News Highlights - Week of 9 - 13 September 2013
The Board of Governors of Bank Indonesia (BI) decided to
raise its benchmark rate by 25 basis points (bps) to 7.25% in its meeting held
on 12 September. The central bank has now raised its policy rate by a total of
150 bps since June. BI also raised its lending facility rate and deposit
facility rate by 25 bps each to 7.25% and 5.50%, respectively. The latest rate
hikes form part of additional measures taken to reinforce the central bank's
policy mix to control inflation, stabilize the rupiah exchange rate, and ensure
the current account deficit is maintained at a sustainable level.
* Last week at
its Monetary Policy Committee Meeting, The Bank of Korea decided to keep the
base rate steady at 2.50%. Also, the Monetary Board of Bangko Sentral ng
Pilipinas (BSP) decided to keep its key policy rates-the overnight borrowing
and lending rates-steady at 3.5% and 5.5%, respectively.
* Hong Kong,
China's industrial production index (IPI) rose 0.3% year-on-year (y-o-y) in
2Q13 following a 0.5% increase in 1Q13. In Malaysia, industrial production rose
7.6% y-o-y in July from revised growth of 3.7% in June. Singapore's retail
sales decreased 5.3% month-on-month (m-o-m) in July on a seasonally adjusted
basis, compared with a 6.9% contraction in June.
* The
Philippines' merchandise exports rose 2.3% y-o-y in July to US$4.8 billion,
mainly driven by an increase in exports of machinery and transport equipment.
On a m-o-m basis, Philippine exports increased 7.7%.
* In the
Republic of Korea, bank holding companies incurred a quarterly drop in their
capital adequacy ratios in 2Q13, based on a report from the Financial
Supervisory Service (FSS) released last week. Between end-March and end-June,
the consolidated capital ratio for bank holding companies fell from 13.11% to
12.95%, and their consolidated Tier 1 capital ratio decreased from 10.49% to
10.36%. Meanwhile, new household loans made by depository corporations in the
Republic of Korea rose KRW1.1 trillion in July, down from KRW6.5 trillion
increase in June, according to The Bank of Korea. As of end-July, the
outstanding amount of household loans was KRW667.5 trillion.
* Last week,
Indonesia raised US$1.5 billion from the sale of 5.5-year Islamic bonds sold at
par to yield 6.125%. Korea Development Bank (KDB) priced a US$-denominated bond
worth US$750 million at a coupon rate of 3.0%. Korea South-East Power (KOSEP)
priced AUD325 million worth of 7-year bonds at a coupon rate of 5.75% in
Australia. In the PRC, Cifi Holdings issued an additional US$275 million at a
coupon rate of 12.25% via a tap on its existing April 2018 bond. Also, China
Zhengtong Auto Services priced a US$335 million 5-year bond at a coupon of
4.5%. In Thailand, PTT Exploration and Production (PTTEP) priced US$500 million
worth of 5-year bonds at a coupon rate of 3.707% last week.
* Government
bond yields fell for all tenors in Indonesia and the Republic of Korea, and for
most tenors in Malaysia, Singapore, and Thailand. Yields rose for most tenors
in the People's Republic of China (PRC) and Viet Nam. Yield movements were
mixed in Hong Kong, China; and the Philippines. Yield spread between 2- and
10-year maturities narrowed for most emerging East Asian markets except for the
PRC and Thailand.
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