Southern East England Regional Market Morning Report 20240604 | Japan implements large-scale foreign exchange intervention; Aramco's share allocation demand alleviates market difficulties

· Japan's Finance Minister Shunichi Suzuki said that the government interfered in the currency market more than a month ago to deal with excessive currency fluctuations driven by speculative transactions. This is the first time that the government officially acknowledged these actions ($62.7 billion) to support the yen after data disclosed on Friday showed that it spent 9.8 trillion yen.

· On May 31, Japan's Ministry of Finance announced the actual situation of foreign exchange intervention from April 26 to May 29. The total amount of intervention was 9.7885 trillion yen. This reflects the suspected intervention of buying yen and selling dollars implemented on April 29 and May 2, and is another intervention since October 2022. Compared with past interventions in the face of the depreciation of the yen, this time the scale reached a record high. This was a clandestine intervention that was not announced immediately after the intervention.

AlJazira Capital's research director said that although profits of Tadawul's listed companies (excluding Aramco) rose significantly by about 8% in the first quarter of 2024, achieving a year-on-year increase for the first time after five consecutive quarters of decline, the recent pressure on Tadawul may not only come from news about Saudi Aramco's secondary offering; recent geopolitical tensions and fluctuations in oil prices in the region and their impact on oil revenues and the impact on the economy and local growth prospects may be viewed as one of the key recent pressure factors.

o Many analysts said that due to Aramco's secondary offering and continued high inflation and interest rates, selling pressure in May was normal.

o They also pointed out that Saudi Aramco's demand for secondary offerings was a positive factor in offsetting negative effects and returning liquidity to normal levels.

o Grab is using generative AI to improve operational efficiency and manage variable cost structures, while expanding its business, marketing, and cloud costs are beginning to benefit.

o Grab focuses on cost management and prudence in the fintech business, and management believes its digital banking business can be profitable within three years.

o Citi maintains a buy rating for the stock, with a target price of $5.00. Grab ADR closed at $3.67 yesterday.

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