The CSOP Double Short Daily Nikkei 225 ETF (07515) surged more than 6% during intraday trading before settling at a 3.41% gain to 15.15 Hong Kong dollars, with turnover reaching 6.728 million Hong Kong dollars. The move comes after confirmation that U.S. and Japanese authorities jointly intervened in the currency market to support the yen.
On July 31, Eastern Time, monetary authorities from both Japan and the United States coordinated to buy yen in an effort to curb the historic depreciation of the Japanese currency. The intervention pushed the yen to the 156 yen per dollar range. This marks a rare instance of direct cooperation between the two nations in foreign exchange markets.
Goldman Sachs Japan equity strategist Bruce Kirk highlighted that the current macro environment for the yen differs fundamentally from two years ago, with conditions for a rapid yen appreciation being significantly weaker. However, he noted that stock market positioning has become more crowded than in July 2024, with net foreign buying, hedge fund allocations, and retail margin balances all exceeding previous levels. While the risk of a sudden currency crash has diminished, the vulnerability of Japanese equities has increased compared to two years ago, particularly if an unexpected shock to AI narratives or geopolitical stability occurs.
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