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Asia week ahead: Japan trade, China flash PMI

After a raft of disappointing figures last week, investors will be looking at data due from Japan and China in the week ahead, for further cues on the health of Asia's two largest economies. Monthly indicators from the U.S., along with corporate earnings from Australia and Hong Kong, will also be on the watch list.

On Monday, China releases its July house price index and investors are bracing for a weak result. A report from the China Index Academy (CIA) showed property prices declined for the third consecutive month in July.

HSBC's preliminary reading of China's purchasing managers' index (PMI) for the month of August is due on Thursday. Government data showed the mainland's manufacturing activity rebounding to 51 in June while the bank's final reading stood at 50.7.

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"The past week has seen softer than expected outcomes for industrial production, retail sales, fixed investment and credit growth so markets will keenly await the HSBC flash PMI. A dip in August would be seen as a further sign that Chinese activity has slowed noticeably from its strong second quarter pace," analysts from the National Australia Bank wrote in a note.

In Japan, trade data for July is scheduled for release on Wednesday at 0850 SIN/HK and is expected to rise for the first time in 3 months – a sign that demand overseas is starting to recover.

A Reuters poll of 26 economists forecast exports to increase 3.8 percent in the year to July, with a 1.7 percent annual decline in imports, led largely by a slowdown of crude oil and other energy imports.

A scene of Chinese workers assembling machinery parts in a factory.
TPG | Getty Images
A scene of Chinese workers assembling machinery parts in a factory.

RBA minutes, Singapore & Thailand GDP

Australia's central bank will also be in focus on Tuesday with minutes from its August policy meeting due, along with Governor Steven's Semi-Annual Parliamentary testimony on Wednesday.

"[Both events] are likely to confirm that rates will remain on hold but with a slight dovish bias. Of particular interest will be the Governor's comments on the Australian dollar which may see a bit more follow on jawboning," Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital wrote in a note.

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The spotlight also falls on Thailand's second-quarter gross domestic product (GDP) due Monday. Moody's Analytics sees a contraction of 1.9 percent year-on-year, following a 2.1 per cent shrink in the January-March period after prolonged political unrest.

Singapore is also on GDP-watch, with its final growth data for the second quarter due on Friday 0800 SIN/HK. The government's advance estimate showed the city-state contracting in April-June for the first time in seven quarters, hit by a sharp drop in manufacturing activity.

The country's non-oil domestic exports (NODX) for July is also due on Monday, which Moody's Analytics expects a growth of 3 percent.

"Singapore's manufactured exports continue to diversify away from electronics and the city's increased capacity to produce pharmaceutical drugs has boosted exports to the U.S. and Europe. The global shift away from PCs is hurting Singapore's tech producers. Exports of semiconductors and other PC components are falling at double‐digit year‐on‐year rates and this is likely to continue," analysts wrote in a note.

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Earnings in full swing

Australia's mining giants will report this week, namely BHP Billiton, Fortescue Metals, Newcrest Mining, Woodside Petroleum, Santos and Alumina. In Hong Kong, investors will be awaiting results from the likes of Bank of China and Ping An Insurance.

A slew of U.S. monthly indicators, namely Tuesday's July inflation data and housing starts, as well as Thursday's Markit manufacturing PMI and existing home sales, are also likely to be in focus for regional markets this week. The minutes from the Fed's last meeting and Fed's Jackson Hole symposium on Thursday will also be closely monitored for any changes to the Fed's rate hike timeline.

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