APAC Market Wrap - 10 Sep

 

 

China Stock Market: The market experienced volatile gains, with the three major indices seeing an intraday surge followed by a pullback and then a rebound. At close, the Shanghai Composite rose 0.13%, the Shenzhen Component Index gained 0.38%, and the ChiNext Index climbed 1.27%.  

 

Sector-wise, oil and gas, film and cinema, and computing hardware led the gains, while batteries, non-ferrous metals, and wind power saw the largest declines.  

 

Hong Kong Stock Market: All three major Hong Kong indices closed higher today. At close, the Hang Seng Index rose 1.01% to 26,200.26 points; the Tech Index gained 1.27% to 5,902.69 points; and the State-Owned Enterprises Index increased 0.93% to 9,328.16 points.  

 

Despite the broad gains, market performance showed clear divergence. Banks, insurance, and gaming and app software stocks led the rally, while auto and gold stocks underperformed.  

 

Japan Stock Market: The Nikkei Average rebounded 0.87%, closing up 378.38 yen at 43,837.67 yen (with a trading volume of approximately 1.93 billion shares), marking the first update to its August 18 all-time high closing price (43,714.31 yen) in about three weeks.  

 

By industry, 17 sectors including non-ferrous metals, banking, information and communication, electricity, and electronic equipment rose. Conversely, 16 sectors such as pharmaceuticals, transportation equipment, textiles, steel, and metal products declined.  

 

South Korea Stock Market: The KOSPI rose 1.67% to 3,314.53 points.

 

Sectors leading the gains included electrical equipment, banking, conglomerates, and securities, while display panels, electrical products, and diversified communication services lagged.  

 

Australia Stock Market: The S&P/ASX 200 (XJO) rose 0.31% to 8,830.400 points.

 

Sectors such as power, industrial products, and aerospace advanced, while semiconductors, construction, and metals and mining saw significant declines.  

 

Singapore Stock Market: The Straits Times Index rose 1.14% to close at 4,346.46 points.

 

Sectors like healthcare services, non-alcoholic beverages, and metals and mining saw slight gains, while utilities, agriculture, and asset management experienced larger drops.  

 

Malaysia Stock Market: The Malaysian stock market rose 0.25% to 1,590.75 points. Sectors including healthcare, communications, and utilities advanced, while business trusts, real estate investment, and industrial products declined.  

Key Events

South Korea Announces 1.5 Trillion Won Fund to Support Investment in AI and Advanced Industries  

 

South Korean President Lee Myung-bak announced on Wednesday the establishment of a public-private fund worth 1.5 trillion won (approximately $120 billion) to support investment in artificial intelligence (AI) and other advanced industries.  

 

Lee unveiled the “Public Growth Fund” plan during a speech in Seoul, increasing the scale from his initial pledge of 1 trillion won.  

 

The plan aims to accelerate AI adoption across industries over the next five years, directing resources to key sectors such as semiconductors, secondary batteries, biotechnology, energy, hydrogen, defense, vaccines, and robotics.  

 

Nearly 1 Million US Jobs “Vanish” Overnight; White House, Treasury Press Fed for Rate Cuts  

 

On Tuesday local time, following the US Labor Department’s significant downward revision of annual nonfarm employment data, the White House unsurprisingly criticized the figures and pressed the Federal Reserve to cut rates.  

 

The Labor Department’s annual revision report, released Tuesday, indicated that the total number of jobs in the US economy over the 12 months ending March may be 911,000 fewer than previously estimated, suggesting that job growth had stalled even before Trump’s widespread tariffs on imports.  

 

The revision means nonfarm jobs averaged an increase of about 71,000 per month, down from 147,000—marking the largest revision on record.  

 

Japan to Auction 5-Year Bonds, First Test of Market Interest Since PM Ishiba’s Resignation

 

Japan will conduct a 5-year government bond auction on Wednesday, the first test of market interest in new bond issuance since Prime Minister Shigeru Ishiba announced his resignation.  

 

Amid domestic political uncertainty, debates over whether the Bank of Japan will slow its rate hike pace have intensified, with investors expecting moderate demand. The 5-year bond yield, sensitive to monetary policy expectations, stood at 1.095% on Tuesday, near its lowest level since mid-August.  

 

“The 5-year bond auction could yield a safe result,” said Naomi Muguruma, chief debt strategist at Mitsubishi UFJ Morgan Stanley Securities. “Supply and demand for short- and medium-term bonds should remain robust for now.”  

 

Singapore IPO Market Showing Signs of “Winter Thaw”? Analysts: Still Lags Behind Hot Markets Like Hong Kong  

 

Singapore’s initial public offering (IPO) market appears to be showing signs of a “winter thaw,” with the number of companies listing on the Singapore Exchange this year already surpassing last year’s total, and more firms planning IPOs.  

 

Analysts note that with government policy support, local firms’ liquidity and credit ratings are expected to improve, boosting Singapore’s appeal as a listing destination. However, in the short term, it is unlikely to overtake hot markets like Hong Kong.  

Institutional Views

 

Goldman Sachs’ research shows that in August, global hedge funds’ net buying of Chinese stocks reached a new high since September 2024, with gross positions hitting a two-year peak. Goldman’s Prime Services data indicates that hedge funds’ risk appetite for Asian equities has remained high for four consecutive months.

 

In August, net buying of Chinese stocks (including A-shares and Hong Kong stocks) hit its highest level since September 2024, with hedge fund positions in Chinese stocks rising 76 basis points to a two-year high.  

 

 

ANZ Bank has raised its 2025 year-end gold target from $3,600 per ounce to $3,800 per ounce, expecting gold to peak near $4,000 per ounce by June 2026. It also lifted its 2025 year-end silver target to $44.7 per ounce.  

 

 

Barclays has raised its 2025 year-end S&P 500 target from 6,050 to 6,450 and its 2026 year-end target from 6,700 to 7,000.  

 

 

Deutsche Bank has increased its S&P 500 year-end target from 6,550 to 7,000, citing positive corporate earnings growth, manageable current tariff impacts, and supportive investor positioning.  

 

 

Vincent Stamer of Commerzbank noted in a report that after failing a no-confidence vote, France is taking another step toward a significant debt increase. “The prospect of decisively addressing uncontrolled public finances has become distant,” he said.

 

Without reforms, France’s debt ratio could climb above 150% in the next decade. Rising interest expenses will make future budget consolidation challenging, and Stamer suggests harsher spending cuts or tax hikes may be needed to stabilize the ratio. “President Macron may appoint a new prime minister in the coming days, but this is unlikely to break the political deadlock.”  

 

 

Natixis analysts Alain Durre and Hadrien Camatte suggest the European Central Bank (ECB) could deliver a final 25-basis-point rate cut in December, provided labor market slowdowns exceed expectations and inflation falls significantly below target due to declining energy prices and euro appreciation.

 

They estimate a 60% chance of this cut, bringing the terminal deposit rate to 1.75%, with the ECB likely maintaining current rates (deposit rate at 2.00%) on Thursday.