Asia week ahead: Key data on China, Japan, South Korea and Taiwan

China releases its August purchasing managers’ data over the weekend. We are expecting the manufacturing PMI to show a slight uptick to 49.5 from 49.3 in July. The newly renamed RatingDog China PMI (formerly Caixin PMI) data from S&P follows with releases on the coming Monday and Wednesday. Data aside, China's military parade commemorating the 80th anniversary of the end of World War II is set for Wednesday. Market participants may be closely monitoring attendees on hand and any new military tech on display.

Exports are expected to grow a mere 0.6% year on year in August, mostly due to unfavourable calendar day effects. Daily average exports are expected to be solidly above 5%. Chips and auto shipments should rise, but exports to the US and China may remain weak due to tariffs. Meanwhile, imports are expected to fall 2.0% as global commodity prices declined. Meanwhile, consumer price index inflation is likely to ease marginally to 2.0% YoY in August from 2.2% in July, thanks to the high base last year. We believe that subway fees and fresh food prices rose, while energy declined. The manufacturing PMI is expected to improve as uncertainty related to US tariffs subsides.

The main data release next week is inflation, scheduled for release on Friday. Inflation has been under control since May, and could cool a bit further in August to 1.4% YoY. Current inflation trends will not be a hindrance to monetary policy easing, but we expect the central bank to remain on hold at the September meeting nonetheless. Additionally, Taiwan's PMI data is set for release on Monday.

Household spending and labour cash earnings data will be released on Friday. Both are expected to improve amid solid wage growth and cooling inflation. If we’re right, market expectations on the Bank of Japan's rate hike in October will only increase.