APAC Market Wrap – Dec 2

Mainland China stock market: At the close, the Shanghai Composite fell 0.42%, the Shenzhen Component fell 0.68%, and the ChiNext Index fell 0.69%.

In terms of sectors, Fujian, food, and pharmaceutical commercial sectors led the gains, while energy metals, non-ferrous metals, film & cinema chains and other sectors were among the biggest decliners.

Hong Kong stock market: Hong Kong’s three major indices showed mixed performance today. At the close, the Hang Seng Index rose 0.24% to 26,095.05 points; the Hang Seng Tech Index fell 0.37% to 5,624.04 points; the H-Shares Index rose 0.11% to 9,182.65 points.

Hong Kong stocks displayed clear sector divergence today. Insurance and consumer electronics stocks were active, while pharmaceutical and film & entertainment stocks generally weakened.

Japanese stock market: The Nikkei Index closed essentially flat at 49,303.45 points.

By industry, banks, non-ferrous metals, rubber products and other sectors edged higher; mining, power utilities, information & communication and other sectors declined.

Korean stock market: The KOSPI rose 1.90% to 3,994.93 points. Roads, autos, electrical equipment, trading, textiles and other industries rose, while other financials, healthcare, non-ferrous metals, biotechnology and other sectors fell.

Australian stock market: The S&P/ASX 200 rose 0.17% to 8,579.700 points. Forestry products, apparel, other energy, industrial products and other sectors rose, while non-alcoholic beverages, credit services, furniture, restaurants and other sectors declined.

Singapore stock market: The FTSE Singapore Straits Times Index STI rose 0.26% to 4,537.96 points. By sector, waste management, interactive media, cyclical retail, oil & gas and other sectors rose, while personalized services, education, industrial products, auto & parts and other sectors fell.

Malaysian stock market: The FTSE Malaysia KLCI rose 0.37% to 1,630.60 points. By sector, financial services, plantations, real estate and other sectors rose, while utilities, construction, business trusts and other sectors edged lower.

Key Events

Indian stocks hit record highs – Nomura sees another 12% upside over the next year

Nomura Securities expects the Indian benchmark Nifty 50 to reach 29,300 by the end of 2026 — roughly 12% above current levels. The reason: cyclical economic momentum and earnings growth are regaining strength under supportive policies.

Nomura analyst Saion Mukherjee wrote in a Tuesday (Dec 2) report that calmer geopolitics, a more solid macro environment, and signs of a cyclical recovery all further justify higher valuations.

Mukherjee added that Nomura lifted its valuation concerns on Indian equities back in May this year as the market stabilized from U.S. tariff-driven selling.

BOJ sounds the rate-hike trumpet! Is the “Pacific storm eye” raging across global markets again?

U.S. markets are once again facing a threat from across the Pacific…

After BOJ Governor Kazuo Ueda issued his clearest signal yet on Monday — hinting at a possible rate hike later this month — Japanese government bond yields surged, quickly followed by rising sovereign yields from the U.S. to Europe and the rest of Asia.

During a meeting with Japanese business leaders in Nagoya on Monday, Ueda said the BOJ will “weigh the pros and cons” of raising the policy rate at its policy meeting ending December 19. The BOJ’s last rate hike was in January this year, when it lifted rates from 0.25% to 0.5% — the highest borrowing cost in Japan in 17 years.

Malaysian PM: Intel to invest an additional $208 million in Malaysia

Malaysian Prime Minister Anwar Ibrahim said U.S. chipmaker Intel (INTC) has announced an additional investment of 860 million ringgit (approximately $208 million) in Malaysia for chip packaging and testing operations.

Institutional Views

Bank of America adjusts Fed forecast: 25 bps cut expected in December, two more cuts in 2026

BofA Global Research said on Monday that given the softening labor market and recent hints from policymakers of earlier easing, it now expects a 25 bps cut at the December meeting.

Previously, the bank expected rates to be held steady in December. It now forecasts two additional 25 bps cuts in June and July 2026, bringing the terminal rate to the 3.00%-3.25% range.

Spartan Capital Securities: Outlook remains bullish, silver could break $75/oz

International silver prices rose for the fifth straight session, hitting a new high and more than doubling year-to-date. Silver is expected to outperform gold in the coming sessions, partly due to rising expectations for a Fed rate cut this month.

Spartan Capital Securities analyst Peter Cardillo said: “Investors are at an inflection point — the silver outlook remains bullish and is gaining momentum versus other metals. $75/oz is an achievable price target.”

MUFG: BOJ rate-hike expectations heating up, yen likely to extend gains

MUFG analyst Lee Hardman noted that after Governor Ueda said the BOJ will thoroughly discuss the possibility of a hike at the next meeting, the yen could strengthen further.

“This is the strongest signal yet that the BOJ is preparing to resume hikes this month,” Hardman said. Previously cautious expectations of an early hike had been tempered by fears the government might oppose it.

This statement supports the yen and aligns with MUFG’s forecast that USD/JPY will fall toward 150 by early 2026.

Capital Economics: Impact of BOJ rate hike on global markets may be overstated

The possibility of an earlier-than-expected BOJ rate hike has shocked global bond and equity markets, but Capital Economics says the concern may be exaggerated.

Analyst Thomas Mathews wrote that while Japan is a major global creditor, rising JGB yields do not necessarily trigger capital repatriation that would put global markets at risk.

On one hand, Japanese investors holding foreign bonds face the cost of hedging short-term FX risk. On the other, even if rising JGB yields pressure bond markets elsewhere, it would not derail the global equity rebound, which is driven by earnings growth rather than higher valuations — a situation likely to persist.

CITIC Securities scenario analysis: OpenAI falling into operational crisis + slower AI industry investment pace viewed as base-case scenario

CITIC Securities research note states that given the continuously expanding scale of AI investment and unclear ROI, discussion of an “AI bubble” has become unavoidable.

Combining projections on algorithmic progress, core company strategies, and macro liquidity, over the next 12 months three main scenarios are possible for the AI industry. CITIC views OpenAI facing an operational crisis and a slowdown in AI industry investment as the base-case scenario (60% probability) — for the current AI industry, this may be the most reasonable and likely outcome.

A substantive short-term breakthrough in AI algorithms or a U.S. inflation rebound & bubble burst are the two extreme low-probability scenarios (20% each).

Facing high short-term uncertainty in AI technological progress and macro expectations, CITIC still recommends investors in the AI space adopt a “wait-and-see” + “contrarian investing” approach while gradually increasing allocation to the application side (internet, application software).