Japan ROE 15%, India (INR, FCNR), RMB Internationalization, Al Implementation Survey

Research evidence excerpt

Japan ROE 15%, India (INR, FCNR), RMB Internationalization, Al Implementation Survey

eta for the rest of

the industry. (Link) While I think the BoJ thesis remains, I have to say that Takaichi’s preference for growth over fiscal discipline

reminds me of Prabowo, although Japan has current account surplus. Among non-banks, Century Tokyo (8439 JT), which aims

for 12.5%/15% by 2030/35 via capital light strategy generated 12.3% in 1Q. (Link) Although their structure (i.e. issuing bond-

type class shares to off-balance-sheet partners) is making it hard to understand, expectations for Orix (8591 JT) might be rising

going ahead of Thu 8/6. Their underlying ROE trend would be the focus as their (indirect) stake in Kioxia is masking their real

earnings power. (Link)

Recent stabilization of INR (Link) suggests that RBI’s bazooka of measures to attract capital inflow (announced on June 5

Link) to serve as a circuit breaker and change expectations in the currency market, in light of two consecutive BoP deficits (the

first such in decades) has so far succeeded. (Our econ team’s great report: Link) Ahead of RBI tomorrow (8/5), OIS is pricing in

a 30%+ chance of a hike. While our team is forecasting a prolonged pause at 5.25% as RBI is favoring a data-dependent “wait

and watch” approach and inflation has been tracking below the RBI’s forecast, there are some risks as high-frequency indicators

are showing no material impact from the Middle East crisis and early reads from 2Q data point to a cyclical uptrend after the

strong 1Q GDP print. (Link) For Indian financials, FCNR (Foreign Currency Non-Resident) is a key variable, esp for HDFC

Bank in Sep Q as the bank’ high LDR remains the pain point. The early data suggests that HDFC Bank is not among the key