Credit spreads generally continued to tighten in August, although Australian physical spreads were mainly flat over the month.
At its 2 September meeting, the Reserve Bank of Australia again left the official cash rate on hold at 2.50%, and the Australian Industry Group’s Performance of Manufacturing Index slipped back into negative territory in August, following a brief stabilisation in July.
Improving US economic fundamentals have marginally offset the heightened geopolitical concerns in Russia/Ukraine and Israel/Gaza, leading to the sell-off in risk-free assets in July.
Asia Pacific ex-Japan markets outperformed their global counterparts, bolstered by strong price returns in China and Hong Kong which were up 7.3% and 6% in USD terms respectively.
As part of its growth strategy, the Japanese government has proposed strengthening corporate governance. The proposal aims to enhance the profitability of private sector firms and ultimately to improve the economic lot of the general population.
The Japanese market for IPOs is booming once again. Following the collapse of Lehman Brothers and the global financial crisis, the number of IPOs in Japan went into decline. However, after new listings hit bottom in 2009, they have gradually recovered, with increases in the number of IPOs in each of the last four years.
The Japan Exchange Group, which runs the Tokyo Stock Exchange (TSE), announced on 7 August that the composition of the JPX-Nikkei Index 400 will change for the first time since the index was created in January of this year.
US high-yield funds, both exchange-traded and mutual funds, have seen heavy outflows in July with almost USD 10bn of outflows in the month, according to Standard Chartered Bank Weekly Fund Flows reports.
Domestically produced goods and imported finished consumer goods both rose mildly MoM. This must be causing much doubt at the BOJ about achieving the 2% Core CPI target.
As for the entire Eurozone, its trade surplus in goods and services remains near record highs, but it is not increasing further, so it is no longer supportive of GDP growth.