AsianBondsOnline Newsletter (26 May 2014)

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20140526.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 19 - 23 May 2014

Consumer price inflation in Hong Kong, China eased to 3.7% year-on-year (y-o-y) in April from 3.9% in March. The durable goods category posted a 2.5% decrease for the month. In Malaysia, consumer price inflation slowed to 3.4% y-o-y in April from 3.5% in March, while remaining unchanged on a month-on-month (m-o-m) basis. Consumer price inflation in Singapore accelerated to 2.5% y-o-y in April from 1.2% in March, which was mainly attributed to the increase in transportation prices. Lastly, consumer price inflation in Viet Nam rose to 4.72% y-o-y in May from 4.45% in April. Price increases in food and foodstuff, and housing and construction materials inched up to 4.53% and 5.04%, respectively.

*     Singapore's gross domestic product (GDP) expanded 4.9% y-o-y in 1Q14, similar to the revised growth rate in the previous quarter. On a seasonally adjusted and annualized basis, GDP growth moderated to 2.3% quarter-on-quarter (q-o-q) in 1Q14 from revised growth of 6.9% in the previous quarter. The government is forecasting that GDP growth will be between 2.0% and 4.0% for full-year 2014. Meanwhile, the national accounts of Singapore were rebased to a new reference year, 2010, last week. In Thailand, the economy contracted in 1Q14 as real GDP declined 0.6% y-o-y and 2.1% q-o-q on a seasonally adjusted basis. The contraction was driven by both demand-side and supply-side factors.

*     The Republic of Korea's external debt increased US$9.2 billion in 1Q14 to level off at US$425.4 billion at end-March, largely stemming from short-term external debt, which climbed US$8.5 billion to US$123.8 billion. Meanwhile, the country's Producer Price Index (PPI) decreased 0.3% y-o-y and 0.2% m-o-m in April. Also in April, retail sales of large discount stores and department stores fell 4.1% y-o-y and 1.4% y-o-y, respectively, while convenience store sales rose 9.4% y-o-y.

*     At its monetary policy meeting on 21 May, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures as the domestic economy continued to recover moderately. Meanwhile, Japan's merchandise trade deficit narrowed to JPY808.8 billion in April from JPY877.4 billion a year earlier as a result of 5.1% y-o-y growth in exports to JPY6.1 trillion and 3.4% y-o-y growth in imports to JPY6.9 trillion.

*     Last week, the Ministry of Finance of the People's Republic of China (PRC) issued a total of CNH16 of billion bonds in Hong Kong, China in multiple tranches: CNH14 billion was allocated to institutional investors and CNH2 billion was allocated to central banks and regional monetary authorities. PRC-based Hainan Airlines priced a 3-year CNH1.7 billion offshore renminbi bond at 6.25% in Singapore, which was the first non-bank issued CNH bond cleared in Singapore. Lastly, China Construction Bank's (CCB) Frankfurt branch plans to issue a 2-year offshore renminbi bond that is expected to yield around 3.6%.

*     The Japan Bank for International Cooperation (JBIC) issued a US$2.5 billion dual-tranche bond, with an unconditional and irrevocable guarantee from the government of Japan. The 5-year US$1.5 billion tranche and 10-year US$1.0 billion tranche were priced at 1.75% and 3.00%, respectively.

*     Government bond yields fell last week for most tenors in the Philippines. Yields rose for all tenors in indonesia, and for most tenors in Malaysia and Singapore. Yield movements were mixed in the PRC; Hong Kong, China; the Republic of Korea; Thailand and Viet Nam. Yield spreads between 2- and 10- year maturities widened in all emerging East Asian markets except for Hong Kong, China and the Republic of Korea.

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