5 December 2011asianbondsonline.adb.org
Key Developments in Asian Local Currency Markets
onsumer price inflation in Indonesia eased for a third consecutive month in November to 4.15% year-on-year (y-o-y) compared with 4.42% in October. In the Republic of Korea consumer price inflation accelerated to 4.2% y-o-yin November from 3.6% in October on the back of price hikes in food, transportation, and utilities. In Thailandconsumer price inflation stood at 4.19% y-o-y in November, the same rate as in October.The People's Bank of China announced lastweek that it will reduce the reserve requirementratio of banks by 50 basis points (bps) effective5 December. The Philippines held steady itspolicy rates last week, while the Bank ofThailand decided to lower its policy interest rateby 25 bps to 3.25%.Philippine real GDP growth eased to 3.2%y-o-y in 3Q11 from 3.4% in the previousquarter. The purchasing managers' index (PMI)for the People's Republic of China's (PRC)manufacturing sector fell to 49.0 in Novemberfrom 50.4 in October. Industrial production inthe Republic of Korea grew 6.2% y-o-y inOctober, while contracting 35.8% y-o-y inThailand. Japan's industrial production rose2.4% month-on-month (m-o-m) in October.The Republic of Korea's current accountsurplus widened to US$4.2 billion in October,the largest surplus position since November2010. In contrast, Thailand's current accountsurplus shrank to US$39 million in October.Indonesia's export growth stood at 16.7% y-o-y in October, compared with 44.0% annualgrowth in September. The Republic of Korea'sannual export growth accelerated to 13.8% inNovember from 8.0% in October.Last week, Shenzhen raised CNY2.2 billionfrom a dual-tranche local government bondsale; ICBC issued US$750 million worth of 10-year bonds; Hyundai Motors priced US$500million worth of 5.5-year bonds; BMW Australiasold CNH400 million of 1-year bonds in HongKong, China; Anih Berhad-a Malaysian toll roadoperator-raised MYR2.5 billion from a multi-tranche Islamic medium-term note sale; andMalaysian holding company DRB-HICOMraised MYR500 million from a dual-tranchesukuk (Islamic bonds) sale. LCY corporatebond issuance in the Republic of Korea surged20.3% m-o-m in October.Last week, Pefindo—an Indonesian ratingagency—announced plans of the localgovernments of Jakarta and Makassar to issuemunicipal bonds. Separately, the Indonesian government plans to offerretail
by March 2012. In the Philippines, Security Bank plans toissue up to PHP5 billion of long-term negotiable certificates of timedeposit.Bank Negara Malaysia and the Monetary Authority of Singaporesigned a Memorandum of Understanding last week to enhance theliquidity of financial institutions in both countries and strengthencooperation in carrying out domestic liquidity management.Government bond yields fell last week for all tenors in Indonesiaand Thailand, and for most tenors in the PRC, Republic of Korea,Malaysia, and the Philippines. Yields rose for most tenors in HongKong, China; Singapore; and Viet Nam. Yield spreads between 2- and10-year tenors widened in the PRC; Hong Kong, China; Republic ofKorea; Singapore; Thailand; and Viet Nam, while spreads narrowed inIndonesia, Malaysia, and the Philippines.
Last week the results of our 2011 Asia Bond MarketSurvey were attached to our quarterly Asia Bond Monitor. This weekwe are sending out the survey to our
distribution listas a separate document.
10-Year Selected LCY Government Security Yields
Close of 2 December 2011
basis point change from
MarketsLatest ClosingPrevious Week*1-Jan-11*
US2.03-5.426.96-126.04EU2.14-4.30-12.80-82.80Japan1.04-2.101.60-8.40PRC3.49-8.00-14.00-42.00ong Kong, China1.35-0.708.30-150.50dia8.67-3.00-15.1075.30HInIndonesia6.23-14.40-66.50-137.60Malaysia3.720.00-2.40-31.60Korea, Rep. of3.79-1.00-1.00-73.00Philippines5.590.53-9.40-29.57Singapore1.734.006.00-98.00Thailand3.29-5.00-12.90-43.40Viet Nam12.8826.2019.20112.50