1) Markets & Flows: risk budgets tightened again
Digital-asset investment products saw a second straight week of redemptions (~US$1.17B), led by BTC (~US$932M) and ETH (~US$438M) outflows. Select alts (e.g., SOL) remained comparatively resilient. The pattern fits a post-FOMC “wait-and-see” stance and tighter risk budgets into mid-November.
Portfolio lens: keep duration and liquidity overlays in place; in the digital-asset sleeve, favor BTC-led liquidity buckets, basis/hedged carry, and option overlays over high-beta directional exposure while flows stabilize. (Flows are an input, not a signal—avoid over-fitting weekly prints.)
2) Market structure (Hong Kong): liquidity plumbing opens up
Hong Kong’s SFC announced upgrades allowing licensed VATPs to access “shared order books” with affiliates, a shift aimed at deeper liquidity and better price discovery under tighter risk controls. The move was flagged during Hong Kong FinTech Week (Nov 3) and supported by an SFC circular. Expect operational work on surveillance, best-execution, and client disclosures before broad rollout.
Implication: for institutions with Asia mandates, execution quality and venue selection may improve as HK taps global liquidity—subject to cross-border compliance checks.
3) Tokenization: incumbents scale real products
- Franklin Templeton launched a tokenized USD money-market fund for professional/institutional investors in Hong Kong, extending its on-chain TA model and signaling regulated tokenised cash-management options in APAC. Collaboration with HSBC and OSL underscores settlement and distribution rails maturing locally.
- In Europe, DWS set out a fund-tokenisation push, engaging administrators/TAs and smart-contract specialists—further evidence that asset-management incumbents are building capacity for scale.
Why this matters: tokenised liquidity instruments (MMFs/T-bill equivalents) are now institutionally executable in several hubs (Luxembourg, Singapore, Hong Kong), with regulated custody/TA—reducing operational frictions for treasury and collateral workflows.
4) Stablecoins (Japan): bank-grade momentum
Japan’s FSA said it will support a stablecoin PoC by MUFG, SMBC and Mizuho, signalling official backing for JPY settlement rails alongside recent private-sector yen-stablecoin initiatives. Key watchpoints: reserve governance, bank connectivity, and cross-border corridors.
Morgan House View — what to do now
- Flows vs. positioning: treat the outflow streak as risk-budget discipline, not a structural reversal. Keep core BTC exposure sized to liquidity; rotate peripheral beta into market-neutral or income overlays until policy visibility improves.
- Execution in HK: pilot cross-venue execution under the new SFC framework once broker/VATP procedures, disclosures and surveillance are in place; document best-execution policies explicitly.
- Tokenised cash buckets: evaluate tokenised MMF/T-bill allocations where regulated TA/custody is available (e.g., HK, SG, Lux). Prioritize treasury/settlement and collateral-use pilots with clear operational runbooks.
- JPY rails: for APAC payables/receivables, begin sandbox assessments with bank-linked yen stablecoin PoCs; set counterparty, reserve and legal opinions as gating criteria.
What we’re watching next
- Whether fund-flow outflows moderate into mid-November; dispersion between BTC/ETH vs. selective alts.
- HK implementations of shared order books and any follow-on SFC guidance (surveillance, client disclosures, product sets).
- Additional tokenised MMF launches or bank-grade collateral integrations across APAC and Europe.