AsianBondsOnline Newsletter (4 November 2013)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20131104.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 28 October - 1 November 2013

Consumer price inflation in Indonesia eased slightly to 8.3% year-on-year (y-o-y) in October from 8.4% in September. In the Republic of Korea, consumer price inflation stood at 0.7% y-o-y in October, slightly lower than September's 0.8%, largely due to annual decreases in food and non-alcoholic beverage prices, and in transport costs. In Thailand, consumer price inflation inched up to 1.5% y-o-y in October from 1.4% in September.

*     Indonesia reported a trade deficit of US$657 million in September after posting a trade surplus of US$72 million in August. Thailand's current account deficit narrowed to US$888 million in 3Q13 from US$6.7 billion in 2Q13, largely due to the merchandise trade balance shifting to a surplus position in 3Q13 from a deficit in 2Q13. Meanwhile, Viet Nam's trade deficit widened to US$200 million in October.

*     In the Republic of Korea, the merchandise trade surplus widened in October to US$4.9 billion, while the current account surplus widened to US$6.6 billion in September from US$5.7 billion in August for an 11.1% increase on a y-o-y basis.

*     The People's Republic of China's (PRC) manufacturing Purchasing Managers Index (PMI) rose to 51.4 in October from 51.1 in September. Thailand's manufacturing sector continues to contract in September as its Manufacturing Production Index (MPI) fell 2.9% y-o-y after recording a 2.8% decline in August. In Viet Nam, the Industrial Production Index (IPI) rose 5.9% y-o-y in October, with the steepest rise recorded in the water supply sector at 11.6%.

*    In the Republic of Korea, the Economic Sentiment Index (ESI) was up slightly in October. However, manufacturing production contracted 2.3% month-on-month (m-o-m) and 3.7% y-o-y in September, while retail sales performance was mixed in September among different retail channels.

*     Last week, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures given a recovering economy, firm domestic demand, and a gradual pick-up in overseas economies.

*     In the Republic of Korea, the loan delinquency rate of domestic banks fell to 1.0% in September from 1.13% in August, mainly due to the falling delinquency rate for small and medium-sized enterprise (SME) loans. Meanwhile, local currency (LCY) corporate bond issuance in September stood at KRW10.8 trillion, up 23.4% from the previous month, led by larger monthly bond issuances from banks and non-financial corporates. Also, the Ministry of Strategy and Finance (MOSF) announced last week that KRW6,700 billion worth of Korea Treasury Bonds (KTBs) are planned to be auctioned in November.

*     Last week in the PRC, Wuhan Metro issued the first domestic corporate perpetual bond denominated in renminbi. The bond has a size of CNY2.3 billion and carries a coupon rate of 8.5%. The bond is callable every 5 years. Meanwhile, Modern Land issued a US$150 million 5-year bond (callable after 3 years), which was priced to yield 14.0%.

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