AsianBondsOnline Newsletter (29 February 2016)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160229.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 22 - 26 February 2016

Hong Kong, China’s gross domestic product (GDP) growth slowed to 1.9% year-on-year (y-o-y) in 4Q15 from 2.2% y-o-y in 3Q15. The slower growth was due to declines in exports of services and gross domestic capital formation, and slower growth in consumption. Singapore’s real GDP growth remained unchanged from the previous quarter at 1.8% y-o-y in 4Q15. By sector, economic growth was led by construction (4.9% y-o-y), wholesale and retail trade (6.8% y-o-y), and information and communications (3.3% y-o-y), all of which posted higher annual increases in 4Q15 than in 3Q15.

*     Consumer price inflation in Hong Kong, China rose to 2.7% y-o-y in January from 2.5% y-o-y in December, driven by accelerating gains in food prices due to the difference in the timing of the Lunar New Year in 2016 compared with 2015. In Malaysia, inflation rose to 3.5% y-o-y in January from 2.7% y-o-y in December, led by a more rapid annual increase in the utilities index. In Japan, consumer prices remained unchanged in January from the same period a year earlier, following a 0.2% y-o-y increase in December. In Singapore, consumer prices fell 0.6% y-o-y in January—after declining at the same rate in December—marking the 15th consecutive month that deflation was recorded. In Viet Nam, consumer price inflation rose to 1.3% y-o-y in February from 0.8% y-o-y in January.

*     Hong Kong, China’s exports fell 3.8% y-o-y in January to HKD300 billion. Imports also fell 9.0% y-o-y in January to HKD317 billion. As a result, Hong Kong, China reported a trade deficit of HKD17.5 billion in January. The Philippines posted a US$603 million merchandise trade surplus in December, a reversal from the US$977 million trade deficit in November, as imports declined at a faster monthly pace than exports. 

*     Manufacturing output in Singapore fell 0.5% y-o-y in January—after declining 11.9% y-o-y in December—as four out of the six manufacturing clusters recorded declines in output.

*     Last week, Fitch Ratings (Fitch) affirmed its long-term foreign currency issuer default rating of A– and long-term local currency issuer default rating of A for Malaysia, with a stable outlook for both ratings.

*     The Republic of Korea’s external debt fell to US$396.6 billion at the end of 2015 from US$424.4 billion a year earlier due to annual reductions in both short-term and long-term external debt, according to the latest report on the country’s international investment position released by the Bank of Korea last week.

*     Easy Buy, a Thai consumer finance company, raised THB4 billion from a dual-tranche bond sale in Thailand last week, issuing THB2 billion worth of 3-year bonds at a 2.07% coupon and another THB2 billion of 5-year debentures at 2.56%. Khazanah Nasional, Malaysia’s sovereign wealth fund, priced a 5-year US$750 million sukuk via a special purpose vehicle, Danga Capital. The US$-denominated sukuk was priced at a profit rate of 3.035% and structured under the Islamic finance principle of wakalah (agency relationship).

*     Government bond yields fell last week for all tenors in Hong Kong, China and the Philippines; and for most tenors in the PRC and Viet Nam. Yields rose for all tenors in Malaysia; and for most tenors in Indonesia, Singapore, and Thailand; while yield movements were mixed in the Rep. of Korea. Yield spreads between the 2-year and 10-year tenors widened for all tenors except in the Rep. of Korea and Malaysia.

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