News Highlights - Week of 15 - 19 August 2016

To read the full report, data and graphs go to http://asianbondsonline.adb.org/newsletters/abowdh20160822.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 15 - 19 August 2016

Japan’s real gross domestic product (GDP) grew at an annualized rate of 0.2% in the second quarter (Q2) of 2016, down from 1.9% revised annualized growth in the first quarter (Q1) of 2016. The slower-than-expected GDP growth was mainly due to weak exports and private business spending. The Philippines’ real GDP growth climbed to 7.0% year-on-year (y-o-y) in Q2 2016 from revised growth of 6.8% y-o-y in Q1 2016. Growth was largely driven by the services and industrial sectors. Thailand’s GDP growth expanded to 3.5% y-o-y in Q2 2016 from 3.2% y-o-y in Q1 2016, buoyed by a rise in private consumption and continued growth in public consumption and total investment.

*     According to revised data from Japan’s Ministry of Economy, Trade and Industry, industrial production in Japan declined 1.5% y-o-y in June after falling 0.1% y-o-y in May.

*     On 18-19 August, Bank Indonesia’s (BI) Board of Governors held steady the BI 7-day reverse repo rate at 5.25%, replacing the BI reference rate as the new policy rate. The deposit facilty rate was kept unchanged at 4.50% while the lending facility rate was reduced by 100 basis points to 6.00%.

*     Indonesia reported a trade surplus for the seventh month in a row in July amounting to USD598 million. Japan’s exports contracted 14.0% y-o-y to JPY7.7 trillion in July while imports dropped 24.7% y-o-y to JPY5.2 trillion. In Singapore, non-oil domestic exports contracted 10.6% y-o-y in July after falling 2.4% y-o-y in June, the electronics and non-electronics sectors both contributed to the contraction.

*     Producer prices in the Republic of Korea declined 2.4% y-o-y in July, compared with a 2.7% y-o-y contraction in June. All major subindexes recorded price declines in July except for services.

*     Personal remittances from overseas Filipinos reached USD2.6 billion in June, up 4.8% y-o-y from USD2.4 billion in May. For the first half of the year, personal remittances to the Philippines stood at USD14.6 billion.

*     Last week, Fitch Ratings (Fitch) affirmed Malaysia’s long-term foreign and local currency issuer default ratings at A– with a stable outlook, while the short-term foreign and local currency issuer default ratings were affirmed at F1.

*     The Ministry of Planning and Finance of Myanmar is set to conduct its first auction of Treasury bonds in September. Details for the bond auction, including size and tenor, have yet to be determined.

*     Last week, China Aircraft Leasing, through its subsidiary CALC Bond 2, priced USD300 million of 5-year bonds at par to yield 4.9%. In Malaysia, Cagamas issued a triple-tranche bond to raise a total of MYR610 million. The issuance comprised 1-year conventional bonds worth MYR180 million and carrying a coupon rate of 3.3%, 1-year sukuk (Islamic bonds) worth MYR230 million and with a 3.3% profit rate, and 3-year conventional bonds worth MYR200 million and with a coupon rate of 3.65%.

*     Local currency government bond yields rose for all tenors in the Republic of Korea and Thailand, and for most tenors in Indonesia, the Philippines, and Singapore. On the other hand, bond yields for tenors of at least 1-year rose in Malaysia, but fell for most of the longer maturities. Bond yields were mixed in the PRC and Viet Nam, and were mostly unchanged in Hong Kong, China.  The 2-year versus 10-year yield spread widened for all emerging East Asian markets except Hong Kong, China; Malaysia, Singapore, and Viet Nam.

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