AsianBondsOnline Newsletter (1 September 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140901.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 25 - 29 August 2014

The Philippines' real gross domestic product (GDP) growth accelerated to 6.4% year-on-year (y-o-y) in 2Q14, following 5.6% growth in 1Q14. However, this is lower than the 7.9% y-o-y growth posted in the same period last year. By sector, growth was mainly driven by the industrial and services sectors, which expanded 7.8% and 6.0%, respectively.

*     Consumer price inflation in Japan eased to 3.4% y-o-y in July from 3.6% in June. In Singapore, annual inflation slowed to 1.2% y-o-y in July from 1.8% in June.

*     Industrial production in Japan increased 0.2% m-o-m in July, but declined 0.9% y-o-y. In Viet Nam, industrial production moderated to 6.7% y-o-y in August from 7.5% in July. In the Republic of Korea, production in the industrial sector grew 3.4% y-o-y and 1.1% month-on-month (m-o-m) in July. Singapore's manufacturing output rose 3.3% y-o-y in July, compared with 0.8% growth in June. In Thailand, the Manufacturing Production Index fell 5.2% y-o-y in July, following a 6.7% contraction in June.

*     Hong Kong, China’s July exports and imports rose 6.8% and 7.5% y-o-y, respectively, resulting in a trade deficit of HKD42.1 billion. The Republic of Korea's merchandise trade surplus shrank to US$3.4 billion in August from US$4.7 billion in the same month of last year. The Philippines posted a merchandise trade surplus of US$731 million in June, a reversal from a trade deficit of US$399 million in the same period last year. In the first 8 months of the year through August, Viet Nam’s exports grew 14.1% y-o-y.

*     The Republic of Korea’s current account surplus stood at US$7.9 billion in July, about the same size as in June. Thailand’s current account balance shifted to a deficit of US$864 million in July from a surplus of US$1.8 billion in June.

*     Retail sales in Hong Kong, China fell 3.1% y-o-y in July, following a 6.9% decline in June. In Viet Nam, retail sales in January–August grew 11.4% y-o-y.

*     In the Republic of Korea, industrial loans from depository corporations grew KRW16.5 trillion in 2Q14 to reach RW860.9 trillion at end-June. Meanwhile, household credit grew KRW15.1 trillion in 2Q14 to reach KRW1,040.0 trillion at end-June.

*     The People’s Bank of China (PBOC) announced last week an increase of CNY20 billion in its re-lending quota to support the agricultural industry and rural financial institutions. In Hong Kong, China, the government announced that it will conduct a series of roadshows starting 1 September for a potential sukuk (Islamic bond) issuance.

*     In the Philippines, the Bureau of the Treasury issued a new 10-year benchmark bond priced at 4.125%. The total issue size of PHP140.39 billion comprised PHP121.72 billion worth of exchange offers of eligible bonds and new subscriptions amounting to PHP9.4 billion. TMB Bank in Thailand sold THB15 billion worth of Basel III-compliant 10-year subordinated bonds at a coupon rate of 5.5% last week.

*     Local currency government bond yields fell for all tenors in Indonesia and the Republic of Korea; and fell for most tenors in the Philippines, Thailand and Viet Nam. Yields rose for most tenors in the People’s Republic of China (PRC) and Hong Kong, China. Yields were mixed in Malaysia. Yield spreads between 2- and 10-year tenors narrowed in all markets except in the Philippines.

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