APAC Market Wrap - Nov 26

Mainland China stock market: At the close, the Shanghai Composite fell 0.15%, the Shenzhen Component rose 1.02%, and the ChiNext Index rose 2.14%.

 

In terms of sectors, pharmaceuticals, retail, CPO and other sectors led the gains, while military equipment, forestry, gaming and other sectors were among the biggest decliners.

 

Hong Kong stock market: Hong Kong stocks extended their rally today, with all three major indices closing higher.

 

At the close, the Hang Seng Index rose 0.13% to 25,928.08; the Hang Seng Tech Index rose 0.11% to 5,618.36; the H-Shares Index rose 0.04% to 9,162.37.  

 

From market performance, pharmaceuticals, home appliances, autos, and aviation stocks performed strongly, while real estate stocks were among the biggest decliners.

 

Japanese stock market: The Nikkei 225 rose 899.55 points, or 1.85%, to 49,559.07.  

 

By industry, 32 of the 33 industries rose and only 1 fell.

 

Korean stock market: The KOSPI rose 2.67% to 3,960.87. Chemicals, electrical products, steel, machinery and other sectors gained, while health management, other financials, beverages and other sectors declined.

 

Australian stock market: The S&P/ASX 200 rose 0.81% to 8,606.500. Restaurants, credit, semiconductors, building materials and other sectors rose, while industrial distribution, regulated utilities, interactive media and other sectors fell.

 

Singapore stock market: The FTSE Singapore Straits Times Index STI rose 0.36% to 4,501.61. By sector, forestry products, personalized services, travel & leisure and other sectors rose, while education, non-alcoholic beverages, oil & gas and other sectors declined.

 

Malaysian stock market: The FTSE Malaysia KLCI rose 0.79% to 1,624.50. By sector, closed-end funds, telecommunications & media, financial services and other sectors rose, while technology, business trusts, energy, plantations and other sectors edged lower.

Key events  

Japan’s 40-year JGB auction draws strong demand  

 

Japan’s 40-year government bonds rose after the auction of the same maturity attracted strong demand. Despite ongoing concerns over Prime Minister Sanae Takaichi’s stimulus plan, the rise in yields drew investors.  

 

The bid-to-cover ratio, a measure of investor demand, was 2.59 versus a 12-month average of 2.48. After the auction, the 40-year JGB yield fell 1 bp to 3.68% after rising earlier in the session; bond futures erased their early losses.

 

Hedge funds flip from short to long: Record two-day net buying of U.S. stocks in six months, aggressive covering of tech shorts  

 

Hedge funds aggressively bought U.S. stocks over the past two trading days, with net purchases reaching the highest level in more than six months, marking a reversal of the previous deleveraging trend. After the Fed signaled a more dovish stance, these institutions shifted from net selling to active long positions and covered tech short positions on a large scale.  

 

A key turning point in U.S. stock deleveraging: Hedge funds significantly net-bought U.S. stocks over the past two days, with cumulative purchases hitting a six-month high.  

 

According to Goldman Sachs prime brokerage data, hedge funds net-bought U.S. stocks by 2.2 and 1.6 standard deviations on Friday and Monday, respectively. In dollar terms, the cumulative two-day net buying was the largest for any two-day period in over six months and among the highest in the past two years.

 

Hedge funds had been net buyers for the previous three weeks, but the intensity was far below the past weekend’s two days.

 

South Korea’s September births rise for 15th straight month, total fertility rate climbs to 0.85  

 

Data released on Wednesday showed South Korea’s September births rose for the 15th consecutive month, driven mainly by an increase in marriages.  

 

According to Statistics Korea, 22,369 babies were born in September, up 8.6% from 20,589 in the same month last year. Births have been trending higher since July 2024.  

 

From January to September this year, South Korea recorded 191,040 births, an increase of 12,488 from the same period last year — the largest year-to-date increase since 2007.

Institutional views

UBS AM: Chinese stock valuations remain attractive, international investors returning to China market  

 

UBS Asset Management China Equity Head Shi Bin said that after the early-year rebound, the MSCI China forward P/E has returned to around 13.2×, slightly above the 10-year average. Despite the clear rally, current valuations and investor participation are still well below historical peaks and “far from overheated.”

 

Global investors, including long-only funds and hedge funds, are actively participating in cornerstone investments and secondary-market trading of Chinese stocks.

 

Shi Bin added that currently most foreign capital is entering the China market via ETFs rather than active funds. This means the market is still in a “technical repair” phase; sustained capital inflows will require continued structural reforms and signs of sustainable growth.

 

Reuters poll: S&P 500 seen reaching 7,490 by end-2026, possible pullback in next three months  

 

A Reuters survey of equity strategists shows that with the U.S. economy remaining healthy, strong performance from tech companies, and the Fed maintaining accommodative policy, the S&P 500 is expected to rise about 12% from current levels through the end of 2026.

 

The median forecast from over 45 strategists, analysts, and portfolio managers surveyed November 14-25 puts the S&P 500 at 7,490 by year-end 2026, up 11.7% from current levels. A 2025 gain would mark the benchmark’s fourth straight yearly advance.

 

Of the 14 respondents who answered an additional question, 8 believe a pullback in the S&P 500 over the next three months is more likely. Analysts cited risks of inflation rebounding and uncertainty over the rate-cut outlook. The survey forecasts the Dow closing 2026 at 50,566, up over 7% from current levels; the index closed Tuesday at 47,112.45.

 

Goldman Sachs: If Russia-Ukraine peace deal is reached, international oil prices will fall $5  

 

Goldman Sachs head of oil research Daan Struyven said that if Ukraine and Russia reach a peace agreement, it could lower the bank’s base-case oil price forecast by about $5 per barrel.

 

Goldman’s current base-case forecast for Brent crude next year is $56 per barrel; “if U.S. sanctions could be lifted, we expect oil prices to be about $5 lower than that forecast, meaning Brent slightly above $50 per barrel in 2026.”

 

ING: German economy to remain stagnant until fiscal stimulus kicks in  

 

ING analyst Carsten Brzeski wrote in a report that the German economy will continue to stagnate until fiscal stimulus measures take effect. The second estimate for quarterly GDP confirmed Q3 stagnation, with private consumption and net exports dragging while public consumption and investment provided support.

 

Brzeski said: “Unfortunately, the short-term outlook is not optimistic. Think tariffs, a stronger currency, and political tensions and uncertainty.”

 

But conditions should improve after the current quarter. With the German parliament expected to approve the 2026 budget this week, this year’s underinvestment in public spending plus next year’s full-scale fiscal stimulus should be enough to pull Germany out of stagnation.