East Asia Today

Highlights of a longer note that takes stock of Japan before the BOJ meeting tomorrow, with the theme being short-term nominal strength. In China by contrast, equity market falls highlights deflationary risk. Business sentiment in Korea ticked up. Taiwan's monitoring index in September was strong.

Paul Cavey

Oct 29, 2026 • 3 min read

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Japan – medium-term concerns

With both growth and inflation strengthening, it will be tough for the BOJ not to hike faster – whatever Takaichi thinks. However, back-to-back or 50bp moves are unlikely. Moreover, the peaking of property prices and sluggishness in some wage indicators point to MT headwinds.

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East Asia Today

Foreign equity holdings are another example of the huge impact of the AI cycle in Korea and Taiwan. Trade volume data in China illustrate again that imports are as weak as exports are strong. Money supply and credit data in Taiwan are strong, but likely not strong enough to push the CBC into action.

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Taiwan – strong, but no trigger

September money and credit data for September are like other indicators for Taiwan: quite strong, but not high enough on their own to think that they suddenly break the CBC's apparently strong desire not to change policy.