APAC Market Wrap - May 18

China: Major indices closed lower, with the Shanghai Composite sliding 1.02% to 4,135.39 and the Shenzhen Component dropping 1.17% to 15,561.37. The ChiNext Index fell 0.56% to 3,929.06.

 

Coal, home appliances, and machinery equipment sectors were active. On the downside, non-ferrous metals, innovative drugs, lithium batteries, photovoltaics, industrial metals, and commercial aerospace led the declines.

 

Hong Kong: The market faced broad pressure as the three major indices retreated in tandem.

 

The Hang Seng Index fell 1.62% to 25,962.73, the Hang Seng Tech Index tumbled 2.66% to 4,941.14, and the H-Share Index dropped 1.89% to 8,691.03.

 

Tech giants were mostly lower; Lenovo, Alibaba, and Xiaomi fell over 3%, while Bilibili plunged over 8%. Oil stocks remained relatively active, while chipmakers saw a sharp correction, with Hua Hong Semiconductor falling nearly 9%. Pork producers also weakened.

 

Japan: The Nikkei 225 fell 1.99% to 61,409.29. Healthcare, precision instruments, and retail sectors showed relative resilience, while non-ferrous metals, electric power, and gas sectors trended lower.

 

South Korea: The KOSPI plummeted 6.12% to 7,493.18.

 

At the industry level, pharmaceuticals, biotech, and medical equipment were relatively defensive, while heavyweight semiconductor, automotive, and electronics sectors dragged the index significantly lower.

 

Australia: The S&P/ASX 200 edged down 0.11% to 8,630.80. Healthcare, utilities, and consumer staples posted gains, while energy, financials, and industrials closed lower.

 

Singapore: The Straits Times Index (STI) dipped 0.18% to 4,918.52. Real estate, telecommunications, and utilities saw modest activity, while financials, technology, and industrials weakened.

 

Malaysia: The FTSE Bursa Malaysia KLCI declined 0.32% to 1,745.63. Technology, healthcare, and consumer sectors were slightly active, but banking, plantations, and energy saw weakness.

Key Events

Foreign Funds Pull $13.2 Billion Last Week; Korean Market Volatility Nears Historic Peaks

 

South Korean equity volatility surged near all-time highs on Monday, triggering wild intraday swings in the KOSPI and prompting brief, exchange-mandated trading curbs. The turbulence followed a massive $13.2 billion divestment by foreign investors last week.

 

The KOSPI slid up to 4% in early trading, extending Friday's 6% plunge—a rout Goldman Sachs described as erasing an entire week's gains on heavy foreign outflows. The KOSPI Volatility Index rose 2.56%, closing in on its early March peak. However, a late-day rally led by heavyweight names like Samsung Electronics helped the KOSPI edge up 0.31% to close at 7,516.04.

 

News that a local court granted an injunction restricting the Samsung union from disrupting production, backed by a daily fine of 100 million KRW, also lifted sentiment.

 

Crucial Test Flight Before Pre-IPO Pitch: SpaceX to Launch Greatly Upgraded Starship V3 on Tuesday

 

SpaceX is scheduled to conduct a pivotal test flight on Tuesday, launching the highly upgraded V3 variant of its massive Starship rocket.

 

The timing is critical as SpaceX nears a heavily anticipated public offering; sources indicate the company could initiate its IPO as early as next month, with a prospectus filing potentially arriving this Wednesday.

 

The company faces mounting pressure to prove its hardware is ready for NASA’s Artemis program—a manned lunar landing slated for 2028—where it competes directly with Jeff Bezos’ Blue Origin.

 

Starship's development timeline currently lags behind NASA's expectations following failed attempts last year, with its 11th test flight occurring seven months ago. Both the booster and upper stage have since undergone extensive redesigns.

 

Central Banks Step Up Bullion Buying; Goldman Sachs Sees Gold Heading Back to Historic Highs

 

Goldman Sachs analysts Lina Thomas and Daan Struyven noted in a report on Friday that central bank gold buying is projected to average 60 tons per month through the end of 2026.

 

Goldman's updated modeling shows the global 12-month rolling average for central bank purchases hit 50 tons in March, far exceeding their previous 29-ton forecast.

 

While bullion prices have languished since the outbreak of the war in Iran in late February—as soaring energy costs trigger global inflation and prevent central banks from easing—Goldman emphasizes that an internal survey reveals a strong baseline appetite for safe-haven diversification among monetary authorities.

Institutional Perspectives

Goldman Sachs on Gold: The bank reiterated its highly bullish end-of-2026 target of $5,400 per ounce, citing robust structural demand and an accelerating diversification push into real assets by central banks worldwide.

 

Goldman Sachs on Treasuries: Strategists noted that U.S. Treasuries have served as a poor portfolio diversifier since late February. Ongoing uncertainty regarding the conflict in Iran and subsequent supply shocks continue to undermine the ability of nominal duration to dampen daily portfolio volatility, which will likely keep risk premiums elevated in the near term.

 

Citi on Equity Consolidation: Citi Wealth Chief Investment Officer Kate Moore warned that global markets may enter a consolidation phase after a powerful run-up.

 

While strong Q1 corporate earnings and upwardly revised guidance fueled market optimism, Moore cautioned that investors are likely underestimating H2 risks, particularly the sprawling effects of the Middle East geopolitical crisis and sticky inflation.

 

Bank of America on Profit-Taking: Chief Investment Strategist Michael Hartnett indicated that a wave of profit-taking could hit global equities in early June.

 

With money increasingly crowding into technology and price pressures broadening across energy, transport, and rent, Hartnett believes a series of major upcoming events—including the OPEC meeting, the World Cup opener, the G7 summit, and the first FOMC meeting chaired by Kevin Warsh—will serve as a catalyst for investors to lock in gains.