The unexpected winners and losers as markets went into meltdown

THE market wipeout that swept through equities, bonds and currencies on Monday (Aug 5) left just a few resilient pockets relatively unscathed.

The unusual moves show that some investors are reconsidering what might be the best havens to run to, as traders rapidly pull out of popular assets once considered good bets like chip stocks and Japanese equities.

Here are some examples of what investors bought – or dumped – that might surprise.

Gold loses lustre

Commodities took a knock on Monday as the tremors that engulfed equity markets reverberated through raw materials. The drop in gold, however – spot prices shed as much as 3.2 per cent at one point – may surprise some given the metal has a long-standing reputation as a haven asset.

In fact, history suggests that at times of intense dislocation, gold tends to weaken too as some traders are forced to cover unexpected margin calls when assets tumble across the board. Goldman Sachs Group, which remains very bullish on bullion’s outlook, suggested that this dynamic may have been at play in Monday’s session.

The precious metal can “suffer from negative spillovers from broader market routs as investors liquidate gold positions to cover margins calls,” analysts including Daan Struyven said in a note, while reaffirming the bank’s target for gold to rally to a record US$2,700 an ounce in 2025.

Ringgit’s turnaround

While key risk-sensitive currencies such as the Aussie dollar, Mexican peso and South African rand all tumbled against the US dollar, Malaysia’s ringgit at one point saw its best single-day rally since 2015, and outperformed all emerging-market peers on Monday.

That marks a massive reversal for the embattled currency, which had in February fallen to the lowest level since 1998 against the US dollar. The ringgit now looks primed to rebound as optimism gathers over Malaysia’s growth, with second-quarter GDP beating all estimates. Foreign bond inflows and improving tech exports are also contributing to the ringgit’s strength.

Chinese borrowers forge ahead

Several Chinese borrowers turned to the lower-cost and relatively stable yuan bond market to offer debt in a week marked by extreme volatility elsewhere, even as US high-grade borrowers held back.

In the offshore yuan market on Tuesday, Pizhou Industrial Investment Holding Group, a local government financing vehicle, is marketing a three-year yuan bond with a 5 per cent coupon. Meanwhile, the Shenzhen municipal government mandated banks to offer a multi-tranche yuan bond. They followed deals by Jiangsu Runxin City Investment Group and Huangshi State-Owned Assets Management.

Lower financing costs for yuan-denominated debt are supporting the sector. Three-month interbank interest rates for the offshore yuan in Hong Kong, also known as CNH Hibor, dropped to 2.06 per cent on Tuesday, the lowest in more than three years, Bloomberg data show.

Mongolian resilience

The Mongolia Stock Exchange Top 20 Index, which tracks the 20 biggest companies in the country, finished the session on Monday with a 1 per cent increase – making it the only benchmark that was in the green in Asia and one of four in the world, according to Bloomberg data (the others were benchmarks in Jamaica, Montenegro and Tunisia). Coal miner Tavantolgoi and milk products company Suu were the two biggest gainers on the gauge.

Dominated by materials and consumer staples companies, the nation’s stock market has been negatively correlated to the performance of the MSCI Asia-Pacific index since late last month, Bloomberg data show.

Hope for Hong Kong developers

Of 11 developers in the Hang Seng Properties Index, nine of 11 rose on Monday. Mall operator Wharf Real Estate Investment was the biggest gainer on the benchmark Hang Seng Index after rising more than 6 per cent, its best rally in more than two years. New World Development and Sun Hung Kai Properties were all up more than 4.5 per cent.

Though Hong Kong’s retail spending and home prices remain weak, faster-than-expected rate cuts in the US will force the Asian financial hub to follow suit, given its currency peg to the US dollar. Cheaper mortgages could spur more home-buying and give a boost to property developers. The offshore yuan also rallied to its strongest level on Monday since December, suggesting that Chinese buyers could be shopping more in Hong Kong in the near future as they feel richer. BLOOMBERG