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Yen traders eye BOJ minutes, China eyes rebound
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Yen traders eye BOJ minutes, China eyes rebound
Jun 23, 2024 3:17 PM

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

The final trading week of the first half of the year gets underway on Monday, with Asia's scorecard looking reasonably positive from an equity perspective, mixed through a currency and bond lens, and more bleak from a Chinese market angle.

Chinese stocks will be looking to stop the rot and halt the recent decline that has extended their underperformance against regional and global peers this year.

Investors in Japanese assets, meanwhile, are on high FX intervention alert after the yen fell on Friday for a seventh straight day towards 160.00 per dollar, the level that triggered the first of Tokyo's yen-buying forays into the market nearly two months ago.

With the Bank of Japan's next policy meeting not until July 30-31, it may require verbal or direct intervention again to halt the yen's slide. The BOJ's summary of opinions from its June 13-14 policy meeting, to be released on Monday, will be closely watched.

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

Asian stocks go into the last week of June in decent shape, supported by subdued volatility and falling inflation globally, lower U.S. bond yields, and buoyant equities worldwide.

With the end of the first half in sight, however, some investors will want to lock in profits and square positions. The slide in Nvidia shares last week - their first weekly decline in nine - could be a sign of how this week will play out.

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

The outlier is China.

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

The news flow isn't particularly encouraging - trade tensions between China and the West are increasing by the day it seems, and on Friday, Washington issued draft rules for banning or requiring notification of certain investments in artificial intelligence and other technology sectors in China.

Capital flows aren't particularly supportive either. Foreign direct investment into China in the January-May period fell 28% to $49.7 billion from the same period last year, and some $4.5 billion has left the mainland this month via the Northbound leg of the Stock Connect Scheme, snapping four months of net inflows.

But Barclays analysts say the selloff is overdone, and the bar is low for market-friendly positive surprises from next month's 'plenum' - a key meeting of the Communist Party's central committee. They recommend positioning for a rebound.

Here are key developments that could provide more direction to markets on Monday:

- BOJ summary of opinions from June meeting

- Singapore inflation (May)

- Taiwan industrial production (May)

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