00:00A possible intervention, the BOJ decision earlier, and we're awaiting that presser that Averill was
00:05talking about. So simply to start with, what do you expect the messaging to be out of the presser?
00:13So if weather actually could give us any indication of the next interstate hike timing
00:21would be a key because very interesting timing that we saw the FX innovation the last night.
00:28So it's certainly the pressure over the yen is getting higher. So September or October are sort
00:37of the consensus right now, but September meeting could be live meeting, then yen could be strengthened
00:43a little bit. So it's all the eyes on the indication for next hike.
00:51Hiromi, I'm also taking a look at the levels the yen is sitting at right now at about 160.7
00:57on the dollar, and it was stronger yesterday following that reported intervention. The
01:03consensus on further intervention, what is that for you? What does that look like? And would
01:08it be enough for the Japanese government to continue intervening? Or are we ultimately going
01:13to need to be looking at higher rates?
01:19So the market, what the market is suggesting is definitely BOJ is the behind the curve right
01:26now, and they need to take action more quickly than right now. So the pressure is really high,
01:33but the government is also, you know, adding the extra pressure of the BOJ. So even though we have seen
01:42like a 165, it could be another intervention level, but the yen itself are structurally weak against
01:50dollars. So any intervention actually have the very short-term impact rather than structural impact.
01:58And Hiromi, what would that mean for equities? Would that be a possible
02:04headwind or a healthy development for Japanese equities? And then what sectors do you see benefiting,
02:11and which ones stand to lose from a possible hike?
02:18So weak yen generally is positive for export-oriented. And as you could see, for example,
02:25the mega caps names in the topics on Nikkei 225 are mostly exposed to the export-oriented business.
02:32So they are the beneficiary for weak yen. However, what we are really, you know,
02:38concern over here is the impact of the inflation and also the sustainability of JJBE level. So we are
02:47really in the level that we feel uncomfortable, to be honest, at the FX level right now.
02:57And I'm just taking a look at the Nikkei, Hiromi, and it's rebounded sharply, especially when compared
03:03to what some moves we've been seeing in regional piers, including the cost piece. So do you think
03:09that despite, and this is also despite the ongoing volatility that we've seen in the yen, so do you
03:15think that foreign investors are still structurally bullish on Japanese equities? Or is this easy money
03:22out of these governance reforms that we've been seeing?
03:28Well, I think it's structurally obviously the investors bullish on Japan. And then I think
03:35it's overall the constructive view on Japan equity itself. Just looking at the index constituents,
03:42of course, Nikkei is exposed to AI-related names and has a sensitivity to all the semiconductor AI-related
03:49LARI. However, looking at how the performance has been driven,
03:54we have a lot of broader sector actually contributing to the positive performance in
04:00Nikkei, which means that Japan equity actually can offer a broader investment opportunity outside
04:06of the AI. Of course, you know, the AI is a big theme, but at the same time that we
04:12have the corporate
04:13governance story, but also, you know, the positive macro environment, which should support the
04:19domestic-oriented side. So I think, you know, compared to US equities or other Asian equities,
04:26Japan equity actually, it's an interesting diversifier providing a different broader investment
04:33opportunity. So all in all, constructive view remained.
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