APAC Market Wrap - Mar 5
Chinese Stock Markets
At the close, the Shanghai Composite rose 0.64%, the Shenzhen Component gained 1.23%, and the ChiNext Index climbed 1.66%. By sector, MicroLED concepts saw a collective breakout, and power grid equipment maintained its strong momentum. Conversely, the seed industry sector underwent a broad correction.
Hong Kong Stock Market
The Hong Kong market continued its volatile pattern, with the three major indices showing mixed performance. At the close, the Hang Seng Index rose 0.28% to 25,321.34; the Hang Seng Tech Index fell 0.69% to 4,796.33; and the HSCEI (H-shares) declined 0.38% to 8,451.43. Market sentiment remained cautious, with capital rotating rapidly between positive policy news and external disruptions, leading to prominent sector divergence.
In terms of performance, power equipment and pharmaceutical stocks strengthened, while oil and gas equipment, petroleum, gold, and aviation stocks trended lower.
Japanese Stock Market:
The Nikkei 225 rose 1.90% to 55,278.06. By industry, mining and petroleum sectors gained, while air transport, other products, and transportation equipment declined.
South Korean Stock Market:
The KOSPI surged 9.63% to 5,583.90. By industry, telecommunications equipment, bio-engineering, life sciences, and aviation sectors collectively rose, all gaining more than 10%.
Australian Stock Market:
The S&P/ASX 200 rose 0.44% to 8,940.30. Semiconductors, aerospace, and credit sectors gained; industrial products, packaging & containers, and independent power declined.
Singapore Stock Market:
The Straits Times Index (STI) rose 0.70% to 4,846.56. Gains were led by industrial products, non-alcoholic beverages, and packaging & containers, while construction materials and cyclical retail fell.
Malaysian Stock Market:
The FTSE Bursa Malaysia Index rose 0.88% to 1,713.20. Industrial products & services and communication & media rose; closed-end funds and business trusts declined.
Key Events
South Korean Authorities Issue Level 1 Energy Security Alert; Contingency Measures Implemented
Amid the rapid surge in crude prices due to the conflict in Iran, Wall Street banks including Goldman Sachs, Standard Chartered, and ANZ have swiftly raised their short-term price targets.
Goldman Sachs warned that geopolitical developments in the coming weeks will dictate long-term oil trends, noting that a prolonged blockade of the Strait of Hormuz could push prices past the $100 mark.
Russian Oil Floods Indian Market Following Strait of Hormuz Disruptions
As military risks in the Middle East disrupt global supply chains, industry insiders reveal that Russia is redirecting oil to India.
Approximately 9.5 million barrels of Russian crude are currently idling near Indian waters, capable of arriving within weeks. India, which relies on the Strait of Hormuz for 40% of its imports, is facing a critical supply shock with current stockpiles only sufficient for roughly 25 days.
The Indian government is actively seeking alternative sources to mitigate a conflict that may persist beyond ten days.
Bridgewater Founder Doubles Down on Gold: Recommends at Least 5% Allocation
Ray Dalio, founder of Bridgewater Associates, reiterated his strong bullish stance on gold Tuesday, declaring it the "clear winner" over Bitcoin.
While Bitcoin prices have plummeted over the past year, gold has continued to rally. Dalio emphasized that central banks will never hold Bitcoin in the same manner as gold, viewing the former as a risk asset rather than a true hedge.
Geopolitics Shatters AI Dreams: Wall Street Exits Asian Tech Stocks
Traders are rapidly retreating from the fervent "AI trade" as the blockade of the Strait of Hormuz ignites inflation fears.
Foreign investors sold over $3 billion in South Korean equities this week, following a record $13.7 billion exit last month. Taiwan also saw $3.6 billion in outflows, marking its largest weekly capital flight since late December.
Analysts suggest the sell-off reflects growing skepticism over whether the massive capital expenditures in the AI sector can ultimately yield sufficient profits in a high-risk environment.
Institutional Perspectives
UBS: Upgrades South Korean Equities; Bullish on Semiconductor Earnings.
Following a roughly 20% correction, UBS upgraded South Korean stocks to "Attractive," citing technical de-leveraging rather than fundamental decay. High DRAM prices are expected to support strong earnings growth, with spot prices potentially doubling to $1.7 per Gb by H2 2027.
TD Securities: Rising Oil Prices Complicate Fed Rate Cut Path.
Strategists noted that a 25% surge in WTI crude would correspond to a 0.5 percentage point rise in headline CPI. If inflation remains sticky and economic growth resilient, the Fed's easing cycle may be delayed, though the threshold for further rate hikes remains high. Money markets currently price in 41 basis points of rate cuts for this year.