Asian stocks surge, led by KOSPI on AI optimism, Wall Street gains
- KOSPI surged over 14%, propelled by massive rebounds in tech giants SK Hynix and Samsung Electronics.
- Strong tech earnings from Microsoft and Amazon renewed global investor confidence in sustained artificial intelligence demand.
- Japan’s Nikkei climbed 3.5% as the Bank of Japan kept benchmark interest rates steady at 1.0%.
Asian stock markets move higher on Friday, tracking overnight gains on Wall Street as a global rally in semiconductor stocks and renewed AI optimism lifted sentiment. Strong earnings from Microsoft and Amazon reinforced expectations for continued hyperscaler investment and resilient AI demand.
South Korea’s KOSPI Composite surged over 14.5%, driven by major gains in SK Hynix, up by over 25%, and Samsung Electronics, up over 20%. Investor sentiment was further boosted by South Korea's plan for a 20 trillion Won sovereign wealth fund targeting strategic industries, alongside June industrial production rising 2.3%, its fastest monthly pace in six years.
Korean authorities step up action to calm equity swings
Analysts at Commerzbank highlight that Korea’s policy response is intensifying, noting that “the Finance Ministry announced additional measures to curb equity market volatility.” They frame these steps as part of a broader official effort to stabilise markets and support the Korean Won at a time of heightened swings in the Kospi and related leveraged products.
Japan’s Nikkei 225 climbs 3.5% to around 64,050 following the Bank of Japan’s (BoJ) decision to hold its policy rate unchanged at 1% in an 8-1 vote, as expected. Hajime Takata was the sole dissenter, favoring a rate hike due to upside inflation risks from Middle East conflicts.
Meanwhile, Chinese markets saw mixed results: the SSE Composite rose 0.70% to roughly 3,830, and the Shenzhen Component jumped over 3% to 13,700, while Hong Kong’s Hang Seng dipped nearly 0.10% to around 25,830.
Economic data from China showed ongoing weakness, with the NBS Manufacturing PMI falling into contraction at 49.2 in July, down from 50.3, and the Non-Manufacturing PMI dropping to 49.0, both missing 50.0 estimates. These weak readings underscored growth concerns following sub-target Q2 GDP performance. Adding to market caution, Zhongji Innolight fell during its Hong Kong debut despite raising HK$53.4 billion in a major IPO, reflecting selective hesitation around tech valuations amid broader market shifts.
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.
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