China’s economy showed signs of recovery in the third quarter, with GDP growth accelerating to 4.5% year-on-year, slightly surpassing the expected 4.4%. This marks an increase from a previous growth rate of 4.3%. Industrial production experienced significant growth, rising by 5.5% year-on-year in September. Additionally, the contraction in fixed asset investment narrowed after four months of decline, contributing positively to the overall economic outlook. This improvement allows China to maintain its GDP growth target for the year, though experts still emphasize the importance of the growth composition to determine its sustainability.
Retail sales figures also showed progress, climbing to 1.1% year-on-year, compared to just 0.4% previously, significantly exceeding predictions of 0.5%. This increase was bolstered by consumer activity during the Mid-Autumn Festival. However, investment in the property sector continued to struggle, contracting by 20.6% year-on-year over the first three quarters, marking a deeper decline than reported through August. Despite the challenges in traditional sectors, technology manufacturing and digital services have been performing well, indicating a shift in economic growth drivers.
In India, the rupee has stabilized following measures introduced on October 10, but challenges remain due to high oil prices and capital outflows, limiting significant recovery. The USD/INR exchange rate remained steady near the 95 level on Monday. Actions such as the special dollar window for oil companies have helped defend the currency against external pressures. Nonetheless, ongoing domestic liquidity tightening and increased demand for short-term hedges have pushed forward premia higher. While the Reserve Bank of India’s interventions have alleviated short-term pressures, a sustainable recovery will require reductions in commodity costs and improved foreign investment flows.
Meanwhile, Indonesia has announced new equity-market reforms aimed at boosting investor confidence. The Jakarta Stock Exchange plans to exclude tightly held stocks from the Jakarta Composite Index and will disclose affiliations of shareholders who own at least 1% of companies. These changes are designed to enhance ownership transparency and mitigate concerns about coordinated trading. However, the actual impact on foreign investment will depend on the effectiveness of implementation and the assessment by MSCI. In the short to medium term, investors are hedging against potential declines in the Indonesian rupiah.
Finally, Malaysia’s Consumer Price Index (CPI) for September decreased to 1.8% year-on-year, slightly below expectations and down from August’s 1.9%. The slowdown in inflation regarding housing and communication contrasted with rising transport prices. This trend indicates subdued overall price pressures, resulting in limited inflationary impetus for the Malaysian ringgit. Additionally, September exports surged by 54.5% year-on-year, outpacing analysts’ forecasts of 39.9% and August’s revised figure of 45.4%, largely driven by electronics shipments.
