AsianBondsOnline Newsletter (3 February 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140203.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 27 - 31 January 2014

Last week, the United States (US) Federal Open Market Committee (FOMC) decided to further reduce the pace of its asset purchase program in February by lowering its monthly purchases of agency mortgage-backed securities to US$30 billion (from US$35 billion) and of longer-term Treasury securities to US$35 billion (from US$40 billion). The FOMC also maintained the federal funds rate in a target range of between zero and 0.25%

*     Hong Kong, China's exports reached HKD310.9 billion in December, while imports rose 1.8% year-on-year (y-o-y) to HKD365.2 billion, leading to a trade deficit of HKD54.4 billion. Japan's merchandise trade deficit doubled to JPY1.3 trillion in December as result of 15.3% y-o-y growth in exports and 24.7% y-o-y growth in imports. The Republic of Korea posted a current account surplus of US$6.4 billion in December and US$70.7 billion in full-year 2013, and a trade surplus of US$0.7 billion in January. Meanwhile, Thailand's current account deficit widened to US$2.8 billion in 2013 from US$1.5 billion in 2012, and posted a surplus of US$5.2 billion in 4Q13. Lastly, Viet Nam posted a trade deficit of US$100 million in January.

*     In Japan, industrial production increased 1.1% month-on-month (m-o-m) and 7.3% y-o-y in December. In Thailand, industrial production contracted 1.9% m-o-m and 6.1% y-o-y in December, and fell 3.2% y-o-y in full-year 2013. Meanwhile, the Republic of Korea's industrial production rebounded in December, rising 3.4% m-o-m and 2.6% y-o-y. Viet Nam's industrial production growth eased to 3.0% y-o-y in January from 7.0% in December due to a decline of 9.6% in the mining and quarrying sector.

*     In the Philippines, real gross domestic product (GDP) grew 6.5% y-o-y in 4Q13 following revised 6.9% growth in 3Q13, mainly driven by the strong performance of the services sector. The People's Republic of China's (PRC) manufacturing and non-manufacturing PMI fell to 50.5 and 53.4 in January.

*     In Japan, consumer price inflation increased slightly in December to 1.6% y-o-y from 1.5% in the previous month. At its Monetary Policy Committee meeting on 29 January, Bank Negara Malaysia (BNM) decided to maintain its overnight policy rate at 3.0%, the same level it has been since May 2011.

*    Last week, the Bangko Sentral ng Pilipinas, Department of Finance, Insurance Commission, Philippine Deposit Insurance Corporation, and Securities and Exchange Commission signed a memorandum of agreement to formally create the Financial Stability Coordination Council in the Philippines.

*     In the Republic of Korea, local currency (LCY) corporate debt issuance fell 9.6% y-o-y to KRW116.3 trillion in 2013 due to lower amounts of debt securities being sold by non-financial corporates and banks. Meanwhile, the country's over-the-counter (OTC) bond market trading volume climbed 3.3% in 2013 to reach a record-high KRW6,088.5 trillion. 

*     Last week, China Construction Bank's (CCB) Hong Kong, China branch priced a 1-year CNH905 million certificate of deposit (CD) at a yield of 2.73%. ICBC Asia also priced a 1-year CNH400 million CD at a yield of 2.8%. The Republic of Korea announced last week its plan to issue KRW5 trillion of treasury bills and KRW7.4 trillion of treasury bonds in February, as well as KRW6 trillion of treasury bills in March.

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