APAC Market Wrap - Jun 29
Mainland China: A-shares registered a powerful rebound across tech growth sectors, driven by memory, semiconductors, and AI hardware.
The Shanghai Composite ticked up 0.23% to 4,120.28, while the ChiNext surged 2.84% to 4,371.99. Total turnover expanded to RMB 3.59 trillion, marked by a sharp divergence as heavyweights lifted the market while broader small-caps softened.
Hong Kong: Benchmarks remained under pressure, with the Hang Seng Index dropping 1.43% to 23,076.91 and the Hang Seng Tech Index shedding 1.63% to 4,405.92.
Tech heavyweights like Alibaba-W and Sunny Optical led the decline, while Southbound capital logged heavy net outflows amid a flight to safety.
Japan: The Nikkei 225 skyrocketed 4.61% to close at a fresh historic high of 72,366.34. Oversold technology plays staged a comprehensive recovery, led by AI-related names, foundational semiconductors, and memory silicon proxies like Kioxia, Tokyo Electron, and Advantest.
South Korea: The KOSPI posted a stunning 5.43% recovery to finish at 8,930.78, fully erasing the previous session's rout. Morning futures surged over 5%, briefly triggering a 5-minute program trading halt. The memory matrix exploded, with SK Hynix rallying 13.00% and Samsung Electronics advancing 5.26%.
Australia: The S&P/ASX 200 Index (.XJO) shed 0.70% to settle at 8,748.70, dragged lower by heavy liquidations across mining and precious metals.
Singapore: The Straits Times Index (.STI) ticked down 0.47% to 5,179.32, with local real estate and resources weighing on the benchmark amid narrow consolidation.
Malaysia: The FBM KLCI slid 1.10% to 1,663.82, showing structural weakness as commodity and precious metals names pulled back, decoupling from the tech-led rally in North Asia.
Key Events
South Korea Builds Advanced Semiconductor Cluster; Samsung and SK Hynix Earmark Massive Capex for Memory Industry
On Monday (June 29), South Korean President Lee Jae-myung unveiled a massive KRW 800 trillion (approximately $517.9 billion) initiative as part of his flagship industrial strategy.
President Lee hosted a nationwide investment presentation at the Blue House state reception hall. He appeared at the televised event alongside the heads of the world’s two largest memory chipmakers, Samsung Electronics and SK Hynix.
The President stated that semiconductors, physical AI, and AI data centers constitute the three core pillars for the nation's next major economic leap.
AI Boom Faces "Heatwave" Threat: Global Data Centers Vulnerable Under Record Temperatures
Amid recent record-breaking heatwaves, technology titans are facing mounting operational hurdles to ensure that high-performance chips in AI data centers remain online under extreme thermal stress.
This week's soaring temperatures highlight the growing impact of weather on critical infrastructure, including fabrication plants, nuclear power facilities, and data centers.
Additional power demand from cooling systems risks overloading electrical grids, leading to blackouts that disrupt normal infrastructure operations across Europe and beyond.
Korean Equity Margin Debt Clocks Historic Highs
Exchange-margin leverage across South Korean equities currently sits around 2x to 5x, pushing absolute leverage to historic highs.
However, leverage relative to total market capitalization has not reached extreme historical or cross-market readings; market sentiment and liquidity indicators appear slightly tight but not severely strained.
Moving forward, high embedded leverage will inherently amplify intraday volatility and could trigger liquidity strains.
A market decline of 16% to 36% would trigger widespread margin calls, and near-term forced liquidation pressures have ticked higher. Over the medium-to-long term, the structural trajectory remains tethered to corporate fundamentals.
Institutional Views
1. RBC Capital Stays Long Gold; Projects Inflows Below $4,000/oz Threshold
RBC Capital Markets remains structurally constructive on the medium-to-long term outlook for gold, noting that the "currency debasement trade" has further room to run.
"We anticipate robust buying interest to step in at or below $4,000 per ounce. More importantly, the broader macro thesis supporting the currency debasement trade remains entirely intact," stated Chris Louney, Commodity Strategist at RBC Capital Markets. "Over the long term, structural anxieties surrounding swelling sovereign debt burdens will continue to act as key tailwinds for gold."
2. ING Pulls Forward BOJ Rate Hike Expectation from December to October
ING analysts noted in a research dispatch that core CPI data out of Tokyo indicates that secondary effects from rising energy prices are gaining traction, paired with increasingly hawkish rhetoric from Bank of Japan officials. With core inflation poised to accelerate, the firm has pulled forward its timing for the next BOJ rate hike from December to October.
3. Invesco: Sovereign Allocators Pivot Toward Energy Assets Amid Diversification Push
According to a survey released by Invesco on Monday, sovereign wealth funds and central banks managing an aggregate $29 trillion are systematically shifting capital into energy assets while expressing growing caution over the USD, reflecting an institutional portfolio rebalancing triggered by unprecedented geopolitical shifts.
The poll of 90 sovereign wealth funds and 54 central banks reveals that against a backdrop of trade tariffs, shipping lane closures, and conflicts in Ukraine and the Middle East, allocators are increasingly prioritizing defensive, diversified portfolios capable of weathering macro shocks while preserving overall stability.