AsianBondsOnline Newsletter (19 May 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140519.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 12 - 16 May 2014

Real gross domestic product (GDP) growth in Japan accelerated to 1.5% quarter-on-quarter (q-o-q) in 1Q14, up from 0.1% in the previous quarter. Growth was mainly attributed to the q-o-q increase in private demand (2.2%), particularly private consumption, which rose 2.1% in 1Q14 compared with a 0.4% increase in the previous quarter. Malaysia's GDP growth climbed to 6.2% year-on-year (y-o-y) in 1Q14 - the fastest rate in more than a year - from 5.1% in 4Q13. On the demand side, the growth was buoyed by strong exports (7.9%) and consumer spending (7.1%). Meanwhile, Hong Kong, China's GDP growth fell to 2.5% y-o-y in 1Q14 from 2.9% in 4Q13.  The lower growth was largely due to a slower increase in domestic consumption (2.0%).

*     Economic data releases last week from the People's Republic of China (PRC) pointed to a moderation in growth. Retail sales in the PRC rose 11.9% y-o-y in April versus 12.2% in March. For the period January-April, investments in fixed assets rose 17.3% y-o-y versus a 20.6% gain in the same period a year earlier. Industrial production, based on industrial value-added, rose 8.7% y-o-y in April versus an 8.8% increase in March.  

*     Malaysia's industrial production index (IPI) grew at a slower pace in March, rising 4.3% y-o-y compared with 6.7% in February. On a seasonally adjusted month-on-month (m-o-m) basis, the IPI declined 2.6%.

*     In the Philippines, personal remittances from overseas Filipinos rose 6.9% y-o-y in March to reach US$2.1 billion. The United States; Saudi Arabia; United Arab Emirates; United Kingdom; Singapore; Japan; and Hong Kong, China remained the top sources of cash remittances coursed through banks.

*     Singapore's retail sales contracted 4.0% m-o-m in March following revised growth of 2.7% in February, mainly driven by a 19.1% drop in motor vehicles sales.

*    Singapore's non-oil domestic exports (NODX) increased marginally by 0.9% y-o-y in April, a reversal from a 6.6% contraction in the previous month. On a seasonally adjusted basis, NODX climbed 9.0% m-o-m in April, up substantially from an 8.9% contraction in the previous month, driven by both electronic and non-electronic exports.

*     The average Basel III-compliant capital ratio of all domestic banks in the Republic of Korea fell to 14.1% at end-March from 14.5% at end-December 2013, as bank capital declined and  risk-weighted assets rose, according to a Financial Supervisory Service (FSS) report released last week. In 1Q14, the total capital of domestic banks decreased 1.4% (KRW2.5 trillion) while risk-weighted assets of these banks climbed 1.3% (KRW16.0 trillion).

*     Cinda Asset Management, one of the PRC's four state-owned asset management companies, issued a US$1.5 billion dual-tranche bond last week. The US$1.0 billion 5-year tranche was priced to yield 4.0% and the US$0.5 billion 10-year tranche was priced to yield 5.625%. China Construction Bank issued a 2-year CNH2 billion bond through its Sydney, Australia branch. In Thailand, real estate developer Ananda Development sold a 3-year bond worth THB4.0 billion at a coupon rate of 5.4% last week

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

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