Asia's Growth Divide: Japan GDP vs China Credit Demand

The Asian cash markets remained closed on Sunday, but the anticipation for Japan's GDP release is high. The Nikkei has seen an approximately 5% weekly advance, and markets are expecting a 2.0% annualized growth in Japan's economy during the second quarter.

However, China's new yuan loans fell by a record 340 billion yuan in July, raising concerns about credit demand and potential policy loosening. Analysts project that the Bank of Japan will raise rates in September, with an almost 80% probability.

The investor issue is not only if Asia is rising but also whether Japan's rally can withstand stricter policy. Strong economic data from Japan could benefit banks and local value stocks, while also increasing yields and strengthening the yen, which may put pressure on high-priced exporters and growth shares.