Asia Markets Volatile

***General Trend and Developments*** -Volatility remained the theme, even as Kospi and Nikkei started out positively.

Kospi initially pared back half of its -10% losses yesterday, before turning sharply negative again, plunging to be down as much as -1.7% before stemming the red ink to be up 3.8% at time of writing.

Samsung and Hynix, which initially rebounded +10% and +5% respectively fell to +3.5% and -3.6%. (Samsung’s initial gains helped by its $58B share buyback announcement for equity-bonuses of employees.

Meanwhile Hynix updated its US listing plans by filing ADR-linked new share sale plan with Korean regulators. -Kospi volatility continues on a series of compounding factors such as concerns on memory pricing power going forward, over-leveraged retail investors and leveraged ETFs, eyes now more critically examining levels of Capex, potential AI windfall taxes by the govt, SpaceX share indigestion, labor concerns, and a volatile Won (KRW). - US Treas Sec Bessent said that the concept of a strong dollar concept is 'distinct' from currency gains -Reports today that Japan is looking to "improve" management of its $1.3% FX reserves, in a draft startegy document. -Volatility not helped by a refocus on Japanese carry trade with the Yen near 40-year lows, a warning from former BOJ official Shirai the Yen could fall to 165 on another Fed rate hike - all amid the threat of intervention and little guidance out of the US Fed, with Chair Kevin Warsh, Waller and Goolsbee the only members who have spoken publicly since the FOMC meeting on June 16-17. -Gold continued to fall back towards the $4,000/oz mark with Silver again threatening to test the $60/oz mark, a level not seen since Dec, 2025 during its historic runup. -Ratings a net negative for both Indonesia and South Korea equities as MSCI once again extended its formal review of Indonesia’s 2026 market classification out to November of this year but warned that it would be cut (from emerging market to frontier market) if there is no sufficient economic progress and “ profound investability concerns” around disclosure.

MSCI also chose to Not upgrade South Korea to 'Developed market status,' remaining in the category of Emerging Market due to FX concerns; Namely the Won not being deliverable offshore and insufficient onshore liquidity during FX trading hours, particularly overnight. -Indonesian bourse rose but the Rupiah again threatened falling back to 18.000/USD, while the Korean Won weakened to 1,540. -Fedex down -6% after hours and overall -10% for the day despite reasonable guidance.

Fuel costs for Q1 notably +66% likely a key factor in their reduced Q1 gross margins. -Iran and the US continue to publicly differ on matters such as nuclear inspections and control of the Strait of Hormuz, but traffic continues to flow.

However, the FT warned that almost 1,200 cargo ships are still stranded, with $125B worth of goods. -With oil trading down at levels not seen since the start of the Iran conflict, Pres Trump leveled criticism at the big US oil companies for not dropping their pump prices commensurate with their own sharply lower prices. -An unnamed “heavy electronics machinery” out of Japan has had two of its employees detained in China.

Details still not to hand. -Ahead of the June Tokyo CPI due this Friday, Japan’s May PPI running hotter at 3.3%, with the prior also revised higher to the same amount. -Australia May inflation fell on the headline even more than expected to -0.7%, with a -11.9% plunge in automotive fuel prices for the month, but the RBA’s closely monitored Trimmed Mean stayed sticky, well above RBA target.

Housing the biggest culprit, followed by food and non-alcoholic drink and transport. -The most interesting comment out of the BOJ’s Summary of Opinions for last week’s hike was one member (likely the hawkish Tamura, who speaks tomorrow and has frequently put actual figures on the neutral rate in the past) believing the neutral rate in Japan to be around 2%.

Overall, as per the BOJ Statement last Tuesday, a strong minority of members are open to further hikes if prices and economy justify -BOJ probabilities last night ticked up to 27.5% for rate hike in September, wit October gearing up to 64.0% -Japan corporate share buybacks rose past ¥16.2T (~$100B) in Jan-May, a record high for period and already nearing the total for all of 2025. -Blackstone’s Japan $6B (¥1.0T) investment plans announced last week will be expanded to include $30B in AI data centers in Japan over next three to five years. -Meanwhile China AI model-maker Z.AI (Zhipu; GML5.2) taking advantage of the renewed interest in Chinese AI models following the Anthropic Mythos / Fable 5 fiasco by looking to raise “billions” in a share sale in Hong Kong. -The huge turnaround in Tesla May registrations in the EU (+152%) even outdone by the rebound in Japan, +182% y/y. -China PBOC weakened the CNY fix for a fourth consecutive day, the longest streak since April 2025, amid further pressure on EM currencies such as the Rupiah and Won. -In South American politics, right-wing Keiko Fujimori (daughter of Alberto Fujimori, President of Peru 1990-2000) poised to win Peru's presidency, initial vote count shows.

It would be 8th right wing victory in a row in South and Central America -US equity FUTs +0.2% to +0.6% during Asia trading *** Looking ahead (Asian-weighted focus, using Asian time zone)*** -Wed Jun 24th: TH Rate Decision, (Wed night, US May Final New Home Sales) -Thu Jun 25th: AU May Jobs, US Fed Bank Stress Test Results, US May Core PCE -Fri Jun 26th: JP Jun Tokyo CPI, *** Holidays in Asia this week*** -Fri Jun 26th: India ***Headlines/Economic Data*** Australia/New Zealand -(AU) ASX 200 opens +0.1% at 8,797 -(AU) Australia May CPI M/M: -0.7% v -0.4%e; Y/Y: 4.0% v 4.3%e China/Hong Kong -(CN) Shanghai Composite opens -0.4% at 4,090; (HK) Hang Seng opens +0.4% at 23,421 -(CN) PBOC Advisor Huang Yiping: China rate cut could still be on the table in 2026, but unsure if r