AsianBondsOnline Newsletter (31 August 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20150831.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 24 - 28 August 2015

The People’s Bank of China decided last week to lower its policy rates by 25 basis points (bps), bringing the 1-year lending rate and the 1-year deposit rate to 4.60% and 1.75%, respectively. It was the fifth time this year that policy rates in the People’s Republic of China (PRC) were lowered. In addition, the central bank decided that, effective 6 September, the reserve requirement ratio (RRR) of financial institutions will be reduced by 50 basis points. 

*     Consumer price inflation in Japan eased to 0.2% year-on-year (y-o-y) in July from 0.4% y-o-y in June, partly due to bigger y-o-y price decreases in energy, private transportation, and utilities. Singapore’s Consumer Price Index (CPI) fell 0.4% y-o-y in July, marking the ninth consecutive month of y-o-y decline, as five out of 10 product items in CPI the recorded price decreases. Consumer price inflation in Viet Nam decelerated to 0.6% y-o-y in August from 0.9% y-o-y in July due to slower y-o-y price hikes in most product categories in the CPI.

*     Real gross domestic product in the Philippines grew 5.6% y-o-y in 2Q15, higher than 1Q15’s y-o-y growth rate of 5.0%, but lower than 2Q14’s 6.7%. Growth in the second quarter was bolstered by household spending and capital formation on the demand side and industry and services on the supply side.

*     Hong Kong, China’s trade deficit was HKD28.4 billion in July, down from a year earlier as exports fell 1.6% y-o-y and imports fell 5.2% y-o-y. The Philippines’ trade balance shifted to a deficit of US$555 million in June from a surplus a year earlier as exports decreased 1.8% y-o-y and imports soared 22.6% y-o-y. Viet Nam’s trade deficit in the January–August period widened from a year earlier to reach US$3.6 billion on export and import growth rates of 9.0% y-o-y and 16.4% y-o-y, respectively.

*     Industrial production in the Republic of Korea contracted 3.3% y-o-y in July after posting 1.4% y-o-y growth in June. In Japan, industrial production growth eased to 0.2% y-o-y in July from 2.3% y-o-y in June. Manufacturing output in Singapore contracted 6.1% y-o-y in July, the sixth consecutive month of y-o-y decline. In Viet Nam, industrial production growth moderated to 9.0% y-o-y in August from 11.3% y-o-y in July.   

*     Corporate debt issuance in the Republic of Korea fell to KRW12.9 trillion in July from KRW14.4 trillion in June due to lower monthly issues in bank debentures, the bonds of financial companies, and non-financial corporate bonds.

*     In the Philippines, the Bureau of the Treasury launched a domestic liability management transaction that invites holders of certain eligible government bonds to exchange their securities for new benchmark 10-year and 25-year government bonds. The transaction aims to promote liquidity by establishing benchmarks. 

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

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