Emerging East Asia’s local currency (LCY) government bond yields fell in most markets for most tenors between 1 June and 15 August due to weak global growth and low inflationary pressures,

To read the full report, data and graphs go to http://asianbondsonline.adb.org/newsletters/abowdh20160919.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 12 - 16 September 2016

Emerging East Asia’s local currency (LCY) government bond yields fell in most markets for most tenors between 1 June and 15 August due to weak global growth and low inflationary pressures, according to the latest Asia Bond Monitor released on 16 September. The report also noted that the value of total outstanding bonds in the region’s LCY bond market rose to USD10 trillion at the end of June. While emerging East Asia’s LCY bond markets have been calm, risks are rising over the possibility of a United States Federal Reserve rate hike and the impact of negative interest rates in some developed markets. For a copy of the full report, please click on the following link:  https://asianbondsonline.adb.org/documents/abm_sep_2016.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx.

*     The People’s Republic of China’s (PRC) industrial production rose to 6.3% year-on-year (y-o-y) in August, up from 6.0% y-o-y in July.  Rapid growth was noted in the automobile sector, which rose 21.4% y-o-y, and the pharmaceutical sector, which rose 11.5% y-o-y.  Industrial production in Hong Kong, China fell 0.5% y-o-y in the second quarter of 2016 after dipping 0.3% in the first quarter of 2016. 

*     Indonesia’s trade surplus was USD293.6 million in August, compared with USD513.6 million in July. Exports from Indonesia totaled USD12.6 billion, contracting 0.7% y-o-y in August, compared with a 16.9% y-o-y decline in July. Imports were USD12.3 billion in August, falling 0.5% y-o-y after declining 10.6% y-o-y in July. Singapore’s non-oil domestic exports registered flat growth of 0.0% y-o-y in August after falling 10.6% y-o-y in July.

*     On 14 September, the Bank of Thailand’s Monetary Policy Committee decided to maintain the policy rate at 1.50% since May of last year The central bank noted that Thailand’s economy continues to recover and decided to hold its policy rate steady to provide flexibility amid uncertainties in the global economy and the direction of monetary policies in advanced economies.

*     The PRC’s retail sales growth accelerated to 10.6% y-o-y in August from 10.2% y-o-y in July. In Singapore, July retail sales totaled SGD3.7 billion, rising 2.8% y-o-y after gaining 1.3% y-o-y in June.

*     Fixed-asset investment in the PRC rose 8.2% y-o-y in August, up from 3.9% y-o-y in July. Gains were driven by improvement in the private sector, with private sector fixed-asset investment rising 2.3% y-o-y in August after falling 1.2% y-o-y in July. The PRC’s foreign direct investment rose 5.7% y-o-y in August, after falling 1.6% in July, to CNY57.3 billion. . 

*     Last week, Bank Indonesia issued a new regulation that allows banking institutions to engage in call spread option contracts on foreign exchange transactions.

*     Overseas Filipinos’ personal remittances to the Philippines fell 5.4% y-o-y to PHP2.4 billion in July from PHP2.6 billion in June. This brought the January–July total to USD16.9 billion on an expansion of 2.9% y-o-y.

*     Yields rose for all tenors in Hong Kong, China; the Republic of Korea, and Singapore; and for most tenors in all other emerging East Asian markets ahead of the US Federal Reserve meeting on 20-21 September. The only exceptions were Viet Nam where yields fell and the PRC were yield movement was mixed. The 2-year versus 10-year yield spread rose for all markets except in the PRC, Hong Kong, China, Thailand and Viet Nam.

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