AsianBondsOnline Newsletter (30 March 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150330.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 23 - 28 March 2015

Japan's overall consumer prices rose 2.2% year-on year (y-o-y) in February, buoyed by price increases in all 10 major product groups except for transport and communications. Between January and February, however, Japan’s Consumer Price Index fell 0.2% due to decreases in the prices of clothing and footwear, food, transport and communications, and utilities. Singapore reported deflation for the fourth consecutive month at –0.3% y-o-y in February; deflation of –0.4% y-o-y was posted in January. The Monetary Authority of Singapore (MAS) expects inflation to ease further during the first half of the year before rising on the back of an expected recovery in global oil prices and due to base effects from low inflation in 4Q14.  Consumer prices in Viet Nam rose 0.9% y-o-y in March after gaining 0.4% in February due to a rise in food prices caused by the celebration of the Lunar New Year.

*     The Republic of Korea’s real gross domestic product (GDP) expanded 3.3% in 2014, led by growth in private consumption, facilities investment, and exports. The GDP growth rate for 2014 was up from 2.9% in 2013. Real GDP growth decelerated to 2.7% y-o-y in 4Q14 from 3.3% y-o-y in 3Q14. Viet Nam’s GDP growth slowed to 6.0% y-o-y in 1Q15 from 7.0% y-o-y in 4Q14. Growth in 1Q15 was driven mostly by the manufacturing industry, which grew 9.5% y-o-y. Meanwhile, the services sector grew 5.8% y-o-y and the agriculture sector grew 2.1% y-o-y.

*     The Bangko Sentral ng Pilipinas (BSP) kept its key policy rates—the overnight borrowing rate and the lending rate—unchanged at 4.0% and 6.0%, respectively. Special deposit account rates and reserve requirement ratios were also left unchanged.

*     Hong Kong, China’s February export growth picked up to 7.2% y-o-y in February from 2.8% y-o-y in January. Imports, on the other hand, fell 0.9% y-o-y in February after rising 7.9% y-o-y in January. For the month of February, the trade deficit was HKD35.9 billion.   The Philippines’ merchandise imports fell 14.2% y-o-y in January, after expanding 0.4% y-o-y in December, to US$5.1 billion. The fall in merchandise imports was mostly due to the decline in global oil prices. In Viet Nam, exports rose 6.9% y-o-y in 1Q15 and imports rose 16.3% y-o-y in the same period. In January–February, exports rose 8.6% y-o-y and imports rose 16.3% y-o-y.  The trade deficit was US$1.8 billion in 1Q15.

*     In Singapore, manufacturing output contracted 3.6% y-o-y in February following 1.3% y-o-y growth in January. Output in the transport engineering cluster fell 7.2% y-o-y in February, the precision engineering cluster declined 5.8% y-o-y, the electronics cluster dropped 4.5% y-o-y, and the biomedical cluster fell 2.5%. On a month-on-month (m-o-m) basis, however, manufacturing output climbed 4.1% in February. In Viet Nam, industrial production growth rose to 9.1% y-o-y in March from 7.0% y-o-y in February.

*     Corporate debt issuance in the Republic of Korea climbed 11.1% m-o-m to KRW7,975.6 billion in February on the back of monthly increases in bank debentures and non-financial corporate debt issues.    

*     Yields fell for all tenors in Indonesia, and for most tenors in the Republic of Korea, Malaysia, Singapore and Thailand, on expectations of an economic slowdown and falling inflation.  Yields rose for most tenors in the Philippines, as the central bank decision was anticipated by most investors, and in Viet Nam.  Yields movements were mixed in the PRC.  The 2-year versus 10-year spread rose for most markets except in the PRC, the Republic of Korea, Singapore and Viet Nam.

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