|
Economic
Research
|
03 May 2016
|
|
China
|
|
|
Economic
Highlights
|
|
|
China’s manufacturing
PMI missed market expectation in Apr 2016. Although the index stayed in its
expansionary territory for two straight months due to recent pro-growth
policies, rising fiscal expenditure and solid infrastructure investment,
sluggish recovery of demand remains as major headwind for industrial sector.
In a longer term, we remain cautious on the outlook for expansion in the
sector, as de-capacity and de-inventory will be two major tasks for
policymakers to carry on their economic restructuring process. Also, if
government fiscal expenditure, which was the main driver for 1Q16’s growth,
slows down, we believe China’s
economic growth will continue its down trend in the coming quarters.
Economist: Zhang Fan|
+8621
6288 9611 ext 105
|
|
|
|
|
|
To access our recent reports please
click on the links below:
|
|
Tuesday, May 3, 2016
Mounting Risk Of Moderation
Credit Market Watch: Summary for week ending 29-Apr
Credit
Market Watch: Summary for week ending 29-Apr
·
MYR Credit:
Ø An ultra-low
probability black swan event occurred over the long weekend, in sports, as
Leicester City was crowned EPL champions.
Ø MGS softened
5-10bps WoW amid negative domestic headlines, but ended the week on a slightly
more constructive tone following the internal appointment of the new BNM
governor. MYR PDS yields largely moved range-bound +/-1bp.
Ø Banking stats in
March: Industry loan growth slowed to 6.4% YoY (Feb: 7.4% YoY) while deposits
growth turned negative for the first time since GFC slipping 0.9% YoY (Feb:
+0.7% YoY). Loan/deposit ratio improved to 87.7% from 88.0% at end-Feb despite
the reduction in deposits and this would require additional details for drivers
behind the drop in LDR. Industry's gross NPL remained steady at 1.6%.
Ø Country Garden
(AA3/negative): RAM cut the outlook to negative, having just assigned the
stable outlook 4 months earlier in Dec 2015. The outlook change was based on a
surprise increase in Country Garden Holdings' borrowings in 2H15 due to land
acquisitions which deteriorated financial metrics and are unlikely to recover
much in the short term amid weaker profitability. Furthermore, the management's
risk appetite remains high with committed land purchases which deviated from
its earlier guidance. Country Garden Holdings' net DE jumped to 0.92x (1H15:
0.72x) with RMB109b total debt (+70% YoY), inclusive of perpetual securities,
and 0.24x OCFDC fell short of an expected 0.3x. RAM wants to see a minimum 0.3x
OCFDC and net DE improving to 0.7x or below to revert the outlook to stable.
Ø CIMB Group: CIMB
Niaga posted weak 1Q16 results, though not surprising, was lower than our
equity analyst's expectations due to higher loan provisions. Asset quality
continued to weaken as NPL ratio rose to 3.90% end Mar 2016 (2015: 3.74%) and
special mention loans spiked to 10.4% (2015: 8.16%), some of which are pending
restructuring. The Indonesian unit also posted a 3% YoY contraction in loans
due to softer loan demand. As CIMB Niaga is estimated to contribute 10-15% of
CIMB Group's net profit, this would weigh on the group's performance and credit
fundamentals.
Ø Relative value:
Perdana Petroleum papers, which are guaranteed by Danajamin, offer decent yield
pick-up due to its FG status. The 2018, 2019, 2020 and 2021 papers last traded
at 4.46%, 4.60%, 4.75% and 4.90% respectively, 17-50bps above our fitted AAA
line. Comparatively, bank-guaranteed EKVE 32 with longer duration last traded
at 5.15%.
·
Asian USD Credit:
Ø UST curve shifted
4-6bps lower along the 2y10y WoW. Asian credit spreads movements was mixed,
with JACI composite -2bps, JACI IG +2bps and JACI HY -9bps WoW.
Ø Sovereigns turned
weaker, led by INDONs and PHILIPs as the former edged 2-3bps higher and the
latter rose 5-15bps higher in yields WoW. KOREA and MALAYS, on the other hand,
traded 2-5bps firmer WoW. OGIMK 2023, the USD3b 1MDB USD bonds, weakened to
6.46% or up ~58bps in yield WoW.
Ø Rating changes:
Tencent's rating was revised to A/positive from A/stable by S&P, citing
good revenue and profitability growth prospect on progress in monetisation of
user traffic and strong operating cashflows generation. Gemdale Corp was
downgraded to Ba2 from Ba1 by Moody's, citing weakened credit metrics more in
line with Ba2 position despite the agency's expectation of some improvements in
the next 12-18 months e.g. revenue/adjusted debt weakened to 79% in 2015 vs
107% in 2014 and EBIT/interest cover declined to 2.7x in 2015 from vs 4.0x in
2014. The ratings of Greenland Holding and its Hong Kong subs were lowered by both
Moody's and S&P due to high leverage and weakened credit metrics, while
S&P has additionally cited weakened probability of extraordinary support
from the government.
·
CDS: EM Asia 5y CDS spreads
widened led by Malaysia and Philippines each +10bps, China +8bps while Korea
and Thailand each +2bps WoW.
RHB | Singapore | Public Demand Drove Small Pick-up In M3 As Loan Growth Worsens
|
Economic
Research
|
03 May 2016
|
|
Singapore
|
|
|
Economic
Highlights
|
|
|
Singapore’s broad money
supply (M3) growth picked up to 2.2% y-o-y in March, rising from 1.2%
the month before. Public demand for credit drove most of the upside, growing
5.4% y-o-y in March, inching higher from its 5.3% reading a month ago. Things
were further improved as government deposits grew at a slower pace of 11.2%
y-o-y, compared to 15.8% the month before. However, private demand for credit
slowed, and net foreign assets shrank during the month, capping some of
gains. Despite the increase in money supply, loan growth continued to decline
at a quicker clip compared to the first two months of the year, casting a
downbeat outlook for 1Q economic growth.
Economist: Ng Kee Chou
| +603 92802179
|
|
|
|
|
|
To
access our recent reports please click on the links below:
19 April 2016: March
NODX Dives On Broad-based Weakness
15 April 2016: MAS
Eases S$NEER After Economy Stalled In 1Q
|
|
Fixed Income Weekly Pulse, 03 May 2016
Highlights of the week:
·
The surprise move of both BoJ and RBNZ to hold their monetary
policy unchanged leads to some sharp swings in the forex markets
·
The Eurozone M3 rise to 5.0% in March, up from February,
suggests a continue gradual recovery in the credit cycle
·
Bank of Japan surprises the market by holding off on expanding
monetary stimulus
·
RM down slightly against the USD as local equity plunges and
Malaysia 5Y CDS increases
Local govvies see sell-off across the curve due to lower risk sentiment
Subscribe to:
Posts (Atom)
