ASIA STOCKS: SK Outflows Halt, But Improvement Not Evident, Indonesia Lags SEA
South Korea recorded net inflows in the past two sessions, helping curb the degree of 5-day outflow momentum, although we are still negative. The sharp retracement in the Kospi from June record highs, combined with a stronger won backdrop, may have encouraged some offshore inflows to return to local stocks. Today, the Kospi is rallying strongly, up close to 5%. Broader tech sentiment has improved in US markets and the successful launch of SK Hynix's ADR in the US has been a factor in aiding sentiment in recent sessions. Still, per BBG's NBUY function we aren't seeing any further offshore buying so far today, with close to $265mn in net selling (mainly in electronic stocks). Hence it remains to be seen if we have reached a trough in terms of outflow momentum.
- Taiwan net selling has been quite strong in the past 5 trading sessions, even as US led tech equity sentiment improved. Local markets are shut today due to Typhoon Bavi, so we may not get a fresh update on offshore flows until markets re-open.
- Indian inflows have continued to recover, even as local stock indices have struggled to build on early July gains. USD/INR stability may be helping, with the pair comfortably under May cycle highs.
- In South East Asia, Thailand remains a standout from a positive inflow standpoint. The SET index is trying to consolidate a break above 1600. Trends elsewhere were also more positive yesterday with lower oil prices potentially aiding.
- Indonesia continues to struggle though, with the week's warning from S&P DJI on potential market reclassification to frontier status a likely headwind.
Table 1: Asia Markets Net Equity Flows
| Yesterday | Past 5 Trading Days | 2026 To Date | |
| South Korea (USDmn) | 104 | -3446 | -102172 |
| Taiwan (USDmn) | -1554 | -8191 | -30168 |
| India (USDmn)* | 996 | 1736 | -27215 |
| Indonesia (USDmn) | -14 | -73 | 4366 |
| Thailand (USDmn) | 259 | 583 | 1674 |
| Malaysia (USDmn) | 35 | 21 | -747 |
| Philippines (USDmn) | 13 | 49 | -201 |
| Total (USDmn) | -161 | -9322 | -154462 |
| * Data Up To July 8 |
Source: Bloomberg Finance L.P./MNI
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JGBS AUCTION: 30Y Auction Delivers Poor Result
The 30-year JGB auction delivered a poor result. The low price failed to meet dealer expectations of 97.65 (Bloomberg survey). Moreover, the cover ratio decreased to 2.9363x (weakest since June 2025) from 3.4938x. The auction tail also lengthened to 0.38 from 0.22.
- Today’s outcome is weaker with this month’s 10-year auction, which delivered mixed results.
- As noted in our preview, today’s issuance came at an outright yield ~5bps higher than the level at last month’s issuance but 35bps below its cycle peak.
- The 10s30s yield curve was flatter than the level to the previous auction and around 50bps below its cycle peak at 170bps.
- On a relative value basis, the 30-year bond valuation was cheaper versus last month, based on the 20-/30-/40-year butterfly spread. The 30-year is at the top of the range seen over the past 12-months.
- The 30-year yield is 1-2bps cheaper in the afternoon session.
JGBS AUCTION: 30-Year JGB Auction Results
The Japanese Ministry Of Finance (MoF) sells Y450.8bn 30-Year JGBs:
- Average Yield (%): 3.860 (prev. 3.842)
- Average Price: 97.78 (prev. 98.02)
- High Yield (%): 3.888 (prev. 3.858)
- Low price: 97.40 (prev. 97.80)
- % Allotted At High Yield (%): 28.0000 (prev. 29.5739)
- Bid/Cover: 2.9363x (prev. 3.4938x)
EUR: EUR/USD - Consolidating Just Above 1.1500, Can The USD Build On its Break ?
The EUR/USD range overnight was 1.1529-1.1578, Asia is currently trading around 1.1545. The pair has broken the support seen just below the 1.1600 area as the USD breaks its trend lower. The market continues to be more comfortable selling US dollars, but this break lower in the Euro will not be sitting comfortably with them for the moment. The USD continues to trade well supported as risk remains under pressure from the escalation in the Middle-east, while this continues to play out it should keep the headwinds for the EUR in place. On the day, the first resistance remains back toward the 1.1570-1.1600 area, while the price holds below 1.1650-1.1700 I would be skewed toward another test of the 1.1400-1.1500 support area. Though with what looks to be quite a lot of optionality around here not sure how likely it is to give way.
- Bloomberg - “Germany will undertake a strategic effort to become a global leader in aviation over the next 15 years, with focused investment in military aircraft manufacturing, sustainable fuels and top technology.” https://x.com/business/status/2064378259773509707?s=20
- Options : Closest significant option expiries for NY cut, based on DTCC data: 1.1430(EU930m), 1.1700(EU920m). Upcoming Close Strikes : 1.1500(EU2.76b June 12), 1.1500(EU4.1b June 15) - BBG
- The EUR/USD Average True Range for the last 10 Trading days: 53 Points
Fig 1 : EUR/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
