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Asian stocks trade mixed, Taiwan’s Taiex leads on tech boost

  • Asian stocks trade mixed on Wednesday. 
  • South Korea and Taiwan stock markets extend the rally amid AI optimism. 
  • Japan’s major financial markets will remain closed for the first three days of the week. 

Asian equities trade mixed on Wednesday. Oil prices and Treasury yields dropped as crude flows through the Middle East improved, adding to risk appetite. Furthermore, a senior Iranian official said that Tehran can reopen the Strait of Hormuz within seven days if the United States (US) eases military pressure and lifts its blockade on Iranian ports.

South Korea and Taiwan stock markets extend the rally, led by gains in tech heavyweights, following the tech-heavy Nasdaq Composite's back-to-back record closes. 

The South Korean stock, the benchmark KOSPI, gained 0.03% to 7,020 as signs of consumer demand for AI apps continued to buoy tech stocks. In Taiwan, the Taiex rose by 0.80% to 48,181. 

Japanese markets will remain closed for a holiday from Monday to Wednesday. Normal trading will resume on Thursday, 24 September.

"We expect a strong reopening in Japan tomorrow, with another move lower in crude, calm conditions in rates and Treasuries, and the Nasdaq cash and futures markets printing all-time highs," said Chris Weston, head of research at broker Pepperstone. 

China and Hong Kong stock markets lost momentum on Wednesday, with the SHANGHAI, China’s main stock market index, declining by 0.25% to 3,942. The Hong Kong Stock Exchange fell by 0.85% to 24,875. Shenzhen Stock Exchange dropped by 0.42% to 13,665. 

Asian stocks FAQs

Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.

Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.

Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.

Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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