com Asia Market Update: Similar to Q2, Kospi volatility continues to drive markets, while Iran is still uncertain; Meanwhile macro data has

***General Trend and Developments*** -Overall Asian equities are again directionless ahead of the upcoming US-related events.

Cautious start to the new quarter? - Disappointing PMIs seen throughout Asia [including China, Indonesia, Japan, South Korea, Taiwan, Vietnam].

The Chinese data was hurt by new export orders. -South Korea’s Jun chip exports accelerated further during the last few days of the month - The BOJ’s Q2 Tankan survey generally beat market ests, supported by large manufacturers.

That being said, the BOJ suggested that the data could have been even stronger.

This is the case because most firms replied before the US-Iran peace deal on June 15th.

Ahead of the data, the markets were only pricing in a marginal chance of a BOJ rate hike in late Jul. -The Yen remains at 40-year lows to begin the new quarter.

Reticence, however, was seen among JP officials before the recent comments from Mimura.

Can we interpret this silence as inaction or vigilance with regards to possible FX intervention, especially with the upcoming US jobs report [Thurs] and holiday [Friday]? US Jun ADP employment data is due on Wed. -JGBs trade mixed.

10-year yields rise ahead of the bond auction results on Jul 2nd -An unnamed US official characterized the US /Iran talks as positive, as ships are transiting the Strait of Hormuz at ‘higher’ levels.

According to Iran, dialogue with mediator Qatar on the implementation of the interim deal with the US, including the release of frozen assets, is likely to be on Wed [July 1st in Doha].

Trump is said to be okay with the talks going beyond the Aug 18th deadline (WSJ) -Headlines related to the US/China tech war continue to appear.

The Trump administration is said to be drafting a ban on imports of foreign energy inverters [the equipment that connects solar projects and batteries to the grid], according to a recent press report.

Shares of Chinese co.

Sungrow [300274.CN] have declined by >13%. -Certain Chinese EV companies again report stronger sales in Jun m/m [Nio, XPENG].

Li Auto lags.

BYD sales figures also in focus. -Macau Jun Casino Revs miss ests -Mexico wants the USMCA to be extended for 16 years.

July 1st is the deadline to renew the trade agreement. -US equity FUTs -0.2% to -0.3% during Asia trading ***Looking ahead (Asian-weighted focus, using Asian time zone)*** -Mon June 29th: EU Jun Consumer Confidence -Tue June 30th: KR May Industrial Production & Retail Sales, JP May Industrial Production & Unemployment Rate, NZ Jun ANZ Business Confidence, AU RBA Meeting Minutes, CN Jun PMIs, UK Q1 GDP, (Tue night, US Jun Consumer Confidence, US May JOLTs) -Wed July 1st: JP Q2 Tankan, KR Jun Prelim Trade Balance, EU & US Jun final S&P/HCOB Mnfg PMIs, CN June RatingDog Mnfg PMI, EU Jun Prelim CPI -Thu July 2nd: KR Jun CPI, AU May Trade Balance, JP 10-Year JGB Auction, EU May Unemployment Rate, (Thu night, US Jun Nonfarm Payrolls ) -Fri July 3rd: AU & JP Jun Final S&P PMIs, CN Jun RatingDog Svcs PMI, Global final Jun S&P/HCOB Services PMIs, (Note: “ Independence Day (Observed)” – U.S. markets closed, reduced liquidity ) ***Holidays in Asia this week*** -Wed July 1st: Hong Kong -Fri July 3rd: US Independence Day ***Headlines/Economic Data*** Australia/New Zealand -(AU) ASX 200 opens flat at 8,779 -(AU) Australia Jun Final PMI Manufacturing: 51.5 v 51.2 prelim (confirms 3rd month of expansion) -(AU) Australia May Building Approvals M/M: -1.1% v 0.0%e -(NZ) RBNZ may focus on ‘risk management equation’ and raise rates, according to analyst [RBNZ to meet on Jul 8th (Wed)] – US financial press China/Hong Kong -(CN) Shanghai Composite opens -0.1% at 4,090; (HK) Hang Seng closed for the 'Hong Kong Special Administrative Region Establishment Day' -(CN) China Jun RatingDog PMI Manufacturing: 51.7 v 52.0e (8th month of expansion) -(CN) China's President Xi: We must clearly grasp China's national conditions and the themes of the times - comments at the Communist Party's 105th Anniversary Event -(CN) LI Reports Jun deliveries 30.9K v 33.4K m/m -(CN) World Bank reportedly proposes phasing out China lending by 2031; Proposal to be discussed during the week of July 20th - FT -(CN) China Communist Party Membership has reached 101M, +1% y/y – US financial press -(CN) China PBOC sets the yuan mid-point at 6.8067 v 6.8109 prior -(CN) China PBOC Open Market Operation (OMO): Sells CNY100B in 7-day Reverse Repos; Net drains CNY1.16T v drains CNY155B prior [the largest net liquidity drain since Oct 2025, the figure includes drainage from the PBOC's new overnight reverse repo tool; the large drain also follows month and quarter-end] -(HK) Hong Kong and mainland China to begin data sharing in 2026 – SCMP -(HK) Macau Jun Casino Rev (MOP): 18.5B, -12.1% y/y Japan -(JP) Nikkei 225 opens +1.0% at 70,774 -(JP) Japan Q2 Tankan Large Manufacturing Index: 22 v 16e; Large Manufacturing Outlook: 17 v 13e (large manufacturing index improvement for 5 straight quarters, highest level since March, 2018) -(JP) Japan top FX diplomat Mimura: US Official made supportive remarks about FX action; Haven't received any objection from US against Japan's intervention from late April; Japan-US currency coordination remains close -(JP) Japan Jun Final PMI Manufacturing: 54.8 v 54.9 prelim (confirms 5th month of expansion) -(JP) Japan Jun Consumer Confidence: 33.8 v 34.1e -(JP) Japan oil refinery operating rate 81% in week to June 27th v 75.9% in early Apr -(JP) Japan Econ Min Kiuchi: Hope BOJ works closely with govt to durably achieve the target [**Note: comments follow recent press speculation that Japan govt apply pressure for BOJ slow its tightening pace] [EU market close] Korea -(KR) Kospi opens +1.4% at 8,592 -(KR) South Korea Jun Trade Balance: $36.1B v $32.6Be (strongest level of monthly surplus on record, exports mark strongest y/y rise since October, 1978); Exports Y/Y: 70.9% v 60.9%e; Semiconductor Exports Y/Y: 199.5% ($44.8B) -(KR) South Korea Jun PMI Manufacturing: 52.1 v 54.8 prior (7th month of expansion) -(K