AsianBondsOnline Newsletter (23 May 2016)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160523.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 16 - 20 May 2016

Hong Kong, China’s real gross domestic product (GDP) growth moderated to 0.8% year-on-year (y-o-y) in the first quarter (Q1) of 2016 from 1.9% y-o-y in the fourth quarter (Q4) of 2015 amid weak domestic and external demand. In Japan, real GDP grew by an annualized 1.7% in Q1 2016, a reversal from its 1.7% annualized contraction posted in Q4 2015, bolstered by household consumption and government spending. Philippine real GDP growth accelerated to 6.9% y-o-y in Q1 2016 from 6.5% y-o-y in Q4 2015, driven by domestic demand and the industrial and service sectors. Real GDP growth in Thailand quickened to 3.2% y-o-y in Q1 2016 from 2.8% y-o-y in Q4 2015, buttressed by government spending, exports, and non-agricultural production.

*     Bank Indonesia’s Board of Governors decided in its meeting held on 18–19 May to keep the benchmark interest rate steady at 6.75%. Bank Negara Malaysia decided on 19 May to keep the overnight policy rate unchanged at 3.25%.  

*     Producer prices in the Republic of Korea fell 3.1% y-o-y in April following a 3.3% y-o-y decline in March. Consumer price inflation in Malaysia moderated to 2.1% y-o-y in April from 2.6% y-o-y in March.    

*     Indonesia’s trade surplus rose to USD667 million in April from USD508 million in March as exports and imports fell 12.6% y-o-y and 14.6% y-o-y, respectively. Singapore’s non-oil domestic exports fell 7.9% y-o-y in April following a 15.7% y-o-y contraction in March.      

*     Overseas Filipinos personal remittances to the Philippines rose 4.3% y-o-y to USD7.2 billion in Q1 2016.

*     The Government of the Philippines’ budget deficit stood at PHP112.5 billion in Q1 2016, up by PHP79 billion as y-o-y growth in expenditure outpaced that of revenue.

*     Foreign net bond investment in the Republic of Korea climbed to KRW631 billion in April from KRW570 billion in March, buoyed by relatively large investments in Treasury bonds. 

*     Korea Eximbank raised USD2.5 billion from a triple-tranche bond sale last week, comprising a USD1 billion 3-year bond with a 1.75% coupon, a USD1 billion 10-year bond with a 2.625% coupon, and a USD500 million 3-year floating rate note priced at par.

*     The Bangko Sentral ng Pilipinas announced last week that it will formally implement an interest rate corridor system which will take effect on 3 June. As a result, the interest rate for the overnight lending facility, which will serve as the upper bound for the interest rate corridor, will be set at 3.5%, a reduction from the current overnight repurchase rate of 6.0%. The interest rate for the overnight reverse repurchase facility will be set at 3.0%, a downward adjustment from its current rate of 4.0%.

*     Local currency government bond yields mostly rose in the People’s Republic of China; Hong Kong, China; Indonesia, Malaysia, and Singapore and for all tenors in the Republic of Korea and Thailand. The United States Federal Reserve released its April meeting minutes last week indicating a higher possibility of a June rate hike. On the other hand, yields fell for most maturities in the Philippines and Viet Nam. The spread between the 2- and 10-year maturities widened for most emerging East Asian markets except in Indonesia, where the spreads narrowed.

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