Asia focus

Views from the Asia trading floor

In March, Japanese stocks were affected by the yen’s rise against the US dollar due to growing geopolitical tensions. U.S. President Donald Trump tweeted on the possibility of a unilateral action against North Korea and missile strikes against Syria.

A quarterly survey by the Bank of Japan showed that Japanese manufacturers are feeling more positive. Bank of Japan Governor Haruhiko Kuroda has confirmed that he will continue the central bank’s quantitative easing programme and yield curve control policy to meet its 2% inflation target.

So far this year, Japan has accounted for almost half of Asian equity market deals – its busiest level since 2010 and surpassing the traditional deal powerhouse Hong Kong. The recent flurry in deal activity is due to the relative stability of the yen as well as Japanese groups coming under increasing pressure to improve their balance sheet efficiency by untangling cross-shareholdings in partner companies and subsidiaries.

Sentiment in Asia was soured, with stocks falling and bond prices rising overnight in March, as the expectation of a smaller than expected US fiscal stimulus package takes hold. Investors were also wary ahead of the meeting between U.S. President Donald Trump and Chinese President Xi Jinping, with the most speculated talking point being a possible trade war between the two countries.

We observe investors showing more interest in products with higher levels of participation to take advantage of the low volatility environment and more interest in baskets of stocks as underlyings compared to indices.