Asian equity markets closed Monday, December 29, 2025, with a divergent performance as investors navigated thin year-end trading conditions and adjusted positions ahead of the final sessions of the year. While South Korea delivered a strong rally, most other major Asian markets posted modest declines, reflecting cautious sentiment and limited conviction amid reduced liquidity.

With several global markets still operating under holiday schedules, trading volumes across Asia remained relatively light. In this environment, price action was driven more by local factors and sector-specific flows than by broad macroeconomic developments. Investors continued to focus on portfolio rebalancing, currency movements, and early positioning for 2026.

South Korea Rallies as Technology and Cyclicals Lead Gains

South Korea’s KOSPI Composite Index surged 2.20% to 4,220.56, delivering the strongest performance in the region. The rally was driven by robust gains in semiconductor, technology, and industrial stocks, as investors rotated back into growth-oriented sectors following recent consolidation.

Market participants pointed to renewed optimism around global technology demand heading into 2026, alongside attractive valuations after earlier pullbacks. Korea’s export-heavy economy benefited from expectations of stabilizing global growth, prompting fresh inflows despite the broader cautious tone across Asia.

The strong advance also reflected confidence in Korea’s corporate earnings outlook, particularly among large-cap technology firms that continue to play a central role in global supply chains.

Japan and Hong Kong Slip as Year-End Caution Prevails

Japan’s Nikkei 225 fell 0.44% to 50,526.92, easing back after recent gains. The decline came amid a 0.39% drop in the Japanese yen index, which typically supports exporters but failed to lift sentiment in a low-liquidity environment. Automakers and industrial stocks saw mild selling pressure as investors opted to lock in profits ahead of year-end.

Hong Kong’s Hang Seng Index declined 0.64% to 25,653.34, reflecting continued caution toward China-linked assets. Technology and property stocks weighed on the index, as investors remained selective amid ongoing questions surrounding China’s economic recovery. Although the downside was limited, the move underscored the lack of strong catalysts to drive a sustained rebound in Hong Kong equities at this stage.

China, Australia, and India See Modest Moves Amid Consolidation

China’s SSE Composite Index edged up 0.04% to 3,965.28, effectively closing flat. Financials and infrastructure-linked stocks provided limited support, while consumer and property-related names remained mixed. The muted move reflected investor indecision as markets await clearer signals on the pace of China’s recovery and potential policy direction in early 2026.

Australia’s S&P/ASX 200 slipped 0.42% to 8,725.70, underperforming despite a 0.13% rise in the Australian Dollar Index. Mining and energy stocks faced mild pressure, as a stronger currency weighed on export-sensitive sectors. The decline was consistent with year-end consolidation rather than a shift in the broader outlook.

India’s S&P BSE Sensex fell 0.35% to 84,747.44, reflecting modest profit-taking after recent gains. Financials and IT stocks were mixed, while domestic growth optimism remained intact. The pullback appeared technical in nature, as investors adjusted positions ahead of the new year.

Outlook: Markets Focus on Year-End Flows and Early 2026 Signals

Looking ahead, Asian markets are likely to remain influenced by thin liquidity, portfolio rebalancing, and currency movements as the year draws to a close. Attention will increasingly shift toward early 2026, with investors watching for fresh guidance on global monetary policy, China’s economic trajectory, and technology demand trends. While near-term volatility may stay muted, selective opportunities could emerge in markets showing strong fundamentals and improving earnings visibility as trading conditions normalize in the new year.