Asia Pacific

Activity in China's manufacturing sector unexpectedly shrank for a third straight month in October, an official survey showed on Sunday, fuelling fears that the economy may be cooling further in the fourth quarter despite a raft of stimulus measures, the International New York Times reported on a Reuters story. The official Purchasing Managers' Index (PMI) was at 49.8 in October, the same pace as in previous month and lagging market expectations of 50.0. A reading over 50 points suggests an expansion in activity while one below that level points to an contraction on a monthly basis.

Japan’s central bank said on Friday that the economic outlook was worsening, but its governor said that the stimulus measures already in place, while slow to take effect, were enough for now. Even with the benchmark interest rate at virtually zero and the bank already buying up trillions of yen of government debt, some economists had expected the bank to ratchet up its efforts in response to a softening Japanese economy. But the Bank of Japan’s rate-setting board voted 8 to 1 to leave its monetary program unchanged.

The wealth-management products that banks sell at branches across China are often considered as safe as deposits by customers. There are growing reasons to question that faith, Bloomberg News reported. The ability of Chinese lenders’ $2.4 trillion of WMPs to generate the returns they promise is being undermined as monetary easing has pushed corporate bond yields to a five-year low.

The Swiss banker Josef Ackermann played a role in the events that nearly destroyed the Cyprus banking system in 2013. Now he was back in this sleepy capital, toiling to fix one of the very banks he helped undermine, the International New York Times DealBook blog reported. Redemption, said Mr. Ackermann, the former Deutsche Bank chief, would be too strong a word to describe why he, once one of the most powerful bankers in the world, agreed to be chairman of the Bank of Cyprus — the Mediterranean island’s largest lender, but puny in global terms.

Higher mortgage rates for millions of homeowners are shaking consumer confidence and raising the likelihood that Australia’s central bank will cut rates before the end of the year to help stave off a recession, The Wall Street Journal reported. The consumer squeeze stems from moves by commercial banks this month to raise lending rates to recover the cost of a new regulatory requirement to set aside more capital.

The fate of emerging market currencies is looming ever larger in the outlook for interest rates in the advanced world, promising that their central banks will keep policies super loose for some time to come, Reuters reported. Ever since China sprang a surprise depreciation of the yuan in August, the resulting decline of a whole host of emerging market (EM) currencies has produced a disinflationary pulse that the world is ill prepared to withstand.

China’s moves to ease mortgage restrictions and cut interest rates are bearing fruit in the nation’s smaller cities, where home prices have staged a recovery. Now comes the bigger challenge: Clearing a supply glut to spur investment by developers, Bloomberg News reported. Lower borrowing costs are helping a residential market recovery spread from the economic hubs such as Shanghai and Shenzhen to smaller and less-prosperous cities. New-home prices rose in September from August in more than half of the 70 major cities monitored by the government for the first time in 17 months.

In most respects, double-digit growth is a relic of the past for China. In the third quarter the economy grew by just 6.9% year-on-year according to official data, and probably by a percentage point or two less in reality. Yet bank loans increased by 15.4% in the third quarter compared with the same period in 2014, The Economist reported. Having released a torrent of credit to buoy the economy during the financial crisis, China was supposed to have started deleveraging by now.

China's Sinosteel will delay the payment of interest to its bondholders due on Tuesday, it said, after the state-owned company extended the date investors can start redeeming its bonds by a month. The company made the announcement in a statement posted on the website of one of the country's main bond clearing houses. On Monday, the steel trader extended a put option date for investors by a month, amid reports the debt-laden firm had asked investors to hold off seeking redemptions due to liquidity problems.

China’s bungled stock market bailout was a significant setback to its decades-long efforts to build a modern financial system, the International New York Times reported. Its currency devaluation shocked global investors and altered the policy calculus at central banks from Hanoi to Washington. A highly anticipated package of overhauls to sprawling state-owned companies was a crushing rebuke to hopes that China would move to privatize such businesses. Instead of reducing their stakes, the Communist Party said it would increase its control over such companies.