Key facts
- Asian stocks concluded a strong quarter with mixed performance.
- The U.S. dollar strengthened, pushing the Japanese yen to a four-decade low.
- South Korea's KOSPI index saw a nearly 65% rise in the second quarter.
- Gold experienced its largest quarterly decline in over a decade.
- Foreign investors sold South Korean equities despite strong market performance.
- Global financial firms are increasingly focusing expansion on South Korea, while showing caution towards China and India.
Asian stock markets concluded a record-breaking quarter with mixed results on Tuesday, as a strengthening U.S. dollar pushed the Japanese yen to a four-decade low and drove gold to its largest quarterly decline in over a decade. Japan's Nikkei index was set for a record quarterly rise of over 36%, while South Korea's chipmaker-driven KOSPI index, though slipping 1% on Tuesday, was poised for a nearly 65% gain in the second quarter.
Concerns about oil supply disruptions from the Russia-Ukraine war have receded, with Brent crude futures trading at pre-war prices. This has reinforced views of more trend-like global growth and improved earnings prospects. The dollar's quarterly rise was attributed to a significant repricing of U.S. interest rate expectations, shifting from anticipated cuts to potential hikes due to economic strength and inflationary pressures.
Chinese manufacturing expanded in June, supported by high-tech exports. Taiwan's benchmark index was also set for a substantial quarterly rise. In contrast, Hong Kong's Hang Seng index lagged, heading for a 7.5% quarterly drop. Foreign investors have been net sellers of South Korean equities throughout the year, despite strong market performance, indicating a trend of rebalancing portfolios and seeking diversification away from heavily tech-weighted markets.
Europe's STOXX index was on track for a 9% quarterly rise, and China's CSI300 index was up about 10%. Investors are increasingly looking for diversification themes beyond technology, such as defense and renewables, to build more robust portfolios.