AsianBondsOnline Newsletter (29 April 2013)

News Highlights - Week of 22 - 26 April 2013

Hong Kong, China's consumer price inflation fell to 3.6% year-on-year (y-o-y) in March from 4.4% in February, due to a decline in food price inflation. In Japan, consumer prices fell 0.9% y-o-y in March compared with a deflation rate of 0.7% in February. In Singapore, consumer price inflation eased to 3.5% y-o-y in March from 4.9% in February, due to smaller price increases across all major categories. In Viet Nam, consumer price inflation eased marginally to 6.61% y-o-y in April from 6.64% in March, with food and telecommunications prices easing the most.

*     The Bank of Japan (BOJ) last week announced that it will conduct money market operations targeting an increase in the monetary base of about JPY60-70 trillion annually. The BOJ also said that it will continue with the quantitative and qualitative monetary easing measures it announced in its last policy meeting (4 April) as it aims to achieve a 2.0% price stability target.

*     On 25 April, the Monetary Board of Bangko Sentral ng Pilipinas (BSP) decided to keep its key policy rates-the overnight borrowing and lending rates unchanged-at 3.5% and 5.5%, respectively. The reserve requirement ratios were also unchanged. However, the Monetary Board lowered interest rates on the Special Deposit Account (SDA) facility by 50 basis points to 2.0% across all tenors.

*     Trade deficits were recorded in Hong Kong, China (HKD49.1 billion in March), the Philippines (US$967 million in February), and Viet Nam (US$1 billion in April).

*     Based on advance estimates from the Bank of Korea, real gross domestic product (GDP) of the Republic of Korea grew 0.9% quarter-on-quarter (q-o-q) and 1.5% y-o-y in 1Q13.

*     Singapore's manufacturing output contracted 4.1% y-o-y in March, lower than the revised decline of 16.3% posted in February.

*     The Hong Kong Monetary Authority (HKMA) will remove its net open position and liquidity ratio requirements on CNH. Meanwhile, Hong Kong, China's Treasury Markets Association announced that it plans to launch a CNH Hong    Kong Interbank Offer Rate (CNH HIBOR) fixing in June. 

*     The People's Republic of China's (PRC) current account surplus rose from US$23.5 billion in 1Q12 to US$55.2 billion in 1Q13. The financial and capital account rose from US$56.1 billion to US$101.8 billion in the same period. Taken together, the PRC posted a balance of payments surplus of US$157 billion in 1Q13.

*     Last week, Citic Securities issued a Reg S US$800 million 5-year bond with a coupon of 2.5%. Daegu Bank based in the Republic of Korea priced a 5-year US$-denominated Reg S bond worth US$300 million at a coupon rate of 2.25%. Japfa Comfeed, an Indonesian animal feed company, priced a US$200 million Reg S 3-year bond.  

*     Government bond yields fell last week for most tenors in Hong Kong, China; Indonesia; the Republic of Korea; and Malaysia. Yields rose for all tenors in the PRC, and for most tenors in the Philippines and Thailand. Yield movements were mixed in Singapore and Viet Nam. Yield spreads between 2- and 10- year maturities narrowed only in Singapore and Viet Nam, while spreads remain unchanged in the Republic of Korea and widened in most other emerging East Asian markets.