Asia Intelligence Brief for Thursday, February 19, 2026

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What matters today

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\nCritical
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\nTense
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\nWatching
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\nSeoul Central District Court sentenced Yoon Suk Yeol to life imprisonment for insurrection. Presiding judge Ji Gwi-yeon found he aimed to paralyse the National Assembly and arrest key politicians through his December 2024 martial law declaration. Prosecutors had sought death, but the life sentence was expected since the coup caused no casualties.
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\nEx-Defence Minister Kim Yong-hyun got 30 years; ex-PM Han Duck-soo 23 years last month; ex-Interior Minister Lee Sang-min 7 years last week. Yoon’s wife Kim Keon Hee is serving a separate bribery sentence. First presidential insurrection conviction since Chun Doo-hwan in 1996.
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\nThe Kospi surged 3.09% to an all-time record 5,677 — the market treated the verdict as closure, not risk. Goldman Sachs forecasts 120% Korean earnings growth in 2026 and says it is “still too early to reduce positions.” The investment question is what follows: whether Yoon’s PPP can rebuild for 2027, or the liberal camp consolidates, reshaping chaebol regulation and China policy.
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\nThe Kospi closed at 5,677.25 (+3.09%, +170.24 points), blasting through the 5,600 barrier for the first time. Samsung Electronics surged 4.86%, SK Hynix gained 1.59%, and AI-focused SK Square added 5.64%. The small-cap Kosdaq jumped nearly 5% to 1,160.71.
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\nAfter nearly doubling in 2025, Korea is again the leading equity market in Asia-Pacific. Goldman Sachs forecasts 120% earnings growth for Korean equities in 2026, following a 36% rise in 2025. The investment bank maintains it is “still too early to reduce positions.”
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\nThe rally has legs beyond Yoon: the semiconductor supercycle is the engine. Samsung’s high-bandwidth memory chips are winning customer praise, and AI capex continues to flow into Korean supply chains. The risk is valuation stretch — at these levels, any earnings miss from the semis complex would trigger a sharp repricing.
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\nABS reported January unemployment steady at 4.1%, trend employment +24,700. Full-time jobs drove the gains. Participation dipped to 66.7%. The data reinforces the RBA’s hawkish posture after its February hike to 3.85%.
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\nCBA, NAB, and Westpac now forecast a further rise to 4.10% in May if inflation stays sticky. Consumer expectations ticked to 5% YoY in February. Housing inflation — rents and construction costs — shows no sign of abating.
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\nAUD consolidated around 0.7070. Consensus expects a March hold, but hot CPI data could bring the most restrictive RBA policy since 2008 — pressuring households already stretched by elevated mortgage costs.
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\nBank Indonesia held its benchmark rate at 4.75% for the fifth consecutive meeting, as expected by 27 of 29 economists polled by Reuters. Governor Warjiyo said the rupiah is “undervalued” and pledged to step up intervention in onshore and offshore markets.
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\nThis was the first decision since Prabowo’s nephew Thomas Djiwandono joined the BI board as deputy governor. His nomination last month triggered capital outflows that sent the rupiah to a record low. Since then, MSCI warned it could downgrade Indonesian equities on governance and transparency concerns, and Moody’s downgraded Indonesia’s rating outlook to negative.
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\nING notes real rate differentials with the US have narrowed by more than 100bp since November 2025. The easing cycle is paused but not done — ING expects two 25bp cuts in H1 if the rupiah stabilises. The deeper issue: Prabowo’s high-growth agenda is colliding with investor demands for fiscal credibility and central bank independence.
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\nNikkei closed at 57,468 (+0.57%), extending its post-election run. Takaichi was formally reelected and confirmed the first tranche of projects under Japan’s $550 billion US investment pledge tied to the Trump bilateral deal.
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\nCiti’s Earnings Revision Index for Japan leads all regions at 0.38, ahead of the US (0.0) and Europe (-0.36). The IMF urged continued monetary normalisation and warned against cutting the consumption tax. BOJ April hike to 1.0% is 80%+ priced.
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\nThe yen weakened sharply past 155 — its biggest one-day drop this month — after hawkish FOMC minutes showed several participants favoured language leaving open the option of raising the fed funds rate. Takaichi’s fiscal expansion conflicts with BOJ tightening. If USD/JPY approaches 160, intervention risk rises.
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\nBrazil imposed five-year anti-dumping duties on Chinese steel: cold-rolled $323–$670/t, hot-dip galvanised $285–$710/t. Usiminas’ petition cited 103% dumping margins. China supplied 63.7% of Brazil’s 5.7Mt rolled imports in 2025 (+20.5% YoY).
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\nThis is the latest front in coordinated pushback. The US has 25% tariffs, the EU safeguard quotas, India its own anti-dumping regime. China’s domestic output ~1.07Bt against ~900Mt consumption leaves a 170Mt surplus seeking export markets.
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\nTrade diversion hits Asia directly. As the US, EU, and Latin America close doors, redirected flows concentrate on ASEAN, the Middle East, and Africa — markets with weaker trade defences. Vietnam, Thailand, and Indonesia should prepare for a steel import surge.
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\nThe BSE Sensex plunged 1,236 points (−1.48%) to 82,498 — its worst session since February 1 — wiping an estimated ₹7.5 lakh crore in investor wealth. All 30 Sensex stocks ended in the red. The Nifty 50 shed 365 points (−1.41%) to 25,454.
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\nRising crude oil prices on US-Iran escalation drove the sell-off, compounded by profit-booking after a three-session rally. Low FII participation due to Lunar New Year closures across key Asian markets and a regional banking holiday amplified the decline. India VIX spiked 10% to 13.46.
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\nONGC (+3.80%) was a rare gainer on surging crude. For net-importer India, every $10/bbl sustained increase adds ~0.3pp to the current account deficit. Friday’s preliminary February PMI will be the next test of whether domestic momentum can absorb the external shock.
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\nChina and Hong Kong’s closure through ~Feb 20 has drained liquidity at the moment Asia’s markets are diverging sharply. Korea surges to records while India crashes — the semiconductor vs oil split in one session.
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\nPre-holiday, authorities moved to rein in leverage after margin trading balances hit all-time highs. Standard Chartered’s Cheng remains positive on A-shares, projecting mid-teen earnings growth and expecting fiscal support at NPC/CPPCC in March.
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\nThe PBOC LPR decision is due Feb 20 when markets reopen — consensus expects another hold at 3.0%/3.5%. Oil at $70+, a weaker yen, and Indonesia’s governance crisis create an air pocket. When Chinese markets reopen, they absorb all of this at once. The rotation narrative holds — APAC +11% YTD vs flat S&P 500 — but the intra-regional divergence is the story.
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Assessment

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\nAsia’s divergence crystallised in a single session. The Kospi surged 3% to a record high while the Sensex crashed 1.5% — the semiconductor vs oil split playing out in real time across the region’s two largest emerging markets.
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\nSouth Korea treated Yoon’s life sentence as political closure and bought the semiconductor cycle with both hands. Goldman’s 120% earnings growth forecast gives the rally fundamental backing, though valuation stretch at these levels makes any semis disappointment a sharp repricing risk. Japan extends the Takaichi trade, but the yen’s drop past 155 on hawkish Fed minutes introduces intervention risk.
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\nIndonesia is the concern. Bank Indonesia is trapped: Moody’s has downgraded the outlook, MSCI is threatening an equity downgrade, the rupiah is at a record low, and Prabowo’s nephew now sits on the central bank board. The governance premium is expanding in real time. Australia’s jobs beat locks in the hawkish RBA path. When Chinese markets reopen tomorrow, they absorb oil at $70+, a weaker yen, and Indonesia’s crisis at once. The rotation holds — APAC +11% YTD vs flat S&P 500 — but the story within the story is which Asia you own.
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