News Highlights - Week of 4 - 8 July 2016

To read the full report, data and graphs go to http://asianbondsonline.adb.org/newsletters/abowdh20160711.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 4 - 8 July 2016

Consumer price inflation in the People’s Republic of China (PRC) eased to 1.9% year-on-year (y-o-y) in June from 2.0% in May due to lower food prices. In the Philippines, consumer price inflation accelerated to 1.9% y-o-y in June from 1.6% y-o-y in May, according to the latest Consumer Price Index (CPI) data of the Philippine Statistics Authority. The uptick in CPI inflation was due to price increases in most food items, higher nonfood inflation, and the lingering effects of El Niño.

*     The Purchasing Managers Index in Singapore has stayed below the 50-point threshold since July 2015, posting a reading of 49.6 in June, which was down from 49.8 in May. The Singapore Institute of Purchasing and Materials Management stated that the decline was due to a contraction in factory output and a faster rate of contraction in both new orders and new exports, while manufacturing inventory and finished goods recorded faster rates of expansion, indicating stock accumulation by manufacturers.

*     Japan’s current account surplus narrowed to JPY1.8 trillion in May from JPY1.9 trillion in April, primarily due to the lower goods account surplus of JPY40 billion posted in May, down from JPY697 billion in the previous month, as exports declined and imports increased.

*     The PRC’s foreign exchange reserves rose to USD3.21 trillion in June from USD3.19 trillion in the prior month. In the Philippines, gross international reserves climbed to USD84.0 billion at the end of June from USD82.9 billion at the end of May, according to the Bangko Sentral ng Pilipinas. Singapore’s foreign reserves rose to USD248.9 billion in June up from USD247.1 billion in May, based on data from the Monetary Authority of Singapore. Thailand’s international reserves climbed to USD178.7 billion in June from USD175.5 billion in May.

*     The Republic of Korea’s foreign reserves slipped to USD369.9 billion at the end of June from USD370.9 billion at the end of May, based on data from the Bank of Korea. Bank Negara Malaysia’s international reserves declined to USD97.2 billion at the end of June from USD97.3 billion at the end of May.

*     Foreign investors sold a net KRW2,748 billion worth of local currency (LCY) bonds in the Republic of Korea in June, a reversal from net bond investment of KRW888 billion in May, according to the Financial Supervisory Service. In June, foreign investors’ net bond purchases totaled KRW2,150 billion, which was less than their bond redemptions of KRW4,898 billion.

*     Bank of China last week issued a multi-tranche USD3.0 billion green bond.  Bank of China issued a 3-year USD750 million floating-rate tranche with a spread of 100 basis points over the 3-month LIBOR, a 3-year USD500 million tranche at a coupon rate of 1.875%, a 5-year USD1,000 million tranche with a coupon rate of 2.25%, a 5-year EUR500 million tranche with a coupon rate of 0.75%, and a 2-year CNY1.5 billion tranche at a coupon rate of 3.6%.

*     Yields fell for most tenors in the PRC, the Republic of Korea, Malaysia, Philippines, Singapore and Thailand following US yields as market continues to expect the Federal Reserve to delay its rate hike despite a better US jobs report in June.  Yields rose for most tenors in Hong Kong, China and Viet Nam. Market was closed in Indonesia due to a week-long holiday. The 2-year versus 10-year yield spread fell in the PRC, Hong Kong, China, the Republic of Korea, Philippines, Singapore and Thailand but rose in Malaysia and was unchanged in Viet Nam.

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