Market Review September 2025
Risk assets strengthened further in August across regions. Investor attention continued to focus on US corporate earnings announcement and Federal Reserve’s annual gathering at Jackson Hole for clue on interest rate decision. Fed chair Jerome Powell suggested the balance of economic risks had shifted, potentially warranting an adjustment to the Fed’s policy stance, and it brought cheers to US investors. The markets reacted positively, registering broad-based gains. The World Index gained 2.49% in August. The MSCI Far East Ex. Japan index continued to chalk up further gain, adding 1.91%, supported by Chinese markets. ASEAN equities performed well with a return of +2.39%, on good performance across the ASEAN markets. Within ASEAN equities, Vietnam, Malaysia and Indonesia stood out with strong returns. Vietnam shares (+11.96%) and Malaysia shares (+4.09%) were top gainers. Performance of regional currencies against the USD was mixed. The best performing currencies were Philippines Peso (+2.08%), Thai Baht (+1.33%) and Singapore Dollar (+1.10%), while the weaker ones were Taiwan NT (-2.26%) and Vietnam Dong (-0.56%).
The US markets performed well with broad based gains amidst heightened trading volatility caused by downward revisions to prior non-farm payroll numbers. Sentiment was supported by positive second quarter’s earnings. Strong earnings reports reinforced the view that the political turmoil of the past months has so far had only a muted impact on US company earnings, at least for now. The Purchasing Managers’ Index (PMI) business survey for August was optimistic, especially for the manufacturing sector. Dow Jones Industrial Average (DJIA) and S&P 500 Index and Nasdaq Composite gained 3.20%, 1.91% and 1.58% respectively. Fed chair Jerome Powell suggested the balance of economic risks had shifted, potentially warranting an adjustment to the Fed’s policy stance. As a result, rates markets now price in a high likelihood that the Fed will reduce the fed funds rate by 25 basis points at its September meeting.
The Stoxx Europe 600 Index recovered, gaining 0.74% driven by positive economic data. The eurozone composite PMI reached a flash 51.1 in August, driven by manufacturing, while loan growth remained strong in July. French equities weighed on overall European performance somewhat after a no confidence vote in the French government was announced and political uncertainty spiked.
Hong Kong and H shares indices extended their gains in July. For the month of August, Hang Seng Index and Hang Seng China Enterprises Index gained 1.23% and 0.73% respectively. Chinese A shares positive surged, returning 10.33%. However, the growth momentum of China’s domestic demand slowed in July as both goods retail sales and service sales weakened and fixed asset investment (FAI) contracted. The sluggish FAI reflected mixed headwinds including higher downward pressure of property market, industrial “anti-involution”, overseas trade conflicts dampening private sector’s confidence as well as the lagged effect of some fiscal supports towards equipment renewal and key infrastructure investment. China’s factory activity unexpectedly deteriorated in July despite a tariff truce with the US, as early signs emerged showing exports are slowing, and weak domestic demand persists. The official manufacturing purchasing managers’ index was 49.3, versus 49.7 in June according to the National Bureau of Statistics.
South Korea’s Index (KOSPI) corrected, declining 1.83% on profit taking. South Korea’s industrial output, retail sales and facility investment all rose from a month earlier in July. Industrial production edged up 0.3% last month, marking the second consecutive month of increase, according to the data compiled by Statistics Korea. Retail sales, a gauge of private spending, went up 2.5% over the cited period, also marking the second consecutive monthly increase. This also represents the sharpest on-month increase since February 2023, when the comparative figure rose by 6.1%.
Taiwan’s TWSE Index gained 2.93%, held up by global technology sector strength. Taiwan export orders totalled US$57.64bn in July, still up 15.2% Year-on-year, missing consensus of 16.7% Year-on-year growth. The new 20% tariffs on exports to US took effect on August 7, while July remained under the previous 10% tariff regime. Taiwan’s consumer confidence fell in August to its lowest level in nearly two and a half years, according to National Central University (NCU). The index slipped to 63.31, down 1.07 points from July and the weakest reading since May 2023. Of six sub-indicators, only stock market confidence improved, while household finances, job opportunities, price levels, durable goods, and the overall economy all declined.
Singapore’s STI continued to gain 2.30%, adding on to the 5.28% rise in July, on positive sentiment from government initiatives to strengthen the capital market. On economic front, Singapore’s non-oil domestic exports (NODX) fell 4.6% year-on-year in July 2025, reversing a downwardly revised 12.9% surge in June. This marked the third decline so far this year and the steepest contraction since October 2024, primarily due to a drop in non-electronic exports, which declined 6.6% (vs 14.4% rise in June). The weakness was led by sharp falls in pharmaceuticals (-18.9%), petrochemicals (-23.4%), and food preparations (-26.3%).
Malaysia’s KLCI gained 4.09% on value hunting, recovering from a 2.6% fall in July. Malaysia’s exports rebounded from contraction in July, mainly due to stronger electrical and electronic products shipments. Exports rose 6.8% from a year earlier to 140.45 billion ringgit marking the highest monthly value since September 2022, amid sustained international demand. Malaysia’s manufacturing industry capacity utilization remained high at an 82.5% rate in the second quarter of 2025 according to the Department of Statistics Malaysia (DOSM). The utilization rate increased by 0.4 percentage points compared to 82.1% in the same quarter of the preceding year.
Thailand’s SET Index stabilized, declining 0.46%, after the strong 13.06% rally in the prior month. Thailand’s economy grew 0.6% Quarter-on-quarter in Q2 2025, above market expectations of 0.3% and marking the sixth straight quarter of expansion. Growth was weighed by softer private consumption (0.2% vs 0.6%) amid high household debt, but supported by a rebound in government spending (0.4% vs -1.3%) on social transfers. Fixed investment contracted at a softer pace (-1.9% vs -2.3%).
Jakarta Composite Index gained 4.63%, adding on to the 5.73% rise in the previous month, on improved sentiment due to interest rate cut. The Bank of Indonesia (BI) further lowered the rate 25 bps to 5.00% during the month. Loan growth slipped further to 7% Year-on-year in July from 7.7% in June, well below the 8-11% target. BI kept its 2025 GDP forecast at 4.6-5.4% on expectations of stronger 2H momentum from fiscal measures and exports. Indonesia government proposed a lower fiscal deficit of 2.5% of GDP in 2026 vs 2.8% in 2025 budget.
The Philippines PSE Index declining 1.55% in August after a 4.92% loss last month. The central bank (BSP) cut another 25 bps in interest rate. The latest cut brings the BSP’s reverse repurchase rate to 5% and the interest rates on the overnight deposit and lending facilities to 4.5% and 5.5%, respectively. The BSP has so far reduced policy rates by a total of 150 basis points since last year.
Vietnam’s VN-Index continued to strengthen, gaining 11.96%, despite a good 9.19% run in the previous month. The market performance was driven by resilient domestic demand, government infrastructural spending and strong exports despite global headwinds. GDP growth in the first 6 months of the year reached 7.52%, the highest level in the same period in nearly 20 years. Trade activities maintained double-digit growth for the sixth consecutive month. Additionally, the PMI regained momentum as new orders rebounded. Exports in July surged by 16% year-on-year, while imports rose by 17.8% Year-on-year.
Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US had sparked a recalibration of macro variables and asset allocation decision. However, the US Administration’s subsequent tariff announcements and the inconsistent and frequent policy changes made in their wake had led to heightened market gyrations and volatility. Following the broad sell off after the announcement of across-the-board reciprocal tariffs on “Liberation Day”, the markets have recovered much of their losses as the shifting tariffs landscape seem to have reached some stability. The US has announced the tariffs deals reached with the majority of its trade partners. With the finalization of tariff rates with majority of US’ trading partners, trade matters are heading into tailwind, at least for now. As for the US tariff for China, the US and China teams held the third round of bilateral meeting in Stockholm in late July. There was no announcement of any agreement, but both sides signalled willingness to continue negotiations. It remains a matter of conjecture as to whether the tariff dusts have really settled, as there appears to be a propensity for issues to burst to the surface that could change what has been agreed. Moreover, tied to the so called tariff agreements are commitments on investments and spending to be made by the trading partner, and it is uncertain how these would pan out. In the light of the higher tariffs on imports into the US, economic forecast may have factored in slower global trade going forward, but actual impact may potentially result in disappointment.
During his Presidential election campaign, Donald Trump had also pitched to bring about a quick end to the Russia-Ukraine war should he be elected. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine. The latest being a face to face Summit between him and President Putin held in Anchorage on August 15. An end to the Ukraine conflict would be positive for the equity markets. However, a peaceful resolution of the conflict does not appear to any nearer. It remains to be seen if Trump and his Administration will succeed in orchestrating a cessation of the conflict in Ukraine. If this does come about, it would change the geo-political situation in Europe and elsewhere. Meanwhile, the Middle East remains a hot spot given the tense situation between Iran and Israeli, and Israel’s continuing military actions in Gaza. The geopolitical headwinds remain.
We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China. The market is keenly watching developments in Trump’s tariffs for the key trade partners. The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications. Investors, by and large, appear to be comfortable with Trump’s “Bill Beautiful Bill” that has been signed into law, notwithstanding that it will substantially increase US federal deficit and government debt.
In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The tariff issues with the US can only exacerbate the economic situation in China. The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets. The Chinese government continues to bring forth various measures to help the economy. In September 2024, the Chinese government announced a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. Since then, there were additional measures taken. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. The various measures have boosted market sentiments. However, the longer- term effectiveness on China’s economy remains to be seen and will be closely watched. It may take time for the initiative to bear fruits. The focus will be on addressing challenges in the property market, lifting consumer sentiments and consumption, and countering the effects of the new US tariffs.
On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies, even at the agreed rates that are significantly below the levels announced by the US during the “Liberation Day”. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers in the importing country may have to pay higher prices, and this translates to higher inflation rate.
While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the still historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China. However, in the investment space we are in, we believe there is room for cautious optimism. After years of prolonged sell down, and despite the upticks in recent months, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.
We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.
We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.