Industrial Profits in China Post Sharp October Decline Amid External and Domestic Pressures

Economic

Summary:

China’s industrial profits fell 5.5% year-on-year in October 2025, marking the sharpest monthly drop since June. This decline highlights growing pressures from U.S.-China trade tensions....

October’s Profit Drop Signals Renewed Strain on China’s Industrial Sector

The latest data from China’s National Bureau of Statistics reveals a 5.5% year-over-year decline in industrial profits for October 2025, the steepest contraction in five months. This downturn reverses the double-digit gains recorded in August and September, suggesting mounting economic vulnerabilities as the year closes. Notably, cumulative profits for the first ten months rose by only 1.9%, decelerating from the 3.2% year-on-year gain posted from January to September. This shift marks a visible slowdown in industrial momentum despite previous signs of recovery.

One contributing factor to the October dip was the renewed trade tension between the United States and China. With former U.S. President Donald Trump threatening 100% tariffs on Chinese imports earlier in the month, uncertainty surged, before a limited agreement was reached in South Korea. This sequence of events correlates closely with the timing of the profit slump, implying a likely causal relationship between escalating geopolitical frictions and deteriorating business sentiment.

Moreover, while some sectors such as utilities and manufacturing posted modest profit gains of 9.5% and 7.7% respectively, mining saw a deep 27.8% contraction in profits from January to October. This disparity reflects sector-specific resilience patterns but also illustrates how resource-related industries are more vulnerable to demand shocks and pricing instability.

Sectoral Performance Reflects Diverging Fortunes

Among key sectors, the automotive industry showed relative stability, with profits rising 4.4% in the first ten months slightly up from 3.4% in the first nine indicating marginal improvement likely supported by policy incentives or export performance. In contrast, state-owned enterprises recorded no growth, while firms with foreign investment achieved a 3.5% increase. Private enterprises grew profits by 1.9%, slightly below the average, which may reflect limited market power or exposure to weaker consumer sentiment.

The manufacturing Purchasing Managers’ Index (PMI) also underscored October’s weakening momentum, falling to 49.0 a six-month low. Since readings below 50 denote contraction, this metric aligns with the observed earnings deterioration and further suggests ongoing softness in business activity.

Muted Domestic Demand Undermines Recovery Prospects

Despite the temporary relief from trade negotiations, China's domestic demand remained lackluster. While consumer prices rose 0.2% in October, core inflation hit 1.2% the highest since February 2024. However, Nomura’s chief China economist Ting Lu warns that a significant portion of this rise stemmed from external factors like rising gold prices, not genuine consumption strength. Additionally, understated rental declines may have distorted headline inflation, casting doubt on whether consumption is truly recovering.

This nuanced view suggests that the relationship between inflation data and domestic consumption is more correlative than causal i.e., core inflation is rising not due to improved demand but rather due to asset-related factors. Consequently, the claim that China is gradually exiting deflation may be premature.

Growth Stalls as Key Indicators Disappoint

October’s macroeconomic indicators painted a grim picture. Retail sales slowed to 2.9%, marking the fifth consecutive monthly decline and the weakest growth in over a year. Industrial output grew by just 4.9%, below expectations, while fixed-asset investment contracted by 1.7% a scenario not seen since the pandemic year of 2020. The urban unemployment rate remained elevated at 5.1%, reinforcing concerns about labor market fragility.

Collectively, these indicators point to a stagnating recovery where neither external nor internal engines of growth are functioning robustly. While Beijing has signaled a strategic pivot toward boosting consumption over the medium term, it has yet to implement meaningful fiscal or monetary stimulus. This cautious approach may be due to the government’s desire to neither undershoot nor overshoot its “around 5%” annual growth target.

Balancing Growth with Stability

Larry Hu from Macquarie Group expects China’s economy to maintain a 5% growth trajectory into 2026, primarily supported by exports. However, such reliance on external demand comes with risks particularly if trade frictions reemerge or global demand weakens. Additionally, Hu anticipates persistent deflationary pressures that could reduce the urgency for domestic stimulus, but at the cost of deeper structural stagnation.

In this context, the correlation between policy conservatism and muted growth becomes critical. While policymakers may achieve their headline targets, the underlying economic fragility remains unresolved. Without more targeted support for private consumption and investment, China’s industrial sector may continue to face earnings pressure in the quarters ahead.

Source: CNBC

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Gerik

Economic

Background and Legislative Momentum

On the final parliamentary sitting day of 2025, Prime Minister Anthony Albanese announced that his government had secured critical Senate support from the Greens to pass a sweeping amendment to the EPBC Act of 1991. While Labor holds a majority in the lower house, it required cross-party negotiation to move the bill through the Senate. The collaboration with the Greens highlights the urgency of reconciling economic expansion with environmental stewardship.

The new bill introduces two major changes. First, it establishes a nationwide Environmental Protection Authority (EPA) with powers to enforce stronger nature protections and oversee major development proposals. Second, it mandates emission disclosure for large-scale projects and aims to eliminate bureaucratic gridlock by accelerating decision timelines for strategic sectors such as critical minerals and renewable energy.

Strategic and Economic Implications

The legislation targets a dual objective: ecological resilience and investment certainty. Given Australia’s status as the world’s driest inhabited continent and a leading exporter of coal, iron ore, and LNG, this reform seeks to balance resource exploitation with biodiversity conservation. Albanese emphasized that these reforms will not only enhance environmental outcomes but also reduce delays that hamper business competitiveness and renewable energy deployment.

This overhaul stems from the findings of the Samuel Review, which warned that the outdated EPBC framework was ineffective in both protecting nature and supporting economic efficiency. A prior iteration of reform the “Nature Positive” program was shelved earlier in 2025 due to political friction before the Labor government’s electoral landslide in May.

If enacted, the law will improve the nation’s ability to meet international climate goals by unlocking stalled renewable infrastructure projects and phasing out aging coal assets. It also signals a shift toward a regulatory model that rewards compliance and long-term sustainability, while addressing one of the key structural impediments to green energy growth: sluggish environmental assessments.

This bill marks a pivotal moment in Australian environmental policy. It reflects a pragmatic approach that aligns ecological priorities with economic imperatives. As global scrutiny increases over environmental governance, Australia’s reform could serve as a case study in how developed nations can modernize regulatory frameworks to meet the challenges of a warming planet and a competitive global economy.

Source: Reuters

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Glendon

Forex

Economic

The Bank of Japan's dovish board member Asahi Noguchi refrained from adding fuel to growing market speculation over a December rate hike by broadly taking a neutral stance, stressing the importance of acting at the right time.

"It is necessary for the bank, as a central bank, to carefully examine how various economic channels ultimately affect economic activity and prices and to use the policy interest rate as a tool to adjust the degree of monetary accommodation as appropriate," he said Thursday in a speech to local business leaders in Oita, southwestern Japan.

The remarks suggest a softening of his recent more hawkish tone after his speech in September surprised traders by pointing to how the need to adjust rates is rising "more than ever." Following a string of hawkish signals from some of his fellow board members in recent weeks, Noguchi's comments Thursday likely help the bank avoid being locked into a December move.

The most realistic approach for policy is to set a certain benchmark as the range for where the neutral rate is thought to lie, and then raise rates incrementally over time while monitoring the impact on the economy and prices, said Noguchi.

"This is what I consider to be the measured, step-by-step approach to policy adjustments that the bank should pursue," the former economics professor said.

Last week, board members Junko Koeda and Kazuyuki Masu helped encourage market speculation over a hike approaching next month. Koeda said the bank should normalize policy further without hinting if the next move should come in December. Meanwhile Masu said that the timing of a hike is approaching in an interview with the Nikkei.

That indicated at least four of the central bank's nine board members are now ready to support a rate hike, after two members already dissented against keeping rates on hold in September and October.

Those developments brought closer market attention to Noguchi's view after his speech in September came as a surprise, especially after he voted against the rate hikes in March and July last year.

Traders see about a 53% chance for the BOJ to increase its policy rate from 0.5% when it delivers its next decision on Dec. 19. The probability goes up to roughly 86% by January, according to the overnight swaps index.

The BOJ currently expects its price goal to be achieved in the second half of its three-year projection period that runs through March 2028. If that outlook is realized, the bank should adjust rates at an appropriate pace to align with that time line, Noguchi said.

"Problems are likely to arise if the pace of policy adjustment is either too fast or too slow," he said.

Source: Bloomberg Europe

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Gerik

Economic

US-South Africa Relations Hit New Low

In a provocative social media post, President Trump declared he would exclude South Africa from the upcoming G-20 summit, stating the country “is not worthy of membership anywhere.” He also announced the immediate termination of all US payments and subsidies to South Africa. The decision marks a dramatic downturn in relations between Washington and Pretoria, already strained by months of accusations and diplomatic snubs.

Trump’s repeated allegations that South Africa is committing genocide against White Afrikaners and seizing land without compensation have been widely criticized as unfounded. These claims were amplified during South African President Cyril Ramaphosa’s visit to Washington in May, where Trump reportedly played a video montage to press his point a move seen as diplomatically confrontational.

Pretoria Responds with Defiance

The South African presidency called Trump’s comments “regrettable” and “insulting,” rejecting what it described as misinformation and distortion. Ramaphosa’s office emphasized that South Africa remains a committed and constructive G-20 member and urged the international community to uphold multilateralism and equal participation.

It is unclear whether Trump can unilaterally block South Africa’s participation in the G-20 summit. Traditionally, all members must agree on changes to the group’s composition. South African officials have expressed concern that the US may attempt to expel the country altogether, though such a move would require consensus from other member states.

Summit Fallout and Diplomatic Tensions

Tensions peaked during the recent G-20 summit hosted by South Africa, which the US boycotted. The South African government also refused to allow a lower-ranking US diplomat to receive the ceremonial G-20 handover, opting for a quiet exchange between diplomats instead. The rift suggests a broader erosion of US-Africa relations under Trump’s leadership.

Trump’s unilateral approach to multilateral institutions may undermine the G-20’s foundational principle of consensus and equal participation. If South Africa is excluded, it could spark broader debate among member states about the politicization of international platforms. With no clear enforcement mechanism and other nations likely to oppose the move, Trump’s declaration may face both legal and diplomatic pushback.

The US-South Africa diplomatic row reflects growing global tensions over sovereignty, misinformation, and leadership in international forums. As South Africa vows to maintain its G-20 role, the world watches whether Trump’s threats will fracture one of the globe’s key economic platforms or galvanize resistance among its members.

Source: Bloomberg

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Michelle

Political

Commodity

Oil prices fell on Thursday on expectations of a Ukraine‑Russia ceasefire which could pave the way for the unwinding of Western sanctions against Russian supply, though trading was set to remain thin due to the US Thanksgiving holiday.

Brent crude futures shed 21 cents, or 0.3%, to US$62.92 (RM259.90) a barrel as of 0108 GMT, while US West Texas Intermediate crude futures dropped 21 cents, or 0.4%, to US$58.44 a barrel.

Both contracts settled about 1% higher on Wednesday, as investors assessed oversupply risk and the prospect of a Russia-Ukraine peace deal.

US envoy Steve Witkoff is set to travel to Moscow next week with other senior US officials for talks with Russian leaders on a possible plan to end the nearly four-year-old war in Ukraine, the deadliest in Europe since World War Two.

Still, Russia will make no big concessions on a peace plan, a senior Russian diplomat said on Wednesday, after a leaked recording of a call involving Witkoff showed he had advised Moscow on how to pitch to US President Donald Trump.

"Any ceasefire will reduce perceived supply risks tied to US sanctions on Russian oil producers Rosneft and Lukoil," Commonwealth Bank of Australia analyst Vivek Dhar said in a client note, adding that the sanctions, which took effect on Nov 21, have already impacted Russia's oil and refined product exports.

"A Ukraine‑Russia deal should see Brent fall to US$60 a barrel relatively quickly," Dhar said, noting that a ceasefire would also allow Russian refinery activity to normalise as Ukraine's drone attacks would stop.

A larger-than-expected rise in US crude inventories also weighed on the market.

US crude inventories climbed 2.8 million barrels to 426.9 million barrels last week, as imports rose to an 11-week high, the Energy Information Administration said on Wednesday. Analysts had expected a 55,000 barrel rise.

US energy firms cut the number of oil rigs by 12 to 407 this week, their lowest since September 2021, energy services firm Baker Hughes also said on Wednesday, a sign that the market is well-supplied.

The Organization of the Petroleum Exporting Countries and allies (OPec+) are likely to leave output levels unchanged at a meeting on Sunday, three Opec+ sources told Reuters on Tuesday. Some members of the group, which pumps about half the world's oil, have been raising production since April to gain market share.

Offering some support to crude prices were rising expectations for a US Federal Reserve interest rate cut in December. A lower rate typically stimulates economic growth and bolsters demand for oil.

Source: Theedgemarkets

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Gerik

Economic

A Historical Engine of Growth Under Pressure

For decades, property investment in New Zealand was a cornerstone of household wealth and a driver of national economic growth. However, the rapid rise in house prices during the pandemic fueled by government stimulus and low interest rates was followed by a sharp correction. Between late 2021 and now, average property values have plunged nearly 20%, and in some cities by up to 30%. Despite minor recoveries, prices remain about 15% below their peak, leaving the housing market in an uncharacteristically prolonged slump.

Housing’s historical strength has become a weakness. With over half the nation’s household wealth tied to real estate, the sharp fall in prices has depressed consumption and private investment. ANZ and Westpac economists highlight that housing’s stagnation has weighed heavily on GDP, contributing to three contractions in the past five quarters. Meanwhile, high unemployment, slow population growth, and cautious government spending have constrained demand.

The New Reality: Slower Gains and Investor Retreat

Gone are the days of 7% annual returns. Even with the Reserve Bank of New Zealand (RBNZ) slashing rates to 2.25% a 3.25 percentage point drop since mid-2024 analysts only predict modest capital gains of 3.8% in 2026 and 3.7% in 2027. Cotality reports that investor activity is down, with multi-property buyers falling from 39.5% to 35.9% of the market. High inventory and weak sentiment have made house flipping unprofitable, and many investors are now sitting on the sidelines.

The central bank has attempted to revive the market with rate cuts and relaxed lending rules, while the government remains committed to making housing more affordable. However, these measures have yet to restore market momentum. A shift in sentiment is also underway: households are slowly adjusting to the idea that housing may no longer deliver the capital gains they once expected.

Market Outlook: A Fragile Path to Recovery

With 33,588 homes listed for sale in October up 75% from the 2021 peak supply remains well above average. While first-home buyers are cautiously returning, overall market activity remains subdued. Economists like Jarrod Kerr argue that any return to moderate home price growth (2–5%) could help revive consumer confidence, but this depends on broader economic recovery.

The recent housing downturn may signal more than a temporary correction. While RBNZ’s chief economist Paul Conway stops short of calling it a structural shift, early signs suggest New Zealand may be entering a “new normal” of modest, volatile returns. In a country where property once meant prosperity, a cultural and economic reckoning may be just beginning.

Source: Reuters

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Blue River

Forex

Technical Analysis

GBP/JPY is a very popular pair in Forex trading as it captures both risk-on/risk-off dynamics, geographic trends, and rate differential trends.

The Yen and Sterling have been subject to some strong dynamics over the past month.

In Japan, markets are still concerned with the reckless government spending which the Japanese Prime Minister tried to defend against.

The latest development sees PM Sanae Takaichi and her cabinet approving a ¥21 trillion stimulus package—the largest since the COVID era.

This fiscal dovishness from the new Prime Minister, historically a negative for currency strength, has been heavily priced in since her appointment. Paradoxically, this may force the Bank of Japan to turn more hawkish, potentially hiking rates sooner to protect against a run on the JPY – The next decision is expected on December 18th.

There could still be an intervention from the BoJ which aims at buying back some Yen against other currency reserves.

For the Pound, the initial volatility relative to the recent Budget is turning into a positive trend. Despite not pivoting to full austerity (aiming to cut expenses for a better fiscal balance), the budget is perceived as far from reckless.

While higher income taxes might dampen consumption slightly, the overall fiscal stance has put the GBP in a decent position, making it the 3rd best performer of today's session.

Technically, the pair is at key point. If the current rally extends beyond the 207.00 level, the price action will point directly to a retest of the July 2024 peak.

Let's dive into a multi-timeframe analysis and technical levels for GBP/JPY, a pair that should stay active during the Thanksgiving break.

GBP/JPY Multi-timeframe Technical Analysis

Daily Chart

GBP/JPY Daily Chart, November 26, 2025 – Source: TradingView

The pair has evolved in a one-way tight bull channel since November 5, taking prices to overbought RSI levels.

Nevertheless, overbought doesn't mean top, particularly as the RSI is still tilting upwards, hence momentum backs the ongoing rebound.

One thing to look for on the bigger timeframe is how the market reacts to its entry (or lack thereof) in the 207.00 Resistance:

Last week, the action stopped at 206.86 which is the level to keep in mind: Closing above would confirm an entry in the Resistance and targets the 208.120 highs.
Below, it could point more to a double-top action and a reversal.
Keep in mind that the Bank of Japan may intervene during the Thanksgiving break which may also provide a huge move lower. The issue is that the timing for such is unknown.

Let's dive into the intraday charts.

4H Chart and Technical Levels