Last week’s Jakota markets:
- Japan’s Nikkei 225 Index rose a modest 0.25% as investors weighed escalating Middle East tensions against a strengthening yen that pressured export heavy sectors
- South Korea’s KOSPI surged 2.9%, propelled by President Lee Jae-myung’s corporate governance reforms and ambitious plans to lift the index to 5,000
- Taiwan’s TAIEX gained 1.9% on U.S.-China trade optimism, with TSMC hitting NT$1,000 for the first time in three months before geopolitical concerns trimmed gains
- The JAKOTA Blue Chip 150 Index advanced 0.8%, led by Kakao Corporation’s 16.3% surge while Japanese insurers fell on declining bond yields
Japan
Japan’s stock market edged up, with the Nikkei 225 rising 0.25%. Investor sentiment was weighted down by escalating geopolitical tensions in the Middle East and a resurgence of trade concerns.
Currency movements provided a notable backdrop to the week’s trading. The yen strengthened to the ¥143 per dollar range from around ¥145 the previous week, as investors sought safe haven assets. The currency’s appreciation pressured the earnings outlook for Japan’s export heavy sectors, which depend on a weaker yen to boost overseas competitiveness.
Japanese government bond yields declined following signals from U.S. President Donald Trump regarding new unilateral tariffs on major trading partners and potential higher import levies on automobiles. The prospect of renewed trade friction focused investor attention on the upcoming Group of Seven (G7) summit, which many view as a potential turning point in U.S.-Japan trade discussions.
Prime Minister Shigeru Ishiba tempered expectations for quick progress, pushing back against hopes for a swift agreement. He emphasised that Japan wouldn’t compromise its national interests and would seek a mutually beneficial agreement.
Economic data presented a mixed picture. Revised first quarter figures showed Japan’s economy remained flat, an improvement from the initial estimate of a 0.2% contraction. However, industrial production declined 1.1% in April, worse than the preliminary 0.9% drop and reversing March’s 0.2% gain.
South Korea
South Korean equities extended their rally, with the KOSPI Index surging 2.9% as investors embraced President Lee Jae-myung’s ambitious reform agenda. The newly elected leader’s corporate governance initiatives have sparked optimism that South Korea can address the persistent “Korea discount” that has long plagued its market valuation.
Lee’s administration this week unveiled tax incentives designed to boost shareholder returns, including reduced dividend taxes and a proposed “one-strike-out” policy targeting illicit trading practices. The president has set an ambitious target of propelling the KOSPI Index to 5,000, nearly double its current level.
Monetary policy remained in focus as Bank of Korea (BOK) Governor Rhee Chang-yong struck a cautious tone on interest rate cuts on Thursday. Despite growing pressure to support a weakening economy, Rhee warned that aggressive monetary easing could fuel asset bubbles and destabilise the won.
Taiwan
Taiwan’s stock market gained ground this week, with the TAIEX rising 1.9% on optimism surrounding U.S.-China trade negotiations that particularly benefitted the electronics sector. The positive sentiment helped lift Taiwan Semiconductor (TSMC), a major TAIEX component, back to the NT$1,000 mark on Monday for the first time in three months.
TSMC bolstered investor confidence on Tuesday by reporting its highest ever sales for May. Analysts attributed the record performance to robust demand for the company’s advanced chipmaking technologies, driven by the ongoing AI boom.
However, the market’s momentum faltered in the final two trading sessions as a technical correction took hold and escalating Middle East geopolitical tensions dampened risk appetite.
JAKOTA Blue Chip 150 Index
The JAKOTA Blue Chip 150 Index advanced 0.8% for the week, with 71 of its 150 constituents posting gains.
Kakao Corporation, the South Korean internet conglomerate, emerged as the index’s standout performer, surging 16.3%. The company’s gains were driven by two primary factors: supportive government policies and strategic AI initiatives.
The South Korean government’s unveiling of tech friendly measures – including eased regulatory constraints and increased R&D support – improved sentiment towards domestic technology champions like Kakao by reducing perceived regulatory risk. Simultaneously, increased market liquidity boosted demand for techn stocks across the sector.
Kakao’s aggressive AI expansion strategy further fuelled investor enthusiasm. The company has announced planned collaborations with U.S.-based developers including OpenAI and the development of a “Korean-style super AI agent platform.” Analysts project operating profit growth of 15% in 2025 and 24% in 2026, citing new ad products and a redesigned messaging app aimed at deepening user engagement and generating additional revenue streams.
In contrast, major Japanese insurers faced headwinds as bond yields declined. MS&AD Insurance, Tokio Marine and Dai-ichi Life Holdings came under pressure as the 10 year Japanese government bond yield fell to 1.40% from 1.46% the previous week. Lower yields typically compress insurance companies’ investment income. MS&AD Insurance suffered the steepest decline among JAKOTA Blue Chip 150 constituents, plummeting 6.2%.
