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WEEKLY MARKET PULSE

Jakota Markets: Past Week in Review

Japan
South Korea
Taiwan
l 373220.KO e 2884.TW
Blue Chip 150
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Last week’s Jakota markets:

  • Japan’s Nikkei 225 Index jumped 4.1%, buoyed by investor optimism over a U.S.-Japan trade agreement that reduces automotive tariffs to 15% from 27.5%
  • South Korea’s KOSPI edged up 0.3% as investors balanced concerns over sidelined trade talks with optimism about proposed tax reforms under President Lee Jae-myung
  • Taiwan’s TAIEX slipped 0.1% amid lingering concerns over U.S. tariff policies affecting the island’s export dependent economy
  • The JAKOTA Blue Chip 150 Index advanced 3.6%, with LG Energy Solutions emerging as the top performer after winning a German patent case against Chinese rival Xinwangda

Japan

Japan’s stock market surged this week, with the Nikkei 225 climbing 4.1% as investors celebrated news that Japan and the U.S. have reached a trade agreement. The rally was driven largely by optimism in Japan’s auto sector, which accounts for more than a quarter of the nation’s exports to the U.S. and stands to benefit significantly from tariff reductions.

Jakota Markets: Past Week in Review: image 1

Under the new agreement, tariffs on Japanese automotive goods will be cut to 15% from the current combined rate of 27.5%. Additional duties on other Japanese products that were scheduled to take effect on August 1 will also be reduced to 15% from 25%. As part of the deal, Japan committed to supporting approximately $550 billion in U.S. industrial investments and pledged to open its domestic market to key American goods.

Political turbulence continues to roil Japanese markets following the Liberal Democratic Party-Komeito coalition’s loss of its Upper House majority in the July 20 election. Speculation has mounted over Prime Minister Shigeru Ishiba’s potential resignation, though he has dismissed reports suggesting he would step down after concluding trade negotiations with the U.S.

On the economic front, Tokyo’s core consumer price index (CPI) – viewed as a leading indicator for national inflation – rose 2.9% year-over-year in July, falling slightly short of the 3% consensus and easing from June’s 3.1% increase. Despite the moderation, inflation remains well above the Bank of Japan’s (BoJ) 2% target. With trade uncertainty diminishing following the U.S.-Japan agreement, market participants increasingly expect the BoJ could resume monetary tightening later this year, having last raised rates in January.

Jakota Markets: Past Week in Review: image 2

Flash purchasing managers’ index (PMI) data presented a mixed economic picture. The services sector maintained solid growth in July, while manufacturing activity contracted sharply amid tariff related headwinds. However, the manufacturing sector may see a near term recovery following the resolution of trade tensions with the U.S..

South Korea

South Korea’s stock market posted modest gains this week, with the KOSPI Index advancing 0.3% as investors navigated uncertainty surrounding U.S. tariff negotiations and domestic tax reforms.

Jakota Markets: Past Week in Review: image 3

In a surprising development, the U.S. unexpectedly cancelled high level trade talks with South Korea that were scheduled for Friday in Washington, heightening concerns in Seoul that the country is being marginalised in Washington’s global tariff negotiations. The move has raised fears that Korean exporters could face steep U.S. duties.

On the domestic front, South Korea is preparing to unveil its first tax reform blueprint under President Lee Jae-myung. A cornerstone of the plan is a proposal for ‘separate taxation’ on dividend income, with the tax rate capped at 30%. Currently, financial income exceeding ₩20 million is subject to a progressive tax structure that peaks at 49.5%.

However, ruling Democratic Party policy chief Jin Seong-jun has expressed reservations about the measure, suggesting the final terms could be modified. The uncertainty has the potential to weigh on dividend heavy stocks, which had rallied on expectations of more favourable tax treatment.

Economic data showed South Korea’s economy gained momentum in the second quarter, expanding 0.6% from the previous three months, supported by a recovery in exports and domestic demand. The rebound, following a 0.2% contraction in the first quarter, exceeded the Bank of Korea’s (BOK) 0.5% growth estimate, demonstrating resilience despite pressure from U.S. trade actions.

Jakota Markets: Past Week in Review: image 4

Taiwan

Taiwan’s stock market edged lower this week, with the TAIEX declining 0.1% amid concerns over U.S. tariff policies.

Jakota Markets: Past Week in Review: image 5

JAKOTA Blue Chip 150 Index

The JAKOTA Blue Chip 150 Index rallied 3.6% this week, with 108 of its 150 constituents posting gains.

LG Energy Solution, a South Korean leading manufacturer of lithium ion batteries for the automotive industry, emerged as the top performer on the JAKOTA Blue Chip 150 Index after securing a victory in a patent infringement lawsuit against Chinese battery manufacturer Xinwangda over battery structure technology.

A German court ruled that Xinwangda’s prismatic batteries used in the Dacia Spring electric vehicle infringed on LGES’s patented electrode assembly structure – a core technology that ensures stable layering within battery cells using a coated separator. The patent is widely adopted in prismatic battery production, an area where Chinese manufacturers have been intensifying their efforts.

The ruling includes an immediate injunction against the sale of infringing batteries in Germany, a mandate for recall and disposal of affected products, disclosure of related accounting records and monetary compensation. While immediately enforceable, the decision remains subject to appeal.

Separately, LG Energy Solution reported on Friday that second quarter operating profit surged 152% to ₩492.2 billion ($357 million), driven by strong demand for electric vehicles and energy storage systems, particularly in the North American market.

Jakota Markets: Past Week in Review: image 6

E.SUN Financial Holding, a Taiwanese bank, was the worst performer among JAKOTA Blue Chip 150 constituents this week as ex-dividend trading weighed on shares, compounded by continued sector rotation away from financial stocks.

Jakota Markets: Past Week in Review: image 7

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