AsianBondsOnline Newsletter (13 July 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150713.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 6 - 10 July 2015

Consumer prices rose 1.4% year-on-year (y-o-y) in the People’s Republic of China (PRC) in June, up from 1.2% y-o-y inflation in May. The slightly higher increase in June was driven mostly by food prices, which rose 1.9% y-o-y in June compared with 1.6% y-o-y in May. In the Philippines, consumer price inflation stood at 1.2% y-o-y in June, down from 1.6% y-o-y in May, largely due to a slower annual increase in the price index for food and non-alcoholic beverages of 2.1% y-o-y in June versus 3.2% y-o-y in May.

*     The Bank of Korea’s Monetary Policy Committee decided on 9 July to maintain the base rate at 1.50%. Last week, the Monetary Policy Committee of Bank Negara Malaysia decided to maintain the overnight policy rate at 3.25%.

*     The Bank of Korea announced last week that it has reduced its 2015 real gross domestic product growth forecast for the Republic of Korea to 2.8% from a previous projection of 3.1% reported in April. Meanwhile, the central bank maintained its 2015 inflation forecast of 0.9%.      

*     Philippine merchandise exports contracted 17.4% y-o-y in May, following a 4.1% y-o-y decrease in April. May exports totaled US$4.9 billion, from US$4.4 billion in April.

*     Japan’s current account surplus expanded to JPY1.9 trillion in May from JPY1.3 trillion in April, mainly due to a reversal in the services account to a surplus of JPY104 billion from a deficit of JPY525 billion.

*     Growth in the Industrial Production Index in Malaysia inched up to 4.5% y-o-y in May from 4.0% y-o-y in April. By category, growth in the Manufacturing Index moderated to 3.2% y-o-y in May from 4.2% y-o-y in April, growth in the Electricity Index declined to 1.2% y-o-y from 3.0% y-o-y, and growth in the Mining Index accelerated to 9.0% y-o-y from 3.9% y-o-y.

*     The Producer Price Index in the People’s Republic of China fell 4.8% y-o-y in June after declining 4.6% y-o-y in May. In Japan, the Produce Price Index decreased 2.4% y-o-y in June after a decline of 2.2% y-o-y in May.        

*     Household loans made by depository corporations in the Republic of Korea expanded 9.8% y-o-y in May to reach KRW768.2 trillion, according to the Bank of Korea. The outstanding stock of household loans made by commercial and specialized banks rose 10.6% y-o-y to KRW537.8 trillion, while that for non-bank depository corporations increased 8.0% y-o-y to KRW230.4 trillion. 

*     China Overseas Land International last week issued a EUR600 million 4-year bond at a coupon rate of 1.75% and priced to yield 1.858%. It marked the first EUR-denominated bond issued by a property company in the People’s Republic of China. 

*     Last week, government bond yields fell for all tenors in Singapore and the Republic of Korea and for most tenors in the PRC; Hong Kong, China; Thailand; Viet Nam. Yields were mixed for the Philippines. Yields rose for all tenors in Indonesia and for most tenors in Malaysia. Spreads between the 2 and 10 year tenors narrowed for the PRC; Hong Kong, China; Singapore; and Thailand. Meanwhile, spreads widened in Indonesia, Malaysia, the Philippines, and Viet Nam. In the Republic of South Korea, spreads were unchanged.

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