APAC Market Wrap - Mar 25
China Equities: By the close, the Shanghai Composite rose 1.30%, the Shenzhen Component gained 1.95%, and the ChiNext Index climbed 2.01%. Sector-wise, the power industry saw a breakout rally led by green energy concepts. On the downside, oil and gas stocks exhibited relative weakness.
Hong Kong Equities: Hong Kong’s three major indices trended higher in volatile trade to close in positive territory. Market turnover remained active, characterized by significant structural divergence across sectors.
By the close, the Hang Seng Index rose 1.09% to 25,335.95; the Hang Seng Tech Index gained 1.91% to 4,922.94; and the Hang Seng China Enterprises Index edged up 0.98% to 8,582.74. From a market perspective, optical communications, AI applications, and power stocks saw varying degrees of gains, while "new consumption" and oil majors trended lower. Capital demonstrated a clear preference for high-growth tracks and defensive sectors.
Japanese Equities: The Nikkei 225 surged 2.87% to 53,749.62. On an industry basis, insurance, non-ferrous metals, and glass sectors saw collective gains, while the mining sector recorded a slight decline.
South Korean Equities: The KOSPI rose 1.59% to 5,642.21. By sector, venture capital, telecommunications equipment, and retail firms gained collectively, while card services, electronics, healthcare, and advertising retreated.
Australian Equities: The S&P/ASX 200 advanced 1.85% to 8,534.30. Non-alcoholic beverages, aerospace, and agriculture trended higher, while petroleum, apparel, and forestry sectors saw sharp declines.
Singapore Equities: The Straits Times Index (STI) rose 0.87% to 4,904.54. Industrial products, construction materials, and semiconductors gained, while diversified media, waste management, and chemicals fell.
Malaysian Equities: The FTSE Bursa Malaysia KLCI rose 0.46% to 1,716.68. Healthcare, business trusts, and financial services gained, while telecommunications & media, plantations, and real estate trended lower.
Key Events
South Korea Escalates Middle East Crisis Response; May Pivot to Russian Oil to Ease Squeeze
South Korean Prime Minister Han Duck-soo further elevated the importance of the nation's energy emergency protocols on Wednesday, stating the government must prepare for "worst-case scenarios" stemming from the Middle East conflict. Han noted that an Emergency Economic Task Force under his leadership will be established, overseeing five departments focused on energy, macroeconomics, financial markets, livelihoods, and overseas impacts, meeting twice weekly. Additionally, an Emergency Economic Command Center will be set up within the Presidential Office.
On Tuesday, Seoul activated emergency measures including a five-day license plate rationing system affecting 1.5 million vehicles, expected to save 3,000 barrels of crude daily against a national consumption of 2.8 million barrels. Separately, Foreign Minister Cho Tae-yul held a call with Omani counterpart Badr Albusaidi to request assistance in securing LNG and oil supplies.
Gold Repeating the "2008 Script"? Wall Street Strategist Eyes Rally to $11,400
Despite the U.S.-Iran conflict failing to propel gold—which instead slumped into bear market territory—optimism remains among some analysts. Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, argues that the current sell-off is a replay of the 2008 Global Financial Crisis, boldly predicting a rebound to $11,400. Gold hit a record $5,608 per ounce in January before retreating to approximately $4,462, a 27% decline from its peak.
Schiff noted on X (formerly Twitter): "In the early stages of the 2008 crisis, gold plummeted 32%... After bottoming, it surged 178% over the next three years."
Institutional Views
JPMorgan: War Exposes U.S. Wartime Capacity Shortfalls
JPMorgan CEO Jamie Dimon stated Tuesday that while the conflict presents short-term risks, he is "slightly optimistic" about long-term Middle East stability. However, he noted the conflict has exposed a lack of U.S. industrial capacity to rapidly scale weapons production. Dimon expressed frustration with "rigid budgets" and "regulatory burdens" following a visit to the Pentagon, adding, "Military spending will increase significantly... we simply want to be involved and help with their supply chains."
JPMorgan: The Longer the Conflict, the Stronger the Bull Case for Gold
JPMorgan noted in a report that while gold has fallen roughly 17% from its January peak due to a stronger dollar and risk aversion, historical data suggests this is a transient pullback providing a buying opportunity. The bank argues that as the conflict persists, the fundamental case for gold strengthens.
Goldman Sachs: Middle East Tensions Driving Fertilizer Shortage and Grain Inflation
Goldman Sachs warned Tuesday that nitrogen fertilizer disruptions in the Strait of Hormuz could lower global grain yields and alter planting decisions. With nitrogen prices up 40% since the conflict began and supply 25% below normal levels, spring planting in Europe and Australia faces challenges, potentially boosting demand for U.S. grain exports and lifting prices.
Goldman Sachs: Maintaining Overweight on China; A-Shares Offer Higher Sharpe Ratio
Goldman Sachs Chief China Equity Strategist Kinger Lau stated on March 24 that international interest in Chinese equities has climbed to multi-year highs, with only 10% of clients now viewing the market as "uninvestable." Amid geopolitical tensions and soaring energy costs, Goldman maintains its Overweight recommendation on Chinese stocks (A-shares and H-shares), noting that A-shares offer a superior Sharpe ratio in the short term.