26 October 2015 asianbondsonline.adb.org ……………………………………………………………………………………………………………..……………..…… Key Developments in Asian Local Currency Markets 1 he People’s Republic of China’s (PRC) economy grew 6.9% year -on-year (y-o-y) in 3Q15, down slightly from 7.0% y-o-y growth in 2Q15. By sector, the fastest growth was in the service sector, which expanded 8.6% y-o- y, followed by the manufacturing industry, which grew 5.8% y-o-y. The agricultural industry grew 4.1% y-o-y in 3Q15. In January–September, the PRC’s gross domestic product (GDP) expanded 6.9% y-o-y. On a quarter- on-quarter (q-o-q) basis, GDP grew 1.7% in 3Q15. Real GDP growth in the Republic of Korea accelerated to 2.6% y-o-y in 3Q15 from 2.2% y-o-y in 2Q15, buoyed by improved growth in domestic demand and in the construction, manufacturing, and utilities sectors. On a q-o-q basis, real GDP growth in the Republic of Korea accelerated to 1.2% in 3Q15 from 0.3% in 2Q15. The People’s Bank of China (PBOC) last week reduced its key policy rates by 25 basis points (bps), taking the 1-year lending rate to 4.35% and the 1-year deposit rate to 1.50%. The PBOC also removed the ceiling on deposit rates for commercial and rural banks and reduced the reserve requirement ratio of financial institutions by 50 bps (17.50% for major banks and 15.50% for smaller banks), with select financial institutions qualifying for an additional 50 bps reduction. Consumer price inflation in Hong Kong, China fell to 2.0% y-o-y in September from 2.4% y-o-y in August, due to slower price increases in housing rents and a more rapid decline in utility prices. In Malaysia, consumer price inflation eased to 2.6% y-o-y in September from 3.1% y-o-y in August, mainly due to the contraction in the transportation sub- index accelerating to –3.8% y-o-y from –1.2% y-o-y in August. Consumer prices slipped in Singapore, falling 0.6% y-o-y in September after declining 0.8% y-o-y in August. The slight uptick in prices was due mainly to increases in consumer services and retail items. Japan's merchandise trade deficit narrowed to JPY114.5 billion in September from JPY569.4 billion in August. Local currency (LCY) corporate debt issuance in the Republic of Korea rose to KRW10.5 trillion in September from KRW7.6 trillion in August, led by monthly increases in the issuance of asset-backed securities, bank debentures, and financial bonds. In Viet Nam, the National Assembly approved the government’s plan to raise US$3 billion through the issuance of bonds and will also allow the issuance of LCY government bonds with maturities of 5 years or less beginning in November. Last week, the Indonesian government raided a total of IDR27,439 billion from the sale of retail bonds. The bonds carry a maturity of 3 years and a coupon rate of 9.0%. The PBOC issued a CNY5 billion 1- year central bank bill in London at a yield of 3.1%. Dongfeng Motors, based in the PRC, issued a EUR500 million 3-year bond at a coupon rate of 1.6%. LCY government bond yields rose for most tenors in most markets with the exception of Malaysia. In Malaysia, yields fell for most tenors following lower inflation and the government’s commitment to reduce the deficit based on 2016 budget. In the PRC, yields rose slightly for most tenors, despite the decline in policy rates as news was released after markets closed. Yield movements were mixed in Singapore. The 2-year versus 10-year spread rose in Hong Kong, China, Malaysia, Thailand. T Asia Bond Monitor September 2015 read more 10-Year Selected LCY Government Security Yields Close of 23 October 2015 basis point change from Markets Latest Closing Previous Day* Previous Week* 1-Jan-15* US 2.09 6.03 5.32 -8.46 EU 0.51 1.60 -3.60 -2.90 Japan 0.30 -0.50 -1.70 -2.60 PRC 3.08 -1.00 -1.00 -57.00 Hong Kong, China 1.49 -0.90 1.40 -40.90 India 7.58 -0.30 1.80 -29.80 Indonesia 8.68 -11.50 1.60 85.20 Korea, Rep. of 2.10 -1.80 4.00 -50.30 Malaysia 4.13 -1.00 0.90 -1.80 Philippines 3.68 0.26 0.68 -18.67 Singapore 2.40 -6.47 2.93 12.27 Thailand 2.58 0.00 8.80 -14.70 Viet Nam 7.17 3.10 6.70 -6.30 5.32 -3.60 -1.70 -1.00 1.40 1.80 1.60 4.00 0.90 0.68 2.93 8.80 6.70 Selected Benchmark Yield Curves - Local Currency Government Bonds Policy Rate versus Inflation Rate Charts Government Security Yields Credit Default Swap Spreads & Exchange Rate Indexes Selected Debt Security Issuances Selected Asia Data Releases 2-versus-10 Yield Spread Chart
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Key Developments in Asian Local Currency Markets ... · reduced the reserve requirement ratio of financial institutions by 50 bps (17.50% for major banks and 15.50% for smaller banks),
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he People’s Republic of China’s (PRC) economy grew 6.9% year-on-year (y-o-y) in 3Q15, down slightly from 7.0% y-o-y growth in 2Q15. By sector, the fastest growth was in the service sector, which expanded 8.6% y-o-y, followed by the manufacturing industry, which grew 5.8% y-o-y. The agricultural industry grew 4.1% y-o-y in 3Q15. In January–September, the PRC’s gross domestic product (GDP) expanded 6.9% y-o-y. On a quarter-on-quarter (q-o-q) basis, GDP grew 1.7% in 3Q15. Real GDP growth in the Republic of Korea accelerated to
2.6% y-o-y in 3Q15 from 2.2% y-o-y in 2Q15, buoyed by improved growth in domestic demand and in the construction, manufacturing, and utilities sectors. On a q-o-q basis, real GDP growth in the Republic of Korea accelerated to 1.2% in 3Q15 from 0.3% in 2Q15.
The People’s Bank of China (PBOC) last week reduced its key policy rates by 25 basis points (bps), taking the 1-year lending rate to 4.35% and the 1-year deposit rate to 1.50%. The PBOC also removed the ceiling on deposit rates for commercial and rural banks and reduced the reserve requirement ratio of financial institutions by 50 bps (17.50% for major banks and 15.50% for smaller banks), with select financial institutions qualifying for an additional 50 bps reduction.
Consumer price inflation in Hong Kong, China fell to 2.0% y-o-y in September from 2.4% y-o-y in August, due to slower price increases in housing rents and a more rapid decline in utility prices. In Malaysia, consumer price inflation eased to 2.6% y-o-y in September from 3.1% y-o-y in August, mainly due to the contraction in the transportation sub-index accelerating to –3.8% y-o-y from –1.2% y-o-y in August. Consumer prices slipped in Singapore, falling 0.6% y-o-y in September after declining 0.8% y-o-y in August. The slight uptick in prices was due mainly to increases in consumer services and retail items.
Japan's merchandise trade deficit narrowed to JPY114.5 billion in September from JPY569.4 billion in August.
Local currency (LCY) corporate debt issuance in the Republic of Korea rose to KRW10.5 trillion in September from KRW7.6 trillion in August, led by monthly increases in the issuance of asset-backed securities, bank debentures, and financial bonds.
In Viet Nam, the National Assembly approved the government’s plan to raise US$3 billion through the issuance of bonds and will also allow the issuance of LCY government bonds with maturities of 5 years or less beginning in November.
Last week, the Indonesian government raided a total of IDR27,439 billion from the sale of retail bonds. The bonds carry a maturity of 3 years and a coupon rate of 9.0%. The PBOC issued a CNY5 billion 1-year central bank bill in London at a yield of 3.1%. Dongfeng Motors, based in the PRC, issued a EUR500 million 3-year bond at a coupon rate of 1.6%.
LCY government bond yields rose for most tenors in most markets with the exception of Malaysia. In Malaysia, yields fell for most tenors following lower inflation and the government’s commitment to reduce the deficit based on 2016 budget. In the PRC, yields rose slightly for most tenors, despite the decline in policy rates as news was released after markets closed. Yield movements were mixed in Singapore. The 2-year versus 10-year spread rose in Hong Kong, China, Malaysia, Thailand.
T Asia Bond Monitor September 2015 read more
10-Year Selected LCY Government Security Yields
asiandbonsonline.adb.org
Close of 23 October 2015
asiandbonsonline.adb.
org
basis point change from Markets Latest Closing Previous Day* Previous Week* 1-Jan-15*
US 2.09 6.03 5.32 -8.46
EU 0.51 1.60 -3.60 -2.90
Japan 0.30 -0.50 -1.70 -2.60
PRC 3.08 -1.00 -1.00 -57.00
Hong Kong, China 1.49 -0.90 1.40 -40.90
India 7.58 -0.30 1.80 -29.80
Indonesia 8.68 -11.50 1.60 85.20
Korea, Rep. of 2.10 -1.80 4.00 -50.30
Malaysia 4.13 -1.00 0.90 -1.80
Philippines 3.68 0.26 0.68 -18.67
Singapore 2.40 -6.47 2.93 12.27
Thailand 2.58 0.00 8.80 -14.70
Viet Nam 7.17 3.10 6.70 -6.30
5.32
-3.60
-1.70
-1.00
1.40
1.80
1.60
4.00
0.90
0.68
2.93
8.80
6.70
Selected Benchmark Yield Curves - Local Currency Government Bonds
Policy Rate versus Inflation Rate Charts
Government Security Yields
Credit Default Swap Spreads & Exchange Rate Indexes Selected Debt Security Issuances Selected Asia Data Releases
The PRC’s GDP Growth Slows in 3Q15, Industrial Production Slows in September;
The Republic of Korea's GDP Growth Accelerates in 3Q15 ........................................................................................................................................ The People’s Republic of China’s (PRC) economy expanded 6.9% year-on-year (y-o-y) in 3Q15, down slightly from 7.0% y-o-y growth in 2Q15. The fastest growth was in the service sector, which expanded 8.6% y-o-y, followed by the manufacturing industry, which grew 5.8% y-o-y. The agrilcutural industry grew 4.1% y-o-y in 3Q15. In January–September, the PRC’s gross domestic product (GDP) grew 6.9% y-o-y. On a quarter-on-quarter (q-o-q) basis, GDP grew 1.7%.
Industrial production growth in the PRC slowed in September to 5.7% y-o-y from 6.1% y-o-y in August. The three major sectors all showed declines in y-o-y growth rates: mining and quarrying growth fell to 1.2% from 4.0%; manufacturing fell to 6.7% from 6.8%; and growth in the distribution of electricity, gas, and water fell to 0.7% from 1.9%.
Real GDP growth in the Republic of Korea accelerated to 2.6% y-o-y in 3Q15 from 2.2% y-o-y in 2Q15, based on advance estimates from the Bank of Korea, buoyed by improved growth in domestic demand and growth in the construction, manufacturing, and utilities sectors. In 3Q15, y-o-y growth accelerated for private consumption, gross fixed capital formation, and imports of goods and services; growth reversed from negative to positive for exports of goods and services. On the production side, y-o-y growth accelerated for manufacturing and utilities, shifted from negative to positive for construction, and contracted less rapidly for agriculture, forestry, and fishing. On a q-o-q basis, real GDP growth accelerated to 1.2% in 3Q15 from 0.3% in 2Q15.
The PBOC Cuts Policy Rates and the RRR ........................................................................................................................................ The People’s Bank of China (PBOC) last week reduced its key policy rates by 25 basis points (bps), taking the 1-year lending rate to 4.35% and the 1-year deposit rate to 1.50%. The PBOC also removed the ceiling on deposit rates for commercial and rural banks, allowing banks more freedom in setting deposit rates, and reduced the reserve requirement ratio (RRR) of financial institutions by 50 bps (17.50% for major banks and 15.50% for smaller banks). Select financial institutions, such as those involved in agriculture, will qualify for an additional 50 bps reduction in the RRR.
Consumer Price Inflation Falls in Hong Kong, China; Malaysia; and Singapore in September;
The Republic of Korea’s PPI Falls in September ........................................................................................................................................ Consumer price inflation in Hong Kong, China fell to 2.0% y-o-y in September from 2.4% y-o-y in August, due to slower price increases in housing rents, which fell to 3.6% y-o-y in September from 4.4% y-o-y in August, and an accelerating decline in utilities prices to –10.7% y-o-y from –4.6% y-o-y due to a special rebate in September. The government expects inflationary pressures to be contained given the lack of domestic cost pressures and low import prices.
In Malaysia, consumer price inflation eased to 2.6% y-o-y in September from 3.1% y-o-y in August, mainly due to an accelerating contraction in the transportation sub-index to –3.8% y-o-y from –1.2% y-o-y in August. Inflation in the food and non-alcoholic beverages sub-index, which accounts for the single largest weight in the inflation index at 30.3%, inched up to 4.3% y-o-y in September from 3.8% y-o-y in August. All other indices posted either the same or higher y-o-y rates of increase in September, except for the alcoholic beverages and tobacco index and the health index.
Consumer prices dipped again in Singapore, falling 0.6% y-o-y in September after declining 0.8% y-o-y in August. The slight uptick in prices was due mainly to increases in consumer services and retail items. Services inflation inched up to 0.8% y-o-y in September on increases in healthcare service fees and public road transport costs. Retail item costs climbed 0.6% y-o-y in September, driven by clothing and footwear and household durables. Between August and September, consumer price inflation was unchanged. The Monetary Authority of Singapore estimates that inflation will average between –0.5% and 0.5% in 2016, up from around -0.5% in 2015.
The Republic of Korea’s Producer Price Index (PPI) fell 4.5% y-o-y in September, the same rate of decline as in August, according to data from the Bank of Korea. Prices of manufacturing industry products and electric power, gas, and water fell 7.4% y-o-y and 9.3% y-o-y, respectively, contributing to the PPI’s y-o-y decrease. Between August and September, the PPI slipped 0.3%.
Consumer Price Inflation Falls in Hong Kong, China; Malaysia; and Singapore in September;
The Republic of Korea’s PPI Falls in September (cont…) ........................................................................................................................................ For inflation rate trends in Hong Kong, China, refer to this link: https://asianbondsonline.adb.org/hongkong/data/marketwatch.php?code=policy_rate_and_inflation_trends
For inflation rate trends in Malaysia, refer to this link: https://asianbondsonline.adb.org/malaysia/data/marketwatch.php?code=policy_rate_and_inflation_trends
Japan’s Merchandise Trade Deficit Narrows in September ........................................................................................................................................ Japan's merchandise trade deficit narrowed to JPY114.5 billion in September from JPY569.4 billion in August as exports increased at a faster pace than imports. Exports of goods rose 9.1% month-on-month (m-o-m) to JPY6.4 trillion in September from JPY5.9 trillion in August, while imports increased 1.3% m-o-m to JPY6.5 trillion from JPY6.4 trillion.
LCY Corporate Debt Issuance in the Republic of Korea Rises in September ........................................................................................................................................ Local currency (LCY) corporate debt issuance in the Republic of Korea rose to KRW10.5 trillion in September from KRW7.6 trillion in August, led by monthly increases in the issuance of asset-backed securities, bank debentures, and financial bonds, according to data from the Financial Supervisory Service. Between August and September, asset-backed securities issuance climbed from KRW0.9 trillion to KRW1.6 trillion; issuance of bank debentures grew from KRW1.7 trillion to KRW3.5 trillion; and financial bond issuance increased from KRW2.3 trillion to KRW2.9 trillion. In contrast, nonfinancial corporate bond issues slipped to KRW2.5 trillion in September from KRW2.6 trillion in August.
Viet Nam to Issue US$3 Billion Sovereign Bond, Allow Issuance of Treasury Bonds
with Maturities of Less Than 5 Years ........................................................................................................................................ In Viet Nam, the National Assembly approved the government’s plan to raise US$3 billion through the issuance of bonds. The bond issuance is needed to fund maturing debt due in 2015 and 2016. The National Assembly’s Committee for Budget and Finance, however, noted that borrowing costs for the offshore issuance should not exceed domestic borrowing costs.
The National Assembly also approved a Ministry of Finance proposal to issue government bonds with maturities of 5 years or less beginning in November. Regulations passed in November 2014 limited issuance of Treasury bonds to maturities of 5 years or more, beginning this year. However, sluggish demand for longer-dated bonds has made it difficult for the government to fulfil its issuance target. In response, the Ministry of Finance proposed the issuance of 1-year, 2-year, and 3-year bonds beginning in November.
Indonesian Government Raises IDR27,439 Billion from Sale of Retail Bonds ........................................................................................................................................ Last week, the Indonesian government issued a total of IDR27,439 billion from the sale of retail bonds, its 12th issuance to date. The bonds carry a maturity of 3 years and a coupon rate of 9.0%. A total of 49,521 individuals subscribed to the issue. Of which, 25.2% were private employees and 21.4% were entrepreneurs. The retail bonds were listed on the Indonesia Stock Exchange on 22 October, with trading to commence on 15 December due to the required holding period.
The PBOC Issues CNY 1-Year Bill in London;
Dongfeng Motors Issues 3-Year EUR-Denominated Bond ........................................................................................................................................ Last week, the PBOC issued a CNY5 billion 1-year central bank bill in London at a yield of 3.1%. Total orders for the bond reached CNY30 billion. Half of the bond’s investors came from Asia, with the remainder mostly coming from Europe and the United States.
Dongfeng Motors in the PRC issued a EUR500 million 3-year bond at a coupon rate of 1.6%.
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News Articles: Sources for Further Reading
PRC’s GDP Growth Slows in 3Q15; Industrial Production Slows
in Septmeber; The Republic of Korea's GDP Growth Accelerates
in 3Q15
Overall Economic Development was Stable in the First Three Quarters of 2015
National Bureau of Statistics (19 October 2015)
Industrial Production Operation in September 2015
National Bureau of Statistics (19 October 2015)
Real Gross Domestic Product: 3rd Quarter of 2015 (Advance Estimate)
The Bank of Korea (23 October 2015)
PRC Cuts Policy Rates and RRR
China cuts RRR, interest rates to boost real economy
Xinhua (23 October 2015)
Consumer Price Inflation Fall in Hong Kong, China, Malaysia and
Singapore in September; Korea’s PPI Falls in September
Consumer Price Indices for September 2015
Census and Statistics Department (22 October 2015)
Consumer Price Index Malaysia September 2015
Department of Statistics Malaysia (23 October 2015)
Consumer Price Developments in September 2015
Monetary Authority of Singapore (23 October 2015)
Producer Price Index during September 2015
The Bank of Korea (20 October 2015)
Japan’s Merchandise Trade Deficit Narrows in September
Value of Exports and Imports September 2015 (Provisional)
Ministry of Finance Japan (21 October 2015)
LCY Corporate Debt Issuance in the Republic of Korea Rises in
September
Corporate Debt and Equity Issues, September 2015
Financial Supervisory Service (21 October 2015)
National Assembly Approves Plan to Raise US$3 Billion of Viet
Nam Sovereign Bonds, Allows Issuance of Treasury Bonds With
Maturities of Less Than 5 Years
NA committee backs int'l bond sales
Viet Nam News (22 Oct6ober 2015)
Indonesian Government Raises IDR27, 439 Billion From the Sale
of Retail Bonds
Allotment of Government Retail Bonds Series ORI012 on October 19, 2015
Directorate General of Budget Financing and Risk Management
Ministry of Finance (19 October 2015)
PBOC Issues CNY 1-year Bill in London; Dongfeng Motors Issues