- The US stock rout is driving investors to Asian and European markets for alternatives.
- Chinese tech rally is boosting Hong Kong and European stocks amid trade war concerns.
- Thailand and Indonesia face stock declines due to local issues and US trade tensions.
The rout in US stocks has sent investors scrambling for cover as they seek out alternative markets to park their funds — but not every market is doing well.
In Asia, stocks in Hong Kong and China have rallied hard on the back of a tech-focused rally ignited by the meteoric rise of DeepSeek’s R1, a cost-efficient Chinese AI model.
The euphoria in Chinese tech sent Hong Kong’s Hang Seng Index and the MSCI China Index both up about 20% so far this year. European markets have also gained significantly thanks to big German and EU government and defense spending plans.
However, US President Donald Trump’s trade war is causing market jitters. They’re especially pronounced in export-focused Asia, where economies and company profits are vulnerable to the fallout.
Asia’s sectors affected by US trade measures include Japanese auto and machinery manufacturers and South Korean makers of autos, machinery, and chips, wrote Charles Chang, the Greater China country lead for corporates at S&P Global Ratings, in a Thursday report.
“If the tariffs slow China’s growth further, there will be a knock-on to mining in Australia, minerals and intermediate metals in Indonesia, and steel and chemicals across Asia-Pacific,” Chang wrote.
These fears are already weighing on some markets.
Thailand’s stock rout is among the worst globally
Thailand’s stock market has been on a weak footing even before Trump won the election.
The Southeast Asian country’s benchmark SET Index is down about 15% so far this year and has lost about a fifth of its value since an October peak. Foreign investors have pulled $4.2 billion from the market over the past 12 months, according to a Bloomberg analysis.
The erosion in investor confidence is mostly due to domestic factors including several corporate scandals, weak economic growth, poor corporate earnings, and political instability. Now, Trump’s trade war is injecting even more uncertainties into the market.
Following meetings with Thai policymakers, industry experts, and investors last week, Nomura analysts wrote in a Tuesday note that “economic pessimism among the locals” is rising, with tourism the only bright spot.
Indonesia stocks tank
The Indonesian stock market was the next to come under scrutiny in recent days.
On Tuesday, Indonesia’s benchmark Jakarta Composite Index fell by as much as 7.1% — the worst since 2011. Circuit breakers and trading halts were triggered, igniting fears that the rout could deepen.
The JCI is down about 10% so far this year.
Somewhat like Thailand, analysts in Indonesia cited multiple local reasons for the slump, including economic concerns and market rumors that Sri Mulyani Indrawati, the country’s longtime finance minister, was resigning. She disputed the rumors at a press conference on Tuesday.
Indonesia’s GDP growth slowed for the second straight year in 2024 and macroeconomic challenges loom for the commodity giant.
S&P Global’s Chang said Indonesian producers of textiles, apparel, rubber, palm oil, and tires could be hit by Trump’s trade war.
Australian stocks came off highs
Australia’s ASX200 started the year strong but is now 7% off a February high.
Kyle Rodda, a senior market analyst at the trading platform Capital.com, told Business Insider that the Australian market started the year “looking overvalued” and is correcting.
“The record highs we achieved, I would argue, have little to do with strong fundamentals and everything to do with positive sentiment in US markets and passive flows entering the ASX,” said Rodda.
“The Australian economy is so trade-sensitive, less global trade (and therefore weaker global growth) is going to have an impact on local company profits,” Rodda added.
Risks ahead
With several global markets on shaky footing analysts are now warning investors not to get too far ahead of market rallies.
On Monday, strategists at BofA Securities warned there may be a “meaningful correction soon” to the rally in Chinese stocks as there are some “fundamental similarities” between the current cycle and China’s stock market crash in 2015.
On Sunday, analysts at Goldman Sachs warned that a US economic slowdown would still pose risks to global markets.
