AsianBondsOnline Newsletter (9 June 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140609.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 2 - 6 June 2014

Emerging East Asian local currency (LCY) bond markets regained their bounce as bond yields fell in most markets in recent months. However, bond markets could still be jolted by the ongoing tapering of quantitative easing in the United States (US), the slowdown in economic growth in the People's Republic of China (PRC), and moves by the European Central Bank to counter threats of deflation, reports the latest quarterly Asia Bond Monitor from the Asian Development Bank (ADB). The region's outstanding LCY bonds reached US$7.6 trillion at end-March, up 2.1% quarter-on-quarter (q-o-q) and 9.5% year-on-year (y-o-y). Please click the link to download the full Asia Bond Monitor (ABM) report: http://asianbondsonline.adb.org/documents/abm_jun_2014.pdf?src=wdh.    

*     Consumer price inflation in Indonesia quickened in May to 7.32% y-o-y from 7.25% a month earlier due mainly to higher prices of processed food, beverages, and tobacco. Consumer price inflation in the Republic of Korea climbed to 1.7% y-o-y in May from 1.5% in April. In the Philippines, consumer price inflation increased to 4.5% y-o-y in May from 4.1% in April. In Thailand, overall consumer prices increased at a faster y-o-y pace in May, rising 2.6% y-o-y for the month following a 2.4% hike in April.

*     The Republic of Korea's real gross domestic product (GDP) grew 0.9% q-o-q and 3.9% y-o-y in 1Q14, according to preliminary estimates of The Bank of Korea. In Japan, GDP growth climbed 6.7% y-o-y in 1Q14, higher than preliminary estimate of 5.9%. Meanwhile, Singapore's Purchasing Managers' Index (PMI) dropped to 50.8 in May from 51.1 in the previous month. In the PRC, non-manufaturing PMI rose to 55.5 in May from 54.8 in April.

*     Indonesia reported a US$1.96 billion trade deficit in April,after posting a trade surplus in the previous 2 months. Malaysia's exports rose 18.9% y-o-y in April from revised growth of 8.3% in March, marking the biggest y-o-y gain since May 2010.

*     In Hong Kong, China, retail sales decreased 9.8% y-o-y in April to reach HKD38.8 billion, compared to a revised contraction of 1.5% in March.

*     Issuance of LCY corporate debt securities in the Republic of Korea rose 26.3% m-o-m to KRW10.6 trillion in April, according to the Financial Supervisory Service (FSS). The monthly increase was brought about by m-o-m increases in issuance of asset-backed securities, non-financial corporate bonds, and financial bonds, offsetting the 25.7% monthly drop in the issuance of bank debentures.

*     The Republic of Korea last week priced US$1.0 billion worth of 30-year bonds at a coupon rate of 4.125% and EUR750 million worth of 10-year bonds at a 2.125% coupon. China Overseas Land and Investment, a state-owned developer in the PRC, issued a total of US$1.0 billion worth of bonds last week in three tranches consisting of a 5-year US$250 million bond with a coupon rate of 4.25%, a 10-year US$250 million bond with a coupon rate of 5.95%, and a US$500 million 20-year bond paying a coupon of 6.45%. SM Investments Corp, a conglomerate based in the Philippines, issued US$350 million worth of 10-year bonds priced at a fixed rate of 4.875%.

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

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