APAC Market Wrap - Jan 20

China Stock Market: At close, the Shanghai Composite fell 0.01%, while the Shenzhen Component dropped 0.97% and the ChiNext Index declined 1.79%.  

 

Precious metals concepts continued strong, real estate was active, and non-ferrous metals gained. On the downside, compute hardware and commercial aerospace led losses.

 

Hong Kong Stock Market: Hong Kong’s three major indices adjusted lower. At close, the Hang Seng Index fell 0.29% to 26,487.51 points, the Hang Seng Tech Index dropped 1.16% to 5,683.44 points, and the H-share Index declined 0.43% to 9,094.76 points.  

 

Aviation, building materials/cement, and gold stocks led gains, while commercial aerospace, pharma, and optical communications continued to weaken.

 

Japan Stock Market:The Nikkei Index fell 1.11% to 52,991.10 points.  

 

Fisheries, retail, and food gained, while securities, transport equipment, and services declined.

 

Korea Stock Market:The KOSPI fell 0.39% to 4,885.75 points. Power utilities, internet, and shipping gained, while air freight, semiconductors, electronics, and maritime declined.

 

Australia Stock Market:The S&P/ASX 200 fell 0.66% to 8,815.90 points. Apparel, semiconductors, and utilities gained, while commercial services, steel, travel, and banks declined.

 

Singapore Stock Market:The Straits Times Index (STI) fell 0.14% to 4,828.00 points.  

 

Agriculture, furniture, and defensive retail gained, while semiconductors, autos, and software declined.

 

Malaysia Stock Market:The FTSE Malaysia KLSE Index fell 0.77% to 1,699.06 points.  

 

Communications/media, transport/logistics, and real estate gained, while financial services, funds, and tech declined.

Key Events  

BofA Survey: Global Investors Reach “Extremely Bullish” Sentiment, Cash Holdings at Record Low  

 

Bank of America’s Tuesday (January 20) survey showed global fund managers’ optimism at the highest since July 2021, with sharply higher growth expectations and cash holdings falling to a record low of 3.2%.  

 

The survey (January 8–15) covered 96 investors managing $575 billion. Note: It was conducted before Trump’s announcement of tariffs on eight European countries tied to Greenland.  

 

BofA’s Bull/Bear indicator jumped to +9.4 (“extremely bullish”), signaling the lowest equity risk hedge level since January 2018.

 

Historic Moment: Japanese Bonds Enter the “4% Era” for First Time in 30 Years  

 

Japan’s 40-year bond yield broke above 4% on Tuesday, the highest since issuance in 2007 and the first time any Japanese sovereign bond maturity has reached that level in over 30 years.  

 

The 40-year yield jumped 5.5 basis points intraday, marking the first return to 4% since the 20-year bond hit that level in December 1995.  

 

This milestone reflects a major shift in Japan’s bond market—years of ultra-low BoJ rates kept yields far below global peers, but Japan’s 30-year yield (~3.6%) now exceeds Germany’s equivalent (~3.5%).

 

Goldman Sachs: The Best Investment Over the Next Year Isn’t the U.S.—It’s Emerging Market Stocks  

 

Where is the best place for wealth and investment over the next year—and the next five years?  Goldman Sachs Wealth Management says it’s not the U.S.—it’s emerging market equities.  

 

Emerging markets have been the top performer in recent years. In a recent report, Goldman Wealth CIO Sharmin Mossavar-Rahmani wrote:  

 

“Emerging market equities offer the highest expected base return at 8%, with a 55% probability. We assign a 20% probability of outperforming and 25% chance of low-to-mid single-digit negative returns.”  

 

“Of all markets, we see the widest range of outcomes for emerging market base expected returns.”

Institutional Views  

ING: European Countries Should Not Rush to React to Trump Tariff Threats  

 

ING global macro head Carsten Brzeski said European countries should not rush to respond to Trump’s tariff threats. Brzeski: “Don’t react—wait and see. Europe has already shown it won’t fully accept, so tariffs are actually a much better outcome than the threat of military invasion.”

 

CITIC Securities: Future U.S. Inflation Upside Pressure Remains Controllable  

 

CITIC Securities noted that December CPI rose 2.7% YoY, in line with expectations, while core CPI rose 2.6% YoY (slightly below 2.7% expected) and 0.2% MoM (below 0.3% expected).

 

Overall, while food and energy inflation may see short-term volatility, with a weak U.S. labor market and likely fading tariff impact, future U.S. inflation upside pressure remains controllable.

 

CITIC Securities: Global Rare Earth Supply-Demand Gap Likely to Widen from 2026  

 

CITIC Securities research said global rare earth strategic importance continues to rise, entering a new era of high-quality development. On the supply side, quota controls and tightening policies may remain rigid; on the demand side, new energy vehicles, humanoid robots, and low-altitude economy are expected to drive long-term high growth.

 

The global rare earth supply-demand gap is likely to widen from 2026, supporting stable-to-rising prices and improved chain profitability. The firm continues to recommend strategic allocation to the rare earth industry chain.

 

Huatai Macro: If U.S. Imposes Tariffs on NATO Members  

 

Huatai Macro research said U.S. tariffs of 10% or 25% on eight NATO countries could raise the U.S. weighted average external tariff rate from the current 11.0% by another 1.1 or 2.2–2.8 percentage points.

 

However, tariffs are merely leverage for Trump’s “Trumpism”; more critically, U.S. claims on Greenland sovereignty will accelerate the breakdown of the rules-based global order and likely prompt short-term stimulus and long-term increases in European defense spending.

 

In the near term, watch Trump administration statements at next week’s Davos and mid-February Munich Security Conference.