News Highlights - Week of 15 - 19 August 2011

Malaysia's real GDP growth moderated to 4.0% year-on-year (y-o-y) in 2Q11 from a 4.9% expansion in the previous quarter. Private consumption increased 6.4% y-o-y in 2Q11, while public consumption growth stood at 4.0% y-o-y. Gross domestic capital formation expanded 3.2% y-o-y in 2Q11. Growth in the manufacturing and construction sectors moderated in 2Q11 to 2.1% and 0.6% y-o-y, respectively. Meanwhile, consumer price inflation in Malaysia eased slightly to 3.4% y-o-y in July from 3.5% in the previous month, with food and transport costs rising 4.9% and 4.8%, respectively. In Singapore, growth in retail sales accelerated to 10.9% y-o-y in June from 9.6% in May. Thailand's real GDP grew 2.6% y-o-y in 2Q11, compared with revised 3.2% growth in 1Q11.

* The People's Republic of China (PRC) raised a total of CNH15 billion in the Hong Kong, China offshore market last week from its sale of (i) CNH6 billion worth of 3-year bonds, (ii) CNH5 billion worth of 5-year bonds, (iii) CNH3 billion of 7-year bonds, and (iv) CNH1 billion worth of 10-year bonds. The average coupon rate of the bonds was lower by 225 basis points compared to onshore yields. Also last week, the PRC's Vice-Premier Li Keqiang visited Hong Kong, China and expressed support for the development of the CNH market. 

* Japan's merchandise exports dropped 3.3% y-o-y in July amid the yen's appreciation and weak demand from the PRC and the United States. Singapore's non-oil domestic exports fell 2.8% y-o-y in the same month. 

* Overseas remittances to the Philippines rose 7.0% y-o-y to USD1.7 billion in June, after climbing 6.9% in May, on the back of sustained foreign demand for Filipino workers. The Philippines posted a balance of payments surplus of USD1.3 billion in July, compared with USD222 million in June.

* Foreign direct investment (FDI) in the PRC rose 18.6% y-o-y to USD69.2 billion in the first 7 months of 2011, including a 19.8% y-o-y increase in July. 

* In the PRC last week, Beijing Energy Investment raised CNY2 billion from a dual-tranche bond sale. Last week in the Republic of Korea, Shinhan Financial Group priced KRW230 billion worth of dual-tranche bonds; Hanjin Heavy Industries issued KRW200 billion worth of 3-year bonds; and Meritz Finance Holdings raised KRW200 billion from a dual-tranche bond sale. Meanwhile, the Bank of Thailand (BOT) plans to offer THB50 billion of savings bonds this month, while Indonesia mandated three banks for its planned USD-denominated global sukuk (Islamic bond), which is expected to be launched at end-September or in early October.

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

* Finally, some of the more interesting economic data due this week include consumer price inflation for Japan, Singapore, and Viet Nam; the 1-day repurchase rate for Thailand; exports for Hong Kong, China and Viet Nam; and the current account balance for the Republic of Korea.