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There are good reasons to expect Japanese equities to prove relatively resilient even if foreign appetite fades again: the market is much less overvalued than it used to be; Japan is poised to enjoy a stronger rebound than other major developed economies; …
24th June 2009
Our in-house measure of growth in the Chinese economy points to a stronger recovery in May but we still doubt that the economy will meets the government’s target for an 8% expansion this year. … China's growth still falling …
22nd June 2009
Japan’s Business Outlook Survey (BOS), released this morning, has allowed us to firm up our forecast for the Q2 Tankan survey, released on 1st July. We now forecast that the headline index (current conditions reported by large manufacturers) will rebound …
This report is only available as a PDF. Click to download. … How long before Asia starts to tighten? …
The recovery in exports has continued and there are now signs that domestic demand is bottoming out too given that the deterioration in labour markets in most places has been, and should stay, mild. Asia faces another weak quarter for GDP in Q2 but the …
18th June 2009
The Bank of Japan shows no signs of repeating its past mistake of tightening policy prematurely, as was the case in both 2000 and 2006. Interest rates will remain near-zero for the foreseeable future. … Bank of Japan won't lead a rush for the …
16th June 2009
This report is only available as a PDF. Click to download. … Trade-reliant economies to continue underperforming …
15th June 2009
The unexpected strength of April industrial output adds to the evidence that India’s slowdown has passed its worst point. GDP growth should accelerate during the rest of 2009. Weak inflation pressures mean that policy rates could still fall further but it …
12th June 2009
The further recovery in Japanese consumer confidence in May is a necessary but unfortunately not sufficient condition for a sustained rebound in household spending. … Japan's households less pessimistic, spending to remain …
The Bank of Korea (BoK) left its key interest rate unchanged today, noting that “proactive fiscal and monetary policy” measures have stabilised GDP. But despite signs of recovery, there are still significant downside risks. Rising household indebtedness …
11th June 2009
China’s reported fixed investment soared in May. But if the economy is doing so well, why did imports post an even steeper decline? … What should we make of the surge in Chinese …
Today we have revised our key economic forecasts. At the same time, we have updated our projections for currency, bond, equity and commodity markets. The new market numbers are presented in the table at the bottom of page 2. Included for the first time …
8th June 2009
We are nudging our forecasts for the leading Asian economies higher, but only in Japan do we see much scope for further positive surprises. … Japan has turned the corner, others to …
This report is only available as a PDF. Click to download. … Japanese sentiment indicators still in recession territory …
7th June 2009
Bank Indonesia (BI) cut its key overnight lending rate by 25bps to 7% today, in line with our and consensus expectations. While many analysts believe that rates have bottomed out, we maintain our view that the BI rate will fall to 6.5% later this year. … …
3rd June 2009
The Reserve Bank of Australia (RBA) left its policy rate unchanged today as expected. But its accompanying statement struck a more dovish note than many others had anticipated. This re-enforces our view that rate cuts will resume in the coming months. The …
2nd June 2009
The Japanese economy appears to be on track for a decent recovery. The key measures of business and consumer sentiment are rebounding and the April releases brought the first real evidence that this is being reflected in the activity data. However, we …
1st June 2009
The slight fall in China’s official PMI in May is actually fairly encouraging since the index usually falls by much more at this time of year. But Asia’s recovery is only gaining ground slowly, as underlined by May’s disappointing trade figures from …
This report is only available as a PDF. Click to download. … China's bond purchases still rising …
31st May 2009
The jump in Japanese export volumes in April gets the second quarter off to a flying start. Combined with the improvement in the forward-looking survey data it looks increasingly likely that GDP will record positive quarterly growth in the second quarter …
27th May 2009
This report is only available as a PDF. Click to download. … Too soon to take strong Japanese recovery for granted …
24th May 2009
A mixed set of data over the past month has dampened hopes that rapid recovery is already underway in China. Reported investment growth is rising, yet sales of key investment inputs such as steel, which may be a better guide to actual investment, are …
20th May 2009
The Bank of Thailand (BOT) left its 1-day repo rate on hold at 1.25% today, against our and consensus expectations for a 25bps cut. The weakness of domestic demand and the spectre of sustained deflation warrant further easing of monetary policy in our …
This report is only available as a PDF. Click to download. … India's new government will find its hands are tied …
18th May 2009
Chinese investment soared last month according to the official figures. Yet something doesn’t add up. Steel inventories stayed high, steel prices remained flat and sales of excavators have plummeted. Overall, April’s data support our view that China’s …
15th May 2009
The jump in the Economy Watchers Survey of business conditions in April provides some of the best evidence yet that the Japanese economy is past the worst. However, while the recent rebound is impressive, the results are still in recession territory. … …
13th May 2009
The Bank of Korea (BoK) left its policy rate unchanged today, with the focus shifting to big fiscal stimulus plans and direct support for the financial sector instead. The Bank will also have been influenced by signs of stabilisation in GDP and in the …
12th May 2009
April’s sharp fall in the growth of lending in China could expose the degree to which credit growth has supported equities and broader sentiment. Slower loan growth tempers concerns about asset bubbles and non-performing loans, but on these scores risks …
11th May 2009
This report is only available as a PDF. Click to download. … Are markets right to bet on Asian recovery? …
China is concerned that widespread adoption of quantitative easing in major economies poses a threat to exchange rate stability. But we should be wary of jumping to conclusions on what this means for China’s reserve holdings. … What should we make of …
8th May 2009
There are tentative signs from several Asian economies that exports are starting to recover. Shipments from Asia ex-Japan are still a fifth below their level of a year ago. However, the pace of decline has stabilised since January and export values …
7th May 2009
Signs of recovery in China have bolstered confidence that the economy can achieve or beat the government’s target of 8% GDP growth in 2009. But we suspect that China is growing more slowly than the official figures suggest and that any rebound will be …
6th May 2009
Signs of stabilisation in the global economy and in domestic confidence convinced the Australian central bank to hold its policy rate steady today. But we feel the RBA is underestimating the weakness of the Australian economy, particularly in the housing …
5th May 2009
It is not too late to rescue something from the decoupling story. The Asian economies – rather than the US or Europe – should recover quickest from the global recession. However, while Japan is likely to be the first major developed economy to return to …
This report is only available as a PDF. Click to download. … Australian rates have further to fall …
4th May 2009
There was much to cheer in China’s latest PMI and April’s export data from Korea. But they are consistent with stabilisation rather than either economy springing rapidly back to life. … Asian recovery still needs deeper …
1st May 2009
The jump in Japan’s unemployment rate from 4.4% to 4.8% in March (consensus 4.6%) removes some of the shine from yesterday’s better manufacturing data. What’s more, unemployment has much further to rise. During the last economic cycle the unemployment …
The rise in industrial production in March and projections of further increases in April and May support our view that the Japanese economy could start to grow again as soon as the current quarter. The rebound in the manufacturing PMI from 33.8 in March …
30th April 2009
The outbreak of swine flu in Mexico and its spread to other countries has inevitably raised questions about the broader economic and market implications. While not wanting to downplay the social costs or uncertainty about how the disease might evolve, an …
27th April 2009
This report is only available as a PDF. Click to download. … Bank of Japan to play catch-up …
Today’s March trade figures allow us to firm up our estimates for Japanese GDP in the first quarter and have an educated guess (with only a little imagination) at the second quarter too. The economy probably shrank by another 3.5% or so in Q1. But GDP is …
22nd April 2009
India’s central bank seems remarkably sanguine about the economic outlook given that even the country’s more optimistic firms are struggling to raise funds for investment and the next government will face severe fiscal constraints. Interest rates still …
21st April 2009
This report is only available as a PDF. Click to download. … India's fiscal weakness starts to show …
20th April 2009
The improvement in consumer confidence reported this morning is consistent with our view that the Japanese economy could start growing again as early as the current quarter. Admittedly, any recovery in sentiment or activity needs to be seen in the context …
17th April 2009
Growth may have bottomed out in the first quarter but with private sector and overseas demand still weak, China will not emerge from this downturn as rapidly as it went in. … China stabilises, but recovery set to …
16th April 2009
Seasoned investors are by now used to unrest in Thailand and markets should take the latest flare up in their stride. But political instability will hold back the economy’s recovery, with the result that interest rates will fall further and remain there …
15th April 2009
This report is only available as a PDF. Click to download. … No longer sinking, but China is still in the doldrums …
13th April 2009
Australian interest rates were cut again today, but given the central bank’s wait-and-see stance and its relatively upbeat assessment of the outlook, they may not have much further to fall. We are less sanguine. The Reserve Bank’s caution only adds to the …
7th April 2009
The Bank of Japan further widened the range of eligible collateral in its money market operations after its Policy Board meeting today, although it is hard to avoid the feeling that it is now scraping the bottom of the barrel in terms of assets that can …
Today’s reports that Japan is planning another fiscal stimulus, which will include more than ¥10 trillion (2% of GDP) in additional spending, are little surprise. But they do raise the question of whether this is affordable. As discussed in our latest …
6th April 2009
