According to the latest edition of the Asia Bond Monitor, 10-year local currency government bond yields rose in emerging East Asian markets between the end of December 2017 and mid-February due to interest rate hikes in the United States and strong global growth. Emerging East Asia’s local currency bond market expanded 3.1% quarter-on-quarter and 12.1% year-on-year (y-o-y) in the fourth quarter (Q4) of 2016, reaching USD10.2 trillion at the end of December. A copy of the full report is available at https://asianbondsonline.adb.org/documents/abm_mar_2018.pdf.
The People’s Republic of China’s (PRC) industrial production grew 7.2% y-o-y in January–February, up from 6.2% y-o-y in December and 6.3% y-o-y in January–February 2017. Meanwhile, fixed asset investment in the PRC grew 7.9% y-o-y in January–February after rising 7.2% y-o-y in December.
Hong Kong, China’s industrial production index for manufacturing rose 0.6% y-o-y in Q4 2017, following a 0.3% y-o-y rise in the previous quarter, mainly driven by an increase of output in the food, beverages, and tobacco sector. All other manufacturing industries recorded decreases in output over the same period. For full-year 2017, the index rose 0.4%. Malaysia’s industrial production grew slightly faster at 3.0% y-o-y in January versus 2.9% y-o-y in December, supported by growth in all production sectors.
Exports from Indonesia grew 11.8% y-o-y in February after gaining 8.6% y-o-y in January, and imports rose 25.2% y-o-y after gaining 27.9% y-o-y. Exports amounted to USD14.1 billion and imports amounted to USD14.2 billion, resulting in a trade deficit of USD116 million in February, much lower than the USD756 million trade deficit in the previous month. It was the third consecutive month that Indonesia registered a trade deficit.
Singapore’s non-oil domestic exports (NODX) fell 5.9% y-o-y in February, following 12.9% y-o-y growth in January, as both electronic and non-electronic products declined. Electronic NODX contracted at a faster pace of 12.3% y-o-y in February versus 3.9% y-o-y in January. Non-electronic NODX declined 3.4% y-o-y in February, a reversal from the 20.7% y-o-y growth posted in the previous month.
The increase in Hong Kong, China’s Producer Price Index for manufacturing slowed to 3.5% y-o-y in Q4 2017 from 3.7% y-o-y in the previous quarter. For full-year 2017, the Producer Price Index rose 3.8%, accelerating from a 1.3% gain in 2016.
The PRC’s retail sales grew 9.7% y-o-y in January–February, down from 10.2% y-o-y in December but up from 9.5% y-o-y in January–February 2017.
Local currency government bond yields fell for most markets in emerging East Asia. Yields fell for all tenors in Indonesia and Malaysia. Yields fell for most tenors in the PRC; Hong Kong, China; the Republic of Korea; Singapore and Thailand. Yields rose for most tenors in the Philippines and Viet Nam. The 2-year versus 10-year yield spreads rose for most markets except in Hong Kong, China; the Republic of Korea; Malaysia and Singapore. Spreads were unchanged in the PRC.