World Economy

Will China data deluge give Asia Monday blues?

The Chinese national flag flies over the Yangtze river in China.
Zhang Peng | LightRocket via Getty Images

Financial markets in Asia are braced for a serious case of Monday blues, with a barrage of crucial data due on the first trading day of the week likely to show continued economic deceleration in China.

Third-quarter gross domestic product (GDP) for the world's second-biggest economy, alongside September retail sales, industrial output and fixed-asset investment (FAI), will be released at 10am local time on Monday.

China's growth in the July-September period likely slowed to 6.8 percent from a year earlier, according to a Reuters poll of 50 economists, down from 7 percent in the second quarter. If correct, the Reuters forecast growth would mark China's weakest pace of expansion since the first quarter of 2009, when it tumbled to 6.2 percent.

Economists from major banks such as Bank of America Merrill Lynch and Goldman Sachs have separately projected GDP to fall below 7 percent in the third quarter.

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Meanwhile, factory output likely slowed in September, as firms cut back on output amid persistent overcapacity, turmoil in equity markets and a weak foreign trade environment, analysts from Moody's Analytics wrote in a recent note.

A Reuters poll predicts industrial production will have risen 6.0 percent on-year last month, a tad weaker than August's 6.1 percent rise.

Annual retail sales growth likely stayed flat at 10.8 percent in September, according to the Reuters' survey.

FAI - seen as a crucial driver of China's economy - is expected to slip to 10.8 percent in the first nine months of 2015, Reuters predicted, from 10.9 percent in January.

Not all market watchers, however, have a pessimistic outlook for China.

"We expect FAI to drop, given the fact that property investments are still trying to find a bottom. Our view is that it has already bottomed out, but we are not going to see new investments coming into the sector," Kelvin Tay, MD and regional chief investment officer for southern APAC at UBS Wealth Management, told CNBC's "Street Signs Asia" on Friday.

"This may not necessarily be a bad thing [because] if China is successful in switching from investment-led GDP to consumption-oriented growth, FAI should drop. And the kind of inputs that are used for FAI such as iron ore are indeed coming down," he added.

Will China's Q3 GDP show stabilization?

South Korea is also on GDP-watch, with advance estimates for the third quarter due at 8am local time on Friday.

Asia's fourth-largest economy is expected to have expanded 0.6 percent in the July-September period over the previous quarter, Moody's Analytics said, ticking up from the second quarter's 0.3 percent growth.

But on a year-on-year basis, the economy likely grew 2 percent in the third quarter from a year earlier, Moody's estimated, compared with the gain of 2.2 percent for the previous three months.

"The Middle East Respiratory Syndrome (MERS) outbreak hit consumption hard in the June quarter, but household spending recovered during the September quarter after the outbreak was contained. Exports continued to drag, primarily because of the slowdown in China," analysts noted.

The Bank of Korea (BOK) kept interest rates steady for a fourth straight month on Thursday, while trimming its economic outlook for this year and next. The central bank now expects GDP for 2015 and 2016 to rise 2.7 and 3.2 percent respectively. Both estimates are 0.1 point weaker than previous forecasts.

"The BOK's seemingly optimistic economic outlook increases risks that the BOK may deliver a rate cut later than our expectation in November. We see downside risks to our 2016 GDP forecast of 2.5 percent, while Q3 GDP adds upside risk to our 2015 GDP forecast of 2.4 percent," a Thursday Nomura report said.

"We believe that the monetary easing cycle is not over yet. The terminal rate will be cut to 1.00 percent by March 2016," analysts at the Japanese brokerage added.

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Meanwhile, earnings season kicks off in parts of Asia this week.

Singapore's telecommunication service provider M1, bourse operator Singapore Exchange, as well as offshore and marine firms Keppel Corp and Sembcorp Marine, will report quarterly results.

South Korean investors will likely be eyeing the reports from heavyweight components Posco and Hyundai Motor on Tuesday and Thursday respectively. Tech names LG Display and SK Hynix also announce earnings on Thursday.

In India, the bulk of the earnings are due on Wednesday, with reports from IT firm Wipro, carmaker Bajaj Auto, HDFC Bank, as well as oil and gas exploration and production company Cairn India, on tap.