APAC Market Wrap - 14 Aug

China Stock Market: The market oscillated and adjusted throughout the day, with the ChiNext Index leading the decline. The Shanghai Composite briefly surpassed 3,700 points but lost ground, ending an 8-day winning streak.

 

At close, the Shanghai Composite fell 0.46%, the Shenzhen Component Index dropped 0.87%, and the ChiNext Index declined 1.08%. By sector, insurance, brain-computer interface, digital currency, and motor sectors led gains, while military, CPO, copper foil, and lithium mining sectors saw the largest declines.  

 

Hong Kong Stock Market: The major Hong Kong indices weakened collectively today. At close, the Hang Seng Index fell 0.37% to 25,519.32 points, the Tech Index dropped 0.97% to 5,576.03 points, and the State-Owned Enterprises Index declined 0.23% to 9,128.93 points.

 

Market performance showed strength in insurance, pharmaceutical, securities, and cryptocurrency stocks, while automotive and coal sector stocks trended weakly.  

 

Japan Stock Market: The Nikkei 225 experienced its first significant drop of 1.45% in seven trading days, closing at 42,649.26 points, down 625.41 points from the previous session.

 

By sector, seven industries including banking, electric power and gas, telecommunications, and securities futures rose, while 26 industries such as machinery, wholesale, transportation equipment, and aviation fell.

 

South Korea Stock Market: The Kospi Index rose 0.53%, or 46.70 points.

 

By sector, internet directories, diversified communication services, and air cargo led gains, while display panels, office electronics, tobacco, and auto parts saw declines.  

 

Australia Stock Market: The S&P/ASX 200 (XJO) fell 0.60%, closing at 8,827.100 points.

 

Sector-wise, industrial distribution, healthcare services, and building materials saw slight gains, while industrial products, other energy, metals and mining, and telecommunications services experienced minor declines.  

 

Singapore Stock Market: The Straits Times Index dropped 0.38%, closing at 4,256.52 points.

 

By sector, industrial distribution, healthcare services, education, and insurance saw slight gains, while forestry products, non-alcoholic beverages, software, and aerospace and defense posted larger declines.  

 

Malaysia Stock Market: The Malaysia Index fell 0.35%, closing at 1,581.05 points.

 

Closed-end funds, energy, and real estate saw slight gains, while utilities, consumer goods and services, and transportation and logistics declined.  

Key Events  

Bill Gates to Visit Korea by Month-End

 

According to insiders, Microsoft co-founder and Gates Foundation Chairman Bill Gates will visit Korea by the end of this month to discuss existing partnerships with Korean biotech firms and government officials.

 

Known for his extensive philanthropy, Gates plans to meet with executives of companies involved in vaccine development and manufacturing, as well as relevant government officials, to discuss efforts to strengthen global health initiatives.

 

His visit is also expected to explore future collaborations with the Korean government and private sector.  

 

Saudi Sovereign Fund PIF Plans 17% AUM Increase This Year, Accelerates AI and Automation Integration

 

The Saudi Public Investment Fund (PIF) annual report shows its assets under management (AUM) reached 34,240 billion riyals (approximately $9.13 billion) by the end of 2024, up 19% year-over-year.

 

It aims to reach 40 trillion riyals (about $10.66 billion) by year-end, a further 17% increase, accelerating its integration with AI and automation.  

 

Yen Outperforms Other Currencies, Bessent Previously Suggested U.S.-Japan Narrow Rate Gap

 

Following U.S. Treasury Secretary Scott Bessent’s suggestion for the Federal Reserve and Bank of Japan to adjust policy rates, the yen outperformed all major currencies on Thursday morning. The yen rose 0.7% against the dollar to 146.38 yen.

 

Earlier, Bessent urged the Fed to cut rates by 150 basis points or more, noting the Bank of Japan’s lag in addressing inflation. Marito Ueda, General Manager of SBI Liquidity Market’s Research Department, said the yen’s strength has two facets—comments on the Fed and Bank of Japan.

 

Ueda suggested that markets may expect a Bank of Japan rate hike by December at the latest, with some anticipating October.  

 

Korea to Establish Consultative Body to Support “Make American Shipbuilding Great Again” Project

 

Korea’s Minister of Trade, Industry and Energy Kim Jong-kwan announced on Thursday that the government will establish a consultative body involving relevant agencies to support a shipbuilding collaboration initiative with the U.S., noting it will create new opportunities for Korea’s shipbuilding industry.

 

On the same day, Hanwha Ocean, a major Korean shipbuilder, held a naming ceremony for two liquefied natural gas (LNG) carriers delivered to the U.S. at its Geoje shipyard, located about 330 km southeast of Seoul, where Kim unveiled the plan.  

Institutional Views 

Deutsche Bank: Trump’s Attacks on U.S. Institutions Threaten Dollar

 

Deutsche Bank analyst Michael Pfister warned in a report that Trump’s attacks on the Federal Reserve and U.S. Bureau of Labor Statistics pose a threat to the dollar’s outlook. Trump criticized Fed Chair Powell again on Tuesday for not lowering rates and threatened to sue him over costly renovations at the Fed’s Washington headquarters.

 

On Monday, Trump nominated conservative think tank economist Anthony to replace the Labor Statistics Bureau chief he fired earlier this month. Pfister noted, “This increasingly resembles authoritarian states where statistical agency or central bank heads are replaced, which is detrimental to the dollar.”  

 

Bank of America: Dissent Guaranteed at Fed’s September Meeting

 

Former Bank of America Securities Chief Economist Ethan Harris said the Fed’s days of unanimity are over. Dissent from Trump-appointed Waller and Bowman supporting rate cuts in July has “broken the harmony.”

 

This means any Fed decision will face opposition. Harris added, “I expect a fierce debate between hawks and doves before the September meeting, adding some uncertainty to the rate cut decision.”  

 

CICC: U.S. Debt Monetization, Financial Repression, and Rising Inflation to Favor Anti-Inflation Assets Like Gold

 

CICC predicts the U.S. may enter a phase of fiscal dominance with monetary support, leading to ample long-term dollar liquidity and a continued dollar depreciation trend. Combined with new narrative logic and fundamentals in non-U.S. markets like Europe, global equities may see a “multi-point bloom.”

 

At the sector level, CICC remains bullish on U.S., European, and Japanese large industrials and financials, with manufacturing, military, power, energy, and infrastructure sectors likely to sustain high growth, boosting prices of resources like copper and aluminum. Additionally, U.S. debt monetization, financial repression, and rising inflation will structurally favor anti-inflation assets like gold.