APAC Market Wrap - 11 Aug

China: Markets fluctuated upward throughout the day, with the ChiNext Index leading gains, while the Shanghai Composite and Shenzhen Component Indices hit new yearly highs during trading.

 

At close, the Shanghai Composite rose 0.34%, the Shenzhen Component gained 1.46%, and the ChiNext Index surged 1.96%.

 

Sector performance: PEEK materials, lithium mining, CPO, and PCB sectors led gains, while banking, gold, film, and construction machinery sectors lagged.

 

Hong Kong: Hong Kong’s three major indices showed mixed performance. The Hang Seng Index rose 0.19%, the Hang Seng Tech Index fell 0.01%, and the H-share Index dropped 0.08%.

 

Sector performance: Tech stocks weakened, Apple concept stocks rose collectively, lithium battery stocks advanced, gold stocks weakened, building materials stocks gained, while casino and gaming stocks generally declined.

 

Japan: Today, the Japanese market is closed due to Mountain Day.

 

South Korea: The KOSPI Index fell 0.10%, down 3.24 points.

 

Sector performance: Electrical products, steel, chemicals, machinery, and broadcasting/entertainment sectors led gains, while internet, catalog retail, tobacco, cosmetics, and office electronics sectors underperformed.

 

Australia: The S&P/ASX 200 (XJO) rose 0.43%, closing at 8,844.800 points.

 

Sector performance: Diversified financials, furniture/tools, and packaging/container sectors saw strong gains, while insurance, aerospace, healthcare services, and tourism/leisure sectors saw slight declines.

 

Singapore: The Straits Times Index fell 0.49%, closing at 4,237.10 points.

 

Sector performance: Education, agriculture, industrial products, and furniture sectors saw modest gains, while diversified financials, software, and cyclical retail sectors saw significant declines.

 

Malaysia: The Malaysia Index rose 0.40%, closing at 1,563.24 points.

 

Sector performance: Financial services, healthcare, and construction sectors saw modest gains, while closed-end funds, communication/media, and real estate investment sectors declined.

Key Events

Japan’s Political Turmoil Casts Shadow on Budget and Rate Hike Timing  

 

Analysts note that Japan’s deepening political uncertainty could prolong policy paralysis, impacting next year’s budget planning and the timing of the Bank of Japan’s next rate hike, casting a shadow over the fragile economic outlook.

 

Japanese Prime Minister Shigeru Ishiba faces growing calls from within the ruling Liberal Democratic Party to resign, holding him accountable for the party’s heavy losses in the July Senate election and last year’s House election.

 

India’s Central Bank Reportedly Sells at Least $5 Billion to Support Rupee  

 

As the Indian rupee nears historic lows, sources say the Reserve Bank of India has sold dollars in both offshore and onshore forex markets this month to prop up the currency.

 

One source indicated that the central bank has sold at least $5 billion. The RBI did not immediately respond to requests for comment. If this trend continues, this month could see the largest net dollar sales by the RBI since January.

 

Australia Announces Plan to Recognize Palestinian State  

 

Australia will formally recognize a Palestinian state at the UN Summit in September. Amid heightened concerns over Israel’s planned renewed military operations in parts of Gaza, Australia is taking a stance opposite to its close ally, the United States.

 

Prime Minister Anthony Albanese told reporters at Parliament House in Canberra after a cabinet meeting on Monday: “A two-state solution is humanity’s best hope for breaking the cycle of violence in the Middle East and ending the conflict, suffering, and hunger in Gaza.”

 

South Korea Continues to Review Capital Gains Tax Plan  

 

Yonhap News reports that South Korean officials have not finalized discussions on the controversial capital gains tax plan and will continue deliberations.

 

Previously, the ruling Democratic Party proposed lowering the capital gains tax threshold for stocks from 5 billion KRW to 1 billion KRW, causing unease among investors and sparking widespread public opposition.

Institutional Views

Goldman Sachs: Maintains No Tariffs on Gold, Sticks to Price Forecast  

 

Goldman Sachs continues to assume no tariffs will be imposed on gold, as no actual tariffs have been implemented since the 10% reciprocal tariffs took effect in April. They maintain their forecast of London spot gold reaching $3,700/oz by the end of 2025 and $4,000/oz by mid-2026.

 

Goldman Sachs: U.S. Consumers Likely to Bear 67% of Tariff Costs  

 

Goldman Sachs research shows that U.S. companies have so far borne most of the costs of Trump-era tariffs, but the burden is increasingly shifting to consumers. Analysts, including Jan Hatzius, noted in a report that as of June, U.S. consumers have absorbed about 22% of tariff costs, but if recent tariffs follow previous patterns, their share could rise to 67%.

 

UBS: Swiss Franc’s Muted Reaction to Tariffs Reflects Hope for U.S.-Swiss Trade Deal  

 

UBS analysts noted in a report that the Swiss franc’s relatively mild reaction to the U.S. imposing 39% tariffs on Swiss goods may reflect market confidence in an eventual tariff reduction agreement. The franc is not particularly sensitive to domestic growth conditions, which remain robust despite tariff news.

 

Combined with higher-than-expected July inflation and the Swiss National Bank’s indication that lowering rates below the current 0% level is unlikely, further rate cuts are improbable. UBS expects the EUR/CHF pair to stabilize in the 0.93-0.94 range until June next year.

 

ING: Central Bank Divisions Signal Increasingly Uncertain Economic Outlook  

 

ING economist Smith noted that predicting central bank actions is becoming increasingly difficult due to growing divisions among policymakers. The Bank of England’s policy committee was forced into an unprecedented second vote this week, while Fed policymakers expressed rare disagreements at their last meeting.

 

Smith attributes this to conflicting conclusions from economic data like labor markets, whose reliability is also questioned. He said supply-side complexities, including labor, are exacerbating instability, and policymakers remain divided on the risk of persistent inflation. “My conclusion… we are in a period of heightened uncertainty for central bank expectations,” Smith said.

 

CITIC Securities: A-Shares in Bull Market Consolidation, Pullbacks Offer Buying Opportunities  

 

CITIC Securities’ report states that while short-term A-share gains face resistance due to weaker-than-expected PPI, expiring tariff relief agreements, and reduced trading volume after valuation recovery, the market remains in a bull market consolidation phase, with pullbacks presenting allocation opportunities.