Kicking off the action in Asia, equity markets in Shenzhen and Shanghai came under pressure after MSCI declined to include mainland shares in its indices, this decision takes some of the wind out of the sails of Chinese equities because it forestalls an expected influx of foreign and institutional investment flow into Chinese equities that would result from bench markers including Chinese assets within their portfolios. Despite this, markets in Shanghai appear set to continue their ebullient outperformance largely on the back of the assumption that Beijing will continue to take steps to stimulate the economy as growth in the middle kingdom slips.
Outside of China, the yen is one of the key beneficiaries of a current bout of weakness in the greenback, surging 1.3 per cent. Much of this movement stems from earlier comments made by Bank of Japan governor Haruhiko Kuroda suggesting that the yen at current valuations is quite weak and that any further declines against the USD are unlikely. This comes on the back of economic data suggesting that the export sector of the Japanese economy continues to outperform with core machine orders beating expectations by a large margin, illustrating that investment in the Japanese economy remains strong.
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