AsianBondsOnline Newsletter (6 October 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20141006.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 29 September - 3 October 2014

Consumer price inflation in Indonesia accelerated to 4.5% year-on-year (y-o-y) in September from 4.0% in August on the back of price hikes for electricity, food, and tobacco. On a month-on-month (m-o-m) basis, Indonesia’s consumer price inflation moderated to 0.3% in September from 0.5% in August. In the Republic of Korea, consumer price inflation slowed to 1.1% y-o-y in September from 1.4% in August, led by a drop in transport prices. On a m-o-m basis, consumer prices in the Republic of Korea fell 0.1% in September following a 0.2% increase in August. Thailand’s consumer price inflation decelerated to 1.8% y-o-y in September from 2.1% in August amid a slower rate of increase in non-food and beverage prices. On a m-o-m basis, Thailand’s consumer prices fell 0.2% in September after a 0.1% drop in August.    

*     Indonesia’s merchandise exports grew 10.6% y-o-y in August following a 6.4% fall in July, while merchandise imports climbed 13.7% y-o-y after contracting 19.2% a month earlier. The Republic of Korea’s merchandise exports rose 6.8% y-o-y in September after slipping 0.2% in August, while merchandise import growth accelerated to 8.0% y-o-y in September from 3.1% in August.

*     The Republic of Korea’s current account surplus slipped to US$7.3 billion in August from US$7.8 billion in July amid monthly increases in the deficit positions of the services and secondary income accounts, and a m-o-m fall in the primary income surplus. Thailand’s current account balance shifted to a surplus of US$239 million in August from a deficit of US$856 million in July, buoyed by a monthly increase in the merchandise trade surplus.

*     Industrial production in Japan declined 1.5% m-o-m and 2.9% y-o-y in August. In the Republic of Korea, industrial production contracted 3.8% m-o-m and 2.8% y-o-y in August. Thailand’s manufacturing production fell 2.7% y-o-y in August.

*     The People’s Republic of China’s (PRC) manufacturing activity continued to expand in September, as the Purchasing Managers Index (PMI) for the manufacturing sector stood at 51.1 in September, the same level as in August. In Singapore, the PMI for the manufacturing sector increased to 50.5 in September from 49.7 in August. Retail sales in Hong Kong, China rose 3.4% y-o-y in August versus a revised decline of 3.2% in July.   

*     Hana Bank, based in the Republic of Korea, issued a US$300 million Basel III-compliant Tier 2 bond with a tenor of 10 years and a coupon rate of 4.375% last week. NongHyup Bank of the Republic of Korea sold a US$300 million 5-year bond at a 2.75% coupon last week. The Siam Cement issued THB10.0 billion worth of 4-year debentures at a coupon rate of 3.9% in Thailand last week.

*     Also last week, Thailand’s cabinet approved an economic stimulus package totaling THB364 billion to help boost its economy in 4Q14.

*     Local currency government bond yields fell last week for all tenors in the Republic of Korea and Viet Nam and for most tenors in Singapore and Thailand. Yields rose for all tenors in Indonesia and for most tenors in Hong Kong, China and Malaysia. Yields remained unchanged for most tenors in the PRC amid a 7-day national holiday while yield  movements were mixed in the Philippines. Yield spreads between 2- and 10-year tenors widened in Indonesia while spreads narrowed in Hong Kong, China; the Republic of Korea; Malaysia; Philippines; Singapore; Thailand; and Viet Nam.

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