AsianBondsOnline Newsletter (12 August 2013)

News Highlights - Week of 29 July - 2 August 2013

The People's Republic of China (PRC) saw an increase in both exports and imports in July, with growth of 5.1% and 10.9% year-on-year (y-o-y), respectively. Japan posted a current account surplus for the fifth straight month in June (JPY336 billion) as income receipts from investments abroad outweighed the trade deficit. The Republic of Korea recorded a merchandise trade surplus of US$2.7 billion in July. Malaysia's exports fell for the fifth consecutive month, declining 6.9% y-o-y, while its imports rose 1.3% y-o-y, resulting in a trade surplus of MYR4.3 billion.

*     The PRC's consumer prices rose 2.7% y-o-y in July, the same rate as in June. Meanwhile, producer prices continued to decline in July, falling 2.3% y-o-y following a 2.7% contraction in June. In the Philippines, consumer price inflation declined to 2.5% y-o-y in July-the slowest increase in prices since September 2009-from revised 2.7% inflation in June.

*     Industrial production in Malaysia rose 3.3% y-o-y in June, which was the same as May's revised growth rate, driven by increases across all indices. In July, the PRC's industrial output grew 9.7% y-o-y, and retail sales grew 13.2% y-o-y to CNY1.85 trillion.

*     Singapore announced a final GDP growth rate for 2Q13 of 3.8% y-o-y, and upgraded the GDP growth forecast for 2013 from between 1.0% and 3.0%, to between 2.5% and 3.5%. Meanwhile, Japan posted an annualized 2.6% quarter-on-quarter (q-o-q) GDP growth rate in 2Q13.

*     At its monetary policy meeting held on 8 August, the Bank of Japan (BOJ) maintained its monetary easing measures. The Bank of Korea's Monetary Policy Committee decided on 8 August to keep the base rate-the 7-day repurchase rate-steady at 2.50%.

*     The Government of Thailand's Cabinet approved a new stimulus package aimed at reviving the Thai economy, which saw real gross domestic product (GDP) growth decelerate to 5.3% y-o-y in 1Q13 from revised 19.1% growth in 4Q12.

*     In the Republic of Korea, the Ministry of Strategy and Finance (MOSF) unveiled a tax revision bill that aims to broaden the tax base and support national priorities.

*     Net bond investment by foreign investors into the Republic of Korea stood at KRW1.7 trillion in July, down from KRW2.6 trillion in June. SK Innovation, a petrochemical company based in the Republic of Korea, priced US$350 million worth of 5-year bonds at a coupon rate of 3.625% last week. In the Philippines, the Bureau of the Treasury (BTr) recently ended the offer period of Retail Treasury Bonds (RTBs) after raising a total of PHP150 billion. The RTBs carry a maturity of 10 years and a yield of 3.25%.

*     China Longyuan Power Group last week issued a US$300 million 3-year Reg S bond. The coupon rate was set at 3.25%. The Hong Kong Monetary Authority (HKMA) tendered an issuance of HKD1.5 billion of 10-year government bonds under the Institutional Bond Programme. The bond has a coupon rate of 1.10% and an average bond yield of 2.916%.

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