JPM Asia Pacific Equity Derivs

J P M O R G A N Global Markets Strategy 30 July 2026

Asia Pacific Equity Derivatives Strategy Japan Thematic Rotation Trades Amid Yen Reversal Risk; Diversify into Korea Buybacks Amid AI/ Momentum Unwind

• Japan Equity Hedges for a Potential USDJPY Reversal: With USDJPY Global Equity Derivatives Strategy approaching our house 4Q26 target of 164, August looks like a key window for Tony SK Lee AC episodic yen-strength risk. Rising JGB yields, fuelled by BoJ ratehike ( expectations and fiscal uncertainty, have brought renewed focus to GPIF’s end-June holdings release on 7 August, which could reinforce speculation J.P. Morgan Securities (Asia Pacific) Limited/ J.P. Morgan Broking (Hong Kong) Limited that policymakers are encouraging greater domestic demand for JGBs as part Haoshun Liu AC of a broader effort to stabilize the rates market. Against a backdrop of elevated ( foreign ownership and crowded exposure to exporters and AI-related sectors, a USDJPY reversal could drive meaningful equity rotation. Historically, J.P. Morgan Securities (Asia Pacific) Limited/ J.P. Morgan Broking (Hong Kong) Limited Strong Yen (JPJBSYEN) and Importers (JPJBIMPO) have been the most effective baskets in orderly yen-appreciation episodes, with both gaining as Xipu Han AC ( investors rotate toward more domestic and defensive exposures; in faster de- risking episodes such as the August 2024 carry unwind or April 2025 J.P. Morgan Securities (Asia Pacific) Limited/ J.P. “Liberation Day,” equity beta tends to dominate. We therefore prefer zero-cost Morgan Broking (Hong Kong) Limited

call spread collars on Strong Yen and Importers to express an orderly Twinkle Mehta, CFA AC USDJPY decline through thematic basket upside. We also reiterate our prior ( diversification idea of using a TOPIX-over-Nikkei outperformance call J.P. Morgan Securities (Asia Pacific) Limited/ J.P. contingent on lower USDJPY to capture yen-led sector rotation away from Morgan Broking (Hong Kong) Limited AI/exporter leadership. For an August 2024-style tail-risk unwind, a best-of Davide Silvestrini put on Nikkei/TOPIX contingent on lower USDJPY is the cleaner hedge. ( • Diversify into Korea Buyback Basket during Market Volatility: We J.P. Morgan Securities plc reiterate our preference for the Korea buyback basket (JPKRBUBK) as Bram Kaplan, CFA a more defensive way to diversify in a volatile environment while staying ( aligned with Korea Value Up efforts, with policy support building through the dividend tax cut and rising Value Up disclosures. Value Up is moving from J.P. Morgan Securities LLC signaling to execution, with shareholder return improvement through Yangyang Hou buybacks and treasury share cancellations. Investors can consider long ( Korea buyback basket or buying a call spread collar on the basket to take J.P. Morgan Securities LLC advantage of elevated volatility. Figure 1: Strong Yen and Importers have worked best Figure 2: The Korea buyback basket has shown in orderly USDJPY declines, while in fast de-risking resilience during the recent momentum unwind - episodes their value has been mainly relative hypothetical performance since July 2025

Source: J.P. Morgan Equity Derivatives Strategy, Bloomberg Finance L.P. Source: J.P. Morgan Equity Derivatives Strategy, Bloomberg Finance L.P. Basket was introduced on June 25, 2026. Past performance is not indicative of future returns.

See page 22 for analyst certification and important disclosures.

Tony SK Lee AC Global Markets Strategy ( July 2026 JPMORGAN

Japan Thematic Rotation Trades Amid Yen Reversal Risk Why Consider Stronger Yen Risks? With USD/JPY approaching our house 4Q26 target of 164, we believe August represents an important risk window where the distribution of outcomes is skewed towards episodic yen strength rather than a continuation of recent depreciation.

The shift in focus is being driven more by developments in Japan's domestic rates market. Japanese government bond yields have continued to move higher as expectations for further Bank of Japan policy normalization have increased, while uncertainty surrounding the government's fiscal agenda (see here), including the potential cost of new growth initiatives and…