ASIA STOCKS: Down As Kospi Pullback Continues, Philippines Near 2022 Lows
Major Asia Pac equity indices are faltering into the end of the week, amid concerns around US jobs momentum and elevated AI/tech valuations. US equity futures are modestly in the red, struggling for fresh upside, post cash losses in Thursday trade. Kospi weakness/volatility remains a standout. The Main index is off close to 3% at the time of writing, putting the index back near the 3900 level. Japan markets are down 2.2% in terms of the NKY 225, while most other markets are weaker as well, despite some modest pockets of strength in South East Asia.
- Offshore investors have sold close to $5bn of local South Korea stocks this week, the most since 2021. Trends today are skewed towards selling by offshore investors but in much more modest size, while local retail investors are buying the dip. South Korean stocks are a good barometer for both global and tech related trends, and given the extent of the recent run higher, some paring in risk is not surprising. Note even with this recent correction, the Kospi index is still 71% above early Apr lows.
- Japan markets had also seen strong offshore inflows through much of Oct, so some paring of risk may also be playing a role in this week's correction. The NKY 225 is challenging 20-day EMA support and is back under 50,000.
- China and Hong Kong markets are also weaker, the HSI down 1.1%. The tech sub index is off 2%. Earlier headlines crossed that the US would restrict Nvidia chip sales to China (even for scaled down products). The CSI 300 index is off 0.20%. We had Oct trade data which was weaker than expected earlier, with exports falling into negative territory, but there was a large holiday period in Oct and this also pre-dates the US-China trade truce.
- In South East Asia, most markets are only down modestly or up slightly. Indonesia remains an outperformer, while a resilient growth and domestic backdrop is also helping the Malaysian market (although recent ranges hold).
- The exception is the Philippines, where much weaker than expected Q3 GDP growth has weighed. The PCOMP was last down 1.5% to fresh lows last seen in 2022 (last around 5750 in index terms).
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
ASIA STOCKS: Tech Rally Takes A Breather
Asia Pac equities are mixed, with some caution coming through in tech/AI related space. Hong Kong markets have returned weaker, with the HSI down over 1%, tracking lower for third straight session. The tech sub index off over 1.1%. We did see US tech related bourses underperform in US Tuesday's trade, while the Golden Dragon index lost 2.24%. Note onshore China markets return tomorrow.
- Reuters also noted: "U.S. lawmakers are calling for broader bans on chipmaking equipment to China after a bipartisan investigation found that Chinese chipmakers had purchased $38 billion of sophisticated gear last year." This has potentially weighed on China tech related plays in Hong Kong.
- BBG also notes Citigroup analysts who stated that Golden Week box office results were below expectations (hurting sentiment in this space).
- Taiwan's Taiex is off around 0.50%, but still 2700, so close to recent record highs. Even with this recent run higher, offshore investors have only added modestly to local stocks, (but regional holidays, with China and South Korea still out may be a factor).
- In South East Asia, trends are mixed. Indonesia went to a fresh record high, but is now tracking modestly lower. Onshore government bond yields continue to fall, amid the dovish BI outlook, while consumer sentiment data for Sep fell to fresh lows since 2022.
- Thailand stocks are up ahead of an expected BoT cut later (last 0.55%). We also stimulus measures (0.3-0.4ppts of GDP) announced yesterday to boost consumption (via BBG).
- NZ stocks are outperforming Australia, after the 50bps RBNZ cut surprised the market.
OIL: Crude Continues Trending Higher Ahead Of EIA Data & Fedspeak
Oil prices continued trending higher during today’s APAC session with little news to give them direction. US industry-based data showed product drawdowns and the market continues to monitor strikes on Russian energy infrastructure which are impacting refining rates. For now the US EIA’s forecast of higher non-OPEC output and lower prices has been looked through but the IEA’s report is not until 14 October.
- WTI is up 0.9% to $62.28/bbl after rising to $62.36 and Brent is 0.8% higher at $65.95/bbl following a peak of $66.04. Both benchmarks are up around 2.2% since the weekend’s cautious OPEC decision.
- Official EIA oil data will still be released Wednesday as the agency is continuing to publish for now despite the US government shutdown. Bloomberg reported mixed industry-based data with oil inventories building but falling at key hub Cushing last week, according to people familiar with the API data. The reported product drawdown has likely provided support to prices today ahead of the EIA data.
- A soft outlook was reflected in the EIA’s October report as it is forecasting global oil inventories to build through next year pushing Brent down to $52/bbl from $62 in Q4 2025. Global output rises across its forecast horizon driven by non-OPEC. It doesn’t believe OPEC will be able to achieve its higher production targets helping to support prices.
- Later the Fed’s Musalem, Barr, Goolsbee, Kashkari and the ECB’s Lagarde, Elderson, Buch, Tuominen and BoE’s Pill speak. The September FOMC meeting minutes will also be published.
MNI EXCLUSIVE: Former BoJ Chief Economist On The Policy Rate Outlook
