Index ($800700.HK) gained 0.73%, and the State-Owned Enterprises Index ($800100.HK) increased 0.65%.

 

Sector-wise, gaming stocks surged, biotech stocks rose broadly, Apple concept stocks advanced, casino and gaming stocks rallied, and pharmaceutical stocks gained.  

 

Japan Stock Market: The Nikkei Average rebounded 0.64%, closing up 258.84 points at 40,549.54. More than 1,100 stocks on the Tokyo main board rose, accounting for over 70% of the total.

 

By sector, 30 industries including non-ferrous metals, agriculture, fisheries, electric power and gas, and securities commodity futures saw gains, while shipping, warehousing, and retail declined.  

 

South Korea Stock Market: The KOSPI index rose slightly, up 50.25 points or 1.60%. By sector, electrical products, electrical equipment, and office electronics led the gains, while furniture, leisure equipment, and automobiles lagged.  

 

Australia Stock Market: The XJO S&P/ASX 200 rose 1.23% to 8,770.400 points. Sectors like aerospace, semiconductors, and credit saw significant gains, while alcoholic beverages and pharmaceutical manufacturers posted slight declines.  

 

Singapore Stock Market: The Straits Times Index rose 0.34% to close at 4,211.63 points. Medical distribution, furniture, and healthcare services saw modest gains, while apparel, chemicals, and auto parts experienced larger declines.  

 

Malaysia Stock Market: The Malaysia Index rose 0.76% to 1,538.64 points. Healthcare, utilities, and business trusts posted slight gains, while real estate, plantations, and consumer services declined.  

Key Events  

KKR Hires First Japan Staff for Private Credit Business, Signals Push into Key Market  

 

As Japan emerges as a critical hub in Asia’s private credit boom, KKR has hired Ken Murata from Goldman Sachs as managing director for its Japan credit business.

 

Based in New York, KKR stated Murata will join in September, reporting to Asia credit and markets head Diane Raposio. He is the firm’s first employee in Tokyo dedicated to private credit.  

 

Japan’s Top Trade Envoy to Visit U.S., Urges Clarity on Auto Tariff Cuts  

 

Japan’s top trade negotiator is set to travel to the U.S. on Tuesday, aiming to press Washington to follow through on last month’s trade agreement by advancing auto tariff reductions.

 

Ryosei Akazawa’s Washington visit marks his first trip since the deal was announced, following his eighth visit to the capital since April, where the U.S. committed to a 15% tariff on most Japanese imports.  

 

Korea Exchange Considers 12-Hour Stock Trading System  

 

The Korea Exchange (KRX) announced on Tuesday it has sought feedback from local brokerages on extending trading hours to 12 hours.

 

A KRX official said, “We recently sent a survey to local securities firms seeking their views on a 12-hour trading system plan.”

 

The proposal remains under consideration. In Korea, cryptocurrencies like Bitcoin trade 24/7, while alternative platform Nextrade (NXT) has offered 12-hour stock trading from 8 AM to 8 PM since March.  

 

Philippine Central Bank Sees Need for Looser Monetary Policy  

 

The Philippine central bank stated that after July’s inflation hit a near six-year low, a looser monetary policy stance remains necessary. In a statement, the bank expects 2025 average inflation to fall below the target range’s lower bound, driven by declining rice prices.

 

Inflation is projected to rise in 2026 and 2027 but stabilize within the 2%-4% target.  

Institutional Views  

Morgan Stanley: Q3 U.S. Stock Pullback of 5-10% Could Be Buying Opportunity  

 

Morgan Stanley’s latest report, “Does the New Bull Market Need a Pause?,” notes that despite a new bull market, seasonal headwinds and macro uncertainties in Q3 2025 could trigger a brief 5-10% correction.

 

However, strategists emphasize this won’t derail the long-term uptrend, viewing any dip as a strategic buying opportunity. Chief U.S. equity strategist Michael J. Wilson and his team cite a “V-shaped” recovery in earnings revision breadth (ERB) since April 2025 as the basis for their bullish stance, though recent weak labor data and Fed delays on rate cuts due to tariff concerns are key Q3 catalysts.  

 

JPMorgan Chief Strategist Warns: U.S. Jobs Data Shatters Sustained Bull Run Expectations!  

 

Wall Street has long been wary of U.S. President Trump’s immigration policies, which threaten the labor market’s foundation. Last Friday’s downward revision of May and June nonfarm payrolls by the U.S. Bureau of Labor Statistics may confirm these fears.

 

JPMorgan’s chief global strategist David Kelly warns that with a shrinking U.S. workforce and historic shifts in immigration policy, worker growth is unlikely over the next five years.  

 

UBS: U.S. Stocks May Drop in August, Offering Buying Chance  

 

UBS strategists predict a U.S. stock decline in August due to worsening economic data, saying, “The S&P 500 has reacted positively to strong data; we believe it will react negatively to weak data before the Fed signals easing.”  

 

Goldman: Expects Fed to Cut Rates by 25 bps Three Times Starting September  

 

Goldman Sachs forecasts the Fed will cut rates by 25 basis points three times starting September; a further rise in unemployment in the next report could prompt a 50 bps cut.  

 

ING: OPEC+ May End Production Increases  

 

ING analysts suggest OPEC’s weekend decision to raise output by 547,000 barrels per day in September was expected, with markets having largely priced in the supply hike.

 

This marks the end of 2.2 million barrels per day in voluntary cuts. As the summer demand peak nears its end and inventories rise, OPEC+ may halt increases.  

 

Mitsubishi UFJ: Traders Eye U.S. Secondary Tariffs on Russian Oil Exports  

 

Mitsubishi UFJ analysts note that while OPEC+ production hikes were anticipated, trade tensions and slowing economic indicators cloud global demand prospects, heightening oversupply fears.

 

Despite weak U.S. jobs data driving last week’s oil price drop, market sentiment remains cautious, with traders watching for potential U.S. secondary tariffs on Russian oil exports, especially to India.