APAC Market Wrap - 27 Aug

China Stock Market: The market experienced a sharp afternoon drop, with both the Shanghai and Shenzhen indices falling over 1%. Total turnover for the Shanghai and Shenzhen markets reached ¥3.17 trillion, an increase of ¥486.5 billion from the previous trading day.

 

By the close, the Shanghai Composite Index dropped 1.76%, the Shenzhen Component Index fell 1.43%, and the ChiNext Index declined 0.69%. In terms of sectors, CPO, rare earth, and semiconductor sectors led the gains, while real estate, baijiu, beauty care, and innovative drug sectors saw the largest declines.  

 

Hong Kong Stock Market: The three major Hong Kong indices continued their weak adjustment trend. By the close, the Hang Seng Index fell 1.27% to 25,201.76 points, the Tech Index dropped 1.47% to 5,697.53 points, and the State-Owned Enterprises Index declined 1.40% to 9,020.26 points.

 

Market performance showed most stocks in pharmaceuticals, brokerage, real estate, tea drinks, and tech sectors weakening, while semiconductor stocks bucked the trend with gains.  

 

Japan Stock Market: The Nikkei 225 index rebounded 0.30%, closing at 42,520.27 yen, up 125.87 yen.

 

By sector, 19 sectors, including electric power and gas, air transportation, non-ferrous metals, and land transportation, saw slight gains, while insurance, other products, rubber products, and services sectors declined.  

 

South Korea Stock Market: The Korea Composite Stock Price Index (KOSPI) rose 0.25% to 3,187.16 points.

 

In terms of sectors, stationery, aerospace, other financial, and life sciences led the gains, while trading companies, airlines, internet and catalog, and diversified communication services sectors saw the largest declines.  

 

Australia Stock Market: The S&P/ASX 200 (XJO) rose 0.28%, closing at 8,960.500 points.

 

By sector, medical distribution, other energy, agriculture, and steel saw slight gains, while defensive retail, restaurants, alcoholic beverages, and agriculture sectors experienced modest declines.  

 

Singapore Stock Market: The Straits Times Index rose 0.04%, closing at 4,245.57 points.

 

By sector, agriculture, forestry, industrial products, and credit saw slight gains, while furniture, non-alcoholic beverages, interactive media, and steel sectors recorded larger declines.  

 

Malaysia Stock Market: The Malaysia Index rose 0.40%, closing at 1,587.91 points.

 

By sector, consumer goods, construction, business trusts, and healthcare saw slight gains, while real estate investment and financial services sectors collectively declined.  

Key Events  

Vietnam Plans Full Adoption of Ethanol-Blended Gasoline Next Year to Boost U.S. Imports  

 

Reports indicate Vietnam plans to fully switch to ethanol-blended gasoline next year, potentially increasing imports of ethanol and corn from the U.S.  

 

A document from the Vietnamese Ministry of Industry and Trade shows it has submitted a proposal to the government to adopt E10, a blend of gasoline with up to 10% bioethanol. Vietnam currently uses RON95 and RON92 unleaded gasoline.  

 

This shift is expected to pave the way for importing U.S. ethanol and corn, narrowing Vietnam’s trade surplus with the U.S.  

 

Australia July Inflation Rate at 2.8%, Exceeding Market Expectations  

 

Australia’s monthly inflation in July surpassed expectations, moving closer to the upper limit of the Reserve Bank of Australia’s 2%-3% target, supporting gradual rate cuts by policymakers.  

 

Data released by the Australian Bureau of Statistics on Wednesday showed the consumer price index (CPI) rose 2.8% year-on-year in July, compared to the 2.3% forecast by economists. The trimmed mean, excluding volatile items like food and energy, rose 2.7% in July from 2.1% the previous month—a key focus for the central bank.  

 

South Korea June Births Up 9.4% Year-on-Year, Largest Monthly Increase on Record  

 

Data released by the South Korean government on Wednesday showed the number of babies born in June grew at the fastest pace on record, a positive sign for a nation battling ultra-low fertility rates.  

 

According to Statistics Korea, 19,953 babies were born in June, a 9.4% increase from the same month last year.  

 

This marks the largest year-on-year increase for June since the agency began tracking data in 1981.  

Institutional Views  

Barclays: Tariffs Begin, India Faces Heightened Economic Risks  

 

India is now among the countries facing the highest U.S. tariffs. Barclays economists note that a 25% secondary tariff plus a 25% reciprocal tariff bring India’s total tariff rate to 50%, amplifying economic risks. They estimate a trade-weighted average tariff of 35.7%, compared to 2.7% before “Liberation Day.”

 

India’s tariffs on U.S. imports are 9.4%. Barclays highlights that electrical machinery, gems, and jewelry sectors face the heaviest burden, with apparel exports at significant risk of losing competitiveness. Pharmaceuticals, India’s third-largest export, are currently exempt but may face separate taxation.

 

Barclays expects trade negotiations to continue, with close attention on Modi’s September U.S. visit and Trump’s October trip to India.  

 

Capital Economics: Bank of England May Need to Accelerate Rate Cuts to Stimulate Economy  

 

Capital Economics Chief UK Economist Paul Dales stated that to invigorate the British economy, the Bank of England must accelerate rate cuts. The Monetary Policy Committee cut the base rate by 25 basis points to 4.00% this month, further from the 5.25% high last summer.

 

However, the bank remains cautious about future policy, citing persistent inflationary pressures.  

 

Dales believes this will lead to a short-term pause, but inflation should begin to decline sustainably by mid-2026. In a note to investors, he wrote: “Once the bank’s concerns about inflation ease significantly, it may need to cut rates faster and deeper than widely expected to support growth.”  

 

CITIC Securities: Fed Independence Likely to Hold Under Powell  

 

A CITIC Securities research report suggests that the case of “Trump firing Cook” may ultimately reach the U.S. Supreme Court, with Cook likely retaining her Fed governor role during legal proceedings.

 

The market has developed a “muscle memory” for Fed independence crises, with reactions to the Cook firing mirroring the “knee-jerk” response to Trump’s July 16 threat to fire Powell—steepening yield curves, falling U.S. stock futures and dollar index, and rising gold prices. After Cook’s lawyer responded, market reactions calmed. The outcome awaits legal rulings, but CITIC believes Fed independence will likely be maintained under Powell.