AsianBondsOnline Newsletter (20 October 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20141020.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 13 - 17 October 2014

The Bank of Korea’s Monetary Policy Committee decided on 15 October to lower the base rate by 25 basis points from 2.25% to 2.00% to support economic growth and ensure price stability in the domestic economy. Meanwhile, in its monetary policy decision, the Monetary Authority of Singapore (MAS) chose to maintain its existing policy of a slow and gradual appreciation of the Singapore Dollar Nominal Effective Exchange Rate ($NEER). MAS will make no change to either the slope, width, or level at which the exchange rate is centered. MAS expects the economy to grow moderately for the remainder of 2014 and in 2015. 

*     The Bank of Korea last week reported that it has revised downward its gross domestic product (GDP) growth outlook for the Republic of Korea to 3.5% in 2014 and 3.9% in 2015 from July’s forecast of 3.8% and 4.0%, respectively. The central bank also revised downward its consumer price inflation outlook to 1.4% year-on-year (y-o-y) from 1.9% in 2014, and to 2.4% y-o-y from 2.7% in 2015.

*     Advanced estimates released by the Ministry of Trade and Industry indicated Singapore’s economy expanding 2.4% y-o-y in 3Q14, the same pace of growth as in 2Q14.

*     The People’s Republic of China’s (PRC) consumer prices rose at a slower pace in September, increasing 1.6% y-o-y versus 2.0% in August, on lower food costs and slower increases in home prices. In Malaysia, consumer price inflation eased to 2.6% y-o-y in September from 3.3% in August.

*     Last week, the Bank of Japan and Bangko Sentral ng Pilipinas signed their third Bilateral Swap Arrangement, which is an expansion of a prior agreement. The new arrangement allows a swap between US$ and the Philippine peso of up to US$12 billion from Japan, and allows the swap between US$ and Japanese yen of up to US$500 million from the Philippines. Moreover, the arrangement also includes a crisis prevention scheme to address possible liquidity needs.

*     In the Philippines, personal remittances from overseas Filipinos rose 7.2% y-o-y in August to reach US$2.3 billion. Personal remittances to the Philippines in the first 8 months of the year totaled US$17.2 billion, up 6.5% y-o-y.

*     Exports from the PRC rose 15.3% y-o-y in September versus August’s 9.4% growth due to improving external demand. Import growth was also strong, rising 7.0% y-o-y in September versus a decline of 2.4% in August. As a result, the PRC’s trade surplus narrowed to US$31 billion in September. In Singapore, non-oil domestic exports (NODX) slowed to 0.9% y-o-y in September after rising 6.0% y-o-y in August.

*     Korea Development Bank priced a JPY24.8 billion 3-year bond at 0.35% coupon and a JPY10.1 billion 2-year bond at 0.28% coupon last week. Also, Korean Reinsurance priced a US$200 million 30-year bond at a coupon rate of 4.5%.

*     Yields fell for all tenors in the PRC, Indonesia, and the Republic of Korea. Yields fell for the PRC due to declining inflation; in the Republic of Korea, a cut in the policy rate drove yields lower. Yields fell for most tenors in Hong Kong, China; Japan; Malaysia; the Philippines; Singapore; and Thailand; but rose for most tenors in Viet Nam. Yield movements in Malaysia were driven by a fall in the inflation rate, while yield movements in Hong Kong, China and Singapore tracked those in the United States (US). The 2- versus 10-year spread rose for all markets except Hong Kong, China; Indonesia; the Republic of Korea; and Malaysia. 

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