AsianBondsOnline Newsletter (2 September 2013)

News Highlights - Week of 26 - 30 August 2013

The Philippines' real gross domestic product (GDP) grew 7.5% year-on-year (y-o-y) in 2Q13 following revised 7.7% growth in 1Q13. This was mainly driven by the strong performance of the service sector, which expanded 7.4% y-o-y, as well as strong performance in manufacturing (10.3%) and construction (17.4%). On the demand side, household and government consumption expenditure increased 5.2% and 17.0% y-o-y, respectively, while capital formation grew 13.2%.

*     In a meeting held on 29 August, Bank Indonesia's (BI) Board of Governors raised its benchmark rate by 50 basis points (bps) to 7.0%. It also raised the lending facility rate by 25 bps to 7.0% and the deposit facility rate by 50 bps to 5.25%. The minimum holding period for central bank certificates (Sertifikat Bank Indonesia) was reduced from 6 months to 1 month.

*     Exports from Hong Kong, China rose 10.6% y-o-y in July, reversing June's 0.2% decline. Meanwhile, import growth accelerated, rising to 8.3% y-o-y in July from 1.4% in June. 

*     In the Republic of Korea, the current account surplus narrowed to US$6.8 billion in July from US$7.2 billion in June.  In the Philippines, the trade deficit increased to US$370 million in June from US$365 million in May. Thailand's current account deficit widened to US$708.9 million in July from US$664.3 million in June. Viet Nam incurred a US$300 million trade deficit in August following 2 months of surpluses.

*     In Japan, consumer prices rose 0.7% y-o-y in July, the highest pace recorded since 2008 following a 0.2% increase in June. In the Republic of Korea, CPI moderated to 1.3% y-o-y in August from 1.4% in July.

*     The People's Republic of China's (PRC) Purchasing Manager's Index for the manufacturing sector rose to 51.0 in August.  The Republic of Korea's seasonally adjusted manufacturing production index fell 0.2% m-o-m in July, but rose 0.8% y-o-y. Japan's industrial production rose 3.2% monthon-month (m-o-m) in July. Singapore's manufacturing output increased 2.7% y-o-y in July. Thailand's manufacturing production index contracted 4.5% y-o-y in July. In Viet Nam, the index of industrial production growth slowed to 4.4% y-o-y in August from 7.0% in July. 

*     Local currency (LCY) corporate bond issuance in the Republic of Korea plunged 35.1% m-o-m to KRW6.4 trillion in July, based on Financial Supervisory Service (FSS) data.

*     Guangzhou R&F Properties announced plans to issue CNY6 billion worth of 3-year bonds. The Republic of Korea announced that it intends to sell KRW6.9 trillion worth of Korea Treasury Bonds (KTBs) in September, comprising KRW1.85 trillion of 3-year KTBs, KRW1.85 trillion of 5-year KTBs, KRW1.8 trillion of 10-year KTBs, KRW700 billion of 20-year KTBs, and KRW700 billion of 30-year KTBs.     

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