Asia week ahead: China’s Two Sessions and South Korean inflation data

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The long-awaited Two Sessions kicks off in Beijing on 4 March. We’ll get China's key economic targets for 2026, most notably for GDP growth. We believe there's a chance the growth target will be lowered to "above 4.5%" from "around 5.0%" over the past few years. China will also unveil fiscal targets, including for the deficit-to-GDP ratio and bond issuance. Markets will watch closely for any new stimulus directions outlined in the readout. The finalised 15^th Five-Year Plan will be approved at the meeting, setting the stage for the next five years of China's development.

We’ll get China's February manufacturing purchasing managers' index. We expect the official manufacturing PMI to moderate to 49.1.

South Korea’s exports should continue to record strong gains in February. Despite unfavourable calendar effects due to the timing of the Lunar New Year holiday, exports are expected to rise 25% year-on-year in February. Data on 20-day exports showed that semiconductors jumped 134%. As DRAM/HBM prices continue to rise, value term exports will increase substantially for an extended period. Meanwhile, auto exports are likely to decline, with Lunar New Year expected to have a more negative impact. Industrial production and retail sales in January are expected to show mild gains, driven by robust global chip demand and the local equity rally. Meanwhile, consumer inflation is expected to rise to 2.2% year-on-year in February. Gasoline prices rose, and additional price hikes are expected amid holiday demand.