News Highlights - Week of 24 - 28 October 2011

Japan's exports of goods increased 2.4% year-on-year (y-o-y) in September, following a 2.8% increase in August. The growth rate turned positive in August for the first time since the 11 March earthquake and remained in positive territory in September. Merchandise exports from Hong Kong, China fell 3.0% y-o-y in September, following 6.8% growth in August, largely due to declining shipments to the People's Republic of China (PRC) and the United States (US). The Republic of Korea's current account surplus rose to US$3.1 billion in September from US$290 million in August. Also last week, Viet Nam reported export growth in October of 4.5% month-on-month (m-o-m). 

*Advance estimates showed the Republic of Korea's real GDP grew 0.7% quarter-on-quarter (q-o-q) and 3.4% y-o-y in 3Q11. Consumer sentiment in the Republic of Korea also improved in October. In September, Singapore's manufacturing output increased 12.8% y-o-y, while retail sales in Japan declined 1.2% y-o-y. 

*Singapore's consumer price inflation eased to 5.5% y-o-y in September from 5.7% in August amid price hikes in food, housing, and transport. Viet Nam reported its October estimate for consumer price inflation at 21.6% y-o-y. 

*Last week, Tenaga Nasional issued MYR4.85 billion of Islamic bonds and RHB Bank sold MYR250 million of medium-term notes in Malaysia. ICBC Asia priced the first Basel III-compliant CNH subordinated bond worth CNH1.5 billion and Dalian Port priced CNH400 million of 3-year bonds in Hong Kong, China. 

*Bank of East Asia priced a US$500 million 10.5-year bond, the Government of Indonesia raised IDR11 trillion from its retail bond sale, the Republic of Korea's KT Corporation sold a total of KRW420 billion worth of dual-tranche bonds, and KDB priced a US$1 billion 5.5-year bond. Finally, PLDT plans to sell PHP5 billion of fixed-rate notes. 

*The Bank of Japan (BOJ) decided last week to expand the size of its asset purchase program by JPY5 trillion and kept the uncollateralized overnight call rate between zero and 0.1%. The BOJ revised downward its growth forecast for Japan in fiscal years 2011 and 2012 from an earlier forecast made in July. 

*The BOJ and the Bank of Thailand (BOT) announced their collaboration in implementing a THB lending facility, with Japanese government securities serving as collateral, to aid companies in Thailand affected by recent flooding. Also last week, Indonesia passed a bill to create the Financial Services Supervisory Authority (OJK), while Viet Nam released a decree on regulations governing corporate bond issuance. 

*The Philippines posted a fiscal deficit of PHP18.5 billion in September after registering a surplus of PHP9.2 billion in the previous month. The fiscal deficit for January-September amounted to PHP53.0 billion. 

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