AUD: AUD/USD - Pokes Above 0.6700 As South Korea Adds To USD Woes

Net equity outflows for Asia last Friday were dominated by South Korea and Taiwan net selling. The net selling from Taiwan of nearly $3bn was the largest single daily outflow since Sep last year. For South Korea, it was the largest daily outflow since 2021. The sharp reversal in tech equity sentiment after the Nvidia results last week has cast a shadow over the tech/AI related equity market outlook. Equity market sentiment is better for both South Korea and Taiwan so far today, but gains are less than 1%. Both markets are still close to recent lows. For Taiwan, in the past trading month, offshore investors have sold just over $12bn in local stocks. We may be getting closer to a trough from a momentum standpoint but it remains to be seen if we can see a positive catalyst that brings positive inflow momentum in the near term. South Korea is seeing positive inflows today, but only to the tune of +$30mn

• Elsewhere, Indian inflow momentum mostly remained positive, although the 5-day sum is only marginally above flat. The NIFTY is pushing higher, last above 26100, while INR FX has fallen through 89.00 to be at fresh lows versus the USD.
• In South East Asia, outflow pressures mostly continue. Thailand and Malaysia were dominant last week in terms of net selling, while positive inflow momentum for Indonesia slowed. 

Table 1: Asian Markets Net Equity Flows 

Source: Bloomberg Finance L.P./MNI 

• China's bond futures are all up on Monday following modest injection of liquidity during this morning's OMO.  
• The 10-Yr is up +0.06 to 108.31 and is at the mid-point between the 20-day EMA of 108.18 and the 200-day EMA of 108.38.
• The 2-Yr is up +0.01 to 102.41 maintaining it's position at the midpoint between the 20-day EMA of 102.40 and the 100-day EMA of 102.42.  There is a sizeable maturity schedule ahead this week for 7-day reverse repo and the PBOC decisions on liquidity are the likely catalyst for the next move in bonds.  
• The CGB 2-Yr is at 1.42% and the 10-Yr at 1.81%

The Crypto community is pointing to an update made by MSCI on the 10th October stating that they would be reviewing how to classify companies whose main business involves accumulating Bitcoin or digital assets. Basically asking the question, are these Treasuries just an index fund ? Their final decision comes on 15 January 2026 and policy will go into effect February 2026. The market will pay very close to this decision as it could have huge short-term ramifications for those “Bitcoin Treasuries" that have been funding purchases through high yield loans together with preferred and common stock offerings. A post on X by Bull Theory broke it down as follows:

• “MSCI Key Proposal: If digital assets = 50% or more of a company’s total assets and the company’s operating activity resembles a digital asset treasury. That company can be excluded from MSCI global indexes. This directly puts several Bitcoin-heavy companies at risk, especially MicroStrategy.”
• “Why this matters, If MSCI excludes these companies: Index funds are forced to sell. Funds tracking MSCI indices must remove these stocks. They do not get to choose. This is literal forced institutional selling.
• “If MSTR is labeled fund-like, MSCI indexed funds could be forced to reduce or exit positions. When MSTR dumps → BTC reacts immediately. Like it or not, $MSTR is treated as a leveraged Bitcoin proxy.”
• Michael Saylor responded publicly on Saturday on X,"MicroStrategy is not a fund, not a trust, not a holding company. It is a publicly traded operating company with a $500M software business and a Bitcoin based treasury strategy." https://x.com/saylor/status/1991875241107222701?s=20
• “His message was simple: "We are not passive holders. We are builders. We are innovating. Index labels do not define us."
• Time will tell if the MSCI agrees with him.