Asia Week Ahead: Another Big Data Splurge

Activity releases from China, Japan and India, and central bank meeting in the Philippines dominate the Asian economic calendar, making it another busy week for markets.

Trade news dominates

As the noise around 'phase one' US-China trade deal intensifies further as the mid-December deadline approaches, China's combined October-November activity growth will give some sense of the economy’s performance in the current quarter. Judging from a rebound in manufacturing PMIs last month, things have stopped getting worse. We anticipate more evidence of this in the forthcoming data supporting our view of GDP growth gaining some traction in this quarter.

Japanese economic data should reinforce the continued weak state of the economy as the markets digest today’s announcement by prime minister Shinzo Abe of $240 billion in fresh stimulus. The key item on the calendar is the Bank of Japan’s quarterly manufacturing Tankan index with expectations of the lowest reading of large manufacturing Tankan in seven years. This comes as domestic spending is taking a hit from the consumption tax hike this quarter, while exports remain under pressure from the trade war.

Of all the Indian data next week, November consumer price inflation will be closely watched in light of surprise pause in RBI easing. Food prices are pushing inflation higher, taking prices above 5% in the last month, closer to the top end of the RBI's 2-4% policy target. Persistent downside growth risk will be revealed by another deeper fall in industrial production in October, we don’t see inflation becoming a hurdle for more RBI easing.

Elsewhere, Taiwan’s exports and Malaysia’s manufacturing data should shed some light on the stage of the electronics cycle. We have seen signs of it bottomed out and would look for more evidence of the same.

Finally, the Philippines central bank policy meeting next Thursday (12 December) should be a non-event with higher November inflation likely to force a pause in rate cuts.     

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