Newsletter N°91 - Summer Edition 2026 

Illustrating the risks of excessive dependence on a limited number of sectors, South Korea's stock market continued its highly volatile performance throughout the summer. The benchmark index behaved like a yo-yo, largely driven by AI and memory-related stocks, particularly Samsung Electronics and SK Hynix. While the underlying economic fundamentals have not changed dramatically, the index has hovered around 7,000 in recent weeks, roughly 25% below its all-time high of 9,385.59 reached on June 19.

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Inbound tourism continues to establish itself as a reliable pillar of the Japanese economy. Although the diplomatic tensions between Japan and China reduced the number of Chinese group tourists, the decline was largely offset by increased arrivals from South Korea and Western countries. As a result, the record for the number of visitors in a single month was broken again in July, with 3.4 million arrivals.

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The scale of tourism's impact on Japan is striking. Monthly visitor numbers are now higher than the total number of foreign visitors the country welcomed in an entire year just three decades ago, illustrating how profoundly the sector has transformed the Japanese economy.

In the second quarter, Japan's economy expanded at an annualized rate of 1.1%, weaker than anticipated. Growth was notably constrained by disruptions affecting energy supplies and shipping routes through the Strait of Hormuz, a critical passage for a significant share of Japan's imported oil.

China's economy during the summer of 2026 continued to display a widening two-track recovery, with robust growth in high-tech manufacturing and advanced industrial sectors contrasting sharply with persistently weak domestic consumption. The real estate sector remained a major drag on overall economic performance throughout the summer.

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Household demand showed only modest momentum, but exports appeared to recover strongly, posting growth of 13%. Real GDP expanded by 4.3% year-on-year in the second quarter of 2026, down from 5.0% in the first quarter, bringing first-half growth to 4.7%. This places the economy broadly on track to achieve Beijing's official annual growth target of 4.5% to 5.0%.

 

As the region moves into the final months of 2026, policymakers will face the common challenge of sustaining growth in an environment marked by geopolitical uncertainty, shifting trade patterns, and uneven domestic economic momentum.