APAC Financial Markets Spotlight – August 2025

Renewed optimism around global trade helped keep equity markets buoyed over the 3M ending July 31, 2025. Monetary policy continued to ease for many markets, but the timing and pace of easing continued to diverge. Currency movements versus USD were divergent within APAC over 3M as attention returned to monetary policy and news around tariff negotiations and the implications for regional growth.

Key highlights:

• Over the 3-months ending July 31, renewed optimism around global trade negotiations has led to a recovery in risk sentiment. Divergent currency moves have driven further divergence in global equity performance in USD terms, while performance leadership in local currency terms has largely tracked index exposures to key industries such as Tech and Financials.
• In fixed income, FTSE APGBI returned 1.3% over 3M and outperformed global peers in FTSE WGBI (-0.6%). Currency divergence played a significant role in USD-based performance leadership, reinforcing the importance of currency hedging for investors. Thailand was the best performing government bond market within APAC over 3M, as yields continued to fall in the wake of monetary policy easing, and as the THB strengthened versus USD. Thailand’s higher levels of gold reserves versus peers have served as a tailwind to foreign investment during recent market volatility, providing additional demand for sovereign debt and supporting the THB. Japan (-7.7%) was the main laggard in the index over 3M as uncertainty around future fiscal policy and the potential for increased JGB supply drove yields higher, especially at the long end of the JGB curve.
• In equities, FTSE Asia Pacific rose 10.4% over the last 3M. Korea (+30.9%) and Taiwan (+30.0%) led performance within the region, as both benefited from strong currency contributions as well as solid performance from Technology names in both markets. China (+12.4%) also outperformed over 3M, again benefitting from a strong contribution from Technology but also from Financials, which have seen renewed investor attention given elevated dividend yields in the context of declining bond yields. Singapore (+9.9%) and Japan (+4.7%) have a relatively attractive risk-reward profile.
• In foreign exchange, most APAC currencies rose versus USD over the last 3M amid USD weakness. TWD and KRW outperformed, while JPY depreciated the most in the region.

This report, published quarterly, delves into the major macroeconomic, fixed income, equity and FX market events shaping the APAC financial markets, leveraging our exclusive databases and platforms such as FTSE Russell indices across asset classes, LSEG Workspace, Lipper fund flows and many more.

From key market movements to emerging trends, this report provides insights on how those critical drivers impact different asset classes across individual APAC markets. This report also discusses the interplay between the APAC markets and global events, helping navigate the complexities of today’s financial world.

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