Key Takeaways
- South Korea is aggressively pursuing its goal of becoming the world's fourth-largest global defense industry power, with President Lee Jae Myung pledging substantial increases in R&D and independent technology investment.
- China's economy presented a mixed picture in September and Q3, with industrial production exceeding expectations at 6.5% year-on-year, but property investment declining by 13.9% year-to-date, signaling persistent sector-specific weaknesses.
- A Dubai-bound Emirates cargo plane crashed at Hong Kong International Airport on Monday, resulting in two fatalities among ground staff and the cancellation of 12 cargo flights, although passenger operations were reportedly unaffected.
- China has appointed Li Chenggang as its new top international trade negotiator, replacing Wang Shouwen, a move that comes amidst escalating trade tensions with the United States.
- The Japanese Yen (JPY) experienced a slip in currency markets due to prospects of Sanae Takaichi becoming Prime Minister, with her fiscally dovish stance potentially delaying Bank of Japan (BOJ) rate hikes.
South Korea's Ambitious Defense Expansion
South Korean President Lee Jae Myung has articulated a bold vision for the nation's defense sector, aiming to elevate it to the fourth-largest global defense industry status. This ambitious goal is underpinned by plans for significant investment in research and development (R&D) and a focus on fostering independent technological capabilities, including specialized defense chips. The government intends to boost defense and aerospace R&D spending through 2030 and enhance technological and industrial know-how sharing with global partners.
President Lee emphasized the establishment of a "defense control tower" and regular strategy meetings to actively support K-defense exports. The defense budget for 2026 is projected to increase by 8.2% to 66.3 trillion won (approximately S$60.8 billion), with a strategic allocation towards cutting-edge technologies like drones and robots. Currently ranked as the world's 10th largest defense industry, South Korea has already secured substantial export contracts, such as a 9 trillion won ($6.7 billion) deal for Hyundai Rotem's (064350:KS) K-2 tanks to Poland. The newly established Korea AeroSpace Administration (KASA) in May 2024 has a 2025 budget of KRW 964.9 billion (USD 665 million), marking a 27% increase from the previous year. The combined market size for South Korea's aerospace, space, and defense sectors is forecast to reach USD 7.64 billion by 2030, with long-term investment targeting 100 trillion won (USD 72.6 billion) by 2045.
China's Mixed Economic Performance
China's economic data for September and the third quarter of 2025 presented a nuanced picture. The country's Gross Domestic Product (GDP) grew 1.1% quarter-on-quarter (seasonally adjusted) in Q3, surpassing expectations of 0.8%, while year-on-year growth stood at 4.8%, slightly below the previous 5.2%. Year-to-date GDP growth reached 5.2%.
Industrial production showed robust growth in September, rising by 6.5% year-on-year, outperforming the estimated 5.0% and the previous month's 5.2%. Year-to-date industrial production also saw a healthy increase of 6.2%. However, other key indicators highlighted ongoing challenges. Fixed asset investment excluding rural areas declined by 0.5% year-to-date, missing the estimated 0.1% growth. The property sector continued to be a drag, with property investment falling by 13.9% year-to-date and residential property sales down 7.6% year-to-date. Retail sales in September grew by 3.0% year-on-year, meeting expectations but slowing from the previous 3.4%, with year-to-date retail sales at 4.5%. The surveyed jobless rate in September was 5.2%, slightly better than the estimated 5.3% and consistent with the previous month.
In a related development, China has removed Li Chenggang, its World Trade Organization (WTO) envoy, from his post. Li, a former assistant commerce minister and WTO ambassador, replaces veteran trade negotiator Wang Shouwen, a change occurring amidst heightened trade tensions with the United States.
Hong Kong Airport Incident and Currency Movements
Hong Kong International Airport experienced a significant incident on Monday, October 20, 2025, when a Dubai-bound Emirates cargo plane (Flight EK9788) crashed. The aircraft reportedly skidded off the northern runway, collided with a ground service vehicle, and subsequently plunged into the sea. The tragic event resulted in the deaths of two ground staff members, although all four crew members on board survived. While passenger flight operations at the airport remained unaffected, the incident led to the cancellation of 12 cargo flights. This marks a more severe outcome than an earlier incident in June 2024, where an Atlas Air Boeing 747-400 freighter's emergency landing closed a runway for eight hours and delayed approximately 450 flights.
In currency markets, the Japanese Yen (JPY) depreciated as prospects for Sanae Takaichi to become Japan's next Prime Minister emerged. Takaichi is perceived as fiscally dovish, leading to expectations of potential fiscal easing and a tempering of anticipated monetary tightening by the Bank of Japan (BOJ). Her path to premiership, however, faces complications following the withdrawal of the Komeito party from the ruling coalition. Meanwhile, the Australian Dollar (AUD) saw gains.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.