ASIA-PACIFIC WEEKLY KICKSTART: MXAPJ closed flat despite a volatile week, with continued sizeable foreign outflows; hopes of US-Iran de-escalation drove a relief recovery, while leveraged ETFs could amplify volatility in Korea
Report Summary
The MXAPJ index closed flat after a volatile week, with EM Asia ex-China markets experiencing US$13bn in foreign institutional outflows. A reported US-Iran Memorandum of Understanding provided geopolitical relief, while Goldman pushed back Fed rate-cut forecasts to Jun/Dec 2027. The report's central focus is the structural risk from leveraged ETFs in Korea (AUM ~US$40bn) and Taiwan (~US$9bn), where dealer gamma rebalancing could mechanically amplify daily price moves.
Key Takeaways
- Leveraged ETFs amplify volatility: Korea's leveraged ETF AUM surged to ~US$40bn; a 5% market move would trigger ~US$4.7bn of procyclical dealer gamma rebalancing flows, exceeding 20% of ADV for mega-caps like Samsung and SK Hynix.
- Persistent foreign outflows from EM Asia: FII outflows totaled US$13bn from EM Asia ex-China, led by Taiwan (-US$8.5bn) and Korea (-US$2.9bn), despite Goldman maintaining Overweight on both.
- Geopolitical de-escalation: US and Iran reportedly agreed on a Memorandum of Understanding, but Taiwan is weighing stricter AI chip export controls to mainland China.
- Fed rate cuts delayed: Goldman's US economists pushed back the final two Fed rate-cut forecasts to June and December 2027 following stronger-than-expected labor market data.
- FTSE GEIS rebalancing to drive US$4.1bn net passive inflows into Asia-Pacific markets, led by Japan (+US$2.4bn) and China/Hong Kong (+US$1.2bn).
- Bank Indonesia surprised with off-cycle rate hike to stem capital outflow pressures.
Who this summary is for
This summary is for users researching the Goldman Sachs ASIA-PACIFIC WEEKLY KICKSTART report. It helps users review ASIA-PACIFIC WEEKLY KICKSTART: MXAPJ closed flat despite a volatile week, with continued sizeable foreign outflows; hopes of US-Iran de-escalation drove a relief recovery, while leveraged ETFs could amplify volatility in Korea coverage, key takeaways, and related broker or sector research paths across Leveraged ETF Structural Risk, FII Capital Flows, FTSE GEIS Rebalancing; Samsung Electronics, SK Hynix.
Topics Covered
Companies Mentioned
Related Search Paths
Use these links to find similar broker research summaries and sector report notes.