AsianBondsOnline Newsletter (8 September 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140908.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 1 - 5 September 2014

Consumer price inflation in Indonesia eased to 4.0% year-on-year (y-o-y) in August, from 4.5% in the previous month, on slower increases for food prices and transportation costs. Consumer price inflation in the Republic of Korea moderated to 1.4% y-o-y in August from 1.6% in July, partly due to price decreases for food and transport.  In the Philippines, consumer price inflation was 4.9% y-o-y in August, the same pace as in July. In Thailand, consumer price inflation slipped to 2.1% y-o-y in August from 2.2% in July.  

*     Indonesia reported a trade surplus of US$124 million in July, reflecting a turnaround from a trade deficit of US$288 million a month earlier. In July, exports from Indonesia fell 6.0% y-o-y and imports contracted at a much faster pace of 19.3%. In Malaysia, exports rose 0.6% y-o-y to MYR61.1 billion in July, the slowest pace of growth in 13 months, after rising 7.9% in June.

*     In the People’s Republic of China (PRC), the manufacturing Purchasing Managers Index (PMI) fell to 51.1 in August from 51.7 in July.  In contrast, the non-manufacturing PMI rose to 54.4 from 54.2. In Hong Kong, China, the PMI fell to 49.6 in August from 50.4 in July. In Singapore, the PMI fell below the 50-point threshold in August to a reading of 49.7.

*     Real gross domestic product (GDP) growth rates for the Republic of Korea in 2Q14 were revised downward by The Bank of Korea to 0.5% quarter-on-quarter (q-o-q) and 3.5% y-o-y from 0.6% q-o-q and 3.6% y-o-y, respectively.

*     Foreign investors’ net bond investment in the Republic of Korea turned negative in August, with the outflow amounting to KRW0.1 trillion. The three-largest net bond investment outflows were generated by investors in Luxembourg (-KRW0.4 trillion), the United States (US) (-KRW0.3 trillion), and France (-KRW0.2 trillion).

*     Thailand’s Securities and Exchange Commission announced that the Capital Market Supervisory Board has approved regulations to allow the offering of commercial banks’ Basel III-compliant Tier 2 instruments to retail investors, with the regulations to take effect starting in 4Q14.

*     Household loans made by depository corporations in the Republic of Korea expanded KRW5.7 trillion in July, to reach KRW711.0 trillion.

*     Last week, 361 Degree Company, a PRC-based sportswear company, sold a 5-year CNY1.5 billion dim sum bond at a yield of 7.7%. West China Cement issued a US$400 million bond with a maturity of 5 years and was priced to yield 6.5%. The Indonesian government priced US$1.5 billion of 10-year US$-denominated sukuk (Islamic bonds) at a yield of 4.35%. Vista Land & Landscapes in the Philippines raised US$125 million last week from a reopening of its 5-year US$-denominated senior notes due in 2019  with a coupon rate of 7.45%.

*     Local currency government bond yields fell for all tenors in Indonesia and for most tenors in the Republic of Korea due to lower inflation . Yields in Viet Nam also fell for most tenors.  Yields changes were mixed in the PRC and the Philippines, but mostly rose in Hong Kong, China, Malaysia and Thailand.  The European Central Bank last week cut its refinancing rate by .05% and 0.20% for the deposit rate. Yield spreads between 2 and 10-year tenors rose in all markets except in Indonesia, Singapore and Viet Nam.

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