AsianBondsOnline Newsletter (25 November 2013)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20131125.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 18 - 22 November 2013

Emerging East Asian local currency (LCY) bond markets recovered some of their recent losses in 3Q13 as global financial markets stabilized. The delay by the United States (US) Federal Reserve in tapering its bond purchase program should put the US economy on stronger footing prior to easing, which in turn can provide a helpful boost to the region's growth prospects, according to the latest edition of the Asia Bond Monitor (ABM). The quarter-on-quarter (q-o-q) growth rate for emerging East Asian LCY bond markets in 3Q13 was 2.4%, down from 3.6% in 2Q13, as the region's market reached US$7.1 trillion in size. The full issue of the ABM is available at http://asianbondsonline.adb.org/documents/abm_nov_2013.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx.

*     Singapore's economy grew 5.8% year-on-year (y-o-y) in 3Q13, up from 4.4% growth in the preceding quarter. On a q-o-q seasonally adjusted and annualized basis, the economy grew at a pace of 1.3%. The Ministry of Trade and Industry (MTI) forecasts that economic growth in Singapore will fall to 3.5%-4.0% in 2013 and to 2.0%-4.0% in 2014. Meanwhile, Thailand's economy advanced 2.7% y-o-y and 1.3% q-o-q in 3Q13. The q-o-q rise resulted from a 1.2% decrease in household spending and a 6.5% contraction in investment. Meanwhile, the National Economic and Social Development Board (NESDB) has cut its estimate for Thailand's economic growth in 2013 to 3.0% from a range of 3.8%-4.3%.

*     Hong Kong, China's consumer prices rose 4.3% y-o-y in October, down from September's increase of 4.6%. In Malaysia, consumer price inflation surged 2.8% y-o-y in October - the highest since January 2012 - following a 2.6% increase in September.

*     Producer prices in the Republic of Korea fell 1.4% y-o-y and 0.4% m-o-m. At its monetary policy meeting on 20-21 November, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures. The BOJ stated that the economy is recovering moderately, although a lackluster performance in external demand was noted. 

*     Foreign direct investment (FDI) in the People's Republic of China (PRC) rose 1.2% y-o-y in October. Japan's merchandise trade deficit almost doubled to JPY1.1 trillion in October. Exports of goods increased 18.6% y-o-y to JPY6.1 trillion, while imported goods increased 26.1% y-o-y to JPY7.2 trillion. In Singapore, non-oil domestic exports rose 2.8% y-o-y in October.

*     Moody's revised its outlook for Malaysia to positive from stable and affirmed the government's bond and issuer ratings at A3. The positive outlook is attributed to Malaysia's improved prospects for fiscal consolidation and reform, and its continued macroeconomic stability.

*     The PRC issued a CNH5 billion 3-year bond at coupon rate of 2.6% and a CNH2 billion 5-year bond with a coupon rate of 3.09%.    BOC Aviation tapped an existing CNH1 billion bond yielding 4.5% to raise an additional CNH500 million. Viet Nam Development Bank (VDB) issued  VND300 billion worth of 2-year bonds that were priced to yield 8.45% and VND220 billion of 5-year bonds at a yield of 9.45%. 

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