Paul Cavey

China – profits fall sharply in September

Last week, next week

Japan – core inflation still at 2%

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Japan – services PMI drops below 50

The flash services PMI dropped sharply in October, and with mfg is now below 50. There was a similar drop in June that then reversed, and while the press release doesn't suggest any new factor, the Reuters nonmfg Tankan, which also fell, suggested some noise from unstable weather and a stronger yen.

Korea – sluggish growth, but weakening KRW

China – crunch time for consumption

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Korea – no surprises in consumer confidence

In today's October survey, overall sentiment remained around the long-term average, inflation expectations didn't pick up, and property price expectations ticked down. There's no reason here for the BOK to become hawkish, or to accelerate the gradual pace of cuts that is currently its intention.

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Asia – the big shift in exports

The export data across the region continue to show an enormous shift in the direction of trade. Exports to China haven't recovered following the post-pandemic slump. Where there is growth, it is all about the US.

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China – outside equities, still not much change

Checking in on some of the indicators needed for a cycle turnaround: still not much change in the YC, or much repricing of developer debt. There's been more rate cuts today, but the gap that's opened between activity and nominal rates suggests the key is whether price expectations rise.

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Taiwan – will TSMC break the TWD?

There's a possibility that TSMC's success is pushing Taiwan into unchartered waters, where the CBC needs to sound hawkish, when the external imbalance is as big as it has ever been. If Taiwan's period of zero inflation has passed, there's a good chance TWD undervaluation will be challenged too.

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Korea – much weaker exports

TSMC's strong results complicate the idea of a peak in the regional export cycle. But the trend is very visible in the drop in today's 20-day exports for Korea, in both YoY and sequential terms. Exports are now back to the sluggish path suggested by equities.

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Japan – what can the BOJ say now?

China – keep on muddling through

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China – property pricing weak, but not worse

Ni Hong said yesterday that the property market started to improve in October. Today's September price data suggest that the market bottomed earlier in Q3. However, signs of a floor back in Q1 didn't last. And on an all-economy basis, today's data show the economy still in deflation.

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China: excavator sales still 70% below the peak

Excavator sales are a good illustration of China's woes. Sales fell more after 2020 than they did following the 2009 boom. It is interesting that they have seem to have now bottomed out, but that still leaves them 70% below the peak. To turn things around, policy has a lot of work to do.

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Taiwan – TSMC still supporting macro

The relationship between TSMC's sales and Taiwan's exports has weakened this year. But with the company remaining bullish into Q4, TSMC remains a big, positive support for Taiwan asset prices and macro into 2025.

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Japan – finally, an export lift

Japan's export volumes in the last couple of months have suddenly broken out of the range of the last four years to reach an all-time high. That's probably not what the BOJ was expecting, given its worries about the July move in the JPY and "uncertainty" on the outlook for the US.

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China – big supply-chain adjustments

China's continued global market share gains negate the idea of decoupling. But foreign firms are relocating from China, a trend exemplified by Taiwan. How to square that circle? Previously, the ROW was dependent on foreign firms in China. Now the dependence is on Chinese domestic companies.

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Japan – capex going sideways

With today's August data, it continues to look like machinery orders are going sideways. That casts doubt on whether the recent upturn in machinery capex in the GDP data can be sustained.

Korea – labour market still fairly tight

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Taiwan – wages holding up, CPI should too

Yesterday's data for August show again that the post-covid stepping up of wage growth in Taiwan is holding. That fits with other signs of stronger inflation, in the form of property prices and core CPI. Rate cuts here still aren't likely.

China – credit both too weak and too strong

China – exports drop in September

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