Last week’s Jakota markets:
- Japan’s Nikkei 225 retreated 2.2%, as exporters faced pressure despite the yen’s slide to 155 against the dollar
- South Korea’s KOSPI plunged 5.6%, hitting a one year low as battery stocks tumbled on potential U.S. EV tax credit elimination
- Taiwan’s TAIEX slumped 3.4% on concerns over U.S.-China semiconductor trade restrictions
- The JAKOTA Blue Chip 150 Index lost 4.0%, though Seven & i Holdings jumped 10% on competing buyout offers
Japan
The Nikkei 225 fell 2.2% despite support from a weaker yen, as exporters faced mounting concerns over potential tariff increases under the incoming Trump administration.
The yen depreciated to the 155 level against the U.S. dollar, dropping from 152.6 the previous week. Japanese officials maintained their stance on possible intervention if currency movements become too volatile. The yen’s weakness stems from dollar strength following Trump’s victory, which has fuelled expectations his policies could accelerate inflation and affect Federal Reserve monetary policy. The Bank of Japan’s unclear timeline for future rate increases added pressure on the currency.
Japan’s economy grew at a slower pace in the third quarter, expanding 0.2% from the previous quarter, down from 0.5% in the second quarter.
On an annualised basis, GDP rose 0.9%, a significant drop from the previous quarter’s 2.2% pace. Private consumption, buoyed by a one time income tax reduction and increased summer bonuses, helped maintain the economy’s second consecutive quarter of growth.
South Korea
South Korean equities hit a one year low on Friday, with the KOSPI Index declining 5.6%., with the KOSPI Index declining 5.6%. The market decline coincided with a weakening won and heightened concerns about U.S. policy shifts under Trump. Battery and electronics sectors bore the brunt of the selloff.
Battery stocks tumbled following reports that Trump’s transition team might eliminate the $7,500 electric vehicle tax credit in a broader tax reform. Samsung Electronics hit its lowest point in four years amid the market uncertainty.
The Korea Development Institute (KDI), in its second half 2024 economic outlook, cut its growth forecasts amid rising uncertainty over the incoming Trump administration’s trade policies. The state run think tank lowered its 2024 growth projection to 2.2% from its August estimate of 2.5%, while reducing its 2025 forecast to 2.0%, down 0.1 percentage point.
The KDI warned that persistent slowdowns in consumer price increases risk hampering domestic recovery and widening the gap between inflation and central bank targets. The institute urged the Bank of Korea (BOK) to consider additional rate cuts while emphasising the need for swift corporate structural reforms to identify new growth drivers and strengthen the economy’s long term prospects.
Taiwan
The TAIEX Index dropped 3.4% as worries intensified over U.S.-China trade relations under Trump. The electronics sector, particularly Taiwan Semiconductor, faced significant pressure amid concerns about potential new restrictions on chip exports to China.
JAKOTA Blue Chip 150 Index
The JAKOTA Blue Chip 150 Index declined 4.0%, with only 44 of its 150 constituents advancing this week.
Seven & i Holdings, a Japanese diversified retail holdings company, led the gains this week with a 10% surge after receiving a buyout proposal from Ito-Kogyo, a company tied to Vice President Junro Ito of the founding family and a major shareholder in 7-Eleven’s parent. The non binding $58 billion bid comes as the company considers a rival offer from Canada’s Alimentation Couche-Tard, with both proposals now under review by the same special committee.
Korean battery stocks, including Ecopro BM, Posco Future M and Samsung SDI, extended their losses from last week on potential changes to U.S. electric vehicle incentives.
Nexon, the South Korean game developer and publisher listed in Tokyo, ranked as the index’s worst performer following its third quarter results. Despite posting sales growth of 12.8% to ¥135.6 billion and an 11.3% increase in operating profit to ¥51.5 billion for the quarter ending September 30, 2024, the company’s operating profit fell short of market expectations.
