East Asia Econ

The dip in Japan's CA surplus in May was not enough to alter the upwards trend, bank lending was strong in June, but the EW survey recovered only modestly in July. In Korea, the huge CA surplus rose further in May, but so did selling of domestic equities by foreigners.

Today, an update on the household sector in Japan with May wage and consumption data. Also, inflation data for Taiwan in June, and the Q1 flow of funds in Korea showing equities now account for 30% of household assets, up from 20% just a year ago.

Upstream prices in China fell at the end of June, showing the feed through from the decline in the global oil price. Data on Friday showed a modest positive output gap in Japan. FX reserves in Taiwan dropped moderately in June.

Some summary charts of a (much) longer chart pack summarising regional themes. In terms of the data flow, the S&P services PMI for Japan ticked up in June, but the consumer confidence survey earlier in the week was still soft. The S&P services PMI for China was once again puzzlingly strong.

The strength of corporate sentiment and prices in the BOJ Tankan is significant for the policy outlook. The rise in inflation in Korea slowed in June, but cost-push and demand-pull point to core inflation remaining firm. After withdrawing liquidity in recent months, the PBC changed course in June.

China's RatingDog mfg PMI continues to be much stronger than the official version. Korea's PMI fell, even though June exports rose again. In the Japan Tankan, sentiment was stronger and prices up across the broad. In Taiwan, the highlight was the strength of today's non-mfg PMI.

China's PMIs ticked up in June, but not by enough to dispel recent concerns about the cycle. In Japan, this year's pick-up in IP was sustained in May. The message from Korea's month-end data is a bit mixed, but there are some signs of the cycle broadening.

China industrial profits in May rose 20% YoY, boosted by upstream industries. Even so, overall profits have to still to break through the top of the post-2022 range. In Japan, retail sales were strong in May. Consumer confidence in Taiwan improved in June as price expectations fell.

A chart pack to summarise the longer note of earlier this week on the semi supercycle in Asia. Also, some more details on China's import growth in May, Tokyo CPI and 10-day export growth in Japan, the rise in Korean equity investment in the US and another strong monitoring index in Taiwan.

Taken at face value, China's latest trade volume data show that the rise in import demand of Q1 has already fully reversed. Flow of funds data in Japan indicate government debt outstanding at around 200% of GDP, but corporates remaining savers. The BSI survey in Korea was underwhelming.

Upstream prices were stable through the second 10 days of June in China, with falling oil prices offset by rising coal prices. Japan goods and services PPI inflation rose over 5% in May, indicating more pipeline pressures for CPI. IP growth remained at over 20% annualised in Taiwan last month.

Highlights of a longer note setting out a framework for thinking about the macro and market consequences of the semi boom. In terms of the data flow, Japan's flash PMI today was strong, Korean data showed strong profits and firm consumer confidence, and in Taiwan export orders rose and UE fell again

Assessed using import data, and China's cycle doesn't look nearly as weak as the picture painted by the bleak domestic FAI numbers. Korean exports in the first 20 days of June were strong again, pushing the trade surplus to another record high.

A new video laying out my argument for stabilisation in China. In terms of the data flow, Japan's inflation was modest in May, but that was because of subsidies, and further JPY depreciation will push up prices again. Korean PPI inflation accelerated, with the jump most obvious in services.

A quiet day, because no policy change from Taiwan's CBC, and no major releases elsewhere. China did release more detailed trade data for May, and in the context of renewed worries about growth, it is important that the broader import growth of this year has persisted.

Highlights of a longer note reviewing the cycle in Taiwan before the central bank's meeting tomorrow. In Japan, machine orders, exports and the Reuters Tankan all point to a strengthening manufacturing cycle on the back of global AI demand. Also, some charts on upstream prices in China.

Another round of bad economic data in China. The BOJ raised rates today, with little reaction in either equities or fx, suggesting with rates at 1% monetary policy still remains very accommodative. In Korea, rather than higher import prices, it is the rise in export prices that is more significant.

On Friday BOK governor Shin Hyun Song gave a short but interesting speech. Today's main release was China's May fx settlement data, indicating that the pace of net capital inflows remains solid. Taiwan's annual IIP data show that despite the huge CA surplus, net foreign assets fell in 2025.

Monetary data for China for May and April wage growth were released late in the day, so some charts summarising both. And while semi-driven nominal growth is near 20% in both Korea and Taiwan, the volume and price composition is very different.

Japan's quarterly MOF and Cabinet Office survey showed business sentiment declining, but the labour market still tight and capex intentions firm. Korea's 10-day exports were strong again, especially in KRW terms, another sign of the huge nominal income growth Korea is currently experiencing

PPI inflation in China continues to rise, but CPI is constrained. Imported upstream inflation is even stronger in Japan, but export prices are rising too. The same chip boom that is boosting Japan's export prices is feeding into wages in Korea. TSMC sales rose again in May.

Three things today. A review of the policy and data releases in Japan the last few days. Some charts on Taiwan's property market before next week's CBC meeting. And I've reworked my China dashboard for tracking trade flows, to make it faster, and incorporate auto data for Japan, Korea and the EU.

Lots today – initial observations from a big database I've been building on regional auto flows, a note on the KRW and today's BOP data, a short piece on today's higher inflation data in Taiwan, and charts on strong consumption in April and other secondary data from Japan.

An update on price trends. First, some charts on inflation pressure resulting from the Middle East conflict. Second, a review of real estate prices, which aren't as hot as equities, but are rising quickly in Tokyo and Seoul, and starting to rebound in Taipei.

The highlight today was the BOJ governor's speech, which I thought was about as hawkish as it could be. In China, while the official services PMI last month was weak, the RatingDog/S&P version was strong. Also in China, PBC liquidity withdrawals suggest May was another strong month for fx inflows.