MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• New government officials want to adopt a pro-growth but fiscally responsible outlook. JGBs are very well behaved but USD/JPY continues to track higher. Services inflation slowed in Sep, adding to the case for the BOJ to remain in wait and see mode next week. Export growth recorded its first y/y rise since April of this year, which will be welcomed by the authorities. The BoJ is watching fallout from higher US tariff levels (albeit that were lowered in Sep) on export growth. 

AUSTRALIA 

• SEEK vacancy data showed that labour demand improved over Q3, which was corroborated by the Q3 NAB survey. NAB employees over the next 12 months rose to its highest since Q1 2024 and labour shortages to its highest since Q4 2024, an indicator monitored by the RBA.
• NZ CPI has high correlations with Australia’s CPI out on 29 October. The RBNZ’s sector factor model measure of core was stable at 2.7% y/y in Q3 signalling that Australia’s may also remain around Q2’s 2.7%, which is consistent with monthly data. NZ’s domestic-related non-tradeables and services annual inflation moderated while goods and tradeables were higher.

NEW ZEALAND

• Q3 CPI data are unlikely to derail any further easing at the 26 November RBNZ meeting but it is also unlikely to tempt the MPC to repeat October’s 50bp. Headline rose 1% q/q bringing annual inflation to 3.0% y/y from 2.7%, the top of the RBNZ’s target band but there had been fears that it could go above.
• Export growth is a bright spot in the NZ economy which was up 19% y/y in September after 21% y/y.

CHINA 

• China's third quarter GDP rose +4.8% YoY, above estimates of +4.7%. The seasonally adjusted QoQ result topped expectations at +1.1%, from +0.8% and Year to Date remained above 5% at 5.2%.
• The largest data surprise was Industrial Production which snapped back above its 3-year average and at 6.5%, consistent with the better-than-expected exports reported earlier this month.
• Whilst the decline in property prices is a glaring reflection of the plight of the sector, the activity led data is more telling. September's Property Investment YTD release declined further to -13.9% for a sixth successive month of increasing declines. 

SOUTH KOREA 

• The Monetary Policy Board of the Bank of Korea decided to leave the Base Rate unchanged at 2.50%, describing inflation as stable and economic growth in an upward trend thanks to improving consumption and exports.

ASIA 

• Again Bank Indonesia (BI) surprised by doing the opposite of consensus expectations. On Wednesday it held rates at 4.75% when it had been forecast to cut 25bp. BI’s assessment of the economy and the need to support growth was broadly unchanged from last month when it eased.

ASIA EQUITY FLOWS 

• Inflow momentum has stalled into tech sensitive plays like South Korea and Taiwan.