AsianBondsOnline Newsletter (20 July 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150720.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 13 - 17 July 2015

The People’s Republic of China’s (PRC) gross domestic product (GDP) growth remained unchanged in 2Q15 at 7.0% year-on-year (y-o-y). The most rapid growth in 2Q15 came from the tertiary sector, which rose 8.4 y-o-y, followed by the secondary sector, which rose 6.1% y-o-y, and the primary sector, which rose 3.5% y-o-y. The government said that the economy continued on its path of rebalancing. Meanwhile, the PRC’s industrial production grew 6.8% y-o-y in June, up from 6.1% y-o-y in May. In Singapore, GDP expanded 1.7% y-o-y in 2Q15, based on advanced estimate released by the Ministry of Trade and Industry. This was slower compared with 2.8% y-o-y growth in 1Q15, largely due to a contraction of 4.0% y-o-y in the manufacturing sector in 2Q15.

*     In a meeting held on 14 July, Bank Indonesia’s Board of Governors decided to keep its benchmark interest rate steady at 7.50%. At its monetary policy meeting on 15 July, the Bank of Japan announced that it would maintain its monetary easing measures.

*     Consumer price inflation in Malaysia increased to 2.5% y-o-y in June from 2.1% y-o-y in May. The Producer Price Index (PPI) in the Republic of Korea fell 3.6% y-o-y in June, which was the index’s 11th consecutive month of y-o-y decline.

*     The PRC’s exports rose 2.8% y-o-y in June while imports fell 6.1% y-o-y, resulting in a trade surplus of US$46.5 billion in June compared with US$59.5 billion in May. Exports from Indonesia contracted 12.8% y-o-y in June and imports fell 17.4% y-o-y, resulting in a trade surplus amounting to US$477 million. In Singapore, non-oil domestic exports increased 4.7% y-o-y in June due to an improvement in exports of both electronic and non-electronic products. 

*     Personal remittances from overseas Filipino workers grew 5.5% y-o-y in May to reach US$2.3 billion. For the first 5 months of the year, overseas Filipino remittances have totaled US$11.0 billion.

*     Foreign investors sold a net KRW561 billion worth of local currency (LCY) bonds in the Republic of Korea in June, a reversal from net bond investments of KRW3.2 trillion in May, according to data from the Financial Supervisory Service. At end-June, investors from the United States (US) remained the largest holder of Korean LCY bonds with a total of KRW18.8 trillion, followed by investors from the People’s Republic of China (PRC) at KRW17.0 trillion.

*     Last week, Fitch Ratings affirmed the Republic of Korea’s long-term foreign currency issuer default rating and long-term LCY issuer default rating at AA- and AA, respectively. The outlook on both ratings was stable.

*     Nonghyup Bank based in the Republic of Korea priced last week a 5-year US$-denominated bond worth US$300 million at a coupon rate of 2.875% and priced to yield 2.898%. Korea Gas Corporation priced a 10-year US$-denominated bond worth US$500 million carrying a coupon of 3.5% and was priced to yield 3.52% last week.

*     LCY government bond yields fell for most tenors in Indonesia as Bank Indonesia maintained its policy rate. Yields also fell for most tenors in the Republic of Korea, Malaysia, and Thailand. Yields rose for all tenors in the PRC mostly on positive sentiment over higher than expected economic growth in 2Q15, and for most tenors in the Philippines, Singapore, and Viet Nam. Yields were mixed in Hong Kong, China. The spread between the 2-year and 10-year bonds fell for most emerging East Asian markets except for Malaysia, Thailand, and Viet Nam. 

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