* Foreign exchange reserves in Indonesia climbed to USD123.2 billion at the end of April from USD121.8 billion at the end of March, stemming from tax revenues and government oil and gas export proceeds, and proceeds from the auction of Bank Indonesia foreign exchange bills.

To read the full report, data and graphs go to http://asianbondsonline.adb.org/newsletters/abowdh20170515.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 8 - 12 May 2017

The gross domestic product of Hong Kong, China grew 4.3% year-on-year (y-o-y) in the first quarter of 2017, owing to larger gains in gross domestic capital formation, consumer spending, and government spending. Malaysia’s Index of Industrial Production slowed to 4.6% y-o-y in March from 4.7% y-o-y in February, which was attributed to the manufacturing sector’s lower growth rate of 5.9% y-o-y and the electricity sector’s marginal drop of 0.2% y-o-y, which offset the mining sector’s 2.0% y-o-y growth.  

*     Bangko Sentral ng Pilipinas kept its monetary policy setting steady at 3.0% during its meeting on 11 May as it asssessed that inflation remained manageable. Rates on the overnight lending and deposit facilities were also unchanged at 3.5% and 2.5%, respectively. Market expectations remained anchored to the inflation target over the policy horizon but a proposed tax reform program and possible further adjustments in transportation fares and electricity rates were flagged as upside risks to inflationary pressure.

*     Bank Negara Malaysia decided to maintain the overnight policy rate at 3.0% during its meeting on 12 May. The central bank’s stance remained supportive of the markets’ economic conditions and growth prospects, while inflation remained in line with expectations.

*     Consumer prices in the People’s Republic of China rose to 1.2% y-o-y in April from 0.9% y-o-y in the previous month due to a rise in nonfood prices.

*     Exports from the Philippines maintained double-digit growth in March, rising 21.0% y-o-y and registering revenue of USD5.6 billion. Imports also remained strong, increasing 24.0% y-o-y to USD7.9 billion. The March trade balance posted a USD2.3 billion deficit. Total exports in the first quarter of 2017 reached USD15.5 billion and total imports reached USD22.1 billion. The People’s Republic of China’s (PRC) exports rose 8.0% y-o-y in April and imports rose 11.9% y-o-y, resulting in a trade surplus of USD38.1 billion during the month.

*     Japan’s current account surplus widened to JPY2.9 trillion in March, largely due to the increase in the primary income account surplus to JPY2.2 trillion. For fiscal year 2016, Japan’s current account surplus widened to JPY20.2 trillion from JPY17.9 trillion in 2015.

*     Foreign exchange reserves in Indonesia climbed to USD123.2 billion at the end of April from USD121.8 billion at the end of March, stemming from tax revenues and government oil and gas export proceeds, and proceeds from the auction of Bank Indonesia foreign exchange bills.

*     Singapore’s retail sales rose 2.1% y-o-y to SGD3.7 billion in March, reversing the decline of 2.6% y-o-y posted in February.

*     Last week, the Republic of Korea’s Woori Bank issued USD500 million worth of USD-denominated, perpetual non-call five Additional Tier 1 notes with a coupon rate of 5.25%. CK Hutchison Holdings issued a USD1 billion subordinated bond with a perpetual maturity, carrying a coupon rate of 4.0%, which will reset every 5 years if the bond is not called.

*     Last week, local currency bond yields were up for most tenors in the PRC, the Republic of Korea, and Singapore; and for all tenors in Indonesia. Yields fell for most tenors in Hong Kong, China, and Viet Nam while yield movements are mixed in Malaysia, the Philippines, and Thailand. Yield spreads between 2-year and 10-year tenors widened in all markets except in the PRC, Indonesia, and Malaysia.

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