ASIA STOCKS: Tech Sensitive Inflows Up, Indian Inflows Recovering
Yesterday saw decent offshore inflows into both South Korean and Taiwan equity markets. The Kospi remains in a strong uptrend, getting close to fresh highs of 3800 in the first part of trade today, although we sit off best levels now. AI/chip sentiment remains strong, underscored by Taiwan's TSMC Q3 results yesterday. Indeed, in Thursday US trade the SOX index still finished higher despite broader credit concerns (which weighed on bank/financial stocks). The US-South Korean trade negotiations continue, with still uncertainty as to how investment/FX concerns on the South Korean side will be met, (particularly given US demand around when the $350bn investment inflows should take place). This, along with broader equity trends, will be watch points.
- In Taiwan, even with yesterday's net inflow, we have still lagged the positive trends seen in local equities (last 5 trading days has seen cumulative outflows near -$2bn). TSMC results bode well for the tech sector, although shares in the tech bellwether are down so far today.
- Indian inflow momentum is better and there is scope for a further recovery (given YTD outflows are still over -$16.5bn). Th break higher in local stocks, the NIFTY through 25500 may induce more inflow momentum. A more stable to stronger FX backdrop may aid with inflows, but broader trends are likely to be dictated by US-India trade discussions and RBI easing expectations.
- In South East Asia, outflows have been evident, with Malaysia now seeing 10 consecutive sessions of outflows. Most markets in this part of the region sit off recent highs or are tracking sideways.
Table 1: Asian Markets Net Equity Flows
| Yesterday | Past 5 Trading Days | 2025 To Date | |
| South Korea (USDmn) | 403 | 1135 | 3224 |
| Taiwan (USDmn) | 426 | -1932 | 7669 |
| India (USDmn)* | 79 | 995 | -16512 |
| Indonesia (USDmn) | -37 | -22 | -3297 |
| Thailand (USDmn) | -62 | -146 | -3035 |
| Malaysia (USDmn) | -3 | -260 | -4130 |
| Philippines (USDmn) | -3 | -28 | -710 |
| Total (USDmn) | 803 | -258 | -16790 |
| * Data Up To Oct 15 |
Source: Bloomberg Finance L.P./MNI
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JGBS AUCTION: Solid Demand Metrics For 20Y Auction
The 20-year JGB auction delivered solid results across key metrics. The low price outperformed dealer forecasts, which were set at 97.80 according to a Bloomberg poll. Moreover, the cover ratio jumped to 3.9974x from 3.0853 in the previous outing and the auction tail shortened to 0.10 from to 0.13.
- As noted in the auction preview, today’s offering featured an outright yield near its cycle high, 10bps above last month’s level.
- Moreover, the 10/20 yield curve remained near its recent high, its steepest since 1999.
- This result was an improvement on the lacklustre performance observed in the 30-year JGB auction earlier this month.
- Post-auction, the 20-year JGB is slightly richer.
JGBS AUCTION: 20-Year JGB Auction Results
The Japanese Ministry of Finance (MOF) sells Y614.9bn 20-Year JGBs:
- Average Yield: 2.654% (prev. 2.581%)
- Average Price: 98.00 (prev. 98.93)
- High Yield: 2.662% (prev. 2.591%)
- Low price: 97.90 (prev. 98.80)
- % Allotted At High Yield: 98.6020% (prev. 65.3666%)
- Bid/Cover: 3.9974x (prev. 3.0853x)
AUSSIE BONDS: Little Changed On A Data-Light Session
ACGBs (YM -0.5 & XM flat) are little changed on a data-light session
- Westpac’s lead index signalled slowing growth in August with the 6-month annualised rate turning negative (-0.16% down from July’s +0.11%) for the first time since September 2024. Almost all variables have eased over the last 6 months. It is signalling that growth on a 2q/2q basis could slow over the coming quarters.
- Cash ACGBs are little changed with the AU-US 10-year yield differential at +19bps.
- The bills strip is slightly weaker.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in September is given a 9% probability, with a cumulative 22bps of easing priced by year-end (based on an effective cash rate of 3.60%).
- The focus this week, however, will be on Thursday's August jobs data. Employment is forecast to rise 21k after July's +24.5k, with the unemployment rate expected to remain at 4.2%. It will also be important to monitor underemployment, the split between full-time & part-time and hours worked. The RBA is currently expected to leave rates unchanged on September 30 as it waits for Q3 CPI on October 29.
