AsianBondsOnline Newsletter (3 November 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20141103.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 27 - 31 October 2014

The Bank of Japan (BOJ) announced on 31 October the expansion of its monetary easing progam through a decision by its Policy Board to (i) expand the monetary base by about JPY80 trillion per year; (ii) increase the BOJ’s holdings of Japanese Government Bonds (JGBs) by about JPY80 trillion per year, and extend the average maturity of its JGB holdings to about 7–10 years; and (iii) raise the BOJ’s holdings of exchange-traded funds by about JPY3 trillion per year and Japanese real estate investment trusts by about JPY90 billion per year. Meanwhile, Japan’s consumer price inflation moderated to 3.2% year-on-year (y-o-y) in September from 3.3% y-o-y in August.

*     Hong Kong, China’s merchandise trade deficit widened to HKD50.4 billion in September from HKD31.5 billion in August due to slower month-on-month (m-o-m) growth in exports compared to imports. The Republic of Korea’s trade in goods surplus expanded to a record-high US$7.5 billion in October on the back of positive growth in exports and negative growth in imports. Viet Nam posted a merchandise trade surplus of US$1.9 billion in January–October, with y-o-y growth of 13.4% and 11.2% in exports and imports, respectively.  

*     The Republic of Korea’s current account surplus widened to US$7.6 billion in September from US$7.2 billion in August, led by a monthly increase in the merchandise trade surplus. Thailand’s current account balance shifted to a deficit of US$862 million in September from a surplus of US$239 million in August, largely due to a monthly drop in its merchandise trade surplus.

*     The Purchasing Managers Index (PMI) for the manufacturing sector in the People’s Republic of China (PRC) slipped to 50.8 in October from 51.1 in September. Japan’s industrial production grew 2.7% m-o-m and 0.6% y-o-y in September. In the Republic of Korea, industrial production climbed 0.1% m-o-m and 1.9% y-o-y in September. Manufacturing production in Thailand contracted 3.9% y-o-y in September and 3Q14. In Viet Nam, industrial production growth moderated to 7.9% y-o-y in October from 8.6% in September.

*     Asset-backed securities issuance in the Republic of Korea decreased 31.8% y-o-y to KRW7.8 trillion in 3Q14 largely due to a drop in sales of mortgage-backed securities, according to the Financial Supervisory Service.

*     Hutchison Whampoa, a listed company in Hong Kong, China, issued a US$2.0 billion 3-year bond, a US$1.5 billion 10-year bond, and a EUR1.5 billion 7-year bond at coupon rates of 1.625%, 3.625%, and 1.375%, respectively. China Travel Service raised US$700 million from the sale of 10-year bonds at a 5.625% coupon and US$300 million from the sale of 5-year bonds with a 3.875% coupon. China Hongqiao priced a US$300 million 3.5-year bond at a coupon of 6.875%, while the PRC’s Tewoo Group priced a US$400 million 3-year bond with a 2.875% coupon last week.

*     China Development Bank priced last week a CNY12 billion Basel III-compliant, Tier 2 subordinated bond with a tenor of 10 years and a coupon of 5.3%.

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

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