Market Wrap MENA-Asia 16 July: Cairo Nears 53,000 and Saudi Edges Up to Close the Week as the Bank of Korea’s First Hike Since 2023 Sinks Seoul 6.4 Percent

By The Edge Research Team

Asia’s whipsaw week found its policy trigger on Thursday and the Gulf closed its first full week of the escalation barely changed. The Bank of Korea raised its policy rate 25 basis points to 2.75 percent, its first increase since January 2023, and Seoul’s Kospi fell 6.37 percent to 6,820.60, handing back almost exactly Wednesday’s surge, while Tokyo dropped 2.79 percent and the mainland fell nearly 2 percent. The Gulf barely noticed: TASI rose 0.15 percent and Kuwait’s All Share 0.17 percent in the week’s final session, while Cairo extended its run, the EGX30 rising 0.70 percent after touching 52,993 during the session.

Seoul completed a round trip that says more about positioning than about Korea. Thursday’s 6.37 percent fall leaves the Kospi just 0.2 percent above Monday’s crash close and about 8.8 percent lower for the week, our calculations, after daily moves of minus 8.95, plus 0.73, plus 6.24 and now minus 6.37 percent. The selling had two engines: the Bank of Korea’s 25 basis point hike to 2.75 percent, its first since January 2023 with inflation at a three-year high, and another plunge in Samsung Electronics and SK Hynix tracking overnight losses in US chip stocks, per CNBC’s coverage. The bank is tightening into strength as much as into oil: first-quarter growth of 3.8 percent was Korea’s fastest since late 2021 and June exports rose 71 percent from a year earlier in dollar terms, the fastest pace since 1978, per the same coverage. The Nikkei 225 fell 2.79 percent to 66,835.54 and the Topix 1.45 percent to 4,028.79, Shanghai lost 1.85 percent to 3,882.41 and Shenzhen’s component index 1.97 percent to 14,488.65, extending their post-GDP slide. Hong Kong was the outlier again, the Hang Seng rising 1.33 percent to 25,008.60 to reclaim the 25,000 line, while India’s Nifty 50 and Australia’s ASX 200 closed flat and Singapore’s Straits Times Index eased 0.37 percent.

The rate turn reached the volatility complex that had just gone quiet. The VIX rose 3.89 percent to 16.28, unwinding part of Wednesday’s slide, and the 10-year Treasury yield backed up about 4 basis points to 4.58 percent, while Brent held steady at 85.11 dollars, up 0.19 percent from Wednesday’s 84.95 dollar settlement, and WTI traded at 79.96, up 0.45 percent. Gold eased 0.15 percent to 4,045.90 dollars. An oil price parked in the mid-80s is now doing its damage through Asian inflation prints and central bank reactions rather than through the barrel itself, our reading of the week.

The Gulf’s final session of the week split quietly. TASI added 0.15 percent to 10,720.28 with the MSCI Tadawul 30 up 0.24 percent at 1,427.55, and Boursa Kuwait’s All Share Index rose 0.17 percent to 8,664.52 with the Premier Market Index up 0.07 percent at 9,073.87. The UAE lagged, Abu Dhabi’s FADGI falling 0.51 percent to 9,781.31 and Dubai’s DFM General Index 0.26 percent to 5,895.93, while Bahrain’s All Share slipped 0.13 percent to 1,984.86. The day’s steepest regional decline was Muscat’s, the MSX 30 dropping 1.20 percent to 7,480.61 with 46 decliners to 17 gainers, its largest fall since the blockade was announced, our reading of the session record, while Amman rebounded 0.45 percent to 3,920.03 per the exchange’s prints. Today’s uptick still leaves TASI down about 1 percent from its close on Sunday, the last session before the blockade was announced, our calculation, a remarkably shallow toll for a week of strikes at the region’s shipping artery. The Qatar Stock Exchange remains suspended and resumes on Sunday, 19 July.

Cairo closed the week as the region’s bull market. The EGX30 rose 0.70 percent to 52,928.06, touching 52,993 during the session, per the exchange’s prints, and is now up 26.53 percent for the year, with the index adding ground in three of the four sessions since the blockade was announced.

In currencies and crypto, the dollar steadied after Wednesday’s slide: the euro was flat at 1.1462 and sterling gave back 0.25 percent to 1.3505, the yen held at 162.20 per dollar, the Kuwaiti dinar firmed slightly to 0.3075, and the Egyptian pound was little changed at 50.50 to the dollar. Bitcoin fell 1.25 percent to 64,071 dollars.

Further west, Wednesday’s closes from our US-Europe wrap remain the reference: the Nasdaq rose 0.62 percent to 26,269.23 and the S&P 500 0.38 percent to 7,572.40 on the week’s second soft inflation print, while the DAX fell 0.59 percent to 24,999.53 as oil revived the European Central Bank’s rate question ahead of its 23 July decision. US equity futures leaned lower, the S&P contract off 0.28 percent, after the Asian rate turn.

Why it matters: The oil shock is starting to collect its bill through policy rather than prices: the Bank of Korea just delivered the escalation’s most visible rate response so far, the ECB’s July decision is back in question, and the VIX is rising again with Brent doing nothing. Against that, the Gulf closing its first full escalation week down roughly 1 percent on TASI while Cairo presses year highs is the regional story: the war premium sits in Asian and European rate expectations now, not in Gulf equity screens.

Outlook: The Gulf goes to its weekend with Qatar’s exchange reopening on Sunday as the next regional sentiment print, and the week ahead carries the ECB’s 23 July decision with the July oil price sitting inside it. The question Seoul just posed for every energy-importing central bank, whether to tighten into a supply shock, now hangs over the coming inflation prints, and Beijing’s answer to a 4.3 percent quarter remains outstanding.

Table – MENA and Asia equities, 16 July close, ranked by change:

Table – US and Europe, Wednesday 15 July closes, for reference, ranked by change:

Table – Commodities, rates, volatility, FX and crypto, intraday 16 July:

Price basis: Gulf and Egypt closes pulled 15:22-15:40 Kuwait time at exchange originators, with the Saudi close re-verified at the originator after the final print settled; Asia, oil and FX via CNBC quotes about 12:15 UTC on 16 July; commodity and FX figures are intraday quotes, not settlements.

Sources: Saudi Exchange; Boursa Kuwait; Egyptian Exchange; Bahrain Bourse; Dubai Financial Market; Abu Dhabi Securities Exchange; Amman Stock Exchange; Muscat Stock Exchange; Qatar Stock Exchange; Bank of Korea; CNBC.

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