APAC Market Wrap - Jul 28
China A-Shares
At the close, the Shanghai Composite Index fell 1.16%, the Shenzhen Component Index dropped 4.52%, and the ChiNext Index tumbled 7.35%.
Total turnover across the Shanghai, Shenzhen, and Beijing stock exchanges reached RMB 2.04 trillion.
Technology growth sectors faced severe selling pressure throughout the day, with hardware computing power and semiconductor chips plummeting. However, relative strength in banking and consumer staples helped cushion the broader benchmarks.
By sector, the CSI 2000, banking, and consumer staples led the gains, while telecommunications, computing hardware, semiconductor chips, memory, coal, and precious metals underperformed significantly.
Hong Kong Stocks
At the close, the Hang Seng Index gained 0.41% to 25,310.85, while the Hang Seng Tech Index rose 0.61% to 4,730.61.
The market demonstrated relative resilience as active trading in consumer staples and tech internet majors supported the benchmark, though sharp declines in memory chip and AI large language model concepts capped upside potential for the broader tech space.
By sector, consumer staples, internet technology, and automobiles led the market, whereas memory concepts, PCB concepts, and AI model concepts experienced deep pullbacks.
Japan Stocks
The Nikkei 225 Index closed down 4.00% at 62,364.92. Dragged down by the decline in US chip stocks and a valuation contraction across the global semiconductor supply chain, technology and export-oriented sectors remained under heavy pressure throughout the session.
Sector-wise, semiconductors, electronic manufacturing, and precision instruments led the decline, while utilities and defensive sectors proved relatively resilient.
Shares of Kioxia slumped as much as 18% intraday, and major tech weights such as SoftBank Group broadly closed lower, weighing on overall market performance.
South Korea Stocks
The KOSPI Index plunged 10.84% to close at 6,023.66, triggering circuit breakers and trading halts during the session.
Slammed by overnight drops in overseas chip stocks and a sell-off in memory giants, panic selling swept the market.
Sector-wise, memory chips and semiconductor equipment led the slide, with SK Hynix down over 13% and Samsung Electronics down over 12%.
Only a handful of utilities and traditional defensive names posted minor gains, as institutional capital fled the core technology trade amid spreading market angst.
Australia Stocks
The S&P/ASX 200 Index (.XJO) closed up 0.40% at 8,932.90.
The market delivered an independent performance, supported by stabilizing commodity and energy prices as well as a rebound in the financial sector.
Sector-wise, banks, financial services, and utilities led the advance, whereas selected tech and consumer electronics stocks trailed, tracking the global drop in tech shares.
Singapore Stocks
The Straits Times Index (.STI) slipped 0.48% to close at 5,577.43.
The pullback in global tech equities and cautious sentiment regarding the macro interest rate outlook weighed on broader performance.
By sector, industrial manufacturing and tech hardware led losses, while financials, non-oil domestic export trading, and defensive consumer names provided modest support, keeping the index in a low-level consolidation range.
Malaysia Stocks
The FTSE Bursa Malaysia KLCI ended virtually flat at 1,711.95.
Sector-wise, financial services and industrial products held steady, while energy and real estate retreated slightly.
Overall performance comfortably bypassed the acute volatility seen in Japanese and South Korean tech stocks.
Key Events
Japanese Government Plans Food Consumption Tax Cut to 1% to Boost Domestic Demand
According to local media reports, the Japanese government plans to lower the consumption tax on food and non-alcoholic beverages to 1% for a two-year period starting next April, fulfilling a flagship campaign promise made by Prime Minister Sanae Takaichi.
Although the proposal aims to ease the financial burden on eligible households through a combination of direct cash subsidies and tax cuts, the measure is expected to create an annual funding shortfall exceeding JPY 4 trillion (approx. $24.4 billion).
With no consensus reached on financing solutions, market concerns over Japan’s fiscal outlook have intensified, putting continued upward pressure on Japanese government bond yields.
South Korean Regulators Consider Stricter Leveraged ETF Restrictions to Curb Volatility
In response to severe market turbulence triggered by the sell-off in memory chip giants, the Chairman of South Korea's Financial Services Commission (FSC) stated on Tuesday that regulatory authorities are prepared to impose additional restrictions on single-stock leveraged ETFs if existing measures prove insufficient.
Regulators are currently considering stricter investment limits for retail investors and raising minimum margin requirements.
Given that Samsung Electronics and SK Hynix account for a massive share of the KOSPI's weighting, excessive speculative trading in leveraged ETFs has amplified downside market risks, prompting regulators to intervene and prevent systemic financial risk from spreading.
Institutional Views
Goldman Sachs: US–South Korea Tech Correlation Hits Multi-Year High; Watch for Near-Term AI Hardware Valuation Adjustments
In its latest market research note, Goldman Sachs highlighted that the 60-day rolling correlation coefficient between the KOSPI and the Nasdaq 100 Index has climbed to 0.50, reaching its highest level since 2021.
Tech trends in both markets are heavily driven by sentiment surrounding AI hardware, with Samsung Electronics and SK Hynix—as key memory suppliers—showing strong co-movement with US tech equities.
Ahead of a dense week of global tech earnings reports, investors remain hyper-vigilant regarding capital expenditure and third-quarter memory pricing guidance, somewhat diminishing the short-term hedging value of cross-border diversification.