In the third quarter, the People’s Republic of China (PRC) posted its fastest economic growth rate this year, on the back of continued credit expansion and stimulus spending.
The country’s third quarter gross domestic product (GDP) increased 8.9 percent year-on-year (y-o-y)—well above the GDP growth rates of 6.11 percent and 7.9 percent registered in the first and second quarters of the year, respectively. Industrial production in September rose 13.9 percent y-o-y, the most in over a year, while September retail sales increased 15.5 percent y-o-y. GDP growth in the Republic of Korea (Korea) is also rebounding. Korean GDP in 3Q09 rose 2.9 percent quarter-on-quarter (0.6 percent y-o-y), leading to market speculation that the Bank of Korea may be considering an increase in its policy rate.
* The PRC’s Ministry of Finance (MOF) reported on 20 October that its CNY6 billion Treasury bond offering in Hong Kong, China attracted subscriptions totalling CNY18 billion —three times the offered amount. The issue, which is MOF’s first outside of the PRC mainland, is part of the PRC’s efforts to broaden the use of the yuan internationally.
* Last week, Singapore’s Temasek Holdings issued a USD1.5 billion 10-year bond, the second offering under its USD5 billion medium-term note programme, and Lumena Resources, a chemicals company based in the PRC, issued a USD250 million high-yield bond issue carrying a 12 percent coupon.
* Malaysia announced its budget for 2010 on Friday, forecasting GDP growth of 2 percent to 3 percent in 2010, as well as a reduction of the budget deficit as a percentage of GDP from 7.4 percent in 2009 to 5.6 percent in 2010.
* The government of Vietnam has projected that GDP will grow by 6.5 percent in 2010. It added that the services sector is expected to expand by 7.5 percent y-o-y in 2010, followed by construction and industry with 7.0 percent growth, while agriculture is likely to grow by 2.8 percent.
*Government bond yields fell for all maturities in Malaysia and for most maturities in Hong Kong, China; the PRC; and Singapore. They rose for most maturities in other emerging East Asian markets. Yield spreads between 2- and 10-year maturities narrowed in Malaysia, the PRC, Thailand, and Vietnam, while they widened in most other markets.
* WHAT’S NEW: Starting October 12, AsianBondsOnline (ABO) has begun posting the most recent monthly data available for LCY bonds outstanding on the Macreconomic and Credit Indicators table of the Credit Risk Watch (CRW) section. The CRW tables can be found by entering the data section under a given market, and scrolling down to the CRW section. On October 12, we posted the most recent monthly data for the PRC, Indonesia, Malaysia, the Philippines, and Thailand.
This week we have begun to post the most recent monthly total LCY bonds outstanding available for Japan (USD 9.6 trillion in August), Korea (USD 1.0 trillion equivalent in September), and Vietnam (USD 12 billion equivalent in September), as well as for Singapore and Hong Kong, China. Only government bond data is available on a monthly basis in Singapore (USD 84 billion in August) and Hong Kong, China (USD 50.5 billion in August). These amounts represent month-on-month growth rates (in LCY terms) of 0.89 percent for Japan, 1.66 percent for Korea, -1.76 percent for Vietnam, 1.74 percent for Singapore government bonds, and 11.66 percent for Hong Kong, China government bonds.