Yen Traders Eye BOJ Minutes, China Eyes Recovery

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets.

The final trading week of the first half of the year begins on Monday, with the Asia scorecard looking reasonably positive from an equities perspective, mixed through a currency and bond lens, and more gloomy from a market perspective Chinese.

Chinese stocks will look to stem the rot and recent decline that has compounded their underperformance relative to their regional and global peers this year.

Meanwhile, investors in Japanese assets are on high alert for currency intervention after the yen fell on Friday for a seventh consecutive day toward 160.00 per dollar, the level that triggered Tokyo’s first yen buying foray. on the market for almost two months.

Given that the Bank of Japan’s next monetary policy meeting will take place on July 30 and 31, verbal or direct intervention may again be necessary to halt the fall of the yen. The Bank of Japan’s summary of views at its June 13-14 monetary policy meeting, to be released on Monday, will be closely watched.

Monday’s regional calendar also includes the latest trade figures from New Zealand, inflation from Singapore and unemployment and industrial production from Taiwan.

Asian equities enter the last week of June in good shape, supported by moderate volatility and falling inflation globally, lower US bond yields and buoyant equities around the world.

With the end of the first half in sight, however, some investors will want to lock in profits and square positions. The drop in Nvidia shares last week – the first weekly drop in nine – could be a sign of how this week will go.

Japanese stocks are up about 15% year to date, and the MSCI Asia ex-Japan, India’s Sensex and South Korea’s Kospi are up about 7%.

The exception is China.

The Shanghai Composite is barely in positive territory for the year, having lost 5% in the last month and is on its worst streak of weekly losses in six years.

The news flow isn’t particularly encouraging – trade tensions between China and the West are rising by the day, it seems, and on Friday, Washington issued draft rules to ban or require notification of certain investments in artificial intelligence and other technological sectors in China.

Capital flows are also not particularly favorable. Foreign direct investment in China in the January-May period fell 28% to US$49.7 billion from the same period last year, and about US$4.5 billion left the mainland this month through northern leg of the Stock Connect Scheme, interrupting four months of net inflows. .

But Barclays analysts say the sell-off is overdone and the bar is low for positive market-friendly surprises at next month’s “plenum” – a key meeting of the Communist Party’s central committee. They recommend positioning for a recovery.

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Here are key developments that could provide further guidance to markets on Monday:

– BOJ summary of June meeting views

– Inflation in Singapore (May)

– Taiwan industrial production (May)

(Reporting by Jamie McGeever)