AsianBondsOnline Newsletter (12 October 2015)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20151012.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 5 - 9 October 2015

Consumer price inflation in the Philippines eased to 0.4% year-on-year (y-o-y) in September from 0.6% y-o-y in August, mainly due to a faster decline in the utilities sub-index and slower annual price increases for most commodity groups. The utilities sub-index decreased 2.2% y-o-y in September following a decline of 1.8% y-o-y in August. The food and non-alcoholic beverages sub-index, which accounts for the highest weight in the Consumer Price Index, posted an annual increase of 0.8% in September compared with a 1.2% gain in August. The transport sub-index posted a 0.3% y-o-y decline following a 0.6% y-o-y decrease in August.

*     At its monetary policy meeting on 7 October, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures. The BOJ stated that the domestic economy is recovering moderately and this trend is expected to continue.

*     Malaysia’s trade surplus increased to MYR10.2 billion in August from MYR2.4 billion a month earlier. Exports rose 5.2% month-on-month (m-o-m) in August to MYR66.5 billion from MYR63.2 billion in July. Meanwhile, imports contracted 7.4% m-o-m to MYR56.3 billion in August from MYR60.8 billion in July, due to declining imports of intermediate goods, consumption goods, and capital goods.

*     The Philippines’s exports fell 6.3% y-o-y in August to US$5.1 billion after falling 1.8% y-o-y in July. The drop in exports was due to lowered demand from the economy’s major trading partners. 

*     Japan’s current account surplus fell slightly to JPY1.7 trillion in August from JPY1.8 trillion in July, mainly due to the drop in the primary income account surplus to JPY2.1 trillion from JPY2.2 trillion. The goods account also posted a larger deficit of JPY326.1 billion in August compared with JPY108.0 billion in the previous month.

*     The People’s Republic of China’s (PRC) foreign exchange reserves fell for the fourth straight month to US$3.5 trillion in September from US$3.6 trillion in the prior month. The Republic of Korea’s foreign reserves stood at US$368.1 billion at the end of September, up from US$367.9 billion at the end of August.

*     Viet Nam’s Ministry of Finance plans to obtain approval from the National Assembly to issue government bonds for all maturities. Regulations passed in November 2014 limited issuance of Treasury bonds to those with maturities of 5 years or more, beginning this year. However, sluggish demand for longer-dated bonds (5 years and up) has made it difficult for the government to fulfill its issuance target.

*     Land & Houses, based in Thailand, raised THB6 billion last week from a triple-tranche debenture sale, comprising a THB4 billion 3-year debenture on a 2.41% coupon, a THB1 billion 4-year debenture at 2.66%, and a THB1 billion 5-year debenture at 2.99%. The debentures have been given a rating of A+ by TRIS Rating.

*     Local currency government bond yields fell for all tenors in Indonesia, Malaysia, and Thailand, and for most tenors in the Philippines on rising expectations that the United States Federal Reserve will hold off a possible rate hike this year. On the other hand, yields in the PRC rose for all tenors, and for most tenors in the Republic of Korea, while yields were mixed for Hong Kong, China; Singapore, and Viet Nam. The spread between the 2- and 10-year maturities rose for all maturities except for Indonesia, the Republic of Korea, and Thailand where the spreads narrowed, while remaining unchanged in the PRC.

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