Economic Growth Target - China set its GDP growth target for 2026 at 4.5% to 5%, marking the lowest target on record, as the country faces persistent deflationary pressures and trade tensions with the U.S. [1] - This target represents a downgrade from the previous "around 5%" set in the last three years, and is the most modest goal since 2020 when no target was set due to the pandemic [2]. Budget Deficit and Inflation Targets - The budget deficit target remains unchanged at "around 4%" of GDP, consistent with last year's target, which is the highest on record since 2010 [2][3]. - The annual consumer inflation target is set at "around 2%", the lowest level in over two decades, indicating a recognition of weak domestic demand [3]. Economic Performance Indicators - In 2025, China's economy expanded by 5%, but the country has entered a fourth year of deflation, influenced by a real estate slump, weak consumer confidence, and local government debt stress [5]. - Retail sales increased by 3.6% in 2025, while factory-gate deflation deepened, falling by 2.6% year-on-year [5]. - Fixed-asset investment declined by 3.8% last year, marking the first annual decline in decades, with real estate investment plunging by 17.2% [6].

Market Performance - South Korea's Kospi index rebounded over 12% after experiencing its worst single-day decline of 12% on Wednesday, indicating a strong recovery in market sentiment [1][2] - Major companies such as SK Hynix and Samsung Electronics saw significant gains, with increases of more than 15% and 14% respectively [1] - The small-cap Kosdaq also rose more than 11%, reflecting a broader market recovery across Asia-Pacific [2] Economic Factors - The rebound in markets was influenced by improved sentiment following gains on Wall Street and easing concerns over rising oil prices, which had previously driven the sell-off [2] - South Korea's status as a major crude oil importer raises concerns about the impact of fluctuating oil prices on the current account balance and inflationary pressures [3] Long-term Outlook - Despite short-term volatility, the long-term structural drivers for Korean equities are expected to remain intact, with tight demand-supply dynamics in the memory chips sector anticipated to persist through this year and possibly into the next [3] - The Australian S&P/ASX 200 and Japan's Nikkei 225 also showed positive movements, indicating a regional recovery trend [3]