Asia Equity Strategy: Spillovers to monitor from the JPY move

Research evidence excerpt

Asia Equity Strategy: Spillovers to monitor from the JPY move

J P M O R G A N Global Markets Strategy

04 August 2026

This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the

territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan.

Asia Equity Strategy

Spillovers to monitor from the JPY move

Over the past week, the JPY has sharply strengthened on the back of reported Equity Macro Research

ACcoordinated buying by the US and Japan. While Asia ex-Japan equities are not Rajiv Batra

directly impacted by this, a move of this size and speed (3z) in a globally-relevant (65) 6882-8151

asset can have spillover effects - especially if the move continues (not the JPM rajiv.j.batra@jpmorgan.com

view, but expectations and positioning prior to this move was quite one-way for J.P. Morgan Securities Singapore Private Limited

JPY weakness). With JPY typically a defensive currency, previous instances of Mixo Das AC

JPY strength have usually coincided with risk-averse price action in Asian equities (852) 2800-0511

mixo.das@jpmorgan.com

- with the most recent ones around Liberation Day, Jul-Aug 2024, and COVID. J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

That said, the drivers of JPY strength and mechanisms of transmission do vary Morgan Broking (Hong Kong) Limited

(intervention vs. rate/growth differential vs. flow) - with the Jan-Aug 2016, Nov Tim Huang

2022 and Jan 2026 appreciations coinciding with a rally in risk assets, for instance. (852) 2800-4323

The main mechanisms to watch are: (1) leverage/momentum unwind in Japan tim.huang@jpmorgan.com