APAC Market Wrap - 22 Sep

 

China stock market: At close, the Shanghai Composite rose 0.22%, the Shenzhen Component gained 0.67%, and the ChiNext Index increased 0.55%.

 

Precious metals, chip industry, and consumer electronics led gains, while film, tourism, and liquor sectors saw the largest declines.  

 

Hong Kong stock market: Hong Kong’s three major indices closed lower. The Hang Seng Index fell 0.76% to 26,344.14 points, the Tech Index dropped 0.58% to 6,257.91 points, and the H-share Index declined 1.07% to 9,370.73 points.

 

Banks, insurance, coal, and auto stocks remained weak, while consumer electronics, semiconductors, pharmaceuticals, and gold stocks strengthened.  

 

Japan stock market: The Nikkei 225 surged 0.99% to 45,493.66 points, up 447.85 points, hitting a record high.

 

Electrical equipment, oil and coal, chemicals, banking, and transport equipment were among the 19 rising sectors, while shipping, telecom, pharmaceuticals, construction, and aviation fell.  

 

South Korea stock market: The KOSPI rose 0.68% to 3,468.65 points.

 

Diversified consumer services, biotech, food, and semiconductors led gains, while publishing, shipping, diversified telecom, and other financials lagged.  

 

Australia stock market: The S&P/ASX 200 rose 0.43% to 8,810.90 points.

 

Industrial distribution, homebuilding, and aerospace sectors gained, while agriculture, restaurants, medical diagnostics, and credit saw sharp declines.  

 

Singapore stock market: The Straits Times Index fell 0.12% to 4,297.37 points.

 

Waste management, conglomerates, and semiconductors rose significantly, while diversified financials, auto parts, and insurance saw larger drops.  

 

Malaysia stock market: The FTSE Malaysia KLCI rose 0.32% to 1,603.34 points.

 

Construction, industrial products and services, and financials gained, while telecom, media, transport, logistics, and closed-end funds declined.  

Key events  

Emerging market bonds up 15%, traders see Fed rate cuts fueling further gains  

 

Fund managers and strategists believe the Fed’s renewed rate-cut cycle will boost the biggest emerging market bond rally in years.

 

Dollar-denominated developing nation bonds have returned 15% this year, on track for the best performance since at least 2017, driven by concerns over U.S. trade wars and policy shifts pushing investors elsewhere. The Fed’s rate cuts after a nine-month pause encourage seeking higher yields in other markets.  

 

Crypto crashes, over $1.5 billion in long positions liquidated  

 

Over $1.5 billion in crypto long positions were forcibly liquidated on Monday, triggering heavy selling, hitting smaller coins hardest. Coinglass data shows Ethereum fell 9% to $4,075, with nearly $500 million in leveraged longs wiped out.

 

Bitcoin dropped nearly 3% to $111,998. Publicly listed digital asset firms faced intense demand in August, pushing Bitcoin and Ethereum to record highs, but momentum is now fading. Japan’s Metaplanet is down 67% from its mid-June peak.  

 

Malaysia says RCEP members will consider new members  

 

Malaysia’s trade minister said Monday that RCEP leaders, led by China, will meet in October for their first summit in five years to discuss new members and trade flow improvements.

 

Malaysia will host the RCEP summit during the ASEAN annual meeting in Kuala Lumpur. RCEP, the world’s largest trade bloc, includes all 10 ASEAN countries, China, Japan, South Korea, Australia, and New Zealand. Signed in November 2020, it aims to cut tariffs, boost investment, and ease regional goods flow.  

 

Buffett boosts stake! Berkshire holds over 10% of Mitsui, Japanese trading firms rally  

 

Warren Buffett’s Berkshire Hathaway became a major shareholder in Mitsui & Co. through additional purchases, signaling confidence in Japanese trading firms. Mitsui said Berkshire’s voting rights exceed 10%, with potential for further increases.

 

Mitsui’s stock rose as much as 2.2% after the news, with Mitsubishi Corporation, Itochu, Marubeni, and Sumitomo also climbing in Tokyo.  

 

Contrarian bets emerge as Wall Street’s hot options strategy draws reverse plays  

 

Dispersion trading is a top Wall Street hedge fund strategy, but some investors are betting against it. Since early August, U.S. markets appear calm, with 60-day realized volatility at pre-pandemic lows and the VIX below its long-term average of 20.

 

Yet, individual stocks are volatile—one surged 32% in a month. Hedge funds are betting on calm market trends with sharp stock moves, but gains are narrowing as the S&P 500 creeps up in a tight range.  

Institutional views  

Citi: Gold bull market may persist short-term  

 

Citi analysts say the gold bull market could continue short-term, driven by cyclical factors like U.S. labor market weakness and structural concerns over Fed independence. “Almost all factors favor the gold rally,” they said, targeting $3,800 per ounce in three months.  

 

Citi: Brent crude may fall to $60/barrel by 2026  

 

Citi analysts predict Brent crude will slide to around $60 per barrel by 2026 as OPEC+ phases out its second round of production cuts. Global oil inventories are expected to rise by 1.1 million barrels daily in 2025 and 2.1 million in 2026.  

 

Capital Economics: Fed rate cuts unlikely to significantly lift commodity prices  

 

Capital Economics’ climate and commodity economist said recent Fed rate cuts haven’t significantly impacted commodity prices. U.S. rate cuts may be offset by other factors, with weak commodity fundamentals due to slowing demand and rising OPEC+ supply.

 

Oil prices may fall through 2026, and markets digesting Fed cuts could limit further commodity price support or even weigh them down.