September profits at China's larger industrial companies accelerated from 4.2% growth in August. Korea grew 1.0% in the third quarter, against forecasts of 0.7%. Seoul and Tokyo stocks rose; Hong Kong fell.
The AI hardware boom has spent most of the year showing up in company results. On Tuesday it showed up in Asian government statistics.
Profits at China's larger industrial companies rose 14.4% in September from a year earlier, after growth of 4.2% in August, according to the National Bureau of Statistics. For the first nine months, profits rose 15.5%. Electronics was the standout: profits in the sector more than doubled, up 103.8% from January through September.
South Korea's economy grew 1.0% in the third quarter from the previous three months, ahead of forecasts of 0.7%, and 3.4% from a year earlier.
The markets
Korea's KOSPI rose 3.09% to 5,638.34, after a morning surge that triggered a sidecar, a five-minute pause in program buying. Japan's Nikkei 225 rose about 1.7%, led by chip-related stocks. Hong Kong's Hang Seng fell 0.73% on a day HSBC slid after its results.
Japan's services producer price index rose 3.7% from a year earlier in September, in line with forecasts and up from a revised 3.5% in August.
Where the growth is
The detail in the Chinese figures points to a narrow source. A doubling of electronics profits against a 15.5% gain for industry as a whole means hardware is carrying a large share of the improvement. Korea's stock market surge was also led by chips.
That concentration cuts both ways. It means the data are strong for reasons that are clear and visible in corporate orders. It also means the strength depends on spending decisions by a small group of large technology buyers.
No move expected this week
The Bank of Japan meets on Oct. 29 and 30. None of the economists in a Bloomberg survey expects an increase this month, and 83% expect one in December. The yuan was steady at about 6.67 per dollar.
Two readings
One reading is that the region's export economies are entering a broad upswing. Profits are accelerating, growth is beating forecasts and the markets most exposed to chips are rallying hard.
The other is that the upswing is one sector deep. Electronics accounts for much of the improvement in China's profits, Hong Kong's market fell on the same day, and growth that depends on AI hardware orders is exposed to any slowdown in that spending.
What to watch
Capital-spending plans from Microsoft and Alphabet on Wednesday and Amazon on Thursday, the Bank of Japan decision, China's official purchasing managers' index at the end of the month and Korea's October export data.