APAC Market Wrap - Mar 11
Chinese Equities: Mainland benchmarks closed higher on Tuesday. The Shanghai Composite gained 0.25%, while the Shenzhen Component and ChiNext Index rose 0.78% and 1.31%, respectively.
From a sectoral perspective, the chemical industry saw a collective rebound, led by coal and salt chemicals, while small-cap metal concepts retreated.
Hong Kong Market: The three major Hong Kong indices closed lower in tandem. The Hang Seng Index (HSI) fell 0.24% to 25,898.76; the Hang Seng Tech Index slipped 0.11% to 5,054.85; and the Hang Seng China Enterprises Index (HSCEI) dipped 0.07% to 8,704.54.
Market performance was characterized by strength in lithium batteries, oil and gas equipment, power, and coal stocks, while healthcare and AI applications faced downward pressure and retraced.
Japan Market: The Nikkei 225 rose 1.43% to 55,025.37. By industry, several sectors including non-ferrous metals, other products, and marine transportation gained collectively, while banking, insurance, and retail sectors declined.
South Korea Market: The KOSPI climbed 1.40% to 5,532.59. By industry, telecommunications equipment, construction materials, and life insurance sectors rallied across the board, while healthcare management and game entertainment sectors saw slight declines.
Australia Market: The S&P/ASX 200 (XJO) rose 0.59% to 8,743.50. Semiconductors, industrial products, and metals and mining sectors advanced, while furniture, chemicals, and medicine sectors traded lower.
Singapore Market: The Straits Times Index (STI) edged up 0.07% to 4,863.81. Industrial products, interactive media, and non-alcoholic beverages gained collectively, while personal services, oil and gas, and steel sectors declined.
Malaysia Market:The FTSE Bursa Malaysia KLCI rose 0.42% to 1,708.78. Energy, transportation and logistics, and real estate sectors advanced, while the technology sector declined.
Key Events
Southeast Asian Nations Counter Energy Shock with Four-Day Workweeks and Carpooling
To mitigate the impact of a potential oil crisis triggered by the Middle East conflict, Southeast Asian nations are implementing measures to reduce energy consumption. The Philippines has mandated government agencies to restrict official travel and adopted a four-day workweek. Similarly, Thailand and Vietnam are encouraging remote work and carpooling.
Indonesia has pledged to increase fuel subsidies. These aggressive measures underscore deep concerns over the threat to fiscal sustainability in a region of 700 million people that is highly dependent on Middle Eastern energy.
JPMorgan Flags Risks in Private Credit: Collateral Valuations Cut
JPMorgan Chase has reportedly notified private credit providers of a downward revision in the collateral valuations of certain loans used as backing for bank borrowings. The write-downs are concentrated in software company loans, which are perceived as particularly vulnerable to disruption from the rise of artificial intelligence.
This move signals increasing caution from Wall Street banks toward the rapidly growing non-bank lending sector.
Diesel Prices Surge Faster than Crude, Threatening Global Economic Slowdown
The spike in diesel prices—an essential industrial fuel—is posing a severe threat to global economic activity. The conflict has intensified supply concerns as the Strait of Hormuz, which facilitates 10% to 20% of global seaborne diesel supply, remains blocked.
Analyst Philip Verleger estimates the supply loss at 3 to 4 million barrels per day, calling the blockade a "Check" in a geopolitical chess match that leaves Western nations with little room for maneuver.
Institutional Perspectives
Morgan Stanley: Analyst Bruna Skarica suggests the Bank of England could cut rates in April if global energy disruptions are resolved soon. Inflationary fears from the conflict have currently led markets to price out a March cut.
MUFG: The firm predicts U.S. February Core CPI will rise 0.291% MoM. While base effects may lower the YoY figure slightly, it remains historically high. The firm warns that the true impact of the Middle East crisis on energy prices will not be fully reflected until the March data.
Bank of America: BofA suggests that while the market currently views rising oil as an inflationary threat, the supply shock simultaneously risks economic growth. If consumer demand remains resilient, the Fed may focus on inflation as it did in 2022; however, a sustained shock could eventually pave the way for easing.