● In our report of 20 July 'Can Equities decouple from FX?', we had highlighted three reasons for decoupling-Asia's large discount versus global equities, the narrowing gap between Asia and World Consensus EPS revisions and a slowing in the pace of net foreign selling.

● The question though from several investors is-which equity markets had decoupled from FX? It was Australia and India that decoupled first-with the All Ordinaries Index and Nifty rising since late March/early April, even as the Australian dollar and Indian rupee continue to fall.

● The key question for investors is whether China and Korea are the next to decouple as they are the only two where equities and FX are yet to decouple. CS China Head of Research, Vincent Chan, highlights the change in tone at the State Council Executive Meeting in his report of 23 July as significant.

● And, while five consecutive days of net foreign buying do not make a summer, it is at least a start after foreign investor capitulation approached February 2016.

Source : Credit Suisse Asia Pacific Equity Research
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