Pantheon Macroeconomics

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Asia Key Issues

The Coronavirus Pandemic

7 Dec 2021 Under Duress, and Trying to Sound Upbeat, the PBoC Acts

Evergrande, and a nudge from upstairs, seem to have forced the PBoC's hand. A 50 bps cut to the RRR frees up funds to deal with the clean-up operation, not...

Craig BothamChina+

2 Dec 2021 Bottlenecks Continued to Ease on the Eve of Omicron

Korean exports beat expectations in November, though we think the data overstate performance. Supply chains are still improving at the margins, even if U.S. ports remain congested. The Omicron variant is a risk to this recovery, but will not derail it entirely.

Craig BothamChina+

1 Dec 2021 Stability and the Easing of Stagflation Risk in China

Chinese economic momentum stabilised in November, thanks to policy action. The end of the energy crisis has boosted output, and eased some bottlenecks. Infrastructure support looks to be arriving, propping up construction as property struggles.

Craig BothamChina+

30 Nov 2021 Coal Boosts Profits as Omicron Lurks in the Wings

October was another strong month for Chinese industrial profits, propelled by coal... ...But coal prices have been slashed, and energy rates hiked, so we expect deceleration from here. China is doubling down on zero-Covid in the face of Omicron, which will prove costly.

Craig BothamChina+

26 Nov 2021 An Expected Hike from the BoK, and Now a Long Pause

The Bank of Korea hiked as expected, taking the policy rate to 1.00%, from 0.75%. Further hikes were made conditional on a plethora of factors, providing plenty of wriggle room. We expect a pause until mid-2022, as Covid cases spike, and with an election looming in March.

Craig BothamChina+

25 Nov 2021 Infrastructure Spending is Coming, but Less than you Hope

Policymakers are low on options to support economic growth amidst multiple headwinds. Infrastructure investment is the surest way to ensure money is actually spent... ...But local governments may still have difficulties spending it, given a lack of viable projects.

Craig BothamChina+

23 Nov 2021 Bottlenecks and Chinese Policy to Ease, but Keep Calm

Korean trade data show further signs of an easing in congested supply chains. Chinese policymakers turn more dovish, but no real relief for the property sector. Renminbi strength starts to bother the PBoC, but "two-way volatility" is more likely than devaluation.

Craig BothamChina+

19 Nov 2021 Regional Trade Data Highlight Persistence of Supply Pressures

Japan's October exports repeated the message of other regional trade data... ...Supply chains remain snarled, and bottlenecks are still narrow, and tight. We think November will prove to be a high-water mark, but tankers have a big turning circle.

Craig BothamChina+

17 Nov 2021 Japan's Recovery Can't Afford Policy Mistakes

Japanese growth fell sharply in Q3, as both consumption and capex declined. A near-term rebound is on the cards, as temporary headwinds fade. Beyond Q4, however, growth needs policy support merely to return to, let alone surpass, its trend.

Craig BothamChina+

16 Nov 2021 Chinese Industry Avoids Calamity, but Q4 Looks Set for Weakness

China's October activity data were better than ex- pected, but chiefly reflecting a low bar. Industrial production growth staved off collapse, but is still near multi-decade lows. The property sector is a chronic, and building, headwind for the economy.

Craig BothamChina+

12 Nov 2021 Halloween is Over, but China will Provide a Late October Scare

China's economy likely slowed in October, as energy outages worsened and property stress spread. We think recent excitement over property sector stimulus is misplaced. Retail sales should do better than expected, but it won't last.

Craig BothamChina+

11 Nov 2021 Chinese Inflation Spikes, but Policymakers Won't Panic

Food and energy prices drove Chinese consumer price inflation sharply higher in October. Partial energy liberalisation, coupled with soaring coal prices, led to record PPI inflation. We think both spikes will be transitory, and will not necessitate a monetary policy response.

Craig BothamChina+

9 Nov 2021 A Sprint to the Finish may Leave China's Trade Fading Next Year

China's latest trade data were better than expected, setting up a potential upside surprise for Q4. Energy imports will weigh more heavily on the trade balance, but external demand appears robust. Next year will be more challenging, given base effects and softening demand.

Craig BothamChina+

4 Nov 2021 China Experiences the Wrong Sort of Green Growth

Chinese vegetable prices have jumped recently, thanks to bad weather and supply disruptions. Food is a substantial part of the Chinese CPI bas- ket, and an inflation spike is on its way. A mix of policy and base effects should mean, how- ever, that the spike will be short-lived.

Craig BothamChina+

2 Nov 2021 China's Output Continues to Crater, Driven by the Energy Crunch

The worsening energy crunch weighed heavily on Chinese manufacturing in October. Inflationary pressures are building, thanks to energy price liberalisation. Shortages of natural gas and fuel remain a risk to production and supply chains.

Craig BothamChina+

29 Oct 2021 The BoJ Turns Bearish on Near- Term Risks

No change in policy settings from the BoJ, but a decided turn for the worse in the growth outlook. The coronavirus, coupled with supply-side issues, is weighing on the short-term outlook. Currency weakness is drawing greater attention, and we think the BoJ will need to act next year.

Craig BothamChina+

28 Oct 2021 A Brief Interlude for Chinese Industrial Profits

Profits surprisingly accelerated in September, de- spite widespread disruption... ...Digging deeper, profits look relatively anaemic, with the improvement driven by transitory factors. Margin squeezes are persisting, and profits should come back to reality in October.

Craig BothamChina+

27 Oct 2021 It Never Rains but It Pours for the Chinese Property Sector

A new property tax pilot reform provides a long run- way to a long-awaited policy. The signalling effect alone will weigh further on property prices and sales, despite a five-year trial. Chinese property's glory days are well and truly finished.

Craig BothamChina+

22 Oct 2021 Policy Intervention Curbs China's Coal Prices, but Risks Remain

The Chinese authorities continue to battle the underlying causes of the energy crisis. A combination of tariff hikes and coal price reductions has brought an end to shortages, for now... ... but heading into the winter, heating needs will jump, renewing pressure on generators.

Craig BothamChina+

21 Oct 2021 Spillovers from China Add to Supply Chain Headaches for Japan

Japanese exports fell in September, due to a double whammy from China and supply problems. Weaker demand from China was worsened by fac- tory closures, hitting exports of intermediate goods. Cars, in particular, took a heavy blow from snarled supply chains.

Craig BothamChina+

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