AsianBondsOnline Newsletter (12 September 2011)

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News Highlights – Week of 5 – 9 September 2011

Consumer price inflation in the People’s Republic of China (PRC) stood at 6.2% year-on-year (y-o-y) in August, compared with 6.5% in July, as the increase in food prices slowed. In Indonesia, consumer price inflation rose to 4.8% y-o-y in August from 4.6% in July as food prices climbed at a faster annual pace amid the Idul Fitri celebration. In the Philippines, the 2006-based consumer price index rose 4.7% y-o-y in August, compared with 5.1% in July, mainly due to an easing in food price inflation. Meanwhile, producer prices in the Republic of Korea rose 6.6% y-o-y in August, the highest annual increase in 4 months.

*Policy interest rates were held steady last week in Indonesia, Japan, the Republic of Korea, Malaysia, and the Philippines.

*The PRC’s trade surplus dropped to USD17.8 billion in August from USD31.5 billion in July, as imports surged 30.2% y-o-y, while Indonesia’s trade surplus fell to USD1.4 billion in July from USD3.3 billion in the previous month. In contrast, Malaysia’s trade surplus widened to MYR9.5 billion in July from MYR7.9 billion in June.

*The Republic of Korea revised its quarterly real gross domestic product (GDP) growth for 2Q11 to 0.9% quarter-on-quarter (q-o-q). Malaysia’s industrial production index declined 0.6% y-o-y in July. The Purchasing Managers’ Index (PMI) for Hong Kong, China fell to 47.8 in August from 51.4 in July, while it rose slightly in Singapore to 49.4 in August from 49.3 in the previous month.

*Net foreign investment into the Republic of Korea’s LCY bond market fell to KRW134 billion in August from KRW2.9 trillion in July. Meanwhile, Thailand launched its initial offering of 3-year retail government bonds totaling THB50 billion on 12 September and intends to raise THB540 billion from planned bond sales in the next fiscal year, beginning in October.

*Last week, Korea Eximbank announced a USD1 billion 10-year global bond sale; Energy firm BP priced a CNH700 million 3-year bond and French gas producer Air Liquide priced a CNH1.75 billion 5-year bond in Hong Kong, China; and Henderson Land priced a SGD200 million 7-year note with a 4.0% coupon.

*In the PRC, China Datang Corporation Renewable Power Company plans to issue CNY2 billion worth of 1-year commercial paper, while Guangdong Development Bank aims to sell CNY2 billion of 10-year subordinated debt. In Hong Kong, China, BSH Bosch Und Siemens Hausgauraete plans to issue CNH-denominated bonds.

*Foreign reserves in Hong Kong, China rose 0.2% month-on-month (m-o-m) to USD279.4 billion in August. Accumulated foreign reserves also increased in August in Japan and the Philippines to USD1.2 trillion and USD75.6 billion, respectively.

*Several commercial banks in Viet Nam began lowering their lending rates last week to between 17% and 19%. The State Bank of Viet Nam released a circular last week presenting the conditions for credit institutions and foreign bank branches to purchase corporate bonds.

*Government bond yields fell for all tenors in Indonesia, the Republic of Korea, and the Philippines, and for most tenors in the PRC; Hong Kong, China; Malaysia; Singapore; and Viet Nam. Yields rose for most tenors in Thailand. Yield spreads between 2- and 10-year tenors widened in Malaysia, the Philippines, and Thailand, while spreads narrowed in most other emerging East Asian markets.



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