AsianBondsOnline Newsletter (24 August 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150824.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 17 - 21 August 2015

Consumer price inflation in Hong Kong, China eased to 2.5% year-on-year (y-o-y) in July from 3.1% y-o-y in June. The government said that inflation is expected to remain contained in the future due to low global inflation, weaker commodity prices, and limited domestic cost pressures. In Malaysia, consumer price inflation rose to 3.3% y-o-y in July from 2.5% y-o-y in June, mainly due to higher food prices and transportation costs. Meanwhile, the Republic of Korea’s Producer Price Index fell 4.0% y-o-y and 0.3% month-on-month (m-o-m) in July. 

*     Thailand’s real gross domestic product (GDP) growth eased to 2.8% y-o-y in 2Q15 from 3.0% y-o-y in 1Q15 amid slower growth in private consumption, domestic investment, and non-agricultural production, as well as negative growth in agricultural output, according to data from the Office of the National Economic and Social Development Board.

*     In a meeting held on 18 August, Bank Indonesia kept steady its benchmark interest rate at 7.50%. Also, as part of efforts to stabilize the rupiah, Bank Indonesia last week revised its auction process for reverse repurchase agreements (reverse repo) for government bonds and for Sertifikat Bank Indonesia (SBI). The central bank said that it will offer fixed rates on the two instruments instead of a variable rate, offer longer tenors such as 3-month reverse repos, and increase issuances of 9-month and 12-month SBI.

*     A week after the State Bank of Viet Nam increased the trading band of the Vietnamese dong to ±2% on 12 August, the central bank again widened the band to ±3% and devalued the dong by 1% on 19 August.

*     Indonesia’s trade surplus climbed to US$1.3 billion in July from a trade surpus of US$0.5 billion in June. In Japan, the merchandise trade deficit widened to JPY268 billion in July from JPY70 billion in June. In Singapore, non-oil domestic exports declined 0.8% y-o-y in July, after rising 4.5% y-o-y in June.

*     Personal remittances from overseas Filipino workers expanded 5.8% y-o-y in June to reach US$2.4 billion following an increase of 5.5% y-o-y in May. For the first half of the year, remittances from overseas Filipino workers stood at US$13.4 billion.

*     Net foreign bond investment in the Republic of Korea’s local currency bond market was negative for the second consecutive month in July, with net bond sales by foreign investors amounting to KRW2.6 trillion for the month, according to Financial Supervisory Service data. Foreign investors’ net bond sales in July were much bigger than June’s KRW561 billion. As a result, foreign investors’ holdings of Korean local currency bonds slipped to KRW103.0 trillion at end-July from KRW105.6 trillion at end-June.

*     Last week, China Everbright Securities issued a US$450 million 3-year bond which was priced to yield 2.949%, with a coupon rate of 2.875%.  The bond is backed by a letter of credit from China Merchants Bank.  Total orders for the bond reached US$1.9 billion.

*     Local currency government bonds yields fell for all tenors in Singapore, tracking movement in US yields, while yields fell for most tenors in the Republic of Korea and Thailand. On the other hand, yields rose for all tenors in Indonesia, and rose for most tenors in Malaysia, amid continued weakness of their respective local currencies versus the US dollar. The spread between the 2-year and 10-year maturities rose for all markets except for Hong Kong, China; the Republic of Korea, and Thailand.

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