Nomura’s US client meetings: bullishness on tech stocks remains mainstream, while views diverge on exchange rates and Asian rates
Clients interviewed were generally bullish on US technology stocks and inclined to expect appreciation of the renminbi and Korean won. Nomura is more wary of the impact of a US equity pullback on USD/JPY and the won, and believes the renminbi could appreciate faster than implied by forward rates.
Original source：Nomura Singapore Ltd.First published on Unhidea：Original source date：
Key takeaway
Nomura believes the US clients interviewed are insufficiently positioned for a pullback in US equities. It therefore favors short USD/JPY and short USD/offshore renminbi positions, while taking account of differences in local capital flows and policy across Asian currencies and rates.
Why do optimistic expectations for US equities matter for the yen?
During meetings with US clients in the week of 19 October, Nomura found that most respondents were bullish on US technology stocks over the medium term, on the grounds that capital spending and earnings at the Magnificent Seven could remain strong through 2027. Some clients held long USD/JPY positions and believed the backdrop for Japanese capital flows had not changed.
Nomura is more cautious: as of 14 October, 14.8% of a sample of US technology company loans totaling 278.1 billion dollars was already at distressed levels. The pace of recent foreign investment inflows into US securities has also slowed. The bank believes that, overall, the clients interviewed are insufficiently positioned for a US equity pullback.
If weakness in US equities triggers risk aversion and repatriation of Japanese capital, USD/JPY could come under pressure. The Bank of Japan’s gradual policy tightening and a narrowing Japan-US policy rate differential are also reasons for Nomura’s bearish view on the exchange rate. The bank’s year-end target for its short USD/JPY position is 152.50.
Why is the pace of renminbi appreciation a point of disagreement?
Most clients interviewed were inclined to expect the offshore renminbi to appreciate against the dollar, but there was no consensus on shorting USD/offshore renminbi. Some were concerned about the negative carry cost of holding a short position, while others believed the exchange rate would only move in line with forward pricing.
Nomura noted that the offshore renminbi had appreciated by about 6.4% against the dollar over the past year. On a month-end to month-end basis, it outperformed the level implied by forward rates in 9 of the past 12 months.
The bank points to factors including exporters’ conversion of foreign currency proceeds, limited signs of official opposition to renminbi appreciation, and efforts to promote renminbi internationalization. It recommends shorting USD/offshore renminbi, with a year-end target of 6.50.
Where do Nomura and its clients differ on Asian currencies?
The Indonesian rupiah is a currency both sides are bearish on. Nomura is focused on policy and fiscal risks, as well as the current-account deficit, weak bond inflows and the risk of equity outflows. The bank also cautions that widespread short positions create positioning risk.
The clients interviewed were inclined to favor the Indian rupee, partly because of the Reserve Bank of India’s recent foreign-exchange policy and carry returns. Nomura, however, expects high energy prices to add pressure to the current-account deficit, while Indian equities have seen net foreign outflows of 32 billion dollars so far this year. It therefore recommends going long USD/INR, targeting 98.5 in mid-January 2027.
Clients were most bullish on the Korean won, while Nomura had a slight preference for the Taiwan dollar, supported by the current-account surplus. Its reasons include the currency’s undervaluation and the possibility that Taiwanese life insurers will increase their US dollar hedging. The won faces the risk of foreign equity selling amid technology-stock volatility; as of September 2026, foreign investors held approximately 1.6 trillion dollars in Korean equities.
What are the points of agreement and the conditions for Asian rates trades?
Most clients interviewed agreed that receiving Korean interest rates with maturities of 5 to 10 years or holding Korean government bonds could hedge against a further decline in technology stocks. Nomura believes moderate government bond issuance before year-end, divergent economic performance and the Bank of Korea’s two rate hikes also support lower rates; recent Korean equity performance remains a key driver.
In Hong Kong, Nomura strongly favors receiving short-end rates, but clients’ views are more divided. Some believe this depends mainly on US rates and that the Federal Reserve is still raising rates; clients who favor Hong Kong carry trades prefer to use short-end FX swap points.
Indian rates already price in multiple rate hikes, but some clients want to see clearer signs of oil prices stabilizing or economic or credit growth slowing, or wait until after the Reserve Bank of India raises rates again in December, before considering receiving rates.
