Newsletter N°89 - May 2026 

Stock exchanges continue to reach unprecedented heights across much of Northeast Asia. By the end of May, Taiwan’s TAIEX had doubled in a year, South Korea’s KOSPI had also multiplied by two in less than six months, and Japan’s Nikkei surpassed its historical record, crossing the 65,000 points mark. The main exception in the region is China, where both the Hang Seng and the CSI 300 took a (relatively) small step back last month. At first glance, this may seem somewhat paradoxical. The Iran crisis is now having tangible and visible effects on daily life in the region, beyond the rising prices of everyday goods.

 

The Japanese yen and the Korean won have fallen to record-low levels, increasing the cost of imports. Anecdotally (or perhaps not), the supply of naphtha, a crucial component in plastic packaging, is under strain in Japan and has become the subject of intense debate in Parliament. Several manufacturers have already adjusted their packaging, with Calbee notably switching to black-and-white designs for its potato chips.In East Asia, investor euphoria outside China may appear puzzling.

 

However, beyond the rapid expansion of AI-related investments, it is also driven by optimism about a potential swift resolution to the Iran crisis, as well as a sense that markets have rebounded quickly from recent shocks, such as the war in Ukraine and the COVID-19 pandemic, fueling a widespread “fear of missing out.”, furthermore widening the perceived gap between the extravaganzas of the financial world and the day-to-day lives of residents.