AsianBondsOnline Newsletter (9 February 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150209.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 2 - 6 February 2015

Consumer price inflation in Indonesia eased in January, with the year-on-year (y-o-y) inflation rate based on the Consumer Price Index (CPI) falling to 7.0% from 8.4% y-o-y in December. On a month-on-month (m-o-m) basis, Indonesia’s CPI fell 0.2% in January due to a monthly decrease in transport costs. In the Republic of Korea, the y-o-y inflation rate in January remained unchanged from the previous month at 0.8%. Consumer price inflation in the Philippines decelerated to 2.4% y-o-y in January from 2.7% y-o-y in December amid price decreases in housing and utilities, and transport. In Thailand, overall consumer prices decreased 0.4% y-o-y in January, induced by falling energy prices and transport costs.

*     Indonesia’s real gross domestic product (GDP) contracted 2.1% quarter-on-quarter (q-o-q) in 4Q14 amid stagnant growth in household expenditure and negative quarterly growth in inventory investment, agricultural production, and wholesale and retail trade. On a y-o-y basis, real GDP grew 5.0% both in 4Q14 and in full-year 2014.

*     Indonesia recorded a trade surplus in goods amounting to US$187 million in December after posting a trade deficit of US$425 million in November. Malaysia’s merchandise trade surplus narrowed 17.4% m-o-m and 5.9% y-o-y to MYR9.2 billion in December as import growth outpaced export growth.

*     Singapore’s Purchasing Managers Index (PMI) stood at 49.9 in January, the second-consecutive month of a reading below 50, thereby indicating a contraction in manufacturing activity. Retail sales in Hong Kong, China fell 3.9% y-o-y to HKD47.8 billion in December.

*     Net foreign bond investment in the Republic of Korea turned positive in January, leveling off at KRW55 billion for the month following a net outflow of KRW117 billion in December. 

*     Tencent, an internet service provider in the People’s Republic of China (PRC), last week priced a US$1.1 billion 5-year bond carrying a coupon of 2.875% and yield of 2.919%, and a US$900 million 10-year bond with a coupon of 3.8% and yield of 3.848%. Shimao Property, also based in the PRC, priced an US$800 million 7-year bond carrying a coupon of 8.375%. China Construction Bank (Asia) priced a EUR500 million 5-year bond carrying a coupon of 1.5%.

*     Tower Bersama Infrastructure, an Indonesian telecommunications provider, raised US$350 million from issuance of a 7-year bond carrying a coupon of 5.25%. Westpac Banking Corporation, an Australian bank, issued CNY1.0 billion worth of Dim Sum Tier 2 notes with a tenor of 10 years and a coupon of 4.85%.

*     In the PRC, the People’s Bank of China reduced the required reserve ratio for all financial institutions by 50 basis points (bps) effective 5 February. It also lowered the required reserve ratio for city commercial banks and qualified non-county level rural commercial banks by another 50 bps, and the required reserve ratio for the Agricultural Development Bank of China by an additional 400 bps.

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

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