29 Nov 2022 China+ Monitor Policy-Supported Sectors Outperform in Broad Profit Decline

China’s industrial profits fell faster in October, owing to Covid-related disruptions and soft price trends.

Autos and equipment manufacturing are exceptions; profits are rising thanks to policy support.

Changing Covid policy holds the key to an eventual improvement in broad industrial profits.

Duncan WrigleyChina+

28 Nov 2022 China+ Monitor Tokyo Inflation Speeds up on Food Price Hikes

Tokyo headline CPI accelerated further in November, on the back of food price rises... 

...But the BoJ is likely to view domestic demand as still weak, and so leave monetary policy unchanged. 

China’s RRR cut is mainly about funding fiscal policy to cushion growth, as Covid cases surge again. 

Duncan WrigleyChina+

25 Nov 2022 China+ Monitor The BoK is Stuck Between a Rock and a Hard Place

The BoK hiked the policy rate by only 25 basis points, concerned about growth as well as inflation. 

Governor Rhee would not give a timeline for rate cuts, even as the Bank cut its 2023 growth outlook. 

Japan’s flash PMIs for November indicated a continued economic downturn, after the Q3 GDP fall. 

Duncan WrigleyChina+

PM Note: Korea BoK Policy Rate November

• The BoK hikes by only 25 basis points, balancing worries about growth and inflation

Duncan WrigleyChina+

CHINA+ DATA WRAP 24 NOVEMBER 2022: The BoK hikes by only 25 basis points

The BoK hikes by only 25 basis points, balancing worries about growth and inflation

Duncan WrigleyChina+

21 Nov 2022 China+ Monitor Japanese Inflation is Picking up on Higher Import Costs

• Japanese headline CPI rose sharply in October, on the back of food price hikes...
• ...But the BoJ is likely to keep monetary policy loose, expecting core inflation to wane in fiscal year 2023.
• The PBoC warned about future inflationary risk in China, as bond markets responded to policy shifts.

Duncan WrigleyChina+

17 Nov 2022 China+ Monitor Policy Shift Points to Housing Market Gradual Recovery Path

• Steepening home price declines in October high-lighted the need for further targeted policy support.
• High-quality developers will benefit from a virtuous cycle of better funding driving sales...
• ...But the housing recovery will be uneven and drawn-out as confidence is gradually restored.

Duncan WrigleyChina+

16 Nov 2022 China+ Monitor China's Economy Likely Hit a Bottom in October, as Policy Shifts

• China’s economy suffered the October blues, due to Covid measures and Congress disruptions.
• Reviving the domestic economy is crucial, with exports trending down on a gloomy global outlook.
• Basic shifts in Covid and property policies will pave the way for a gradual growth recovery in 2023.

Duncan WrigleyChina+

25 Oct 2022 China+ Monitor China's Reopening Rebound is More Flawed than it First Appears

• Official data show a decent, but highly uneven, Q3 economic bounce.
• Property and consumption remain the critical areas of economic weakness.
• The Congress signalled economic policy continuity, with meaningful change unlikely before mid-2023.

Duncan WrigleyChina+

24 Oct 2022 China+ Monitor Japanese Headline Inflation Set to Rise as Food Prices Heat up

• Japan’s headline CPI is expected to resume rising in October, thanks to food price increases...
• ...But the BOJ will stick to easy monetary policy, given the lacklustre core inflation and wage outlook.
• Korean 20-day exports for October indicated still-worsening global demand. 

Duncan WrigleyChina+

18 Oct 2022 China+ Monitor Xi's Speech at Congress Signals Policy Continuity

• Xi's Congressional opening speech signalled no immediate shift from current policy settings.
• We see zero-Covid policy continuing until at least mid-2023, if not later.
• The PBoC left the MLF rate unchanged, in implicit acknowledgement of China's liquidity trap.

Duncan WrigleyChina+

17 Oct 2022 China+ Monitor Chinese Core Inflation Fades Further, Signalling Weak Demand

• Weak demand is still weighing on inflation in China, with only food prices pushing CPI higher.
• Consumer inflation likely has now peaked, and PPI is headed to deflation over the next six months.
• Chinese policy will have the—likely unintended— effect of exporting disinflation globally.

Craig BothamChina+

13 Oct 2022 China+ Monitor The PBoC Tries Another Tool in an Effort to Escape the Liquidity Trap

• China is still caught in the liquidity trap, but
  policymakers have eased some artificial constraints.
• We will be watching the revived PSL facility for signs that policy support is being scaled up aggressively.
• The BoK delivered a bumper hike, but accompanied it with dovish messaging, as it looks for an off-ramp.

Craig BothamChina+

CHINA+ DATA WRAP 12 OCTOBER 2022: Another outsized but dovish rate hike by the BoK

 Another outsized but dovish rate hike by the BoK

Craig BothamChina+

27 Sept 2022 China+ Monitor An Unsustainable Rebound for Japanese Growth in September

• Japan learns to live with Covid, but must still contend with slower global growth, and bad weather.
• The renminbi is tumbling, along with every other currency, but capital flight risks compel PBoC action.
• Rumours of a coup in China are based on a rogue Twitter account, and should be discounted.

Craig BothamChina+

26 Sept 2022 China+ Monitor Property Stimulus Starts to Show in the Data, but Much More is Needed

• August was another bad month for China’s property
  sector, with sales, starts, and prices all falling.
• Bailout funds are visible in the data, but so far have only moved the needle from “terrible” to “very bad”.
• More money is needed to break the downward spiral trapping the sector, and restore market confidence.

Craig BothamChina+

23 Sept 2022 China+ Monitor FX Intervention Begins, as the BoJ Feigns Innocence

• Japan has embarked on direct currency intervention in support of the yen for the first time since 1998.
• The main goal of this intervention is to slow the pace of depreciation, rather than draw a line in the sand.
• Monetary policy will be kept at its current easy settings, undermining any attempt to defend a level.

Craig BothamChina+

PM Datanote: Governor Q&A, Japan, September

In one line: A long pause for monetary policy, but thinking on the yen is shifting

Craig BothamChina+

CHINA+ DATA WRAP 22 SEPTEMBER 2022: No change from the BoJ

Doves defiant at the BoJ

Craig BothamChina+

21 Sept 2022 China+ Monitor Yen Weakness will Continue to Push Japanese Inflation Higher

• Japanese inflation continues to climb, driven by cost-push pressures and base effects.
• The BoJ will not change tack, despite the multi-year high in CPI inflation.
• We expect Governor Kuroda to hold the line on both inflation and the yen at tomorrow’s meeting.

Craig BothamChina+