AsianBondsOnline Newsletter (16 May 2016)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160516.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 9 - 13 May 2016

Gross domestic product (GDP) growth in Malaysia slowed to 4.2% year-on-year (y-o-y) in the first quarter (Q1) of 2016 from 4.5% y-o-y in the fourth quarter (Q4) of 2015. The slower rate of expansion was due to weaker growth in gross fixed capital formation of 0.1% y-o-y in Q1 2016 compared with 2.7% y-o-y in the previous quarter. Exports also contracted 0.5% y-o-y in Q1 2016, while imports increased 1.3% y-o-y. Government spending (3.8% y-o-y) and private final consumption expenditure (5.3% y-o-y) both posted higher annual increases in Q1 2016 compared with the previous quarter. On a quarter-on-quarter and seasonally adjusted basis, the economy grew 1.0%.

*     Last week, policy rates were held steady in the Republic of Korea (1.50%), the Philippines (4.00% for the overnight borrowing facility and 6.00% for the overnight lending facility, and Thailand (1.50%).

*     The People’s Republic of China’s (PRC) consumer price inflation remained at 2.3% y-o-y in April. Producer prices fell 3.4% y-o-y in April after contracting 4.3% y-o-y in March.

*     The  PRC’s exports (in USD terms) fell 1.8% y-o-y in April after rising 11.5% y-o-y in March. Imports fell 10.9% y-o-y in April after contracting 7.6% y-o-y  in March. In the Philippines, merchandise exports plunged 15.1% y-o-y to USD4.6 billion in March, the twelfth consecutive month of y-o-y decline, according to the Philippine Statistics Authority.

*     Indonesia’s current account deficit narrowed to USD4.7 billion (equivalent to 2.1% of GDP) in Q1 2016 from a deficit of USD5.1 billion (equivalent to 2.4% of GDP) in Q4 2015. Japan’s current account surplus widened to JPY3.0 trillion in March from JPY2.4 trillion in February.

*     Foreign direct investment into the Philippines surged 50.6% y-o-y to USD936 million in January–February, according to the Bangko Sentral ng Pilipinas.

*     The Philippines registered a fiscal deficit of PHP34.6 billion in February—bringing the January–February fiscal deficit position to PHP38.1 billion—as growth in government spending outpaced government revenue, according to the Bureau of the Treasury.

*     Indonesia’s foreign exchange reserves rose to USD107.7 billion at the end of April from USD107.5 billion at the end of March. In Singapore, foreign reserves rose to USD250.4 billion at the end of April from USD246.5 billion at the end of March.

*     China International Capital Corporation last week issued USD500 million worth of 3-year bonds at a coupon rate of 2.75% and priced to yield 2.81%. United Overseas Bank raised SGD750 million from the sale of perpetual non-call-five bonds that were priced at par to yield 4.0%. Societe Generale sold SGD425 million of 10-year non-call-five Tier 2 bonds that were priced to yield 4.3%. National Australia Bank priced SGD450 million of 12-year non-call-seven Tier 2 bonds that were priced to yield 4.15%.

*     Local currency government bond yields fell for all tenors in Singapore and for most maturities in the PRC; Hong Kong, China; the Republic of Korea; Malaysia; the Philippines; Thailand; and Viet Nam. On the other hand, yields mostly rose in Indonesia. The spread between the 2- and 10-year tenors narrowed for most emerging East Asian markets except for the PRC, Malaysia, and Viet Nam where the spreads widened.

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