Asia week ahead: China gets back on its feet
The data-packed calendar and ongoing coronavirus crisis should keep the market on its toes in a holiday-shortened week. China’s economic data for March and the Korean central bank policy meeting are some of the highlights
Covid-19 – what’s ahead
Extended lockdowns are becoming the norm, as global infections of the Covid-19 disease surpass the one million mark, suggesting an even graver economic impact around the world than what we're already seeing. Frequent downgrades of economic growth have become the norm too. This week, we made sharp cuts to our growth forecasts of some Asian countries (Malaysia and Thailand) and further moves are likely in the coming weeks.
Meanwhile, what we think about the outlook for Asia and the rest of the world over the coming weeks and months could make for good weekend reading.
China – getting back on its feet
The economic calendar is crowded with inflation, retail sales, manufacturing and trade figures from around the region, which will offer some insight into the impact of the virus. Within these, March indicators are likely to grab more attention as these complete the picture for the first quarter when infections began to spread rapidly.
Above all, China’s data will remain key for markets given that the spread of the virus subsided in March and businesses began to operate again. A return to positive territory for the Purchasing Managers Indexes heralds a similar outcome for real economic activity, while stimulus continues to trickle down, as likely to be revealed by monetary indicators for March.
Korea – BoK on hold
The Bank of Korea announces its policy decision next week (9 April). An outsized emergency rate cut by 50 basis point to 0.75% on 16 March has reduced the scope of another cut just yet. The country has managed to rein in the spread of the disease and economic activity growth has been surprisingly firm (11% surge in industrial production in February).
However, Asia’s heavily export-dependent economy still remains at risk from the so far unrestrained global spread of the disease, which is denting exports. We don’t think the BoK is done with easing yet. The house view is 50bp of rate cuts in the current quarter.
Markets – thin liquidity
The outcome of the US jobs report will set the tone for Asian markets next week while Covid-19 and the policy responses globally continue to rule investor sentiment.
However, a slew of public holidays around the region might result in somewhat reduced market liquidity. China, India, and Thailand are going to be out on Monday, and most regional markets will be closed for Good Friday.
Download
Download article
6 April 2020
Good MornING Asia - 6 April 2020 This bundle contains 4 articles
"THINK Outside" is a collection of specially commissioned content from third-party sources, such as economic think-tanks and academic institutions, that ING deems reliable and from non-research departments within ING. ING Bank N.V. ("ING") uses these sources to expand the range of opinions you can find on the THINK website. Some of these sources are not the property of or managed by ING, and therefore ING cannot always guarantee the correctness, completeness, actuality and quality of such sources, nor the availability at any given time of the data and information provided, and ING cannot accept any liability in this respect, insofar as this is permissible pursuant to the applicable laws and regulations.
This publication does not necessarily reflect the ING house view. This publication has been prepared solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved.
ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam).