APAC Market Wrap - 5 Sep

 

China Stock Market: The market oscillated upward throughout the day, with the ChiNext Index leading gains and the Shanghai Composite reclaiming the 3,800-point mark. At the close, the Shanghai Index rose 1.24%, the Shenzhen Component Index gained 3.89%, and the ChiNext Index surged 6.55%.

 

By sector, solid-state batteries, photovoltaics, CPO, and third-generation semiconductors led the gains, while banking and dairy were among the few sectors to decline.  

 

Hong Kong Stock Market: The three major Hong Kong indices posted collective gains this week. At the close, the Hang Seng Index rose 1.36% to 25,417.98 points; the Tech Index gained 0.23% to 5,687.45 points; and the State-Owned Enterprises Index increased 1.22% to 9,057.22 points.

 

Market performance showed strength in photovoltaics, semiconductors, gold, and pharmaceuticals.  

 

Japan Stock Market: The Nikkei 225 Average continued its upward trend, rising 1.03% or 438.48 yen to close at 43,018.75 yen (trading volume approximately 196 million shares), marking the first time it surpassed 43,000 yen since August 19.

 

By sector, 25 industries, including precision instruments, steel, rubber products, and transportation equipment, rose, while 8 sectors, including air transportation, oil and coal, warehousing, and electricity and gas, declined.  

 

South Korea Stock Market: The KOSPI index rose 0.13% to 3,205.12 points.

 

Sectors such as health management technology, communication equipment, electrical equipment, and bioengineering led gains, while power utilities, electrical products, aerospace and defense, internet, and steel lagged.  

 

Australia Stock Market: The S&P/ASX 200 (XJO) rose 0.51%, closing at 8,871.200 points.

 

Sectors including semiconductors, aerospace, and diversified financials advanced, while medical distribution, packaging and containers, apparel, and education saw significant declines.  

 

Singapore Stock Market: The Straits Times Index rose 0.17%, closing at 4,296.83 points.

 

By sector, non-alcoholic beverages, apparel, hardware, and credit saw slight gains, while semiconductors, forestry products, and alcoholic beverages experienced larger declines.  

 

Malaysia Stock Market: The Malaysian stock market was closed today.  

Key Events  

“15% Cap” Tariff Implementation Boosts Market Sentiment, Japanese Auto Stocks Surge  

 

Following US President Donald Trump’s signing of an executive order confirming a cap of 15% on tariffs imposed by the US government on Japan’s auto manufacturing sector, Japanese auto stocks rallied.

 

The tariff rate on Japanese vehicles and parts dropped significantly from an initial 27.5% to 15%, greatly boosting investor optimism for Japanese auto stocks, especially compared to the 25% tariff applied to nearly all other countries’ auto vehicles and parts globally.  

 

Japan to Raise Minimum Wage by 6.3%  

 

Japan will increase its minimum hourly wage by 6.3% to a record 1,121 yen (approximately $7.56), strengthening the wage-price cycle and supporting further rate hikes by the Bank of Japan.  

 

The Japanese Ministry of Health, Labor and Welfare stated on Friday that, for the current fiscal year, counties nationwide will raise the average minimum wage by 66 yen per hour—the largest increase since records began in 1978. The new wage standard, applicable to about 3 million workers, will take effect gradually starting in October.  

 

South Korea and Australia Agree to Expand Supply Chain Cooperation in Key Industries  

 

South Korea’s Ministry of Economy and Finance announced on Friday that South Korea and Australia have agreed to significantly expand cooperation in supply chains for critical strategic industries.  

 

The ministry stated that during the first talks held in Canberra on Friday, senior official Sohn Woong-ki, responsible for economic security and supply chains, and his Australian counterpart Jocelyn Cooper from the Treasury reached this agreement.  

 

Both sides agreed to hold regular dialogues and share best practices to effectively address the rapidly evolving global supply chain landscape.  

 

Apple’s Last Fiscal Year India Sales Reportedly Hit Record $9 Billion  

 

Apple’s annual sales in India for the last fiscal year reached a record approximately $9 billion, indicating growing consumer demand for its flagship products as the company expands its retail presence in the country.  

 

According to an insider, revenue for the 12 months ending March grew about 13% from $8 billion the previous year. iPhones accounted for the bulk of sales, with significant demand also for MacBooks. Due to the non-public nature of the information, the source requested anonymity.  

Institutional Views 

BofA: Fed May Face Severe Internal Division in September Meeting  

 

Bank of America anticipates significant internal division at the Federal Reserve’s September rate decision. Dovish members Waller, Bowman, Daly, and likely-confirmed nominee Milan may push for further rate cuts, while hawkish members like Hammack, Bostic, Mester, and Schmid emphasize inflation risks. Even with a 25 basis point cut in September, the committee may see dual dissenting votes.  

State Street Global Advisors: Gold Could Rise $500 in Next 6-12 Months  

 

State Street Global Advisors’ monthly gold monitor report notes that spot gold prices hit a new high above $3,500 per ounce in early September, driven by multiple macro factors, including elevated stock valuations, steepening yield curves in developed market government bonds, and high US policy uncertainty.

 

State Street suggests that if gold maintains its recent momentum post the September Fed meeting, it may raise the probability of its long-term bullish scenario from 30% to 40% by October. The firm maintains a base-case floor of $3,100 per ounce and sees a high likelihood of a $500 increase in the next 6-12 months.  

 

Rabobank: Despite Imminent Rate Cuts, Downside for Dollar Limited  

 

Rabobank analyst Jane Foley suggests the dollar may react reflexively to Friday’s nonfarm report, as the data could solidify expectations for a Fed rate cut in September. The employment report should set the tone for the coming weeks.

 

However, there’s a strong risk that a significant dollar decline may not exceed the initial reaction to the data, as rate cut expectations are already priced in, and the market is bearish on the dollar. Rabobank maintains a mid-term EUR/USD target of 1.20, expecting the exchange rate to approach this level gradually and slowly.

 

CICC: Greatest Risk to US Economy Remains ‘Stagflation-Like’ Conditions, Beware of Spillover Risks

 

CICC’s research report identifies the greatest risk to the US economy as “stagflation-like” conditions. Under the dual impact of tariffs and immigration policies, both demand and supply are constrained short-term, potentially leading to structural inflation mid-term.

 

Declining consumer confidence, reduced business investment willingness, and diverging bond market signals already exhibit “stagflation-like” traits. Policy-wise, Fed rate cuts may provide temporary relief but won’t alter structural factors.

 

Historical experience shows “stagflation” is not merely a cyclical phenomenon but a result of policy, structure, and market expectations interacting. In this context, caution is needed regarding potential US economic risk spillovers and financial market volatility.