Foreigners Miss Out In Japan

As the Nikkei 225 Stock Average rises toward its highest level in more than two decades, one group of investors has surprisingly missed out.

Since the start of 2016, foreigners have offloaded some $27 billion in the Asian country’s equities. While they were initially right to sell as the Nikkei 225 fell to a 20-month low in June 2016, they’ve been slow to return, even as the measure trades within 4 percent short of its highest close since 1996. In fact, a Bank of America Merrill-Lynch survey published this month showed global fund managers cut their allocations to Tokyo shares.

Strategists say overseas investors, who made big profits plowing money into Japanese equities in Prime Minister Shinzo Abe’s early years, simply took their eye off the ball. They’ve been diverted by markets like Europe, where valuations are attractive and political risk has receded, as far-right candidates lost in French and Dutch elections. For once, Japanese investors are much more optimistic about Japan — pushing two measures of smaller shares to the highest on record.

“Japan doesn’t seem to be foreign investors’ predominant focus,” Shusuke Yamada, chief foreign-exchange and equity strategist at Bank of America Merrill Lynch in Japan, said in a phone interview. “We don’t have big events. It may not be easy for the Japanese market to attract attention.”

The Nikkei 225 has risen 35 percent from that low in June last year, while the Jasdaq Index and the Tokyo Stock Exchange Second Section gauge of smaller stocks, which are dominated by local investors, both advanced to records this week. The Nikkei 225 slipped 0.5 percent Wednesday.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd

Global Round Up

Here are some of the key events coming up:

  • More Fed officials will be speaking as the FOMC’s June 13-14 meeting approaches. Robert Kaplan will be in New York on Wednesday.
  • The U.S. jobs report Friday may bolster the case for a rate hike, with a gain of 180,000 positions expected.
  • Brazil’s central-bank decision Wednesday will probably see a cut of 75 to 100 basis points from the current 11.25 percent, according to economists.
  • The EIA is due to release its monthly supply reports Wednesday.

Here are the main movers in markets:

Stocks

  • The MSCI Asia Pacific Index dropped less than 0.1 percent, paring its advance for May to 2.6 percent. The Stoxx Europe 600 Index fell 0.1 percent, trimming a monthly gain to 0.8 percent.
  • The Shanghai Composite rose 0.2 percent, after nearly wiping out an earlier gain of 1.1 percent. The manufacturing purchasing managers index remained at 51.2 for a second straight month in May, compared with a median estimate of 51 in a Bloomberg survey of economists.
  • Hong Kong’s Hang Seng was flat, heading for a fifth straight monthly gain, the longest winning streak since 2013, as improving earnings outweighed concerns about China’s campaign to cut leverage.
  • Japan’s Topix fell 0.3 percent, following two days of gains.
  • Futures on the S&P 500 rose 0.1 percent. The benchmark index slipped 0.1 percent Tuesday, retreating for the first time in eight days. The Nasdaq 100 Index advanced for an eighth day to an all-time high.

Currencies

  • The pound dropped 0.3 percent to $1.2817. The euro was little changed, heading for a monthly gain of 2.7 percent, its best performance in more than a year.
  • The yen weakened 0.1 percent to 110.93 per dollar after rising 0.4 percent Tuesday. The South African rand strengthened 0.4 percent, after tumbling for two days.
  • The onshore yuan climbed 0.4 percent, poised for its highest closing level since November.
  • The Bloomberg Dollar Spot Index was little changed for a third straight day. The gauge is down 1.3 percent for the month.

Commodities

  • Iron-ore futures in Dalian fell 5.4 percent to 429.5 yuan a ton, the lowest since Nov. 7.
  • Gold was little changed at $1,262.69 an ounce, extending a 0.4 percent loss Tuesday.
  • Oil dropped 0.6 percent to $49.35 a barrel after retreating 0.3 percent in the previous session. OPEC and Russia’s deal last week to extend output limits through March was met with a selloff as it didn’t include deeper cuts, a plan for the rest of 2018 or a new ally.

Bonds

  • The yield on 10-year Treasuries rose two basis point to 2.23 percent, after declining four basis points in the previous session.
  • Benchmark yields in the U.K. rose one basis point, after a drop of two basis points Tuesday.
  • Australia 10-year yields fell less than one basis point to 2.39 percent.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd

Today’s FOREX Trades

EUR/USD Intraday: towards 1.1280.
Pivot: 1.1210

Our preference: long positions above 1.1210 with targets at 1.1265 & 1.1280 in extension.

Alternative scenario: below 1.1210 look for further downside with 1.1170 & 1.1145 as targets.

Comment: the RSI is bullish and calls for further upside.

USD/JPY Intraday: supported by a rising trend line.
Pivot: 111.45

Our preference: long positions above 111.45 with targets at 111.90 & 112.20 in extension.

Alternative scenario: below 111.45 look for further downside with 111.10 & 110.80 as targets.

Comment: the RSI is bullish and calls for further upside.

GBP/USD Intraday: continuation of the rebound.
Pivot: 1.2960

Our preference: long positions above 1.2960 with targets at 1.3005 & 1.3020 in extension.

Alternative scenario: below 1.2960 look for further downside with 1.2925 & 1.2900 as targets.

Comment: the RSI is mixed with a bullish bias.

 

As well as these current currency plays we remain bullish on both gold and silver.

 

Cheerio.

The Pinstripe and Bowler Club shares information with MF Solutions Ltd.

 

Current Currencies

EUR/USD Intraday: the upside prevails.
Pivot: 1.0905

Our preference: long positions above 1.0905 with targets at 1.0945 & 1.0960 in extension.

Alternative scenario: below 1.0905 look for further downside with 1.0885 & 1.0870 as targets.

Comment: the RSI lacks downward momentum.

USD/JPY Intraday: bullish bias above 111.75.
Pivot: 111.75

Our preference: long positions above 111.75 with targets at 112.30 & 112.55 in extension.

Alternative scenario: below 111.75 look for further downside with 111.55 & 111.20 as targets.

Comment: technically the RSI is above its neutrality area at 50

 

GBP/USD Intraday: under pressure.
Pivot: 1.2950

Our preference: short positions below 1.2950 with targets at 1.2880 & 1.2860 in extension.

Alternative scenario: above 1.2950 look for further upside with 1.2965 & 1.2995 as targets.

Comment: the RSI is mixed to bearish.

Cheerio

The Pinstripe and Bowler Club shares information with MF Solutions Ltd.