China’s steel market is not collapsing despite the property downturn. Instead, demand is stabilising at a lower level as manufacturing, exports and new energy sectors gradually replace construction-driven demand. This is not a demand collapse, it’s a structural shift from property to industrial and export-driven demand. What’s Really Happening The sharp drop in construction activity has clearly hurt steel demand: Property-related steel (like rebar) has fallen significantly Construction’s share of demand is shrinking But the broader market tells a different story: Total steel demand is only slightly below past peaks Manufacturing, shipbuilding and energy transition sectors are absorbing demand Exports are acting as a key buffer Instead of a sudden crash, the industry is entering a long plateau . Why This Matters The market had expected a sharp collapse but reality is more gradual: Demand is declining slowly, not falling off a cliff China is shifting from construction-led growth to ...
Emerging Asian markets came under heavy pressure on Monday as persistent Middle East tensions kept oil prices elevated, driving risk aversion and accelerating capital outflows across the region.
Broad Selloff Across Emerging Asia
The MSCI Emerging Asia Index fell 3%, extending its March decline to over 11%, putting it on track for its worst monthly performance since 2022.
Key markets led the downturn:
- South Korea’s Kospi plunged up to 6.4%
- Taiwan equities dropped as much as 3.2%
- Singapore and Philippines markets fell 2%–3%
The selloff reflects mounting concerns over prolonged geopolitical risks and inflation pressures.
Oil Above US$110 Fuels Risk Aversion
Oil prices remained above US$110 per barrel, reinforcing fears of:
- Imported inflation across Asia
- Higher production and transport costs
- Slower economic growth
While some Iranian supply may return to markets, investors remain focused on the risk of further disruptions to energy infrastructure.
Currencies Weaken Across the Region
Emerging market currencies also came under pressure:
- South Korean won hit its weakest level since 2009
- Taiwan dollar fell to a near one-year low
- Indian rupee dropped to a record low
- Thai baht reached a 10-month low
A broader EM currency index fell to a three-month low, reflecting strong demand for the US dollar as a safe haven.
Tech Stocks Hit as Foreign Funds Exit
Technology-heavy markets were among the hardest hit:
- Samsung Electronics fell 4.8%
- SK Hynix dropped over 6%
Foreign investors have been systematically reducing exposure, with:
- US$44 billion in outflows from EM Asia (ex-China) since the conflict began
- Hedge funds selling at the fastest pace since April 2025
Supply Chain Risks Extend Beyond Energy
The impact of the conflict is spreading beyond oil into fertilisers and industrial inputs, raising concerns over food inflation and supply chain disruptions.
Countries most exposed include:
- Thailand, Vietnam, and the Philippines, due to reliance on imports
Outlook: Volatility Likely to Persist
Markets are increasingly pricing in a prolonged conflict scenario, with continued downside risks if:
- Energy disruptions intensify
- Inflation accelerates further
- Capital outflows persist
Investor Takeaways
- Emerging Asian equities are under pressure, with the MSCI EM Asia Index down over 11% in March.
- Oil prices above US$110 are driving inflation concerns and weakening growth outlooks.
- Regional currencies are depreciating, reflecting strong US dollar demand.
- Foreign capital outflows are accelerating, particularly from tech-heavy markets.
- Investors should monitor geopolitical developments, oil prices, and capital flows as key market drivers.
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