APAC Market Wrap - Mar 16

China Equity Markets: The Shanghai Composite edged down 0.26%, while the Shenzhen Component rose 0.19% and the ChiNext Index gained 1.41%.

 

By sector, memory chip concepts staged a collective breakout, and the shipping sector moved higher in the afternoon. On the downside, energy storage and green power concepts continued to adjust.

 

Hong Kong Equity Markets: The three major Hong Kong indices closed broadly higher today. The Hang Seng Index (HSI) rose 1.45% to close at 25,834.02; the Tech Index surged 2.69% to 5,111.78; and the HSCEI climbed 1.67% to 8,816.32.

 

Against the backdrop of a collective rally in the major indices, sectors such as memory chips, new-style tea beverages, NEVs, and AI applications led the gains. Meanwhile, traditional safe-haven assets including gold, non-ferrous metals, and energy generally pulled back as market risk appetite saw a significant recovery.

 

Japan Equity Market: The Nikkei 225 slipped 0.13% to close at 53,715.15. By sector, fisheries, food, and ICT saw collective gains, while non-ferrous metals, petroleum, and rubber declined.

 

South Korea Equity Market: The KOSPI rose 1.14% to 5,549.85. By sector, energy equipment, healthcare, and retail rallied, while life insurance, electronics, food, and aviation saw minor declines.

 

Australia Equity Market: The S&P/ASX 200 dropped 0.39% to 8,583.40. Diversified financials, independent power, and healthcare distribution gained, while semiconductors, apparel, and other energy sectors declined.

 

Singapore Equity Market: The Straits Times Index (STI) rose 0.55% to 4,868.69. Forestry products, autos & parts, and consumer packaging rallied, while medical equipment, real estate, and building materials declined.

 

Malaysia Equity Market: The KLCI edged down 0.13% to 1,696.56. Plantations, financial services, and healthcare rose, while real estate, business trusts, and energy declined.

Key Events

$10 Billion Redemption Wave Hits Private Credit; Wall Street Growth Engine Forced to Decelerate

 

In the first quarter of this year, wealthy investors are seeking to redeem over $10 billion from some of the largest private credit funds. This move threatens to stall one of Wall Street's most critical sources of growth, prompting investment managers to limit withdrawal scales.

 

According to media calculations, heavyweights including Blackstone, BlackRock, Cliffwater, Morgan Stanley, and Monroe Capital have agreed to fulfill approximately 70% of redemption requests, with the remainder deferred.

 

This figure is expected to rise further over the next two weeks as statistics are finalized from funds managed by Ares Management, Apollo Global, Blue Owl, Oaktree, and Goldman Sachs, where more wealthy investors are expected to exit.

 

Goldman Sachs Slashes Short-term Japan Equity Targets as Geopolitical Risks Drive Oil Higher

 

Goldman Sachs has lowered its short-term targets for Japan's benchmark indices, citing escalating Middle East geopolitical risks. Heightened concerns over global energy supply disruptions could drive oil prices higher, dealing a blow to the Japanese economy, which relies heavily on energy imports.

 

The latest report shows Goldman cut its 3-month and 6-month TOPIX targets to 3,900 and 4,100, respectively, from 4,200 and 4,400. As of Monday (March 16), the TOPIX closed down 0.5% at 3,610.73.

 

However, the firm maintained its 12-month target at 4,300, suggesting that long-term returns in the Japanese market remain promising once current uncertainties subside.

 

Global Aluminum Shock: World's Largest Single Smelter Cuts Production; Indian Giant Declares Force Majeure

 

The global aluminum market is experiencing an "earthquake" amid the ongoing conflict in the Middle East. Aluminum Bahrain (Alba), operator of the world’s largest single-site aluminum smelter, announced a phased production shutdown over the weekend. The company stated the move would allow it to preserve raw material inventories and maintain other plant operations while maritime transport through the Strait of Hormuz is impacted.

 

Alba has reportedly initiated shutdown procedures for three production lines—accounting for 19% of its total annual capacity (1.6 million tons) and approximately 2.2% of global aluminum output. This production cut is the latest in a wave of volatility hitting the industry, with LME aluminum prices jumping to their highest levels since 2022.

Institutional Perspectives

Goldman Sachs Warns: Iran War Could Trigger Severest Recession for Gulf Economies Since the 1990s

 

As the Iran war persists, major Gulf economies including Saudi Arabia, the UAE, and Qatar could face their most severe economic recession since the 1990s if the conflict does not end in the short term.

 

Farouk Soussa, Goldman Sachs' economist for the MENA region, noted that if the conflict continues into April and leads to a two-month closure of the Strait of Hormuz, the GDP of Qatar and Kuwait could shrink by 14% this year. This would mark the worst recession for these two nations since the Gulf War in the early 1990s.

 

In contrast, Saudi Arabia and the UAE are relatively better positioned due to their ability to transport oil via alternative routes. Nevertheless, both countries could still face their most significant economic shock since the 2020 pandemic, with GDP projected to decline by approximately 3% and 5%, respectively.

 

Barclays: Fed Expected to Cut Rates by 25bps Each in Sept 2026 and March 2027

 

The latest forecast from Barclays suggests the Federal Reserve may lower its benchmark interest rate by 25 basis points in September 2026 and March 2027, respectively. Compared to the previously expected two cuts in June and September 2026, this forecast delays the initial pivot and extends the second cut into the first quarter of next year.

 

Bank of America: Oil Price Shock May Drive Up Fed Inflation Forecasts; Powell Expected to Emphasize "Wait-and-See"

 

Bank of America stated that the Federal Reserve will have to grapple with another supply shock: soaring oil prices. In the Summary of Economic Projections (SEP) to be released ahead of the March Fed meeting, both headline and core inflation forecasts are likely to be revised upward.

 

BofA reported: "If long-term growth expectations are also raised, we expect the median dot plot for long-term rates could shift slightly higher." Under these circumstances, the bank believes Fed Chair Jerome Powell may acknowledge stagflation risks while emphasizing a "wait-and-see" approach.