APAC Market Wrap - 26 Sep
China Stock Market: At the close, the Shanghai Composite fell 0.65%, the Shenzhen Component dropped 1.76%, and the ChiNext Index declined 2.60%.
Wind power and insurance sectors led gains, while gaming, computing hardware, and lithography equipment saw the largest declines.
Hong Kong Stock Market: This week, Hong Kong’s three major indices pulled back. At the close, the Hang Seng Index was down 1.57% to 26,128.20 points, the Tech Index fell 1.58% to 6,195.11 points, and the China Enterprises Index dropped 1.79% to 9,303.10 points.
Wind power and dairy stocks performed strongly, while consumer electronics, robotics, and internet tech stocks weakened.
Japan Stock Market: After four days of gains, the Nikkei 225 retreated 0.87%, closing at 45,354.99 yen, down 399.94 yen.
By sector, real estate, food, construction, insurance, and other products were among 24 sectors rising, while nonferrous metals, electrical equipment, pharmaceuticals, IT/telecom, and metal products were among 9 sectors declining.
South Korea Stock Market: The KOSPI fell 2.45% to 3,386.05 points.
Cigarettes, utilities, life insurance, and diversified consumer services led gains, while semiconductors, electrical products, electronic equipment, and communication equipment saw the biggest drops.
Australia Stock Market: The S&P/ASX 200 rose 0.17% to 8,787.70 points.
Apparel, construction materials, aerospace, and industrial products gained, while medical services, biotechnology, and utilities saw sharp declines.
Singapore Stock Market: The Straits Times Index dipped 0.03% to 4,272.70 points.
Forestry products, commercial services, and medical services surged, while non-alcoholic beverages, apparel, and cyclical retail fell significantly.
Malaysia Stock Market: The FTSE Malaysia KLCI rose 0.66% to 1,609.05 points.
Closed-end funds, healthcare, and industrial products/services rose, while technology, construction, and communication/media declined.
Key Events
Japan’s Ishiba to Visit South Korea on September 30-October 1
South Korean President Lee Jae-myung’s office announced that Japanese PM Shigeru Ishiba will visit South Korea on September 30-October 1 for a summit in Busan. Lee’s spokesperson said the leaders will lay the foundation for future-oriented cooperation.
HSBC: Won Depreciation and Financial Stability Risks Cloud Korea’s Rate Outlook
HSBC analysts, including Albert Leung, noted that financial stability concerns and won depreciation are pressuring South Korea’s markets, adding uncertainty to monetary policy.
Analysts still expect a Bank of Korea rate cut in October but warn of resurfacing real estate risks and shifting global rate expectations.
Japan Stocks Face 11th Straight Year of September Capital Outflows
For the week ending September 20, foreign investors sold Japanese stocks for the second consecutive week, locking in gains after a record rally.
Japan’s Ministry of Finance reported net sales of ~2.03 trillion yen ($11.69 billion) the prior week, followed by 1.75 trillion yen ($11.69 billion) this week, marking a likely 11th consecutive year of September net outflows.
South Korea to Expand Cooperation with Saudi Arabia in Shipbuilding, Autos, and AI
South Korea’s Ministry of Trade, Industry, and Energy announced Friday that South Korea and Saudi Arabia will deepen ties in shipbuilding, autos, AI, and other advanced industries, supporting joint projects.
At the “Korea-Saudi Vision 2030 Committee” meeting in Seoul, 11 new projects were outlined, and 46 ongoing projects were reviewed.
Bitcoin, Ethereum Extend Declines; $22B Options Expiry Adds Uncertainty
Amid fading risk appetite, Bitcoin and Ethereum prices continued to slide, with the crypto market losing over $140 billion in value this week. A $22 billion options expiry looms, casting further uncertainty. Ethereum fell 8.2%, dipping below $4,000 to a seven-week low. Bitcoin dropped 3.3%, falling below $110,000 for the first time in four weeks.
Speculative tokens like Dogecoin and Cronos fell harder, down 9.4% and 10%, respectively. Deribit data shows $17 billion in Bitcoin and $5.3 billion in Ethereum open interest contracts expiring Friday, likely fueling volatility.
Global Copper Supply Tightens, Prices Set for Biggest Weekly Gain in Five Months
Due to multiple production disruptions, global copper supply constraints are intensifying, with prices on track for their largest weekly gain since April. LME copper hit $10,289.50 per ton intraday, with a projected weekly rise of 2.7%.
Traders are watching two key events: a fatal accident at Freeport-McMoRan’s Grasberg mine in Indonesia, prompting a force majeure declaration, and a processing plant shutdown at Hudbay Minerals’ Peru mine.
Institutional Views
Goldman Sachs Hedge Fund Head: Don’t Fight, Don’t Chase, Stay Bullish on U.S. Stocks
Goldman Sachs’ hedge fund chief sees U.S. stocks rising, driven by positive fund flows, historical trends, and Fed rate cuts, particularly favoring tech and consumer discretionary. However, he’s cautious on small caps and European markets, noting this is a “stock picker’s market” where outperformance hinges on individual stock selection.
Amid the three-day U.S. stock decline, top Wall Street traders advocate “rational bullishness.”
JPMorgan: Gold to Hit at Least $4,050 by Mid-2026
JPMorgan Private Bank forecasted Thursday that gold prices will reach $4,050-$4,150 per ounce by mid-2026, expecting continued record highs. Despite Fed Chair Powell’s unclear rate-cut timeline, further economic weakening could prompt sustained Fed cuts, boosting gold.
Investors can consider structured products for better entry points amid gold’s recent rally.
Panmure Liberum: High Treasury Yields May Delay AI Boom
Panmure Liberum strategist Joachim Klement said tech giants’ massive AI investments are driving U.S. stock gains, but rising long-term Treasury yields threaten data center investment enthusiasm.
AI projects rely heavily on debt financing, and yields have climbed significantly since 2023, potentially rising further in 2026. Higher yields could make some projects unprofitable, with a 1% yield increase potentially slowing IT equipment investment by 0.6% and software by 0.4%. While growth won’t stop, it may slow, leading markets to adjust earnings forecasts for hyperscalers and growth stocks.
Citadel: Fed May Cut Rates Once More in 2025, Watch Labor Market Slowdown
Citadel founder Griffin predicts the Fed will cut rates once, possibly twice, in 2025, as it shifts focus to a slowing labor market. “The Fed’s worried about jobs, as we’re seeing fewer new positions created,” Griffin said.
Capital Economics: Swiss-Japan Yield Gap May Weaken Franc, Strengthen Yen
Capital Economics notes the Swiss National Bank’s decision to hold rates steady contrasts with the Bank of Japan’s cautious tightening, widening the bond yield gap. This divergence may further expand, potentially weakening the Swiss franc and strengthening the yen in coming years.