APAC Market Wrap - Nov 21
Mainland China stock market: Chinese stocks closed sharply lower. The Shanghai Composite fell 2.45%, the Shenzhen Component dropped 3.41%, and the ChiNext Index declined 4.02%.
Gains were led by China Shipbuilding and AI application sectors, while batteries, silicon energy, and lithium mining were the biggest decliners.
Hong Kong stock market: Hong Kong's major indices fell across the board this week. The Hang Seng Index closed down a cumulative 5.09% at 25,220.02, the Hang Seng Tech Index lost 7.18% to 5,395.49, and the State-owned Enterprises Index slipped 5.09% to 8,919.78.
Most sectors saw broad weakness, including lithium batteries, gold, internet, and semiconductors.
Japanese stock market: The Nikkei 225 declined 2.40% to close at 48,625.88. Of the 33 sectors, 13 fell while 22 rose. Real estate, land transport, and insurance posted modest gains; nonferrous metals, electrical equipment, and machinery led the losses.
South Korean stock market: The KOSPI dropped 3.79% to 3,853.26. Health management, tobacco, and road transport rose, while electrical equipment, semiconductors, machinery, and aerospace & defense were among the decliners.
Australian stock market: The S&P/ASX 200 fell 1.59% to 8,416.50. Non-alcoholic beverages, industrial distribution, and waste management gained; semiconductors, aerospace, agriculture, and metals & mining declined.
Singapore stock market: The Straits Times Index (STI) eased 0.95% to 4,469.14. Industrial distribution and education rose, offset by weakness in personalized services, industrial products, and cyclical retail.
Malaysian stock market: The KLCI dipped 0.15% to 1,617.57. Real estate and telecommunications & media edged higher; technology, closed-end funds, and industrial products & services drifted lower.
Key Events
SoftBank shares plunge over 10% in a day, cracks emerge in "AI gamble"
Asia-Pacific markets traded lower on Friday (November 21), with Japan's benchmark Nikkei 225 down 2.4% and heavyweight SoftBank Group tumbling 10.9% — its steepest single-day drop since August 5 last year.
Analysts attribute the regional pressure largely to the overnight U.S. reversal from big gains to sharp losses. The Nasdaq briefly rose nearly 2.6% on Nvidia's earnings but closed down 2.15%.
In a mixed U.S. jobs report, markets fretted over the Fed's resolve to keep cutting rates. Nvidia's results amplified concerns about lofty valuations and technical momentum, potentially prompting short-term profit-taking.
CGS International Securities executive Billy Toh called Nvidia a victim of multiple headwinds: Bitcoin sell-off, delayed Fed cuts, and broader financial tightening.
Foreign investors net sell over KRW 12 trillion this month, fleeing Korean stocks
South Korea's market surged this year, with the KOSPI hitting a record high earlier this month. But signs point to foreign investors pulling back.
As positive inflows faded amid a weakening won, doubts over a December Fed cut, and AI bubble fears, concerns mount that the exodus could continue.
Korea Exchange data shows foreigners net sold about KRW 12.0274 trillion in KOSPI stocks this month, dominating sales on all but four trading days.
Selling focused on big semis like SK Hynix (KRW 7.05989 trillion) and Samsung Electronics (KRW 2.0148 trillion). Analysts link it to rising AI bubble worries dragging global chip performance.
Singapore raises 2025 GDP forecast to 4%
Singapore's third-quarter economy beat expectations, prompting a near-doubling of this year's growth outlook to around 4%. But officials see activity slowing next year amid U.S. tariff impacts on global trade.
The Ministry of Trade and Industry said Friday that 2026 growth will ease to 1%-3% — its first projection for that year.
"Looking to 2026, the impact of U.S. tariffs is expected to become more pronounced, with GDP growth in most of Singapore's key trading partners likely below 2025 levels," the ministry noted. "This slowdown in major economies will curb export demand for Southeast Asia."
Yen depreciation pressure surges! BOJ December rate hike on the cards?
On Friday, Bank of Japan Governor Kazuo Ueda told parliament the central bank must weigh how yen weakness could lift import costs and overall prices, potentially altering inflation dynamics.
Despite Prime Minister Sanae Takaichi's preference for loose policy, Ueda's remarks suggest the BOJ may act soon — possibly hiking rates to tighten policy, bolster the yen, and prevent runaway inflation.
Institutional Views
Goldman Sachs: Expects $40 billion in stock selling next week
Goldman Sachs told clients the S&P 500's breach of a key level has given trend-following hedge funds the go-ahead to potentially dump nearly $40 billion in equities over the coming week. The index fell below 6,725 on Wednesday.
Goldman views this threshold as a signal for these funds to either unwind positions or amp up shorts betting on further declines. Their math shows $39 billion in global stock sales in the following week after the break.
If prices keep sliding, systematic trend funds could offload up to $65 billion. These funds chase early trend signals — up or down — based on volume, price, or intraday speed. Before the sell-off, they were net long about $150 billion in global equities.
The last such breach was in October, and before that, April 2 when President Trump unveiled tariff proposals.
Citadel Securities: Three factors to support S&P 500 year-end rally to 7,000
Citadel Securities analyst Scott Rubner says the S&P 500's recent "healthy" pullback has paved the way for a strong rebound, with positioning and seasonality set to drive gains into year-end.
In a client note, he highlighted bullish forces: ① Ongoing retail trader demand; ② Institutions trimming U.S. stock exposure ahead of Thanksgiving, leaving room to reload; ③ Nvidia's solid results, which could spur traders to unwind hedges and rebuild positions before close.
He sees the index hitting 7,000 by year-end — a 5.4% rise from Wednesday's close.
Seasonality favors stocks too: Data back to 1928 shows the S&P 500 typically up ~4% from now through December.
Rubner also flags systematic investors — funds that mechanically adjust based on trends and volatility. They're "clearly in de-risk mode," cutting stock holdings amid recent softness. For him, these mechanical outflows could stay heavy for days, then fade entirely.
CIBC: Fed December rate-cut pause largely hinges on data gaps
CIBC Capital Markets analyst Ali Jaffery on the U.S. September jobs report: The Fed's potential pause in December boils down to incomplete data, pushing decisions into next year for fuller visibility. This could be the smarter play, especially with tariffs facing legal hurdles.