AsianBondsOnline Newsletter (23 February 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150223.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 16 - 20 February 2015

Last week, Bank Indonesia’s Board of Governors decided to cut the benchmark interest rate by 25 basis points (bps) to 7.50%. The deposit facility rate was also lowered by 25 bps to 5.50%, while the lending facility rate was held steady at 8.00%. The Bank of Korea’s Monetary Policy Committee decided on 17 February to leave the base rate unchanged at 2.00%. At its monetary policy meeting on 18 February, the Bank of Japan announced that it would maintain its monetary easing measures, stating that the domestic economy was recovering moderately and that the improving external environment was leading to rising exports.

*     Real gross domestic product (GDP) growth in Japan increased 0.6% quarter-on-quarter (q-o-q) in 4Q14 following a revised contraction of 0.6% q-o-q in 3Q14. On an annualized basis, Japan’s real GDP grew 2.2% in 4Q14. Singapore’s GDP growth slowed to 2.1% year-on-year (y-o-y) in 4Q14 from 2.8% in 3Q14.  For full-year 2014, GDP grew 2.9% after gaining 4.4% in 2013. Real GDP growth in Thailand accelerated in 4Q14 to 2.3% y-o-y from 0.6% y-o-y in 3Q14, buoyed by faster growth in domestic and external demand, as well as agricultural production. On a q-o-q basis, real GDP growth quickened to 1.7% in 4Q14. However, on a y-o-y basis, real GDP growth slowed down to 0.7% in 2014 from 2.9% in 2013.

*     Consumer price inflation in Malaysia eased to 1.0% y-o-y in January from 2.7% y-o-y in December. The Republic of Korea’s Producer Price Index fell 1.2% month-on-month (m-o-m) and 3.6% y-o-y in January, driven by decreases in the prices of agricultural, forestry, and marine products; manufacturing industry products; and utilities.

*     Indonesia’s trade surplus jumped in January to US$709 million from only US$187 million surplus in December. Increased exports of agricultural products contributed to the higher surplus. Japan's merchandise trade deficit widened to JPY1.2 trillion in January from a deficit of JPY665.2 billion in the earlier month. Singapore’s non-oil domestic exports rose 4.3% y-o-y in January on gains in both electronics and non-electronics exports.

*     In the Philippines, personal remittances from overseas Filipinos rose 6.4% y-o-y in December to reach US$2.6 billion. In full-year 2014, remittances rose 6.2% to reach US$26.9 billion.

*     Local currency corporate debt issuance in the Republic of Korea fell 16.0% m-o-m and 15.6% y-o-y to KRW7.2 trillion in January, according to Financial Supervisory Service data. The monthly decline stemmed from a 97.9% m-o-m decrease in issuance of bank debentures and an 11.0% m-o-m drop in bonds issued by financial companies. 

*     Government bond yields rose for all tenors in Singapore and Thailand on higher-than-expected economic growth. Yields rose for most tenors in the Republic of Korea and the Philippines. Bond yields fell for all tenors in Indonesia due to the policy rate cut. Yields fell for most maturities in the People’s Republic of China due to a liquidity injection by the People’s Bank of China prior to the Lunar New Year holiday. The spread between 2- and 10-year maturities narrowed in Hong Kong, China and the Republic of Korea, while it rose for most other emerging East Asian markets.

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