Condivergence: Japan’s Long-awaited Chance Of A Market Revival

Broad-Based Decline Across Asia-Pacific Markets

Banking Sector Fears Spill Over Globally

Mixed Regional Signals and Isolated Bright Spots

Fragile Sentiment Ahead of Key U.S. Events

Source: CNBC

Decline in Jobless Claims Masks Deeper Labor Market Inertia

Labor Market Enters a 'No Hire, No Fire' Phase

Small Business Labor Demand Falters

Continuing Claims and Elevated Unemployment Point to Weak Recovery

Recovery Stalled as Structural and Political Factors Collide

Source: Reuters

A Strategic Recalibration or Political Gamble?

Russia Seeks Strategic Delay, Not Resolution

The Geopolitical Optics of a Budapest Summit

Consequences of Summit Without Leverage

Source: Bloomberg

[Quick Facts]

[News Details]

[Today's Focus]

China: The 15th Five-Year Plan, while Q3 GDP expected to slow

It will be a busy start to the week in China. The Fourth Plenum meetings run from Monday to Wednesday, with the primary focus expected to be the discussion of China’s 15th Five-Year Plan. It will cover the key development plans for China between 2026 and 2030. While the full Five-Year Plan likely won't be available until next year's Two Sessions, we will likely get some information on the key themes discussed. Of particular interest are priorities for development, including how to expand consumption, foster innovation, and the strategic focusses going forward.

Monday morning kicks off with a decision on loan prime rates. No change is expected after the People’s Bank of China stood pat. Also Monday, China reports third-quarter GDP. Barring a stronger-than-expected rebound in September -- we are currently expecting slight slowdowns in retail sales, industrial production, and fixed asset investment growth -- the data is likely to show China slowed substantially to 4.5% year-on-year. We will also get September property price data. Prices have been on a negative trajectory in recent months. With no fresh stimulus, there's little reason to expect a significant turnaround.

South Korea: BoK rate cut likely to be delayed

The Bank of Korea's policy meeting on Thursday should be the highlight of the week. Due to rising housing prices in the Seoul area, the USD/KRW exceeding 1,400, and ongoing uncertainties related to tariff negotiations with the US, the BoK's rate cut cycle may be postponed to November -- or even to next year. The government announced updated measures on mortgage and housing purchases this week, but it will take time to see their impact. Also, the outcome of the $350 billion investment pledge is another major factor influencing both the currency and the BoK's policy stance. Thus, the BoK may monitor developments in the housing market and tariff discussions before making further decisions. We believe growth and inflation are likely to stay close to the BoK's current projections. Yet, downside risks have notably increased recently.

Japan: Exports and inflation expected to rebound

Ahead of the Bank of Japan’s meeting on 30 October, this week’s updates on exports, following the 15% US tariff deal and recent inflation developments, are of great interest. We expect exports to rebound to 4.0% YoY, as shipments of automobiles and chip-producing machinery return to normal. Imports are likely to decline 0.5%, mostly thanks to lower global commodity prices. We expect further export normalisation in the coming months after the trade agreement reached in September. Meanwhile, inflation is expected to rise to 2.9% YoY in September, with core prices likely to stay above 3.0%. The recent deceleration of inflation is largely thanks to government subsidies for energy and social welfare programs.

Taiwan: Exports expected to rebound due to reciprocal tariffs

It’s a quiet week ahead in Taiwan. September export orders, out Tuesday, are expected to have rebounded to 25.4% YoY. Trade data has generally held up better since the reciprocal tariffs took effect. Taiwan also publishes its industrial production data on Thursday, which is expected to have moderated to 13.6% YoY.

Key events in Asia next week

Source: ING

In a dim warehouse in Kojima, a rural port town at the heart of Japan’s denim industry, the deafening clatter of automated looms doesn’t seem to bother Shigeru Uchida as he bends over the machines to ensure they’re running smoothly.The 79-year-old is used to the loud rattle of the wooden shuttles shifting back and forth, as cotton fibers drift through air that’s thick with the acrid smell of oil. Five decades spent weaving textiles have stained his fingertips a deep blue.

“You have to rely on intuition,” says Uchida, who trained for more than a decade to master the looms and is one of a shrinking cohort of artisans left in the southern town. “Without learning the ways of the older people who are here now, these machines won’t stay in motion.”The gloomy factory feels far-removed from the glamor of fashion runways in Tokyo and Paris, where Japanese denim is in vogue.Long cherished by connoisseurs for its textured yarns and the unique way it fades, the patiently crafted fabric is gaining global recognition with fashion houses such as Christian Dior and Balenciaga using it in their collections. Celebrities including Andrew Garfield and Joe Jonas have fueled the hype, boosting a market that’s projected to grow by more than 85% to $5.2 billion by 2035.

Yet just as Japanese denim enjoys global attention, its future looks fragile. With a rapidly aging population, Japan faces a labor shortage that’s particularly acute in Kojima’s denim workshops, where few young people are willing to endure such punishing conditions.

Uchida, who’s worked in the textile industry since he was in his 20s, recalls being chased around a factory floor when he was younger by a mentor wielding a hammer. He says only about half a dozen artisans remain in the town; the handful of recent apprentices all quit within six months of being hired.“It’s a harsh job and the path you have to take isn’t easy,” says Masataka Suzuki, president of Japan Blue Co., which employs Uchida and is one of the town’s main denim producers. “The workplace is the same as it was in the old days,” he adds from his air-conditioned office, removed from the cacophony of the looms.

Most Japanese denim is made by a handful of companies based in the southwestern prefectures of Okayama and Hiroshima. High-quality cotton is spun into yarn, then dipped repeatedly into vats of natural indigo dye to create the rich blue color. Each step is often handled by people who have spent decades perfecting the craft.The denim is then made using looms invented in the early 20th century by Sakichi Toyoda, whose company, Toyota Industries Corp., later diversified into engines and vehicles and spun off its automotive division into Toyota Motor Corp.

The looms work at a slower pace than modern machines, allowing for a denser, tighter weave. The shuttle passes the yarn back and forth in a continuous line, locking in the fabric as it turns back to create a clean, self-finished edge known as selvedge. Modern looms, which are faster, cut the weft, or horizontal, thread at each pass, leaving fraying edges that require overlocking or stitching.The neat border of selvedge denim is often marked by a red yarn that, along with the indigo dyes that fade distinctly over time, gives the denim a signature look adored by aficionados.

Japan’s textiles industry had as many as 300,000 shuttle looms in 1975, according to Japan Blue. But after cheaper imports hollowed out the industry and aging machines broke down, fewer than 400 are now being used in denim mills — with about a third under the control of Japan Blue, Suzuki says. Replacement parts have to be painstakingly sourced if a machine breaks down, and are mostly cannibalized from other broken looms. Finding workers who can operate, maintain and repair the machines is an added challenge.

Nevertheless, demand is booming — helped by inbound tourism that hit a record high in the first half of 2025 and a weak yen that’s increasing visitor spending. Suzuki says sales have tripled in the past year, much of it driven by tourists flocking to Kojima’s Jeans Street, a 400-meter (quarter-mile) strip with many denim stores, workshops, cafes and galleries.

The origins of Japanese denim trace back to American GIs who introduced jeans to the nation after World War II. The Japanese made the garment their own through traditional artisanry. But despite taking off globally at the turn of the century, it remains a relatively exclusive product, according to Aaron Ward , a lecturer at Toyo University in Tokyo who researches cultural consumption and aesthetics. Many brands have websites that are only in Japanese and don’t sell their products overseas — giving those that do serve international demand an added scarcity appeal.

“They’re clearly not out to make huge amounts of money,” Ward says. “Whether or not the local community keeps it up will determine whether or not it survives.”Consumers are prepared to pay a premium for authentic Japanese denim. Levi Strauss & Co. launched its Blue Tab collection earlier this year. A pair of jeans in the collection can cost more than $250, which is about twice the price of a standard pair of Levi 501s.

In another sign of the denim’s growing cultural cachet, L Catterton, a private equity firm backed by LVMH Moet Hennessy Louis Vuitton SE, last year invested in Japanese denim brand Kapital, which was founded in Kojima in 1985. The price for a pair of Kapital jeans is anywhere between a few hundred dollars to well over $1,000.

Among selvedge denim’s growing legion of fans is Jeff Yamazaki, a model and content creator who frequently travels to Japan from his home in Los Angeles to discover new brands. “Japanese denim is like the greatest in the world,” says Yamazaki, whose Instagram feed is full of recommendations on the best places in Tokyo to shop for denim. He says a consumer backlash against the environmental impact of fast fashion could be contributing to demand for Japanese denim, which exemplifies quality and longevity.

Despite its growing popularity, the industry’s future is in doubt.

“In 10 years, we won’t be able to make denim like this anymore,” says Kenichi Iwaya, chief executive officer of Pure Blue Japan, based in Kurashiki, Okayama. The company sells roughly 20,000 pairs of jeans per year — up more than 50% since the 1990s — and 90% of them are exported to the US. But production costs have doubled over that period. Iwaya says that between running the business, visiting storefronts in Tokyo and flying abroad to attend fashion shows, he doesn’t have the bandwidth to find and train replacements for aging artisans.

“There’s no time to teach,” he says.

About 40 kilometers to the west in the town of Fukuyama, Ryoichi Sakamoto has similar concerns.He grew up roaming the factory floors of family-run Sakamoto Denim Co., where ribbons of white cotton are pulled through simmering vats of indigo dye by a vast machine, adopting hues of green and blue before taking on a rich, dark navy at the end of the process. A stench of boiling sulfur fills the air and blue residue clings to every exposed surface, including workers’ hands.

“I always wanted to stick my hands into the indigo,” says Sakamoto. Now in his 70s and company president — the fourth generation of his family to run the business — he’s afraid for the future. The plant is operating at full capacity and can’t keep up with orders. Hiring became difficult about 10 years ago and has only gotten harder since. “It’s a huge problem,” he says.

At the Yamaashi Orimono textile mill in the nearby town of Ibara, much of Sakamoto’s dyed yarn will be woven into denim. But the mill is also facing a labor crunch. Hideo Yamaashi, 67, its third-generation president, says it takes anywhere between six months and five years to learn how to operate a loom, and up to a decade to become capable of maintenance and repairs.It’s been five years since Sachiko Kouzu joined the company, which has about three dozen looms, most of them located in an unassuming block near the edge of a small forest. Now in her 40s, she skips from loom to loom inside the humid building, checking to make sure each one is humming.

Finding people willing to endure the grind and grit of the craft has become difficult, Kouzu says. “It’s tough — it gets hot, the noise is loud, and then there’s the oil,” she says. “If young people don’t take up the work, and with the machines being so old, I’m not sure how much longer this can continue.”

Source: Bloomberg Europe