Asian stocks continued their uptrend today, May 19, as investors adopted a risk-on sentiment amid hopes of a deal between the US and Iran. In Japan, the blue-chip Nikkei 225 Index soared by 2.30% to a record high of ¥66,120. It has soared by 31% this year.
In Hong Kong, the Hang Seng Index rose to H$25,275, up from this week’s low of H$24,722. South Korea’s Kospi Index continued its bull run, reaching a record high of KRW 8,400, up by 100% this year and 210% in the last 12 months.
Nikkei 225, Hang Seng, Kospi jump amid peace deal hopes
Asian stock indices like the Nikkei 225, Hang Seng, and Kospi jumped as investors cheered a potential deal between the US and Iran.
This deal will see Iran reopen the Strait of Hormuz and the US end its blockade against its ports. It will then lead to a surge in crude oil shipments, benefiting top Asian countries that depend on the region. It will also lead to a surge in fertilizer and helium shipments.
The hopes for a deal have pushed crude oil priceslower, with Brent moving to $91 and the West Texas Intermediate (WTI) falling to $87. Natural gas prices have also continued to move downwards amid hopes of more supplies.
Lower crude oil prices and increased supplies will solve one of the biggest challenges facing Asian markets this year. It will ensure that central banks don’t move to aggressively hike interest rates to combat inflation.
Indeed, data shows that bond yields in select Asian countries have continued moving downwards this week. For example, South Korea’s ten-year bond yield dropped to 4.078% from the year-to-date high of 4.3%.
The same happened in Hong Kong, where the ten-year yield dropped to 3.25% from the year-to-date high of 3.31%. In Japan, the ten-year fell to 2.64% from this month’s high of 2.8%.
AI boom is boosting Asian stocks
The Nikkei 225 and Kospi indices are also being boosted by the ongoing artificial intelligence boom. Indeed, some of the biggest gainers are in the technology industry.
In South Korea, Samsung and SK Hynix have soared and moved into the trillion-dollar club. Only the US, Taiwan, and South Korea have companies valued at over $1 trillion.
LG Electronics stock jumped by over 23% after the company inked several automotive deals with Google. It said:
“The solution supports automakers to significantly reduce the cost of deploying multi-display in-cabin systems.”
Similarly, in Japan, Softbank’s stock price has soared to a record high this year, helped by its investments in companies like SB Energy and OpenAI. It has jumped by over 297% in the last 12 months, with its Vision Fundpowering its profit engine.
The only place left behind in the AI boom is Hong Kong, where top technology companies have pulled back substantially. For example, Alibaba stock price has retreated by 34% from its highest point last year. Tencent has also plunged by over 35%, while JD is down by 21%.
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