China PMI to kick off the New Year

What's important in Asia this week

In a holiday-thinned week for Asian markets, focus is likely to fall on the official Chinese purchasing mangers' index (PMI) for the latest clues on how the manufacturing sector in the world's second biggest economy is faring.

The December PMI data is due out on Wednesday and is followed on Thursday by the release of the final reading of the HSBC China PMI for December.

The China official PMI is forecast to ease to 51.2 in December, down a touch from November's 51.4, according to a Reuters poll of economists.

(Read more: China flash PMI slips – What are we missing?)

Workers on the assembly line at an automobile factory, December 7, 2013.
Peter Parks | AFP | Getty Images

"In the next three days there are only really two major market news events; the first is tonight [Monday] with U.S. pending home sales…The second is more important from an Asian perspective; with the release of China's manufacturing PMI on New Year's Day," Evan Lucas, a market strategist at trading firm IG, said in a note.

"This will be an interesting piece of macro data as the liquidity in the FX markets on New Years can be as low as half the normal average and the data is likely to cause large fluctuations in the FX world," he added.

(Read more: China will not overtake US economy until 2028: CEBR)

The preliminary reading on the HSBC survey showed manufacturing activity slowed in December, raising concerns about the outlook for the Chinese economy.

Elsewhere in Asia, both Thailand and Indonesia release their latest inflation numbers on Thursday. Fourth quarter gross domestic product (GDP) numbers from Singapore are released the same day.

This is China's biggest near-term risk

Economists polled by Reuters forecast the Singapore economy expanded about 4.7 percent on year in the final quarter of the year, compared with a 5.8 percent increase in the third quarter.

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"Singapore's Q4 GDP flash estimate on Thursday is worth watching in Asia, given that the small open economy is often a good barometer of global inflection points," analysts at Mizuho Corporate Bank said in a note.

India is scheduled to release current-account data on Tuesday. India's current account deficit narrowed to $5.2 billion in the July to September period from $21.8 billion in the same period last year.

A wide current account deficit has been cited by analysts as one of the main reasons for India suffering heavy outflows of foreign cash during a sell-off in emerging markets earlier this year.

(Read more: Good news could mean lighter stock gains in new year)

Many markets in Asia are closed on Tuesday and Wednesday, with trading activity not expected to pick up until next week following a holiday period.