APAC Market Wrap - 7 Aug

China: The market oscillated with mixed results throughout the day, with the Shanghai Composite hitting a new yearly high, while the ChiNext Index adjusted downward. By the close, the Shanghai Composite rose 0.16%, the Shenzhen Component Index fell 0.18%, and the ChiNext Index dropped 0.68%.

 

Sector-wise, rare earth magnets, semiconductors, logistics, medical devices, innovative drugs, insurance, copper foil, and photovoltaic sectors led the declines.  

 

Hong Kong: All major indices rose, with the Hang Seng Index up 0.69%, the Hang Seng Tech Index gaining 0.26%, and the State-Owned Enterprises Index increasing 0.55%.

 

Sector performance saw tech stocks mostly rise, with Apple-related stocks performing strongly. Casino and gaming stocks advanced, brain-computer interface stocks surged late, biotech stocks weakened, pharmaceutical stocks broadly fell, and real estate developers saw gains.  

 

Japan Stock Market: The Nikkei 225 rose for the third consecutive day by 0.65%, closing at 41,059.15 yen. On the Tokyo Stock Exchange’s Prime Market, over 1,000 stocks rose, accounting for more than 60% of the total.

 

By sector, 27 industries including electric power, gas, warehousing, transportation, banking, and securities futures saw gains, while transportation machinery, rubber products, precision machinery, and shipping saw declines in 5 industries.  

 

South Korea Stock Market: The KOSPI Index rose 0.92%, or 29.54 points.

 

By sector, media, air freight, non-metallic minerals, broadcasting, and cosmetics led the gains, while integrated utilities, road and rail transport, bioengineering, and tobacco lagged.

 

Australia Stock Market: The S&P/ASX 200 (XJO) fell 0.14%, closing at 8,831.400 points.

 

Sector-wise, diversified financials, other energy, and industrial products saw significant gains, while semiconductors, agriculture, business services, and home construction experienced slight declines.  

 

Singapore Stock Market: The Straits Times Index rose 0.72%, closing at 4,258.15 points. By sector, forestry products, other energy, hardware, and alcoholic beverages saw modest gains, while construction, furniture, and metals and mining posted larger declines.  

 

Malaysia Stock Market: The FTSE Malaysia KLCI rose 0.49%, closing at 1,549.11 points. Utilities, communications and media, and closed-end funds saw slight gains, while financial services, energy, and healthcare sectors declined.  

Key Events  

U.S.-Japan Trade Agreement Discrepancies Persist, U.S. Plans 15% Tariff Hike  

 

Japan’s chief trade negotiator, Ryo Takahashi, stated on Wednesday that after repeated confirmations with the U.S., the total tariff rate for goods with existing rates below 15% should be set at 15% post-August adjustment.

 

However, the U.S. tariff announcement effective August 7 contradicts this, imposing higher tariffs on Japan. Japan demands correction and adherence to the agreed terms. Two weeks after the official U.S.-Japan trade agreement announcement, key details remain disputed.

 

On August 6 (Eastern Time), Japanese media reported that the U.S. will impose an additional 15% tariff on Japan atop existing rates, with White House officials noting this as part of reciprocal tariffs against multiple countries, regardless of current rates.  

 

Samsung to Manufacture Next-Gen Chips for Apple at Texas Plant  

 

Samsung Electronics announced on Thursday that it will produce Apple’s next-generation chips at its Austin, Texas, foundry. In a press release, Apple stated it is collaborating with Samsung’s Austin semiconductor plant to develop an innovative new chip manufacturing technology, marking its global debut.  

 

South Korea Announces Measures to Boost Non-Capital Region Consumer Spending  

 

On Thursday, the South Korean government unveiled a series of measures to boost consumer confidence in non-capital regions as part of a broader economic stimulus plan. The Finance Ministry said consumers spending 50,000 KRW (about $36) or more with credit cards at small businesses outside the capital region, such as traditional markets and restaurants, will be eligible for a lottery.  

 

Cambodia and Thailand Reaffirm Ceasefire, Ease Border Tensions  

 

Cambodia and Thailand agreed to maintain a ceasefire, ending one of the deadliest conflicts in their modern history, brokered by external mediation over a week ago. A meeting of senior security officials in Kuala Lumpur approved strict measures to enforce the ceasefire and reduce border tensions.

 

The so-called “General Border Committee” meeting also agreed not to deploy or reinforce troops and weapons along the disputed border. Thai officials noted at a briefing that an ASEAN defense attaché team led by Malaysia will oversee ceasefire compliance.  

 

OPEC+ Production Increase May Ease India’s Russian Oil Shortfall, Market Eyes Middle East Crude Flows  

 

ING’s latest analysis suggests that if India reduces its Russian crude imports—facing challenges in sourcing alternative medium-sulfur crude—OPEC+’s expected production increase will effectively supplement market supply.

 

Data shows India imported about 1.9 million barrels daily of Russian crude in the first four months of 2023, accounting for 40% of its total imports, though purchases have dropped 12% in the last two months.  

Institutional Views  

Goldman Sachs: U.S. Stocks Surge, Market Ignores Recession Risks  

 

A Goldman Sachs macro trader noted that a 30% U.S. recession probability might sound alarming, but global stocks remain resilient as “shorting feels irrational” amid current market momentum. “The key is the market can’t see far enough ahead, which is why it ignores recession risks,” Paolo Schiavone wrote in a report.

 

He suggested investors may overlook labor market slowdowns, focusing instead on strong liquidity and structural growth themes like AI and fiscal credit expansion.  

 

Nomura: U.S. Tariffs to Heighten India’s Short-Term Growth Risks  

 

Nomura Securities analysts warned in a research note that an additional 25% U.S. tariff on India could amplify short-term growth risks. The tariff, set to take effect within 21 days and raising U.S. tariffs on India to 50%, is likened to a trade embargo, potentially halting affected product exports abruptly.

 

Nomura previously projected India’s 2026 fiscal year GDP growth at 6.2%, with a 0.2% downside risk. Analysts added that the impact could be greater depending on tariff duration.

 

ING: EUR/USD Has Further Upside Potential  

 

ING analyst Francesco Pesole stated in a report that EUR/USD has significant upside potential. Weaker-than-expected U.S. economic data and Fed Governor Kugler’s resignation have boosted U.S. rate-cut expectations, pressuring the dollar.

 

Trump’s trade policies and pressure on Fed rate cuts also weigh on the dollar. However, Pesole noted that concerns over tariffs hurting the eurozone economy may prevent a straight upward move for the euro.  

 

ING: Czech Koruna May Appreciate if Central Bank Remains Cautious on Rate Cuts  

 

ING indicated the Czech koruna has room to rise after recent gains, as the Czech National Bank (CNB) may signal high interest rates at Thursday’s meeting. Data released Tuesday showed July inflation eased from 2.9% in June to 2.7%, but this hasn’t shifted the CNB’s cautious stance on cuts.

 

ING expects the CNB to maintain the benchmark rate at 3.5% with no further cuts this year.