APAC Market Wrap - Jul 17

China A-Shares

At close, the Shanghai Composite Index fell 3.05% to 3,764.15 points; the Shenzhen Component Index dropped 5.40% to 13,706.88 points; the ChiNext Index plunged 7.15%, and the STAR 50 Index sank 7.12%. The market trended unilaterally lower throughout the session, with losses deepening in the afternoon.

The Shanghai benchmark hit its lowest level since September 2025, as a collective selloff in semiconductor and AI sectors triggered panic selling across growth names. By sector, only utilities, power, and gold defensive names held up relatively well; semiconductors, computing hardware, memory chips, AI applications, photovoltaics, lithium batteries, and consumer electronics all tumbled across the board.

Hong Kong Equities

At close, the Hang Seng Index fell 1.78% to 24,562.24 points; the Hang Seng Tech Index dropped 4.37% to 4,623.17 points.

The market traded lower all day, led by heavyweight tech names, tracking the broader APAC tech selloff.

By sector, power, utilities, and local property names offered modest support; internet platforms, semiconductors, AI tech, and autos retreated sharply, with SMIC, Kuaishou, and Maxscend leading declines among index constituents.

Japan

The Nikkei 225 closed down 4.03% at 64,141.12 points.

The index opened lower and extended losses through the session, at one point falling more than 6% and breaching the 63,000 level.

Tech and export-oriented sectors came under broad pressure as the global AI valuation correction and weak offshore sentiment triggered concentrated selling.

Among industries, semiconductors, electronics manufacturing, and exporters led declines; banks and utilities fared better. Kioxia plunged 16.03% and SoftBank Group dropped 9.27%, with tech heavyweights weighing heavily on the broader market.

South Korea

Market closed today (Note: On Thursday, the KOSPI plummeted 6.37% to 6,820.60 points, triggering a trading halt. Semiconductor leaders sold off sharply as regulatory crackdowns on leveraged ETFs sparked widespread market panic).

Australia

The S&P/ASX 200 fell 0.50% to 8,796.70 points.

The market drifted lower through the day, dragged by mining and tech stocks, with banking names providing partial offset.

By sector, banks, utilities, and healthcare held up relatively well; materials, non-energy mining, and tech led declines, with BHP and other mining majors weighing on the resources space.

Singapore

The Straits Times Index (STI) edged down 0.50% to 5,509.43 points.

Risk appetite retreated across the region, with tech losses and rising oil-price-driven inflation concerns pressuring the benchmark.

By industry, tech, healthcare, and industrial manufacturing led declines; financials and defensive property names provided modest support. The benchmark traded in a narrow range, with defensive assets relatively resilient.

Malaysia

The FTSE Malaysia KLCI rose 0.54% to 1,731.45 points.

Gains were led by financial services, plantations, and industrial products; energy and tech names pulled back slightly.

The index traded higher throughout the day, with inflows into domestic blue-chip names helping the market decouple from the tech-led selloff seen in Japan and Korea.

Key Events

Malaysia Q2 GDP Grows 5.8% YoY, Beating Estimates; June CPI at 1.9%

Malaysia's Department of Statistics released second-quarter GDP data showing the economy expanded 5.8% year-on-year, well above market expectations of 5.2% and up from 5.4% in the previous quarter.

The services sector was the main driver of growth.

Meanwhile, June CPI rose 1.9% year-on-year, slightly below forecasts, supporting the central bank's stance to keep rates on hold. The stronger-than-expected economic data underpinned the outperformance of Malaysian equities on Friday.

Singapore June Non-Oil Domestic Exports Surge 20.7% YoY

Singapore's non-oil domestic exports (NODX) jumped 20.7% year-on-year in June, significantly exceeding expectations and marking a sharp rebound from the previous month.

The strong trade data pointed to resilience in the city-state's manufacturing and export sectors, though gains were partially offset by broader regional risk-off sentiment on Friday.

Australia Consumer Inflation Expectations Fall to Lowest Since January

Australian consumer inflation expectations declined to their lowest level since January, according to the latest survey.

Swap markets are no longer pricing in an additional rate hike from the Reserve Bank of Australia, with the implied year-end terminal rate at 4.52%. Australian government bond yields were broadly stable, with the 3-year yield dipping 1 basis point and the 10-year yield flat.

Global Tech Selloff Spreads to APAC; Semiconductor Stocks Rout

The global AI chip valuation correction spread across Asia-Pacific on Friday, sending semiconductor sectors tumbling in Japan, Taiwan, Hong Kong, and mainland China.

Investors grew concerned that the AI-driven rally had run too far, while South Korea's regulatory crackdown on leveraged ETFs added to selling pressure.

Kioxia fell 16% in Tokyo, TSMC dropped more than 7% in Taipei, and China's STAR 50 plunged over 7% as semiconductor names neared limit-down levels across the board.

Institutional Views

UBS: Remains Constructive on China Tech; AI Still Key Driver for H2

UBS Wealth Management continues to favor China's technology sector, supported by new breakthroughs, accelerating AI adoption, improving fundamentals, and domestic policy support.

The firm believes valuations remain reasonable with strong earnings growth expected, and sees AI as the primary engine for further market upside in the second half.

UBS also notes that international investor sentiment has shifted from "whether to allocate to China" to "how to select the right names," with quality Chinese assets increasingly becoming a standard allocation in global portfolios.

JPMorgan: Overweight Emerging Market Equities; Likes Japan on Reflation Theme

JPMorgan Asset Management maintains a positive view on risk assets and is moderately constructive on equities, particularly in the U.S. and emerging markets where earnings momentum is strongest.

Across the Pacific, the firm favors emerging markets where AI capex should feed earnings at cheaper valuations, and continues to like Japanese equities on expectations of reflation and corporate governance reform.

BlackRock & Global Peers: Consensus Overweight on China Assets

Major global institutions including BlackRock, Goldman Sachs, UBS, Morgan Stanley, HSBC, and Citi have all turned positive or overweight on Chinese assets heading into the second half.

The consensus view is that China offers diversification benefits and strong cyclical earnings momentum, with AI application leaders, advanced manufacturing exporters, and rate-sensitive sectors all seen as attractive positioning plays.