News Highlights - Week of 13 - 17 May 2013

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News Highlights - Week of 13 - 17 May 2013

On 13 May, the State Bank of Viet Nam (SBV) cut its key interest rates for the second time this year, following six cuts in 2012. The refinance rate, discount rate, and overnight inter-bank lending rate were reduced by 100 basis points (bps) each to 7.0%, 5.0%, and 8.0%, respectively. In its meeting held on 14 May, Bank Indonesia's (BI) Board of Governors decided to hold its benchmark policy rate steady at a record-low level of 5.75%.

*     Real gross domestic product (GDP) growth in Japan rose 0.9% quarter-on-quarter (q-o-q) in 1Q13, up from 0.3% posted in the previous quarter. Growth was attributed mainly to the 0.9% q-o-q increase in private consumption, which accounts for approximately 60% of the economy. Malaysia's GDP grew 4.1% year-on-year (y-o-y) in 1Q13, slower than the 5.1% growth recorded in 1Q12 and 6.5% in 4Q12. Strong private consumption, which expanded 7.5% in 1Q13 compared to 6.2% in 4Q12, supported the economy amid slower public expenditure. In Thailand, real GDP growth moderated to 5.3% y-o-y in 1Q13 from 19.1% in 4Q12.

*     Growth in foreign direct investment (FDI) in the People's Republic of China (PRC) decelerated in April, rising 0.4% y-o-y to US$8.4 billion. FDI growth was 5.7% y-o-y in March and 6.3% in February.

*     Indonesia's current account deficit narrowed to US$5.3 billion (equivalent to 2.4% of GDP) in 1Q13, compared with US$7.6 billion (equivalent to 3.5% of GDP) in 4Q12, on account of an improved non-oil and gas trade surplus and reduced deficits in the services and income accounts. Malaysia's current account balance posted a surplus of MYR8.7 billion in 1Q13, compared with MYR22.9 billion in 4Q12, due to a lower trade surplus. In Singapore, non-oil domestic exports fell 1.0% y-o-y in April.

*     Singapore's retail sales fell 7.4% y-o-y in March, compared with a revised contraction of 3.0% in February. On a seasonally adjusted basis, retail sales in March decreased 5.4% month-on-month (m-o-m).

*     Personal remittances from overseas Filipinos rose 3.7% y-o-y in March to US$1.9 billion, the slowest monthly rate of growth since August 2009. Total remittances in 1Q13 reached US$5.6 billion, a 6.2% increase from the same period last year.

*     The government of Thailand raised THB15 billion from last week's auction of inflation-linked bonds maturing in March 2028 with a coupon rate of 1.25%. In the Philppines, the Bureau of the Treasury (BTr) announced plans to issue long-dated securities (10, 15, and 20 years) in its monthly bond auction in 3Q13 in response to demand for longer maturities.

*     Last week, PRC real estate developer Poly Property issued a US$200 million (5-year non-call) 3-year Reg S bond at a coupon rate of 4.75%.  Bright Foods also issued a US$500 million 5-year Reg S bond at a 3.0% coupon rate.  Want Want China sold a US$600 million 5-year bond at a coupon rate of 1.875%. Pertamina, a state-owned Indonesian energy firm, raised a total of US$3.25 billion from a dual tranche bond sale last week. The bonds, amounting to US$1.625 billion for each tranche, consisted of 10-year bonds with a coupon rate of 4.3% and 30-year bonds with a coupon rate of 5.625%.

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

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