Asian stocks trade mixed with a positive bias as KOSPI leads gains
- South Korea's KOSPI jumped over 4% past 6,950, driven by chipmakers like Samsung Electronics and SK Hynix.
- Japan's Nikkei 225 climbed 1.85% above 66,200 as tech shares gained despite Bank of Japan rate hike fears.
- Chinese markets split as the Shanghai Composite fell 0.24% while the Shenzhen Component jumped over 2%.
Asian stocks were mixed with a positive bias on Monday, driven by optimism that a new OpenAI model will spur demand for memory chips. This momentum followed Friday's rally among US semiconductor and memory stocks as broader sentiment toward the sector improved.
South Korea’s benchmark KOSPI climbed over 4% to top 6,950, surging for a third consecutive day with gains in Samsung Electronics, SK Hynix, SK Square, and Hyundai Motor. The rally was backed by robust economic fundamentals, as South Korea’s exports reached a record $709.4 billion year-to-date, surpassing its 2025 total, led by a 169.6% jump in semiconductor exports from January to August.
Japan’s Nikkei 225 jumped 1.85% above 66,200, while the Topix rose 0.48% past 4,100, extending gains for a second day behind tech heavyweights like Kioxia Holdings and SoftBank Group. However, sentiment remains cautious as traders price in a potential September rate hike by the Bank of Japan to combat sticky inflation and currency weakness.
Chinese markets presented a split picture as the Shanghai Composite dipped 0.24% toward 3,920, while the Shenzhen Component jumped over 2% above 13,800. To bolster credit growth and shore up balance sheets, China announced a CNY 300 billion ($45 billion) injection into its largest financial institutions, marking its biggest sector recapitalization in nearly two decades. Meanwhile, Hong Kong’s Hang Seng Index fell roughly 1% to near 25,400, dragged down by financial, technology, and energy shares.
However, broader markets remained cautious after strong US jobs data reinforced expectations of a Federal Reserve rate hike this month. August Nonfarm Payrolls rose by 162,000, significantly outperforming the 56,000 forecast. Meanwhile, the unemployment rate held steady at 4.1%, and annual wage growth slowed less than anticipated to 3.1%. Following these figures, traders rapidly priced in tighter monetary policy, with the CME FedWatch tool indicating a 58.3% probability of a 25-basis-point Fed rate increase in September.
Traders also adopt caution as rising crude oil prices have stoked fears of rekindled inflationary pressures following a geopolitical escalation between the US and Iran over the weekend. The conflict intensified after the US targeted three Iranian tankers in response to missile attacks on its warships, leading Tehran to establish a new restricted zone around the Strait of Hormuz.
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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