APAC Market Wrap - 12 Aug

China Stock Market: Markets oscillated upward all day, with the Shanghai Composite marking seven consecutive gains, all three major indices hitting new yearly highs. By close, the Shanghai Composite rose 0.5%, the Shenzhen Component Index gained 0.53%, and the ChiNext Index climbed 1.24%.

 

Sector-wise, semiconductors, ports, CPO, and Xinjiang led gains, while PEEK materials, rare earth permanent magnets, military, and lithium mining sectors saw declines.  

 

Hong Kong Stock Market: The three major indices showed mixed results, with the Hang Seng Index up 0.25%, the Hang Seng Tech Index down 0.38%, and the State-Owned Enterprises Index up 0.32%.

 

Sector highlights included broad gains in semiconductor stocks, a rise in coal stocks, a midday surge in stablecoin concept stocks, gains in internet healthcare, a broad uptick in insurance stocks, and a uniform rise in casino and gaming stocks.  

 

Japan Stock Market: The Nikkei 225 rose sharply for the fifth straight trading day, up 2.15% or 897.69 yen, closing at 42,718.17 yen—the highest since July 11 last year.

 

By industry, 26 sectors including mining, banking, information communication, and securities/commodities futures advanced, while 7 sectors like other products, oil and coal, pulp and paper, and fisheries/agriculture declined.  

 

South Korea Stock Market: The Kospi Index fell 0.53%, down 16.86 points.

 

Sector performance saw air cargo, telecom, securities, and banking lead gains, while cosmetics, machinery, electrical equipment, aerospace and defense, and department stores led declines.  

 

Australia Stock Market: The S&P/ASX 200 (XJO) rose 0.41%, closing at 8,880.800 points.

 

Sectors like aerospace, semiconductors, and insurance saw slight gains, while education, diversified media, diversified financials, and real estate experienced minor declines.  

 

Singapore Stock Market: The Straits Times Index dropped 0.28%, closing at 4,220.72 points.

 

Sectors including apparel, industrial distribution, non-alcoholic beverages, and oil and gas saw slight gains, while medical distribution, business services, education, and capital markets posted larger declines.  

 

Malaysia Stock Market: The Malaysia Index rose 0.30%, closing at 1,567.90 points. Plantation, technology, and consumer goods sectors saw slight gains, while healthcare, construction, and transportation/logistics sectors declined.  

Key Events  

RBA Rate Cut Triggers Bank Moves: After the Reserve Bank of Australia cut rates by 25 basis points to 3.6%

 

a two-year low due to falling inflation and a loosening labor market—the country’s four major banks, including Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB), lowered variable home loan rates by 25 basis points. However, with uncertain growth prospects, the bank remains cautious about further easing.  

 

Indian Bonds Struggle Amid Tariff Pressure

 

Indian government bond prices hit a four-month low, with analysts warning of further declines as investors fear increased borrowing for fiscal stimulus to counter U.S. high tariffs. The 10-year benchmark yield rose to 6.44%—the highest since April—with Standard Chartered predicting it could reach 6.6% by Q1 2026.  

 

The First CPI Report Post-BLS Leadership Change Is Here

 

Following Trump’s dismissal of the Bureau of Labor Statistics (BLS) chief earlier this month, tonight’s report gains even more intriguing highlights and talking points.

 

The release of this CPI report comes just 11 days after Trump fired BLS chief McTavish. This follows a surprisingly weak nonfarm payroll report on August 1, which significantly revised down employment data from previous months.

 

U.S. President Trump promptly accused McTavish of “manipulating” the data and announced his dismissal that same day, though this claim has been strongly refuted by the former BLS chief from the Trump administration, as well as numerous statisticians and economists.

 

Traditional Funds Keep Bleeding, Bitcoin Emerges as the Savior! A Staggering 22% Excess Return Over the Past Year

 

For years, ordinary stock mutual funds have been losing assets. However, Bitcoin’s price has soared 100% over the past year, providing a significant boost to the $9 trillion active managed fund portfolios.

 

Over the 12 months ending July, seven out of ten funds investing in Bitcoin via exchange-traded funds (ETFs) averaged returns 22 percentage points above their benchmark indices.

 

On this, David Cohne of Bloomberg Intelligence noted that while stock selection played a role in these funds’ strong performance, Bitcoin also delivered a notable uplift.

Institutional Views  

UBS: Raises S&P 500 Target but Predicts Decline for Rest of 2025

 

UBS strategist Bhanu Baweja has raised the S&P 500 year-end 2025 target to 6,100 points and set a 2026 target at 6,800 points.

 

Despite strong U.S. economic and corporate performance and eased tariff risks, UBS expects the index to fall below current levels by the end of 2025 due to slowing growth, with a recovery anticipated by the end of 2026.

 

ING: A 0.3% Core CPI in July Could Open Door for Fed Rate Cut in September

 

The U.S. July CPI data will be released today. If it shows cooling inflation, it could solidify expectations for a September Fed rate cut, though signs of Trump’s tariffs driving price increases might prompt the Fed to hold rates steady.

 

ING forex strategist Francesco Pesole notes that before data release, the bar for a hawkish Fed surprise is higher. Given the worsening labor market, a core CPI of 0.3% as expected would provide room for the Fed to lower rates.

 

MUFG: U.S. 50% Tariff on India Could Cut GDP by 1%

 

Mitsubishi UFJ Financial Group warns that a sustained 50% U.S. tariff on Indian goods could push the USD/INR exchange rate to 89.50 by June 2026, underperforming against major currency pairs. A 25% reciprocal tariff is already in effect, with another 25% set for August 28.

 

MUFG notes that recent developments, with both sides hardening trade stances, have significantly lowered the odds of a tariff reduction deal. The 50% tariff could reduce India’s GDP growth by 1%, prompting the government to consider more fiscal and credit measures.

 

Cathay Haitong: Maintains Tactical Overweight on A-Shares and U.S. Stocks in August

 

Cathay Haitong’s research report maintains a tactical overweight stance on A-shares and U.S. stocks for August. Improved market risk appetite continues to drive asset pricing, with risk assets outperforming safe havens (equities > commodities > bonds).

 

The firm is highly optimistic about A-shares due to upward revisions in economic sentiment, strong government support for capital markets, stable liquidity, improving risk appetite, and robust micro trading structures. It remains relatively positive on U.S. stocks, where a near-term recession is hard to confirm and rate-cut odds are rising.