AsianBondsOnline Newsletter (7 October 2013)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20131007.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 30 September - 4 October 2013

Moody's Investors Service upgraded its sovereign foreign and local currency long term ratings for the Philippines last week to Baa3 from Ba1, with a positive outlook. Moody's stated the country's robust economic performance, ongoing fiscal and debt consolidation, and political stability and improved governance - factors that prompted the review for an upgrade announced in July 2013 remained intact.

*     Consumer price inflation eased in Indonesia to 8.4% year-on-year (y-o-y) in September from 8.8% in August. In the Republic of Korea, consumer price inflation also eased to 0.8% y-o-y in September from 1.3% in August. In Thailand, consumer price inflation moderated to 1.4% y-o-y in September from 1.6% in August. Meanwhile, in the Philippines, consumer price inflation increased to 2.7% y-o-y in September from a revised 2.1% in August.

*     Manufacturing production in the Republic of Korea improved in August, as the manufacturing production index (MPI) expanded 3.4% y-o-y for the month, up from the 0.9% in July. In contrast, Thailand's MPI contracted 3.1% y-o-y in August. The People's Republic of China's (PRC) Purchasing Managers Index (PMI) for manufacturing posted a 17-month high in September, rising to 51.1 from 51.0 in August. Meanwhile, Singapore's PMI remained at 50.5 in September.

*     At its monetary policy meeting held on 3-4 October, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures. Meanwhile, Japan's industrial production declined 0.7% month-on-month (m-o-m) and 0.2% y-o-y in August.

*     Indonesia reported a trade surplus amounting to US$132 million in August, a reversal from a deficit of US$2.3 billion in July. Thailand's current account position also reverted to a surplus of US$1.3 billion in August following a deficit of US$1.6 billion in July. Meanwhile, the Republic of Korea's merchandise trade surplus in September stood at US$3.7 billion, which was larger than the surplus of US$2.9 billion a year earlier. In Malaysia, exports expanded 12.4% y-o-y in August to MYR62.9 billion - the highest growth since February 2012.

*     The Financial Supervisory Service (FSS) reported last week that local currency (LCY) corporate bond issuance in the Republic of Korea surged 37.1% m-o-m to KRW8.7 trillion in August. Moreover, Korea Financial Investment Association (KOFIA) also reported that the over-the-counter (OTC) trading volume in the Republic of Korea's bond market fell 11.6% m-o-m to KRW422.5 trillion.

*     Last week, Bank Indonesia (BI) signed an extension of its bilateral swap arrangement with the People's Bank of China (PBOC) amounting to CNY100 billion (IDR175 trillion).

*     On 1 October, the Securities Commission Malaysia, the Monetary Authority of Singapore, and the Securities and Exchange Commission of Thailand signed a Memorandum of Understanding to establish an ASEAN Collective Investment Scheme (CIS) Framework that will facilitate cross-border offerings to retail investors in Malaysia, Singapore, and Thailand.

*     Government bond yields fell last week for all tenors in Hong Kong, China, and for most tenors in Indonesia, Malaysia, the Philippines and Thailand. Yield movements were mixed in Singapore and Viet Nam, and mostly unchanged in the Republic of Korea. Yield spreads between 2- and 10- year maturies widened in the Philippines, while spreads narrowed in the rest of Emerging Asian markets except for the PRC market which was closed last week to observe the national holidays.

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