On top of the data：Wobbly,still

Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. Issuer of report: The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at: https://www.research.hsbc.com   A sharp deterioration in January exports points to further downside risks for the regional growth outlook  Inflation pressures remain low or non-existent, and a softer US dollar has helped reduce external stability concerns  We expect central banks to respond with further easing; fiscal policy will also have to play a bigger role, especially in China US Fed signals stance of watchful waiting. Speaking against a backdrop of heightened financial market volatility, US Fed Chair Yellen sounded a relatively dovish tone in her annual Congressional testimony. While the Fed Chair highlighted the continued improved in US labour market conditions, she acknowledged that financial conditions in the US and abroad had become tighter, and that this could potentially put the FOMC's expectations for steady economic growth this year at risk (see Yellen Testimony, 10 February 2016). Softer US dollar tempers external stability concerns. Diminishing market expectations of Fed rate hikes has resulted in a weaker US dollar. The more benign US dollar environment will likely reinforce the dovish bias of regional central banks. Concerns about external stability have at times prompted Asian central banks to become cautious about cutting rates into a U.S. tightening cycle. But these risks are fading. Asian exports collapse in January; China yet to show signs of bottoming out Instead, deteriorating growth and rising disinflationary pressures remain the overwhelming concern for Asian policymakers. Disappointing January data only strengthens the case for additional monetary easing. Korea, Taiwan, and China all reported significant export declines in January, despite the fact that Lunar New Year effects should have distorted the latest trade data to the upside. This points to a significant deterioration in global trade at the start of 2016. Slowing growth in the mainland economy is clearly taking its toll. Unfortunately, we see few signs that growth is bottoming out. More monetary and fiscal easing in the pipeline. In light of growing downside risks to what is already a tempered growth outlook, we expect further rate cuts from many of the region's central banks, including in China, Indonesia, India, Korea, Australia, New Zealand, and Japan, where the Bank of Japan introduced a negative interest rate policy in January (see overleaf for a discussion of BoJ liquidity and its impact on Asia). Fiscal policy will also have to play a bigger role, especially in China, where authorities need to come up with a convincing package that includes greater fiscal expansion in order to shore up private sector confidence in growth and reform (see China Inside Out: Beijing's five policy options, 2 February 2016).18 February 2016 Frederic Neumann Economist The Hongkong and Shanghai Banking Corporation Limitedfredericneumann@hsbc.com.hk +852 2822 4556 Izumi Devalier Economist The Hongkong and Shanghai Banking Corporation Limitedizumidevalier@hsbc.com.hk +852 2822 1647 Joseph Incalcaterra Economist The Hongkong and Shanghai Banking Corporation Limitedjoseph.f.incalcaterra@hsbc.com.hk +852 2822 4687 Abanti Bhamik Economics Associate Bangalore On top of the data ECONOMICS ASIA Wobbly, still abc ECONOMICS  ASIA 18 February 2016 2 It's raining yen 3 Best of Asian economics research 4 Asia Brief 5 PMI Heatmaps 7 Indicators 9 GDP & Industrial Production 11 Export 12 Consumer Spending 13 Headline & Core CPI 14 Major Asia Events 15 Australia 16 China 17 Hong Kong 18 India 19 Indonesia 20 Japan 21 Korea 22 Malaysia 23 New Zealand 24 Philippines 25 Singapore 26 Sri Lanka 27 Taiwan 28 Thailand 29 Vietnam 30 Disclosure appendix 31 Disclaimer 32 Contents abc 3 ECONOMICS  ASIA 18 February 2016 BoJ liquidity and Asia On 29 January, the Bank of Japan made a surprise decision to adopt negative interest rate policy (NIRP), lowering the marginal interest rate charged on bank reserves to -0.1% (see BoJ turns negative, 1 February 2016). The announcement of NIRP