AsianBondsOnline Newsletter (10 February 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140210.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 3 - 7 February 2014

Gross domestic product (GDP) growth in Indonesia rose to 5.7% year-on-year (y-o-y) in 4Q13, following 5.6% growth in 3Q13, driven by a recovery in exports and sustained strong domestic demand.

*     In the Philippines, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) decided to keep its key policy rates?the overnight borrowing and lending rates?steady at 3.50% and 5.50%, respectively. The reserve requirement ratios and the interest rate for BSP's Special Deposit Account facility were also kept steady.

*     Consumer price inflation in the Philippines increased slightly to 4.2% y-o-y in January from 4.1% in December 2013 as a majority of commodity groups posted higher annual increases. In Thailand, consumer price inflation climbed to 1.9% y-o-y in January from 1.7% in December on higher food prices. Meanwhile, consumer price inflation in Indonesia eased slightly to 8.2% y-o-y in January from 8.4% in December, but remained elevated mainly due to flooding in various areas in Indonesia that affected food supply distribution and prices. In the Republic of Korea, consumer price inflation stood at 1.1% y-o-y in January, the same rate as in December.

*     Indonesia reported a trade surplus for the third consecutive month in December amounting to US$1.5 billion, up from US$789 million in the previous month. Bank Indonesia noted the positive trend in the trade balance will help support efforts to bring down the current account deficit in 4Q13. In Malaysia, exports grew for the sixth consecutive month, rising 14.4% y-o-y in December from 6.7% in November. 

*     Hong Kong, China's retail sales grew 5.7% y-o-y in December, down from November's growth of 8.5%. For full-year 2013, retail sales grew 11.0%. Singapore's Purchasing Managers Index (PMI) rebounded in January, posting a reading of 50.5, up from 49.7 in December, attributed to an expansion in new orders as well as inventory and input prices.

*     Foreign investors' net investment into the Republic of Korea's local currency (LCY) bond market turned positive in January, amounting to KRW0.6 trillion for the month based on Financial Supervisory Service (FSS) data, after posting outflows for 5 consecutive months from August through December.

*     Last week, Korea Midland Power Company priced a 5-year US$-denominated bond worth US$300 million and carrying a coupon rate of 2.75%. Korea Gas Corporation sold a US$-denominated 10-year bond worth US$500 million at a coupon rate of 3.875% last week.   Philippine Long Distance Telephone Co. (PLDT) raised PHP15 billion from its first retail bond issuance. The bonds have tenors of 7 and 10 years, and were priced at 5.225% and 5.2813%, respectively.

*     Government bond yields fell last week for all tenors in the Republic of Korea, and for most tenors in Hong Kong, China; Malaysia; the Philippines; Singapore; and Thailand. Yields rose for most tenors in Indonesia, and yield movements are mostly unchanged in Viet Nam. Yield spreads between 2- and 10- year maturities widened in Indonesia and the Philippines, while spreads stayed unchanged in Hong Kong, China and Viet Nam, and narrowed in other emerging East Asian markets. The PRC's bond market was closed last week due to observation of the Chinese New Year.