APAC Market Wrap - Mar 4
China Stock Markets:
At the close, the Shanghai Composite, Shenzhen Component, and ChiNext fell 0.98%, 0.75%, and 1.41% respectively. Power grid and military stocks rose against the trend, while oil and gas recovered from lows. Shipping remained the major laggard.
Hong Kong Stock Market:
The market continued its correction with the HSI down 2.01% and the Tech Index hitting a new low since April 2025. Power equipment outperformed, while port transport, oil, and AI application sectors faced significant selling pressure.
Japanese Stock Market: The Nikkei 225 dropped 3.61% to 54,245.54, with metals and wholesale sectors leading the broad-based decline.
South Korean Stock Market: The KOSPI crashed 12.06% to 5,093.54. Energy, machinery, and shipping industries all saw double-digit percentage losses.
Australian Stock Market: The S&P/ASX 200 fell 1.94%. Independent power rose, while semiconductors and agriculture declined.
Singapore Stock Market: The STI fell 2.11% due to broad weakness in industrial and transport sectors.
Malaysian Stock Market: The KLCI eased 0.80%, with tech and energy sectors retreating.
Key Events
Iran Conflict Grips Oil Markets! Wall Street Banks Raise Forecasts: Prices Could Hit $100
Goldman Sachs, Standard Chartered, and ANZ have hiked short-term price targets as the conflict escalates. Goldman warned that a multi-week blockade of the Strait of Hormuz could push crude prices past the $100 threshold.
World's Top-Performing Market Suffers Record Crash
South Korea's KOSPI plunged 12.06%, surpassing its 9/11-era record for the worst single-day drop. The KOSDAQ dived 14%. The crash wiped out massive 2026 gains, driven by the nation's high energy dependence and the risk of forced margin liquidations.
Analysis and Margin Liquidation
The "export-led + energy-dependent" nature of Korea’s economy made it highly vulnerable to the Middle East crisis. Zian Investment Management noted that many leveraged positions are facing mandatory liquidation, warning that few investors are willing to "catch the falling knife" if the slide continues.
JPMorgan: Iraq and Kuwait May Cut Production Within Days if Hormuz Remains Blocked
JPMorgan warned that Iraq and Kuwait may be forced to cut output within days if the Strait of Hormuz stays closed. Daily supply losses could hit 3.3 million barrels by day eight and scale up to 4.7 million barrels by day eighteen of a prolonged blockade.
Geopolitics Shatters AI Dreams: Wall Street Rapidly Exits Asian Tech Stocks
Traders are fleeing the "AI trade" due to mounting inflation risks. Overseas investors pulled over $3 billion from Korean equities this week, while Taiwan faced its largest weekly outflow since late 2024. Analysts suggest investors are de-risking as high energy costs threaten corporate margins.
Institutional Perspectives
Goldman Sachs: Warning for Emerging Asia; Hormuz Blockade Could Spike Inflation
Goldman warns that a six-week blockade could raise regional inflation by 0.7% and drag GDP growth down by 0.5%, with Singapore, Thailand, and the Philippines being the most sensitive to these shocks.
Morgan Stanley: 70% of Korea's Oil Imports from Middle East; 10% Oil Hike Expected to Push Inflation by 0.6%
With 70% of oil sourced from the Middle East, Korea faces significant stagflation risks. Morgan Stanley estimates every 10% rise in oil prices adds 0.6% to inflation, though the BOK may hold rates steady due to weak domestic demand.
Fitch Ratings: APAC Energy Exporters May Benefit if Middle East Conflict Persists
Upstream producers in Australia and Indonesia may gain as buyers seek alternative sources. Conversely, energy-intensive sectors like chemicals and fertilizers will face severe margin pressure due to soaring input costs and shipping disruptions.