News Highlights - Week of 19 - 23 September 2011

Consumer price inflation in Hong Kong, China slowed to 5.7% year-on-year (y-o-y) in August, compared with 7.9% in July, due to a timing difference in the government's payment of public housing rentals in July. Netting out this effect, consumer price inflation in August rose to 6.3% y-o-y from 5.8% in July on account of higher private housing rental and food prices. Malaysia's consumer price inflation eased slightly to 3.3% y-o-y in August from 3.4% in July. The index for food and non-alcoholic beverages increased 4.6% y-o-y in August, slightly lower than the 4.9% increase posted in July. In Singapore, consumer price inflation accelerated to 5.7% y-o-y in August from 5.4% in July due to higher costs for transportation, housing, and food. 

*The People's Republic of China's (PRC) outstanding foreign debt climbed to USD642.5 billion as of end-June from USD586.0 billion at end-March. 

*The seasonally adjusted unemployment rate in Hong Kong, China eased to 3.2% in June-August compared with 3.4% in May-July. The unemployment rate in the Republic of Korea fell to 3.0% in August from 3.3% in July amid strong export growth and a modest increase in domestic demand. Malaysia's unemployment rate fell to 3.0% in July from 3.2% in June.

*Japan reported a trade deficit of JPY775.3 billion in August-the highest recorded deficit since 1979-resulting from the fuel imports of utility firms to meet electricity demand as many nuclear reactors remain offline. The Philippines' balance of payments (BOP) surplus soared 166.0% y-o-y to USD9.0 billion in the first 8 months of the year, exceeding the revised full-year target of USD6.7 billion

*The Philippines posted a budget surplus of PHP9.2 billion in August due to higher revenue collections and constrained government spending. The Bureau of the Treasury plans to issue retail treasury bonds in 4Q11.

*Last week in Hong Kong, China, US-based Yum! Brands priced a CNH350 million 3-year bond at 2.375%. In the Republic of Korea, Honam Petrochemical Corporation priced a KRW500 billion 3-year bond at a coupon rate of 3.93%, while Dongkuk Steel priced a KRW250 billion 3-year bond and a KRW70 billion 5-year bond at coupon rates of 4.35% and 4.53%, respectively. In Malaysia, shipping company MISC sold two tranches of Islamic medium-term notes totaling MYR800 million: (i) a MYR500 million 3-year tranche, which pays an annual return of 3.51%; and (ii) a MYR300 million 5-year tranche, which pays an annual return of 3.71%. In Singapore, Overseas Union Enterprise Ltd. (OUE) issued SGD200 million worth of 4-year medium-term notes at 3.95% last week. Thailand's mobile phone operator True Move also completed its tender offer to buy back two USD-denominated bonds totaling USD690 million. In Viet Nam, Song Da Urban & Industrial Investment and Development Joint Stock Company issued VND700 billion 3-year corporate bonds with coupon rate to be adjusted every six months. 

*Government bond yields fell last week for most tenors in Singapore, while yields rose for all tenors in Indonesia, the Republic of Korea, and the Philippines, and for most tenors in Malaysia, Thailand and Vietnam. Yield movements were mixed in the PRC and Hong Kong, China: falling in the shorter end of the curve in the PRC, but in the longer end of the curve in Hong Kong, China. Yield spreads between 2- and 10- year maturities widened in the PRC, the Republic of Korea, the Philippines and Thailand, while spreads narrowed in most other emerging East Asian markets.