APAC Market Wrap - May 26

China Equity Markets: The Shanghai Composite ticked down 0.17% to 4,145.37, the Shenzhen Component shed 0.32% to 15,805.00, and the tech-heavy ChiNext Index slipped 0.51% to 4,000.00.

 

High-flying sectors including semiconductors, AI computing power, and telecommunications equipment saw tech-led divergence as several names pared early gains.

 

Defensives including consumer staples, pharmaceuticals, and utilities showed resilience, while new energy and real estate-linked chains pulled back.

 

Hong Kong Equity Market: Hong Kong benchmarks closed mixed. The Hang Seng Index edged down 0.03% to 25,599.45, while the Hang Seng Tech Index rallied 1.59% to 4,946.88 and the H-Share Index advanced 0.30% to 8,576.89.

 

Large-cap technology growth names climbed, led by NetEase (+3%), with Baidu and Xiaomi both adding over 2%. Semiconductors and AI applications spearheaded the advance, easily absorbing weakness in local property and energy titles.

 

Japan Equity Market: The Nikkei 225 index drifted 0.25% lower to finish at 64,996.09. Profit-taking hit AI servers and semiconductor materials following recent extensions, while shipping and financials tracked the broader market lower.

 

Tech investment giant SoftBank Group bucked the trend, gaining over 1%.

 

South Korea Equity Market: The benchmark KOSPI index surged 2.55% to close at a historic high of 8,047.51.

 

Heavies propelled the index as Samsung Electronics climbed 2.6% to cross the 300,000 won milestone and SK Hynix jumped 3.1%. AI chips and semiconductor capital equipment recorded broad-based rallies.

 

Australia Equity Market: The S&P/ASX 200 index lost 0.39% to settle at 8,657.80. Basic materials and energy names led the decline, comfortably offsetting minor technical rebounds across healthcare and consumer staples as financials consolidated.

 

Singapore Equity Market: The Straits Times Index (STI) edged up 0.08% to finish at 5,074.30. Local banking and telecommunications plays recorded fractional gains, cushioning the index against softer real estate and shipping segments amid quiet rangebound trading.

 

Malaysia Equity Market: The FTSE Bursa Malaysia KLCI drifted 0.31% lower to 1,703.20, dragged down by plantation and energy heavyweights, while selective small-cap tech names saw sporadic trading activity.

Key Events

Hang Seng Index Quarterly Rebalancing Sets Clear Passive Capital Targets

 

Following the regular index adjustment on May 22, the flagship benchmark will add J&T Global Express, Chalco, and BeiGene to bring its constituent count to 93, effective June 8.

 

Goldman Sachs estimates the rebalancing will expand the aggregate market cap by 4.5%, leaving Tencent, BeiGene, and J&T highly favored for incoming passive capital flows.

 

US-Iran Peace Accord Progress Triggers Sharp Crude Price Swings

 

US Secretary of State Marco Rubio noted Tuesday that a formal diplomatic accord with Iran could be finalized within days, pointing to an imminent normalization of maritime traffic through the Strait of Hormuz.

 

The geopolitical shift caused severe divergence in energy markets, with Brent crude rising 2.09% to $98.15/bbl while WTI plunged 5.13% to $91.64/bbl, providing near-term inflationary relief to Asian aviation and refining plays.

 

South Korea to Unveil Highly Leveraged Single-Stock ETFs Allowing ±60% Daily Swings

 

South Korea will debut 16 leveraged and inverse ETFs offering 2x exposure tied to Samsung Electronics and SK Hynix this Wednesday, alongside two ETN structures.

 

Regulators issued a volatility warning noting that because local equity swings are capped at ±30%, these single-stock leveraged instruments could trigger maximum daily losses of up to 60%, introducing severe liquidity risks.

 

The launch comes amid an accelerating foreign capital exit, with international funds logging a massive 46.34 trillion won net sell-off over the last 12 trading sessions.

Institutional Perspectives

JPMorgan Affirms Constructive Secular Super-Cycle, Targets S&P 500 Breaching 9,000

 

Reiterating that the structural magnitude of the AI cycle continues to handily outpace conservative assumptions, JPMorgan projections point to the S&P 500 clearing the 9,000-point milestone over the next 12 months, implying a 22% upside runway.

 

This constructive thesis relies on AI-driven corporate efficiency gains, which could sustain double-digit earnings growth without reigniting broader core inflationary pressures.