Halister News

(Bloomberg) -- Bank of Japan is likely to loosen monetary policy at its July meeting to slow yen’s gains after Brexit as well as combat falling inflation and slowing economic growth, Mark McFarland, Asia chief economist at Union Bancaire Privee says in interview.

• Measures may include broadening the range of assets to be purchased and increasing size of QE
• BOJ and BOK may be first central banks to ease monetary policy in Asia after Brexit, followed by Bank of Indonesia
  • Also sees Taiwan and India cutting interest rates
  • Expects 1-2 more rates cuts in Korea, 2-3 rate cuts in Indonesia
• Maintains overweight position in EM sovereign dollar bonds because spreads with U.S. treasury yields are attractive
  • “Performance of sovereign dollar market has been quite good with spreads coming down, but we still think there is value in that market,” McFarland says
  • Prefers fixed income positions without currency risks
  • Brexit leads to a lot of difficulty in seeing through how currencies will react
• “Still hesistant” on China onshore sovereign bonds
  • Yuan developing shallow long-term depreciation trend
  • Not entirely clear on PBOC’s FX policy and central govt’s debt-for-equity swap policy in terms of reducing non-performing loan levels
• Switzerland’s Union Bancaire Privee manages about CHF110b as at Dec. 31, 2015