To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160118.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx
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News Highlights - Week of 11 - 15 January 2016
In its meeting on 13–14 January, Bank Indonesia’s Board
of Governors decided to lower the benchmark interest rate by 25 basis points
(bps) to 7.25%. Both the deposit facility rate and the lending facility rate
were also reduced by 25 bps to 5.25% and 7.75%, respectively. The rate cut was
consistent with Bank Indonesia’s view that there is sufficient room for
monetary easing given current macroeconomic conditions and also takes into
account the United States (US) Federal Reserve rate hike. The Bank of Korea’s
Monetary Policy Board decided on 14 January to keep the base rate unchanged at
1.50%. In its monetary policy decision, the board assessed recent developments
in the global economy—including a sustained US economic recovery, the
eurozone’s ongoing “modest improvements,” and the continued slowdown in
emerging market economies.
* The Bank of
Korea announced last week that it has revised downward its 2016 consumer price
inflation forecast for the Republic of Korea to 1.4% from an earlier projection
of 1.7% made in October. In addition, its gross domestic product growth
forecast for full-year 2015 was revised downward to 2.6% from 2.7%.
* Industrial
production growth in Malaysia eased to 1.8% year-on-year (y-o-y) in November
from 4.2% y-o-y in October. The lower growth was driven by a larger annual
decrease in the mining index of –4.1% in November compared with –1.4% in
October.
* The People’s
Republic of China’s (PRC) exports fell 1.4% y-o-y in December while imports
contracted 7.6% y-o-y. A trade surplus of US$60.1 billion was recorded in
December. In Indonesia, exports declined 17.7% y-o-y and imports contracted
16.0% y-o-y in December. In the Philippines, merchandise exports contracted
1.1% y-o-y to US$5.1 billion in November, due to y-o-y decreases in exports of
five major commodity product categories.
* Japan’s
current account surplus narrowed to JPY1.1 trillion in November from JPY1.5
trillion in October, mainly due to a reversal in the goods account to a deficit
of JPY272 billion from a surplus of JPY200 billion.
* On 11 January,
Moody’s Investors Service affirmed its A3 sovereign credit rating for Malaysia
and revised its outlook to stable from positive.
* Foreign
investors sold a net KRW784 billion worth of listed bonds in the Republic of
Korea in December, a reversal from net bond investment inflows of KRW69 billion
in November, according to data from the Financial Supervisory Service. At the
end of 2015, investors in the US remained the largest holder of Korean bonds,
totaling KRW18,094 billion, followed by PRC investors at KRW17,428 billion.
* Woori Bank,
based in the Republic of Korea, priced a US$500 million 5.5-year bond on a
2.625% coupon to yield 2.704% last week. DBS Group priced its first Basel
III-compliant Tier 2 notes amounting to SGD250 million with a 12-year maturity.
The bonds carry a fixed rate of 3.8% and are callable in 2023.
* Local currency
government bond yields fell for all tenors in Indonesia after the policy rate
cut announced last week, and for the Republic of Korea and Thailand. Bonds
yields fell for most tenors in Singapore following movements in US treasury
rates, and for the PRC. On the other hand, yields rose for most tenors in the
Philippines, and Viet Nam, while yields were mixed for Hong Kong, China, and
Malaysia. The yield spread between the 2- and 10-year bond yields narrowed for
most emerging East Asian markets except for Indonesia, the Philippines, and
Viet Nam.
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