AsianBondsOnline Newsletter (27 October 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20141027.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 20 - 24 October 2014

Consumer price inflation rose in Hong Kong, China to 6.6% year-on-year (y-o-y) in September from 3.9% in August. According to the government, the increase was driven by a low base effect last year due to the government’s subsidy of public housing rentals. In Singapore, inflation eased to 0.6% y-o-y in September from 0.9% y-o-y in August on account of slower increase in services costs and a decline in accommodation costs. In Viet Nam, consumer price inflation eased to 3.2% y-o-y in October from 3.6% in September. The Republic of Korea’s Producer Price Index (PPI) decreased 0.3% m-o-m and 0.4% y-o-y in September. 

*     The People’s Republic of China’s (PRC) gross domestic product (GDP) growth fell in 3Q14 to 7.3% from 7.5% in 2Q14. The PRC said that the lower growth was due to a reduction in overcapacity and the downturn in the property market. Real GDP growth in the Republic of Korea stood at 0.9% quarter-on-quarter (q-o-q) and 3.2% y-o-y in 3Q14. On a q-o-q basis, the expansion stemmed from increases in final consumption expenditure and gross fixed capital formation. 

*     Japan's trade deficit slightly increased to JPY958.3 billion in September from JPY943.2 billion in the same month a year earlier. The Philippines’ merchandise trade deficit narrowed to US$17 million in August from US$608 million in the same period last year.

*     In the PRC, industrial production rose 8.0% y-o-y in September, compared with 6.9% growth posted in August. Meanwhile, retail sales growth fell to 11.6% y-o-y in September from 11.9% in August. Manufacturing output in Singapore fell 1.2% y-o-y in September following revised annual growth of 4.0% in August. Excluding biomedical manufacturing, industrial output rose a marginal 0.5% y-o-y.

*     The Monetary Board of the Bangko Sentral Pilipinas (BSP) decided to keep its key policy rates--the overnight borrowing and lending rates--steady at 4.0% and 6.0%, respectively. The BSP also decided to increase the minimum capital requirement for all bank categories to further strengthen the banking system. The new minimum capital requirement for universal and commercial banks will be tiered based on a bank’s network size.

*     Local currency (LCY) corporate debt issuance in the Republic of Korea increased 57.5% month-on-month (m-o-m) to reach KRW10.6 trillion in September.

*     The Indonesian government raised a total of IDR21.22 trillion from the sale of 3-year retail bonds with a coupon rate of 8.5%.

*     Hanjin International priced a US$300 million 3-year floating rate note with the coupon based on the 3-month Libor plus 88 basis points. Korea Hydro and Nuclear Power priced a US$300 million 5-year bond at a coupon rate of 2.375%. National Power Supply, a Thai operator of biomass power plants, sold THB4 billion worth of 5-year bonds carrying a 5.55% coupon and a THB1 billion 3.5-year debenture with a 5.1% coupon.

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

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