AsianBondsOnline Newsletter (18 May 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150518.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

******************************************************************************

News Highlights - Week of 11 - 15 May 2015

Hong Kong, China’s gross domestic product (GDP) grew 2.1% year-on-year (y-o-y) in 1Q15 following a 2.4% y-o-y expansion in 4Q14. The slower growth was driven by weaker exports and private domestic consumption, the latter of which fell to 3.5% y-o-y in 1Q15 from 4.1% y-o-y in the prior quarter. The growth of goods exports fell slightly to 0.4% y-o-y from 0.6% y-o-y over the same period, while services exports fell to 0.6% y-o-y from 0.3% y-o-y. Malaysia’s GDP growth slowed to 5.6% y-o-y in 1Q15 from 5.7% y-o-y in 4Q14, mainly due to the decline in exports.

*     The People’s Republic of China’s (PRC) industrial production growth climbed to 5.9% y-o-y in April from 5.6% y-o-y in March.   Industrial production growth in Malaysia rose to 6.9% y-o-y in March from 5.2% y-o-y in February.

*     The Bank of Korea's Monetary Policy Committee decided on 15 May to keep the base rate steady at 1.75%. Also, the Bangko Sentral ng Pilipinas  decided to keep its key policy rates—the overnight borrowing and lending rates—steady at 4.0% and 6.0%, respectively. The rates on its term reverse repurchase rate, repurchase rate, and special deposit account facility were also kept steady. 

*     Indonesia’s current account deficit narrowed to US$3.8 billion (1.8% of GDP) in 1Q15, an improvement over a current account deficit of US$5.7 billion (2.6% of GDP) in 4Q14. In Japan, the current account surplus widened to JPY2.8 trillion in March from JPY1.7 trillion in February. Malaysia’s current account surplus widened to MYR10.0 billion in 1Q15 from MYR5.7 billion in 4Q14.

*     Indonesia reported a trade surplus—for the fifth month in a row—of US$454 million in April, though this was down from US$1,026 million in March. The surplus was generated by weak imports, which contracted 22.3% y-o-y in April, while exports slipped 8.5% y-o-y. In the Philippines, merchandise exports increased 2.1% y-o-y to US$5.4 billion in March. Japan remained the Philippines’ largest export market, accounting for a 20.8% share of total merchandise exports, followed by the United States (US) (16.4%) and the PRC (10.9%).

*     Foreign net investment in the Republic of Korea’s local currency bond market fell to KRW143 billion in April from KRW1,370 billion in March, according to Financial Supervisory Service data released last week. The monthly decrease was due to a larger increase in bond redemptions than in bond purchases in April. At end-April, US investors remained the largest foreign investor group with cumulative bond holdings of KRW18,826 billion, accounting for 18.3% of total foreign investor bond holdings.

*     Charoen Pokphand Foods, an agro-industrial and food company based in Thailand, raised THB12.0 billion from a dual-tranche bond sale last week, comprising a THB6.5 billion 5-year bond and a THB5.5 billion 8-year bond, which carried coupon rates of 3.21% and 3.98%, respectively, and were issued at par. Thanachart Bank issued  a THB7.0 billion 10-year bond to yield 4.65% last week.

*     Government bond yields fell for all tenors in the PRC-on continued sentiment over the recent rate cut and in Indonesia on improvements in the current account deficit. On the other hand, yields rose for most tenors in Malaysia-following a slight rebound in oil prices, and in Thailand, and Viet Nam. Yields were mixed for Hong Kong, China; the Republic of Korea, and the Philippines. The spread between the 2- and 10-year tenors rose for most markets while it narrowed for Indonesia, Malaysia, and the Philippines.