APAC Market Wrap - 30 Sep
China Stock Market: At the close, the Shanghai Composite rose 0.52%, the Shenzhen Component gained 0.35%, and the ChiNext Index was flat at 0.00%.
Hot sectors remained active, with nonferrous metals and memory chips leading gains, while liquor and big finance lagged.
Hong Kong Stock Market: This month, Hong Kong’s three major indices continued their rally. At the close, the Hang Seng Index was up 7.09% to 26,872.99 points, the Tech Index surged 13.95% to 6,472.41 points, and the China Enterprises Index rose 6.79% to 9,564.56 points.
Notably, the Hang Seng and Tech indices have risen for five straight months. Tech, internet, gold, copper, semiconductors, and pharmaceuticals performed strongly.
Japan Stock Market: The Nikkei 225 fell 0.25% for the third straight session, closing at 44,932.63 yen, down 111.12 yen from the prior day.
Insurance, banking, precision instruments, and pharmaceuticals were among 13 sectors that rose, while mining, shipping, steel, and pulp/paper were among 20 that fell.
South Korea Stock Market: The KOSPI dipped 0.19% to 3,424.60 points.
Office electronics, aviation, defense, and construction materials led gains, while shipping, publishing, utilities, and insurance saw the biggest declines.
Australia Stock Market: The S&P/ASX 200 fell 0.16% to 8,848.80 points.
Non-alcoholic beverages, education, and healthcare rose, while furniture, lighting, oil and gas, and diversified financials saw modest declines.
Singapore Stock Market: The Straits Times Index rose 0.44% to 4,288.66 points.
Credit, metals/mining, and cyclical retail surged, while oil and gas, diversified financials, and defensive retail posted larger declines.
Malaysia Stock Market: The FTSE Malaysia KLCI edged up 0.06% to 1,611.88 points.
Utilities, construction, and healthcare gained, while closed-end funds, commercial trusts, and real estate investment trusts fell.
Key Events
Vietnam Furniture Exporters Stay Put, Betting U.S. Consumers Absorb Tariff Hit
The day after Trump’s re-election, Trayton Group signed a deal to shift most of its furniture production to Vietnam. Its CEO told Reuters that new U.S. tariffs won’t alter this strategy. The mid-sized manufacturer, which exports 70% of its furniture to the U.S., sells sofas and armchairs under premium retailer brands or its Simon Li brand at Costco.
Trump signed an order Monday for a 25% tariff on wooden furniture starting October 14, with bathroom and kitchen cabinets potentially facing 50% tariffs and upholstered furniture 30% next year. He previously said tariffs would start October 1.
Australia Central Bank Holds Rates Steady
The Reserve Bank of Australia (RBA) kept the cash rate at 3.60% on Tuesday, following three cuts since February.
The RBA cited persistent inflation and a tight job market but noted rebounding consumer spending and rising home prices, prompting a pause on further easing. Markets see the RBA nearing the end of its easing cycle, with a potential small cut in November if Q3 core CPI (October 29) stays low.
Japan Rate Hike Bets Heat Up, Two-Year Bond Auction Sees Weak Demand
Expectations of a Bank of Japan rate hike as early as October led to the weakest demand for two-year JGBs since 2009.
The bid-to-cover ratio fell to 2.81 from 3.24, below the 12-month average of 3.79. Two-year JGB yields rose 1 basis point to 0.935%, a 2008 high, while 10-year JGB futures turned negative.
South Korea’s Crypto Market Value Drops 14% in H1
Data released Tuesday showed South Korea’s virtual asset market value fell 14% in the first half of 2025 from six months prior, driven by crypto price declines. Per the Financial Services Commission, the market was worth 95.1 trillion won (~$67.8 billion) by June’s end, down 15.4 trillion won.
Traders’ won deposits fell 4.5 trillion won (42%) to 6.2 trillion won, and operators’ operating profits dropped 18% to 607 billion won. South Korea has 25 virtual asset operators, including 17 crypto exchanges.
Global Copper Supply Shocks: LME Copper Breaks $10,400, Banks Raise Targets
Copper prices surged due to supply disruptions and bullish bank forecasts. LME three-month copper rose 2% to $10,409/ton Monday, extending last week’s 2%+ gain. U.S. Comex October contracts climbed 2.6% to $4.841/pound, the best close since July 30.
Supply issues drove the rally: Freeport-McMoRan’s Grasberg mine faces long-term cuts after a mudslide, Chile’s El Teniente mine halted production after a tunnel collapse, and DRC’s Kakula mine paused due to an earthquake. These, plus Grasberg’s woes, heightened supply shortage fears.
Institutional Views
Goldman Sachs: Overweight China Stocks, Healthier Rally, Valuations Not Overheated
Goldman Sachs’ Asia-Pacific chief equity strategist Timothy Moe and China equity strategist Kinger Lau shared views. Moe said Fed rate cuts and a weaker dollar favor stocks, especially in Asia, with Goldman overweighting China, South Korea, and Japan, focusing on tech and cyclical sectors.
He expects Fed cuts in October and December 2025, and Q1 and Q2 2026, lowering rates to 3.0-3.25%. For U.S. stocks, Moe noted valuations at 22-23x P/E, with gains tied to earnings growth, especially in tech as AI shifts to revenue-generating applications.
Lau said China’s rally is healthier than past cycles, with valuations still reasonable, no speculative froth in A-shares, and strong interest from long-term global investors.
Lombard Odier: Tactically Bullish on APAC Stocks vs. U.S. for Rest of Year
Lombard Odier Singapore’s senior macro strategist Homin Lee is tactically bullish on APAC stocks over U.S. stocks for the rest of 2025.
Stable commodity prices, U.S. rate cuts, and easing trade risks create a favorable backdrop. MSCI APAC’s forward P/E is 16x, versus the S&P 500’s 23x, giving APAC a valuation edge, even in tech.
Invesco: Boost Non-U.S. Stocks Over U.S. Exposure
Invesco’s Hong Kong-based multi-asset portfolio manager Chang Hwan Sung is increasing non-U.S. stock exposure, including Asian stocks, over U.S. stocks, driven by a bearish dollar outlook and U.S. capital seeking international diversification and foreign currency appreciation.