Asia's Powerhouses Show Grit This Week
Southeast Asia and India Stumble as North Asian Tech and Chinese SOEs Dominate
In this report, I combined the analysis of the developed Asia markets and the Emerging Tiger Cubs of Southern Asia to investigate the anomalies.
Week Ended August 26, 2025
Asian and South Asian equity markets exhibited a pronounced tale of two regions for the week ending August 26, 2025. Performance was sharply bifurcated, with North Asian technology and Chinese state-owned enterprises (SOEs) demonstrating remarkable resilience and institutional confidence, while Southeast Asian markets and Indian equities faced substantial selling pressure due to localized economic concerns and structural headwinds. This divergence highlights a market aggressively discriminating between regional growth stories, liquidity support, and underlying macroeconomic stability.
North Asian Technology and Chinese SOEs Lead with Conviction
The standout performers were unequivocally in North Asia. South Korea’s technology sector displayed exceptional strength, with SK Hynix (000660.KS) and Hyundai Mobis (012330.KS) both achieving perfect Total scores of 200. This reflects profound institutional confidence in the region's technological supply chain dominance and innovative capacity. Kakao Corp (035720.KS) joined them with a 200 score, bolstered by a 70.16% year-to-date gain, underscoring robust investor appetite for high-growth platform companies. The theme of institutional favor extended to Chinese large-caps, particularly state-owned banks and insurers. Agricultural Bank of China (601288.SS) and China Life Insurance (601628.SS) scored 197 and 191, respectively. Their performance is not merely technical; it signifies a deep market belief in state-backed stability, attractive dividend yields, and policy support amidst broader economic uncertainties. This "SOE trade" has become a cornerstone of institutional portfolios seeking exposure to China without the volatility of its private sector. Semiconductor Manufacturing International Corp (0981.HK) further exemplifies this strength, rocketing 76.73% YTD with a score of 177, as the region continues to benefit from strategic investments and global demand for non-Western chip supplies.
Southeast Asia and India Buckle Under Pressure
In stark contrast, Southeast Asian markets faced a brutal week, with the Philippine index constituting a case study in bearish sentiment. Ayala Corp (AC.PS) and SM Prime Holdings (SMPH.PS) both recorded the maximum negative Total score of -200. This extreme reading suggests a market pricing in severe fundamental deterioration, likely related to soaring inflation, currency weakness, and concerns over corporate debt levels. The selling was broad-based, affecting financials and real estate, and indicates a loss of investor confidence in the near-term economic outlook. The Australian materials sector also languished, with Fortescue Metals (FMG.AX) scraping a score of just 33, reflecting concerns over Chinese demand and global growth deceleration.
Perhaps most alarming for long-term investors was the severe distress signals emanating from the Indian IT sector, traditionally a market darling. Infosys (INFY.NS) and Tata Consultancy Services (TCS.NS) scored -24 and -30, respectively. These are not merely negative scores; they are indicative of a deep structural repricing. The market appears to be questioning the sector's growth model in the face of artificial intelligence disruption, potential protectionism in key Western markets, and elevated valuations. The fact that such bellwethers are being sold so aggressively, despite modest weekly price moves, points to a fundamental reassessment of their future earnings potential, which has profound implications for the broader Indian equity landscape.
Thematic Conclusions and Outlook
The weekly performance creates a clear map of institutional sentiment: a strong preference for the deep liquidity, technological prowess, and state-supported stability of North Asian giants, and a simultaneous flight from the perceived fragility of Southeast Asian economies and the expensive growth stories of Indian IT. This is more than a cyclical rotation; it is a strategic shift in capital allocation based on regional macroeconomic stability and exposure to global technological trends. Investors are overwhelmingly choosing the perceived safety of Chinese SOEs and the proven execution of Korean tech over the recovery stories elsewhere. For markets like the Philippines and India to recapture investor interest, they will need to demonstrate tangible economic policy improvements and corporate earnings resilience that can overcome the current deep-seated skepticism. The divergence is likely to persist until clear catalysts emerge.
References — Reuters: "North Asian Tech, Chinese Banks Rally on Earnings and Policy Support"; "Philippine Equities Crushed by Macroeconomic Concerns"; "Indian IT Sector Faces Structural Repricing Amid AI Disruption".