AsianBondsOnline Newsletter (7 March 2016)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160307.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 29 February - 4 March 2016

Consumer price inflation in Indonesia rose to 4.4% year-on-year (y-o-y) in February from 4.1% y-o-y in January due largely to higher food prices. In the Republic of Korea, consumer price inflation quickened to 1.3% y-o-y in February from 0.8% y-o-y in January on the back of a relatively large hike in food prices. Consumer price inflation in the Philippines stood at 0.9% y-o-y in February, down from 1.3% y-o-y in January, amid declines in the indices for housing and utilities and transport. Thailand’s Consumer Price Index fell 0.5% y-o-y in February, marking the 14th consecutive month of a y-o-y decrease, induced by falling energy prices.

*     Last week, the People’s Bank of China reduced the reserve requirement ratio for banks by 50 basis points.

*     The Republic of Korea’s trade-in-goods surplus climbed to US$7.4 billion in February from US$5.2 billion in January amid a larger monthly drop in imports than exports. Malaysia’s merchandise trade surplus narrowed to MYR5.4 billion in January from MYR8.3 billion a month earlier as exports decreased at a faster pace than imports.   

*     The Republic of Korea’s current account surplus declined to US$7.1 billion in January from US$7.4 billion in December, prompted by a month-on-month (m-o-m) decrease in the merchandise trade surplus and a m-o-m increase in the services account deficit. Thailand’s current account surplus narrowed to US$4.1 billion in January from US$4.9 billion in December, induced by a monthly decline in the merchandise trade surplus.     

*     The People’s Republic of China’s (PRC) Purchasing Managers Index (PMI) for manufacturing fell to 49.0 in February from 49.4 in January, while its PMI for non-manufacturing decreased to 52.7 in February from 53.5 in January. In Singapore, the manufacturing PMI stood at 48.5 in February.

*     Industrial production in Japan grew 3.7% m-o-m in January, following a 1.7% m-o-m decrease in December. In the Republic of Korea, industrial production was down 1.8% m-o-m in January, a reversal from 0.5% m-o-m growth in December. Manufacturing production in Thailand contracted 3.3% y-o-y in January after growing 1.4% y-o-y in December. 

*     Corporate debt issuance in the Republic of Korea climbed to KRW8.7 trillion in January from KRW8.5 trillion in December on the back of monthly increases in the issuance of bank debentures and nonfinancial corporate bonds.

*     United Overseas Bank based in Singapore raised EUR500 million worth of 5-year covered bonds at a coupon rate of 0.25% last week.

*     Moody’s Investors Service has downgraded its outlook on the PRC’s credit rating from stable to negative.   

*     Bank Indonesia has issued a new regulation allowing Islamic banks to hedge foreign exchange risk.  

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

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