In Japan, we see locals buying the dollars and selling the yen, adding that the trend had likely accelerated in the run-up to yesterday’s news that Soft-Bank Group Corp. 9984, -10.32% was making a $32 billion bid for U.K.-based chip-designed ARM Holdings PLC ARM, +40.87% using sterling.
Stocks in Japan rose for their sixth straight session Tuesday amid continued expectations that the Bank of Japan will soon roll out stimulus for the economy. But elsewhere in Asia, shares mostly weakened.
The Nikkei Stock Average NIK, +1.37% traded up 0.5%, as trading resumed following a holiday the previous day. The benchmark gained 9.2% last week.
Hong Kong’s Hang Seng Index HSI, -0.61% fell 0.8% and South Korea’s Kospi SEU, -0.21%
Shanghai’s Composite Index SHCOMP, -0.57% were both down 0.5%. Australia’s S&P ASX 200 XJO, -0.13% slipped 0.1%.
Shares of Soft-Bank plunged nearly 11% on Tuesday in reaction to the news, but the forex-market is supporting the overall Japanese market, as the banks funding the deal put pressure on the yen.
Market sentiment in Asia was turning a bit more cautious with central bank meetings this week, including the European Central Bank’s on Thursday. Meanwhile, the Australian dollar and New Zealand dollar lost ground on expectations that central banks in their respective countries are moving towards lowering interest rates. Investors are now shifting their focus to the BOJ meeting. Up until the BOJ meeting on July 28-29, there may be flows related to buying and selling by Japanese corporate players, as well as an adjustment to one-sided positions. But investors are largely expected to remain on the sidelines. Speculation has grown that the Japanese government and the Bank of Japan would team up to stimulate the economy, especially after Prime Minister Shinzo Abe’s meeting with former Federal Reserve Chairman Ben Bernanke, an advocate of monetization.
Beijing — China’s State Council, vowed to make it easier for local and foreign companies to do business in the country by cutting red tape and expanding their financing channels. Investment projects will no longer require government approvals, except for those that concern state security, ecological security, strategic resources development and public interests, the cabinet said in guidelines released Monday. The government will accelerate the development of capital markets, support asset secularization backed by solid business activities and start a pilot program to allow some financial institutions to hold stakes in non-financial firms.
It will also encourage the nation’s pension fund and insurance companies to invest in capital markets.
J. Mason ♦