MARKET UPDATE FOR ASEAN+3 June 2013
MARKET UPDATE FOR ASEAN+3 3 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian Stocks Fall as U.S. Data Stokes Fed Exit Concern. The MSCI Asia Pacific Index fell 1.4 percent to 132.99 as of 5:13 p.m. in Tokyo. All but one of 10 industry groups dropped on the gauge, which declined 5.1 percent in May, the first monthly loss since October. This is mainly due to improving U.S. economic reports added to concern the Federal Reserve will scale back stimulus and as data painted a mixed picture about China’s manufacturing. Japan’s Topix index lost 3.4 percent, having entered a so-called correction after falling more than 10 percent from its recent high on May 22. Hong Kong’s Hang Seng Index (HSI) dropped 0.5 percent and China’s Shanghai Composite Index fell 0.1 percent after official and private reports on China’s factory activity offered conflicting views of the economy. South Korea’s Kospi index declined 0.6 percent. Singapore’s Straits Times Index slipped 0.5 percent and Taiwan’s Taiex Index lost 0.7 percent. New Zealand’s market was closed for a holiday. .
•
Thiland’s baht declined while most other currencies in the region slightly gained or unchanged. Baht fell to the weakest level since January after overseas investors trimmed holdings of the nation’s assets. (See Breaking News Section). Yen appreciated 0.31% backed by the decline in US stock market so that more Yen assets were bought by overseas investors. Chinese yuan almost unchanged from its previous level.
•
Brent oil Fell and gold rose as China Slows and US economy expanded less than expected. Brent crude fell below $100 a barrel for the first time in a month on Monday as signs that China's economy is slowing and OPEC’s decision to maintain production boosted speculation that supply will outstrip demand. Brent for July settlement was at $100.44 a barrel, up 5 cents, on the ICE Futures Europe exchange at 9:43 a.m. London time. Hedge funds reduced bullish WTI crude bets by the most in six weeks, according to the Commodity Futures Trading Commission’s May 31 Commitments of Traders report. Money managers cut net-long positions, or wagers on higher prices, by 6.2 percent in the week ended May 28. It was the largest drop since the seven days ended April 16. Gold spot price slightly rose on Monday.
BREAKING NEWS GLOBAL •
Manufacturing in the U.S. probably made little progress in May. The Institute for Supply Management’s factory index held at 50.7 during the month, matching the weakest this year, according to the median forecast in a Bloomberg survey of 71 economists. Fifty is the dividing line between expansion and contraction. Factory activity has waned since reaching an almost two-year high in February as across-the-board federal budget cuts took hold and overseas markets struggled to improve. One area of construction that remains a bright spot is residential real-estate as borrowing costs near a record low attract buyers and encourage more projects. Manufacturing, which accounts for about 12 percent of the economy, is finding support from the housing rebound as demand picks up for everything from Page 1 of 8
machinery to furniture, appliances and home-decor items. Automobile purchases may help keep assembly lines running as households use low borrowing costs to replace older vehicles. Gross domestic product rose at a 2.4 percent annualized rate in the first three months of 2013, figures showed last week. •
Euro-Area manufacturing activity shrinks less than estimated. A gauge of manufacturing in the 17-nation euro area increased to 48.3 last month from 46.7 in April, London-based Markit Economics said today. That’s above an initial estimate of 47.8 on May 23. The gauge has been below 50, indicating contraction, since July 2011. Today’s PMI report followed encouraging euro-zone industrial confidence and trade data released last month that showed the currency bloc edging toward an economic recovery. The European Central Bank has cut its benchmark rate to a record low of 0.5 percent and is exploring unconventional ways of channeling money to needy companies, especially in the south. ECB President Mario Draghi said today in Shanghai that while the economic outlook in the euro area is “challenging” he still anticipates a recovery this year. “There are a few signs of a possible stabilization,”Draghi said in the text of a speech in Shanghai. “Our baseline scenario continues to be one of a very gradual recovery starting in the latter part of this year.”
•
Bank of England Governor Mervyn King said an economic recovery in the U.K. appears to be under way. He advised his successor, Mark Carney, to “be himself.” “You can see signs now of a recovery,” King told BBC Radio in an interview broadcast yesterday. “The economy is growing. Not as fast as we would like it to grow, but no one can foretell the future.” Of Carney, King said “he’s an outstanding person but the important thing is that he does it in his own way.”
REGIONAL •
China's factory activity shrank for the first time in seven months in May and growth in the services sector cooled. The HSBC/Markit Purchasing Managers' Index (PMI) for May dropped to 49.2, the lowest level since October 2012 and down from 50.4 in April, as domestic and overseas demand fell. The figure was slightly lower than a preliminary reading of 49.6 released on May 23. "The downward revision of the final HSBC China Manufacturing PMI suggests a marginal weakening of manufacturing activities towards the end of May, thanks to deteriorating domestic demand conditions," said Qu Hongbin, chief China economist at HSBC. China's official manufacturing PMI, released on Saturday, rose but remained close to 50. It ticked up to 50.8 in May from April's 50.6, although it also pointed to falling orders from export markets. The Chinese government's official PMI for the nonmanufacturing sector, released earlier on Monday, also pointed to a loss of growth. It fell to 54.3 in May from 54.5 in April, the lowest since September last year. The figures add to evidence China's economy is struggling for momentum, buffeted by weak exports demand and overcapacity in some industrial sectors.
•
Japanese PM Shinzo Abe emphasised on Monday that deregulation is the priority for the nation's growth strategy. Abe, speaking at a news conference after the Tokyo International Conference on African Development (TICAD) held in the city of Yokohama near Tokyo, said he would watch market movements closely. "As I decided to join talks of the TPP (TransPacific Partnership), I would like to push forward what needs to be done without hesitation," Abe said. Abe also said he expected the financial markets to calm down gradually as the Bank of Japan is communicating with the markets. Many want to see concrete steps for deregulation and structural reform in Abe's "Third Arrow" growth Page 2 of 8
strategy, due to be unveiled along with macroeconomic guidelines including fiscal reform on June 14. But expectations for structural reform are already dimming, with few expecting early moves to reduce corporate taxes nationwide or to make it easier for firms to lay off workers in business sectors on the decline, at least ahead of a July election for parliament's upper house. A third tranche of the growth strategy to be unveiled on Wednesday is expected to focus on the creation of special economic zones where deregulation and tax cuts can be implemented in limited geographic areas such as big cities. •
Indonesia reports trade deficit of $1.61 bln in April: Indonesia had a $1.61 billion trade deficit in April, following a surplus a month earlier, as global demand remained weak, the statistics bureau said on Monday. A month ago, Indonesia reported a trade surplus of $330 million for March. In April, exports contracted for a 13th consecutive month on an annual basis, down 9.11 percent. Imports fell 3.68 percent from April 2012. In March, imports fell 9.97 percent from a year earlier. Indonesia posted twin deficits in the current and capital accounts in the first quarter, producing a $6.6 billion deficit in its balance of payments for those months. Bank Indonesia estimated the current account deficit may ease to 2.4 percent of gross domestic product this year if the government hikes fuel prices by 33 percent on average. Rising inflationary pressure coupled with the country's deficits have put pressure on the rupiah. Manufacturing activity expanded moderately in May with new exports orders accelerated at the fastest pace since November.
•
Indonesia's annual inflation rate index unexpectedly eased in May to 5.47 percent, in line with soft prices for food and jewellery. But, but worries about inflationary pressure remained ahead of a possible government decision to cut fuel subsidies to narrow a budget deficit. Headline inflation was 5.47 percent, versus April's 5.57 percent and lower than the median of a Reuters' poll for April of 5.62 percent. On a monthly basis, May headline inflation fell 0.03 percent, compared with April's 0.1 percent contraction. Bank Indonesia expects inflation to be around 3.5-5.5 percent this year, but has said it could rise as high as 7.76 percent if the government does raise subsidised fuel prices.
•
Thailand’s baht fell and government bonds dropped after overseas investors trimmed holdings of the nation’s assets on concern policy makers will impose measures to stem inflows. Global funds turned net sellers of the nation’s debt in May for the first time since September 2011 as central bank Assistant Governor Paiboon Kittisrikangwan said that measures have been prepared to combat baht volatility. The Finance Ministry plans to reduce its 5.3 percent growth forecast for 2013 this month, Ekniti Nitithanprapas, a ministry spokesman, said May 30. “There’s lingering concern about the capital controls in Thailand, which has been weighing on the baht,” said Kozo Hasegawa, a Bangkok-based foreignexchange trader at Sumitomo Mitsui Banking Corp. “There’s also some indication of slowing growth, which discourages investors.” International investors sold $930 million more government debt than they bought in May after pumping a net $12 billion into the securities in the first four months of this year, Thai Bond Market Association figures show. They sold a net $477 million of local equities last week, according to exchange data. Societe Generale SA recommends clients sell the baht against the dollar on the risk of capital controls.
IFIs NEWS (compiled from their websites) BIS- Publication: “BIS Quarterly Review, June 2013 - Markets under the spell of monetary easing” Page 3 of 8
•
The BIS has publicised its’ Quarterly Review for June 2013. It features: (a) Further monetary easing boosted asset prices despite negative macroeconomic news; (b) Crossborder claims of BIS reporting banks fell in the fourth quarter of 2012 as a sharp reduction in cross-border interbank lending more than offset higher cross-border credit to nonbanks; (c) Paul Melaschenko and Noel Reynolds (BIS) propose a mechanism to recapitalise banks that are too big to fail; (d) Mathias Drehmann (BIS) finds that the reliability of credit gap indicators as an early warning signal for incipient systemic crises can be improved by using data on total credit to the private sector rather than bank credit data only; and (e) Chen Zhou (Netherlands Bank) and Nikola Tarashev (BIS) measure banks' systemic importance on the basis of information about rare events that they compute using tools from extreme value theory. http://www.bis.org/press/p130603.htm (Press Release and Summary of Individual Chapters) http://www.bis.org/publ/qtrpdf/r_qt1306.htm (Report)
IMF – Press Release: IMF Completes Third Review Under Extended Fund Facility Arrangement for Greece, Concludes 2013 Article IV Consultation •
On May 31, 2013, the Executive Board (EB) of the IMF completed the third review of Greece’s performance under an economic program supported by an Extended Fund Facility (EFF) arrangement. The following is an excerpt of the statement made by Ms. Christine Lagarde, Managing Director and Chair of IMF at the conclusion of the discussion with the EB: “Greece is well underway to complete its ambitious fiscal adjustment plan, and is on track to meet its 2013 fiscal targets. A critical priority is to tackle tax evasion by pressing forward rapidly with reform of the revenue administration to improve operational independence and make the burden of adjustment more equitable. Pressures to reduce taxes using the space from any fiscal over-performance should be resisted. Decisive steps are needed to reform public administration, including through targeted staff reductions, to lower costs, improve efficiency, and increase fairness.” http://www.imf.org/external/np/sec/pr/2013/pr13195.htm (Main Press Release) http://www.imf.org/external/np/sec/pr/2012/pr1285.htm (Press Release 12/85 dated March 15, 2012: IMF Executive Board Approves €28 Billion Arrangement Under Extended Fund Facility for Greece)
IMF – Press Release: Sweden—2013 Article IV Consultation: Concluding Statement of the Mission •
The IMF has publicised the 2013 Article IV Consultation Concluding Statement pertaining to its’ Mission to Sweden. http://www.imf.org/external/np/ms/2013/053113b.htm
IMF – Working Papers •
The IMF has publicised the following working papers: • "Afghanistan: Balancing Social and Security Spending in the Context of Shrinking Resource Envelope” http://www.imf.org/external/pubs/ft/wp/2013/wp13133.pdf
•
“Comparing Parametric and Non-parametric Early Warning Systems for Currency Crises in Emerging Market Economies” http://www.imf.org/external/pubs/ft/wp/2013/wp13134.pdf
•
“Inclusive Growth: Measurement and Determinants” http://www.imf.org/external/pubs/ft/wp/2013/wp13135.pdf
•
“Measuring the Informal Economy in the Caucasus and Central Asia” Page 4 of 8
http://www.imf.org/external/pubs/ft/wp/2013/wp13137.pdf
•
“The Economic Effects of Fiscal Consolidation with Debt Feedback” http://www.imf.org/external/pubs/ft/wp/2013/wp13136.pdf
•
“The Growth Comeback in Developing Economies: A New Hope or Back to the Future?” http://www.imf.org/external/pubs/ft/wp/2013/wp13132.pdf
•
“The Macroeconomic Effects of Natural Resource Extraction: Applications to Papua New Guinea” http://www.imf.org/external/pubs/ft/wp/2013/wp13138.pdf
World Bank – Press Releases •
The World Bank has publicised the following news release on their projects: • “China - Guangxi Laibin Water Environment Project” http://www.worldbank.org/en/news/loans-credits/2013/05/31/china-guangxi-laibin-waterenvironment-project (Press Release) http://www.worldbank.org/projects/P126817/guanxi-laibin-water-environment-project?lang=en
(Project’s Details: Guangxi Laibin Water Environment Project) • “China - Ningbo Municipal Solid Waste Minimization and Recycling Project” http://www.worldbank.org/en/news/loans-credits/2013/05/31/china-ningbo-municipalsolid-waste-minimization-and-recycling-project (Press Release) http://www.worldbank.org/projects/P123323/ningbo-municipal-solid-wasteminimization-recycling-project?lang=en (Project’s Details: Ningbo Municipal Solid Waste Minimization and Recycling Project) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 31-May 3-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,877.00 9,877.00 9,815.00 Japan 86.75 100.45 100.45 100.40 Korea 1,064.40 1,129.64 1,129.64 1,128.20 Malaysia 3.06 3.10 3.10 3.09 Philippines 41.01 42.27 42.27 42.19 Singapore 1.22 1.26 1.26 1.26 Thailand 30.59 30.34 30.34 30.45 Vietnam 20,840.00 21,013.00 21,013.00 21,008.00 Note: Negative values indicate depreciation and positive values indicate appreciation. 2012 close
% change 0.02 -0.01 0.63 0.05 0.13 0.12 0.17 0.44 -0.36 0.02
2013 YTD (%chg) 1.6 -0.2 -1.7 -13.0 -5.7 -1.8 -3.2 -3.0 -0.4 -0.8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9
Previous wk's close 2,300.6 22,392.2 5,068.6 13,774.5 2,001.1 1,769.2 7,022.0 3,311.4 1,562.1
31-May 2,300.6 22,392.2 5,068.6 13,774.5 2,001.1 1,769.2 7,022.0 3,311.4 1,562.1
3-Jun 2,305.0 22,451.3 5,014.6 13,261.8 1,989.6 1,771.6 6,732.6 3,294.3 1,545.9
% change 0.19 0.26 -1.07 -3.72 -0.57 0.13 -4.12 -0.51 -1.04
2013 YTD (%chg) 1.6 -3.7 15.4 27.6 -2.0 5.8 14.9 2.9 9.8
Page 5 of 8
Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
413.7
518.4
518.4
OVERNIGHT LENDING RATE (%) 31-May 3-Jun 4.600 4.810 0.078 0.074 4.171 4.170 0.090 0.093 2.500 2.500 3.000 3.000 1.345 1.345 0.054 0.054 2.500 2.500 0.880 1.125
bps change 21.00 -0.36 -0.07 0.25 0.00 0.00 0.00 0.00 0.00 24.50
520.8
0.46
24.5
3-MONTH INTERBANK LENDING RATE (%) 31-May 3-Jun bps change 3.882 3.883 0.13 0.377 0.377 0.00 4.906 4.904 -0.21 0.230 0.230 0.00 2.680 2.680 0.00 3.210 3.210 0.00 1.235 1.025 -21.00 0.373 0.373 0.00 2.602 2.602 -0.08 4.000 4.033 3.30
CREDIT DEFAULT SWAP (IN BPS) 30-May 31-May bps change China 81.32 84.28 2.96 Hong Kong SAR 44.80 44.97 0.17 Indonesia 164.01 170.73 6.72 Japan 76.07 76.58 0.51 Korea 73.91 76.39 2.48 Malaysia 84.76 87.24 2.48 Philippines 97.08 100.00 2.92 Thailand 88.23 89.22 0.98 Vietnam 208.95 211.22 2.27 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 31-May 3-Jun Gold Spot (in US$ per 1,387.8 1,397.9 ounce) Sources: Bloomberg & Thomson Reuters Datastream CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
% change 0.73
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012 China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand
30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6
31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5
30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6
2013 31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 83.8 259.3 181.6
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8
31-May n.a n.a n.a n.a n.a 141.4 n.a n.a 175.7
Page 6 of 8
21.3 21.4 23.2 Vietnam Note: Data for China and Vietnam refer to FX reserves
n.a
n.a
n.a
n.a
n.a
n.a
EXTERNAL LIQUIDITY RATIOS Latest Int'l Reserves
3 months imports of goods & services
Short-term external debt
Import cover (Qtrs of imports
(US$bn)
(US$bn)
(US$bn)
covered by reserves)
Reserves over short-term debt
3,442.7 521.2 572.8 6.6 6.0 China 306.5 149.9 752.6 2.0 0.4 Hong Kong SAR 107.3 51.8 43.9 2.1 2.4 Indonesia 1,258.0 68.1 2,371.0 18.5 0.5 Japan 328.8 155.1 126.7 2.1 2.6 Korea 141.4 57.8 30.4 2.4 4.6 Malaysia 83.2 20.1 8.5 4.1 9.8 Philippines 261.7 119.0 964.3 2.2 0.3 Singapore 175.7 69.4 60.7 2.5 2.9 Thailand 23.2 30.9 10.0 Vietnam Notes: Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt. DATA RELEASES FOR THE DAY Economies
CHINA JAPAN JAPAN KOREA THAILAND INDONESIA INDONESIA INDONESIA INDONESIA
Indicators
Period
NON-manufacturing PMI Vehicle Sales (YoY) Capital Spending CPI (YoY) CPI (YoY) INFLATION (YoY) TRADE BALANCE EXPORTS (YoY) IMPORTS (YoY)
May May 1Q May May May April April April
Last
54.3 -7.3% -3.9% 1.0% 2.27% 5.47% -1,616M USD -9.1% -3.7%
Previous
54.5 2.0% -8.7% 1.2% 2.42% 5.57% 305M USD -13.0% -10.0%
SELECTED ECONOMIC RELEASES CALENDAR (27 – 31 May 2013) Expected Release Date
6/3/2013
6/4/2013 6/5/2013 6/6/2013 6/7/2013
Economies
CHINA JAPAN JAPAN KOREA INDONESIA INDONESIA THAILAND SINGAPORE JAPAN KOREA PHILIPHINES THAILAND JAPAN KOREA
Indicators
NON-manufacturing PMI Capital Spending Vehicle Sales (YoY) CPI Inflation Trade Balance CPI PMI Monetary Base FOREIGN Reserve CPI Consumer Confidence Official Reserve Assets GDP
Period
May 1Q May May May April May May May May May May May 1Q (Final)
Page 7 of 8
MALAYSIA MALAYSIA THAILAND PHILIPHINES SINGAPORE
TRADE Balance FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves
April May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 4 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian stocks rose from three-month low, led by Japan. Asia’s benchmark stock index snapped a three-day loss amid optimism the Federal Reserve will maintain record monetary stimulus as Federal Reserve Bank of Atlanta President Dennis Lockhart said central-bank officials are committed to record stimulus measures on 3 June. Japanese shares rallied the most in almost a month. The MSCI Asia Pacific Index rose 0.9 percent to 134.65 as of 5:46 p.m. in Tokyo after previous day closing at the lowest level since Feb. 27. Japan’s Topix gained 2.6 percent, its biggest increase since May 7, after falling 3.4 percent previous day. South Korea’s Kospi index was little changed. Australia’s S&P/ASX 200 Index rose 0.3 percent as nation’s benchmark interest rate at a record low 2.75 percent. Hong Kong’s Hang Seng Index was little changed and China’s Shanghai Composite Index retreated 1.2 percent. Indonesia’s JCI index gains 1.01 percent this day.
•
Japanese yen weakened while other Asian currencies steady. The yen weakened for the first time in three days against the euro as Asian and European stocks gained amid waning speculation the Federal Reserve will reduce monetary stimulus. Japan’s currency depreciated beyond 100 dollar after climbing to the strongest in three weeks on Monday. Australia’s dollar declined after the Reserve Bank said the inflation outlook provided some scope for further monetary easing. Indonesia Rupiah and Thailand Bhat depreciated 0.68% and 0.23% respectively while Korean won gains 0.53%. Japan’s currency fell 0.8 percent to 100.29 per dollar after appreciating to 98.87 yesterday, the strongest since May 9. The euro fell 0.1 percent to $1.3065.
•
Gold swung after climbing most in two weeks on stimulus outlook. Gold swung between gains and losses. Spot gold traded at $1,406.1 an ounce at 5:00 p.m. in Singapore, after climbing and dropping. Prices jumped 1.7 percent previous day, the most since May 20, as U.S. manufacturing unexpectedly contracted in May. Gold fell 16 percent this year after a 12-year bull run as investors sold the metal from exchange-traded products at a record pace on speculation the Fed may taper quantitative easing. Commodities were supported as the dollar weakened after an unexpected contraction in the U.S. manufacturing sector.
BREAKING NEWS GLOBAL •
Surprise factory downturn holds back US growth: Manufacturing in the U.S. unexpectedly shrank in May at the fastest pace in four years, showing slowdowns in business and government spending are holding back the world’s largest economy. The Institute for Supply Management’s factory index fell to 49, the lowest reading since June 2009, from the prior month’s 50.7. Across-the-board federal budget cuts and overseas markets that are struggling to rebound will probably continue to curb manufacturing, which accounts for about 12 percent of the economy. At the same time, demand for automobiles, gains in residential construction and lean inventories may spark a pickup in orders and production in the second half of the year. The Standard & Poor’s 500 Index climbed 0.6 percent to Page 1 of 7
1,640.42 at the close in New York after posting its first consecutive weekly losses since November. ISM report was an example of the “very mixed” readings that indicate the economy isn’t strong enough to justify a reduction in the central bank’s bond-buying program. Meanwhile, spending on construction increased 0.4 percent in April to an $860.8 billion annualized rate, figures from the Commerce Department showed today. Outlays on private construction projects rose 1 percent in April from the month before. Government projects fell by 1.2 percent, to the lowest spending level since October 2006, after slumping in the prior month by a revised 2.9 percent. •
European Stock Futures Gain on Fed Official’s Stimulus Comments. European stock futures rose, signaling the Stoxx Europe 600 Index will rebound from the lowest level in a month, as a Federal Reserve official said the bank is committed to record stimulus measures. The S&P 500 climbed 0.6 percent on June 2 as Fed Bank of Atlanta President Dennis Lockhart said recent data suggest the economy isn’t strong enough to justify a reduction in the central bank’s bond-buying program. “To the extent that the markets are seeing mixed messages, it simply reflects the debate that’s going on among the colleagues on the Federal Open Market Committee,” Lockhart said in a Bloomberg Television interview. “The bigger picture is that any adjustment is not a major policy shift.” The European Stoxx 600 on June 2 fell for a second day, extending the lowest level since May 2, amid speculation the Fed will scale back stimulus measures.
•
Spain’s Crisis Fades as Exports Lead the Way. Spanish exports climbed to a record 223 billion euros ($291 billion) last year as a drought in orders at home pushed companies to upgrade products and go abroad. It was another step away from a decade of growth fueled by mass construction and tourism. The “painful” reforms undertaken by debt-strapped countries “are starting to bear fruit,” European Central Bank President Mario Draghi said in a May 23 speech in London. “It’s visible in “the impressive improvement in export performance in Ireland, Spain and Portugal.” Spaniards may have to wait to see the impact on the overall economy. GDP contracted for a seventh quarter in the first three months of the year amid a slump in lending that is strangling small businesses. The March trade surplus was driven by a 15 percent import drop as households cut spending. Foreign sales rose 2 percent and first-quarter exports fell at the fastest pace in a year. The European Commission forecast in May that exports will grow 4.1 percent this year, almost twice the European Union average rate. Exports of goods and services as a share of GDP, at 32 percent, was the highest last year since at least 2000, Eurostat figures show. Sales are rising at double-digit rates in fast-growing markets in Asia and Africa. Registered unemployment may decline for a third month in May, according to economists surveyed by Bloomberg.
•
RBA kept Benchmark Interest Rate at 2.75%. Australia’s central bank said it still has room to cut the benchmark interest rate from its record-low level and judged that the nation’s exchange rate remains high even after the biggest monthly drop since 2011. The Reserve Bank of Australia said in a statement today in Sydney. “The inflation outlook, as currently assessed, may provide some scope for further easing, should that be required,” Two percentage points of rate cuts in the past 20 months have boosted the property market, while a 7.7 percent decline in the Australian dollar last month helped buoy manufacturing sentiment. Policy makers are trying to shift growth toward industries such as construction in the nation’s south and east to spur hiring as mining investment in the north and west is predicted to peak this year. The Australian dollar was little changed at 97.23 U.S. cents at 3:26 p.m. in Sydney, from 97.14 before the decision.
Page 2 of 7
REGIONAL •
Japan fails to plow yen profits back Into capital spending. In the first full quarter of Prime Minister Shinzo Abe’s tenure, capital spending excluding software fell 5.2 percent from a year earlier. Spending by Japan’s biggest companies dropped 4.9 percent in January-March, the biggest decline since the quarter after the March 2011 earthquake. Unprecedented monetary easing by the Bank of Japan has weakened the yen 17 percent versus the dollar since Dec. 3, helping exporters report improved earnings through March. Yet, weak capital spending places fresh importance on Abe unveiling structural reforms within weeks that economists say are needed to revive Japan Inc. There are also some plans to raise compensation including summer bonuses. In March, the prime minister announced his intention to join talks on a regional trade pact that may help domestic auto and electronics makers compete with rivals in South Korea. “How Japanese companies spend this increased profit will play an essential part in realizing the Japanese economic recovery,” said a chief economist at Dai-Ichi Life Research Institute in Tokyo. There are some signs that Abe’s policies are beginning to change corporate behavior with regards to wages. Japan’s wages rose by the most in a year in April. Monthly pay including overtime and bonuses rose 0.3 percent from a year earlier to 273,427 yen.
•
Abe to urge review of Japan's public fund strategy. Japan's government is set to urge the nation's public pension funds - a pool of over $2 trillion - to increase their investment in equities and overseas assets as part of a growth strategy being readied by Prime Minister Shinzo Abe. The steps represent the first time the Abe administration has looked to mobilize Japan's massive pool of savings to support a growth agenda that aims to spur more consumer spending and corporate investment by pushing the economy toward 2 percent inflation. Specifically, the government will set up a panel in July to consider the investment strategies of public funds, which, like other Japanese institutional investors, have relied heavily on investment in Japanese government bonds in recent years. The panel will look to reach a conclusion as soon as this autumn on strategy and will urge implementation of the new investment guidelines by public funds no later than April 2015, according to the sources. As part of its deliberations, the panel will consider steps to allow the public funds to invest in alternative investments, including infrastructure financing both in Japan and abroad, the sources said. The main idea under consideration would be for GPIF to change the way it evaluates the potential risk and return on assets to allow it more flexibility, sources have said.
•
Overseas funds sold the most Indonesian stocks in 21 month. Foreign institutional investors sold a net $171.2 million of Indonesian equities on Monday, the biggest outflow since August 2011, according to data compiled by Bloomberg. The Jakarta Composite Index fell for a fourth day today, dropping 0.5 percent to the lowest in a month. The gauge’s 15day historical volatility rose to 19.6 today, the highest level in a year. The rupiah fell 1.8 percent last month through May 29 to 9,905 per dollar, the weakest level since September 2009. Jakarta Composite Index has surged 15 percent this year, driving valuations to 16.8 times projected 12-month earnings on May 23, the highest since December 2010. Foreign investors poured a net $2.57 billion into the nation’s stocks this year through May 22, a record for the period, as monetary stimulus by central banks from the U.S. to Europe and Japan stoked demand for emerging-market assets. They’ve sold a net $759.1 million since. Indonesian stock markets declined the most in a year yesterday, while the currency weakened 0.1 percent, after data showed the nation’s trade deficit rose to a near record in April as exports dropped amid declining commodity prices. Page 3 of 7
IFIs NEWS (compiled from their websites) ADB – Press Release: ASEAN Nations Complete First-Ever Corporate Governance Scorecard •
Results of the first-ever ASEAN Corporate Governance (CG) Scorecard will be released on 5 June 2013, resulting from the completion of the inaugural assessment of publicly-listed companies using the standardized ASEAN Corporate Governance Scorecard. “This is a significant milestone towards ASEAN integration, as the effort has moved beyond national boundaries. The ASEAN Corporate Governance Scorecard supersedes national scorecards,” said Shigeko Hattori, Director of Public Management, Financial Sector and Trade division in the Southeast Asia Department of the Asian Development Bank (ADB), which has been supporting ASEAN regional capital market integration since 2005 through a series of regional technical assistance projects. http://www.adb.org/news/asean-nations-complete-first-ever-corporate-governancescorecard (Press Release) http://www.adb.org/projects/44083-012/main (Overview of Project Data Sheet pertaining to ‘Promoting an Interlinked ASEAN Capital Market”)
ADB – Publication: “Asia Bond Monitor - June 2013” •
Emerging East Asia’s local currency bond markets expanded 12.1% year-on-year to $6.7 trillion at the end of March 2013, driven by double-digit growth in corporate bonds, according to the latest edition of the Asian Development Bank’s (ADB) Asia Bond Monitor. “We should see further growth in the bond markets given the region’s economies are continuing to expand and with foreign and domestic investors increasingly comfortable with Asian local currency debt,” said Iwan J. Azis, Head of ADB’s Office of Regional Economic Integration. “Governments and companies are also much better now at managing their debt than they were a decade ago.” http://www.adb.org/news/emerging-east-asias-local-bond-markets-grow-121-highcorporate-sales (Press Release) http://www.adb.org/publications/asia-bond-monitor-june-2013 (Asia Bond Monitor - June 2013)
IMF – Press Release: Germany—2013 Article IV Consultation: Concluding Statement of the IMF Mission •
The IMF has publicised the 2013 Article IV Consultation Concluding Statement pertaining to its' Mission to Sweden. The following is an excerpt of the Concluding Statement: “Amid strong domestic fundamentals, a recovery in activity in Germany is expected in the second half of 2013. A more robust rebound is being held back by continued weakness in business investment, mainly related to uncertainty surrounding prospects and policies for the euro area, despite the progress made so far. The slight loosening of the fiscal stance envisaged this year is appropriate, and fiscal over-performance should be avoided. Domestic financial sector reforms should be undertaken with a view to ensuring both full harmonization with European initiatives and clarity on the emerging financial landscape. Structural reforms to raise the German economy’s growth potential remain an important priority.” http://www.imf.org/external/np/ms/2013/060313.htm
IMF – Press Release: Statement on the Third Financial Sector Monitoring Mission to Spain
Page 4 of 7
A staff team from the IMF visited Madrid on May 21-31 for the third independent monitoring mission of the financial sector in the context of the European financial assistance for bank recapitalization, as agreed with the Spanish authorities and the European Commission (EC) on July 20, 2012. The mission found that program implementation remains on track, with action now taken on the vast majority of measures specified in the program’s Memorandum of Understanding, as envisaged under its frontloaded timetable. Most notably, actions to recapitalize parts of the banking sector and the asset transfers to SAREB have provided an important boost to the system’s liquidity and solvency. At the same time, financial market sentiment has continued to improve since the last monitoring mission, with the risk premium on Spanish sovereign debt now well below its levels at the start of the program. Nonetheless, risks to the economy and hence to the financial sector remain elevated as Spain continues to undergo a difficult process of correcting large pre-crisis imbalances. http://www.imf.org/external/np/sec/pr/2013/pr13196.htm (Press Release) http://www.imf.org/external/np/country/2012/esp/spaintor.pdf (Terms of Reference for Fund Staff Monitoring in the Context of European Financial Assistance for Bank Recapitalization)
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 3-Jun 4-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,877.00 9,808.00 9,875.00 Japan 86.75 100.45 99.53 100.29 Korea 1,064.40 1,129.64 1,128.20 1,122.25 Malaysia 3.06 3.10 3.10 3.09 Philippines 41.01 42.27 42.07 41.96 Singapore 1.22 1.26 1.25 1.25 Thailand 30.59 30.34 30.36 30.43 Vietnam 20,840.00 21,013.00 21,005.00 21,010.00 Note: Negative values indicate depreciation and positive values indicate appreciation. 2012 close
% change 0.04 0.00 -0.68 -0.76 0.53 0.19 0.26 -0.09 -0.23 -0.02
2013 YTD (%chg) 1.7 -0.2 -2.2 -12.9 -5.2 -1.9 -2.6 -2.6 -0.3 -0.8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,300.6 22,392.2 5,068.6 13,774.5 2,001.1 1,769.2 7,022.0 3,311.4 1,562.1 518.4
3-Jun 2,299.3 22,282.2 4,971.4 13,261.8 1,989.6 1,766.3 6,763.4 3,291.1 1,539.3 517.0
4-Jun 2,272.4 22,285.5 5,021.6 13,533.8 1,989.5 1,773.1 6,673.5 3,287.9 1,549.9 510.7
% change -1.17 0.01 1.01 2.05 0.00 0.38 -1.33 -0.10 0.69 -1.23
2013 YTD (%chg) 0.1 -4.4 15.5 30.2 -2.0 5.9 13.9 2.7 10.1 22.1
Page 5 of 7
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
OVERNIGHT LENDING RATE (%) 3-Jun 4-Jun 4.620 4.440 0.074 0.074 4.170 4.170 0.093 0.095 2.500 2.500 3.000 3.000 1.109 0.309 0.034 0.034 2.500 2.500 1.125 1.200
bps change -18.00 -0.07 0.00 0.25 0.00 0.00 -80.00 0.00 0.00 7.50
3-MONTH INTERBANK LENDING RATE (%) 3-Jun 4-Jun bps change 3.883 3.884 0.01 0.377 0.377 0.00 4.904 4.907 0.29 0.230 0.230 0.00 2.680 2.680 0.00 3.210 3.210 0.00 1.025 1.022 -0.30 0.373 0.373 -0.08 2.602 2.600 -0.15 4.033 4.167 13.40
CREDIT DEFAULT SWAP (IN BPS) 31-May 3-Jun bps change China 81.32 90.67 9.35 Hong Kong SAR 44.80 45.47 0.67 Indonesia 164.01 179.40 15.39 Japan 76.07 79.80 3.73 Korea 73.91 80.83 6.92 Malaysia 84.76 91.16 6.40 Philippines 97.08 106.81 9.73 Thailand 88.23 94.11 5.88 Vietnam 208.95 217.93 8.98 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 3-Jun 4-Jun Gold Spot (in US$ per 1,411.4 1,406.1 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change -0.37
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012 30-Sep 31-Oct 30-Nov 3,285.1 3,287.4 3,297.7 China 301.2 301.7 305.2 Hong Kong SAR 110.2 110.3 111.3 Indonesia 1,277.0 1,274.2 1,270.9 Japan 322.0 323.5 326.1 Korea 137.5 138.3 139.1 Malaysia 82.0 81.7 83.9 Philippines 252.1 254.2 255.8 Singapore 183.6 181.5 181.6 Thailand Vietnam 21.3 21.4 23.2 Note: Data for China and Vietnam refer to FX reserves
2013 31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 83.8 259.3 181.6 n.a
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a n.a n.a n.a n.a 141.4 n.a n.a 175.7 n.a
Page 6 of 7
EXTERNAL LIQUIDITY RATIOS Latest Int'l Reserves
3 months imports of goods & services
Short-term external debt
Import cover (Qtrs of imports
(US$bn)
(US$bn)
(US$bn)
covered by reserves)
Reserves over short-term debt
3,442.7 521.2 572.8 6.6 6.0 China 306.5 149.9 752.6 2.0 0.4 Hong Kong SAR 107.3 51.8 43.9 2.1 2.4 Indonesia 1,258.0 68.1 2,371.0 18.5 0.5 Japan 328.8 155.1 126.7 2.1 2.6 Korea 141.4 57.8 30.4 2.4 4.6 Malaysia 83.2 20.1 8.5 4.1 9.8 Philippines 261.7 119.0 964.3 2.2 0.3 Singapore 175.7 69.4 60.7 2.5 2.9 Thailand 23.2 30.9 10.0 Vietnam Notes: Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt. DATA RELEASES FOR THE DAY Economies
JAPAN JAPAN
Indicators
Monetary Base (YoY) Labor Cash Earnings (YoY)
Period
May April
Last
31.6% 0.3%
Previous
23.1% -0.6%
SELECTED ECONOMIC RELEASES CALENDAR (27 – 31 May 2013) Expected Release Date
6/3/2013
6/4/2013 6/5/2013 6/6/2013 6/7/2013
Economies
CHINA JAPAN JAPAN KOREA INDONESIA INDONESIA THAILAND SINGAPORE JAPAN JAPAN KOREA PHILIPHINES THAILAND JAPAN KOREA MALAYSIA MALAYSIA THAILAND PHILIPHINES SINGAPORE
Indicators
NON-manufacturing PMI Capital Spending Vehicle Sales (YoY) CPI Inflation Trade Balance CPI PMI Monetary Base Labor Cash Earnings (YoY) FOREIGN Reserve CPI Consumer Confidence Official Reserve Assets GDP TRADE Balance FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves
Period
May 1Q May May May April May May May April May May May May 1Q (Final) April May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 7 of 7
MARKET UPDATE FOR ASEAN+3 5 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian stocks fell as Japan reverses gain after Abe speech. Asian stocks fell, led by Japanese equities after Prime Minister Shinzo Abe failed to impress investors in a speech outlining his growth strategy. Shares dropped across the region amid concern the Federal Reserve will scale back stimulus as the U.S. economy improves. The MSCI Asia Pacific Index slid 1.9 percent to 132.15 as of 5:39 p.m. in Tokyo, heading for the lowest close since Feb. 5. The measure is down 8.5 percent from this year’s high on May 20. Japan’s Topix index slid 3.2 percent, reversing a gain of 1.2 percent, after Abe’s speech in Tokyo. Other leading indices from Korea(-1.52%), Hong Kong(-0.97%), China(-0.07%), Indonesia(-0.41), Philippines(1.73%), Malaysia(-0.18%), Singapore (-1.39%), and Thailand(-0.86%) also declined while Vietnam gains 0.77%.
Japanese yen, South Korea’s won and Indonesia’s rupiah advanced while Australia’s dollar slumped. The yen strengthened versus the dollar and euro as Japanese stocks slumped after Prime Minister Shinzo Abe failed to provide additional detail on stimulus measures, boosting demand for safer assets. Japan’s currency gained against 14 of its 16 major counterparts after the Topix index of shares dropped more than 3 percent. Australia’s dollar fell after the nation’s gross domestic product grew at the slowest pace in almost two years. Indonesia rupiah and Korean won appreciated 0.82% and 0.57% respectively while Thailand bhat and Philippines peso depreciated 0.39% and 0.09% respectively. The pound advanced against the dollar and euro after a report showed services output in the U.K. expanded last month by the most in more than a year. The euro fell 0.1 percent to $1.3062 at 5 pm in Singapore time.
Commodity prices advanced. Gold rebounded to trade above $1,400 an ounce as equities retreated and the dollar’s rally halted, boosting demand for the metal as a store of value. Silver, platinum and palladium increased. Investors are keeping an eye on the dollar, which is expected to gain if jobs data including Friday's key nonfarm payrolls report support talk of an end to the Fed stimulus. Spot gold rose 0.5 percent to $1,400.1 an ounce while Brent crude was up 0.4 percent at $103.60 a barrel. West Texas Intermediate crude rose to trade near its highest intraday level in four days after an industry report showed U.S. inventories dropped the most since December. WTI for July delivery climbed as much as 67 cents to $93.98 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.59 at 9:09 a.m. London time. Aluminium and nickel also advanced.
BREAKING NEWS GLOBAL
Widening US trade gap offers mixed signals on economy. US Trade deficit widened in April as a rise in imports offset a rebound in exports, suggesting trade could drag on growth in the second quarter even as demand holds up. The Commerce Department said on Tuesday the trade gap increased to $40.3 billion from $37.1 billion in March. it still suggested that trade would not be of much help to gross domestic product this quarter. The more heavily Page 1 of 8
U.S. business and consumers turn to foreign products, the bigger the bite out of domestic production. The data prompted some economists to trim their second-quarter GDP estimates. Macroeconomic Advisers pared its estimate by two-tenths of a percentage point to a 1.2 percent annual rate, while Morgan Stanley economists cut theirs to 1.4 percent from 1.6 percent. Despite a widening in the trade deficit in April, details of the report offered some good news for an economy that hit a speed bump as higher taxes and government spending took hold. In April, imports of goods and services increased 2.4 percent to $227.7 billion. The snap-back in imports, driven mostly by capital goods and automobiles, pointed to resilience in domestic demand. While imports rose, the petroleum bill was the lowest since November 2010. This is a positive development for the energydependent economy. Record increases in exports of consumer goods and automobiles and parts pushed overall exports up by 1.2 percent to $187.4 billion in April, the second highest on record. Economists also expect export growth to slow as the lagged effects of dollar strength earlier in the year kick in. A stronger dollar makes U.S. goods more expensive to foreign buyers.
European stocks fell on Fed stimulus concern. European stocks retreated, following a selloff in U.S. equities, as investors weighed comments by Federal Reserve policy makers on when to scale back the central bank’s bond-buying program. U.S. index futures and Asian shares also slipped. The Stoxx Europe 600 Index decreased 0.4 percent to 298.48 at 8:39 a.m. in London amid concern that the Fed may soon scale back its quantitative-easing program. Standard & Poor’s 500 Index futures retreated 0.1 percent, while the MSCI Asia Pacific Index tumbled 1.9 percent as Japan’s Nikkei 225 Stock Average slumped 3.8 percent. The S&P 500 declined after the close of European trading, closing 0.6 percent lower, as economists at Deutsche Bank AG predicted that the Fed could start winding down its bondbuying program at the end of the summer. Fed Bank of Kansas City President Esther George, who has dissented against the latest round of asset purchases at every policy meeting this year, urged the Fed yesterday to slow its bond-buying program.
EU hits China with solar-panel duties in dumping dispute. The European Union imposed tariffs as high as 67.9 percent on solar panels from China in the largest EU commercial dispute of its kind, seeking to help revive a withering industry in Europe. The duties punish Chinese manufacturers of solar panels for allegedly selling them in the 27-nation EU below cost, a practice known as dumping. The European Commission said 25,000 jobs in EU solar production would likely be lost without the import taxes. The levies, due to be published today in the EU’s Official Journal and to take effect tomorrow at an initial lower rate of 11.8 percent, will be for six months and may be prolonged for five years. The trade protection covers EU imports of crystalline silicon photovoltaic modules or panels, and cells and wafers used in them -- shipments valued at 21 billion euros ($27.5 billion) in 2011. European companies including Solar world have demanded punitive levies to counter growing competition from China following similar U.S. trade protection. The case highlights EU concerns about the expansion of Chinese solar companies, which have grabbed market share from European rivals that were once dominant, and underpins a broader crackdown by Europe on perceived unfair low pricing by China’s exporters. The dispute also spotlights tensions within Europe between high-tech manufacturers and consumers and between policies to bolster production and to spur clean-energy use. After Aug. 6, unless an accord is reached, the provisional levies will range from 37.2 percent to 67.9 percent, depending on the Chinese company, according to the commission. It said those duties would average 47.6 percent. Page 2 of 8
Australia’s slowest growth since 2011 spurs rate-cut bet: Australia’s economy expanded at the slowest annual pace in almost two years as manufacturers and builders detracted from growth, sending the nation’s currency lower as traders increased bets on further interestrate cuts. Gross domestic product expanded 2.5 percent in the first quarter from a year earlier, the weakest reading since the second quarter of 2011. Economists predicted a 2.7 percent gain. The Reserve Bank of Australia has slashed borrowing costs to 2.75 percent to combat currency strength that prompted Ford Motor Co. to cease operations and eliminate 1,200 jobs. Today’s report showed some of the nation’s most employment-intensive industries that the central bank has sought to stoke with record-low interest rates remain subdued. The local dollar declined to 95.61 U.S. cents at 5:06 p.m. in Sydney, from 96.35 cents before the release. Growth advanced 0.6 percent from the previous three months, when it expanded at the same pace, today’s report showed. Manufacturing fell 0.8 percent and exports climbed 1.1 percent and non-dwelling construction jumped 7.6 percent, the data showed. Household spending rose 0.6 percent in the first quarter, adding 0.3 percentage point to GDP growth, today’s report showed. Machinery and equipment fell 6.9 percent, subtracting 0.4 percentage point from GDP growth. REGIONAL
Abe pledges campaign to loosen Japan business regulations. Japanese Prime Minister Shinzo Abe pledged a legislative campaign to loosen rules on businesses ranging from nonprescription drugs to construction. Stocks slid as he said the effort won’t begin for months. Abe said policy makers will remove barriers to private enterprise and legislation will be enacted as soon as autumn. The growth strategy to be unveiled next week is part of an economic revival plan following fiscal and monetary stimulus. While the first two stages were initially greeted with enthusiasm by investors, stocks have entered a correction from the biggest rally in a quarter century and the yen has risen against the dollar after touching a four-and-a-half year low. Abe vowed to deregulate the energy, health and infrastructure sectors and double foreign investment in Japan to 35 trillion yen by 2020. He said he will raise investment in the power industry to 30 trillion yen in 10 years and triple to 12 trillion yen the use of public-private partnerships to fund infrastructure projects such as airports, waterworks and highways over the same period. He didn’t address whether to change labor laws in order to make it easier to fire workers. Abe is still considering lowering corporate tax rates, a topic that wasn’t addressed in today’s speech. The government is examining Economy Minister Akira Amari’s suggestion of lower taxes in special economic zones, which may be created in a bid to encourage innovation. Japan’s corporate tax rate is about 37 percent, the second-highest among countries in the Organization for Economic Cooperation and Development.
South Korea prepares contingency plan amid swings in bond market. South Korea is “closely analyzing” volatility in foreign purchases of government bond futures and preparing a contingency plan should overseas investors yank money from the market, a senior Finance Ministry official said. The contingency plan will include stronger cooperation with the Bank of Korea, financial regulators and the stock exchange. Bank of Korea Governor Kim Choong Soo this week urged global coordination to limit the risk of financial instability that could be triggered by volatility in capital flows and exchange rates. South Korea’s government aims to drive a rebound after a slowdown in economic growth last year to the weakest pace since the global financial crisis, yesterday rolling out measures to boost
Page 3 of 8
employment as a sliding yen aids export rivals in Japan. Overseas investors were net sellers of a record 42,295 of three-year bond futures contracts on May 29, having on average sold 397 more than they bought per day so far this year. The price of Korean government debt has fallen as investors speculate that a strengthening U.S. economy may prompt the Fed to reduce quantitative easing. Foreign investors bought a net 6.2 trillion won ($5.5 billion) of Korean Treasury bonds this year as of April 30, close to last year’s entire net inflow of 7.4 trillion won, Financial Supervisory Service data show. Investors from France were the biggest net investors this year, followed by those from the U.S. and Thailand. Finance Minister Hyun Oh Seok and Governor Kim said in a joint statement yesterday that uncertainties were increasing amid a possible U.S. exit from quantitative easing. Hyun and Kim agreed to keep in close touch on any adverse effects from other central banks’ policies and to strengthen cooperation.
Cash outflows turn world’s best stocks of Southeast Asia to worst. Stock markets in Indonesia, the Philippines and Thailand have gone from being the world’s best to among the worst as the threat of reduced bond purchases by the U.S. Federal Reserve sends foreign investors to the exit. Equity indexes in the three markets have declined more than 3.5 percent since May 22, when Fed Chairman Ben S. Bernanke said policy makers could consider reducing stimulus if the U.S. labor market improves. International money managers pulled a combined $1.6 billion from the Southeast Asian countries in that period, the most since August 2011. Indonesia, the Philippines and Thailand led a four-year rally in global stocks as buoyant local economies sent corporate profits to records and the Fed’s debt buying spurred investors to seek higher-yielding assets. The two-week outflows from Thailand, Indonesia and the Philippines compare with $2.3 billion of combined net inflows this year into the three markets. Thailand recorded the most withdrawals among the countries from May 22 through June 3, losing a net $769 million. International investors poured $25 billion into the three markets since Nov. 25, 2008, when the Fed announced its first round of so-called quantitative easing to revive economic growth amid the global financial crisis. The Jakarta index surged 356 percent through May 22 and the SET gauge advanced 322 percent. The Philippine measure rose 310 percent, versus a 116 percent gain in the MSCI emerging index. High valuations may drive equity investors out of Southeast Asia and into cheaper markets such as South Korea and Taiwan that will benefit more from a U.S. economic recovery, according to Citigroup Inc.
IFIs NEWS (compiled from their websites) IFC – Press Release: IFC Partners with Everbright International to Boost China’s Water Development and Efficiency
IFC is providing a $70 million loan to China Everbright International Limited, a leading investor and operator in environmental friendly businesses, to build three water plants in China. The project will further develop China’s water sector and promote water efficiency in the country. "In a world where almost 800 million people don't have access to clean water, IFC is helping China and other countries improve water security,” said IFC Executive Vice President and CEO Jin-Yong Cai. “This investment will support the establishment of state-of-the-art water facilities, help make the China's water sector more efficient, and promote global best practices.”
Page 4 of 8
http://www.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/C7CF9F84A9527CB685257B810 01A86B9 IMF – Policy Paper: “Implementation Plan in Response to Board-Endorsed Recommendations for the IEO Evaluation of International Reserves--IMF Concerns and Country Perspectives”
On March 29, 2013, the IMF Executive Board discussed an implementation plan in response to board-endorsed recommendations for the IEO evaluation of international reserves—IMF Concerns and Country Perspectives. http://www.imf.org/external/np/sec/pn/2013/pn1363.htm (Press Release) http://www.imf.org/external/np/pp/eng/2013/032113.pdf (Implementation Plan in Response to Board-Endorsed Recommendations for the IEO Evaluation of International Reserves--IMF Concerns and Country Perspectives) http://www.imf.org/external/np/pp/eng/2011/021411b.pdf (Paper dated February 14, 2011: Assessing Reserve Adequacy)
IMF – Press Release: France: 2013 Article IV Consultation—Concluding Statement
The IMF has publicised the 2013 Article IV Consultation Concluding Statement pertaining to its’ Mission to France. http://www.imf.org/external/np/ms/2013/060413b.htm
IMF – Publication: “Bangladesh: Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding”
The IMF has publicised the following reports pertaining to Bangladesh’s request of the completion of the second review under the Extended Credit Facility (ECF) arrangement and access to the third disbursement in the amount of SDR 91.423 million (about US$136.6 million), bringing the total amount disbursed equivalent to SDR 274.269 million (about US$409.7 million). http://www.imf.org/External/NP/LOI/2013/BGD/051313.pdf (Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding) http://www.imf.org/external/np/sec/pr/2013/pr13193.htm (Press Release 13/193 dated May 29, 2013: IMF Executive Board Completes Second Review Under the ECF Arrangement for Bangladesh and Approves US$136.6 Million Disbursement)
World Bank – Press Release: China - Ma'anshan Cihu River Basin Improvement Project
On June 4, 2013, the World Bank’s Board of Executive Directors approved a loan of US$100 million equivalent to the People’s Republic of China to improve flood protection for 1.3 million people living in the urban areas of Ma’anshan City in Anhui Province. The objective of the project is to improve drainage and flood protection capacity in urban areas of Ma'anshan municipality. http://www.worldbank.org/en/news/press-release/2013/06/04/china-improving-floodprotection-1-3-million-people-maanshan (Main Press Release) http://www.worldbank.org/en/news/loans-credits/2013/06/04/china-maanshan-cihuriver-basin-improvement-project (Press Release pertaining to the loan details)
Page 5 of 8
http://www.worldbank.org/projects/P126813/maanshan-cihu-river-basin-improvementproject?lang=en (Project’s Details: Ma'anshan Cihu River Basin Improvement Project) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 4-Jun 5-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,877.00 9,875.00 9,795.00 Japan 86.75 100.45 100.03 99.91 Korea 1,064.40 1,129.64 1,122.25 1,115.89 Malaysia 3.06 3.10 3.09 3.08 Philippines 41.01 42.27 41.96 41.99 Singapore 1.22 1.26 1.25 1.25 Thailand 30.59 30.34 30.45 30.57 Vietnam 20,840.00 21,013.00 21,008.00 21,018.00 Note: Negative values indicate depreciation and positive values indicate appreciation. 2012 close
% change 0.02 -0.01 0.82 0.12 0.57 0.29 -0.09 0.28 -0.39 -0.05
2013 YTD (%chg) 1.7 -0.1 -1.4 -12.6 -4.7 -1.6 -2.7 -2.3 -0.8 -0.8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,300.6 22,392.2 5,068.6 13,774.5 2,001.1 1,769.2 7,022.0 3,311.4 1,562.1 518.4
4-Jun 2,272.4 22,285.5 5,021.6 13,533.8 1,989.5 1,776.7 6,673.5 3,291.4 1,555.6 510.7
OVERNIGHT LENDING RATE (%) China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
4-Jun 4.440 0.074 4.170 0.095 2.500 3.000 0.309 0.039 2.500 1.200
5-Jun 4.740 0.075 4.170 0.095 2.500 3.000 -0.323 0.039 2.500 1.000
5-Jun
% change
2,270.9 22,069.2 5,001.2 13,014.9 1,959.2 1,773.6 6,557.9 3,245.6 1,542.2 514.6
-0.07 -0.97 -0.41 -3.83 -1.52 -0.18 -1.73 -1.39 -0.86 0.77
2013 YTD (%chg) 0.1 -5.3 15.1 25.2 -3.5 5.9 11.9 1.4 9.6 23.0
3-MONTH INTERBANK LENDING RATE (%) bps change 30.00 0.14 0.00 0.00 0.00 0.00 -63.20 0.00 0.00 -20.00
4-Jun 3.884 0.377 4.907 0.230 2.670 3.210 1.022 0.373 2.600 4.167
5-Jun 3.884 0.377 4.915 0.230 2.670 3.210 0.858 0.373 2.601 4.167
bps change 0.03 0.00 0.79 0.00 0.00 0.00 -16.40 0.08 0.08 0.00
CREDIT DEFAULT SWAP (IN BPS) 3-Jun 4-Jun bps change China 81.32 90.67 9.35 Hong Kong SAR 44.80 45.47 0.67 Indonesia 164.01 179.40 15.39 Japan 76.07 79.80 3.73 Korea 73.91 80.83 6.92 Malaysia 84.76 91.16 6.40 Philippines 97.08 106.81 9.73 Thailand 88.23 94.11 5.88 Vietnam 208.95 217.93 8.98 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.
Page 6 of 8
4-Jun Gold Spot 1,399.6 (in US$ per ounce) Sources: Bloomberg & Thomson Reuters Datastream
5-Jun
% change
1,400.1
0.04
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012 30-Sep 31-Oct 30-Nov 3,285.1 3,287.4 3,297.7 China 301.2 301.7 305.2 Hong Kong SAR 110.2 110.3 111.3 Indonesia 1,277.0 1,274.2 1,270.9 Japan 322.0 323.5 326.1 Korea 137.5 138.3 139.1 Malaysia 82.0 81.7 83.9 Philippines 252.1 254.2 255.8 Singapore 183.6 181.5 181.6 Thailand Vietnam 21.3 21.4 23.2 Note: Data for China and Vietnam refer to FX reserves
2013 31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 83.8 259.3 181.6 n.a
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a n.a n.a n.a 328.1 141.4 n.a n.a 175.7 n.a
EXTERNAL LIQUIDITY RATIOS Latest Int'l Reserves
3 months imports of goods & services
Short-term external debt
Import cover (Qtrs of imports
(US$bn)
(US$bn)
(US$bn)
covered by reserves)
Reserves over short-term debt
3,442.7 521.2 572.8 6.6 6.0 China 306.5 149.9 752.6 2.0 0.4 Hong Kong SAR 107.3 51.8 43.9 2.1 2.4 Indonesia 1,258.0 68.1 2,371.0 18.5 0.5 Japan 328.8 155.1 126.7 2.1 2.6 Korea 141.4 57.8 30.4 2.4 4.6 Malaysia 83.2 20.1 8.5 4.1 9.8 Philippines 261.7 119.0 964.3 2.2 0.3 Singapore 175.7 69.4 60.7 2.5 2.9 Thailand 23.2 30.9 10.0 Vietnam Notes: Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 7 of 8
DATA RELEASES FOR THE DAY Economies
KOREA PHILIPHINES
Indicators
FOREIGN Reserve CPI (YoY)
Period
Last
May May
328.10 Bil. USD 2.6%
Previous
328.80 Bil. USD 2.6%
SELECTED ECONOMIC RELEASES CALENDAR (27 – 31 May 2013) Expected Release Date
6/3/2013
6/4/2013 6/5/2013 6/6/2013 6/7/2013
Economies
CHINA JAPAN JAPAN KOREA INDONESIA INDONESIA THAILAND SINGAPORE JAPAN JAPAN KOREA PHILIPHINES THAILAND JAPAN KOREA MALAYSIA MALAYSIA THAILAND PHILIPHINES SINGAPORE
Indicators
NON-manufacturing PMI Capital Spending Vehicle Sales (YoY) CPI Inflation Trade Balance CPI PMI Monetary Base Labor Cash Earnings (YoY) FOREIGN Reserve CPI Consumer Confidence Official Reserve Assets GDP TRADE Balance FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves
Period
May 1Q May May May April May May May April May May May May 1Q (Final) April May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 6 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian Stocks Slide to Lowest Since January on U.S. Data. Asian stocks fell after U.S. jobs and factory data missed estimates and investors speculated whether the Federal Reserve will scale back bond purchases. The MSCI Asia Pacific Index slid 1.2 percent to 130.79 as of 5:23 p.m. in Tokyo heading to a six-month low. Japan’s Topix index slid 1.8 percent after plunging 3.2 percent yesterday. The Topix is down 16 percent from a May 22 five-year high, cuttings its 2013 advance to 25 percent. Australia’s S&P/ASX 200 Index declined 1.1 percent. Singapore’s Straits Times Index dropped 1.4 percent. Hong Kong’s Hang Seng Index lost 1.1 percent. China’s Shanghai Composite Index fell 1.3 percent. Other leading indices from Malaysia (-0.20%) and Thailand (-1.75%) also declined while Vietnam (+1.22%) and Philippines (+0.78%) gained. Futures on the S&P 500 Index rose 0.3 percent today.
•
Asian currencies depreciated as Asian stocks fell amid speculation on the US Fed exit. The Chinese yuan fell 0.14% to 6.1362 per USD, the biggest decline since May 10 before data forecast to show export growth halved in May, revealing subdued demand for goods from China. Japanese yen slightly depreciated 0.05% to 99.11. Korean won (0.26%), Indonesia’s rupiah (1.01%), Philippines peso (0.23%), and Thailand bhat (0.16%) also depreciated while Malaysian Ringgit gained 0.07%. The Australian dollar fell 0.6 percent to 94.81 U.S. cents as of 5:11 p.m. in Sydney, lowest level since 2011, as the nation’s shrinking interest-rate advantage over its peers damps the allure of the currency. India’s rupee weakened to 57 per USD for the first time in almost a year. The euro climbed 0.2% to 1,31 per USD, the highest level in almost a month amid speculation the European Central Bank will refrain from cutting its main interest rate today. The UK pound strengthened to four-week high versus USD before the Bank of England releases its latest policy decision at noon in London.
•
Commodity prices mixed. Gold spot price maintained its previous level as 1,403 USD per ounce. WTI trades near one-week high after U.S. stockpiles dropped the most this year. U.S. crude supplies slid by 6.3 million barrels last week, the most since December. It rose 43 cents yesterday to $93.74, the highest close since May 28. Brent for July settlement decreased 1 cent to $103.03 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $9.15 to WTI futures, down from $9.30 yesterday. Copper retreated from the highest level in two weeks on concern that signs of slowing growth from the U.S. to China will curb demand. Copper for July delivery fell 0.9 percent to $3.342 a pound on the Comex in New York. In London, zinc and lead lost at least 1.5 percent while aluminum, tin and nickel also declined.
BREAKING NEWS GLOBAL •
US Services Gains Show Companies Confident in Outlook. Service industries in the U.S. expanded at a faster pace in May as a pickup in orders showed companies are confident demand will be sustained after a second-quarter slowdown. The Institute for Supply Management’s non-manufacturing index climbed to 53.7 from 53.1 in April, according to a Page 1 of 9
report from the Tempe, Arizona-based group today. A reading above 50 indicates expansion in the industries that make up almost 90 percent of the economy. Other figures showed private payroll growth slowed last month. The gain in services shows the expansion is weathering a downturn in manufacturing, propelled by a housing market rebound that is driving sales at companies such as Home Depot Inc. (HD) At the same time, federal budget cuts help explain why employers are reluctant to accelerate hiring and give the economy a bigger boost. The survey’s measure of new orders increased to a three-month high of 56 in May after 54.5 a month earlier. The ISM’s gauge of business activity improved to 56.5 from 55. The employment gauge declined to 50.1, the weakest since July, from 52. Another report showed companies added fewer workers than forecast in May. The 135,000 increase followed a revised 113,000 gain in April that was smaller than initially estimated, according to figures from the Roseland, New Jersey-based ADP Research Institute. The median forecast in a Bloomberg survey called for a 165,000 increase. Orders placed with U.S. factories rose less than forecast in April as demand for non-durable goods dropped, probably reflecting lower fuel costs, according to a Commerce Department report in Washington today. •
EU Considering Moving Libor Oversight to ESMA From U.K. The European Union is considering whether to hand oversight of the scandal-ridden London interbank offered rate to the European Securities and Markets Authority. The European Commission is proposing to move regulation of Libor away from the U.K. to Paris-based ESMA because the rates may affect banks, administrators and consumers in multiple member countries, according to a draft of the proposed regulation obtained by Bloomberg News. Global regulators are working on alternatives to Libor after U.S. and U.K. officials uncovered attempts by banks to manipulate the benchmark rate. Royal Bank of Scotland Group Plc, UBS AG (UBSN) and Barclays Plc (BARC) have been fined a total of about $2.5 billion and at least a dozen firms remain under investigation. The proposals would also hand regulators the power to force banks to join panels that submit data for the setting of “critical” benchmarks, according to the draft. The commission’s proposal will establish “good governance rules” to ensure “more transparency, to limit conflicts of interest and to assure the representativeness of benchmarks,” Chantal Hughes, a spokeswoman for Michel Barnier, the EU’s financial services chief, said in an e-mail. “It will also establish a framework for the supervision of benchmarks” backed with sanctions, she said, without going into detail about the specifics of the plans. Spokesmen for ESMA and the London-based U.K. Financial Conduct Authority, which currently oversees Libor, declined to comment.
•
IMF Says Greece May Need Faster Debt Relief, Cites Own Mistakes. Greece’s public debt remains a risk to its recovery that could require faster European relief, the International Monetary Fund said as it criticized its own handling of the country’s rescue. While the Mediterranean nation is meeting key targets under its second international bailout, such as budget cuts and changes to labor laws, concern about its debt levels “hang over the program,” the staff wrote in a report released yesterday. A second paper cited “notable failures” in the fund’s first loan to Greece in 2010. The recommendation reflects the tougher approach the IMF has taken over the past year with Europe over the level of debt it deems sustainable as it draws lessons from the first Greek bailout. In the self-evaluation also released yesterday, fund staff said it would have been better for Greece to restructure debt held by investors as early as 2010, a plan the IMF didn’t push because Europeans opposed it. “A delayed debt restructuring also provided a window for private creditors to reduce exposures and shift debt into official hands,” the staff said. In December, European Page 2 of 9
governments committed to further ease the country’s debt burden to ensure that it falls to 124 percent of gross domestic product in 2020 and “substantially below”110 percent of GDP in 2022, from a peak of about 175 percent this year. Under the current goals, some debt relief will be provided at the start of 2014 and of 2015 if Greece meets fiscal targets, IMF mission chief Poul Thomsen said on a conference call yesterday. That report showed the IMF had “misgivings” about Greece’s debt burden and that its macroeconomic projections were too optimistic. The oversight of the program with the European Central Bank and the European Commission in the so-called troika lacked clarity in the division of labor, with “occasionally marked differences of view within” the group, according to the report. In addition, “Greece’s recent experience demonstrates the importance of spreading the burden of adjustment across different strata of society in order to build support for a program,” the staff wrote. •
RBA Rate Cuts Having Smaller Impact on Housing. Australia’s record-low interest rates are having a weaker impact on the housing industry than has historically been the case, as consumers shy away from taking on more debt, Treasury said. The department indicated nominal gross domestic product for the year ending June 30 may be weaker than the May budget’s 3.25 percent forecast. Australia’s economy expanded at the slowest annual pace in almost two years in the first quarter after the central bank reduced the key rate by 2 percentage points since November 2011. Falling rates aren’t enough to lure individuals to take on more debt as employment-intensive industries such as construction and manufacturing struggle and a slowdown looms in mining investment, Treasury Secretary Martin Parkinson said. The total value of outstanding owner-occupied mortgages climbed 4 percent in April from a year earlier, near the slowest annual pace in Reserve Bank of Australia records. The nation’s household savings ratio rose to 10.6 percent in the three months through March from a revised 10.4 percent in the fourth quarter, yesterday’s Bureau of Statistics report showed. The measure averaged 5.6 percent over the past 10 years. The Reserve Bank of Australia held its cash-rate target at 2.75 percent on June 4 and said the inflation outlook may provide scope for further policy easing. REGIONAL
•
China Export Gains Seen Halved With Fake-Data Crackdown. China’s crackdown on fake export invoices used to disguise money flows is probably cutting the nation’s trade figures, revealing subdued global demand that will weigh on economic growth. Outbound shipments may have grown 7.1 percent in May from a year earlier, less than half the previous month’s reported 14.7 percent, based on the median estimate of 34 economists ahead of data due June 8. Import growth probably slowed to 6.9 percent from April’s 16.8 percent, a Bloomberg News survey showed. Successful deterrence of fraudulent data through regulatory scrutiny of companies and banks would help restore trust in trade figures, while more accurate numbers may also highlight the urgency for Premier Li Keqiang to shift growth toward domestic consumption. Weakness in exports could also test Li’s reluctance to add stimulus to support the expansion of the world’s second-biggest economy. Economists in a separate survey last month said January-April export growth was overstated by 4 to 13 percentage points. Shipments abroad probably rose 8.5 percent in the first four months of 2013 from a year earlier, based on the median estimate of 15 economists, less than half the official 17.4 percent number. Imports may have gained 8.25 Page 3 of 9
percent, according to 14 analysts’ median estimate, compared with the government’s 10.6 percent figure. China official said that they are investigating possible fraud behind firstquarter export growth and that the practice of false trade declarations does exist but is definitely not main stream. •
Abe’s Power Plan Lifts Renewables at Utilities Expense. Shinzo Abe’s pledge to spur 30 trillion yen ($302 billion) of investment in Japan’s electricity industry opens the way for a surge in clean energy projects at the expense of traditional utilities. The prime minister endorsed proposals to deregulate an industry that produces power mostly from fossil fuels, as well as boost competition among generators and make it easier for wind and solar energy to be distributed to consumers. Abe’s remarks raise the chances the government will move to weaken the monopoly power producers now enjoy after elections for the upper house of Parliament set for the end of next month. Abe also indicated coal would benefit from his policy, with the nation funding cutting-edge coal-fired power plants at home with technology that can be exported. The suggestion that Abe is moving to restructure the power generation business is a threat to the utilities, which were hoping that the government would allow them to restart nuclear plants. All except two of Japan’s 50 reactors have been shut since the earthquake, and they provided more than a quarter of the nation’s electricity. Since the earthquake, fossil fuels such as coal and natural gas have replaced nuclear power, driving up Japan’s trade deficit and making it more difficult for the nation to reduce the pollution blamed for global warming. Abe said renewables such as wind and geothermal may be part of the solution, giving environmental campaigners hope that clean energy technology will get a boost. Japan aims to capture a total 26 trillion yen worth of energy technology sales home and abroad in 2020, from the current 8 trillion yen.
•
Vietnam Eyes Foreign Investors to Expand Stock Market. Vietnamese regulators will submit a proposal next month to ease restrictions on foreign ownership in companies as they lure more international investors to a stock market that’s 14 times smaller than Singapore’s. The proposal would raise the foreign ownership limit for publicly-traded companies from the existing 49 percent. Vietnamese regulators see foreign investment as one key to the stock market’s growth, as the biggest year-to-date stock purchases by international investors since 2008 made the benchmark VN Index Southeast Asia’s best performer. The nation’s stocks are valued at $44.6 billion, compared with $621.4 billion in Singapore, the region’s largest market. Under the proposal, ownership limits may be raised for certain industry groups or approvals may be granted on a case-by-case basis, Bang said. International investors bought a net $244 million of Vietnamese stocks since the start of the year to June 5, the biggest purchases for the same period dating back to 2008. The commission will also submit this year a proposal to merge the country’s two main exchanges in Hanoi and Ho Chi Minh City by the end of the year, he said. Bang announced the merger in March last year and had initially set a target for the proposal in the third quarter of 2012. To help further attract investors, the two exchanges plan to add more products such as covered warrants, he said. The regulator will also offer a plan for derivatives by the end of this year, Bang said. Earlier this year, the regulator expanded trading bands on the country’s two exchanges and raised the margin-financing ratio limit. The commission has also proposed extending tax exemptions and reductions for stock trading this year.
Page 4 of 9
IFIs NEWS (compiled from their websites) ADB – Press Release: Myanmar Unveils $500 Million Tourism Plan •
The Government of Myanmar, alongside the ADB and the Government of Norway, has unveiled a Tourism Master Plan which outlines 38 development projects valued at nearly a half billion dollars that will help increase Myanmar’s tourism competitiveness, protect environmentally important areas, and safeguard ethnic communities. http://www.adb.org/news/myanmar-unveils-500-million-tourism-plan (Press Release) http://www.adb.org/sites/default/files/news/fast-facts-myanmar-tourism-master-plan.pdf (Myanmar Tourism Master Plan)
ADB – Publication: “New Energy Architecture: Myanmar” • The ADB has publicised the above-stated report. http://www.adb.org/news/energy-sector-critical-myanmars-transformation-report (Press Release) http://www.adb.org/publications/new-energy-architecture-myanmar (Report) BIS and Basel Committee – Press Release: Agustín Carstens to chair the BIS Economic Consultative Committee and the BIS Global Economy Meeting; Mario Draghi to chair the Group of Governors and Heads of Supervision •
The BIS and Basel Committee have publicised the above-stated news. http://www.bis.org/press/p130605.htm
IMF – Press Release: “Greece – IMF Executive Board Concludes 2013 Article IV Consultation, Completes Third Review of the Extended Fund Facility (EFF), and Discusses Ex Post Evaluation of 2010 Stand-By Arrangement (SBA)” •
On May 31, 2013, the Executive Board of the IMF concluded the 2013 Article IV Consultation with Greece and completed the Third Review of the country’s performance under an economic program supported by an Extended Fund Facility (EFF) arrangement (see Press Release No. 13/195). The Executive Board also discussed the Ex Post Evaluation of Exceptional Access Under the 2010 Stand-By Arrangement for Greece1. The Executive Directors commended the Greek authorities for the progress thus far in addressing deep-seated vulnerabilities amidst a sharp and socially painful recession. Fiscal adjustment has been exceptional by any international comparison, wage adjustment has facilitated a significant decline in the competitiveness gap, and financial sector stability has been safeguarded. Nevertheless, the recovery path remains very difficult, on the back of still high levels of unemployment, public debt, and non-performing loans. They urged the authorities to redouble their reform efforts to improve tax and public administration and enhance productivity, noting that these reforms would promote the efficient allocation of resources and boost output, facilitate remaining fiscal adjustment, and make the burden of adjustment more equitable. http://www.imf.org/external/np/sec/pn/2013/pn1364.htm (Main Press Release) http://www.imf.org/external/pubs/ft/scr/2013/cr13153.pdf (Staff Report: Greece -Third Review Under the Extended Arrangement Under the Extended Fund Facility—Staff Report; Staff Statement; Press Release; and Statement by the Executive Director for Greece) http://www.imf.org/external/pubs/ft/scr/2013/cr13154.pdf (Staff Report: Greece – 2013 Article IV Consultation)
Page 5 of 9
http://www.imf.org/external/pubs/ft/scr/2013/cr13155.pdf (Staff Report: Greece Selected Issues) http://www.imf.org/external/pubs/ft/scr/2013/cr13156.pdf (Staff Report: Greece - Ex Post Evaluation of Exceptional Access under the 2010 Stand-By Arrangement) http://www.imf.org/external/np/sec/pr/2013/pr13166.htm (Press Release 13/166 dated June 5, 2013: IMF Executive Board Reviews Greece Misreporting, Remedial Steps) IMF – Publication: “Bangladesh: Second Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Modification of Performance Criteria—Staff Report etc.” •
The IMF has publicised the following staff report pertaining to the above-stated issue. http://www.imf.org/external/pubs/ft/scr/2013/cr13157.pdf
IMF – Working Papers •
The IMF has publicised the following working papers: • •
“Fiscal Policy and Lending Relationships” http://www.imf.org/external/pubs/ft/wp/2013/wp13141.pdf “The Co-movement in Commodity Prices: Sources and Implications” http://www.imf.org/external/pubs/ft/wp/2013/wp13140.pdf
World Bank – Press Release: “The Financial Sector is part of Malaysia's Success” •
The World Bank has publicised the above-stated news article. http://www.worldbank.org/en/news/opinion/2013/06/04/The-financial-sector-part-ofmalaysias-success
____________________________________________________________________________________ 1
The requirement for ex post evaluations (EPEs) was agreed by the IMF Executive Board in September 2002 for members using exceptional access in capital account crises, and extended to any use of exceptional access in February 2003. The aim of an EPE is to determine whether justifications presented at the outset of the individual program were consistent with IMF policies and to review performance under the program. To do this, EPEs seek to provide a critical and frank consideration of two key questions: (i) were the macroeconomic strategy, program design, and financing appropriate to address the challenges the member faced in line with IMF policy, including exceptional access policy?; and (ii) did outcomes under the program meet program objectives?
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 5-Jun 6-Jun close China 6.23 6.13 6.13 6.14 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,877.00 9,795.00 9,895.00 Japan 86.75 100.45 99.06 99.11 Korea 1,064.40 1,129.64 1,115.89 1,118.76 Malaysia 3.06 3.10 3.08 3.08 Philippines 41.01 42.27 41.99 42.09 Singapore 1.22 1.26 1.25 1.25 Thailand 30.59 30.34 30.55 30.60 Vietnam 20,840.00 21,013.00 21,018.00 21,013.00 Note: Negative values indicate depreciation and positive values indicate appreciation. 2012 close
% change -0.14 -0.01 -1.01 -0.05 -0.26 0.07 -0.23 0.15 -0.16 0.02
2013 YTD (%chg) 1.6 -0.1 -2.4 -11.9 -4.9 -1.5 -2.9 -2.2 -0.9 -0.8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia
2,269.1 22,656.9 4,316.7
Previous wk's close 2,300.6 22,392.2 5,068.6
5-Jun 2,270.9 22,069.2 5,001.2
6-Jun 2,242.1 21,838.4 5,001.2
% change -1.27 -1.05 0.00
2013 YTD (%chg) -1.2 -6.3 15.1
Page 6 of 9
Japan Korea Malaysia Philippines Singapore Thailand Vietnam
10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
13,774.5 2,001.1 1,769.2 7,022.0 3,311.4 1,562.1 518.4
13,014.9 1,959.2 1,774.4 6,557.9 3,243.4 1,522.7 514.6
12,904.0 1,959.2 1,770.9 6,609.0 3,196.4 1,496.0 520.9
OVERNIGHT LENDING RATE (%) China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
5-Jun 4.740 0.075 4.170 0.095 2.500 3.000 -0.323 0.044 2.500 1.000
6-Jun 8.000 0.079 4.170 0.073 2.500 3.000 1.224 0.044 2.500 1.000
-0.85 0.00 -0.20 0.78 -1.45 -1.75 1.22
24.1 -3.5 5.7 12.8 -0.2 6.3 24.5
3-MONTH INTERBANK LENDING RATE (%) bps change 326.00 0.36 0.00 -2.25 0.00 0.00 154.70 0.00 0.00 0.00
5-Jun 3.884 0.377 4.915 0.230 2.670 3.210 0.858 0.373 2.601 4.167
6-Jun 3.894 0.376 4.915 0.230 2.670 3.210 1.186 0.373 2.601 4.167
bps change 1.00 -0.07 0.00 0.00 0.00 0.00 32.80 0.00 0.00 0.00
CREDIT DEFAULT SWAP (IN BPS) 4-Jun 5-Jun bps change China 87.23 88.97 1.73 Hong Kong SAR 45.46 45.47 0.01 Indonesia 176.99 178.91 1.91 Japan 76.83 79.30 2.47 Korea 77.38 79.35 1.97 Malaysia 89.70 90.19 0.48 Philippines 101.94 103.89 1.94 Thailand 90.70 91.19 0.48 Vietnam 217.97 220.36 2.39 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.
5-Jun Gold Spot 1,403.4 (in US$ per ounce) Sources: Bloomberg & Thomson Reuters Datastream
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
6-Jun
% change
1,403.5
0.00
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
Page 7 of 9
2012
2013
30-Sep 31-Oct 30-Nov 3,285.1 3,287.4 3,297.7 China 301.2 301.7 305.2 Hong Kong SAR 110.2 110.3 111.3 Indonesia 1,277.0 1,274.2 1,270.9 Japan 322.0 323.5 326.1 Korea 137.5 138.3 139.1 Malaysia 82.0 81.7 83.9 Philippines 252.1 254.2 255.8 Singapore 183.6 181.5 181.6 Thailand Vietnam 21.3 21.4 23.2 Note: Data for China and Vietnam refer to FX reserves
EXTERNAL LIQUIDITY RATIOS
31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 83.8 259.3 181.6 n.a
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
Latest Int'l Reserves
3 months imports of goods & services
Short-term external debt
Import cover (Qtrs of imports
(US$bn)
(US$bn)
(US$bn)
covered by reserves)
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a n.a n.a n.a 328.1 141.4 n.a n.a 175.7 n.a
Reserves over short-term debt
3,442.7 521.2 572.8 6.6 6.0 China 306.5 149.9 752.6 2.0 0.4 Hong Kong SAR 107.3 51.8 43.9 2.1 2.4 Indonesia 1,258.0 68.1 2,371.0 18.5 0.5 Japan 328.8 155.1 126.7 2.1 2.6 Korea 141.4 57.8 30.4 2.4 4.6 Malaysia 83.2 20.1 8.5 4.1 9.8 Philippines 261.7 119.0 964.3 2.2 0.3 Singapore 175.7 69.4 60.7 2.5 2.9 Thailand 23.2 30.9 10.0 Vietnam Notes: Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt. DATA RELEASES FOR THE DAY Economies
THAILAND
Indicators
Period
Consumer Confidence
Last
May
Previous
82.5
83.7
SELECTED ECONOMIC RELEASES CALENDAR (27 – 31 May 2013) Expected Release Date
6/3/2013
Economies
CHINA JAPAN JAPAN KOREA INDONESIA INDONESIA THAILAND SINGAPORE
Indicators
NON-manufacturing PMI Capital Spending Vehicle Sales (YoY) CPI Inflation Trade Balance CPI PMI
Period
May 1Q May May May April May May
Page 8 of 9
6/4/2013 6/5/2013 6/6/2013 6/7/2013
JAPAN JAPAN KOREA PHILIPHINES THAILAND JAPAN KOREA MALAYSIA MALAYSIA THAILAND PHILIPHINES SINGAPORE
Monetary Base Labor Cash Earnings (YoY) FOREIGN Reserve CPI Consumer Confidence Official Reserve Assets GDP TRADE Balance FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves
May April May May May May 1Q (Final) April May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 9 of 9
MARKET UPDATE FOR ASEAN+3 7 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Most Asian stocks dropped as Japanese exporters retreated after the yen’s biggest surge in three years. The MSCI Asia Pacific Index lost 0.77 percent to 131.31 after briefly rising as much as 0.5 percent. Five shares retreated for every three that gained on the measure, which is headed for a 2.9 percent decline this week, its third straight weekly drop, the longest such run of losses in a year. Japanese shares have slumped this week after Prime Minister Shinzo Abe failed to impress investors in a speech outlining his growth strategy. Japan’s Topix index closed 1.3 percent lower, paring an earlier decline of 3.5 percent. The Nikkei 225 Stock Average lost just 0.2 percent, rebounding from a 2.8 percent drop. Australia’s S&P/ASX 200 Index declined 0.9. South Korea’s Kospi index (-2.8%), Hong Kong’s Hang Seng Index (-1.2%), China’s Shanghai Composite Index (-1.4%), and Indonesia’s JCI index (-2.72%) also dropped while other leading indices from Malaysia (0.34%) and Thailand (1.77%), Philippines (1.41%), and Vietnam (+1.36%) gained. Futures on the S&P 500 Index rose 0.3 percent today. Singapore’s Straits Times Index were little changed.
Yen Advances as Aso Says Japan Won’t Intervene. Japan’s currency climbed to the strongest in more than two months versus the USD as the nation’s stocks fell and a gauge of volatility jumped to the most since 2011. The dollar headed for a weekly drop versus the euro before U.S. jobs data. Australia’s dollar declined before Chinese data tomorrow that economists said will show growth in imports slowed, dimming the demand outlook for commodities. All markets have been heavily short the yen and so people have been caught wrong-footed which is forcing heavy buying. The yen gained 0.5 percent to 96.49 per dollar at 5:00 p.m. Singapore time. Australia’s dollar slid 1.1 percent to 94.89 U.S. cents after falling to 94.35 yesterday, the weakest since Oct. 4, 2011. Chinese yuan (0.05%) and Korean won (0.18%), and Indonesia’s rupiah (0.09%) also appreciated while other currencies from South Asian peers including Malysia (-0.41%), Pilippines (-0.48%), Singapore (-0.14%), Thailand (-0.29%), and Vietnam (-0.01%) weakened today.
Gold price declined while crude oil gained. Gold spot price dropped 0.17% to 1,411.6 USD per ounce ending two days’ rally. Oil price rose today amid recent weakening rally of USD. West Texas Intermediate headed for its first weekly gain in a month before data forecast to show more jobs were added in the U.S., the biggest crude consumer. WTI was traded at $95.09 (+0.36%) a barrel and Brent price rose 0.48% to 104.11. Copper gained 0.2% first day in three on supply concerns and weak dollar while rubber lost 0.61%. Soybean gained 0.21% while corn lost 0.1% today.
BREAKING NEWS GLOBAL
Fed Is Seen Reducing Asset Purchases by Smaller Amount in Survey. Economists cut their estimates for how much the Federal Reserve will reduce the amount of its monthly asset purchases, a Bloomberg survey shows. Policy makers led by Chairman Ben S. Bernanke will trim their so-called quantitative easing program to $65 billion a month at the Oct. 29-30 Page 1 of 8
meeting of the Federal Open Market Committee, from the current level of $85 billion, according to the median estimate in the survey of 59 economists this week. When the first move comes, officials will split their $65 billion in purchases between $30 billion a month of mortgage bonds and $35 billion a month of Treasuries, a $10 billion reduction in each category, according to the survey, conducted June 4-5. Two of the 59 economists surveyed this week expect the pace of purchases to be reduced at the FOMC meetings on June 18-19 or July 30-31. Sixteen say tapering will begin at the Sept. 17-18 meeting, 14 see it happening Oct. 29-30 and 15 forecast the first tapering Dec. 17-18. Twelve see tapering next year or later. Philadelphia Fed President Charles Plosser has called for tapering to start as early as the central bank’s next meeting. Federal Reserve Bank of New York President William C. Dudley said in an interview with Bloomberg News last month that he would like to wait three or four months to see “how the tug-of-war between the fiscal drag and the improving economy are going to sort of work their way out.” St. Louis Fed President James Bullard said May 23 in London that more disinflation could prompt additional asset purchases by the central bank, and Boston’s Eric Rosengren said the Fed should increase purchases if the incoming data “do not reflect improvements” in unemployment and inflation.
Draghi Disappoints as Firepower Becomes Fig Leaf. European Central Bank President Mario Draghi isn’t racing to the rescue of Europe’s banks or economy this time. Almost a year since his promise to do “whatever it takes”to protect the euro soothed investors, and a month since cutting interest rates, Draghi signalled yesterday that governments, not the ECB, should do more to fight recession and boost credit to businesses in cash-strapped countries such as Spain. Yields on Spanish and Italian 10-year bonds jumped to the most in six weeks, while German two-year borrowing costs climbed to the highest since February. Draghi said the central bank currently sees no reason for “immediate action” after listing potential measures, including charging banks for leaving money on deposit with it and lending institutions cash over the long term. The bank cut its forecasts for this year to show the economy contracting 0.6 percent and inflation accelerating by 1.4 percent. When an ECB-led round of asset reviews and stress tests are completed next year, governments need to make “an explicit commitment” to provide a backstop in the event of a “capital shortfall,” he said. While Europe’s largest banks have been rebuilding their capital buffers, profitability remains weak and lenders are still vulnerable to economic downturns, the ECB’s Financial Stability Report said last week. The OMT remains unpopular with Bundesbank President Jens Weidmann, while Governing Council member Ewald Nowotny is among those to have distanced themselves from negative deposit rates.
German Exports Surges Signaling Economic Recovery. German exports, adjusted for working days and seasonal changes, jumped 1.9 percent from March, when they gained 0.5 percent. That’s the strongest increase since May 2012. Economists predicted a gain of 0.1 percent, according to the median forecast of 17 economists in a Bloomberg News survey. Imports advanced 2.3 percent in April. German business confidence rose for the first time in three months in May after an unusually long winter delayed a recovery in Europe’s largest economy. At the same time, factory orders dropped in April and industrial production probably stagnated. “Much speaks for the fact that trade will provide positive impulses in the export-led German economy in the second quarter,” said Jens Kramer, an economist at Nord LB in Hanover. “Private consumption continues to be robust, while investment remains weak.”
Page 2 of 8
REGIONAL
Aso Says Japan Won’t Intervene in Market After Surge in Yen. Japanese Finance Minister Taro Aso said that the government won’t intervene in the currency market for now after the yen strengthened by the most in three years against the dollar. “We are carefully watching, but we don’t have any immediate intention of taking any action, such as intervention,” the finance minister told reporters in Tokyo today. The yen jumped 0.7 percent to 96.28 per dollar as of 1:47 p.m. local time. Japan’s currency surged 2.2 percent yesterday, adding to the headwinds of a slide in stocks and volatility in bonds as Prime Minister Shinzo Abe campaigns to revive the world’s third-biggest economy. As attention turns to a Bank of Japan meeting on June 10-11, Governor Haruhiko Kuroda’s actions may be limited by his pledge to avoid “incremental” steps after announcing a plan to double the monetary base over two years. Abe said this week that legislation to advance the so-called “third arrow” of Abenomics, measures to boost growth and cut regulation stifling business, won’t be unveiled until autumn. The Bank of Japan is divided over whether to authorize a measure designed to quell bond-market volatility. At issue is whether the board should give its financial markets department the power to double the maturity of loans it extends to banks to two years. An opposing view is that the step is a useful backup in case of a spike in fluctuations in the government bond market.
China Lending Data May Be Overstated, Credit Suisse Says. China’s record funding expansion this year may be overstated in part because of double-counting, say Credit Suisse Group AG and Bank of America Corp. analysts trying to reconcile the data with weaker economic growth. Some Chinese companies may use loans to buy wealth management products that are recorded a second time in another category, Vincent Chan, a Credit Suisse analyst in Hong Kong, wrote in a June 5 report, citing people he didn’t identify at the central bank and banking regulator. Bank of America estimates that double-counting explains 2.7 percentage points of a 12-point gap between first-quarter growth in outstanding credit and nominal gross domestic product. The concerns echo doubts about Chinese trade figures that helped trigger an official crackdown on false reporting, resulting in May export growth forecast to be about half of April’s gains in data due tomorrow. The first quarter’s $1 trillion increase in economy-wide financing contrasted with an unexpected growth slowdown, suggesting China was becoming less responsive to credit. Credit Suisse said the PBOC and China Banking Regulatory Commission highlighted in meetings with Credit Suisse in Beijing three possible causes for overstated credit growth: bill financing for non-existent trade; double-counting of credit used to buy wealth-management products; and new loans that highly leveraged companies are using to pay interest.
Myanmar as Economic Miracle Hinges on Natural Gas Bounty. Myanmar’s opening to foreign investment has been compared to the fall of the Berlin Wall and the start of an economic growth story to emulate Vietnam. How those views pan out will be largely decided by natural gas. Exxon Mobil Corp. (XOM), Woodside Petroleum Ltd. (WPL) and Oil India Ltd. (OINL) are among 59 global energy companies lining up for a share of Myanmar’s estimated $75 billion bounty of the fuel, according to the country’s energy ministry. While oil and gas have been pumped for decades, investment largely dried up during almost five decades of military rule that ended in 2012. Wedged between energy-hungry China and India, Myanmar needs more investment to explore its gas potential. The nation’s transition to democracy in 2012 prompted the U.S. to ease sanctions last May. Concerns about
Page 3 of 8
government transparency and ethnic violence persist among investors in Myanmar, which is hosting a three-day World Economic Forum on East Asia that concludes today. Human Rights Watch has accused Myanmar’s government of destroying mosques, conducting mass arrests, blocking aid to displaced Muslims and dumping bodies in mass graves since sectarian violence began last June. Ranked No. 172 of 176 nations in Transparency International’s 2012 corruption index, Thein Sein’s government might be challenged to find a balance between attracting capital and limiting a flood of money from mostly benefiting an elite. Myanmar’s economy may grow 6.75 percent this fiscal year, driven by natural gas sales and investment, according to the International Monetary Fund. GDP in the year that ended March 31 expanded an estimated 6.5 percent, the IMF said last month.
Singapore’s Malls Top Retail Investment Ranking. Singapore’s shopping malls offer the best returns among Asia-Pacific retail investments as economic and demographic growth boost consumption. Suburban retail units catering to local resident demand will offer better yields than the central shopping centers, according to Aviva Investors Asia Pte., which manages $2.5 billion in property assets and is a unit of U.K.’s second-biggest insurer. Malls in the island state may yield an average annual return of as much as 8 percent over the next two years, while those in the suburbs may have between 9 percent and 10 percent return annually over the same period, Aviva forecasts. Investors are betting on Singapore’s economy, which unexpectedly expanded last quarter as services and construction strengthened. Australia and New Zealand are ranked second and third by Aviva based on risk-adjusted returns, it said, declining to give specific performances for other markets. Hong Kong, China and Japan are among Aviva’s other top-ranked retail markets. Aviva’s favorite markets include Australia, Singapore and Japan, which it terms as “necessity retail” where demand from resident consumers will be sustained even if the economic outlook takes a turn for the worse.
IFIs NEWS (compiled from their websites) G20– Press Release: The G20 High-Level Seminar on “Benchmarks and Credit Rating Agencies”
The G20 High-Level Seminar on "Benchmarks and Credit Rating Agencies (CRA)" was held on June 4-5, 2013 in St. Petersburg. This event was organized within the framework of G20 Finance Ministers' and Central Bank Governors' Deputies Meeting, which will be held on June 6-7, 2013. The two-day seminar which was attended by representatives from the Financial Stability Board (FSB) and International Organization of Securities Commissions (IOSCO) was devoted to a discussion on Benchmarks reforms and Credit Ratings. The participants of the seminar exchanged views on the necessity of further coordinating their efforts with regards to EU perspectives on CRA market reforms and recent European regulatory initiatives to address the conflict of interests and competition issues. http://www.g20.org/news/20130605/781392881.html
IMF – Press Release: The IMF’s Work Program: Invigorating a Sustainable Recovery and Restoring Resilience
On June 3, 2013, the Executive Board of the IMF considered the IMF's bi-annual work program. The Work Program translates the policy priorities laid out in the Global Policy Agenda (GPA) presented to the International Monetary and Financial Committee (IMFC) in April 2013, into the agenda for the Fund over the next six to twelve months.
Page 4 of 8
“The IMF’s work program charts a range of actions needed to invigorate a sustainable recovery and to make the global economy more resilient.” IMF Managing Director Christine Lagarde said in presenting the work program to the Executive Board. “An important goal for all countries is to have more growth and jobs, although individual countries’ challenges and constraints vary,” she said. “We also need to think ahead—and be ahead of the curve—by reflecting on longer-term trends and integrating them into our work.” http://www.imf.org/external/np/sec/pr/2013/pr13199.htm (Press Release) http://www.imf.org/external/np/pp/eng/2013/042013.pdf (Managing Director’s Global Policy Agenda, April 2013) http://www.imf.org/external/np/pp/eng/2013/052213.pdf (Statement made by the Managing Director On the Work Program of the Executive Board at an Executive Board Meeting held on June 3, 2013) IMF – Publications
The IMF has publicised the following country reports pertaining to Brazil’s banking sector, marco-prudential framework as well as its’ consumer credit growth and financial stress.
“Brazil: Technical Note on Stress Testing the Banking Sector” http://www.imf.org/external/pubs/ft/scr/2013/cr13147.pdf “Brazil: Technical Note on Macro-prudential Policy Framework” http://www.imf.org/external/pubs/ft/scr/2013/cr13148.pdf “Brazil: Technical Note on Consumer Credit Growth and Household Financial Stress” http://www.imf.org/external/pubs/ft/scr/2013/cr13149.pdf
IMF – Working Paper: “Bank Leverage and Monetary Policy's Risk-Taking Channel: Evidence from the United States”
The IMF has publicised the captioned working paper. “We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.” http://www.imf.org/external/pubs/ft/wp/2013/wp13143.pdf
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 6-Jun 7-Jun close China 6.23 6.13 6.14 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,877.00 9,895.00 9,886.00 Japan 86.75 100.45 96.97 96.49 Korea 1,064.40 1,129.64 1,118.76 1,116.79 Malaysia 3.06 3.10 3.08 3.10 Philippines 41.01 42.27 42.09 42.30 Singapore 1.22 1.26 1.24 1.25 Thailand 30.59 30.34 30.58 30.67 Vietnam 20,840.00 21,013.00 21,013.00 21,016.00 Note: Negative values indicate depreciation and positive values indicate appreciation. 2012 close
% change 0.05 0.02 0.09 0.50 0.18 -0.41 -0.48 -0.14 -0.29 -0.01
2013 YTD (%chg) 1.6 -0.1 -2.4 -9.5 -4.8 -1.9 -3.4 -2.1 -1.1 -0.8
Page 5 of 8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,300.6 22,392.2 5,068.6 13,774.5 2,001.1 1,769.2 7,022.0 3,311.4 1,562.1 518.4
6-Jun
7-Jun
2,242.1 21,838.4 5,001.2 12,904.0 1,959.2 1,769.6 6,609.0 3,193.5 1,490.2 520.9
2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,190.8 1,516.6 528.0
OVERNIGHT LENDING RATE (%) China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
6-Jun 8.000 0.079 0.000 0.073 2.500 3.000 1.224 0.021 2.500 1.000
7-Jun 8.620 0.075 4.170 0.095 2.500 3.000 0.136 0.021 2.500 1.000
% change -1.39 -1.21 -2.72 -0.21 -1.80 0.34 1.41 -0.09 1.77 1.36
2013 YTD (%chg) -2.6 -7.4 11.9 23.9 -5.3 6.0 14.3 -0.3 7.8 26.2
3-MONTH INTERBANK LENDING RATE (%) bps change 62.00 -0.36 417.00 2.25 0.00 0.00 -108.80 0.00 0.00 0.00
6-Jun 3.894 0.376 0.000 0.230 2.670 3.210 1.186 0.373 2.601 4.167
7-Jun 4.574 0.376 4.916 0.230 2.670 3.210 1.238 0.373 2.601 4.220
bps change 68.02 0.00 491.57 0.00 0.00 0.00 5.20 0.00 0.00 5.30
CREDIT DEFAULT SWAP (IN BPS) 5-Jun 6-Jun bps change China 88.97 90.66 1.70 Hong Kong SAR 45.47 45.49 0.01 Indonesia 178.91 180.37 1.46 Japan 79.30 79.79 0.49 Korea 79.35 82.30 2.95 Malaysia 90.19 93.13 2.94 Philippines 103.89 103.89 0.00 Thailand 91.19 93.63 2.45 Vietnam 220.36 221.77 1.41 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.
6-Jun Gold Spot 1,414.0 (in US$ per ounce) Sources: Bloomberg & Thomson Reuters Datastream
7-Jun
% change
1,411.6
-0.17
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
Page 6 of 8
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
2013
30-Sep
31-Oct
30-Nov
31-Dec
31-Jan
28-Feb
31-Mar
3,285.1
3,287.4
3,297.7
3,311.6
3,410.1
3,395.4
3,442.7
n.a
n.a
Hong Kong SAR
301.2
301.7
305.2
317.3
304.7
304.8
303.8
306.5
n.a
Indonesia
110.2
110.3
111.3
112.8
108.8
105.2
104.8
107.3
105.1
Japan
1,277.0
1,274.2
1,270.9
1,268.1
1,267.3
1,258.8
1,254.4
1,258.0
1,250.2
Korea
322.0
323.5
326.1
327.0
328.9
327.4
327.4
328.8
328.1
Malaysia
137.5
138.3
139.1
139.7
140.2
140.3
139.7
140.3
141.4
Philippines
82.0
81.7
83.9
83.8
85.3
83.6
84.0
83.2
82.9
Singapore
252.1
254.2
255.8
259.3
258.8
259.1
258.2
261.7
258.4
183.6 181.5 181.6 Thailand Vietnam 21.3 21.4 23.2 Note: Data for China and Vietnam refer to FX reserves
181.6
181.6
179.2
177.8
177.8
175.3
n.a
n.a
n.a
n.a
n.a
n.a
China
30-Apr
31-May
EXTERNAL LIQUIDITY RATIOS Latest Int'l Reserves
3 months imports of goods & services
Short-term external debt
Import cover (Qtrs of imports
(US$bn)
(US$bn)
(US$bn)
covered by reserves)
China Hong Kong SAR
Reserves over short-term debt
3,442.7
521.2
572.8
6.6
6.0
306.5
149.9
752.6
2.0
0.4
107.3
51.8
43.9
2.1
2.4
Japan
1,258.0
68.1
2,371.0
18.5
0.5
Korea
328.8
155.1
126.7
2.1
2.6
Malaysia
141.4
57.8
30.4
2.4
4.6
Indonesia
Philippines
83.2
20.1
8.5
4.1
9.8
Singapore
261.7
119.0
964.3
2.2
0.3
Thailand
175.3
69.4
60.7
2.5
2.9
23.2 30.9 10.0 Vietnam Notes: Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt. DATA RELEASES FOR THE DAY Economies
JAPAN KOREA KOREA MALAYSIA MALAYSIA MALAYSIA THAILAND PHILIPHINES
Indicators
Official Reserve Assets GDP (QoQ) GDP (YoY) TRADE Balance Export (YoY) Import (YoY) FOREIGN Reserves FOREIGN Reserves
Period
May 1Q (Final) 1Q (Final) April April April May May
Last
1,250 Billion USD 0.8% 1.5% 0.94 Billion USD -3.3% 9.2% 175.3 Billion USD 82.9 Billion USD
Previous
1,258 Billion USD 0.9% 1.5% 5.08 Billion USD -2.9% 7.0% 175.7 Billion USD 83.4 Billion USD
Page 7 of 8
SELECTED ECONOMIC RELEASES CALENDAR (27 – 31 May 2013) Expected Release Date
6/3/2013
6/4/2013 6/5/2013 6/6/2013 6/7/2013
Economies
CHINA JAPAN JAPAN KOREA INDONESIA INDONESIA THAILAND SINGAPORE JAPAN JAPAN KOREA PHILIPHINES THAILAND JAPAN KOREA MALAYSIA MALAYSIA THAILAND PHILIPHINES SINGAPORE
Indicators
NON-manufacturing PMI Capital Spending Vehicle Sales (YoY) CPI Inflation Trade Balance CPI PMI Monetary Base Labor Cash Earnings (YoY) FOREIGN Reserve CPI Consumer Confidence Official Reserve Assets GDP TRADE Balance FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves FOREIGN Reserves
Period
May 1Q May May May April May May May April May May May May 1Q (Final) April May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 10 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian stocks rise on U.S. jobs data. Asian stocks rose, with the regional benchmark index heading for the biggest rally in more than six weeks, after a report showed the U.S. added more workers than expected. Japan’s Nikkei surged by 4.9 percent, Hong Kong’s Hang Seng Index gained 0.2 percent, Korea’s KOSPI Index rose by 0.5 percent, Singapore’s Straits Times Index added 0.4 percent, Philippine PSE Index climbed by 2.6 percent, and Malaysia’s FTSE Bursa Malaysia Index gained 0.7 percent. Stock indices in Indonesia and Vietnam bucked the trend, declining by 1.8 percent and 0.7 percent, respectively as at 5.00 p.m. Singapore time. Market in China is closed for a national holiday.
•
Asian currencies dropped to nine-month low on concerns over the U.S. Fed policy and signs of sharper-than-expected slowdown in China. The Bloomberg-JPMorgan Asia Dollar Index dropped as much as 0.4 percent to 116.52, the lowest level since 14 Sept 2012. Malaysia’s ringgit dropped to an 11-week low, weakening by about 1 percent. Japanese yen weakened by 1.2 percent to 98.75 percent, while Korea’s won fell by just under 1 percent to 1,127.47. Likewise, the Philippine peso dropped by 1.31 percent to 42.86. In Indonesia, the one-month non-deliverable forwards on the rupiah decline by 2.6 percent to 10,388 per the US dollar, the weakest level since August 2009, according to Bloomberg data. They were at a 5.6 percent discount to the exchange rate quoted by banks in Indonesia – the biggest gap since September 2011. The spot rate fell by close to 2 percent, breaching the 10,000 threshold at 10,087 at 5.10 p.m. Singapore time.
•
WTI traded near two-week high on improving U.S. economy and amidst Sudan oil threat. The West Texas Intermediate (WTI) traded near the highest in more than two weeks following speculation that demand will improve in the U.S., and amidst threat of a halt in South Sudan’s oil. WTI for July delivery advanced by USD1.27, or 1.3 percent, to close at USD96.03 a barrel on the NYMEX, the highest settlement since 21 May. Brent for July settlement rose by 95 cents, or 0.9 percent, to settle at USD104.56 a barrel on the Londonbased ICE Futures Europe exchange.
BREAKING NEWS GLOBAL •
Euroland nations must follow Germany’s lead on growth. Chancellor Angela Merkel said that euro nations must follow Germany’s lead in tightening budgets and reshaping labour markets to return to growth as she seeks to stave off any crisis eruptions before elections in September. As European leaders struggle to stanch recession and unemployment, Merkel lauded Germany’s efforts to keep its economy stable through the crisis and said that he euro area’s 17 member states must stick to a recipe of budget discipline and improving competitiveness so that growth can take hold. Even as French President Francois Hollande restated his declaration that the three-year-old crisis is over, a looming risk of Greek debt write-downs and a scourge of joblessness among Europe’s youth could compound the turmoil as EU leaders prepare for a 27 June summit. Merkel is easing into an election campaign to seek a third term as chancellor in a 22 September vote.
Page 1 of 7
•
U.S. Treasuries offering the highest real yields in more than two years amid 7.6 percent unemployment. For the first time since 2009, U.S. bond yields are rising at the same time inflation is slowing. While the 10 year yields reached 2.23 percent 29 May, the highest since April 2012, the personal consumption expenditure deflator, the Fed’s preferred gauge of inflation, rose by 0.7 percent in April from a year earlier, the smallest increase since 2009. The yield gap between Treasury Inflation-Protected Securities (TIPS) and non-indexed bonds show investors have cut their expectations for consumer price increases to the lowest level since July. Ten-year notes yielded 2.16 percent today as of 12:01 p.m. in Tokyo.
•
ECB says it has not set limit to bond-buying. According to the European Central Bank (ECB), there is no limit to the ECB’s bond-buying programme. This comes a day after France's President Francois Hollande announced that Europe's debt crisis is over. A German newspaper, Frankfurter Allgemeine Sonntagszeitung quoted yesterday that central bank sources mentioned about the ECB seting a limit of €524 billion on the Outright Monetary Transactions (OMT) scheme. In response, the ECB said that that there is no ex-ante limits on the amount of the OMT.
REGIONAL •
Japan recorded stronger first quarter economic growth and sustained current account surplus in April. Japan's first-quarter economic growth was stronger than first thought, official revised data showed today. The economy grew at an annualised rate of 4.1 percent, up from a preliminary reading of 3.5 percent. On a sequential basis, the economy grew by 1.0 percent in the first three months of the year, slightly better than preliminary 0.9 percent growth. On the current account, Japan posted a surplus for the third straight month in April, as the weaker yen helped boost the value of income from overseas investments. The surplus doubled to ¥750 billion, helping offset a widening trade deficit. Over the weekend, Japan’s Government Pension Investment Fund, which had 112 ¥trillion (USD1.14 trillion) under management as of 31 December, said that it will cut its holdings of local bonds and buy more equities. The proportion of Japanese shares will increase to 12 percent from 11 percent.
•
Sustained industrial output and retail sales in May, amidst lower-than-expected inflation data in China. China's industrial output rose by 9.2 percent year-on-year in May, marginally weaker than the 9.3 per cent increase in April, official figures showed on Sunday. Similarly, annual growth in retail sales was largely sustained in May (12.9 percent; April: 12.8 percent). On the inflation front, China's May inflation slowed to 2.1 percent from a year ago (2.4 percent in April), or a decrease of 0.6 percent month-on-month, as compared with a gain of 0.2 percent gain in the previous month. The median forecast was for a 2.5 percent annual increase in CPI inflation by analysts. China’s leaders face a test of their resolve to forgo short-term stimulus for slower, more-sustainable growth after a slew of economic data for May signalled a weaker global and domestic demand.
•
Korea to raise growth outlook to 2.8 percent in 2013. The government is expected to raise its forecast for this year’s growth rate to 2.8 percent from the current 2.3 percent on the back of improved economic fundamentals boosted by a series of economic stimulus measures. The move came amidst signals that the pump-priming measures, including the property market stimulus packages, are having an effect on the economy. According to media reports, the Ministry of Strategy and Finance plans to revise the growth target to the upper 2-percent level this month believing that the stimulus measures will provide a boost for recovery in the second half. According to a high-ranking official, the government is Page 2 of 7
considering raising this year’s economic growth rate when announcing the second-half economic policy direction slated for late June. •
Singaporean investors apparently undeterred by proposed Johor property tax hike. Plans to raise property tax rates for foreign home buyers in Johor at the end of the year appear not to deter Singaporeans from buying units at the Afiniti Residences in Medini Iskandar Malaysia. It is a joint venture between Khazanah Nasional and Temasek Holdings. Singaporeans made up 25 percent of the buyers. A total of 147 units were snapped up during last Saturday's launch. The Iskandar Regional Development Authority said that it is working with the state government to provide market feedback about the proposed tax increase and is seeking assurance that it will not burden both local and foreign property owners or dampen the market.
•
Foreign funds net sellers of RM523.9 million of Malaysia equities. According to MIFD Equities Research, foreign selling on Bursa Malaysia extended into the week ended 7 June – the second consecutive week, where they were net sellers of RM523.9 million in Malaysian equities. The intensity of the sell-down reduced as the amount was less than the net selling of RM629.5mil in the week ended 31 May. Even after the liquidation in the last two weeks, the overhang of foreign liquidity remained uncomfortably high. So far this year, foreign investors have bought net RM17.5 billion (or net USD5.8 bn) of Malaysian equity in the open market compared with net RM13.7 billion (net USD4.5 bn) in 2012.
•
Cambodia’s milled rice exports up by 127 percent. Cambodian milled rice exports increased by more than 100 per cent during the first five months in 2013 compared with the same period the year before, according to data from the Council of the Development of Cambodia. The figures showed that milled rice exports reached 146,854 tonnes at the end of May, an increase of 127 per cent when compared with the 64,581 tonnes sent out in the first five months of 2012.
•
Vietnam’s exports to Korea leaped. Korea has emerged as Vietnam’s fifth biggest export partner (after the European Union, U.S., China and Japan), with a total turnover of USD2.2 billion for the first four months of this year, up 36 percent year-on-year. According to the General Department of Customs, in April alone, Vietnam exported USD550.4 million worth of goods to the market, mainly crude oil, textiles, seafood, coal, wood and timber, and rubber. Textiles experienced the highest export turnover with USD411.2 million (+45.37 percent), followed by crude oil with USD396.7 million (+366.2 percent).
•
Unemployed Bruneians urged to start business from home. Cottage businesses may prove to be the answer in helping the unemployed contributes to the local economy, according to the secretary of Brunei Council on Social Welfare (MKM). In an interview on the sidelines of the three-day 'Introduction to the cottage industry' workshop, Hamidah Lakem said that starting a home business could pave a way for the unemployed to break out of their cycle. The workshop is taking place at the Civil Service Institute (IPA) and saw about 20 participants. The participants are made up of those who are uneducated or are early school-leavers who have become unemployed due to various factors.
Page 3 of 7
IFIs NEWS (compiled from their websites) G20 – Press Release: G20 Finance Ministers’ and Central Bank Governors’ Deputies discussed issues of the global economic growth • The G20 Finance Ministers' and Central Bank Governors' Deputies Meeting was held on June 6-7, 2013 in St.Petersburg. The main purpose of this meeting is to prepare for the G20 Finance Ministers and Central Bank Governors Meeting which is being scheduled for July 1819, 2013 in Moscow. The recovery of global economic growth and facilitation to job creation were the key issues of the discussion. Special attention was paid to seeking a solution of effective policy mix ("calibration") aimed at stimulation of economic growth and boosting employment. There was also an exchange of views on further G20 efforts in modernizing international financial monetary relations - approaches to the IMF quota and voice reform, update of the IMF-World Bank "Guidelines for Public Debt Management", discussion on responsible lending principles for low-income countries etc. On a final note, the G20 Deputies touched on the issues of providing energy sustainability, commodity markets transparency and climate finance, as well as the problems of tax base erosion and profit shifting. http://www.g20.org/news/20130607/781399440.html IMF – Working Paper: “Risk Exposures and Financial Spillovers in Tranquil and Crisis Times: Bank-Level Evidence” • The IMF has publicised the captioned working paper. “For a sample of 83 financial institutions during 2003–2011, this paper attempts to answer three questions: first, what is the evolution of banks’ stock price exposure to country-level and global risk factors as approximated by equity indices; second, which bank-specific characteristics explain these risk exposures; third, are there clusters of banks with equity price linkages beyond market risk factors. The paper finds a rise in sensitivities to both country and global risk factors in 2011, although on average to levels still below those of the subprime crisis. The analysis of bank-to-bank linkages suggests that any “globalization” of the euro area crisis is likely to be channelled through U.K. and U.S. banks, with little evidence of direct spillover effects to other regions.” http://www.imf.org/external/pubs/ft/wp/2013/wp13142.pdf World Bank – Press Release: World Bank Vice President for East Asia and the Pacific visits Lao PDR • The World Bank’s Vice President for East Asia and the Pacific, Axel van Trotsenburg, commended Lao PDR for its steady economic growth and success in overcoming poverty as he concluded a three day official visit to the country. “We have worked well together over the decades and the testimony of this cooperation is the sustained reduction of poverty headcount. In less than a generation, the incidence of poverty in Lao PDR has gone from almost half the population to just over a quarter”, said Axel van Trotsenburg, World Bank Vice President for East Asia and the Pacific. “This is a solid basis to build a program for the future focused on further reducing poverty and making a real impact on improving people’s lives.” http://www.worldbank.org/en/news/press-release/2013/06/07/world-bank-vice-presidentfor-east-asia-and-the-pacific-visits-lao-pdr (Press Release)
Page 4 of 7
http://www.worldbank.org/projects/P076445/lao-nam-theun-2-power-project-formerunder-pe-p004206-len?lang=en (Details pertaining to the Lao Nam Theun 2 Power Project [formerly classified under the category of PE-P004206-LEN]) http://www.worldbank.org/projects/P075531/rural-electrification-phase-project-ruralelectrification-apl-program?lang=en (Details pertaining to the Rural Electrification Phase I Project of the Rural Electrification (APL) Program FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 7-Jun 10-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,886.00 9,886.00 10,087.00 Japan 86.75 97.56 97.56 98.75 Korea 1,064.40 1,116.79 1,116.79 1,127.47 Malaysia 3.06 3.10 3.10 3.13 Philippines 41.01 42.30 42.30 42.86 Singapore 1.22 1.25 1.25 1.26 Thailand 30.59 30.63 30.63 30.78 Vietnam 20,840.00 21,018.00 21,018.00 21,018.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
% change 0.00 -0.01 -1.99 -1.21 -0.95 -1.07 -1.31 -0.71 -0.49 0.00
2013 YTD (%chg) 1.6 -0.2 -4.3 -11.6 -5.7 -3.0 -4.7 -3.0 -1.5 -0.8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
7-Jun 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
OVERNIGHT LENDING RATE (%) 7-Jun 10-Jun bps change 8.620 4.500 -412.00 0.075 0.076 0.07 4.170 4.170 0.00 0.095 0.073 -2.25 2.500 2.500 0.00 3.000 3.000 0.00 0.136 0.117 -1.90 0.018 0.018 0.00 2.500 2.500 0.00 1.000 0.920 -8.00
10-Jun
% change
2,210.9 21,615.1 4,777.4 13,514.2 1,932.7 1,787.8 6,875.6 3,196.9 1,528.0 524.6
0.00 0.18 -1.81 4.94 0.46 0.69 2.59 0.38 0.77 -0.65
2013 YTD (%chg) -2.6 -7.3 9.9 30.0 -4.8 6.8 17.3 -0.2 8.6 25.4
3-MONTH INTERBANK LENDING RATE (%) 7-Jun 10-Jun bps change 4.574 5.145 57.10 0.376 0.378 0.16 4.916 4.919 0.36 0.230 0.230 0.00 2.670 2.670 0.00 3.210 3.210 0.00 1.238 1.291 5.30 0.373 0.373 0.00 2.601 2.600 -0.08 4.220 3.740 -48.00
CREDIT DEFAULT SWAP (IN BPS) 6-Jun 7-Jun bps change China 90.66 94.60 3.94 Hong Kong SAR 45.49 45.47 -0.02 Indonesia 180.37 185.67 5.30 Japan 79.79 80.28 0.49 Korea 82.30 84.27 1.97 Malaysia 93.13 94.59 1.46 Philippines 103.89 110.69 6.80 Thailand 91.19 93.63 2.45 Vietnam 220.36 221.77 1.41 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.
Page 5 of 7
7-Jun Gold Spot 1,383.0 (in US$ per ounce) Sources: Bloomberg & Thomson Reuters Datastream
10-Jun
% change
1,378.3
-0.34
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
Short-term external debt
2013
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,371.0 0.5 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.9 8.5 9.8 Singapore 258.4 964.3 0.3 Thailand 175.3 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 6 of 7
DATA RELEASES FOR THE DAY Economies Japan Japan Japan Japan Japan Japan
Indicators GDP (Annualised) GDP (QOQ) Total Current Account (¥ bn) Adjusted Total Current Account (¥ bn) Trade balance (¥ bn) Consumer Confidence (PTS)
Period 1Q F 1Q F Apr Apr Apr May
Last 4.2 1.0 750.0 852.7 -818.8 45.7
Previous 3.5 0.9 1,251.2 342.4 -219.9 44.5
SELECTED ECONOMIC RELEASES CALENDAR (10 – 14 JUNE 2013) Expected Release Date 6/10/2013
6/11/2013
6/12/2013
6/13/2013
6/14/2013
Economies Japan Japan Japan Japan Japan Japan Japan Japan Malaysia Malaysia Philippines Philippines Singapore Japan Japan Korea Korea Japan Philippines Korea Indonesia Hong Kong Hong Kong Singapore Singapore Singapore Thailand
Indicators GDP (Annualised) GDP (QOQ) Current Account (TOTAL) Current Account (ADJUSTED TOTAL) Trade balance (¥ Bn) Consumer Confidence (PTS) Machinery Tool Orders (YOY) BOJ Target Rate Industrial Production (YOY) Manufacturing Sales (YOY) Unemployment Rate (%) Total Exports (YOY) Unemployment Rate, SA (%) Machine Orders (MOM) Machine Orders (YOY) Unemployment Rate, SA (%) Bank Lending to Households (KRW trillion) Japan International Securities Transaction Overnight Borrowing Rate (%) BOK Base Rate Bank Indonesia Reference Rate (%) Industrial Production (YOY) Producer Price (YOY) Retail Sales, SA (MOM) Retails Sales (YOY) Retail Sales ex-auto (YOY) Foreign Reserves
Period 1Q F 1Q F Apr Apr Apr May May P 11 Jun Apr Apr Apr Apr 1Q F Apr Apr May May 7 Jun 13 Jun 13 Jun 13 Jun 1Q 1Q Apr Apr Apr 7 Jun
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 7 of 7
MARKET UPDATE FOR ASEAN+3 11 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian stocks fall as the Bank of Japan (BOJ) disappointed investors by failing to expand monetary stimulus and concern grew that the Federal Reserve will scale back debt purchases. Japan’s Nikkei dropped by 1.5 percent after the Bank of Japan refrained from extending the maturity of loans to lenders it uses to smooth bond market volatility, bucking economists’ predictions. In Korea, the KOSPI gave back 0.6 percent, while Hong Kong’s Hang Seng Index lost 1.2 percent. In southeast Asia, equity markets tumbled, led by Indonesia, Thailand and the Philippines. The Jakarta Composite Index lost 3.5 percent, Philippines PSE Index plunge close to 4.6 percent – the most since September 2011 on weaker jobs and exports data in April. Similarly, in Thailand the SET Index gave up 4.6 percent.
In the currencies market, the yen rose against its 16 major peers, snapping a two-day decline against the USD. The yen strengthened by 1.3 percent to 97.52 at 5.10 p.m. Singapore time. Indonesia rupiah stood at 9,828.00 as at 5.10 p.m. Singapore time, reversing yesterday’s steep decline. Other regional currencies also continued its downward trend, with the won giving back 0.6 percent, ringgit (-0.7 percent), peso (-0.5 percent), baht (-0.6 percent).
WTI crude fluctuates as stockpiles and refinery rates seen gaining. West Texas Intermediate crude fluctuated after snapping a three-day gain. A government report tomorrow is forecast to show that U.S. stockpiles increased while refinery run rates advanced a second week.
BREAKING NEWS GLOBAL
Draghi says that he has confidence in German Court for the OMT Review. European Central Bank President Mario Draghi said that he trusts Germany’s constitutional court, which will consider a case against the central bank’s bond-buying plan starting today. In an interview on German ZDF television yesterday, Draghi said that he has full confidence in the constitutional court’s independence, and also in its ability to examine with thoroughness and with fairness all the advice it is getting from all sides. The ECB’s Outright Monetary Transactions (OMT) programme, introduced last year as concerns peaked that the euro would break apart, will be reviewed by the court in Karlsruhe at hearings this week after plaintiffs including a lawmaker allied to Chancellor Angela Merkel brought a case against it. The as-yet-unused OMT foresees potentially unlimited purchases of bonds of debt-stricken countries that sign up to adjustment programme.
U.K. house price index reaches three-year high on buyer revival. A U.K. house-price gauge rose in May to a three-year high as government credit-easing programs revived buyer interest across the country, according to the Royal Institution of Chartered Surveyor (RICS). The price index increased to 5 from 1 in April in a monthly poll of property surveyors. A positive number means more respondents saw values increase rather than decline. Measures of new buyer enquiries and newly agreed sales reached Page 1 of 6
levels last seen in 2009. The improvement largely reflects the Bank of England’s expanded Funding for Lending Scheme, which is designed to ease the flow of credit by lowering bank funding costs.
Australian dollar falls to the lowest since September 2010 as home loan slows. The Australian dollar fell to the lowest in almost three years versus the greenback after home-loan approvals grew at the slowest pace in three months, boosting the case for further cuts to borrowing costs. Australia’s currency slid for a third day amid speculation that the Federal Reserve will reduce stimulus this year, narrowing Australia’s interestrate advantage.
India’s rate cut dented as rupee drops to record low. The slump in the rupee to a record low has narrowed the Reserve Bank of India’s scope to cut interest rates next week for a fourth straight meeting. The rupee reached its weakest level today, weighed down by an unprecedented current account deficit, the slowest Indian economic expansion in a decade and speculation that the dollar will gain if the U.S. scales back monetary stimulus. The rupee stood at 58.41 at 5.10 p.m. Singapore time, dropping by about 2 percent.
REGIONAL
BOJ policymakers refrained from expanding their tools to address bond market volatility. BOJ Governor Haruhiko Kuroda and his fellow board members left unaltered the one-year fixed-rate loan facility the bank has tapped seven times amid a surge in 10year government bond yields from a record low in April. Officials before the meeting were divided over whether to extend the loans to a two-year horizon, according to people familiar with the discussions. Today’s decision sends a signal that Kuroda would not be swayed by short-term swings and volatility in bond yields.
April’s jobless rate increased while exports slumped in the Philippines. Unemployment rate in the Philippines increased to 7.5 percent in the three months ended April. It is the highest rate since the quarter through 30 June 30 2010, according to data compiled by Bloomberg. The high unemployment rate casts a shadow of doubt on the strength of economic growth and its sustainability. Exports slumped by 12.8 percent from a year earlier. Data from the Bangko Sentral Ng Pilipinas (BSP) also showed that FDI plummeted in March, registering a net outflow of USD78 million. Year to date, FDI remained positive with a net inflow of USD1.303 billion, down from the USD1.424 billion seen in the comparable period in 2012.
Foreign investors withdrawn Rp986 billion during the first trading session. Indonesian stocks declined, heading to the lowest close since 26 February, as rupiah forwards touched the lowest level in more than three years and foreign investors sold the nation’s stocks for the 12th consecutive day. The Jakarta Composite Index dropped by 2.5 percent to 4,656.59 during the morning session, slumping about 11 percent since climbing to a record on 20 May.
Malaysia’s budget carrier AirAsia considers end to tie-up with Japan’s ANA. Malaysian budget carrier AirAsia said that it is considering ending its near two-year tie-up with Japan's All Nippon Airways (ANA) blaming management tensions. Asia's biggest budget airline revealed that AirAsia Japan had been "facing some challenges attributed to a difference of opinion in management”, most critically on the points of how to operate a low-cost business. AirAsia Japan, which flies out of Tokyo's Narita airport to five Page 2 of 6
Japanese destinations plus Busan and Seoul in Korea has been unprofitable since taking to the skies in August, while having to compete with ANA's own low-cost carrier, Peach.
Malaysia's industrial production index (IPI) increased in April. IPI went up by 4.7 percent in April 2013 compared with a year earlier. The increase in April IPI was due to the increases in manufacturing index and electricity index by 6.0 percent and 8.0 percent, respectively. In seasonally adjusted terms, the IPI in April grew by 3.9 percent month-onmonth. From January to April this year, Malaysia's IPI climbed by 1.1 percent compared with the same period last year.
Lao government urged to cut unnecessary spending. The Lao government urged to cut unnecessary spending, including reception expenditure, so that it has enough resources for its planned increase in spending during the next fiscal year, a senior financial official has reportedly told the National Assembly. Director General of the Finance Ministry's Budget Department, Mr Saisamone Xaysoulien made the comment at a four-day meeting in Thalath, Vientiane province. The planned increased in salary for state employees next fiscal year alone requires an additional 2 trillion kip adding significantly to the already heavily burdened state budget. On the other hand, revenue generated from mines like gold and copper, one of the country's main income generating sources, has dropped due to the decline in global prices in recent months.
China’s slump may lead to rate cut by the Bank of Thailand. The Bank of Thailand is set to lower its 2013 gross domestic product growth forecast from the current 5.1 percent following China's disappointing economic data. The central bank is likely to trim the 2013 economic growth projection. However, it needs to mull information from the Monetary Policy Committee's policy rate call on 10 July before it does. According to the Governor, the figure will be announced on 19 July if the forecast is revised.
Vietnam’s Prime Minister passes confidence vote as economic growth slows. Vietnam’s prime minister secured enough support from parliament during the communist country’s first confidence vote to keep his job, with almost a third of lawmakers rating him poorly as economic growth stagnates. Nguyen Tan Dung had support from 67 percent of National Assembly members, the legislature announced in Hanoi today. Thirty-two percent of lawmakers gave him a “low-confidence” ranking, while central bank Governor Nguyen Van Binh received a “low-confidence” report card from 42 percent of lawmakers.
IFIs NEWS (compiled from their websites) IEA – Publication: “Special Report of World Energy Outlook 2013: Redrawing the EnergyClimate Map” Warning that the world is not on track to limit the global temperature increase to 2 degrees Celsius, the International Energy Agency (IEA) today urged governments to swiftly enact four energy policies that would keep climate goals alive without harming economic growth. “Climate change has quite frankly slipped to the back burner of policy priorities. But the problem is not going away – quite the opposite,” IEA Executive Director Maria van der Hoeven said in London at the launch of a World Energy Outlook Special Report, Redrawing the Energy-Climate Map, which highlights the need for intensive action before 2020. Noting that the energy sector accounts for around two-thirds of global greenhouse-gas emissions, she added: “This report shows that the path we are
Page 3 of 6
currently on is more likely to result in a temperature increase of between 3.6 °C and 5.3 °C but also finds that much more can be done to tackle energy-sector emissions without jeopardising economic growth, an important concern for many governments.” http://www.iea.org/newsroomandevents/pressreleases/2013/june/name,38773,en.html (Press Release) http://www.worldenergyoutlook.org/media/weowebsite/2013/energyclimatemap/RedrawingEne rgyClimateMap.pdf (Special Report of World Energy Outlook 2013: “Redrawing the EnergyClimate Map” published on 10 June 2013) http://www.iea.org/media/presentations/130529WEOClimateMvdHlaunchremarks.pdf (Opening Remarks made by IEA’s Executive Director Maria van der Hoeven on 10 June 2013) http://www.iea.org/media/presentations/RedrawingTheEenrgyClimateMapPresentation.pdf (Presentation Slides for the launch of this Special Report: “Redrawing the Energy-Climate Map”) http://www.worldenergyoutlook.org/media/weowebsite/2013/WEO_2013_ToC.pdf (Table of Contents for the Report titled “World Energy Outlook 2013” to be published on 12 November 2013) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 10-Jun 11-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,886.00 10,087.00 9,828.00 Japan 86.75 97.56 98.76 97.52 Korea 1,064.40 1,116.79 1,127.47 1,134.00 Malaysia 3.06 3.10 3.13 3.15 Philippines 41.01 42.30 42.86 43.09 Singapore 1.22 1.25 1.26 1.26 Thailand 30.59 30.63 30.78 30.95 Vietnam 20,840.00 21,018.00 21,018.00 21,016.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
% change 0.00 0.00 2.64 1.27 -0.58 -0.68 -0.53 -0.08 -0.55 0.01
2013 YTD (%chg) 1.6 -0.2 -1.8 -10.4 -6.2 -3.6 -5.2 -3.0 -2.0 -0.8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
10-Jun 2,210.9 21,615.1 4,777.4 13,514.2 1,932.7 1,787.8 6,875.6 3,200.5 1,528.6 524.6
OVERNIGHT LENDING RATE (%) 10-Jun 11-Jun bps change 4.500 4.500 0.00 0.076 0.076 0.00 4.170 4.170 0.00 0.073 0.095 2.25 2.500 2.500 0.00 3.000 3.000 0.00 0.117 1.070 95.30 0.018 0.018 0.00 2.500 2.500 0.00 0.920 0.878 -4.20
11-Jun 2,210.9 21,354.7 4,609.9 13,317.6 1,920.7 1,782.8 6,556.7 3,169.1 1,458.4 522.0
% change 0.00 -1.20 -3.50 -1.45 -0.62 -0.28 -4.64 -0.98 -4.59 -0.50
2013 YTD (%chg) -2.6 -8.4 6.1 28.1 -5.4 6.5 11.9 -1.0 3.6 24.8
3-MONTH INTERBANK LENDING RATE (%) 10-Jun 11-Jun bps change 5.145 5.145 0.00 0.378 0.377 -0.09 4.919 5.926 100.71 0.230 0.230 0.00 2.670 2.670 0.00 3.210 3.210 0.00 1.291 1.417 12.60 0.373 0.373 0.00 2.600 2.600 0.00 3.740 3.233 -50.70
Page 4 of 6
CREDIT DEFAULT SWAP (IN BPS) 7-Jun 10-Jun bps change China 94.60 93.13 -1.47 Hong Kong SAR 45.47 45.49 0.02 Indonesia 185.67 190.93 5.26 Japan 80.28 75.62 -4.67 Korea 84.27 83.05 -1.22 Malaysia 94.59 94.11 -0.49 Philippines 110.69 109.71 -0.97 Thailand 96.07 95.58 -0.49 Vietnam 226.05 225.10 -0.95 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 10-Jun 11-Jun Gold Spot (in US$ per 1,386.5 1,369.9 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change -1.20
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
2013
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
(US$bn) 3,442.7 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 23.2
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
Short-term external debt (US$bn) 540.9 752.6 44.6 2,371.0 126.7 32.9 8.5 964.3 63.0 10.0
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a
Reserves over short-term debt
6.4 0.4 2.4 0.5 2.6 4.3 9.8 0.3 2.8 -
Page 5 of 6
Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies Japan Malaysia Malaysia Philippines Philippines Singapore
Indicators Machinery Tool Orders (YOY) Industrial Production (YOY) Manufacturing Sales (YOY) Unemployment Rate (%) Total Exports (YOY) Unemployment Rate, SA (%)
Period May P Apr Apr Apr Apr 1Q F
Last -7.4 4.7 -5.2 7.5 -12.8
Previous -23.6 -0.1 -6.5 7.1 0.1 pending
SELECTED ECONOMIC RELEASES CALENDAR (10 – 14 JUNE 2013) Expected Release Date 6/10/2013
6/11/2013
6/12/2013
6/13/2013
6/14/2013
Economies Japan Japan Japan Japan Japan Japan Japan Malaysia Malaysia Philippines Philippines Singapore Japan Japan Korea Korea Japan Philippines Korea Indonesia Hong Kong Hong Kong Singapore Singapore Singapore Thailand
Indicators GDP (Annualised) GDP (QOQ) Current Account (TOTAL) Current Account (ADJUSTED TOTAL) Trade balance (ÂĽ Bn) Consumer Confidence (PTS) Machinery Tool Orders (YOY) Industrial Production (YOY) Manufacturing Sales (YOY) Unemployment Rate (%) Total Exports (YOY) Unemployment Rate, SA (%) Machine Orders (MOM) Machine Orders (YOY) Unemployment Rate, SA (%) Bank Lending to Households (KRW trillion) Japan International Securities Transaction Overnight Borrowing Rate (%) BOK Base Rate Bank Indonesia Reference Rate (%) Industrial Production (YOY) Producer Price (YOY) Retail Sales, SA (MOM) Retails Sales (YOY) Retail Sales ex-auto (YOY) Foreign Reserves
Period 1Q F 1Q F Apr Apr Apr May May P Apr Apr Apr Apr 1Q F Apr Apr May May 7 Jun 13 Jun 13 Jun 13 Jun 1Q 1Q Apr Apr Apr 7 Jun
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 6 of 6
MARKET UPDATE FOR ASEAN+3 12 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian stocks drop, extending the global rout on stimulus concerns. Asian equities extended a rout that wiped out about USD400 billion from the value of global equities yesterday, amid concern that central banks from Tokyo to Washington are increasingly reluctant to add stimulus. As at 5.00 p.m. Singapore time, the Nikkei dropped by 0.2 percent, the KOSPI lost 0.6 percent, the STI gave up 0.4 percent, and Thailand’s SET retreated by close to 0.9 percent. Markets in China, Hong Kong and the Philippines are shut for holidays.
In the currencies market, the yen weakens against the USD after government data showed a large-than-expected decline in factory orders. The yen fell by 0.7 percent at 5.00 p.m. Singapore time to 96.68 per the USD. The rupiah lost 0.3 percent to 9,861.00, reversing yesterday’s gain. The Singapore dollar, the Korean won and the Thai baht traded flat today, while the ringgit gained back about 0.6 percent.
WTI crude declines for a third day as U.S. crude stockpiles are seen as rising. West Texas Intermediate (WTI) oil fell for a third day after an industry report showed U.S. crude stockpiles increased the most in more than four years. WTI for July delivery declined as much as 92 cents to USD94.46 a barrel in electronic trading on the NYMEX and stood at USD94.12 at 3.40 p.m. Singapore time. Brent for July settlement fell as much as 73 cents, or 0.7 percent, to USD102.23 a barrel on the London-based ICE Futures Europe exchange.
BREAKING NEWS GLOBAL
U.K. unemployment falls as economic recovery gains momentum. U.K. jobless claims fell more than economists forecast in May and a wider measure of unemployment also declined, providing further evidence that an economic recovery is under way. Jobless claims fell by 8,600 to 1.51 million, leaving the rate at 4.5 percent, the Office for National Statistics said today in London. Joblessness as measured by International Labour Organisation methods fell by 5,000 in the three months through April to 2.51 million, a rate of 7.8 percent.
U.S. Securities and Exchange Commission (SEC) puts exchanges in sights charging regulatory lapses at CBOE. Exchange executives, long shielded from legal scrutiny in the U.S., have been put on notice that may be changing after federal regulators fined CBOE Holdings Inc. (CBOE) USD6 million for unprecedented lapses in supervision. The levy, disclosed yesterday in a settlement with the biggest American options venue, marks the third time in nine months the SEC has announced financial sanctions against a market operator.
PIMCO cuts Treasury holdings in May to the lowest in two months. The Pacific Investment Management Co. (PIMCO) has cut its holdings of Treasuries even as the cofounder cited that the U.S. Federal Reserve is unlikely to reduce its unprecedented assetpurchase programme in the near-term. The proportion of U.S. government securities in Page 1 of 6
the USD285.16 billion Total Return Fund declined to 37 percent in May, from 39 percent in April – the highest level since July 2010. Mortgage holdings were maintained at 34 percent, while municipal holdings were reduced to 4 percent, the lowest since July 2012, from 5 percent.
Greece became the first developed nation to be cut to emerging market status by MSCI Inc. after the local index plunged 83 percent since 2007. According to New York-based MSCI, whose equity indices are tracked by investors with about USD7 trillion in assets, Greece failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability. Qatar and the United Arab Emirates were raised to emerging markets, while Morocco was cut to a frontier market. Korea and Taiwan are kept as emerging markets, and placed Chinese shares traded local exchanges on review for inclusion in the emerging category.
Australian dollar rebounds from near three month low. The Australian dollar snapped a three-day slide after tumbling 9.2 percent since the end of March, set for the biggest quarterly decline since the period ended September 2011. The currency advanced after a private report showed that Australia’s consumer confidence recovered in June after slumping the most in 17 months. The Australian currency gained by 0.4 percent to 94.65 U.S. cents as of 5:05 p.m. in Sydney from yesterday, when it touched 93.26, the lowest since 14 September 2010.
REGIONAL
Japan passes law changes dealing with failed financial firms. Japan’s parliament endorsed changes in legislation dealing with failed financial institutions as part of efforts by regulators worldwide to avoid a repeat of the global financial crisis. The passed amendments, proposed by the Financial Services Agency, allow brokerages and insurers to join banks in being eligible for emergency capital from the state-run deposit insurance agency. The Upper House today also approved so-called bail-in rules that impose losses on investors of failing financial institutions to reduce taxpayers’ burden. The vote was broadcast live through the Internet.
Hong Kong turns airport into a cruise terminal. Hong Kong turned a former airport into an HKD8.2 billion (USD1.1 billion) cruise terminal as the city seeks to woo wealthy Chinese travellers to help it become Asia’s hub for luxury liners. The terminal, built at the city’s former Kai Tak Airport, will open on a public holiday today. Royal Caribbean, one of the operators, expects to draw mostly Chinese tourists to travel from the iconic Victoria Harbour. Hong Kong joins Singapore in adding a second terminal capable of handling the world’s biggest cruise ships as cities across Asia expand facilities to capture a share of the growing vacation market. Worldwide cruise vacationers are expected to increase 3.3 percent from a year earlier to 20.9 million this year, with Asia accounting for 6.5 percent of the traffic.
Korea’s unemployment rate falls to 3 percent in May. Korea's unemployment rate fell in May from a month earlier but job creation slowed amid concerns labour market conditions might remain tough for many job seekers, a government report showed today. According to the report by Statistics Korea, the jobless rate stood at 3 percent last month, down from the previous month's 3.2 percent. The jobless rate adjusted for inflation, however, edged up to 3.2 percent from April's 3.1 percent. The pace of job creation decelerated as the number of employed people stood at 25.39 million in May, up Page 2 of 6
265,000 from a year earlier, which is smaller than the 345,000 on-year job creation tallied in April.
Bank Indonesia (BI) increases the overnight deposit facility rate by 25 bps to 4.25 percent. BI raised its overnight deposit facility rate by 25 bps, ahead of its policy meeting tomorrow amidst weakness in the rupiah. In the last two days, BI has been fighting against the markets following increased demand for U.S. dollar, both for real needs and speculations. According to analysts, BI will likely increase the policy rate as a signal to guard against inflation. Indonesian policy makers have struggled to contain the rupiah’s plunge as a delay in fuel-subsidy cuts hurts investor sentiment, with the country’s currency reserves dropping as the central bank sold dollars. Rupiah forwards, which weakened to the lowest in more than three years this week, rose today following the decision.
Myanmar Airlines offering half-price tickets for its citizens in Malaysia to return home. Myanmar's national airline is offering half-price tickets for Myanmar nationals who wish to return home from Malaysia. According to Myanmar Airlines International's marketing manager, Aye Mra Thar, the discount would run from 12 June to 12 July, exclusively for its citizens working in Malaysia. The Airlines' office in Kuala Lumpur confirmed that there is currently an on-going promotion, which only applies to a one-way journey back to Myanmar.
Property sector in Thailand cooling with the economy. According to governor of Bank of Thailand (BOT), Prasarn Trairatvorakul, the recent slowing of the Thai economy is helping to ease concerns about the overheating property sector, although the BOT will keep monitoring the situation. In a remark made yesterday, he said the slowdown means that a real estate bubble is no longer a major concern. Some areas are suffering from a property glut, but others still have room for further growth. He added that banks and property developers are also protecting themselves from the potential artificial demand of speculators by requiring higher down payments and identifying potential housing loan defaulters.
New Mekong bridge in Lao to open by September. People will find it easier to cross in and out of Xayaboury province in the next few months, with the bridge over the Mekong River connecting to Luang Prabang province nearing completion. The bridge will span the Mekong linking Thadeua village in Xayaboury to Pakkhone village in Luang Prabang, which were previously only connected by ferry services. Construction on the 620m bridge began in 2009, with the Lao government seeking funding from Korea in order to complete the project.
IFIs NEWS (compiled from their websites) UNCTAD – Press Release: General Assembly confirms appointment of Mukhisa Kituyi of Kenya as next Secretary-General of UNCTAD On June 10, 2013, The General Assembly of the United Nations approved the nomination made by Mr. Ban Ki-moon, United Nations Secretary-General, for Mr. Mukhisa Kituyi of Kenya to serve as the next Secretary-General of UNCTAD. Mr. Kituyi has a distinguished academic and parliamentary background, coupled with wide-ranging experience in trade negotiations. He will succeed Mr. Supachai Panitchpakdi of Thailand, who assumed the
Page 3 of 6
leadership of the organization in 2005 and was reappointed in 2009. Mr. Kituyi will begin his four-year term of office as Secretary-General of UNCTAD on 1 September 2013. http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=529 FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 11-Jun 12-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,886.00 9,828.00 9,861.00 Japan 86.75 97.56 96.03 96.68 Korea 1,064.40 1,116.79 1,134.00 1,133.70 Malaysia 3.06 3.10 3.15 3.13 Philippines 41.01 42.30 43.09 42.92 Singapore 1.22 1.25 1.25 1.25 Thailand 30.59 30.63 30.93 30.93 Vietnam 20,840.00 21,018.00 21,028.00 21,018.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
% change 0.00 0.00 -0.33 -0.67 0.03 0.55 0.40 0.11 0.00 0.05
2013 YTD (%chg) 1.6 -0.2 -2.1 -9.7 -6.2 -3.1 -4.8 -2.6 -1.9 -0.8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
11-Jun 2,210.9 21,354.7 4,609.9 13,317.6 1,920.7 1,779.6 6,556.7 3,170.4 1,452.6 522.0
OVERNIGHT LENDING RATE (%) 11-Jun 12-Jun bps change 4.500 4.500 0.00 0.076 0.076 0.00 4.170 4.380 21.00 0.095 0.095 0.00 2.500 2.500 0.00 3.000 3.000 0.00 1.070 1.070 0.00 0.029 0.029 0.00 2.500 2.500 0.00 0.878 0.927 4.90
12-Jun
% change
2,210.9 21,354.7 4,681.6 13,289.3 1,909.9 1,776.8 6,556.7 3,157.0 1,440.1 518.2
0.00 0.00 1.55 -0.21 -0.56 -0.16 0.00 -0.42 -0.86 -0.71
2013 YTD (%chg) -2.6 -8.4 7.7 27.8 -6.0 6.1 11.9 -1.4 2.3 23.9
3-MONTH INTERBANK LENDING RATE (%) 11-Jun 12-Jun bps change 5.145 5.145 0.00 0.377 0.377 0.00 4.926 5.161 23.43 0.230 0.230 0.00 2.670 2.670 0.00 3.210 3.210 0.00 1.417 1.417 0.00 0.373 0.373 -0.08 2.600 2.600 0.00 3.233 3.783 55.00
CREDIT DEFAULT SWAP (IN BPS) 10-Jun 11-Jun bps change China 93.13 101.46 8.33 Hong Kong SAR 45.49 48.94 3.45 Indonesia 190.93 215.38 24.45 Japan 75.62 78.07 2.45 Korea 83.05 91.14 8.09 Malaysia 94.11 104.38 10.28 Philippines 109.71 124.25 14.53 Thailand 95.58 106.34 10.76 Vietnam 225.10 235.54 10.44 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.
Page 4 of 6
11-Jun 12-Jun Gold Spot (in US$ per 1,378.3 1,378.4 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change 0.00
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
2013
31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun China 3,287.4 3,297.7 3,311.6 3,410.1 3,395.4 3,442.7 n.a n.a n.a Hong Kong SAR 301.7 305.2 317.3 304.7 304.8 303.8 306.5 305.7 n.a Indonesia 110.3 111.3 112.8 108.8 105.2 104.8 107.3 105.1 n.a Japan 1,274.2 1,270.9 1,268.1 1,267.3 1,258.8 1,254.4 1,258.0 1,250.2 n.a Korea 323.5 326.1 327.0 328.9 327.4 327.4 328.8 328.1 n.a Malaysia 138.3 139.1 139.7 140.2 140.3 139.7 140.3 141.4 n.a Philippines 81.7 83.9 83.8 85.3 83.6 84.0 83.2 82.9 n.a Singapore 254.2 255.8 259.3 258.8 259.1 258.2 261.7 258.4 n.a Thailand 181.5 181.6 181.6 181.6 179.2 177.8 177.8 175.3 n.a Vietnam 21.4 23.2 n.a n.a n.a n.a n.a n.a n.a Note: Data for China and Vietnam refer to FX reserves EXTERNAL LIQUIDITY RATIOS* Int'l Reserves 3 months imports Short-term Import cover (Qtrs Reserves over of goods & external debt of imports short-term debt services covered by (US$bn) (US$bn) (US$bn) reserves) China 3,442.7 523.3 540.9 6.6 6.4 Hong Kong SAR 305.7 149.7 752.6 2.0 0.4 Indonesia 105.1 51.8 44.6 2.0 2.4 Japan 1,250.2 80.0 2,371.0 15.6 0.5 Korea 328.1 155.1 126.7 2.1 2.6 Malaysia 141.4 57.1 32.9 2.5 4.3 Philippines 82.9 19.4 8.5 4.3 9.8 Singapore 258.4 118.2 964.3 2.2 0.3 Thailand 175.3 66.9 63.0 2.6 2.8 Vietnam 23.2 30.9 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 5 of 6
DATA RELEASES FOR THE DAY Economies Japan Japan Korea Korea
Indicators Machine Orders (MOM) Machine Orders (YOY) Unemployment Rate, SA (%) Bank Lending to Households (KRW trillion)
Period Apr Apr May May
Last -8.8 -1.1 3.2 465.1
Previous 14.2 2.4 3.1 462.5
SELECTED ECONOMIC RELEASES CALENDAR (10 – 14 JUNE 2013) Expected Release Date 6/10/2013
6/11/2013
6/12/2013
6/13/2013
6/14/2013
Economies Japan Japan Japan Japan Japan Japan Japan Malaysia Malaysia Philippines Philippines Singapore Japan Japan Korea Korea Japan Philippines Korea Indonesia Hong Kong Hong Kong Singapore Singapore Singapore Thailand
Indicators GDP (Annualised) GDP (QOQ) Current Account (TOTAL) Current Account (ADJUSTED TOTAL) Trade balance (¥ Bn) Consumer Confidence (PTS) Machinery Tool Orders (YOY) Industrial Production (YOY) Manufacturing Sales (YOY) Unemployment Rate (%) Total Exports (YOY) Unemployment Rate, SA (%) Machine Orders (MOM) Machine Orders (YOY) Unemployment Rate, SA (%) Bank Lending to Households (KRW trillion) Japan International Securities Transaction Overnight Borrowing Rate (%) BOK Base Rate Bank Indonesia Reference Rate (%) Industrial Production (YOY) Producer Price (YOY) Retail Sales, SA (MOM) Retails Sales (YOY) Retail Sales ex-auto (YOY) Foreign Reserves
Period 1Q F 1Q F Apr Apr Apr May May P Apr Apr Apr Apr 1Q F Apr Apr May May 7 Jun 13 Jun 13 Jun 13 Jun 1Q 1Q Apr Apr Apr 7 Jun
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 6 of 6
MARKET UPDATE FOR ASEAN+3 13 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Global stock markets tumbled. Asian stocks ended in the red, taking the cue from overnight trading in Wall Street, as well as after the World Bank cuts its 2013 global growth forecast amidst concerns that central banks may pare monetary stimulus. The Nikkei closed at 20 percent below the May 22 high, entering what investors believed as a bear market. Stock markets in Philippines and Thailand are deep in the red, closing about 6 percent lower. As at 5.00 p.m. Singapore time, the Shanghai Composite lost 2.8 percent, Hong Kong’s Hang Seng gave back about 2.2 percent and the Jakarta Composite slipped 1.9 percent. Korea’s KOSPI and Singapore’s Straits Times dropped 1.4 percent and 0.9 percent, respectively.
•
Emerging markets act to stem capital flight. Emerging markets from Asia to Latin America took steps to stem an outflow of capital as concern mounts that developed nations are approaching the beginning of the end of an era pumping unprecedented liquidity. India’s central bank continued to step in to stem the rupee’s slide, while Brazil will eliminate a tax (effective tomorrow) on currency derivatives in a bid to arrest the decline of the real that is at a four year low. The yen surges past 94 per the USD for the first time in two months, as Japanese investors cut holdings of overseas stocks and bonds. Regional currencies are under selling pressure, with the peso sliding close to 0.3 percent, rupiah (-0.2 percent), won (-0.1 percent) and Singapore dollar slipping 0.2 percent. The Thai baht gained about 0.6 percent, reversing yesterday’s decline.
•
WTI crude declines on speculation that fuel demand will falter, outweighing concerns of unrest in the Middle East. West Texas Intermediate (WTI) oil for July delivery dropped as much as 64 cents to USD95.24 a barrel in electronic trading on the NYMEX. Brent for July settlement, which expires today, declined as much as 38 cents, or 0.4 percent, to USD103.11 a barrel on the London-based ICE Futures Europe exchange.
BREAKING NEWS GLOBAL •
World Bank sees softer global growth in 2013. The World Bank lowered its growth estimate for the global economy in 2013, but said that expansion appeared better balanced than just before the 2008 financial crisis. According to the World Bank, the global economy is expected to grow at an annual rate of 2.2 percent this year, led by a 5.1 percent surge in developing countries, down from January’s estimate of a 2.4 percent. Overall, the World Bank said that economic risks appeared to be diminishing and growth is more stable than in the run-up to the 2008 financial crisis that pitched the global economy into recession.
•
Australia jobless rate eases in May. Australia's unemployment rate eased to 5.5 percent in May, an unexpected fall that could see the central bank hold off on cutting interest rates next month. Economists had tipped a jobless figure of 5.6 percent, the same as the upwardly-revised April number. But the amount of people employed rose 1,100, the Australian Bureau of Statistics said today, compared with an expected fall of 10,000. The Page 1 of 8
Australian dollar gained half a U.S. cent, jumping to 94.90 U.S. cents from 94.41 immediately before the release of the data. Prime Minister Julia Gillard trumpeted the low unemployment rate as proof that the economy remained resilient. •
Retail sales in the U.S. probably climbed on pickup in car purchases. Retail sales in the U.S. probably increased in May by the most in three months as Americans took advantage of cheap borrowing costs to purchase new cars, according to economists before a report that is expected to be released later today. The median forecast of economists by Bloomberg expected a 0.4 percent gain, following a 0.1 percent advance in April.
•
U.K.’s inflation expectations risk becoming dislodged. U.K.’s inflation expectations risk becoming dislodged because consumer price growth has been elevated for such a long time, according to the Bank of England (BOE). In an article in the central bank’s Quarterly Bulletin, published in London today, the researcher said that prolonged period of abovetarget inflation could cause inflation expectations to become less well anchored, which could trigger changes in the nominal exchange rate, and affect consumption and investment decisions, as well as wages and prices. This would in turn cause inflation to persist above the target for a longer period of time. Inflation has exceeded the BOE’s 2 goal target every month since December 2009, and Chancellor of the Exchequer George Osborne revamped its mandate in March to give it more flexibility to set policy.
•
France pension deficit balloons. Thirty-two years after France’s first Socialist President Francois Mitterrand cut the retirement age by five years, his party’s successor at the Elysee Palace is telling the French preserving their way of life means staying in jobs longer. Tomorrow, the Hollande’s government will kick off a three-month long talk with employer and employee groups to save a state pension system that last year lost 14 billion euros (USD18 billion).
REGIONAL •
Indonesia unexpectedly raised key policy interest rate for the first time since 2011. Indonesia’s central bank unexpectedly raised its key interest rate for the first time since 2011 as Governor Agus Martowardojo accelerates efforts to boost confidence in the currency and cool inflation expectations. Bank Indonesia policy makers increased the reference rate by 25 bps to 6 percent. All 19 economists surveyed by Bloomberg News expected no change. The surprise increase comes after the central bank yesterday raised the rate it pays lenders on overnight deposits, and said that it is ready to buy government bonds from the secondary market to support the weakening rupiah.
•
Philippines kept policy rate unchanged. The Philippines held its benchmark interest rate and refrained from adding to cuts on its special deposit accounts as Southeast Asia economies battle capital outflows that have driven down stocks and currencies. Bangko Sentral ng Pilipinas kept the rate it pays lenders for overnight deposits at a record-low 3.5 percent, according to a statement in Manila today. It also held the rate on all SDAs at 2 percent.
Page 2 of 8
•
Hong Kong Chief Executive pledges property curbs to stay. According to Hong Kong Chief Executive, the government will not ease its real estate curbs until there is a steady supply of new properties. Earlier actions have brought down prices and rents, and the government can do more if needed, Chief Executive Leung Chun-Ying said in an interview in New York. An index of Hong Kong property stocks fell to the lowest in nine months, prompting concerns that the government should ease-off some of the curbs.
•
Korea leaves key policy interest rate unchanged at 2.5 percent. Korea’s central bank left its key interest rate unchanged as expected at 2.5 percent today after a surprise rate cut last month. The Bank of Korea's decision to freeze the rate followed hints of a recovery in Asia's fourth-largest economy whose exports grew at a faster-than-expected pace in May. Industrial output for April, announced in late May also rose for the first time in four months, fanning hopes for an economy that posted its slowest growth for three years.
•
Thailand’s rice pledging price may drop. There is a possibility that the crop pledging price of rice could be reduced from the current 15,000 baht per tonne for ordinary rice, according to Finance Minister Kittiratt Na-Ranong today. He said that the set price was suitable when the government first implemented the programme. But it is no longer a suitable price since the baht’s strength had caused operational losses to the scheme. Mr Kittiratt said that the government will carefully consider all related information and data before making any change to the pledging price.
•
China’s local debt audit is ‘credit negative’ according to Moody’s. China’s government risks being forced to bail out some local authorities and take over their liabilities after a report from the nation’s audit office showed a jump in borrowings, according to Moody’s Investors Service. The National Audit Office review indicates that total local government direct and guaranteed debt may have risen 13 percent to 12.1 trillion yuan (USD2 trillion) by end-2012 from end-2010, Moody’s said, citing its own calculations based on data in the report which showed a 13 percent increase in the debts of a sample 36 local authorities. Moody’s lowered its outlook for China’s sovereign credit rating to stable from positive in April, saying the nation has made less progress than anticipated in reducing risks from local-government debt and credit expansion. Earlier that same month, Fitch Ratings Ltd. cut China’s long-term local-currency debt rating, citing increasing dangers to the country’s financial stability given the lack of transparency in local authorities’ borrowing.
•
China’s PBOC halts open market operations first time since March. China’s central bank refrained from draining funds from the financial system for the first time in three months after a cash squeeze pushed up the overnight money-market rate to an all-time high. According to Bloomberg news, the People’s Bank of China (PBOC) has not offered repurchase contracts or bills today, according to two traders required to bid at the auctions. The central bank has held repo operations every week since February to drain cash and resumed sales of bills in May for the first time since December 2011. The overnight repo rate, which measures interbank funding availability, touched 9.78 percent on 8 June, the highest since May 2006, when the National Interbank Funding Centre started compiling the weighted average. China’s financial markets were shut in the first three days of the week for the Dragon Boat Festival holiday. The rate stood at 6.32 percent as of 10:39 a.m. in Shanghai today, little changed from 9 June, while the seven-day repo rate dropped by 34 bps to 5.63 percent. Page 3 of 8
•
The World Trade Organization (WTO) agreed to extend a waiver that frees some lower developed countries, such as Cambodia from enforcing intellectual property laws. The WTO agreed to extend a waiver that frees Cambodia from enforcing intellectual property laws for another eight years, a WTO official confirmed yesterday. Proponents hailed the decision as a means to allow Cambodia access to products and technology needed for development, while critics took the slightly different view that the lack of protections would stifle economic growth. Concerned by the amount of pirated products in Cambodia, Pily Wong, a Microsoft representative in the country and President of the Information Communication and Technology Business Association in Phnom Penh, says the WTO extension can deter foreign investment, limit innovation and create an unequal playing field for local competitors.
IFIs NEWS (compiled from their websites) BIS – Working Paper: “Foreign exchange intervention and expectation in emerging economies” • The BIS has publicised the captioned working paper. “Using monthly data for four selected emerging economies, sterilised central bank foreign exchange intervention is found to have little systematic influence on the near-term nominal exchange rate expectations in the direction intended by the central banks. In other words, central bank dollar purchases to stem exchange rate appreciation or related exchange rate volatility are not associated with an adjustment of the near-term exchange rate forecasts in the direction of depreciation, and vice versa. This suggests intervention may not change the nearterm exchange rate expectations. Moreover, intervention may have had unintended effects in the sense that it can lead to undesired volatility in the exchange rate, which is consistent with previous studies.” http://www.bis.org/publ/work414.htm IMF – Press Release: IMF Completes Seventh Review Under an EFF Arrangement with Portugal, Approves €657.47 Million Disbursement • On June 12, 2013, the Executive Board of the IMF completed the seventh review of Portugal’s performance under an economic program supported by a 3-year, SDR 23.742 billion (about €27.19 billion) Extended Fund Facility (EFF) arrangement. The following is an excerpt of the statement made by Ms. Nemat Shafik, Deputy Managing Director and Acting Chair of IMF at the conclusion of the Executive Board’s discussion: “Considerable progress has already been made on fiscal and external adjustment and the structural reform agenda, despite strong headwinds. Market conditions have improved significantly and Portugal has been able to return to capital markets at long maturities. Nonetheless, given the still sizable risks to the outlook, the authorities need to sustain the reform effort to improve competitiveness, boost longterm growth, and further advance fiscal consolidation.” http://www.imf.org/external/np/sec/pr/2013/pr13209.htm (Main Press Release) http://www.imf.org/external/np/sec/pr/2011/pr11190.htm (Press Release No 11/190 dated May 20, 2011: IMF Executive Board Approves an €26 Billion Extended Arrangement for Portugal)
Page 4 of 8
World Bank – Press Release: Laos and World Bank to end poverty and build shared prosperity • The World Bank Group and the Lao PDR have forged a constructive partnership for development lasting more than five decades, during which time, the Lao PDR has made significant strides in relation to poverty reduction. It has reduced the poverty headcount from almost half the population (46 percent) to about one quarter (27.6 percent) in just 15 years, and GNI per capita is now over US$1,200. It is now a lower middle income country, on track to move up the income ladder as many of its dynamic neighbours are doing. http://www.worldbank.org/en/news/opinion/2013/06/12/laos-and-world-bank-to-endpoverty-and-build-shared-prosperity World Bank – Publication: “Global Economic Prospects – June 2013: Less volatile, but slower growth” • Risks from advanced economies have eased and growth is firming, despite ongoing contraction in the Euro Area. However, the pick-up in developing countries will be modest because of capacity constraints in several middle income countries, says the World Bank in the newly-released Global Economic Prospects (GEP) report. “While there are markers of hope in the financial sector, the slowdown in the real economy is turning out to be unusually protracted,” mentioned by Mr Kaushik Basu, Senior Vice President and Chief Economist at the World Bank. “This is reflected in the stubbornly high unemployment in industrialized nations, with unemployment in the Eurozone actually rising, and in the slowing growth in emerging economies, with India’s annual growth having dropped below 6 percent for the first time in 10 years. Also, there is heightened speculation that the US may withdraw QE and widespread concern about its consequences. By going into these topical matters, the World Bank’s latest Global Economic Prospects alerts us to both the hopes and the risks in the global economy, and also gives valuable instructions on policy.” http://www.worldbank.org/en/news/press-release/2013/06/12/world-bank-expectsmuted-global-growth-led-by-developing-world (Press Release) http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/EXTGBLPROS PECTSAPRIL/0,,menuPK:659178~pagePK:64218926~piPK:64218953~theSitePK:659149,00. html (Report) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 12-Jun 13-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,886.00 9,861.00 9,885.00 Japan 86.75 97.56 96.02 94.36 Korea 1,064.40 1,116.79 1,133.70 1,134.43 Malaysia 3.06 3.10 3.13 3.13 Philippines 41.01 42.30 42.92 43.04 Singapore 1.22 1.25 1.26 1.25 Thailand 30.59 30.63 30.96 30.79 Vietnam 20,840.00 21,018.00 21,018.00 21,036.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
% change -0.02 0.00 -0.24 1.76 -0.06 -0.02 -0.28 0.19 0.55 -0.09
2013 YTD (%chg) 1.6 -0.2 -2.3 -7.4 -6.2 -3.1 -5.1 -2.6 -1.5 -0.9
Page 5 of 8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
12-Jun 2,210.9 21,354.7 4,697.9 13,289.3 1,909.9 1,775.1 6,556.7 3,153.5 1,433.5 518.2
OVERNIGHT LENDING RATE (%) 12-Jun 13-Jun bps change 4.500 7.300 280.00 0.076 0.077 0.14 4.380 4.400 2.00 0.095 0.095 0.00 2.500 2.500 0.00 3.000 3.000 0.00 1.070 0.725 -34.50 0.027 0.027 0.00 2.500 2.500 0.00 0.927 0.900 -2.70
13-Jun
% change
2,148.4 20,887.0 4,607.7 12,445.4 1,882.7 1,743.4 6,114.1 3,126.8 1,390.8 515.1
-2.83 -2.19 -1.92 -6.35 -1.42 -1.79 -6.75 -0.85 -2.98 -0.61
2013 YTD (%chg) -5.3 -10.4 6.0 19.7 -7.3 4.1 4.3 -2.3 -1.2 23.1
3-MONTH INTERBANK LENDING RATE (%) 12-Jun 13-Jun bps change 5.145 5.205 6.00 0.377 0.377 0.00 5.161 5.254 9.36 0.230 0.230 0.00 2.670 2.670 0.00 3.210 3.210 0.00 1.417 1.134 -28.30 0.373 0.373 0.08 2.600 2.600 0.00 3.783 3.675 -10.80
CREDIT DEFAULT SWAP (IN BPS) 11-Jun 12-Jun bps change China 101.46 101.46 0.00 Hong Kong SAR 48.94 48.94 0.00 Indonesia 215.38 215.38 0.00 Japan 78.07 79.05 0.98 Korea 91.14 91.14 0.00 Malaysia 104.38 104.38 0.00 Philippines 124.25 124.24 -0.01 Thailand 106.34 106.33 -0.01 Vietnam 235.54 235.53 0.00 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 12-Jun 13-Jun Gold Spot (in US$ per 1,389.0 1,387.0 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change -0.15
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Moody's Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
Fitch A+ AA+ BBBA+ AAABBBAAA BBB+ B+
Page 6 of 8
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
2013
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
Short-term external debt
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,371.0 0.5 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.9 8.5 9.8 Singapore 258.4 964.3 0.3 Thailand 175.3 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies Japan
Philippines Korea Indonesia
Indicators Japan International Securities Transaction - Japan buying foreign bonds (¥ bn) - Japan buying foreign stocks (¥ bn) - Foreign buying Japan bonds (¥ bn) - Foreign buying Japan stocks (¥ bn) Overnight Borrowing Rate (%) BOK Base Rate Bank Indonesia Reference Rate (%)
Period 7 Jun
13 Jun 13 Jun 13 Jun
Last
Previous
-386.9 -221.8 -280.0 113.6 3.50 2.50 6.00
-1,172.5 -137.3 -119.7 -191.1 3.50 2.50 5.75
SELECTED ECONOMIC RELEASES CALENDAR (10 – 14 JUNE 2013) Expected Release Date 6/10/2013
Economies Japan Japan Japan Japan Japan Japan
Indicators
Period
GDP (Annualised) GDP (QOQ) Current Account (TOTAL) Current Account (ADJUSTED TOTAL) Trade balance (¥ Bn) Consumer Confidence (PTS)
1Q F 1Q F Apr Apr Apr May
Page 7 of 8
6/11/2013
6/12/2013
6/13/2013
6/14/2013
Japan Malaysia Malaysia Philippines Philippines Singapore Japan Japan Korea Korea Japan Philippines Korea Indonesia Hong Kong Hong Kong Singapore Singapore Singapore Thailand
Machinery Tool Orders (YOY) Industrial Production (YOY) Manufacturing Sales (YOY) Unemployment Rate (%) Total Exports (YOY) Unemployment Rate, SA (%) Machine Orders (MOM) Machine Orders (YOY) Unemployment Rate, SA (%) Bank Lending to Households (KRW trillion) Japan International Securities Transaction Overnight Borrowing Rate (%) BOK Base Rate Bank Indonesia Reference Rate (%) Industrial Production (YOY) Producer Price (YOY) Retail Sales, SA (MOM) Retails Sales (YOY) Retail Sales ex-auto (YOY) Foreign Reserves
May P Apr Apr Apr Apr 1Q F Apr Apr May May 7 Jun 13 Jun 13 Jun 13 Jun 1Q 1Q Apr Apr Apr 7 Jun
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 14 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian stocks climbed, tracking gains from Wall Street. Asian stocks climbed encouraged by positive U.S. data on jobs and retail sales. As at 5.00 p.m. Singapore time, Japan’s Nikkei rose by 2.2 percent, the Shanghai Composite gaining by 0.6 percent, while the Hang Seng Index advanced by 0.9 percent. In southeast Asia, stock markets also increased due to bargain hunting following yesterday’s slump. The Philippines PSE in particular, climbed by 3 percent, while the Singapore’s STI and Malaysia’s KLCI gained close to 1 percent.
•
In the currencies market, Asian currencies gained, with the yen strengthening against most of its major counterparts as minutes of the Bank of Japan’s latest meeting showed concern communication about monetary-easing plans might be destabilising financial markets. The yen advanced by close to 0.4 percent, won (+0.7 percent) and the ringgit and the baht (+0.6 percent). However, Asian currencies mostly fell this week, led by the Philippine peso, the currency of which retreated by 1.3 percent to 42.805. The Korean won declined by 0.8 percent to 1,126.25. The Thai baht however, gained 0.4 percent this week to 30.52, halting seven weeks of losses following intervention by the Bank of Thailand.
•
WTI crude trades near three-week high on signs of better U.S. growth. WTI for July delivery stood at USD96.70 a barrel, up 1 cent, in electronic trading on the NYMEX.
BREAKING NEWS GLOBAL •
U.S. jobless claims fall in a second straight week. According to the U.S. Labour Department, new claims for U.S. unemployment insurance benefits fell for a second straight week last week. Initial jobless claims, a sign of the pace of layoffs, totalled 334,000 in the week ended 8 June, down 12,000 from the previous week. The four-week moving average of claims was 345,250, down from 352,500 a week earlier. That compared with 378,250 a year ago. Employment data for May released last week confirmed the economy continues to add jobs at a steady, modest pace.
•
Spain affirmed at BBB- by S&P on structural reform commitments. Spain’s credit rating was affirmed at BBB- by Standard & Poor’s, which said that the country’s commitment to the implementation of a comprehensive fiscal and structural reform agenda remains strong. The outlook on the long-term rating remains negative, which still shows the potential for a downgrade if political support on the current reform agenda dwindles, the budget “significantly” worsens, or policies in the euro area falter in stabilising the country’s funding costs. S&P added that Spain faces high external debt as well “relatively” low medium-term economic growth prospects and a highly segmented labour market.
•
FX rates said to face global regulation in LIBOR review. Global regulators may start overseeing currency rates in a widening response to benchmark-rate setting scandals that began with revelations on the manipulation of LIBOR. The International Organization of Securities Commissions, a Madrid-based group known as IOSCO that Page 1 of 8
harmonizes market rules, may propose final guidelines for improving transparency and oversight of benchmarks as soon as next month, according to people familiar with the issue. REGIONAL •
Korea’s pension fund to buy more overseas stocks and cut bond holdings. Korea’s National Pension Service (NPS), the nation’s biggest investor, plans to allocate more funds to overseas equities as it seeks to boost returns. The agency, which had KRW406 trillion (USD360 billion) in assets as of March, will raise the weighting of overseas stocks to 10.5 percent of its assets in 2014, the Ministry of Health and Welfare, which oversees the NPS, said in a statement today. That compares with the 2013 target of 9.3 percent. The fund is keeping its target for domestic equities unchanged at 20 percent and aims to pare domestic bond holdings to 54.2 percent of assets next year from 56.1 percent targeted for 2013.
•
China’s debt sale fails for the first time in 23 months. According to Bloomberg, China failed to sell all of the debt offered at an auction for the first time in 23 months owing to a cash squeeze that threatens to exacerbate a slowdown in the economy. The ministry sold 9.53 billion yuan (USD1.55 billion) of 273-day bills, less than the 15 billion yuan target, according to two traders at finance companies that participate in the auctions. It is reported that banks are hoarding money to meet quarter-end capital requirements at the same time as capital inflows are easing amid a worsening economic outlook and speculation the Federal Reserve will rein in monetary stimulus.
•
Bank of Japan (BOJ) urged to set easing time-limit to quell bond volatility. The Bank of Japan should specify a two-year limit for its unprecedented monetary easing to help quell bond-market volatility, according to one of the central bank’s board members. BOJ minutes released in Tokyo today show that the suggestion was made by the unidentified policy maker at a meeting held on 21-22 May. According to the board member and documented in the minutes, BOJ could state that easing “should be restricted to about two years” and then be reviewed “in a flexible manner”. Takahide Kiuchi is the board member previously publicly identified as favoring a time-frame of about two years.
•
Lao government urged to legalise Lao workers working in Thailand. Thailand has asked Laos to legalise thousands of workers employed illegally in Thailand by August, after officials of both countries met last week in Laos. The Lao Ministry of Labour and Social Welfare and Thailand's Labour Ministry met in the northern province of Luang Prabang to discuss labour cooperation and other related issues. According to the Director General of the Lao ministry's Skill Development and Employment Department, Mr Phouvanh Chanthavong, Laos will continue to legalise the thousands of Lao people still working in Thailand without legal documents. In 2012-2013, the Lao government legalised 9,700 Lao workers, leaving more than 56,000 people known to be still working in Thailand illegally.
•
Three Chinese firms eye tie-up for deep sea fishing off Brunei. Three companies from China have expressed interest in deep sea fishing prospects in waters off the sultanate's coast, according to the President of Brunei-China Friendship Association (BCFA). In an interview at BCFA headquarters in Gadong following a visit by Chinese media, Dr Hj Kamaruddin Dato Seri Paduka Hj Talib said that the companies are keen into harvesting Page 2 of 8
deep sea fish such as tuna, provided that more details on deep sea fishing in "Zone Four" is given by relevant authorities. Zone Four is an area that is untapped, and is the deepest and most outer end of Brunei waters. •
Vietnam businesses see red as admin reforms rolled back. With the issuance of the Business Law in 1999 and then its revision in 2005, it was said that Vietnam had succeeded in significantly reducing red tape. The laws scrapped many unnecessary licenses that businesses were asked to acquire. However, according to economists and business representatives, red tap has recently resurfaced in new regulations issued by state agencies. Le Dang Doanh, former head of the Central Institute for Economic Management (CIEM), said that add-on licenses have reappeared “a lot.” He added that these licenses are affecting the local business environment very negatively.
•
EU lets Myanmar back into preferential trade scheme. The European Union has readmitted Myanmar to a scheme allowing it to benefit from lower duties on exports, a further sign of the its rehabilitation following political reforms. Myanmar will return to the EU’s Generalised System of Preferences (GSP), having been forced out in 1997 due to systemic practices of forced labour. Ireland, which holds the rotating E.U. presidency, said in a statement. According to Richard Bruton, Irish Minister for Jobs, Enterprise and Innovation, “Given the positive developments in Myanmar, it is important that the E.U. supports this by facilitating economic growth and development opportunities”. The E.U.’s decision had been conditional on the International Labour Organization reporting improvements regarding forced labour, which it did a year ago.
•
Singapore’s retail sales fall lower-than-expected in April, while unemployment rate stayed steady in March. Singapore's retail sales fell by a lower-than-expected 0.5 percent in April 2013, according to data from Singapore's Department of Statistics released today. Economists polled had expected an on-year drop of about 3.0 percent in April after March's 7.4 percent plunge due to sharply lower COE prices. Excluding motor vehicles, April's retail sales went up marginally by 0.2 percent. In a separate report, job vacancies in Singapore rose in the first quarter of this year while unemployment remained low. Singapore’s seasonally adjusted overall unemployment rate stayed low at 1.9 per cent in March, compared to the 1.8 per cent registered in December 2012. The unemployment rate for Singapore residents rose to 2.9 per cent from 2.7 per cent while the citizen unemployment rate remained unchanged at 2.9 per cent.
•
Malaysia’s Prime Minister urges the EPF and other GLICs to step up involvement in smaller companies. The Employees Provident Fund (EPF) and other Government-linked investment companies in Malaysia should step up their involvement particularly in high quality mid-cap stocks, according to the Prime Minister, Datuk Seri Najib Tun Razak. The Prime Minister said the fund management industry, including public sector funds, should set specific objectives to increase the velocity of trades in the shares of such companies. He added that it is time for the government-linked investment companies (GLICs), especially the EPF, to step up and play a more prominent role, increasing market vibrancy particularly in good quality mid-cap stocks. Their participation would provide another avenue for companies to access primary and secondary funding to bring their businesses to the next stage of development, Najib said in his keynote address at the 2013 Invest Malaysia conference.
Page 3 of 8
•
New rate will hurt Indonesia’s growth prospects. Indonesia may see another downturn in economic growth after Bank Indonesia (BI) started a liquidity tightening campaign earlier this week by raising its key interest rate to contain inflation and stabilise the rupiah. According to economists, the higher interest rate would prevent the rupiah from further fall. However, the liquidity tightening would hurt investment and domestic demand, which would in turn affect economic growth. BI Deputy Governor Perry Warjiyo acknowledged the new policy rate would drag down the GDP growth. He added that following the hike, the tendency will be for our full-year economic growth to head toward 6.1 percent in 2013. IFIs NEWS (compiled from their websites) IFC – Press Release: IFC Supports Lao Government in Strengthening Management of Water Resources • IFC is supporting the Lao People’s Democratic Republic in revising its water law to foster equitable and sustainable management of water resources. “We support the Lao PDR government in consulting a broad range of stakeholders on the draft law to ensure that their different perspectives and needs are considered,” said Aimilios Chatzinikolaou, IFC’s resident representative in Lao PDR. “IFC is helping the government develop hydropower sustainably and economically so that the environment and local peoples’ livelihoods are protected at the same time.” http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/A2078E6A082C1B4685257B89 0026B13D IMF: Publication - Seventh Review under Extended Arrangement for Portugal • The IMF has publicised the following reports pertaining to IMF’s completion of the seventh review of Portugal’s performance under an economic program supported by a 3year, SDR 23.742 billion (about €27.19 billion) Extended Fund Facility (EFF) arrangement and Portugal authorities’ request for modification of the end-June 2013 performance criteria. •
•
Portugal: Seventh Review Under the Extended Arrangement and Request for Modification of End-June Performance Criteria—Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Portugal http://www.imf.org/external/pubs/ft/scr/2013/cr13160.pdf Portugal: Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding http://www.imf.org/External/NP/LOI/2013/PRT/061213.pdf
IMF –Working Papers • The IMF has publicised the following working papers: •
Does Public-Sector Employment Fully Crowd Out Private-Sector Employment? –“ We quantify the extent to which public-sector employment crowds out privatesector employment using specially assembled datasets for a large cross-section of developing and advanced countries, and discuss the implications for countries in the Middle East, North Africa, Caucasus and Central Asia. The findings indicate that high rates of public employment, which incur substantial fiscal costs, have a large negative impact on private employment rates and do not reduce overall Page 4 of 8
unemployment rates.” http://www.imf.org/external/pubs/ft/wp/2013/wp13146.pdf •
Fiscal Sustainability, Public Investment, and Growth in Natural Resource-Rich, LowIncome Countries: The Case of Cameroon – “This paper assesses the implications of the use of oil revenue for public investment on growth and fiscal sustainability in Cameroon. Policy scenarios show that Cameroon’s large infrastructural needs and relatively low current debt levels could justify a temporary deviation from traditional policy advice that suggests saving part of the oil revenue to smooth expenditure over time. Model simulations show that a relatively high degree of efficiency of public investment is needed for scaled-up public investment to make a significant contribution to growth, while maintaining fiscal sustainability.” http://www.imf.org/external/pubs/ft/wp/2013/wp13144.pdf
•
Investing Volatile Oil Revenues in Capital-Scarce Economies: An Application to Angola – “Natural resource revenues are an increasingly important financing source for public investment in many developing economies. Investing volatile resource revenues, however, may subject an economy to macroeconomic instability. This paper applies to Angola the fiscal framework developed in Berg et al. (forthcoming) that incorporates investment inefficiency and absorptive capacity constraints, often encountered in developing countries.” http://www.imf.org/external/pubs/ft/wp/2013/wp13147.pdf
•
Potential Output and Output Gap in Central America, Panama and Dominican Republic – “Potential Output is a key factor for debt sustaintability analysis and for developing strategies for growth, but unfortunately it is an unobservable variable. Using three methodologies (production function, switching, and state-space), this paper computes potential output for CAPDR countries using annual data. Main findings are: i) CAPDR potential growth is about 4.4 percent while output gap volatility is about 1.9 percent; ii) The highest-potential growth country is Panama (6.5 percent) while the lowest-growth country is El Salvador (2.6 percent); iii) CAPDR business cycle is about eigth years.” http://www.imf.org/external/pubs/ft/wp/2013/wp13145.pdf
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 13-Jun 14-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,886.00 9,885.00 9,875.00 Japan 86.75 97.56 95.37 95.03 Korea 1,064.40 1,116.79 1,134.43 1,126.25 Malaysia 3.06 3.10 3.13 3.11 Philippines 41.01 42.30 43.04 42.81 Singapore 1.22 1.25 1.25 1.25 Thailand 30.59 30.63 30.70 30.53 Vietnam 20,840.00 21,018.00 21,036.00 21,003.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
% change 0.07 0.03 0.10 0.36 0.73 0.60 0.53 -0.19 0.56 0.16
2013 YTD (%chg) 1.7 -0.1 -2.2 -8.1 -5.6 -2.6 -4.6 -2.4 -0.7 -0.8
Page 5 of 8
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
13-Jun 2,148.4 20,887.0 4,607.7 12,445.4 1,882.7 1,742.9 6,114.1 3,130.7 1,403.3 515.1
OVERNIGHT LENDING RATE (%) 13-Jun 14-Jun bps change 7.300 4.000 -330.00 0.077 0.078 0.07 4.400 4.407 0.71 0.095 0.095 0.00 2.500 2.500 0.00 3.000 3.000 0.00 0.725 -0.097 -82.20 0.036 0.036 0.00 2.500 2.500 0.00 0.900 0.920 2.00
14-Jun
% change
2,162.0 21,083.4 4,607.7 12,714.5 1,886.9 1,756.6 6,297.9 3,152.6 1,403.3 515.1
0.64 0.94 0.00 2.16 0.22 0.79 3.01 0.70 0.00 0.00
2013 YTD (%chg) -4.7 -9.6 6.0 22.3 -7.1 4.9 7.5 -1.5 -0.3 23.1
3-MONTH INTERBANK LENDING RATE (%) 13-Jun 14-Jun bps change 5.205 5.290 8.50 0.377 0.377 0.00 5.254 5.261 0.64 0.230 0.230 0.00 2.670 2.670 0.00 3.210 3.200 -1.00 1.134 0.844 -29.00 0.373 0.373 0.00 2.600 2.601 0.08 3.675 3.350 -32.50
CREDIT DEFAULT SWAP (IN BPS) 12-Jun 13-Jun bps change China 101.46 106.35 4.89 Hong Kong SAR 48.94 50.21 1.27 Indonesia 215.38 223.77 8.39 Japan 79.05 83.49 4.44 Korea 91.14 98.03 6.89 Malaysia 104.38 111.24 6.86 Philippines 124.24 132.91 8.67 Thailand 106.33 112.22 5.89 Vietnam 235.53 249.78 14.25 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 13-Jun 14-Jun Gold Spot (in US$ per 1,386.2 1,382.2 ounce) Sources: Bloomberg & Thomson Reuters Datastream CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
% change -0.29
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
Page 6 of 8
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
2013
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
Short-term external debt
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,385.2 0.5 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.9 8.5 9.8 Singapore 258.4 964.3 0.3 Thailand 175.3 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies Hong Kong Hong Kong Singapore Singapore Singapore Singapore Thailand
Indicators Industrial Production (YOY) Producer Price (YOY) Unemployment rate, SA (%) Retail Sales, SA (MOM) Retails Sales (YOY) Retail Sales ex-auto (YOY) Foreign Reserves
Period 1Q 1Q 1Q F Apr Apr Apr 7 Jun
Last 0.5 0.6 1.9 5.3 -0.5 0.2 176.5
Previous 1.3 -1.0 1.9 -5.5 -7.4 1.1 175.3
Page 7 of 8
SELECTED ECONOMIC RELEASES CALENDAR (10 – 14 JUNE 2013) Expected Release Date 6/10/2013
6/11/2013
6/12/2013
6/13/2013
6/14/2013
Economies Japan Japan Japan Japan Japan Japan Japan Malaysia Malaysia Philippines Philippines Singapore Japan Japan Korea Korea Japan Philippines Korea Indonesia Hong Kong Hong Kong Singapore Singapore Singapore Singapore Thailand
Indicators GDP (Annualised) GDP (QOQ) Current Account (TOTAL) Current Account (ADJUSTED TOTAL) Trade balance (¥ Bn) Consumer Confidence (PTS) Machinery Tool Orders (YOY) Industrial Production (YOY) Manufacturing Sales (YOY) Unemployment Rate (%) Total Exports (YOY) Unemployment Rate, SA (%) Machine Orders (MOM) Machine Orders (YOY) Unemployment Rate, SA (%) Bank Lending to Households (KRW trillion) Japan International Securities Transaction Overnight Borrowing Rate (%) BOK Base Rate Bank Indonesia Reference Rate (%) Industrial Production (YOY) Producer Price (YOY) Retail Sales, SA (MOM) Retails Sales (YOY) Unemployment rate, SA (%) Retail Sales ex-auto (YOY) Foreign Reserves
Period 1Q F 1Q F Apr Apr Apr May May P Apr Apr Apr Apr 1Q F Apr Apr May May 7 Jun 13 Jun 13 Jun 13 Jun 1Q 1Q Apr Apr 1Q F Apr 7 Jun
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 17 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian stocks rose, with the regional benchmark index heading for its biggest two-day advance since September, as investors await this week’s Federal Reserve meeting. Japan’s Topix Index jumped after falling the past four weeks. The MSCI Asia Pacific Index climbed 1.3 percent to 132.43 as of 3:14 p.m. in Tokyo, with almost three stocks gaining for every one that fell on the measure. Japan’s Topix index and benchmark Nikkei 225 Stock Average both gained 2.7 percent. Singapore’s Straits Times Index added 0.7 percent and Taiwan’s Taiex Index increased 0.7 percent. Hong Kong’s Hang Seng Index advanced 1.3 percent, while China’s Shanghai Composite Index climbed 0.1 percent. South Korea’s Kospi index fell 0.3 percent.
WTI Crude Trades Near Four-Month High as U.S. Arms Syria. West Texas Intermediate crude traded near the highest price in more than four months on renewed speculation that unrest in Syria will spread to other parts of the Middle East and disrupt supplies. WTI for July delivery was at $97.81 a barrel, down 4 cents in electronic trading on the New York Mercantile Exchange at 3:01 p.m. Singapore time
BREAKING NEWS GLOBAL
U.S Housing Market Probably Brightened in May. Sales of existing homes probably rose in May to a three-year high and builders began work on more new properties, extending gains in residential real estate that are boosting the U.S. expansion. Purchases of previously owned houses climbed 0.6 percent to a 5 million annualized rate, the strongest since November 2009, according to the median forecast of economists surveyed by Bloomberg ahead of a June 20 report from the National Association of Realtors. Housing starts may have increased to a 950,000 pace last month. The projected pace of existing-home sales in May, up from a 4.97 million annual rate in April, would be the fastest since a tax credit for first-time homebuyers was first due to expire in November 2009. It would be the third-highest since July 2007, five months before the start of the last recession
Economists See Risk of Australian Recession. Goldman Sachs said last week there was a one-in-five chance that Australia could tip into recession in the coming year—the first time it has flagged a risk of a contraction since the global financial crisis intensified in 2007. While a 20% risk may not sound too alarming, Goldman Sachs said that only once in the postwar period had a probability higher than this not resulted in a recession in Australia. The country's central bank has been trying to revive the economy by cutting rates seven times since late 2011. In May, the benchmark cash rate was reduced to a record 2.75%, lower even than in the depths of the financial crisis. The most ratesensitive sectors of the economy, including consumer spending and manufacturing, have been slow to respond to the rate cuts. The chief culprit has been the Australian dollar, which until recently had recorded its longest stretch above parity with the U.S. greenback in three decades, making the nation's exports less competitive. Goldman Sachs says a combination of better global growth, lower interest rates and a declining Page 1 of 7
local currency could be enough to keep the economy growing. But it lowered its forecast for economic growth to 1.9% in 2014, from a previous projection of 2.7%.
Italy Tries to Revive Economy. The Italian government has approved a new package of urgent measures aimed at restarting the country's economy, including a €3 billion ($4 billion) investment in infrastructure works and increased funding for small and midsize companies. The government decree, unveiled late Saturday after a six-hour cabinet meeting, is part of Prime Minister Enrico Letta's challenge to revive Italy's flagging economy which is now in its eighth consecutive quarter of contraction and facing record youth unemployment rates. The new measures release almost €3 billion for infrastructure work across the Italian regions—mainly focusing on improving the country's rail and highway networks—and aim to create some 30,000 new jobs in the sector. After the meeting, the Italian premier reiterated his commitment to keep the Italian deficit under 3% of gross domestic product, in line with EU rules.
U.K. Bank Fines on Risk Management Failures Rose Sevenfold. The U.K. markets watchdog increased fines for risk management failings by more than seven times last year, according to a report by the Chartered Institute of Internal Auditors. The Financial Services Authority, which was replaced in April by the Financial Conduct Authority, levied 292 million pounds ($458 million) in fines against firms that didn’t have adequate risk management and controls in place in 2012, up from 38 million pounds in 2011, the group said in an e-mailed survey. “The financial crisis and scandals like Libor and interest rate swaps mis-selling have underlined how easily weak internal controls can lead to inappropriate conduct, and, at the extreme, even let potentially criminal practices go unnoticed,” Ian Peters, chief executive officer of the CIIA, said in the statement.
Emerging-Market Fund Exodus Grows. Investors continued to pull money out of emerging-market bond and equity funds on increasing concerns about a tapering of the Federal Reserve's bond-buying program. During the week ended June 12, mutual-fund and ETF managers pulled out $8.9 billion in total, said data provider EPFR Global. This adds to the nearly $6 billion in outflows the previous week, bringing the total selling of emerging-market assets to nearly $15 billion. So far this year, emerging-market assets continue to be the worst-performing asset class. The widely followed sovereign debt benchmark index, J.P. Morgan Emerging Market Bond Index Global, has lost 6.1% this year, according to the index provider. Meanwhile, stocks have taken an even moresevere beating in emerging countries. The MSCI EM stock market index is down 9.6% on the year.
REGIONAL
Japan to Issue Bonds With Returns Linked to Inflation. Japan's Ministry of Finance is tiptoeing back into the inflation-linked bond market after a five-year hiatus, responding to investor demand for an investment tool to hedge against the Bank of Japan's inflation campaign and offering the government a channel to gauge its progress in changing price expectations. The ministry will issue two tranches of 10-year inflationprotected Japanese government bonds of ¥300 billion ($3.2 billion) each in October and January, it said Friday. The strength of demand for inflation-indexed bonds is seen as a good indicator of such expectations. A ministry analysis last month of the market for previously issued price-indexed bonds showed that investors see an average inflation Page 2 of 7
rate of about 2% over the next five years, as they assessed progress by Mr. Kuroda toward meeting his inflation target.
Singapore Exports Fall More Than Estimated on Electronics Slump. Singapore’s exports fell more than economists estimated in May as manufacturers shipped fewer electronics after an uneven global recovery hurt demand. Non-oil domestic exports slid 4.6 percent from a year earlier, after falling 1 percent in April, the trade promotion agency said in a statement today. The median of 10 estimates in a Bloomberg News survey was for a 0.2 percent drop. Shipments of electronics dropped 13.2 percent from a year ago, extending the slump to a 10th month. The World Bank last week cut its global growth forecast for 2013 after emerging markets from China to Brazil slowed more than projected, weakening prospects for Singapore’s trade-dependent economy. Analysts have lowered their estimate for the island’s export expansion this year to 2.5 percent from 4 percent, according to a survey by the central bank this month.
Rigged-Benchmark Probes Proliferate From Singapore to UK. The probe of Libor manipulation is proving to be the tip of the iceberg as inquiries into assets from derivatives to foreign exchange show that if there’s a chance to rig benchmark rates in world markets, someone is usually willing to try. Singapore’s monetary authority last week censured 20 banks for attempting to fix interest rate levels in the island state and ordered them to set aside as much as $9.6 billion. Last week, the Monetary Authority of Singapore said ING Groep NV, Royal Bank of Scotland and UBS were among 20 banks at which 133 traders tried to manipulate the Singapore interbank offered rate, swap offered rates and currency benchmarks in the city-state, after reviewing the period from 2007 to 2011. The regulator will make rigging key rates a criminal offense and bring supervision under its oversight.
Indonesia Debates Compensation for Fuel Price Increase. Indonesia’s parliament is set to decide today on a compensation plan for the poor that President Susilo Bambang Yudhoyono has made a precondition for raising fuel prices in Southeast Asia’s largest economy. Lawmakers are meeting for a plenary session to approve the government’s revised 2013 budget. Three out of nine factions in the commission rejected either the compensation program or a fuel price increase on Saturday. Approval for the fuel compensation program by parties in the coalition government, who hold the majority of seats in parliament, would enable Yudhoyono to increase subsidized fuel prices, which would reduce trade and current account deficits. The deficits have made the rupiah the worst performer in Asia after the Japanese yen among 11 most-traded currencies tracked by Bloomberg over the past year.
Vietnam’s Central Bank Says It Intervened to Slow Dong Decline. The State Bank of Vietnam said it intervened in the local foreign-exchange market to slow a slide in the dong fueled by increasing dollar demand from importers. The central bank “intervened with reasonable volume” as the currency declined after April, it said in a statement on its website today. The regulator aims to cap this year’s fluctuation in the dong at 3 percent, according to the statement. The dong lost 0.4 percent since April 30 as Vietnam’s trade deficit widened to $1.2 billion in May from $936 million the previous month. The State Bank will closely watch market developments and manage the exchange rate, seeking to encourage holding the dong and support exports, according to the statement. Page 3 of 7
IFIs NEWS (compiled from their websites) ADBI– Publication: “The Future of the World Trading System: Asian Perspectives” The ADBI and Centre for Economic Policy Research (CEPR) have published an electronic book which analyses the future of global trade and explores the policy implication for Asia. The essays in this VoxEU1 electronic book by leading Asian and international trade experts dissect key changes taking place in the world trading system. http://www.adbi.org/files/book.2013.06.14.future.world.trading.system.pdf BIS –Working Paper: “The interest rate effects of government debt maturity” The BIS has publicised the captioned working paper. “Federal Reserve purchases of bonds in recent years have meant that a smaller proportion of long-dated government debt has had to be held by other investors (private sector and foreign official institutions). But the US Treasury has been lengthening the maturity of its issuance at the same time. This paper reports estimates of the impact of these policies on long-term rates using an empirical model that builds on Laubach (2009). Central banks will face uncertainty not only about the true magnitude of maturity effects, but also about the size and concentration of interest rate risk exposures in the financial system. Nor do they know what the fiscal authorities and their debt managers will do as long-term rates change.” http://www.bis.org/publ/work415.htm IMF –Press Release: Iceland—Concluding Statement of an IMF mission for the 2013 Article IV Consultation and the Third Post-Program Monitoring Discussion • The IMF has publicised the 2013 Article IV Consultation Concluding Statement pertaining to its’ Mission to Iceland and also with regards to its’ Third Post-Program Monitoring Discussion. The following is an excerpt of the Concluding Statement: “Iceland’s economy is on a path to recovery and the outlook is for continued gradual expansion. The overarching challenge is to create a foundation for durable growth by resolving legacy problems from the previous boom and crash. This will require lifting capital controls without disrupting the external position, implementing durable measures to complete the fiscal adjustment, and further increasing the resilience of the financial sector.” http://www.imf.org/external/np/ms/2013/061413a.htm IMF –Press Release: United States of America— Concluding Statement of the 2013 Article IV Mission • The IMF has publicised the 2013 Article IV Consultation Concluding Statement pertaining to its’ Mission to the United States of America. The following is an excerpt of the Concluding Statement: “The U.S. recovery has remained tepid over the past year, but underlying fundamentals have been gradually improving. However, growth is expected to slow to 1.9 percent this year owing to an excessively rapid pace of fiscal deficit reduction, before accelerating to 2.7 percent next year. Risks to the outlook appear modestly tilted to the downside. Against this background, policymakers’ main challenge is to support the recovery while addressing the vulnerabilities that threaten growth, public finances, and financial stability in the medium term.” http://www.imf.org/external/np/ms/2013/061413.htm (Concluding Statement of IMF’s 2013 Article IV Mission to United States of America) Page 4 of 7
http://www.imf.org/external/mmedia/view.aspx?vid=2479953024001 (Press Conference on Conclusion of United States Article IV Consultation) 1
VoxEU.org is a policy portal set up by the Centre for Economic Policy Research (www.CEPR.org) in conjunction with a consortium of national sites. FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 14-Jun 17-Jun close China 6.23 6.13 6.13 6.12 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 9,875.00 9,888.00 Japan 86.75 94.31 94.31 94.88 Korea 1,064.40 1,126.25 1,126.25 1,126.25 Malaysia 3.06 3.11 3.11 3.13 Philippines 41.01 42.81 42.81 42.89 Singapore 1.22 1.25 1.25 1.25 Thailand 30.59 30.57 30.57 30.67 Vietnam 20,840.00 21,003.00 21,003.00 21,033.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
% change 0.11 0.03 -0.13 -0.60 0.00 -0.56 -0.17 -0.19 -0.33 -0.14
2013 YTD (%chg) 1.8 -0.1 -2.4 -7.9 -5.6 -3.1 -4.7 -2.7 -1.1 -0.9
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
14-Jun 2,162.0 20,969.1 4,760.7 12,686.5 1,889.2 1,762.2 6,242.3 3,161.4 1,465.3 509.0
OVERNIGHT LENDING RATE (%) 14-Jun 17-Jun bps change 4.000 4.800 80.00 0.078 0.075 -0.29 4.407 4.411 0.36 0.095 0.093 -0.25 2.500 2.500 0.00 3.000 3.000 0.00 -0.097 1.025 112.20 0.030 0.030 0.00 2.500 2.500 0.00 0.920 0.927 0.70
CREDIT DEFAULT SWAP (IN BPS) 13-Jun China 106.35 Hong Kong SAR 50.21 Indonesia 223.77 Japan 83.49 Korea 98.03 Malaysia 111.24 Philippines 132.91 Thailand 112.22 Vietnam 249.78
14-Jun 96.06 48.21 198.88 79.54 85.99 102.93 112.62 104.90 234.60
17-Jun 2,156.2 21,225.9 4,774.5 13,033.1 1,883.1 1,772.2 6,339.4 3,184.2 1,470.6 498.5
% change -0.27 1.22 0.29 2.73 -0.32 0.57 1.56 0.72 0.36 -2.06
2013 YTD (%chg) -5.0 -8.9 9.8 25.4 -7.3 5.8 8.2 -0.5 4.5 19.2
3-MONTH INTERBANK LENDING RATE (%) 14-Jun 17-Jun bps change 5.290 5.319 2.90 0.377 0.376 -0.07 5.261 5.258 -0.28 0.230 0.230 0.00 2.670 2.670 0.00 3.200 3.200 0.00 0.844 0.802 -4.20 0.373 0.373 0.00 2.601 2.600 -0.08 3.350 4.083 73.30
bps change -10.29 -2.00 -24.89 -3.95 -12.04 -8.31 -20.29 -7.32 -15.18
Page 5 of 7
Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 14-Jun 17-Jun Gold Spot (in US$ per 1,390.7 1,387.2 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change -0.25
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
2013
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
Short-term external debt
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,147.9 0.6 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.9 8.5 9.8 Singapore 258.4 964.3 0.3 Thailand 175.3 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 6 of 7
DATA RELEASES FOR THE DAY Economies
SINGAPORE SINGAPORE
Indicators
Non-oil Domestic Exports (YoY)% Electronic Exports (YoY)%
Period
Last
Previous
May May
-4.6 -13.2
-1.0 -9.0
SELECTED ECONOMIC RELEASES CALENDAR (17 – 21 JUNE 2013) Expected Release Date
6/17/2013
6/18/2013
6/19/2013
6/20/2013 6/21/2013
Economies
Indicators
Period
CHINA PHILIPPINES SINGAPORE SINGAPORE
Actual FDI (YoY)% Overseas Remittances (YoY)% Non-oil Domestic Exports (YoY)% Electronic Exports (YoY)%
May Apr May May
INDONESIA JAPAN JAPAN HONG KONG SOUTH KOREA MALAYSIA JAPAN JAPAN HONG KONG CHINA THAILAND MALAYSIA
Consumer Confidence Index Industrial Production YOY% Capacity Utilization (MoM)% Unemployment Rate SA% Producer Price Index (YoY)% CPI YoY % Merchnds Trade Exports YoY % Merchnds Trade Balance Total (JPY bn) CPI - Composite Index (YoY)% HSBC Flash China Manufacturing PMI Foreign Reserves (USD bn) Foreign Reserves (USD bn)
May Apr F Apr F May May May May May May Jun Jun 14 Jun 14
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 7 of 7
MARKET UPDATE FOR ASEAN+3 18 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
• Asian stocks swung between gains and losses as the Federal Reserve prepares for a two-
day policy meeting. Chinese developers fell on concern gains in home prices will limit scope for monetary easing. The MSCI Asia Pacific Index was little changed at 132.36 as of 3:15 p.m. in Tokyo, having swung between a gain of 0.3 percent and a loss of 0.6 percent. Japan’s Topix index closed 0.2 percent higher, erasing a loss of as much as 0.5 percent. The benchmark Nikkei 225 Stock Average dropped 0.2 percent after rising 0.8 percent. Hong Kong’s Hang Seng Index declined 0.4 percent and China’s Shanghai Composite Index added 0.1 percent. South Korea’s Kospi index climbed 0.9 percent and Singapore’s Straits Times Index jumped 1.4 percent.
BREAKING NEWS GLOBAL •
G-8 Leaders See Worst Over for World Economy. Leaders of the Group of Eight nations say that the worst has passed for the global economy, an aide to U.K. Prime Minister David Cameron said after summit talks on promoting employment and growth. While economic prospects remain weak, downside risks have abated thanks to actions taken by policy makers in the U.S., euro area and Japan, and due to the resilience of emerging-market economies, the aide said yesterday, following the first of a two-day meeting in Northern Ireland. European leaders said during the summit debate on the economy “that we have overcome the manifest crisis of confidence, but that a huge amount of work still lies ahead,” German Chancellor Angela Merkel said. Merkel also expressed concern about Japan’s effort to end two decades of economic stagnation, which includes bond-buying by the Bank of Japan and $102 billion in planned stimulus spending by Prime Minister Shinzo Abe. Merkel, who met Abe separately at the summit, said Japan’s budget deficit “surely has to be scaled back in the medium term.”
•
EU, U.S. Advance Free-Trade Deal. The U.S. and the European Union said they would start talks to build a free-trade agreement to boost growth and create jobs across the Atlantic, a deal that officials hope will strengthen the world's biggest two-way economic relationship. The talks' launch was announced by U.S. President Barack Obama, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy and U.K. Prime Minister David Cameron, who spoke in a joint news conference ahead of a meeting here of leaders from the Group of Eight. The first round of talks will take place next month in Washington, D.C. Officials want the trade pact to be ambitious: They hope it will largely eliminate trade tariffs and harmonize regulations across a broad range of industries, greasing the gears of transAtlantic trade and investment.
•
EU Car Sales Fall to 20-Year Low as Joblessness at Record. European Union car sales in May fell to a 20-year low as rising joblessness caused by a recession in the euro region contributed to falling demand. Registrations in the 27-member EU dropped 5.9 percent to 1.04 million vehicles from 1.11 million cars a year earlier, reaching the lowest level Page 1 of 9
for the month since 1993, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. The unemployment rate reached a record 12.2 percent in April in the 17 countries using the euro, and manufacturing output in the area contracted in May, extending a decline to almost two years. The carsales drop in May contrasts with growth in April that was the first gain in 19 months. Four of Europe’s five biggest automotive markets shrank in May. •
U.K. Inflation Accelerates on Record Air-Fare Increase for May. U.K. inflation accelerated more than economists forecast in May as a record jump in air fares for the month helped extend its persistence above the Bank of England’s 2 percent target. Consumer prices rose 2.7 percent from a year earlier, compared with 2.4 percent in April, the Office for National Statistics said in London today. On the month, prices increased 0.2 percent. Britons face a persisting squeeze in living costs as they endure inflation triple the rate of basic pay growth, which was 0.9 percent in the three months through April. Concerns on prices have prompted Bank of England policy makers to block a bid by outgoing Governor Mervyn King for more quantitative easing to aid an economy which has yet to build up momentum. The Bank of England held its bond purchase plan at 375 billion pounds ($588 billion) this month. Minutes of the meeting will be published tomorrow and will show whether King and two colleagues extended a push to increase bond purchases by 25 billion pounds.
•
Homebuilder Confidence in U.S. Rises to a Seven-Year High. Confidence among U.S. homebuilders surged in June to the highest level in seven years, reflecting gains in sales as Americans rushed to take advantage of low mortgage rates. The National Association of Home Builders/Wells Fargo index of builder sentiment rose 8 points, the biggest monthly increase since September 2002, to 52 during the month, the Washington-based group reported today. The reading, the highest since March 2006, exceeded all 50 forecasts in a Bloomberg survey in which the median was 45. Readings above 50 mean more respondents said conditions were good. “Builders are experiencing some relief in the headwinds that are holding back a more robust recovery,” David Crowe, the group’s chief economist, said in a statement. “Today’s report is consistent with our forecast for a 29 percent increase in total housing starts this year.”
•
Australia Held Rates to Boost Nonmining Economy. Australia's central bank left interest rates at a record low this month as conditions outside the mining industry looked weak, according to minutes of its June 4 policy meeting. A relatively tame inflation outlook "might" give it room to take interest rates even lower, the central bank said. The Reserve Bank in May cut interest rates to 2.75% amid a deepening slowdown in resources investment that has led mining companies to shed thousands of workers over the past year as major building work nears completion. The most ratesensitive sectors of the economy, including consumer spending and construction, have been slow to respond to the rate cuts, while other industries such as manufacturing and tourism have been struggling for years with a strong currency.
REGIONAL •
China Home-Price Gains Add to Dilemma on Cash Crunch. Chinese property prices rose at the fastest pace in more than two years in major cities, defying tougher government curbs and constraining the ability of policy makers to ease credit in response to Page 2 of 9
weakening economic growth. Today’s data showed the southern city of Guangzhou posted the biggest gain with prices rising 15 percent from a year earlier. Beijing prices climbed 12 percent, while they advanced 10 percent in Shanghai. 69 of the 70 cities tracked by the government showed increases, the most since August 2011, National Bureau of Statistics data showed today in Beijing. The property gains limit the ability of Premier Li Keqiang to counter an economic slowdown that showed signs of deepening in May. The central bank today refrained from adding cash to the financial system and money-market rates reached the highest level in seven years this month, a liquidity squeeze that Fitch Ratings says may accelerate a banking crisis. China’s oneyear interest-rate swaps rose to a 21-month high today. •
China's Foreign Direct Investment Rose in May. China attracted $9.3 billion of foreign direct investment in May, up 0.29% from a year earlier, the Ministry of Commerce said Tuesday. The result was above the $8.4 billion recorded in April, which was 0.4% higher than a year earlier. Foreign direct investment in the January-May period rose 1.03% from a year earlier to $47.6 billion, the ministry said in a statement. Nonfinancial overseas direct investment rose 20% from a year earlier in the year to May 31, to $34.3 billion
•
Abenomics Mobilizes Japan Homebuyers to Action. Japanese Prime Minister Shinzo Abe’s pledge to end 15 years of deflation has prompted the nation’s biggest banks to raise mortgage rates. Banks including Mitsubishi UFJ Financial Group Inc. raised mortgage rates for a second straight month after the Bank of Japan unveiled a plan in April to target a 2 percent inflation rate in two years, leading to an increase in benchmark bond yields. The supply of new apartments in Tokyo’s metropolitan area this year will reach the highest level since 2007 to meet rising demand, according to an estimate by the Real Estate Economic Institute. In May, the offering surged 49 percent to 4,967 apartments from a year ago, marking the biggest gain in more than a year, the researcher said on June 17. Housing starts nationwide gained by 6.2 percent to 893,002 units in the year ended March 31, the fastest pace since 1996, according to land ministry data. Still, an increase in a consumption tax scheduled for next year that also contributed to potential buyers taking action may now cap demand, said Mitsubishi Estate’s Takagi.
•
Indonesia Prepares to Raise Fuel Prices. Indonesian lawmakers on Monday set the stage for the government to raise the price of subsidized fuel for the first time in years, a move championed by economists but deeply unpopular with millions of voters. After more than 11 hours of deliberations, legislators voted to approve revisions to the state budget allowing for the distribution of cash aid to Indonesia's poorest citizens to help compensate for the fuel-price increases. Mr. Yudhoyono's administration is expected in the coming days to announce an increase in fuel prices, for the first time since 2008, by about 44% for low-grade gasoline and 22% for diesel. Indonesia imports about 40% of its fuel needs and the government has been sorely stretched, as global oil prices have generally climbed in recent years. With car sales reaching a record 1.1 million units in 2012, more than double the total just three years earlier, fuel subsidies have risen steadily to 212 trillion rupiah ($21.4 billion) in 2012 from just 45 trillion rupiah in 2009. The Ministry of Finance has said that without raising the prices of gasoline and diesel fuel, the subsidy could rise to 297 trillion rupiah this year, about 50% more than the
Page 3 of 9
budgeted amount. The central bank says the fuel price increases will push inflation to 7.8%, beyond its 3.5%-5.5% target. •
Philippines Plans Peso Linker Before Global Bond: The Philippines plans to sell its first inflation-linked bonds in the fourth quarter before returning to the global debt market in 2014 after a year’s absence, Treasurer Rosalia de Leon said. The Treasury will meet investors including insurance companies to gauge interest in peso-denominated linkers to be offered by year-end, de Leon, 52, said in an interview at her office in Manila yesterday. The government may meet 10 percent of its funding needs overseas next year by selling $1 billion of notes and borrowing another $1 billion from lenders such as the World Bank and Asian Development Bank, she said. The government estimates overseas borrowing, including concessional loans, will help meet 6 percent of its funding needs this year, compared with 14 percent in 2012, she said. The funding plan is preliminary and the final numbers will be submitted to Congress along with the 2014 budget proposal in late July, she said. The Treasury will probably buy about $2 billion from Bangko Sentral to pay offshore debt this year, according to de Leon.
•
Thai Rice Aid Under Fire. Thailand's government took a step toward disclosing the full cost of its rice-price support program, saying it had lost 136 billion baht, or $4.4 billion, on the subsidy from fall 2011 to September 2012. Along with tax rebates for first-time house and car buyers, Ms. Yingluck's government introduced the rice subsidy after a landslide election win in 2011 to help boost rural incomes. Government officials began buying up rice at about 15,000 baht, or about $500, a ton, some 50% above the market price. Rival exporters, including India and Vietnam, stepped up production and were selling rice at about $150 to $170 a ton less than Thailand, toppling Thailand from its perch as the world's top exporter and leaving it with stockpiles estimated by the U.S. Department of Agriculture at about 17 million tons of milled rice. The 136 billion baht loss is calculated based on what Thailand would lose by selling the rice at the prevailing global price. The political and economic fallout from the subsidy has increased in recent weeks, especially after Moody's Investors Service warned that the cost of the program could potentially affect Thailand's Baa1 credit rating despite its relatively strong economy.
•
Malaysia’s PM to head new fiscal policy committee to reduce deficit, increase growth. PM Najib will head a newly set up committee, made up of ministers and government's heads of departments, to manage the fiscal policy of the nation. “Our aim is to meet the medium-term fiscal deficit target of around 3% of GDP by 2015 without jeopardising the growth momentum of the domestic economy and ongoing fiscal support for transformation initiatives," he said when announcing the formation of the committee at the start of the Budget 2014 Consultative Council's meeting here on Tuesday. "This is our commitment to strengthen efforts in managing our fiscal policy,” he said. Najib, who is also Finance Minister, said the government would continue to work towards reducing the fiscal deficit further from 4.5 % of GDP last year to 4% this year.
•
Vietnam Says Asset Company Will Start Operations in Mid-July. State Bank of Vietnam plans to start operations of its asset management company in mid-July to clean up nearly $5 billion of bad debt at lenders and accelerate the country’s banking restructuring process. Prime Minister Nguyen Tan Dung last month approved the Page 4 of 9
formation of an asset management company, effective July 9, that will acquire nonperforming loans from lenders. Lenders with bad-debt ratios of 3 percent and above will be required to sell their non-performing loans to the asset management company, according to a May 22 government statement. The company will have an initial registered capital of 500 billion dong ($24 million) and be overseen by the central bank. The asset management firm is expected to resolve about 100 trillion dong of bad debt, and aim to clear 40 trillion dong to 70 trillion dong of non-performing loans this year. Vietnam’s banks reported bad debt made up 4.51 percent of total loans as of the end of March, Deputy Prime Minister Nguyen Xuan Phuc said on May 20. That figure compares with the central bank’s estimate of 7.8 percent at the end of 2012. •
Vietnam Adds to Dong Intervention With Plan to Cut Dollar Rates. The State Bank of Vietnam is considering lowering the maximum interest rate that lenders can offer on dollar deposits to curb demand for the U.S. currency, Nguyen Thu Ha, deputy head of monetary policy at the central bank, said in a telephone interview in Hanoi today. She said no timeframe has been set. The cap will be cut “sharply,” news website VnExpress reported yesterday, citing central bank Governor Nguyen Van Binh. The move comes as Asian policy makers seek to temper declines in their currencies amid concern a reduction in U.S. monetary easing will spur capital outflows, putting pressure on inflation as exchange rates weaken. The State Bank intervened “with reasonable volume” to slow a slide in the dong fueled by increasing dollar demand from importers, according to a statement on its website yesterday. The local currency tested the upper limit in which it’s allowed to trade for a second day. The central bank caps rates on dollar deposits for individuals at 2 percent, compared with 7.5 percent for the dong. The government has embarked on an “anti-dollarization” program to reduce the use of the greenback and cut black market trading.
IFIs NEWS (compiled from their websites) ADB – Press Release: ADB Loan Revitalizes Old Silk Road Outpost in China's Poor Northwest • The ADB is providing a $100 million loan to revitalize Jiuquan City, a former outpost along the Silk Road located in the under-developed northwestern region in the People’s Republic of China (PRC). The loan from ADB will be used to improve the roads in the city to relieve congestion, making it easier for people to get to their jobs, expand farm-tomarket routes for nearby rural areas, and provide betters links to the nearby city of Jiayuguan. http://www.adb.org/news/adb-loan-revitalizes-old-silk-road-outpost-prcs-poornorthwest (Press Release) http://www.adb.org/projects/45506-002/main (Project’s Details: Project Date Sheet (PDS), Overview -45506-002: Gansu Jiuquan Integrated Urban Environment Improvement) IFC –Press Release: IFC Supports OJK in Improving Corporate Governance in Indonesia • IFC and Indonesia’s financial services authority Otoritas Jasa Keuangan signed an agreement on June 17, 2013 to improve corporate governance standards in the country, which will help strengthen its financial system and lead to sustainable economic growth. “Good corporate governance standards and practices help improve the competitiveness Page 5 of 9
and sustainability of businesses, ultimately fostering economic development,” said Sérgio Pimenta, IFC Director for East Asia and Pacific. “Our cooperation with Indonesia’s OJK will help strengthen the country’s financial system.” http://ifcext.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/EBDF33EB2847E92685257B8D 0034CEFF IMF –Press Release: IMF Concludes 2013 Article IV Mission to Thailand • An IMF mission visited Bangkok during May 29 – June 13, to conduct the 2013 Article IV consultation discussions. The following is an excerpt of a statement made by Mr Luis E. Breuer, Mission Chief of IMF at the conclusion of the Mission: “The Thai economy has shown an impressive resilience to shocks, including the global financial crisis, supply-chain disruptions following the tsunami in Japan, and the devastating 2011 floods. Economic fundamentals are strong, including a track record of growth, stability and fiscal discipline, healthy balance sheets of commercial banks and corporations, high international reserves, and manageable public debt. The mission welcomes the authorities’ commitment to fiscal discipline, including their objectives of keeping the public debt ratio under 50 percent of GDP and balancing the central government budget by 2017.” http://www.imf.org/external/np/sec/pr/2013/pr13212.htm IMF –Press Release: IMF Completes Tenth Review Under the Extended Fund Facility Arrangement for Ireland and Approves €0.95 Billion Disbursement • On June 17, 2013, the Executive Board of the IMF completed the tenth review of Ireland’s performance under an economic program supported by a three-year, arrangement under the Extended Fund Facility (EFF), for the equivalent of SDR 19.4658 billion (about €22.28 billion or about US$29.71 billion) or the equivalent of 1,548 percent of Ireland’s IMF quota. http://www.imf.org/external/np/sec/pr/2013/pr13218.htm (Main Press Release) http://www.imf.org/external/np/sec/pr/2010/pr10496.htm (Press Release No 10/496 dated December 16, 2010: IMF Executive Board Approves €22.5 Billion Extended Arrangement for Ireland) OECD –Publication: “A Step Change in Tax Transparency” • The OECD has presented to G8 leaders the steps needed to create a fairer and more transparent global tax system. A new OECD report,” A Step Change in Tax Transparency”, prepared at the request of the G8 for the Lough Erne Summit in June 2013, outlines four concrete steps needed to put in place a global, secure and cost effective model of automatic exchange of information. The report follows the G20 Finance Minister’s endorsement in April 2013 of automatic exchange of information for tax purposes as the expected new standard. http://www.oecd.org/newsroom/oecd-reports-to-g8-on-global-system-of-automaticexchange-of-tax-information.htm (Press Release) http://www.oecd.org/ctp/exchange-of-tax-information/taxtransparency_G8report.pdf (Report) UNCTAD and OECD – Publication: “UNCTAD-OECD Report on G20 Investment Measures (9th Report, June 2013)” • The UNCTAD and OECD have publicised a joint report for the above-stated topic. http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=538 (Press Release) http://unctad.org/en/PublicationsLibrary/unctad_oecd2013d9_en.pdf (Main Report) Page 6 of 9
http://unctad.org/en/PublicationsLibrary/unctad_oecd2013d9_summary_en.pdf (Summary: Reports on G20 Trade and Investment Measures for the period from MidOctober 2012 to Mid-May 2013) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 17-Jun 18-Jun close China 6.23 6.13 6.12 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 9,888.00 9,908.00 Japan 86.75 94.31 94.51 95.13 Korea 1,064.40 1,126.25 1,126.25 1,130.96 Malaysia 3.06 3.11 3.13 3.15 Philippines 41.01 42.81 42.89 43.12 Singapore 1.22 1.25 1.26 1.26 Thailand 30.59 30.57 30.67 30.79 Vietnam 20,840.00 21,003.00 21,033.00 21,036.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
2013 YTD (%chg) 1.7 -0.1 -2.6 -8.2 -6.0 -3.7 -5.2 -3.1 -1.5 -0.9
% change -0.07 0.02 -0.20 -0.65 -0.42 -0.67 -0.53 -0.32 -0.39 -0.01
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
17-Jun 2,156.2 21,225.9 4,774.5 13,033.1 1,883.1 1,772.2 6,339.4 3,183.4 1,471.0 498.5
OVERNIGHT LENDING RATE (%) 17-Jun 18-Jun bps change 4.800 5.700 90.00 0.075 0.075 0.00 4.411 4.425 1.43 0.093 0.093 0.00 2.500 2.500 0.00 3.000 3.000 0.00 1.025 0.812 -21.30 0.029 0.029 0.00 2.500 2.500 0.00 0.927 0.911 -1.60
18-Jun
% change
2,159.3 21,225.9 4,840.5 13,007.3 1,900.6 1,774.2 6,518.8 3,230.7 1,460.7 498.9
0.14 0.00 1.38 -0.20 0.93 0.11 2.83 1.49 -0.70 0.07
2013 YTD (%chg) -4.8 -8.9 11.4 25.1 -6.4 5.9 11.2 0.9 3.8 19.2
3-MONTH INTERBANK LENDING RATE (%) 17-Jun 18-Jun bps change 5.319 5.329 1.00 0.376 0.378 0.11 5.258 5.265 0.71 0.230 0.230 0.00 2.670 2.670 0.00 3.200 3.200 0.00 0.802 1.097 29.50 0.373 0.373 0.00 2.600 2.600 0.00 4.083 3.875 -20.80
CREDIT DEFAULT SWAP (IN BPS) 14-Jun 17-Jun bps change China 96.06 91.17 -4.89 Hong Kong SAR 48.21 47.69 -0.52 Indonesia 198.88 190.86 -8.02 Japan 79.54 81.02 1.48 Korea 85.99 81.56 -4.43 Malaysia 102.93 95.10 -7.83 Philippines 112.62 109.71 -2.91 Thailand 104.90 98.06 -6.84 Vietnam 234.60 229.95 -4.65 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.
Page 7 of 9
17-Jun 18-Jun Gold Spot (in US$ per 1,385.3 1,379.3 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change -0.43
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
2013
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
Short-term external debt
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,147.9 0.6 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.9 8.5 9.8 Singapore 258.4 964.3 0.3 Thailand 175.3 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 8 of 9
DATA RELEASES FOR THE DAY Economies
CHINA JAPAN JAPAN HONG KONG SOUTH KOREA
Indicators
Actual FDI (YoY)% Industrial Production YOY% Capacity Utilization (MoM)% Unemployment Rate SA% Producer Price Index (YoY)%
Period
Last
May Apr F Apr F May May
Previous
0.3 -3.4 1.6 3.4 -2.6
0.4 -2.3 -0.8 3.5 -2.8
SELECTED ECONOMIC RELEASES CALENDAR (17 – 21 JUNE 2013) Expected Release Date
6/17/2013
6/18/2013
6/19/2013
6/20/2013 6/21/2013
Economies
Indicators
Period
CHINA PHILIPPINES SINGAPORE SINGAPORE
Actual FDI (YoY)% Overseas Remittances (YoY)% Non-oil Domestic Exports (YoY)% Electronic Exports (YoY)%
May Apr May May
INDONESIA JAPAN JAPAN HONG KONG SOUTH KOREA MALAYSIA JAPAN JAPAN HONG KONG CHINA THAILAND MALAYSIA
Consumer Confidence Index Industrial Production YOY% Capacity Utilization (MoM)% Unemployment Rate SA% Producer Price Index (YoY)% CPI YoY % Merchnds Trade Exports YoY % Merchnds Trade Balance Total (JPY bn) CPI - Composite Index (YoY)% HSBC Flash China Manufacturing PMI Foreign Reserves (USD bn) Foreign Reserves (USD bn)
May Apr F Apr F May May May May May May Jun Jun 14 Jun 14
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 9 of 9
MARKET UPDATE FOR ASEAN+3 19 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian Stocks Advance as Topix Rallies on Japanese Exports. Asian stocks rose, with the regional benchmark index heading for a two-week high, as investors awaited the conclusion of a Federal Reserve policy meeting and Japanese exporters rallied after the nation’s shipments increased more than analysts estimated. The MSCI Asia Pacific Index advanced 1 percent to 133.06 as 3:40 p.m. in Tokyo, with about three shares rising for every two that fell on the gauge. Japan’s Topix index advanced 1.9 percent and the benchmark Nikkei 225 Stock Average gained 1.8 percent. China’s Shanghai Composite Index fell 0.7 percent, heading for its lowest close since Dec. 13 amid signs a cash crunch is worsening in the mainland. Hong Kong’s Hang Seng Index dropped 0.4 percent. South Korea’s Kospi index lost 0.7 percent and Singapore’s Straits Times Index slipped 0.2 percent.
WTI Crude Trades Near Nine-Month High as U.S. Stockpiles Decline. West Texas Intermediate crude traded near the highest price in nine months after an industry report showed U.S. stockpiles dropped last week. West Texas Intermediate for July delivery, which expires tomorrow, rose 24 cents to $98.68 a barrel in electronic trading on the New York Mercantile Exchange at 2:52 p.m. Singapore time. Prices climbed 67 cents to $98.44 yesterday, the highest close since Sept. 14. The more-active August contract gained 25 cents to $98.92. Brent for August settlement increased 16 cents to $106.18 a barrel on the London-based ICE Futures Europe exchange.
BREAKING NEWS GLOBAL
Inflation Pressure in Check as Consumer Prices Edge Up 0.1%. U.S. consumer prices ticked up in May as weak growth abroad and slow wage gains at home kept inflation pressures contained. The consumer-price index rose a seasonally adjusted 0.1% last month, the Labor Department said Tuesday, driven by higher rents, airfares and energy costs. While the data suggest prices are stabilizing after two months of declines, even with May's small gain, consumer prices are up only 1.4% from a year earlier. The latest report showed that four years into the economic recovery, demand still remains too weak for firms to push prices higher and unemployment too high for workers to secure significantly higher wages.
Housing Starts Rise 6.8% as Builders Position for Demand Pickup. Home builders stepped up construction of apartment buildings in May and prepared to boost construction of single-family homes, the latest signs that an improving housing market will support the shaky U.S. recovery. Overall housing starts rose 6.8% in May from a month earlier to a seasonally adjusted annual rate of 914,000 units, the Commerce Department said Tuesday. That level was nearly 29% higher from a year ago. A separate report Monday by the National Association of Home Builders showed that builders' confidence in home-sales conditions surged this month to levels not seen since the
Page 1 of 7
mid-2000s housing boom. Housing is benefiting right now from low interest rates and prices that, while rising, are below their peak.
Cyprus Asks Creditors to Help Biggest Bank. Cyprus has asked its European partners to help ease a cash crunch at the island's biggest lender. In a letter sent to European leaders, Cyprus President Nicos Anastasiades said the success of the island's bailout depended on Bank of Cyprus PCL's survival, and he criticized capital controls put in place as part of the deal, which he said are severely damaging the economy. Under an April agreement, Cyprus agreed to take some €13 billion ($17.3 billion) of measures to cut its deficit and restructure its banking system in exchange for a €10 billion loan from its euro-zone peers and the IMF. At the same time, the government shut the island's second-biggest bank, Cyprus Popular Bank PCL—also known as Laiki—and is merging it into the largest, Bank of Cyprus, which would undergo its own restructuring. At issue is the outstanding liabilities Cyprus's two banks have to the island's central bank—money that was provided to them to meet their short-term cash needs on an emergency basis. Under the terms of the bailout, Bank of Cyprus assumed all of those liabilities from Laiki—about €9 billion—but without accompanying assets—particularly Laiki's Greek operations, which were sold off as part of the deal.
REGIONAL
PBOC Sacrifices Growth as Bank Curbs Invert Swaps. China’s interest-rate traders are the most pessimistic on economic growth in 21 months. The five-year interest-rate swap, which exchanges fixed payments for the floating seven-day repurchase rate, was 32 basis points below the one-year rate as of 11:26 a.m. in Shanghai, the biggest discount since September 2011, data compiled by Bloomberg show. The shorter contract jumped 22 basis points today to 4.2 percent after the finance ministry’s 10-year bond sale drew the lowest bid-to-cover ratio since August 2012. An inverted swap curve is a further sign of waning confidence about the prospects for the world’s second-largest economy. The one-year swap rate rose the most since August 2011. HSBC expects the swap curve to stay inverted until the end of July. A slowdown in capital inflows has contributed to the cash shortage. Yuan positions at local financial institutions accumulated from sales of foreign exchange, an indication of capital flows into China, rose 66.86 billion yuan in May, the central bank reported on June 14. That was the smallest gain since November.
HKMA Adds HSBC to Its Investigation of Hibor. The global rate-fixing investigation idened Tuesday as Hong Kong's de facto central bank said it was investigating HSBC Holdings PLC and other banks about the possible rigging of local benchmark interest rates. The investigation by the Hong Kong Monetary Authority was begun in December, when HKMA said it was looking at UBS AG after receiving information from overseas regulators about alleged possible misconduct by the Swiss banking giant.
Japan Exports Surge, but Trade Deficit Persists. Japanese exports jumped an unexpected 10.1% in May from the year-earlier month as a fall in the yen helped push up the value of goods sold abroad, but a robust flow of imports from China and other Asian nations kept the nation's overall trade balance deep in the red. Japan racked up a ¥993.9 billion ($10.42 billion) trade deficit in May, compared with a ¥907.9 billion deficit in the year-earlier month, data from the Ministry of Finance showed Wednesday. An official briefing reporters on the data attributed the deficit, which was Page 2 of 7
the third-largest on record, to sharply higher imports of petroleum products and communications devices. The official also said the import bills in May from China and the greater Asian region were the largest on record, although Japan's exports to China increased 8.3% on year and exports to Asia grew 11.1%.
Kuroda Says BOJ Can Ease More If Conditions Change Significantly. Bank of Japan Governor Haruhiko Kuroda said that the central bank could add to its unprecedented monetary easing announced two months ago should economic conditions change significantly. The April 4 package could be expanded or reduced as needed, Kuroda told lawmakers today. The BOJ said in its latest statement that it will make policy adjustments “as appropriate.” While the BOJ has laid out a two-year plan for doubling the monetary base, that doesn’t mean that no further actions will be taken over that period, Kuroda told parliament today.
Foreigners' JGB-Buying Wanes at End-March as Yen Weakens. Overseas investors continued to slash their holdings of Japanese government debt in the first quarter of this year, Bank of Japan data showed Wednesday, a sign their appetite for hedging the risk of the yen's sharp rise receded amid continued yen weakening since November. The balance of short- and long-term Japanese government debt held by foreign investors stood at a preliminary Y81.5 trillion yen at the end of March, or 8.4% of total outstanding debt, according to quarterly data released by the BOJ. That was lower than Y82.5 trillion at the end of December, or 8.6% of the total. The balance has been on a declining trend after hitting a record Y86.0 trillion, or 9.1% in the third quarter of last year. Meanwhile, foreign investors increased their investment in the Japanese stocks on high expectations for "Abenomics"--a combination of aggressive monetary easing, government spending and structural reforms pledged by Prime Minister Shinzo Abe.
Indonesia’s Opposition Party Rallies Against Fuel Price Increase. About 600 members of Indonesia’s biggest opposition party protested in Jakarta today against a government plan to raise subsidized fuel prices. Supporters and officials of the Indonesian Democratic Party of Struggle, or PDI-P, gathered in Central Jakarta and urged the public to reject the proposed fuel policy. PDI-P, led by former President Megawati Soekarnoputri, lost a parliament vote on June 17 to block approval of the revised 2013 state budget, which paves the way to raise prices of subsidized fuel.
Vietnam Leader Visiting China Seeks Export Gain. Talks between the presidents of Vietnam and China, their first meeting since China’s leadership change, will focus on bolstering economic ties even as tensions rise over disputed territory in the South China Sea. Vietnam President Truong Tan Sang is set to meet President Xi Jinping during a three-day visit starting today, Chinese Foreign Ministry Spokeswoman Hua Chunying said June 14. Sang, will address disputes over islands and energy resources in the South China Sea while seeking Chinese investment to boost Vietnam’s economy. China’s trade with Vietnam is less than many other Asian countries, including those with a smaller population than Vietnam’s 89 million people. In the first five months of the year, twoway trade amounted to $24.4 billion, a 33.8 percent rise from the year-earlier period, according to Chinese customs figures. During the same period, China’s trade with Singapore was $30.7 billion and its trade with Malaysia was $43.1 billion. Vietnam’s trade deficit with China is widening. China recorded a trade surplus with Vietnam of
Page 3 of 7
more than $11 billion from January through May, with exports to Vietnam rising almost 46 percent and imports increasing almost 10 percent, Chinese trade figures show. IFIs NEWS (compiled from their websites) IMF – Press Release: Statement at the Conclusion of the IMF’s 2013 Article IV Consultation Mission to the Russian Federation A staff team from the IMF, headed by Mr. Antonio Spilimbergo, visited Moscow during June 5 - 18 to hold discussions for the 2013 Article IV consultation. The following is an excerpt of a statement made by Mr Spilimbergo at the conclusion of the Mission: “Russia’s growth has slowed while inflation remains high. Ambitious economic policy reforms are necessary to realize the Russian economy's medium-term potential and reduce its vulnerabilities. The fiscal stance in 2013 is appropriate, while more ambitious medium-term fiscal adjustment and higher savings would be beneficial. Monetary policy should remain geared towards achieving inflation objectives and a strong supervisory framework remains essential to financial stability and growth. Improving Russia’s business climate would provide needed impetus to investment, diversification, and growth.” http://www.imf.org/external/np/sec/pr/2013/pr13215.htm FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 18-Jun 19-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 9,908.00 10,026.00 Japan 86.75 94.31 95.33 95.08 Korea 1,064.40 1,126.25 1,130.96 1,130.59 Malaysia 3.06 3.11 3.15 3.15 Philippines 41.01 42.81 43.12 43.15 Singapore 1.22 1.25 1.26 1.26 Thailand 30.59 30.57 30.87 30.72 Vietnam 20,840.00 21,003.00 21,036.00 21,033.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
2013 YTD (%chg) 1.7 -0.1 -3.7 -8.1 -5.9 -3.7 -5.3 -3.0 -1.3 -0.9
% change 0.02 0.02 -1.18 0.26 0.03 0.06 -0.07 0.29 0.49 0.01
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
18-Jun 2,159.3 21,225.9 4,840.5 13,007.3 1,900.6 1,774.1 6,518.8 3,229.6 1,427.4 498.9
OVERNIGHT LENDING RATE (%) 18-Jun 19-Jun bps change 5.700 7.870 217.00 0.075 0.079 0.43 4.425 4.436 1.07 0.093 0.093 0.00 2.500 2.500 0.00 3.000 3.000 0.00
19-Jun 2,143.5 20,986.9 4,806.7 13,245.2 1,888.3 1,772.9 6,513.2 3,213.6 1,433.7 503.4
% change -0.73 -1.13 -0.70 1.83 -0.65 -0.07 -0.09 -0.49 0.44 0.90
2013 YTD (%chg) -5.5 -10.0 10.6 27.4 -7.0 5.9 11.1 0.4 1.9 20.3
3-MONTH INTERBANK LENDING RATE (%) 18-Jun 19-Jun bps change 5.329 5.408 7.90 0.378 0.379 0.11 5.265 5.273 0.79 0.230 0.230 0.00 2.670 2.670 0.00 3.200 3.200 0.00
Page 4 of 7
Philippines Singapore Thailand Vietnam
0.812 0.033 2.500 0.911
1.283 0.033 2.500 0.911
47.10 0.00 0.00 0.00
1.097 0.373 2.600 3.875
0.752 0.373 2.600 3.875
-34.50 0.00 0.00 0.00
CREDIT DEFAULT SWAP (IN BPS) 17-Jun 18-Jun bps change China 91.17 90.91 -0.26 Hong Kong SAR 47.69 47.69 0.00 Indonesia 190.86 197.10 6.24 Japan 81.02 78.05 -2.97 Korea 81.56 79.34 -2.22 Malaysia 95.10 94.60 -0.50 Philippines 109.71 109.71 0.00 Thailand 98.06 97.55 -0.51 Vietnam 229.95 227.56 -2.39 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 18-Jun 19-Jun Gold Spot (in US$ per 1,367.7 1,368.4 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change 0.05
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012 31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
2013 31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
Page 5 of 7
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
Short-term external debt
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,147.9 0.6 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.9 8.5 9.8 Singapore 258.4 964.3 0.3 Thailand 175.3 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 6 of 7
DATA RELEASES FOR THE DAY Economies
MALAYSIA JAPAN JAPAN
Indicators
CPI YoY % Merchnds Trade Exports YoY % Merchnds Trade Balance Total (JPY bn)
Period
Last
May May May
Previous
1.8 10.1 -993.9
1.7 3.8 879.9
SELECTED ECONOMIC RELEASES CALENDAR (17 – 21 JUNE 2013) Expected Release Date
6/17/2013
6/18/2013
6/19/2013
6/20/2013 6/21/2013
Economies
Indicators
Period
CHINA PHILIPPINES SINGAPORE SINGAPORE
Actual FDI (YoY)% Overseas Remittances (YoY)% Non-oil Domestic Exports (YoY)% Electronic Exports (YoY)%
May Apr May May
INDONESIA JAPAN JAPAN HONG KONG SOUTH KOREA MALAYSIA JAPAN JAPAN HONG KONG CHINA THAILAND MALAYSIA
Consumer Confidence Index Industrial Production YOY% Capacity Utilization (MoM)% Unemployment Rate SA% Producer Price Index (YoY)% CPI YoY % Merchnds Trade Exports YoY % Merchnds Trade Balance Total (JPY bn) CPI - Composite Index (YoY)% HSBC Flash China Manufacturing PMI Foreign Reserves (USD bn) Foreign Reserves (USD bn)
May Apr F Apr F May May May May May May Jun Jun 14 Jun 14
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 7 of 7
MARKET UPDATE FOR ASEAN+3 20 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
•
•
Asian Stocks Drop Most in Two Years on Fed, China Credit. The MSCI Asia Pacific Index dropped 3.6 percent to 128.29 as of 3:28 p.m. in Tokyo, heading for its biggest loss since September 2011 as nine shares fell for each that rose. Japan’s Topix index slipped 1.3 percent, while the Nikkei 225 Stock Average decreased 1.7 percent. South Korea’s Kospi index declined 2 percent while China’s Shanghai Composite Index fell 2.1 percent. Hong Kong’s Hang Seng Index slumped 2.5 percent and the Hang Seng China Enterprise Index, a gauge of mainland companies in the city, plunged 2.9 percent. Gold Drops to Lowest in More Than 2 1/2 Years on Fed Comments. Gold fell to the lowest in more than 2 1/2 years in London, exceeding the drop in April. Gold for immediate delivery dropped as much as 3.4 percent to $1,304.75 an ounce, the cheapest since Sept. 30, 2010, and traded at $1,309.28 by 9:12 a.m. in London. Bullion for August delivery sank as much as 5.1 percent to $1,303.30 an ounce on the Comex in New York. Silver fell as much as 6.2 percent to $20.0845 an ounce, the cheapest since Sept. 14, 2010. WTI Crude Drops a Second Day on Rising Stockpiles, Fed. West Texas Intermediate crude fell for a second day. WTI for July delivery, which expires today, dropped as much as $2.13 to $96.11 a barrel in electronic trading on the New York Mercantile Exchange. The more actively traded August contract was down $2.25 at $96.23 as of 9:14 a.m. London time. Brent for August settlement on the London-based ICE Futures Europe exchange lost as much as $2.10, or 2 percent, to $104.02 a barrel.
BREAKING NEWS GLOBAL •
Bernanke Says Fed on Course to End Asset Buying in 2014. Federal Reserve Chairman Ben S. Bernanke said the central bank may start dialing down its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy finally achieves the sustainable growth the Fed has sought since the recession ended in 2009. The Federal Open Market Committee today left the monthly pace of bond purchases unchanged at $85 billion, while saying that “downside risks to the outlook for the economy and the labor market” have diminished. Policy makers raised their growth forecasts for next year to a range of 3 percent to 3.5 percent and reduced their outlook for unemployment to as low as 6.5 percent. The Fed also left unchanged its statement that it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent. Fed officials lowered their forecasts for the unemployment and inflation rates this year. They now see a jobless rate of 7.2 percent to 7.3 percent, compared with 7.3 percent to 7.5 percent in their March forecasts. They predict the jobless rate will fall to 6.5 percent to 6.8 percent in 2014.
•
EU Parliament Chief Negotiator Backs Budget Cut for Bloc. The European Parliament’s chief budget negotiator accepted a lower seven-year spending ceiling demanded by government leaders in return for a mid-term review, setting the stage for a push to win Page 1 of 8
the full assembly’s support. Alain Lamassoure, a French member of the European Union legislature, accepted a proposal by national leaders in February to fix the EU’s budget for 2014-2020 at 960 billion euros ($1.3 trillion). The sum, down from an original proposal of 1.047 trillion euros and less than the 994 billion euros committed in the current budget cycle, would mark the first shrinking of the EU’s “Multiannual Financial Framework.” Lamassoure, endorsed the spending cut yesterday in Brussels after winning a pledge from EU governments to review in 2016 whether the seven-year ceiling is adequate. Other members of the Parliament’s negotiating team refused to sign off on the deal, raising questions about whether the full 754-seat assembly will give its approval in a vote due in July. European spending is about 1 percent of EU gross domestic product compared with national spending in the bloc that is around 50 percent of domestic GDP. The debate over 2014-2020 EU spending has taken on added significance as the bloc seeks to contain the three-year-old debt crisis that has threatened to break up the 17nation euro. •
Bank of England Chief Makes Parting Plea for More Stimulus. The Bank of England Gov. Mervyn King made a parting plea for further stimulus for the U.K. economy in his final speech before handing over the reins of Britain's 319-year-old central bank to Mark Carney. Mr. King, who stands down at the end of June after 10 years in charge of the BOE, told bankers in London's financial district Wednesday night that although there are "clear signs" of a modest recovery, economic growth in Britain is still too slow and unemployment is too high. Also, Britain's banks still have too little capital, Mr. King said. The BOE's bank supervision arm, the Prudential Regulation Authority, was on Thursday to spell out just how short of capital the U.K.'s major lenders are. It identified a roughly £25 billion deficit in February.
•
U.K. Retail Sales Rise More Than Forecast on Food, Internet. U.K. retail sales rose more than economists forecast in May as consumers spent more online and food sales increased at their fastest pace for more than two years. Sales including auto fuel jumped 2.1 percent from April, when they fell 1.1 percent, the Office for National Statistics said today in London. The median forecast of 23 economists in a Bloomberg News survey was for a 0.8 percent increase. The data add to signs the economic recovery is taking hold, though consumers remain under pressure as inflation outpaces pay growth and government spending cuts bite. Sales volumes stood at a record last month, driven by a 3.5 percent gain in food sales, the most since April 2011, and a 4.3 percent jump in nonstore retailing, which includes Internet sales, the ONS said. Overall retail sales rose 1.9 percent on the year. In the latest three months, they climbed 0.7 percent from the previous quarter.
REGIONAL •
China Manufacturing Hits a Nine-Month Low. China saw a fresh sign of economic weakness on Thursday, as an initial gauge of manufacturing health slumped to a ninemonth low in June. The HSBC flash PMI slumped to 48.3 in June from an already weak 49.2 reading in May. Anything below 50 points to contraction in manufacturing activity from the previous month. All subindices, including new export orders, were also weaker. A sharp slump in export orders shown in the HSBC index was particularly worrisome for some economists. On Wednesday, HSBC joined other investment banks
Page 2 of 8
in cutting its estimate of China's economic growth, down to 7.4% in 2013 from 8.2% previously. Such a 2013 growth rate would be below the government's 7.5% target for the year. HSBC cut its estimate for 2014 to 7.4% from 8.4%. •
Chinese Government Says Financial System Must Support Economy. China’s government said the financial system must better support the economy, after a surge in credit failed to ignite growth and interbank borrowing costs jumped to a two-year high. Authorities will boost credit support for industries the government has defined as strategic and those that are labor-intensive, the State Council, or Cabinet, said in Beijing yesterday after a meeting led by Premier Li Keqiang. The nation must more firmly guard against financial risks, according to a statement on the central government’s website. The comments follow a jump in the seven-day repurchase rate, a gauge of interbank funding availability, to the highest level since June 2011. Slowing economic growth combined with a crackdown on illegal capital inflows, efforts to rein in shadow banking and a campaign to control home prices have contributed to increased borrowing costs. The central bank has refrained from using reverse-repurchase agreements to inject funds into the interbank market since Feb. 7. Central bank Governor Zhou Xiaochuan said in April that the nation needs to “sacrifice short-term growth” to make reforms in the economy.
•
Japan to Consider Fiscal Steps to Counter Hit From Tax Rise. Japan’s government is ready to provide extra spending if a sales-tax increase next year damps economic growth, a senior finance ministry official said. “Naturally, there will be a decline in economic growth” following the tax increase planned for April, Yuzuru Takeuchi, 54, parliamentary secretary for finance and a lower house legislator, said in an interview today in Tokyo. “We must take appropriate action to counter this” and it’s possible to provide more spending, possibly using extra tax collected this year, he said. The economy may shrink an annualized 3.9 percent in the second quarter of 2014 after the sales tax is raised to 8 percent from its current 5 percent, according to the median forecast of economists surveyed by Bloomberg News. The tax will be further increased to 10 percent in 2015.
•
Basri Predicts Rupiah Gain With Boost in Fuel Prices. Indonesia’s fuel-price increase this month will strengthen the rupiah and the trade balance as oil imports fall, while removing the incentive for smugglers to sell subsidized products abroad, Finance Minister Chatib Basri said. The nation will meet its budget assumption of the rupiah averaging 9,600 per dollar this year, Basri said in an interview at the Finance Ministry yesterday. The currency will have to be about 4.6 percent stronger than the current level on average for the rest of the year to meet the estimate. Once we adjust the fuel price, there will be a significant amount of import decline, especially from oil,” Basri, 47, said as he defended the need to push through a planned increase that has sparked protests. “Once we improve the trade balance, then the rupiah will be strengthening.” The government may announce an increase in subsidized fuel prices tomorrow night and will make the new prices effective immediately, Industry Minister Mohamad S. Hidayat said today. The administration intends to raise subsidized gasoline prices to 6,500 rupiah ($0.65) a liter and subsidized diesel to 5,500 rupiah, both from 4,500 rupiah, Basri said. That compares with 9,800 rupiah a liter outside Indonesia, Basri said. Page 3 of 8
IFIs NEWS (compiled from their websites) IMF – Press Release: Spain - Concluding Statement of 2013 Article IV Mission • The IMF has publicised the 2013 Article IV Consultation Concluding Statement pertaining to its Mission to Spain. The following is an excerpt of the Concluding Statement: “Strong reform progress is helping stabilize the economy and external and fiscal imbalances are correcting rapidly. But unemployment remains unacceptably high and the outlook difficult. This calls for urgent action to generate growth and jobs, both by Spain and Europe.” http://www.imf.org/external/np/ms/2013/061813.htm IMF – Press Release: Russian Federation—Concluding Statement of 2013 Article IV Mission • The IMF has publicised the 2013 Article IV Consultation Concluding Statement pertaining to its Mission to Russia. The following is an excerpt of the Concluding Statement: “While growth has slowed, Russia’s economy continues to operate at full capacity and inflation remains high. As a result, monetary and fiscal stimuli may prove ineffective. Reinvigorating growth potential requires bold supply-side reforms, improvements in the investment climate and financial intermediation, diversification, and a smaller role for the state in the economy. The fiscal rule should be strengthened and efficiency in the public sector and public enterprises improved. The shift to inflation targeting should be completed on schedule.” http://www.imf.org/external/np/ms/2013/061713.htm IMF – Press Release: Greece – Statement by the IMF, EC, and ECB on the Review Mission • The IMF, European Commission (EC) and European Central Bank (ECB) have publicised a joint statement pertaining to their Mission to Greece. It said, “The mission has made important progress. To allow completion of technical work, policy discussions will pause, but are expected to resume by the end of the month.” http://www.imf.org/external/np/sec/pr/2013/pr13223.htm IMF – Press Release: Ireland – Tenth Review under Extended Fund Facility Arrangement • The IMF has publicised the following reports pertaining to IMF's completion of the tenth review of Ireland’s performance under an economic program supported by a three-year, arrangement under the Extended Fund Facility (EFF), for the equivalent of SDR 19.4658 billion (about €22.28 billion or about US$29.71 billion) or the equivalent of 1,548 percent of Ireland’s IMF quota. • Ireland: Tenth Review under the Extended Arrangement – Staff Report, Staff Supplement dated June 11 ,2013 pertaining to update of information on recent developments and Press Release on the Executive Board Discussion http://www.imf.org/external/pubs/ft/scr/2013/cr13163.pdf • Ireland: Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding http://www.imf.org/External/NP/LOI/2013/IRL/060313.pdf IMF – Working Papers • The IMF has publicised the following working papers: • “Bank Funding in Central, Eastern and South Eastern Europe Post Lehman: a “New Normal”?” http://www.imf.org/external/pubs/ft/wp/2013/wp13148.pdf Page 4 of 8
• •
“How Do Banking Crises Affect Bilateral Exports?” http://www.imf.org/external/pubs/ft/wp/2013/wp13150.pdf “The Growth and Stabilization Properties of Fiscal Policy in Malaysia” http://www.imf.org/external/pubs/ft/wp/2013/wp13149.pdf
World Bank – Publication: “Turn down the heat: climate extremes, regional impacts, and the case for resilience” •
On June 19, 2013, the World Bank has published a new scientific report titled “Turn down the heat: climate extremes, regional impacts, and the case for resilience” which indicates the rising possibility of a warmer world in the next two decades that is magnifying the development challenges South East Asia is already struggling with, and which threatens to reverse hard-won development gains. http://www.worldbank.org/en/news/press-release/2013/06/19/warmer-worldthreatens-livelihoods-in-south-east-asia (Press Release) http://wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/06/14/000445 729_20130614145941/Rendered/PDF/784240WP0Full00D0CONF0to0June19090L.pdf (Report) http://documents.worldbank.org/curated/en/2013/06/17861350/turn-down-heatclimate-extremes-regional-impacts-case-resilience-executive-summary (Executive Summary)
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 19-Jun 20-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 10,026.00 9,982.00 Japan 86.75 94.31 96.45 98.07 Korea 1,064.40 1,126.25 1,130.59 1,145.63 Malaysia 3.06 3.11 3.15 3.20 Philippines 41.01 42.81 43.15 43.88 Singapore 1.22 1.25 1.27 1.27 Thailand 30.59 30.57 31.01 31.07 Vietnam 20,840.00 21,003.00 21,036.00 21,031.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
2013 YTD (%chg) 1.7 -0.1 -3.3 -10.9 -7.2 -5.2 -6.9 -4.3 -2.4 -0.9
% change -0.02 0.02 0.44 -1.65 -1.31 -1.62 -1.66 -0.48 -0.19 0.02
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
19-Jun 2,143.5 20,986.9 4,806.7 13,245.2 1,888.3 1,772.9 6,513.2 3,213.8 1,437.7 503.4
20-Jun 2,084.0 20,382.9 4,630.0 13,014.6 1,850.5 1,762.3 6,326.7 3,134.6 1,403.1 499.5
% change -2.77 -2.88 -3.68 -1.74 -2.00 -0.59 -2.86 -2.46 -2.41 -0.77
2013 YTD (%chg) -8.2 -12.6 6.5 25.2 -8.9 5.2 7.9 -2.1 -0.3 19.4
Page 5 of 8
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
OVERNIGHT LENDING RATE (%) 19-Jun 20-Jun bps change 7.870 4.310 -356.00 0.079 0.084 0.43 4.436 4.434 -0.14 0.093 0.095 0.25 2.500 2.500 0.00 3.000 3.000 0.00 1.283 1.148 -13.50 0.043 0.043 0.00 2.500 2.500 0.00 0.911 0.909 -0.20
3-MONTH INTERBANK LENDING RATE (%) 19-Jun 20-Jun bps change 5.408 5.803 39.50 0.379 0.378 -0.07 5.273 5.273 0.00 0.230 0.230 0.00 2.670 2.670 0.00 3.200 3.200 0.00 0.752 1.094 34.20 0.373 0.373 -0.08 2.600 2.600 0.00 3.875 3.350 -52.50
CREDIT DEFAULT SWAP (IN BPS) 18-Jun 19-Jun bps change China 90.91 100.97 10.06 Hong Kong SAR 47.69 47.68 -0.01 Indonesia 197.10 200.46 3.36 Japan 78.05 78.05 0.00 Korea 79.34 81.81 2.47 Malaysia 94.60 102.44 7.84 Philippines 109.71 111.66 1.95 Thailand 97.55 103.91 6.36 Vietnam 227.56 229.89 2.33 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 19-Jun 20-Jun Gold Spot (in US$ per 1,351.3 1,307.5 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change -3.24
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
2013
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
Page 6 of 8
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 19.4 118.2 66.9 30.9
Short-term external debt
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.3 2.2 2.6 -
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,147.9 0.6 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.9 8.5 9.8 Singapore 258.4 964.3 0.3 Thailand 175.3 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 7 of 8
DATA RELEASES FOR THE DAY Economies
HONG KONG CHINA
Indicators
CPI - Composite Index (YoY)% HSBC Flash China Manufacturing PMI
Period
Last
May Jun
Previous
3.9 48.3
4.0 49.2
SELECTED ECONOMIC RELEASES CALENDAR (17 – 21 JUNE 2013) Expected Release Date
6/17/2013
6/18/2013
6/19/2013
6/20/2013 6/21/2013
Economies
Indicators
Period
CHINA PHILIPPINES SINGAPORE SINGAPORE
Actual FDI (YoY)% Overseas Remittances (YoY)% Non-oil Domestic Exports (YoY)% Electronic Exports (YoY)%
May Apr May May
INDONESIA JAPAN JAPAN HONG KONG SOUTH KOREA MALAYSIA JAPAN JAPAN HONG KONG CHINA THAILAND MALAYSIA
Consumer Confidence Index Industrial Production YOY% Capacity Utilization (MoM)% Unemployment Rate SA% Producer Price Index (YoY)% CPI YoY % Merchnds Trade Exports YoY % Merchnds Trade Balance Total (JPY bn) CPI - Composite Index (YoY)% HSBC Flash China Manufacturing PMI Foreign Reserves (USD bn) Foreign Reserves (USD bn)
May Apr F Apr F May May May May May May Jun Jun 14 Jun 14
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 21 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian Stocks Outside Japan Drop on Fed, China Concerns. Asian stocks outside Japan fell, with a regional gauge heading for its lowest close since September, amid concern the Federal Reserve will reduce stimulus and China’s economic slowdown may deepen as a cash crunch worsens. The MSCI Asia Pacific Excluding Japan Index lost 0.6 percent to 421.05 as of 3:23 p.m. in Tokyo, paring losses of as much as 1.4 percent. More than two shares fell for each that rose on the measure. China’s Shanghai Composite Index slipped 0.1 percent, paring a loss of as much as 2 percent. Hong Kong’s Hang Seng Index fell 0.1 percent and is heading for a sixth straight weekly decline, the longest losing streak since the 2008 global financial crisis. South Korea’s Kospi index declined 1.5 percent. Japan’s Topix index added 0.7 percent, after falling 2.9 percent earlier. The Nikkei 225 Stock Average gained 1.7 percent, erasing losses of as much as 2.4 percent. The benchmark MSCI Asia Pacific Index added 0.1 percent to 127.77, erasing earlier losses of 1.5 percent and heading for a 2.3 percent decline this week.
•
Asian Currencies Tumble Most in 21 Months on Fed Exit Outlook. Asian currencies tumbled by the most in 21 months this week as Federal Reserve Chairman Ben S. Bernanke said the central bank will probably taper stimulus that has fueled fund flows to emerging markets. India’s rupee touched a record low and Malaysia’s ringgit had its worst week in three years. The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies, dropped 1.1 percent since June 14 to 115.51 as of 5 p.m. in Hong Kong, the biggest decline since Sept. 23, 2011. The rupee retreated 3.1 percent to 59.3600 per dollar, the ringgit fell 2.7 percent to 3.2 and the Philippine peso lost 2.1 percent to 43.735. Elsewhere in Asia, South Korea’s won dropped 2.4 percent this week to 1,154.15 per dollar. Thailand’s baht fell 1.5 percent to 31.04 and Indonesia’s rupiah declined 0.6 percent to 9,928. China’s yuan was down 0.06 percent at 6.1342, while the Vietnamese dong slipped 0.2 percent to 21,036.
•
WTI Crude Trims Weekly Drop After Biggest Slump in Seven Months. West Texas Intermediate crude rebounded after the biggest drop in seven months yesterday. Prices are headed for the first weekly decline since May. WTI for August delivery was at $95.54 a barrel in electronic trading on the New York Mercantile Exchange, up 40 cents, at 2:50 p.m. Singapore time. The July contract expired yesterday after losing $2.84, or 2.9 percent, to $95.40, the most since Nov. 7. Brent for August settlement was 48 cents higher at $102.63 a barrel on the London-based ICE Futures Europe exchange. It decreased $3.97, or 3.7 percent, to $102.15 yesterday.
BREAKING NEWS GLOBAL •
Fed Seen by Economists Trimming QE in September With End in 2014. The Federal Reserve will trim its monthly bond purchases to $65 billion in September and end buying in June 2014, according to the plurality of estimates by economists in a Bloomberg Page 1 of 8
survey. Chairman Ben Bernanke’s remarks prompted economists to predict a faster reduction in bond purchases from $85 billion per month: in the June 19-20 survey, 44 percent of economists see a tapering in September compared with 27 percent in a June 4-5 survey. Fifteen percent of economists in the survey said the Fed will start to taper in October and 28 percent said policy makers will wait until December. The remaining 13 percent said the Fed won’t begin reducing its pace of purchases until at least next year. The central bank will halt bond buying entirely in June 2014, according to 44 percent of the economists in the latest survey. •
Brisk U.S. Home Sales Spur a Price Warning. Sales of previously owned homes surged in May to the highest level since late 2009, pushing prices up so quickly that a major real-estate trade group warned about unsustainable gains. Home sales rose 4.2% in May from a month earlier to a seasonally adjusted annual rate of 5.2 million, the first time the pace crossed 5 million since November 2009, the National Association of Realtors said Thursday. The figures, showing rising home prices and contracts closing at a brisk pace, boosted optimism for the housing market and its ability to support the broader economic recovery. Median prices rose 15.4% from a year earlier to $208,000, the highest level since July 2008.
•
U.S. Jobless Claims Rise, but Labor-Market Growth Chugs On. The number of U.S. workers seeking new unemployment benefits rose last week, at a level that still points to jobs growth but underscores the uneven nature of the labor market's recovery. Initial jobless claims, a proxy for layoffs, increased by 18,000 to a seasonally adjusted 354,000 in the week ended June 15, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires had forecast 340,000 new applications for last week. U.S. employers added 175,000 jobs in May, though the unemployment rate rose slightly to 7.6% from 7.5% in April as more people entered the workforce. The Labor Department will release June employment figures on July 5.
•
ECB Bank Oversight Start Said to Be Delayed to Late 2014. The European Central Bank probably won’t take over as euro-area bank supervisor until the final months of 2014, further delaying the banking union that leaders wanted in place quickly to stem the sovereign debt crisis. Part of the delay comes from German legislative procedures that limit the European Parliament’s ability to sign off on the legislation. Germany’s lower house, or Bundestag, approved the euro area’s Single Supervisory Mechanism on June 13 and it probably will be voted on in the upper house on July 5. That’s right after the European Parliament’s next plenary session, set for July 1-4. Lawmakers have said they are unwilling to vote on the plans until the German parliament has approved them, and so confirmed it won’t seek changes. As a result, EU lawmakers won’t have a chance to vote until September at the earliest. This contrasts with an initial goal of moving to the new system in March, later pushed back to July.
•
Euro Area, IMF Say Greek Funding Assured With Reform Progress. The euro area and the International Monetary Fund said Greece is assured of sufficient international aid next month as long as the country presses ahead with its economic-overhaul program. “We have discussed the state of play on the Greek program, also on financing, and we once again concluded that financing is guaranteed for another year,” Jeroen Dijsselbloem, Dutch head of the group of euro-area finance ministers, told reporters late Page 2 of 8
yesterday in Luxembourg after chairing a meeting of his euro-area counterparts. “Further disbursements will be decided on the basis of the review to be finalized in July.” The assurances came amid further political fallout in Greece resulting from the government’s June 11 decision to shut down public broadcaster ERT, suspend 2,600 jobs there and create a new, smaller company. One of Greek Prime Minister Antonis Samaras’s two coalition partners yesterday rejected his proposals for revamping ERT, weakening the government. As part of the conditions for the international aid, Greece has to reduce the number of workers on the state payroll by 15,000 by the end of 2014. •
U.K. Banks Need More Capital. The U.K. banking regulator toughened rules Thursday on how much equity banks must hold against their assets, as it issued a damning report card showing a £27.1 billion ($41.96) capital shortfall across Barclays PLC, Royal Bank of Scotland Group PLC, Lloyds Banking Group, Nationwide Building Society and Co-op Bank PLC at the end of last year. The Prudential Regulation Authority, part of the Bank of England, previously said it wants banks to hold a minimum of 7% in equity capital against risk-weighted assets, after making three key adjustments for potential loan losses from U.K. commercial real estate and assets in weakened euro-zone countries, possible fines for past misconduct and higher risk weights on some loans. The £27.1 billion figure represents what banks would have needed to meet that target at the end of last year. In a new clampdown, the PRA said banks must hold at least 3% in equity against total assets by the end of 2013, a specific requirement under global bank capital rules known as Basel III that won't take effect in most countries for several years.
REGIONAL •
China Funds Lose Most in Fifth Week of Asian Outflow. International money managers pulled a combined $1.2 billion from Asian funds this past week, a fifth straight week of outflows, according to Citigroup Inc. China funds posted the biggest losses with $558 million of net withdrawals in the week ended June 19, followed by regional funds at $521 million, Citigroup’s Hong-Kong based chief Asian strategist Markus Rosgen wrote in a note to clients today. Foreigners net sold Asia by $3.6 billion in the week, with South Korea and Taiwan taking up the largest shares, he wrote. Inflows into Asia have slowed to $1.1 billion this year from the peak of $9.4 billion in March, Rosgen wrote. Foreigners bought a net $518 million of Japanese shares in the week, he said. Overall, bond funds saw $7.5 billion of outflows, while equity funds posted $4.8 billion of inflows, with most of that money going to North America, the report said.
•
China Money Rates Retreat After PBOC Said to Inject Cash. China’s benchmark moneymarket rates retreated from records after the central bank was said to have made funds available to lenders amid a cash squeeze. The one-day repurchase rate dropped 384 basis points, or 3.84 percentage points, to 7.90 percent as of 9:33 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That is the biggest drop since 2007. The seven-day rate fell 351 basis points to 8.11 percent. They touched record highs yesterday of 13.91 percent and 12.45 percent, respectively. The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repo rate, dropped 19 basis points to 4.51 percent in Shanghai, according to data compiled by Bloomberg. It reached an all-time high of 5.06 percent yesterday. Page 3 of 8
•
Vietnam, China to Extend Oil Project. Vietnam and China have extended an agreement to jointly explore for oil and gas in the Gulf of Tonkin until 2016 and significantly expanded the area involved despite tensions between the two countries over large areas of the South China Sea they both claim. The extension of the 2006 pact, reached during an official visit to China by President Truong Tan Sang this week, is another sign the two countries are ready to deepen economic cooperation despite heated rhetoric and occasional clashes over potentially large hydrocarbon reserves lying beneath the disputed waters. The two started joint explorations in the Gulf of Tonkin, which lies to the north of hotly contested areas near the Paracel and Spratley islands, in 2006, and has been handled by state-owned Vietnam Oil & Gas Group, or PetroVietnam, and China National Offshore Oil Corp., or Cnooc. No commercially exploitable reserves have been found despite 3D seismic survey work and the drilling of one well. The exploration area is being expanded to 4,076 square kilometers (1,574 square miles) from the 1,541 square kilometers (595 square miles) under the initial arrangement, and will run until 2016, the government said. The two sides will equally split operational responsibilities and costs, and if the joint operation finds commercial oil and gas reserves, they will move to joint production.
•
Indonesia Bonds Headed for Worst Week Since 2011. Indonesia’s bonds headed for the worst week since November 2011 and the rupiah declined on concern the Federal Reserve will taper its stimulus program, damping appetite for emerging-market assets. Overseas investors pulled 17.3 trillion rupiah ($1.7 billion) from local-currency sovereign debt this month through June 18, poised for the biggest monthly outflow since September 2011, finance ministry data show. The yield on the 5.625 percent bonds due May 2023 climbed 46 basis points this week, the most since the five days ended Nov. 25, 2011, to 6.9 percent as of 10:15 a.m. in Jakarta. The yield rose two basis points, or 0.02 percentage point, today and was at the highest since the same month of 2011. The rupiah declined for a sixth week, losing 0.6 percent to 9,933 per dollar, prices from local banks compiled by Bloomberg show. It traded at a 4 percent premium to one-month non-deliverable forwards, which slid 2.8 percent to 10,350, data compiled by Bloomberg show. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 2.60 percentage points this week and 86 basis points today to 16.19 percent, the highest level in a year.
IFIs NEWS (compiled from their websites) Basel Committee – Publication: “Large Exposures Quantitative Impact Study (QIS)” •
The Basel Committee on Supervision has published the following documents which provide answers to technical and interpretive questions raised by supervisors and banks during the Large Exposures Quantitative Impact Study (QIS). The documents intend to facilitate the completion of the questionnaire and are not to be construed as an official interpretation of other documents published by the Committee. Paragraph numbers given in the remainder of this document usually refer to a Supervisory framework for measuring and controlling large exposures ("the Consultative Document"). Cell references refer to the questionnaire and the accompanying instructions. http://www.bis.org/publ/bcbs246.htm (Press Release dated March 2013: Consultation – “Supervisory Framework for measuring and controlling large exposures”) http://www.bis.org/publ/bcbs250.pdf (Consultative Document: Frequently Asked Page 4 of 8
Questions on Large Exposures Quantitative Study (QIS)) http://www.bis.org/publ/bcbs246/lei2013qis_questionnaire.xls (Questionnaire for Large Exposures 2013 Quantitative Study (QIS)) http://www.bis.org/publ/bcbs246/instructions.pdf (Instructions for Large Exposures QIS) World Bank – Press Releases •
China - Anhui Xuancheng Infrastructure for Industry Relocation Project On June 20, 2013, the World Bank’s Board of Executive Directors approved a loan of US$150.0 million equivalent to the People’s Republic of China to support the development of the Xuancheng Economic and Technological Development Zone and prepare it for industrial relocation. The objective of the project is to contribute to the economic, social and environmental sustainability of the project area in the Xuancheng Economic and Technological Development Zone. http://www.worldbank.org/en/news/press-release/2013/06/20/china-world-banksupport-infrastructure-development-industry-relocation (Press Release) http://www.worldbank.org/en/news/loans-credits/2013/06/21/china-anhui-xuanchenginfrastructure-for-industry-relocation-project (Loan’s Details) http://www.worldbank.org/projects/P129431/anhui-xuancheng-infrastructure-industryrelocation?lang=en (Project’s Details)
•
China - Guangdong Social Security Integration and Rural Worker Training Project On June 20, 2013, the World Bank’s Board of Executive Directors approved a loan of US$80.0 million equivalent to the People’s Republic of China for the captioned project. The objectives of the project are to enhance portability of social security data and beneficiary entitlements and to strengthen the skills base and employment prospects of rural hukou workers in Guangdong. http://www.worldbank.org/en/news/press-release/2013/06/20/china-world-bank-helpdevelop-portable-social-security-rural-worker-training-guangdong (Press Release) http://www.worldbank.org/en/news/loans-credits/2013/06/20/china-guangdong-socialsecurity-integration-and-rural-worker-training-project (Loan’s Details) http://www.worldbank.org/projects/P117596/china-guangdong-social-securityintegration-migrant-training?lang=en (Project’s Details)
•
China – Nanchang Urban Rail Project On June 20, 2013, the World Bank’s Board of Executive Directors approved a loan of US$250.0 million equivalent to the People’s Republic of China to support the development of an urban rail line in Nanchang Municipality in Jiangxi Province. The objective of the project is to provide an effective urban mass rapid transit system of appropriate quality along the Line 2 corridor from ZhanQianNanDaDao Station to XinJiaAn Station. http://www.worldbank.org/en/news/press-release/2013/06/20/china-world-banksupport-urban-rail-development-nanchang (Press Release) http://www.worldbank.org/en/news/loans-credits/2013/06/21/china-nanchang-urbanrail-project (Loan’s Details) http://www.worldbank.org/projects/P132154/china-nanchang-urban-railproject?lang=en (Project’s Details)
Page 5 of 8
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 20-Jun 21-Jun close China 6.23 6.13 6.13 6.13 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 9,982.00 10,011.00 Japan 86.75 94.31 97.28 97.81 Korea 1,064.40 1,126.25 1,145.63 1,154.15 Malaysia 3.06 3.11 3.20 3.20 Philippines 41.01 42.81 43.88 43.72 Singapore 1.22 1.25 1.27 1.27 Thailand 30.59 30.57 31.18 31.07 Vietnam 20,840.00 21,003.00 21,036.00 21,036.00 Note: Negative values indicate depreciation and positive values indicate appreciation. 2012 close
2013 YTD (%chg) 1.6 -0.1 -3.6 -10.7 -7.8 -5.1 -6.6 -4.2 -2.4 -0.9
% change -0.07 0.02 -0.29 -0.54 -0.74 0.11 0.35 -0.02 0.35 0.00
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
20-Jun 2,084.0 20,382.9 4,630.0 13,014.6 1,850.5 1,762.3 6,326.7 3,133.3 1,402.2 499.5
OVERNIGHT LENDING RATE (%) 20-Jun 21-Jun bps change 4.310 8.890 458.00 0.084 0.088 0.43 4.434 4.443 0.86 0.095 0.073 -2.25 2.500 2.500 0.00 3.000 3.000 0.00 1.148 1.692 54.40 0.055 0.055 0.00 2.500 2.500 0.00 0.909 0.867 -4.20
21-Jun
% change
2,073.1 20,263.3 4,515.4 13,230.1 1,822.8 1,755.9 6,182.2 3,124.5 1,397.7 498.8
-0.52 -0.59 -2.48 1.66 -1.49 -0.37 -2.28 -0.28 -0.32 -0.13
2013 YTD (%chg) -8.6 -13.1 3.9 27.3 -10.3 4.8 5.5 -2.4 -0.7 19.2
3-MONTH INTERBANK LENDING RATE (%) 20-Jun 21-Jun bps change 5.803 5.790 -1.30 0.378 0.384 0.57 5.273 5.280 0.71 0.230 0.230 0.00 2.680 2.680 0.00 3.200 3.200 0.00 1.094 0.993 -10.10 0.373 0.373 0.08 2.600 2.600 0.00 3.350 3.567 21.70
CREDIT DEFAULT SWAP (IN BPS) 19-Jun 20-Jun bps change China 100.97 125.90 24.93 Hong Kong SAR 47.68 54.67 6.99 Indonesia 200.46 242.82 42.36 Japan 78.05 85.26 7.21 Korea 81.81 97.54 15.73 Malaysia 102.44 122.42 19.98 Philippines 111.66 133.87 22.21 Thailand 103.91 120.98 17.07 Vietnam 229.89 252.93 23.04 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 20-Jun 21-Jun Gold Spot (in US$ per 1,285.0 1,294.4 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change 0.74
Page 6 of 8
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Fitch
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 17.2 118.2 66.9 30.9
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
Short-term external debt
2013
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.8 2.2 2.6 -
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,147.9 0.6 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.0 9.8 8.4 Singapore 258.4 964.3 0.3 Thailand 176.5 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
Page 7 of 8
DATA RELEASES FOR THE DAY Economies
THAILAND
Indicators
Foreign Reserves (USD bn)
Period
Last
Jun 14
Previous
176.45
176.5
SELECTED ECONOMIC RELEASES CALENDAR (17 – 21 JUNE 2013) Expected Release Date
6/17/2013
6/18/2013
6/19/2013
6/20/2013 6/21/2013
Economies
Indicators
Period
CHINA PHILIPPINES SINGAPORE SINGAPORE
Actual FDI (YoY)% Overseas Remittances (YoY)% Non-oil Domestic Exports (YoY)% Electronic Exports (YoY)%
May Apr May May
INDONESIA JAPAN JAPAN HONG KONG SOUTH KOREA MALAYSIA JAPAN JAPAN HONG KONG CHINA THAILAND MALAYSIA
Consumer Confidence Index Industrial Production YOY% Capacity Utilization (MoM)% Unemployment Rate SA% Producer Price Index (YoY)% CPI YoY % Merchnds Trade Exports YoY % Merchnds Trade Balance Total (JPY bn) CPI - Composite Index (YoY)% HSBC Flash China Manufacturing PMI Foreign Reserves (USD bn) Foreign Reserves (USD bn)
May Apr F Apr F May May May May May May Jun Jun 14 Jun 14
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 24 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian Stocks Headed for Biggest Monthly Loss in a Year. Asian stocks declined, with the benchmark regional index heading toward the worst monthly loss in a year, as Chinese stocks entered a bear market amid a cash crunch at banks in the world’s second-largest economy. The MSCI Asia Pacific Index slid 2 percent to 125.23 as of 4:09 p.m. in Hong Kong, bringing this month’s decline to 7.1 percent. More than three shares fell for every one that advanced. The gauge declined 2.3 percent last week amid concern that Federal Reserve stimulus measures for the U.S. economy are nearing an end and that interbank lending in China is worsening.
•
Dollar Rises to Two-Week High Versus Yen and other major currencies. The dollar strengthened to a two-week high against the yen before U.S. reports tomorrow that economists said will show durable goods orders increased and house prices rose. The dollar climbed against all 16 of its major counterparts amid speculation the data will back the case for the Federal Reserve to reduce bond purchases. The U.S. currency rose 0.5 percent to 98.36 yen at 9:06 a.m. in London after climbing to 98.70, the highest level since June 11.
•
WTI Drops a Fourth Day on China Economic Recovery Concern. West Texas Intermediate fell for a fourth day amid speculation China’s economic recovery may be threatened by cash constraints. WTI for August delivery slid as much as 48 cents to $93.21 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.23 at 2:22 p.m. Singapore time. Prices decreased for a fourth day, the longest losing streak in a month.
•
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment increased, according to traders of credit-default swaps. The Markit iTraxx Asia index for CDS spreads of 40 investment-grade borrowers outside Japan gained 8 to 168 basis points as of 1:42 p.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark is set for its highest close since June 20, according to CMA, which compiles prices quoted by dealers in the privately negotiated market. It surged 27.6 basis points last week, the most since November 2011.
BREAKING NEWS GLOBAL •
EU Leaders Face Renewed Bond-Market Slump as Bank Talks Sputter. European Union leaders will this week attempt to stave off a resurgence of market tremors following a breakdown in talks on setting up unified banking rules. Euro-area bonds slumped, led by Spain and Italy, after negotiations among the 27-member bloc’s finance ministers stalled over the weekend in Luxembourg. They failed to agree on assigning losses at failing banks as part of proposed rules on bank resolution and recovery. They will regroup June 26, before EU leaders gather the next day for a summit in Brussels. European leaders’ failure to forge ahead with a so-called banking union that was agreed on almost a year Page 1 of 8
ago has underscored the frustrations in overcoming a crisis now in its fourth year. With global markets jolted last week on concern over the possible tapering of U.S. stimulus, euro-area leaders who have relied on market calm over the past year may have less leeway. •
US Mortgage-Bond Yields Surge in Largest Weekly Increase Since 2009. Yields on Fannie Mae and Freddie Mac mortgage bonds that guide U.S. home-loan rates posted their largest weekly increase in four years, extending a surge sparked by a potential slowing of the Federal Reserve’s debt buying. A Bloomberg index of Fannie Mae’s current-coupon 30-year securities rose 0.15 percentage point today to a 22-month high 3.44 percent as of 5 p.m. in New York. Yields, which have climbed in seven of the past eight weeks, rose 0.5 percentage point this week, the biggest weekly advance since June 2009. Bonds are tumbling worldwide as the Fed moves closer to scaling back its $85 billion in monthly debt buying, including $40 billion of government-backed mortgage securities. Chairman Ben S. Bernanke said June 19 at a news conference following a statement by the Federal Open Market Committee that the central bank may “moderate” the pace later this year and end the purchases around the middle of 2014 if the economy continues to improve as it forecasts.
•
Increasing Bond Yields Risk Debt Spiral in U.S., Japan, BIS Says. Major economies risk ballooning debt loads unless their growth can keep pace with increases in borrowing costs as spending on the elderly rises, according to the Bank for International Settlements. Japan’s public debt would swell to 600 percent of gross domestic product by 2050 on a 2 percentage-point increase in funding costs, should its agerelated government spending continue unchecked, the Basel-based BIS said in its 83rd annual report. In the U.S., the debt-to-GDP ratio would almost double to 200 percent under the same circumstances, it said. “Governments in several major economies currently benefit from historically low funding costs,” the BIS said. “At the same time, rising debt levels have increased their exposure to higher interest rates. The consolidation needs of countries experiencing low interest rates would be greater if their growth-adjusted interest rates were to rise.”
•
U.S. Weighs Doubling Leverage Standard for Biggest Banks. U.S. regulators are considering doubling a minimum capital requirement for the largest banks, which could force some of them to halt dividend payments. The standard would increase the amount of capital the lenders must hold to 6 percent of total assets, regardless of their risk. That’s twice the level set by global banking supervisors. U.S. regulators last year proposed implementing the 3 percent international requirement for what’s known as the simple leverage ratio. Five of the six largest U.S. lenders, including JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS), would fall under the 6 percent level.
REGIONAL •
China Money Rates Tumble for Second Day on Targeted PBOC Easing. China’s benchmark money-market rates tumbled for a second day, extending a retreat from record highs, on signs targeted injections of funds are being used to ease a cash crunch that threatens to worsen an economic slowdown. Interbank loans were recorded in the final hour of trading on both June 20 and 21 at below-market rates, according to data Page 2 of 8
compiled by Bloomberg. The People’s Bank of China said the nation should “appropriately fine-tune” its policies, according to a statement yesterday that summarized the monetary policy committee’s second-quarter meeting in Beijing. The monetary authority gauged demand for sales of repurchase agreements and reverserepo contracts this morning, according to a trader at a primary dealer required to bid at the auctions. The overnight repurchase rate dropped 196 basis points, or 1.96 percentage points, to 6.47 percent in Shanghai, according to a daily fixing compiled by the National Interbank Funding Center. It plunged 442 basis points on June 21, from a record 12.85 percent, and is still more than double this year’s average of 3.09 percent. The seven-day rate fell 118 basis points today to 7.32 percent, following a decline of 227 basis points on June 21, a separate fixing showed. •
China Cash Crunch Puts Pressure on Small Banks, Moody’s Says. China’s worst cash squeeze in at least a decade may weigh on smaller banks’ financial strength as their higher reliance on interbank funding could lead to an erosion of loan margins, according to Moody’s Investors Service. Mid-sized banks got 23 percent of their funding and capital from the interbank market at the end of last year, compared with 9 percent for the largest state-owned banks, Moody’s said in an e-mailed statement today. Those banks will probably compete “more aggressively” for deposits, which would increase their cost of funds, it said.
•
Hazardous Fire Haze Clouds Outlook for Singapore Tourism. Forest fires raging on the neighboring Indonesian island sent Singapore’s Pollutant Standards Index to a record 401 on June 21, a level deemed hazardous, according to the National Environment Agency. Singapore’s air quality has improved to good today after the haze shifted north into Malaysia over the weekend. A state of emergency was called in parts of Johor in Malaysia yesterday, and pollution rose to hazardous levels in Port Dickson on the west coast of the country this morning. The haze may prompt more visitors to reconsider trips to Singapore, which was ranked Asia’s most-popular business destination in the first half of 2012 with hotel occupancy rates averaging 86 percent in the past three years. The pollution will hit tourism-related industries in Singapore, which make up as much as 6 percent of the economy, as well as construction, Joey Chew, an economist at Barclays Plc, said in a research note on June 20. A disruption for one week could cost the economy about $1 billion, Barclays economist Wai Ho Leong said in an e-mail on June 19.
•
Myanmar preparing to connect to the digital age. Myanmar has opened the floodgates for a frenzy of innovation, as 60 million people prepare to get online for the first time. Currently, less than 10 percent of the population is estimated to have access to a mobile phone. After being under a closed network, cellular phones have boomed, with HTC, Samsung, and Huawei phones available for sale everywhere on the street. On June 27, the government of Myanmar will grant the first two licenses to foreign mobile companies to operate in the country. Digicel, based in the Caribbean, and Singtel, out of Singapore, have both pledged to invest billions to bring wireless coverage to 96 percent of the country within a few years. The government has set a goal of 80 percent coverage by 2015.
Page 3 of 8
•
Indonesian government starts to disburse fuel aid. The Indonesian government has begun distribution of its cash handout program to four million households most affected the rise in price of subsidized fuel. From Saturday, people began receiving Rp 300,000 ($30). The temporary direct-cash assistance (BLSM) scheme could now be accessed in 14 major cities, and would be available at its post offices nationwide from June 25. Finance Minister M. Chatib Basri said his Ministry had earmarked Rp 4.65 trillion for the first installment of the BLSM distribution. The government has targeted 15.5 million households for the BLSM. The price of subsidized gasoline, known as Premium, has gone up from Rp 4,500 ($0.46) per liter to Rp 6,500, and the price of subsidized diesel, known as Solar, has increased from Rp 4,500 per liter to Rp 5,500.
•
Small firms get massive tax breaks in Vietnam. Vietnam's lawmakers amended tax laws last Wednesday to sharply cut the rates for small and medium-sized businesses and developers of low-cost housing with effect from July 1. The corporate tax, now 25 percent, will be cut by five percentage points for businesses earning profits of up to VND20 billion ($952,380) a year. The corporate tax will be reduced to 22 percent next year and 20 percent in 2016, with the proposals being passed this week in the National Assembly, the country's top legislative unit. For certain other sectors like education, healthcare, culture, sports, environment, and the print media, the corporate tax was cut to just 10 percent with effect from next year.
•
Malaysian Unemployment Rate Drops In April. Malaysia's unemployment rate decreased from the previous month in April, data released by the Department of Statistics showed Friday. The seasonally adjusted unemployment rate declined to 3.1 percent in April from 3.3 percent in March. In April 2012, the jobless rate was 3 percent. There were around 403,600 unemployed persons in the country at the end of April, down by 8.2 percent from a month earlier. Compared to April 2012, however, unemployment increased by 5.1 percent. Meanwhile, the number of persons in employment increased to about 13.12 million in April from 12.95 million in March. Year-on-year, employment grew by 4.6 percent. The labor force participation rate was 66.4 percent during the month, higher than the previous month's figure of 65.5 percent. The increase reflected the entry of more persons into the labor force.
•
Bank of Thailand capital movement plan ongoing. The Bank of Thailand has made progress in drafting the second phase of the capital movement master plan - its longterm framework for handling capital currents. The plan would enable the bank to create a balance between inflows and outflows of capital in the long run. The central bank implemented the master plan in 2011, aiming to support Thai businesses making overseas investments and acquiring new sources of natural resources and labour. This will create two-way flows of the baht and stem baht speculation to some extent. The implementation of the master plan is like the installation of a "gate", which will function according to the situation in the market. If the central bank detects excessive outflows, it will close the gate a little to slow down the outflow.
IFIs NEWS (compiled from their websites) BIS – Publication: “83rd BIS Annual Report 2012/2013” •
The BIS has publicised the captioned 83rd Annual Report for 2012/2013. “Since 2007, Page 4 of 8
actions by central banks have prevented financial collapse. Further accommodation is borrowing time for others to act. But the time must be used wisely. The focus of action must be on balance sheet repair, fiscal sustainability and, most of all, the economic and financial reforms needed to return economies to the real growth paths authorities and the public both want and expect (Chapter I). After reviewing the past year's economic developments (Chapter II), the remaining economic chapters cover the critical policy challenges in detail: reforming labour and product markets to restore productivity growth (Chapter III), ensuring the sustainability of public finances (Chapter IV), adapting financial regulation to ensure resilience of the increasingly complex global system (Chapter V), and re-emphasising the stabilisation objectives of central banks (Chapter VI).” http://www.bis.org/events/agm2013.htm (Press Release) http://www.bis.org/publ/arpdf/ar2013e.htm (Report: 83rd 2012/2013)
BIS
Annual
Report
IMF – Publication: “Macroprudential and Microprudential Policies: Toward Cohabitation” •
The IMF has publicised the captioned Staff Discussion Note. “Effective arrangements for micro and macroprudential policies to further overall financial stability are strongly desirable for all countries, emerging or advanced. Both policies complement each other, but there can also be potential areas of overlap and conflict, which can complicate this cooperation. Organizing their very close interactions can help contain these potential tensions. This note clarifies the essential features of macroprudential and microprudential policies and their interactions, and delineates their borderline. It proposes mechanisms for aligning both policies in the pursuit of financial stability by identifying those elements that are desirable for effective cooperation between them. The note provides general guidance. Actual arrangements will need take into account country-specific circumstances, reflecting the fact that that there is no “one size fits all.” http://www.imf.org/external/pubs/ft/sdn/2013/sdn1305.pdf
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 21-Jun 24-Jun close China 6.23 6.13 6.13 6.14 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 10,011.00 10,009.00 Japan 86.75 94.31 97.90 97.99 Korea 1,064.40 1,126.25 1,154.15 1,161.23 Malaysia 3.06 3.11 3.20 3.22 Philippines 41.01 42.81 43.72 43.88 Singapore 1.22 1.25 1.28 1.28 Thailand 30.59 30.57 31.12 31.11 Vietnam 20,840.00 21,003.00 21,036.00 21,036.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
2013 YTD (%chg) 1.4 -0.1 -3.6 -10.9 -8.4 -5.7 -6.9 -4.7 -2.5 -0.9
% change -0.19 0.03 0.02 -0.09 -0.61 -0.61 -0.35 -0.31 0.03 0.00
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9
21-Jun 2,073.1 20,263.3 4,515.4 13,230.1 1,822.8
24-Jun 1,963.2 19,814.0 4,429.5 13,062.8 1,799.0
% change -5.30 -2.22 -1.90 -1.26 -1.31
2013 YTD (%chg) -13.5 -15.0 1.9 25.7 -11.4
Page 5 of 8
Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
1,689.0 5,812.7 3,167.1 1,391.9 413.7
1,775.6 6,702.0 3,184.7 1,516.2 528.0
1,755.9 6,182.2 3,124.5 1,400.5 498.8
OVERNIGHT LENDING RATE (%) 21-Jun 24-Jun bps change 8.890 6.650 -224.00 0.088 0.084 -0.43 4.443 4.447 0.43 0.073 0.090 1.75 2.500 2.500 0.00 3.000 3.000 0.00 1.692 1.480 -21.20 0.063 0.063 0.00 2.500 2.500 0.00 0.867 0.800 -6.70
1,738.2 5,971.1 3,074.3 1,369.3 489.7
-1.01 -3.41 -1.60 -2.23 -1.82
3.8 1.9 -4.0 -2.7 17.1
3-MONTH INTERBANK LENDING RATE (%) 21-Jun 24-Jun bps change 5.790 5.724 -6.60 0.384 0.384 0.00 5.280 5.291 1.14 0.230 0.230 0.00 2.690 2.690 0.00 3.200 3.200 0.00 0.993 0.968 -2.50 0.373 0.373 0.00 2.600 2.601 0.08 3.567 3.986 41.90
CREDIT DEFAULT SWAP (IN BPS) 20-Jun 21-Jun bps change China 125.90 122.87 -3.03 Hong Kong SAR 54.67 54.10 -0.57 Indonesia 242.82 236.61 -6.21 Japan 85.26 86.23 0.97 Korea 97.54 99.99 2.45 Malaysia 122.42 121.94 -0.48 Philippines 133.87 136.67 2.80 Thailand 120.98 122.95 1.97 Vietnam 252.93 257.86 4.93 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 21-Jun 24-Jun Gold Spot (in US$ per 1,296.4 1,282.9 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change -1.04
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
SOVEREIGN BOND RATES (%, 5-YEAR) Previous wk's 2012 close close 3.220 3.270 China 0.396 1.148 Hong Kong SAR 4.806 6.336 Indonesia 0.185 0.355 Japan 2.980 3.320 Korea
21-Jun 3.270 1.148 6.336 0.355 3.320
24-Jun 3.270 1.148 6.444 0.356 3.320
bps change
2013 YTD (bps)
0.000 0.000 10.800 0.100 0.000
5.000 75.200 163.800 17.100 34.000
Page 6 of 8
Malaysia Philippines Singapore Thailand Vietnam
3.186 4.115 0.330 3.195 9.750
3.329 3.165 1.300 3.400 8.600
3.329 3.165 1.300 3.400 8.600
3.329 3.415 1.300 3.605 8.250
0.000 25.000 0.000 20.500 -35.000
14.300 -70.080 97.000 41.000 -150.000
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
2013
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 17.2 118.2 66.9 30.9
Short-term external debt
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.8 2.2 2.6 -
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,147.9 0.6 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.0 9.8 8.4 Singapore 258.4 964.3 0.3 Thailand 176.5 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies
VIETNAM SINGAPORE HONG KONG HONG KONG
Indicators
CPI (YoY) % CPI (YoY) % Current Account (HK$ bn) Balance of Payments – Overall (HK$ bn)
Period
Last
June May 1Q 1Q
Previous
6.69 1.6 -9.54 16.40
6.36 1.5 9.62 94.34
SELECTED ECONOMIC RELEASES CALENDAR (17 – 21 JUNE 2013) Expected Release Date
6/24/2013
Economies
Indicators
Period
VIETNAM
CPI (YoY) %
June
SINGAPORE
CPI (YoY) %
May
Page 7 of 8
6/25/2013
6/26/2013
6/27/2013 6/28/2013
HONG KONG
Current Account
1Q
HONG KONG SOUTH KOREA PHILIPPINES PHILIPPINES HONG KONG HONG KONG HONG KONG VIETNAM VIETNAM VIETNAM VIETNAM VIETNAM SOUTH KOREA SOUTH KOREA SINGAPORE THAILAND THAILAND SOUTH KOREA JAPAN SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN JAPAN JAPAN THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND PHILIPPINES
Balance of Payments - Overall SK Consumer Confidence Trade Balance (USD mn) Total Imports (YoY)% Exports YoY% Imports YoY% Trade Balance (HKD bn) Imports YTD (YoY)% Exports YTD (YoY)% Retail Sales YTD (YoY)% Industrial Production Index YoY % GDP Constant Prices YTD (YoY)% Business Survey- Manufacturing Business Survey- Non-Manufacturing Industrial Production YoY% Customs Exports (YoY)% Customs Imports (YoY)% Current Account in (USD mn) All Industry Activity Index (MoM) % Industrial Production (YoY)% Industrial Production (MoM)% Job-To-Applicant Ratio Jobless Rate % National CPI Ex Food, Energy YoY % National CPI YoY % Industrial Production YOY% Foreign Reserves (USD bn) Business Sentiment Index Total Exports YOY% Total Imports YOY% Current Account Balance (USD mn) Total Trade Balance (USD mn) Budget Deficit/Surplus (PHP bn)
1Q Jun Apr Apr May May May Jun Jun Jun Jun 2Q Jul Jul May May May May Apr May May May May May May May P Jun 21 May May May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 25 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian Stocks Fall as China Sinks Deeper Into Bear Market. Asian stocks fell as a gauge of the biggest Chinese shares traded in the mainland sank deeper into a bear market amid concern a cash crunch will curb growth in the world’s second-largest economy. The MSCI Asia Pacific Index fell 0.3 percent to 125.42 as of 5:30 p.m. in Tokyo, reversing gains of 0.5 percent. Almost two shares fell for each that rose on the measure. The gauge dropped 13 percent from this year’s high on May 20 through yesterday after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank may start dialing down stimulus, and as money-market rates in China surged to records.
Yen Gains From Two-Week Low on Stock Declines, Fed Speculation. The yen rose from near a two-week low versus the U.S. dollar as Asian stocks slumped for a second day amid concern a cash crunch in China will curb economic growth, supporting demand for haven assets. The won rebounded from a one-year low. Malaysia’s ringgit strengthened the most in more than a week, rebounding from a three-year low, as some investors judged this month’s losses excessive. Thailand’s baht gained the most in a week amid concern the central bank will step in to halt declines that sent it to a nine-month low.
US Treasuries Rise as China Credit Squeeze Boosts Demand for Safety. Treasuries rose, with 10-year notes halting a six-day decline, as investors sought safer assets amid speculation a credit squeeze in China’s financial industry will slow growth in the world’s second-biggest economy. The U.S. 10-year yield dropped three basis points, or 0.03 percentage point, to 2.51 percent at 8:56 a.m. London time after rising to 2.66 percent yesterday, the highest level since August 2011. The 1.75 percent note due in May 2023 gained 1/4, or $2.50 per $1,000 face amount, to 93 13/32.
BREAKING NEWS GLOBAL
FSB to Examine Alternatives to Scandal-Hit Benchmark Rates. Global regulators are to assess alternatives to tarnished benchmarks in the wake of rate-rigging scandals that have harmed investor confidence. The Financial Stability Board (FSB) will set up working groups to examine possible alternatives, with an initial focus on interest-rate benchmarks, Mark Carney, the board’s chairman, told reporters in Basel today. The groups will look at “options for robust reference rates,” Carney, the incoming governor of the Bank of England, said. He said the groups would report back with their findings by “summer 2014.” The groups will examine whether existing benchmarks, and possible alternatives, meet international standards, he said. The initiative will include a regulators group led by Martin Wheatley, Chief Executive Officer of the U.K.’s Financial Conduct Authority, and Federal Reserve Governor Jeremy C Stein, as well as a market participants group, Carney said.
US Fed’s Fisher Says He Backs Tapering QE as Economy Improves. Federal Reserve Bank of Dallas President Richard Fisher, who doesn’t vote on monetary policy this year, Page 1 of 7
said he favors scaling back the Fed’s monthly bond-buying if the economy makes the kind of progress officials are currently expecting. “I agree fully with the chairman that we should dial back on the stimulus” should “we achieve what the 19 of us forecast,” Fisher said today in a speech in London. Fisher has been among the most vocal critics within the Fed of the central bank’s unprecedented measures to bolster the economy. Investors shouldn’t overreact to the central bank’s plans to reduce the pace of asset purchases, Fisher said in an interview with the Financial Times published today on its web site.
Options on Debt Derivatives Nearing $100 Billion. The market for options on credit derivatives indexes has surged more than 40 percent in the past month to $98.8 billion as investors search farther afield for cheap hedges protecting against a sell-off in the bond markets. The contracts, which give investors the right but not the obligation to buy or sell indexes of credit-default swaps at a certain price, have doubled from $48.7 billion a year ago, Depository Trust & Clearing Corp. data show. That compares with a 17 percent drop in the amount covered by swaps benchmarks on U.S. and European investment-grade debt and a 4 percent decline for all credit derivative products in the year through June 14. Demand for options is a sign that the bond market might be nearing an inflection point with Federal Reserve officials saying that the economy is strong enough for them to curtail measures that have supported fixed-income prices.
REGIONAL
Cash Squeeze Risks First GDP-Goal Miss for China Since 1998. China’s biggest squeeze on credit in at least a decade is increasing the chance that the annual growth target will be missed, the first time since the Asian financial crisis in 1998. Goldman Sachs and China International Capital yesterday joined banks from Barclays to HSBC in paring their growth projections this year to 7.4 percent, below the government’s 7.5 percent goal. The cuts followed a tightening in central bank liquidity.
China Beige Book Shows Fewer Firms Borrowing as Rates Rise. Chinese bankers are reporting increased lending while fewer companies are taking out loans, an incongruity that helps explain the recent increase in borrowing costs, a private survey showed. The number of companies reporting loan applications in the second quarter fell 13 percentage points from the previous period to 38 percent, the survey from New Yorkbased China Beige Book International said yesterday. The proportion of banks showing higher lending to businesses rose 10 percentage points to 45 percent, indicating that “credit appears to be concentrated on a few borrowers,” according to the report. The lending disparity is part of a picture of slowing economic expansion across the country, according to the survey, which began last year and is modeled on the U.S. Federal Reserve’s Beige Book.
Hong Kong Banking System Outlook Cut by Moody’s on China Risks. The outlook for Hong Kong’s banking system was lowered to negative from stable at Moody’s Investors Service on lenders’ increasing exposure to borrowers in China. Hong Kong banks are increasingly reliant on the mainland because real interest rates in the city remain low amid surging property prices, the credit-rating company said in a statement yesterday. These circumstances “may contribute to adverse future operating conditions Page 2 of 7
for Hong Kong banks,” it said. Hong Kong banks are turning to borrowers in the mainland at a time when economic growth and efforts to rein in shadow banking are leading to rising bad loans. Non-performing loans at Chinese banks rose for six straight quarters through March 31, the longest deterioration in at least nine years. The increase may accelerate in the coming months, Moody’s said in a separate statement yesterday. Hong Kong lenders have mitigated risks from mainland lending by requiring collateral and bank guarantees, Moody’s said. The firm rates 17 banks in Hong Kong, which, led by HSBC Holdings Group , Hang Seng Bank , Bank of China and Standard Chartered , accounted for 70 percent of total the city’s domestic loans as of the end of 2012, according to the statement.
British, Chinese Central Banks Agree on Currency Swap Line. The Bank of England and the People's Bank of China have signed an agreement to establish a reciprocal, threeyear sterling-yuan currency swap line. The maximum value of the swap is 200 billion (yuan) renminbi ($32.6 billion, 24.8 billion euros)," the BoE said in a statement. "The swap line may be used to promote bilateral trade between the two countries and to support domestic financial stability should market conditions warrant." The UK joins a group of just over 20 countries to have such a currency swap agreement in place, most of which are key trading partners with China, such as Australia, Brazil and Japan. The deal is the first of its kind within Europe. While it is hoped that the deal will help foster increased trade and investment between China and the UK, the initial focus will be as a tool to promote London’s role in international currency markets. At Rmb200bn, the swap line is similar in size to those with Australia and Brazil, but is just half that with Hong Kong, reflecting the city’s continued position as the main global hub for offshore renminbi trading.
Myanmar Agriculture Sector Needs a Major Boost. The government will need US$120 million in technical assistance to implement agricultural development projects, according to a United Nations Food and Agriculture Organization representative. Speaking at a global summit on agricultural trade, investment and technology, Bui Thi Lan laid out the priorities for Myanmar’s agricultural sector. In the medium term, until 2016, priority would go to increasing production for food security, followed by improving food safety and quality, sustainable management, human resources and capacity-building, improving rural livelihoods, land-use management and preparing for natural disasters and climate change. Agricultural production in Myanmar is low despite the abundance of water and fertile land, with output per worker of only about $1300, half that of Thailand and Indonesia, according to a McKinsey report released on May 30. Myanmar has a total of 12.25 million hectares of arable land and permanent crops, the 25th largest endowment in the world. The full growth potential of agriculture is critical to ensuring the country’s economy, as 52 percent of the workforce is employed in agriculture, the report said.
Page 3 of 7
IFIs NEWS (compiled from their websites) BIS – Press Release: Guy Debelle appointed Chairman of the Markets Committee
At the Markets Committee’s meeting held at the BIS in Basel last weekend, the Central Bank Governors of the Global Economy Meeting (GEM)1 appointed Mr Guy Debelle as Chairman of the Markets Committee.2 Mr Debelle is an Assistant Governor (Financial Markets) at the Reserve Bank of Australia. Mr Debelle's appointment as Chairman of the Markets Committee is for a term of three years starting immediately. He succeeds Mr Hiroshi Nakaso, Deputy Governor of the Bank of Japan, who has been Markets Committee Chairman since June 2006. http://www.bis.org/press/p130624.htm
World Bank – Publication: “Malaysia Economic Monitor, June 2013: Harnessing Natural Resources”
Resilient domestic demand will allow the Malaysian economy to recover from a slow first quarter in 2013, says a new World Bank report titled “Malaysia Economic Monitor, June 2013: Harnessing Natural Resources” released on June 24, 2013. GDP is expected to grow by 5.1% for both 2013 and 2014, driven by higher consumer and business spending. As the global recovery gathers speed in 2014, the Bank report states, Malaysia's external sector will increase its contribution to growth, offsetting the impact of tighter fiscal policies on the domestic economy. http://www.worldbank.org/en/news/press-release/2013/06/24/malaysia-smartnatural-resource-management-ensures-smooth-path-to-high-income-economy (Press Release) http://www.worldbank.org/content/dam/Worldbank/document/EAP/malaysia/Malaysi a_Economic_Monitor_June2013.pdf (Report) http://www.worldbank.org/en/country/malaysia/publication/malaysia-economicmonitor-june-2013-harnessing-natural-resources (Key Findings of the Report)
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 24-Jun 25-Jun close China 6.23 6.13 6.14 6.14 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 10,009.00 9,949.00 Japan 86.75 94.31 97.73 97.43 Korea 1,064.40 1,126.25 1,161.23 1,159.65 Malaysia 3.06 3.11 3.22 3.19 Philippines 41.01 42.81 43.88 43.46 Singapore 1.22 1.25 1.28 1.27 Thailand 30.59 30.57 31.08 30.94 Vietnam 20,840.00 21,003.00 21,036.00 21,033.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
% change -0.01 0.02 0.60 0.31 0.14 1.04 0.95 0.52 0.45 0.01
2013 YTD (%chg) 1.4 -0.1 -3.0 -10.4 -8.3 -4.7 -6.0 -3.8 -2.0 -0.9
1
The members of the GEM are the central bank Governors of Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, the Netherlands, Poland, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the United States and also the President of the European Central Bank and the President of the Federal Reserve Bank of New York. 2 The Markets Committee is a forum for senior central bank officials to jointly monitor developments in financial markets and assess their implications for the market operations of central banks.
Page 4 of 7
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
24-Jun 1,963.2 19,814.0 4,429.5 13,062.8 1,799.0 1,738.2 5,971.1 3,074.3 1,364.1 489.7
OVERNIGHT LENDING RATE (%) 24-Jun 25-Jun bps change 6.650 5.830 -82.00 0.084 0.081 -0.21 4.447 4.449 0.14 0.090 0.093 0.25 2.500 2.500 0.00 3.000 3.000 0.00 1.480 0.737 -74.30 0.062 0.062 0.00 2.500 2.500 0.00 0.800 0.827 2.70
25-Jun
% change
1,959.5 19,855.7 4,454.0 12,969.3 1,780.6 1,731.3 5,789.1 3,090.5 1,373.0 473.0
-0.19 0.21 0.55 -0.72 -1.02 -0.40 -3.05 0.53 0.66 -3.41
2013 YTD (%chg) -13.6 -14.8 2.5 24.8 -12.3 3.4 -1.2 -3.5 -2.4 13.1
3-MONTH INTERBANK LENDING RATE (%) 24-Jun 25-Jun bps change 5.724 5.641 -8.30 0.384 0.383 -0.07 5.291 5.310 1.86 0.230 0.230 0.00 2.690 2.690 0.00 3.200 3.200 0.00 0.968 0.555 -41.30 0.373 0.373 0.00 2.601 2.601 0.00 3.986 3.740 -24.60
CREDIT DEFAULT SWAP (IN BPS) 21-Jun 24-Jun bps change China 122.87 141.42 18.55 Hong Kong SAR 54.10 55.65 1.55 Indonesia 236.61 261.72 25.11 Japan 86.23 87.23 1.00 Korea 99.99 111.75 11.76 Malaysia 121.94 139.50 17.56 Philippines 136.67 150.99 14.32 Thailand 122.95 141.48 18.53 Vietnam 257.86 271.99 14.13 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 24-Jun 25-Jun Gold Spot (in US$ per 1,282.4 1,288.5 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change 0.47
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
Page 5 of 7
SOVEREIGN BOND RATES (%, 5-YEAR) Previous wk's 2012 close close 3.220 3.270 China 0.396 1.148 Hong Kong SAR 4.806 6.336 Indonesia 0.185 0.355 Japan 2.980 3.320 Korea 3.185 3.329 Malaysia 4.115 3.165 Philippines 0.330 1.300 Singapore 3.195 3.400 Thailand 11.000 8.550 Vietnam
24-Jun
25-Jun
3.390 1.333 6.440 0.352 3.430 3.329 3.415 1.610 3.470 8.550
bps change
3.390 1.333 6.462 0.337 3.320 3.329 3.892 1.610 3.430 8.350
0.000 0.000 2.200 -1.500 -11.000 0.000 47.710 0.000 -4.000 -20.000
2013 YTD (change bps) 17.000 93.700 165.600 15.200 34.000 14.400 -22.370 128.000 23.500 -265.000
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
2013
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 17.2 118.2 66.9 30.9
Short-term external debt
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.8 2.2 2.6 -
Reserves over short-term debt
(US$bn) (US$bn) China 3,442.7 540.9 6.4 Hong Kong SAR 305.7 752.6 0.4 Indonesia 105.1 44.6 2.4 Japan 1,250.2 2,147.9 0.6 Korea 328.1 126.7 2.6 Malaysia 141.4 32.9 4.3 Philippines 82.0 9.8 8.4 Singapore 258.4 964.3 0.3 Thailand 176.5 63.0 2.8 Vietnam 23.2 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies
SOUTH KOREA PHILIPPINES PHILIPPINES HONG KONG HONG KONG
Indicators
SK Consumer Confidence Trade Balance (USD mn) Total Imports (YoY)% Exports YoY% Imports YoY%
Period
Jun Apr Apr May May
Last
Previous
105 -1020 7.4 -1.0 1.7
Page 6 of 7
104 -593 -8.4 9.0 7.7
HONG KONG
Trade Balance (HKD bn)
May
-44.3
-42.7
SELECTED ECONOMIC RELEASES CALENDAR (24 – 28 JUNE 2013) Expected Release Date
6/24/2013
6/25/2013
6/26/2013
6/27/2013 6/28/2013
Economies
Indicators
Period
VIETNAM
CPI (YoY) %
June
SINGAPORE
CPI (YoY) %
May
HONG KONG
Current Account
1Q
HONG KONG SOUTH KOREA PHILIPPINES PHILIPPINES HONG KONG HONG KONG HONG KONG VIETNAM VIETNAM VIETNAM VIETNAM VIETNAM SOUTH KOREA SOUTH KOREA SINGAPORE THAILAND THAILAND SOUTH KOREA JAPAN SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN JAPAN JAPAN THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND PHILIPPINES
Balance of Payments - Overall SK Consumer Confidence Trade Balance (USD mn) Total Imports (YoY)% Exports YoY% Imports YoY% Trade Balance (HKD bn) Imports YTD (YoY)% Exports YTD (YoY)% Retail Sales YTD (YoY)% Industrial Production Index YoY % GDP Constant Prices YTD (YoY)% Business Survey- Manufacturing Business Survey- Non-Manufacturing Industrial Production YoY% Customs Exports (YoY)% Customs Imports (YoY)% Current Account in (USD mn) All Industry Activity Index (MoM) % Industrial Production (YoY)% Industrial Production (MoM)% Job-To-Applicant Ratio Jobless Rate % National CPI Ex Food, Energy YoY % National CPI YoY % Industrial Production YOY% Foreign Reserves (USD bn) Business Sentiment Index Total Exports YOY% Total Imports YOY% Current Account Balance (USD mn) Total Trade Balance (USD mn) Budget Deficit/Surplus (PHP bn)
1Q Jun Apr Apr May May May Jun Jun Jun Jun 2Q Jul Jul May May May May Apr May May May May May May May P Jun 21 May May May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 7 of 7
MARKET UPDATE FOR ASEAN+3 26 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •
Asian Stocks Rise on U.S. Data, Easing China Cash-Crunch. Asian stocks rose for the first time in three days after better-than-estimated U.S. data bolstered the outlook for the world’s largest economy and China’s central bank sought to ease cash crunch concerns. The MSCI Asia Pacific Index added 0.9 percent to 126.17 as of 5:48 p.m. in Tokyo, with almost two shares rising for each that fell on the measure. The gauge dropped 13 percent through yesterday from this year’s high on May 20 after Federal Reserve Chairman Ben S. Bernanke said policy markers may start dialing down stimulus if the U.S. economy shows sustained improvement, and as money-market rates in China surged to records.
•
Yen Strengthens for Fourth Day Against Euro Amid China Concern. The yen strengthened for a fourth day against the euro as Chinese equities declined for a sixth day even as the central bank gave the first official signs of relief for a cash squeeze in the economy. Japan’s currency rose versus most of its 16 major counterparts as the Shanghai Composite Index (SHCOMP) slid as much as 1.9 percent. The euro fell to a three-week low against the dollar after European Central Bank President Mario Draghi said yesterday the region still requires an accommodative monetary policy.
•
Treasuries Advance, Snap Longest Run of Losses Since March 2012. Treasuries advanced, with 10-year notes gaining for the first time in eight days, ending their longest run of declines in more than a year. Treasury inflation-linked securities headed for their second-worst monthly slump on record before U.S. data tomorrow that economists said will show the Federal Reserve’s preferred measure of inflation was near an all-time low. The benchmark 10-year yield fell five basis points, or 0.05 percentage point, to 2.56 percent at 10:06 a.m. London time. The 1.75 percent note due in May 2023 rose 14/32, or $4.38 per $1,000 face amount, to 92 31/32. The yield had risen for the previous seven days, the longest run since the period ended March 19, 2012.
BREAKING NEWS GLOBAL •
Consumers to Factories Point to Durable Expansion in the US. Consumers and companies are starting to act as if the U.S. economic expansion is here to stay. Purchases of new homes jumped in May to a five-year high, while business investment plans improved for a third straight month, figures from the Commerce Department showed. Builders sold 476,000 new properties at an annualized rate last month, a 2.1 percent gain from April. The median selling price climbed to $263,900, up 10.3 percent from May 2012. Values of existing properties are also picking up. Home prices in 20 U.S. cities rose 12.1 percent in April from the same month in 2012, the biggest year-over-year gain since March 2006, a report from S&P/Case-Shiller showed. Americans are gaining confidence as their biggest asset, a house, becomes more valuable. The New York-based Conference Board’s consumer sentiment index increased to 81.4 in June from 74.3 a month earlier, data from the private research group showed. Cars and light trucks sold at a 15.2 million Page 1 of 8
annualized rate in May, putting 2013 on course to be the best year for automakers since 2007, according to industry figures. •
Global Central Bankers Say Tighter Policy Is a Long Way Off. Global central bankers led by Federal Reserve officials said they are still a long way off from tightening monetary policy, seeking to calm investors unnerved by the Fed’s push toward curtailing bondbuying. Bank of England Governor Mervyn King and European Central Bank Executive Board member Benoit Coeure today echoed Fed counterparts in saying policy will stay loose to safeguard economic expansion. The Europeans’ comments come a day after two regional Fed presidents emphasized that U.S. policy remains accommodative. Richard Fisher, president of the Federal Reserve Bank of Dallas and a critic of the Fed’s easing policies, said yesterday that officials are talking about a “dialing back,” not an exit. Minneapolis Fed President Narayana Kocherlakota, who has called for easier policy, said the Fed must emphasize in its statement that policy will remain accommodative “for a considerable time” after the end of quantitative easing.
•
EU Resumes Battle Over Imposing Losses at Failing Lenders. European Union finance ministers convene in Brussels today to continue their battle over how to handle failing banks, aiming to break a deadlock that sent them home empty-handed after 19 hours of talks last week. Irish Finance Minister Michael Noonan, chairing his final meeting of Ireland’s six-month EU presidency, will push hard to get a deal that he says is essential for keeping the EU’s crisis-fighting strategy on track. Noonan arrives in Brussels this afternoon for a series of smaller meetings ahead of this evening’s 27-nation gathering. Talks in Luxembourg foundered on the question of which creditors face write-downs when banks fail. Some countries demanded more flexibility for national authorities, while others sought strict rules across all 27 EU nations. Ministers considered several ways to set thresholds for losses that would need to be assigned via strict formulas before national discretion would be allowed.
REGIONAL •
China Swap Drops for a Fourth Day as PBOC Eases Cash Squeeze. The cost of locking in China’s interest rates slid for a fourth day, the longest run of declines since February, and money-market rates fell after the central bank pledged to ease the worst cash crunch in a decade. The People’s Bank of China has provided financing to some financial institutions to stabilize interbank lending rates and will use short-term liquidity operations and existing loan-facility tools to ensure steady markets, according to a statement posted on its website yesterday. It also called on commercial banks to improve their cash management. The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repurchase rate, slid 14 basis points, or 0.14 percentage point, to 3.93 percent as of 2:47 p.m. in Shanghai, data compiled by Bloomberg show. It reached an all-time high of 5.06 percent on June 20. The seven- and one-day repo rates both declined.
•
Bangko Sentral ng Pilipinas rules out capital controls. Capital controls to stabilize the country’s financial markets are off the table despite the recent crash in local share prices and the depreciation of the peso, the Bangko Sentral ng Pilipinas (BSP) said Tuesday. As asset prices in emerging markets collapse because investors are pulling out of emerging Page 2 of 8
markets due to an improving US economy, the BSP said it remained confident that the country’s macroeconomic fundamentals would be enough to keep the Philippine economy thriving. •
Philippine Imports Post Recovery. Merchandise imports recovered in April, after slumping in the first quarter, due to higher purchases of transport equipment, industrial equipment, consumer goods and petroleum. Imports summed up to $5.14 billion, up by 7.4% compared to the same month last year, the National Statistics Office (NSO) yesterday announced. The strong April turnout was not enough to offset import declines of 7.9%, 5.8% and 8.4% in January, February and March, respectively. Aggregate imports summed to $19.498 billion, 3.9% lower compared to the same fourmonth period in 2012. The government is targeting imports and exports growth of 12% and 10%, respectively, for 2013.
•
Korea Government may purchase corporate bonds to revive sagging market. The Financial Supervisory Service (FSS) is considering a set of measures to revive a sagging corporate bond market, FSS officials said Tuesday. Demands for corporate bonds have dropped sharply in recent months amid rising default risks for construction, shipbuilding and shipping firms. They have been hit hard by a protracted economic slump and sluggish overseas sales. In addition to the woes is increased financial market volatility triggered by the U.S. move to drop its monetary stimulus policy. Financial Services Commission Chairman Shin Je-yoon indicated earlier that the government will take over bonds from corporations that are having difficulty in selling them, using state-run financial institutions.
•
Fuel price hike in Indonesia is in line with policy assumption, according to Fitch. Rating agency Fitch says recent Indonesian policies, including the subsidized-fuel hike, are a move toward cooling the economy and achieving sustainable growth. “Our assumption that the authorities would manage policy along broadly appropriate lines is one of the factors that supported Indonesia's upgrade to 'BBB-' in December 2011,” Fitch said in a press statement on Tuesday. “This assumption remains an important element in our credit assessment. Indonesia's sovereign credit profile has benefited from stronger and less volatile economic growth than its 'BBB' range peers,” the rating agency added. Fitch stressed that delivering a macroeconomic policy mix that delivers sustainable growth was important. Inflation and current account deficit developments suggest that growth might stand at about 5.5 percent to six percent, according to Fitch.
•
Manufacturing output in Singapore rises 2.1% on-year in May. Singapore's manufacturing output beat market expectations to record a 2.1 per cent increase in May from a year ago, led mainly by growth in the biomedical manufacturing sector. Singapore's improved factory output was driven mainly by growth in the biomedical manufacturing cluster which climbed 22.8 per cent on-year in May. Within the biomedical cluster, pharmaceuticals production expanded 25.2 per cent, supported by higher production of active pharmaceutical ingredients while medical technology manufacturing grew 10.7 per cent. Meanwhile, electronics production output rose 4.3 per cent in May, compared to the same period a year ago. In particular, the other electronics modules and components segment jumped 55.6 per cent on the back of high regional demand for electronics components. Page 3 of 8
IFIs NEWS (compiled from their websites) ADB – Publication: Publication of “Same Energy, More Power: Accelerating Energy Efficiency in Asia” at 8th Asia Clean Energy Forum • At the 8th Asia Clean Energy Forum in Manila today, the ADB has publicised the abovestated study report, which highlights the booming demand for power in developing Asia. According to the report, the region’s share of primary global energy consumption is set to rise from 34% in 2010 to as much as 56% in 2035. By then, most Asian countries will produce less than half of the energy they need, forcing substantial fuel imports. Under such circumstances, the report advocates that implementing energy efficiency measures is more cost effective than expanding energy generation, and energy efficiency investments equivalent to 1% - 4% of energy sector spending could meet as much as 25% of the projected increase in primary energy consumption in developing Asia by 2030. http://www.adb.org/news/adb-aims-accelerate-demand-side-energy-efficiencyinvestments (Press Release) http://www.adb.org/sites/default/files/pub/2013/same-energy-more-power.pdf (Report) http://www.adb.org/news/events/8th-asia-clean-energy-forum-2013 (8th Asia Clean Energy Forum 2013) Basel Committee – Publication: “Regulatory Consistency Assessment Programme (RCAP) Assessment of Basel III regulations – Switzerland” • On June 25, 2013, the Basel Committee on Banking Supervision has published the abovestated report assessing the regulations that implement the Basel capital framework in Switzerland. The assessment team evaluated compliance of Switzerland's domestic capital rules vis-à-vis international Basel capital standards through its RCAP. Switzerland has implemented its Basel capital framework with an intention that it conforms closely to the Basel standard. The assessment found the implementation of the International Approach closely aligned with Basel III standards and therefore assessed it as "compliant". 11 out of 14 assessed components were found to be "compliant", while three of the components were graded "largely compliant" (definition of capital, credit risk-IRB, and Pillar 3). Although some differences with the Basel framework were found in these three areas, none of the findings were evaluated to be material at this point. http://www.bis.org/press/p130625.htm (Press Release) http://www.bis.org/bcbs/implementation/l2_ch.pdf (Report) http://www.bis.org/bcbs/implementation/l2.htm (Earlier Country Reports for Level Two of RCAP Assessment of Basel III Capital Standards: European Union, Japan, United States and Singapore) FSB – Press Release: Meeting of the Financial Stability Board in Basel, Switzerland • The FSB convened for a meeting in Basel, Switzerland on June 24, 2013. At the meeting, discussions were held with regards to the vulnerabilities in the global financial system and the progress in authorities' work to strengthen financial regulation, including on resolution of financial institutions, global systemically important insurers and OTC derivatives reforms. http://www.financialstabilityboard.org/press/pr_130625.pdf
Page 4 of 8
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 25-Jun 26-Jun close China 6.23 6.13 6.14 6.15 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 9,920.00 9,965.00 Japan 86.75 94.31 97.81 97.52 Korea 1,064.40 1,126.25 1,159.65 1,154.45 Malaysia 3.06 3.11 3.18 3.20 Philippines 41.01 42.81 43.34 43.45 Singapore 1.22 1.25 1.27 1.27 Thailand 30.59 30.57 30.96 31.13 Vietnam 20,840.00 21,003.00 21,036.00 21,036.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
2013 YTD (%chg) 1.4 -0.1 -3.1 -10.4 -7.9 -5.1 -6.0 -4.0 -2.6 -0.9
% change -0.04 0.00 -0.45 0.30 0.45 -0.51 -0.25 -0.18 -0.55 0.00
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
25-Jun 1,959.5 19,855.7 4,418.9 12,969.3 1,780.6 1,728.6 5,789.1 3,089.9 1,384.6 473.0
OVERNIGHT LENDING RATE (%) 25-Jun 26-Jun bps change 5.830 5.550 -28.00 0.081 0.081 -0.07 4.449 4.450 0.14 0.093 0.093 0.00 2.500 2.500 0.00 3.000 3.000 0.00 0.737 -1.784 -252.10 0.048 0.048 0.00 2.500 2.500 0.00 0.827 0.800 -2.70
26-Jun
% change
1,951.5 20,338.6 4,587.7 12,834.0 1,783.5 1,740.8 6,118.9 3,107.1 1,420.8 473.5
-0.41 2.43 3.82 -1.04 0.16 0.70 5.70 0.56 2.61 0.11
2013 YTD (%chg) -14.0 -12.8 5.6 23.5 -12.2 3.9 4.4 -3.0 0.9 13.2
3-MONTH INTERBANK LENDING RATE (%) 25-Jun 26-Jun bps change 5.641 5.582 -5.90 0.383 0.382 -0.07 5.310 5.329 1.93 0.230 0.230 0.00 2.690 2.690 0.00 3.200 3.200 0.00 0.555 0.300 -25.50 0.373 0.373 0.00 2.601 2.601 0.00 3.740 3.740 0.00
CREDIT DEFAULT SWAP (IN BPS) 24-Jun 25-Jun bps change China 141.42 138.93 -2.49 Hong Kong SAR 55.65 56.30 0.65 Indonesia 261.72 250.52 -11.20 Japan 87.23 89.18 1.95 Korea 111.75 110.75 -1.00 Malaysia 139.50 136.52 -2.98 Philippines 150.99 148.03 -2.96 Thailand 141.48 138.54 -2.94 Vietnam 271.99 267.50 -4.49 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 25-Jun Gold Spot (in US$ per
1,277.7
26-Jun 1,233.3
% change -3.47
Page 5 of 8
ounce) Sources: Bloomberg & Thomson Reuters Datastream CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
SOVEREIGN BOND RATES (%, 5-YEAR) Previous wk's 2012 close close 3.220 3.270 China 0.396 1.148 Hong Kong SAR 4.806 6.336 Indonesia 0.185 0.355 Japan 2.980 3.320 Korea 3.185 3.329 Malaysia 4.115 3.165 Philippines 0.330 1.300 Singapore 3.195 3.400 Thailand 9.650 7.800 Vietnam
25-Jun
26-Jun
3.490 1.256 6.403 0.337 3.320 3.575 3.892 1.500 3.450 7.800
3.490 1.256 6.498 0.341 3.250 3.575 4.077 1.500 3.450 7.675
bps change
2013 YTD (bps)
0.000 0.000 9.500 0.400 -7.000 0.000 18.540 0.000 0.000 -12.500
27.000 86.000 169.200 15.600 27.000 39.000 -3.830 117.000 25.500 -197.500
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
2013
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand
(US$bn) 3,442.7 305.7 105.1 1,250.2 328.1 141.4 82.0 258.4 176.5
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 17.2 118.2 66.9
Short-term external debt (US$bn) 540.9 752.6 44.6 2,147.9 126.7 32.9 9.8 964.3 63.0
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.8 2.2 2.6
Reserves over short-term debt 6.4 0.4 2.4 0.6 2.6 4.3 8.4 0.3 2.8
Page 6 of 8
Vietnam 23.2 30.9 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies
SOUTH KOREA SOUTH KOREA SINGAPORE THAILAND THAILAND
Indicators
Business Survey- Manufacturing Business Survey- Non-Manufacturing Industrial Production YoY% Customs Exports (YoY)% Customs Imports (YoY)%
Period
Last
Jul Jul May May May
Previous
78 69 2.1 -5.25 -2.14
82 69 4.7 2.89 8.91
SELECTED ECONOMIC RELEASES CALENDAR (24 – 28 JUNE 2013) Expected Release Date
6/24/2013
6/25/2013
6/26/2013
6/27/2013 6/28/2013
Economies
Indicators
Period
VIETNAM
CPI (YoY) %
June
SINGAPORE
CPI (YoY) %
May
HONG KONG
Current Account
1Q
HONG KONG SOUTH KOREA PHILIPPINES PHILIPPINES HONG KONG HONG KONG HONG KONG VIETNAM VIETNAM VIETNAM VIETNAM VIETNAM SOUTH KOREA SOUTH KOREA SINGAPORE THAILAND THAILAND SOUTH KOREA JAPAN SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN JAPAN JAPAN THAILAND THAILAND
Balance of Payments - Overall SK Consumer Confidence Trade Balance (USD mn) Total Imports (YoY)% Exports YoY% Imports YoY% Trade Balance (HKD bn) Imports YTD (YoY)% Exports YTD (YoY)% Retail Sales YTD (YoY)% Industrial Production Index YoY % GDP Constant Prices YTD (YoY)% Business Survey- Manufacturing Business Survey- Non-Manufacturing Industrial Production YoY% Customs Exports (YoY)% Customs Imports (YoY)% Current Account in (USD mn) All Industry Activity Index (MoM) % Industrial Production (YoY)% Industrial Production (MoM)% Job-To-Applicant Ratio Jobless Rate % National CPI Ex Food, Energy YoY % National CPI YoY % Industrial Production YOY% Foreign Reserves (USD bn) Business Sentiment Index
1Q Jun Apr Apr May May May Jun Jun Jun Jun 2Q Jul Jul May May May May Apr May May May May May May May P Jun 21 May
Page 7 of 8
THAILAND THAILAND THAILAND THAILAND PHILIPPINES
Total Exports YOY% Total Imports YOY% Current Account Balance (USD mn) Total Trade Balance (USD mn) Budget Deficit/Surplus (PHP bn)
May May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 8 of 8
MARKET UPDATE FOR ASEAN+3 27 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian Stocks Set to Gain Most Since September on Fed Bets. Asian stocks rose, with the regional benchmark index on course for its biggest gain since September, as slower-thanestimated U.S. economic growth stoked speculation the Federal Reserve may hold back from reducing stimulus. The MSCI Asia Pacific Index increased 1.8 percent to 128.52 as of 5:52 p.m. in Tokyo, with almost five shares rising for each that fell.
Yen Declines, Paring Monthly Gains. The yen fell at least 0.3 percent versus all 16 of its major peers, paring monthly gains. The Dollar Index halted a six-day advance after Federal Reserve Bank of Richmond President Jeffrey Lacker said yesterday the Fed isn’t close to cutting bond holdings accrued in its quantitative-easing program. The euro rallied from near a three-week low against the dollar as European Union finance chiefs struck an agreement on how to deal with failing banks. The Japanese currency weakened 0.4 percent to 98.12 per dollar at 9:30 a.m. London time. It fell 0.6 percent to 127.88 per euro. The greenback slid 0.2 percent to $1.3031 per euro. It touched $1.2985 yesterday, the strongest since June 3. The Dollar Index, which Intercontinental Exchange Inc. uses to monitor the greenback against the currencies of six U.S. trade partners, fell 0.1 percent to 82.881, slipping from the highest close this month. Meanwhile, U.S. Treasuries advanced, pushing 10-year yields down two basis points to 2.52 percent as of 9:38 a.m. London time.
WTI Rises for a Fourth Day on U.S. Refining Boost, China Profits. West Texas Intermediate climbed for a fourth day as U.S. refiners boosted crude processing to the highest rate this year and industrial profits increased in China, the world’s second-largest oil consumer. U.S. refineries operated at 90.2 percent of combined capacity last week even as stockpiles rose, government data showed yesterday. Profit at Chinese industrial companies was up 16 percent in May from a year earlier, according to China’s National Bureau of Statistics today. WTI for August delivery rose as much as 64 cents to $96.14 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.80 at 9:16 a.m. London time.
BREAKING NEWS GLOBAL
Tax Bite Curbs U.S. Growth Along With Consumer Spending. Growth in the world’s largest economy was less than originally estimated in the first quarter as an increase in the U.S. payroll tax took a bigger bite out of consumer spending than previously calculated. Gross domestic product grew at a 1.8 percent annualized rate from January through March, down from a prior reading of 2.4 percent, Commerce Department data showed today in Washington. Household purchases were trimmed to a 2.6 percent advance, still the fastest in two years -- from the 3.4 percent gain estimated last month. Americans cut back on services from vacations to legal advice as the two percentagepoint increase in the payroll tax caused incomes to drop by the most in more than four years. At the same time, an improving labor market and rising home prices are Page 1 of 9
underpinning consumer confidence, one reason economists project growth will pick up in the second half of the year.
ECB Policy Makers Say Accommodative Monetary Policy to Stay. European Central Bank policy makers including President Mario Draghi said they’ll maintain a loose monetary stance for as long as needed, while urging euro area governments to cut their deficits and boost investment. The ECB’s monetary policy “will stay accommodative for the foreseeable future,” Draghi said today in a speech at the French National Assembly in Paris. “We have an open mind about all other possible instruments that we may consider proper to adopt.” An exit is “very distant,” he said at a press conference. Draghi’s position was reiterated in later speeches by ECB Executive Board members Joerg Asmussen and Yves Mersch, and Governing Council member Christian Noyer. Central bankers from the Bank of England to the Fed yesterday said they are still a long way off from tightening.
Emerging Markets FDI Inflows Top Advanced Nations for First Time. Foreign direct investment into emerging economies surpassed that into developed markets for the first time last year even as such inflows slowed globally, the United Nations said. Developing countries received 52 percent of investors’ funds in 2012, compared with 45 percent the year before, the United Nations Conference on Trade and Development said in a report today. Foreign direct investment globally fell 18 percent to $1.35 trillion last year, and is forecast to be around the same level in 2013, it said. The agency defines FDI as a lasting interest in an enterprise in a foreign economy. The shift to emerging nations reflected companies turning their focus last year to fastergrowing regions as advanced countries struggled, with Europe and Japan suffering recessions. At the same time, the prospect of reduced U.S. monetary stimulus from later in 2013 is adding to the challenge of sustaining the faster pace of expansion in developing economies. Investments into advanced economies slid 32 percent to $561 billion, the lowest in almost a decade, while those into emerging nations dropped 4 percent to $703 billion, according to the report. Developed economies also invested less overseas as outflows fell 23 percent to $909 billion, while those by emerging countries rose 1 percent to $426 billion.
S&P Revises Monetary Score Criteria in Sovereign Ratings Update. Standard & Poor’s updated its sovereign rating methodology, giving reserve currency status its highest monetary score. Countries with a reserve currency receive the strongest score under the company’s monetary criteria category, one of five the largest credit rater examines to rank sovereign nations, the New York-based unit of McGraw Hill Financial said in a June 24 report. The top spot was previously defined as floating currencies. The reserve currency status was already considered under a separate category.
EU Finance Chiefs Said to Reach Deal on Failing Banks. European Union finance chiefs struck an agreement on how to handle failing banks, a step they said would bolster investor confidence and help overcome the euro-area financial crisis. In seven hours of emergency negotiations in Brussels that wrapped up at about 1:30 a.m. today, ministers settled on guidelines for assigning losses to private creditors and regulating public assistance. They also spelled out when governments can step in and established a role for the European Stability Mechanism, the euro area’s 500 billion-euro ($651 Page 2 of 9
billion) firewall fund. The deal came hours before EU government leaders meet to take stock of the progress toward their 2012 pledge to break the cycle of contagion between banks and sovereign borrowers. The European Central Bank is due to oversee financial supervision in the euro zone next year, the first stage in a strategy combining new EU resolution procedures along with national backstops. REGIONAL
China Swap, Money Rates Fall for Fifth Day on PBOC Easing Signs. China’s benchmark interest-rate swap and interbank lending rate fell for a fifth day, the longest runs of declines in at least two months, on signs the central bank is adding funds selectively to ease a cash squeeze. About 10 transactions for overnight loans in the interbank market were recorded yesterday after 3:55 p.m. in Shanghai at rates of between 3.5 percent and 4 percent, according to data compiled by Bloomberg. Those were the lowest levels of the day and compared with the daily average of 5.51 percent. The People’s Bank of China signaled this week that while it won’t let the cash crunch roil money markets, any liquidity support will be focused on banks that are lending to help the economy. The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repurchase rate, dropped six basis points, or 0.06 percentage point, to 3.85 percent as of 12:16 p.m. in Shanghai, data compiled by Bloomberg show. It reached an all-time high of 5.06 percent on June 20 and rose 54 basis points this month, the most since January 2011.
Goldman Sachs downgrades several Asean outlooks. Several Asean economies' outlooks, including Malaysia's, have been downgraded by Goldman Sachs, with economists citing the impact from a slowing Chinese economy as a reason for the gloomier forecast. The economists said in a report that Malaysia's gross domestic product (GDP) had been lowered to 5.1% year-on-year from 5.3% for this year, while 2014's GDP growth had been cut to 5.2% from 5.5%. They have also cut Singapore's GDP growth forecast this year to 2.5% from 3%, pointing to “moderately tighter” financial conditions to the outlook. Thailand's GDP forecast has been lowered to 4.6% from 4.8% this year, while next year's GDP outlook has been cut to 4.7% from 5%. The investment bank's Hong Kong-based senior economist Li Cui had in a June 23 report downgraded China's growth to 7.5% from 7.8% for the second quarter ending June 30, and expects full-year growth of 7.4% for 2013 (from 7.8%) and 7.7% (from 8.4%) for next year.
Korea raises growth outlook. South Korea on Thursday raised its 2013 economic growth outlook to 2.7 per cent from 2.3 per cent, citing payoffs from back-to-back stimulus measures. The last forecast predicting a 2.3 per cent GDP growth was made in March. The government also predicted that the fourth largest economy in Asia would expand four per cent next year. Since President Park Geun-Hye took office in February, the government has engaged in various stimulus efforts including a 17.3 trillion won ($14.99 billion) supplementary budget alongside a set of policies aimed at boosting the slumping property market and encouraging corporate investment. Some analysts, however, have warned that the government has set its bar too high, pointing out the latest volatility over a feared winding down of the US stimulus programme.
Page 3 of 9
Vietnam Economic Growth Quickens as Investment Aids Exports. Vietnam’s economic growth accelerated in the second quarter after the central bank cut interest rates to revive lending to businesses and rising foreign investment boosted the nation’s exports. Gross domestic product grew 5 percent in the second quarter from a year earlier, according to figures released today by the General Statistics Office in Hanoi. The economy expanded 4.9 percent in the first half from a year earlier, the data showed, compared with a median estimate of 5 percent in a Bloomberg News survey of seven economists. Vietnam’s central bank has cut its refinancing rate eight times since the beginning of 2012 to spur lending, and the government is setting up an asset management company to clear bad debt. The legislature last week voted to lower the corporate income tax rate to help businesses, while disbursed foreign investment rose 5.6 percent in the first half of the year to $5.7 billion, according to the Ministry of Planning & Investment.
Indonesia Freezes public transport fares in Jakarta. TransJakarta canceled plans to raise fares 43 percent on Wednesday as part of an effort to encourage Jakarta residents to choose public transportation, Governor Joko Widodo said. The public transit authority planned to increase ticket prices to Rp 5,000 a ride in response to the central government's fuel subsidy cuts. But the plan was abandoned over worries it would discourage commuters from choosing public transit and add to the capital's already serious traffic congestion. Joko's decision to freeze TransJakarta fares pulled the hike off the table, but still left the door open for the capital's other public transit groups to increase prices. The organizations behind Jakarta's ramshackle minibuses, as well as its iconic blue public minivan system, have all pushed to increase fares from Rp. 2,000 to Rp. 3,000. Some minibus operators were already charging higher fares on Wednesday despite a lack of city council approval.
IFIs NEWS (compiled from their websites) Basel Committee – Consultation: “Revised Basel III Leverage Ratio Framework and Disclosure Requirements” On June 26, 2013, the Basel Committee on Banking Supervision has publicised its consultative document on the Revised Basel III Leverage Ratio Framework and Disclosure Requirements. As well as strengthening the regulatory capital base and enhancing risk coverage, the Basel III reforms introduced a leverage ratio into the regulatory framework. The leverage ratio was designed to serve as an important backstop to the risk-based capital measures by constraining the build-up of leverage in the banking system and providing an extra layer of protection against model risk and measurement error. The released consultative document sets out a specific formulation for calculating the leverage ratio by banks subject to the Basel III framework, as well as a set of public disclosure requirements. Final adjustments to the definition and calibration of the leverage ratio will be made by 2017, with a view to migrating to a Pillar 1 treatment on 1 January 2018 based on appropriate review and calibration. Comments on this consultative report should be submitted by 20 September 2013 by email to baselcommittee@bis.org. http://www.bis.org/press/p130626.htm (Press Release) http://www.bis.org/publ/bcbs251.htm (Consultative Document) Page 4 of 9
IMF – Press Release: IMF Executive Board Concludes 2013 Article IV Consultation with Brunei Darussalam On April 18, 2013, the Executive Board of the IMF concluded the Article IV consultation with Brunei Darussalam and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis.1 The following is an excerpt of the Executive Directors’ endorsement of the staff’s appraisal: “Sound policies have helped maintain macroeconomic stability, despite a temporary downturn in hydrocarbon production. Staff welcomes the increase in development spending, which, in addition to mitigating the impact of the lower hydrocarbon production on the non-energy sector, should also help boost medium term growth prospects. Overall, fiscal policy remains prudent, allowing the government to continue building savings that will help maintain the welfare of the population over the long term and provide a buffer against short run shocks to the energy sector. The currency peg has underpinned both exchange rate and domestic price stability. The real exchange rate appears to be broadly in line with fundamentals.” http://www.imf.org/external/np/sec/pn/2013/pn1371.htm (Press Release) http://www.imf.org/external/pubs/ft/scr/2013/cr13174.pdf (Country Report: Brunei Darussalam - Statistical Appendix) IMF – Press Release: Public Debt Management Forum and U.S. Treasury Roundtable on Treasury Markets and Debt Management Held at IMF Headquarters Senior debt managers, treasury officials, and central bankers from 40 advanced and emerging market economies, together with private market participants and academics, met in Washington, D.C., on June 19–20, 2013 for the 13th International Monetary Fund Public Debt Management Forum and 3rd U.S. Treasury Roundtable on Treasury Markets and Debt Management. At the Forum and the Roundtable, participants discussed the definition and measurement of liquidity in government bond markets and the benefits of having a liquid bond market. They also discussed the potential impacts of regulatory changes in the financial system and the unwinding of the unconventional monetary policies on the liquidity of government debt. On a final note, they agreed that efforts to strengthen the resilience of debt portfolios and to foster deep and liquid debt markets will continue to be a priority. http://www.imf.org/external/np/sec/pr/2013/pr13233.htm IMF – Working Papers The IMF has publicised the following working papers:
“Fiscal Policy over the Election Cycle in Low-Income Countries” http://www.imf.org/external/pubs/ft/wp/2013/wp13153.pdf
“Macro-Financial Implications of Corporate (De)Leveraging in the Euro Area Periphery” http://www.imf.org/external/pubs/ft/wp/2013/wp13154.pdf
1
The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
Page 5 of 9
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 26-Jun 27-Jun close China 6.23 6.13 6.15 6.15 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 9,965.00 9,908.00 Japan 86.75 94.31 97.72 98.11 Korea 1,064.40 1,126.25 1,154.45 1,149.76 Malaysia 3.06 3.11 3.20 3.17 Philippines 41.01 42.81 43.45 43.43 Singapore 1.22 1.25 1.27 1.27 Thailand 30.59 30.57 31.11 31.14 Vietnam 20,840.00 21,003.00 21,036.00 21,018.00 Note: Negative values indicate depreciation and positive values indicate appreciation.
2013 YTD (%chg) 1.4 -0.1 -2.6 -11.0 -7.5 -4.4 -5.9 -3.7 -2.6 -0.8
% change -0.02 0.03 0.58 -0.40 0.41 0.78 0.05 0.57 -0.10 0.09
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
26-Jun 1,951.5 20,338.6 4,587.7 12,834.0 1,783.5 1,740.8 6,118.9 3,104.4 1,424.4 473.5
OVERNIGHT LENDING RATE (%) 26-Jun 27-Jun bps change 5.550 3.500 -205.00 0.081 0.081 0.00 4.450 4.450 0.00 0.093 0.095 0.25 2.500 2.500 0.00 3.000 3.000 0.00 -1.784 -0.611 117.30 0.048 0.048 0.00 2.500 2.500 0.00 0.800 0.814 1.40
27-Jun
% change
1,950.0 20,440.1 4,675.7 13,213.6 1,834.7 1,753.0 6,328.0 3,127.9 1,443.6 483.0
-0.08 0.50 1.92 2.96 2.87 0.70 3.42 0.76 1.35 1.99
2013 YTD (%chg) -14.1 -12.3 7.6 27.1 -9.7 4.7 8.0 -2.3 2.6 15.4
3-MONTH INTERBANK LENDING RATE (%) 26-Jun 27-Jun bps change 5.582 5.539 -4.30 0.382 0.382 0.00 5.329 5.346 1.64 0.230 0.230 0.00 2.690 2.690 0.00 3.200 3.200 0.00 0.300 0.295 -0.50 0.373 0.373 0.00 2.601 2.601 0.00 3.740 3.350 -39.00
CREDIT DEFAULT SWAP (IN BPS) 25-Jun 26-Jun bps change China 138.93 125.83 -13.10 Hong Kong SAR 56.30 57.10 0.80 Indonesia 250.52 222.14 -28.38 Japan 89.18 84.27 -4.91 Korea 110.75 98.54 -12.21 Malaysia 136.52 125.83 -10.69 Philippines 148.03 133.70 -14.33 Thailand 138.54 128.31 -10.23 Vietnam 267.50 255.59 -11.91 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.
Page 6 of 9
26-Jun 27-Jun Gold Spot (in US$ per 1,226.6 1,237.6 ounce) Sources: Bloomberg & Thomson Reuters Datastream
% change 0.90
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
SOVEREIGN BOND RATES (%, 5-YEAR) Previous wk's 2012 close close 3.220 3.270 China 0.396 1.148 Hong Kong SAR 4.806 6.336 Indonesia 0.185 0.355 Japan 2.980 3.320 Korea 3.185 3.329 Malaysia 4.115 3.165 Philippines 0.330 1.300 Singapore 3.195 3.400 Thailand 9.650 7.800 Vietnam Latest data are available on a one-day lag.
25-Jun
26-Jun
3.490 1.256 6.403 0.337 3.320 3.575 3.892 1.500 3.450 7.500
3.490 1.267 6.524 0.341 3.250 3.705 4.077 1.410 3.450 7.500
bps change
2013 YTD (bps)
0.000 1.100 12.100 0.400 -7.000 13.000 18.540 -9.000 0.000 0.000
27.000 87.100 171.800 15.600 27.000 52.000 -3.830 108.000 25.500 -215.000
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
2013
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a n.a n.a n.a 176.5 n.a
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines
(US$bn) 3,442.7 305.7 105.1 1,250.2 328.1 141.4 82.0
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 17.2
Short-term external debt (US$bn) 540.9 752.6 44.6 2,147.9 126.7 32.9 9.8
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.8
Reserves over short-term debt 6.4 0.4 2.4 0.6 2.6 4.3 8.4
Page 7 of 9
Singapore 258.4 118.2 964.3 2.2 0.3 Thailand 176.5 66.9 63.0 2.6 2.8 Vietnam 23.2 30.9 10.0 Notes: * Based on latest available data Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies
Indicators
SOUTH KOREA SOUTH KOREA JAPAN CHINA PHILIPPINES VIETNAM VIETNAM
Current Account in (USD mn) Goods Balance in (USD mn) All Industry Activity Index (MoM) % Industrial Profits YTD YoY (%) Budget Deficit/ Surplus (Pesos bn) Exports YTD (%, YoY) Trade Balance Monthly Value (USD mn)
Period
Last
May May Apr May May Jun Jun
Previous
8638.8 7270 0.4 12.3 -13.2 16.1 -200
3972.2 3589 -0.3 11.4 36.8 15.1 -1200
SELECTED ECONOMIC RELEASES CALENDAR (24 – 28 JUNE 2013) Expected Release Date
6/24/2013
6/25/2013
6/26/2013
6/27/2013 6/28/2013
Economies
Indicators
Period
VIETNAM
CPI (YoY) %
June
SINGAPORE
CPI (YoY) %
May
HONG KONG
Current Account
1Q
HONG KONG SOUTH KOREA PHILIPPINES PHILIPPINES HONG KONG HONG KONG HONG KONG VIETNAM VIETNAM VIETNAM VIETNAM VIETNAM SOUTH KOREA SOUTH KOREA SINGAPORE THAILAND THAILAND SOUTH KOREA JAPAN SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN
Balance of Payments - Overall SK Consumer Confidence Trade Balance (USD mn) Total Imports (YoY)% Exports YoY% Imports YoY% Trade Balance (HKD bn) Imports YTD (YoY)% Exports YTD (YoY)% Retail Sales YTD (YoY)% Industrial Production Index YoY % GDP Constant Prices YTD (YoY)% Business Survey- Manufacturing Business Survey- Non-Manufacturing Industrial Production YoY% Customs Exports (YoY)% Customs Imports (YoY)% Current Account in (USD mn) All Industry Activity Index (MoM) % Industrial Production (YoY)% Industrial Production (MoM)% Job-To-Applicant Ratio Jobless Rate % National CPI Ex Food, Energy YoY %
1Q Jun Apr Apr May May May Jun Jun Jun Jun 2Q Jul Jul May May May May Apr May May May May May
Page 8 of 9
JAPAN JAPAN THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND PHILIPPINES
National CPI YoY % Industrial Production YOY% Foreign Reserves (USD bn) Business Sentiment Index Total Exports YOY% Total Imports YOY% Current Account Balance (USD mn) Total Trade Balance (USD mn) Budget Deficit/Surplus (PHP bn)
May May P Jun 21 May May May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 9 of 9
MARKET UPDATE FOR ASEAN+3 28 June 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS
Asian Stocks Headed for Biggest Advance Since September. Asian stocks rose, with the regional benchmark index headed for its biggest gain in nine months, amid signs the Japanese and U.S. economies are improving and assurances on stimulus efforts by the Federal Reserve. The MSCI Asia Pacific Index climbed 2.0 percent to 130.84 as of 5:29 p.m. in Tokyo, heading for its biggest advance since September 14 last year.
The Yen Fell Against its Higher-yielding Peers Driven Down by Positive US data. The yen depreciated 0.6 percent to 98.95 per dollar at 8:29 a.m. London time. It has dropped 1.1 percent this week, adding to its 3.8 percent slide in the five days through June 21. The dollar fell 0.1 percent to $1.3048 versus the 17-nation euro, pushing its quarterly drop to 1.8 percent. The yen weakened 0.6 percent to 129.01 per euro.
Treasuries Rise a Third Day as Investors Weigh Stimulus Outlook. Treasuries advanced for a third day as investors weighed whether the world’s largest economy is expanding fast enough to prompt the Federal Reserve to taper monetary stimulus. The benchmark 10-year yield fell one basis point, or 0.01 percentage point, to 2.46 percent at 8:18 a.m. London time, according to Bloomberg Bond Trader prices. The 1.75 percent note due in May 2023 rose 1/8, or $1.25 per $1,000 face value, to 93 26/32. The yield has declined seven basis points this week.
WTI Rises a Fifth Day on Bets U.S. Economy Will Boost Oil Demand. West Texas Intermediate rose for a fifth day and was poised for a second quarterly advance as signs of economic recovery in the U.S. boosted the demand outlook in the world’s largest oil consumer. WTI for August delivery increased as much as 48 cents to $97.53 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.34 at 3 p.m. Singapore time. The contract rose $1.55, or 1.6 percent, to $97.05 yesterday, the biggest gain since May 3. The volume of all futures traded was 29 percent higher than the 100day average. Futures are up 5.9 percent this month and 0.1 percent in the second quarter.
BREAKING NEWS GLOBAL
Fed Officials Step Up Campaign to Stem Increase in Rates. Federal Reserve officials stepped up their campaign to stem an increase in long-term borrowing costs that threatens to blunt the U.S. expansion and sought to clarify comments by Chairman Ben Bernanke that sparked turmoil in global financial markets. William C. Dudley, president of the Federal Reserve Bank of New York, said any decision to reduce the pace of asset purchases wouldn’t represent a withdrawal of stimulus, and that an increase in the Fed’s benchmark interest rate is “very likely to be a long way off.” He said bond purchases could be prolonged if economic performance fails to meet the Fed’s forecasts. The remarks by Dudley, who also serves as vice chairman of the policy-setting Federal Open Market Committee, along with Fed Governor Jerome Powell and Atlanta Fed President Page 1 of 9
Dennis Lockhart sought to damp expectations that an increase in the benchmark interest rate will come sooner than previously forecast.
Consumer Spending in U.S. Rebounds as Incomes Increase. Consumer spending in the U.S. rebounded in May following the largest drop in more than three years, a sign the economy can weather a second-quarter slowdown. Household purchases rose 0.3 percent after a 0.3 percent decline the prior month that was the biggest since September 2009, according to Commerce Department data issued today in Washington. Other reports showed the housing recovery is gaining momentum and consumers are becoming more confident. Rising home prices, an improving job market and bigger income gains will help households overcome the payroll-tax increase that took effect in January, propelling spending in the last six months of 2013. The pickup will be needed to overcome the effects of the automatic federal budget cuts that began in March, which are contributing to weaker growth this quarter. Incomes advanced 0.5 percent in May following a 0.1 percent gain the prior month, the Commerce Department’s report also showed.
Jobless Claims in U.S. Declined 9,000 Last Week to 346,000. Fewer Americans filed claims for unemployment benefits last week, indicating employers are slowing the pace of firings as the economic outlook improves. Jobless claims decreased by 9,000 to 346,000 in the week ended June 22 from a revised 355,000 the prior period, the Labor Department reported today in Washington. Smaller reductions in headcounts indicate employers are confident enough that demand will be sustained as the housing market improves and consumers grow more optimistic. Bigger gains in sales may encourage companies to step up hiring and help reduce an unemployment rate.
European Economic Confidence Improves More Than Forecast. Economic confidence in the euro area improved more than economists forecast in June, adding to indications the 17-nation economy is starting to recover from the longest recession since the debut of the common currency. An index of executive and consumer sentiment rose to 91.3 from 89.5 in May, the biggest jump since July 2010, the European Commission in Brussels said today. The June reading, the highest in 13 months, was above the 90.4 median projection by economists in a Bloomberg News survey. European Central Bank President Mario Draghi said yesterday that policy makers will maintain a loose monetary stance for as long as needed. Today’s report “supports hopes that euro-zone economic activity may have finally stopped contracting in the second quarter,” said Howard Archer, chief U.K. and European economist at IHS Global Insight in London. The euro-area economy shrank 0.2 percent in the first quarter, a record sixth consecutive contraction. The recession is forecast to end this quarter, as the economy stagnates before returning to growth in the following three months, according to a separate Bloomberg survey of economists.
REGIONAL
Japan’s Economy Accelerated in May in Boost for Abe’s Reflation. Japan’s economy strengthened in May as industrial production rose the most since 2011, retail sales climbed and consumer prices halted a six-month slide, bolstering Prime Minister Shinzo Abe’s push to end a deflationary malaise. Consumer prices excluding fresh food were Page 2 of 9
unchanged from a year before as a weakening yen sent utility costs up the most in almost five years, the statistics bureau in Tokyo reported today. Industrial output advanced 2 percent from April, exceeding the median estimate for a 0.2 percent rise in a Bloomberg News survey of economists. Retail sales gained 1.5 percent. The biggest contributors to the May production data included parts and accessories for steam turbines as well as boiler parts used in thermal power plants, and water tube boilers used by electric power companies, according to the Trade Ministry. Retail sales rose on increased sales of clothing, fuel and medicines, the ministry said.
Japanese Automakers’ U.S. Production Soars 36 percent. Japanese automakers, rebounding from an earthquake and aided by a weakening yen, cranked up U.S. vehicle production by 36 percent last year while boosting imports from Japan by 19 percent. Japanese automakers built 3.3 million cars and trucks in the U.S. last year, up from 2.4 million in 2011, according to new data from the Japan Automobile Manufacturers Association, a Tokyo-based trade group representing that country’s major carmakers. That was the most since 2007, when Japanese automakers produced 3.5 million vehicles in the U.S., JAMA said. As U.S. auto sales reached their highest level last year since 2007, Japanese automakers boosted their U.S. market share to 36.9 percent, from 34.9 percent in 2011. Japanese automakers are also benefiting from a yen that has weakened by 19 percent against the dollar since Oct. 31, when Prime Minister Shinzo Abe began a campaign to lower Japan’s currency to stimulate the economy. That gives Japanese automakers an extra $1,500 to $2,000 per car and reduces the cost of production in Japan, according to Morgan Stanley.
PBOC’s Zhou Maintains Pledge to Keep Stability in Markets. Chinese central bank Governor Zhou Xiaochuan said the nation will maintain market stability and adjust policies at the right time, his first comments since a record cash squeeze hit the world’s second-largest economy. China’s growth slowdown remains in a “reasonable” range and the economy is stable, Zhou, head of the People’s Bank of China, said today in a speech at the annual Lujiazui Forum financial conference in Shanghai. The nation will continue to implement a prudent monetary policy, which has shown to be appropriate with good results, Zhou said. Zhou is trying to soothe concerns that the credit crunch will harm growth, saying today that he’s fully confident in the nation’s economic prospects and financial system. He reiterated points in the central bank’s June 25 statement that it will use tools to safeguard stability in money markets, after the overnight repurchase rate surged to a record high last week. He made the points on the economy and markets at the end of a 30-minute speech devoted mostly to discussing how Shanghai can develop into a global financial center.
Vietnam Devalues Dong for First Time Since December 2011. Vietnam’s central bank devalued its currency for the first time since 2011 and cut the interest-rate cap on dollar deposits to help improve the balance of payments and boost foreign-exchange reserves. The State Bank of Vietnam weakened its reference rate by 1 percent to 21,036 dong per dollar, effective today, according to a statement released yesterday. The trading band of +/-1 percent remains unchanged, with the currency falling by 0.8 percent to 21,195 as of 12:01 p.m. at banks in Hanoi, the most since Aug. 9, 2011, according to data compiled by Bloomberg. To curb the impact of lowered VND deposit rates on the exchange market, SBV also announced a 75-bsp cut for the rate capped on USD deposits, from 2 percent Page 3 of 9
per annum to 1.25 percent. The central bank cut the cap on corporate dollar deposits to 0.25 percent from 0.5 percent for all tenors and reduced the limit for household savings to 1.25 percent from 2 percent, the regulator said on its website yesterday. The maximum rate for dong deposits was also lowered to spur spending and investment, the statement said. The ceiling for deposits of less than one month fell to 1.2 percent from 2 percent, while that for periods of up to six months declined to 7 percent from 7.5 percent. The rate-cap reductions are intended “to curb deposit and lending rates at reasonable levels to help stabilize the money market and the foreign-currency market and to continue implementing measures to help resolve difficulties for businesses and production,” the central bank said in the statement.
Myanmar Picks Telenor and Ooredoo for Phone Licences. Norway’s Telenor ASA and Ooredoo QSC of Qatar won licenses to expand telecommunications in Myanmar, one of the world’s last remaining untapped markets where only about one in 10 people has a mobile phone. The two carriers beat nine other bidders including Singapore Telecommunications, billionaire George Soros and Bharti Airtel in the auction. A France TelecomSA-Marubeni Corp. group was named as a backup in case one of the winners doesn’t fulfill final requirements. The decision ends a six-month race that drew 91 expressions of interest to operate in the country of 64 million people. The licenses are among the biggest prizes for foreign companies since President Thein Sein moved to allow greater political and economic freedom after taking power in 2011. They’ll be awarded according to a telecommunications law that parliament expects to adopt soon, according to a statement yesterday. Myanmar plans to boost telecommunications coverage to as much as 80 percent of the country by 2016. It has a mobile-phone penetration rate of 9 percent, compared with 70 percent in Cambodia, 87 percent in Laos and more than 100 percent in Thailand, the Communication Ministry said in January.
IFIs NEWS (compiled from their websites) ADBI – Working Paper: “Cross-Border Price Differentials and Goods Market Integration in East Asia” The ADBI has publicised the captioned working paper. “As cross-border movements of goods, capital, and labor are intensifying, it is likely that goods markets in East Asia will become increasingly integrated. This study investigates the current state of goods market integration in East Asia by measuring the extent of cross-border price differentials. Specifically, this study shows that compared with the European Union, East Asian markets are neither sufficiently integrated nor are they showing any price convergence over time.” http://www.adbi.org/files/2013.06.27.wp426.price.differentials.market.integration.east.a sia.pdf Basel Committee - Consultation: “Sound management of risks related to money laundering and financing of terrorism” On June 27, 2013, the Basel Committee on Banking Supervision has publicised its consultative document on the Sound management of risks related to money laundering and financing of terrorism. The proposed guidelines take into account the February 2012
Page 4 of 9
recommendations set out in the Financial Action Task Force (FATF) International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation. In particular, the published proposal reflects the importance of a risk-based approach, which is the first of the FATF recommendations, and is fully aligned with other Committee guidance on this topic. Comments on the proposals should be submitted by Friday 27 September 2013 by e-mail to: baselcommittee@bis.org. http://www.bis.org/press/p130627.htm (Press Release) http://www.bis.org/publ/bcbs252.pdf (Consultative Document) http://www.fatfgafi.org/topics/fatfrecommendations/documents/internationalstandardsoncombatingmo neylaunderingandthefinancingofterrorismproliferation-thefatfrecommendations.html (FATF Recommendations published on February 16, 2012: International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation ) IMF – Policy Paper: “The Fund's Capacity Development Strategy--Better Policies Through Stronger Institutions” On June 12, 2013, the Executive Board of the IMF considered the staff report “The Fund’s Capacity Development Strategy—Better Policies through Stronger Institutions”. Executive Directors welcomed the opportunity to discuss the Fund’s capacity development (CD) strategy, which builds on the 2008 and 2011 reviews of technical assistance (TA), and the 2008 review of training and they reiterated their support for the key attributes of Fund technical assistance as defined in the 2011 TA review, and agreed that they applied as much to training as to TA. http://www.imf.org/external/np/sec/pn/2013/pn1372.htm (Press Release) http://www.imf.org/external/np/pp/eng/2013/052113.pdf (Policy Paper: The Fund's Capacity Development Strategy--Better Policies Through Stronger Institutions) http://www.imf.org/external/np/pp/eng/2013/052113a.pdf (Background Paper: The Fund's Capacity Development Strategy - Better Policies Through Stronger Institutions) http://www.imf.org/external/np/pp/eng/2011/101911.pdf (Report of the Task Force on the Fund's Technical Assistance Strategy published on October 19, 2011) IMF – Press Release: Statement by the European Commission and the IMF on Cyprus On June 27, 2013, the European Commission and IMF issued a joint statement on the debt exchange announced by the Cypriot authorities. The following is an excerpt of the issued statement: “We welcome today’s announcement by the Cypriot authorities to launch a voluntary debt exchange of Cypriot sovereign bonds with a total nominal value of €1,0 billion and maturing within the economic adjustment program period (2013-Q1 2016), for new bonds with the same coupon rates and 5‒10 year maturities. The objective of this liability management operation is to facilitate cash-flow management for the government and to ensure adequate funding at terms that support long-term public debt sustainability, an essential step towards Cyprus’s economic recovery. Once this transaction is completed, the refinancing commitment undertaken by the Cypriot authorities in support of the adjustment program would be fulfilled.” http://www.imf.org/external/np/sec/pr/2013/pr13235.htm
Page 5 of 9
FOREIGN CURRENCY EXCHANGE RATES Previous wk's 27-Jun 28-Jun close China 6.23 6.13 6.15 6.14 Hong Kong SAR 7.75 7.76 7.76 7.76 Indonesia 9,793.00 9,875.00 9,908.00 10,004.00 Japan 86.75 94.31 98.35 98.92 Korea 1,064.40 1,126.25 1,149.76 1,142.06 Malaysia 3.06 3.11 3.17 3.16 Philippines 41.01 42.81 43.43 43.14 Singapore 1.22 1.25 1.27 1.26 Thailand 30.59 30.57 31.15 31.02 Vietnam 20,840.00 21,003.00 21,018.00 21,205.00 Note: Negative values indicate depreciation and positive values indicate appreciation. 2012 close
2013 YTD (%chg) 1.6 -0.1 -3.5 -11.7 -6.9 -4.0 -5.3 -3.3 -2.2 -1.7
% change 0.19 0.02 -0.96 -0.58 0.67 0.43 0.67 0.33 0.42 -0.88
STOCK MARKET INDEX 2012 close China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7
Previous wk's close 2,210.9 21,575.3 4,865.3 12,877.5 1,923.9 1,775.6 6,702.0 3,184.7 1,516.2 528.0
27-Jun 1,950.0 20,440.1 4,675.7 13,213.6 1,834.7 1,751.6 6,328.0 3,118.0 1,446.5 483.0
OVERNIGHT LENDING RATE (%) 27-Jun 28-Jun bps change 3.500 4.860 136.00 0.081 0.086 0.57 4.450 4.450 0.00 0.095 0.093 -0.25 2.500 2.500 0.00 3.000 3.000 0.00 -0.611 1.085 169.60 0.053 0.053 0.00 2.500 2.500 0.00 0.814 0.800 -1.40
28-Jun
% change
1,979.2 20,803.3 4,818.9 13,677.3 1,863.3 1,767.2 6,465.3 3,153.3 1,459.0 481.1
1.50 1.78 3.06 3.51 1.56 0.89 2.17 1.13 0.87 -0.38
2013 YTD (%chg) -12.8 -10.8 10.9 31.6 -8.3 5.5 10.3 -1.5 3.7 15.0
3-MONTH INTERBANK LENDING RATE (%) 27-Jun 28-Jun bps change 5.539 5.439 -10.00 0.382 0.381 -0.07 5.346 5.358 1.21 0.230 0.230 0.00 2.690 2.690 0.00 3.200 3.200 0.00 0.295 0.711 41.60 0.373 0.373 0.00 2.601 2.601 0.00 3.350 3.350 0.00
CREDIT DEFAULT SWAP (IN BPS) 26-Jun 27-Jun bps change China 125.83 117.56 -8.27 Hong Kong SAR 57.10 56.09 -1.01 Indonesia 222.14 208.19 -13.95 Japan 84.27 80.79 -3.48 Korea 98.54 91.17 -7.37 Malaysia 125.83 120.48 -5.35 Philippines 133.70 127.02 -6.68 Thailand 128.31 120.51 -7.80 Vietnam 255.59 239.04 -16.55 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 27-Jun Gold Spot (in US$ per ounce)
1,200.7
28-Jun 1,202.7
% change 0.17
Sources: Bloomberg & Thomson Reuters Datastream
Page 6 of 9
CREDIT RATINGS China Hong Kong SAR Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam
S&P
Moody's
Fitch
AAAAA BB+ AAA+ ABBBAAA BBB+ BB-
Aa3 Aa1 Baa3 Aa3 Aa3 A3 Ba1 Aaa Baa1 B2
A+ AA+ BBBA+ AAABBBAAA BBB+ B+
SOVEREIGN BOND RATES (%, 5-YEAR) Previous wk's 2012 close close 3.220 3.270 China 0.396 1.148 Hong Kong SAR 4.806 6.336 Indonesia 0.185 0.355 Japan 2.980 3.320 Korea 3.185 3.329 Malaysia 4.115 3.165 Philippines 0.330 1.300 Singapore 3.195 3.400 Thailand 9.650 7.800 Vietnam Latest data are available on a one-day lag.
26-Jun
27-Jun
3.490 1.267 6.524 0.341 3.250 3.705 4.077 1.410 3.450 9.800
3.490 1.234 6.532 0.316 3.210 3.505 4.100 1.300 3.360 9.800
bps change
2013 YTD (bps)
0.000 -3.300 0.800 -2.500 -4.000 -20.000 2.290 -11.000 -9.000 0.000
27.000 83.800 172.600 13.100 23.000 32.000 -1.540 97.000 16.500 15.000
INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)
2012
2013
31-Oct 30-Nov 31-Dec China 3,287.4 3,297.7 3,311.6 Hong Kong SAR 301.7 305.2 317.3 Indonesia 110.3 111.3 112.8 Japan 1,274.2 1,270.9 1,268.1 Korea 323.5 326.1 327.0 Malaysia 138.3 139.1 139.7 Philippines 81.7 83.9 83.8 Singapore 254.2 255.8 259.3 Thailand 181.5 181.6 181.6 Vietnam 21.4 23.2 n.a Note: Data for China and Vietnam refer to FX reserves
31-Jan 3,410.1 304.7 108.8 1,267.3 328.9 140.2 85.3 258.8 181.6 n.a
28-Feb 3,395.4 304.8 105.2 1,258.8 327.4 140.3 83.6 259.1 179.2 n.a
31-Mar 3,442.7 303.8 104.8 1,254.4 327.4 139.7 84.0 258.2 177.8 n.a
30-Apr n.a 306.5 107.3 1,258.0 328.8 140.3 83.2 261.7 177.8 n.a
31-May n.a 305.7 105.1 1,250.2 328.1 141.4 82.9 258.4 175.3 n.a
30-Jun n.a n.a n.a n.a n.a 140.8 n.a n.a 176.5 n.a
EXTERNAL LIQUIDITY RATIOS* Int'l Reserves (US$bn) China 3,442.7 Hong Kong SAR 305.7 Indonesia 105.1 Japan 1,250.2 Korea 328.1 Malaysia 141.4 Philippines 82.0 Singapore 258.4 Thailand 176.5 Vietnam 23.2 Notes: * Based on latest available data
3 months imports of goods & services (US$bn) 523.3 149.7 51.8 80.0 155.1 57.1 17.2 118.2 66.9 30.9
Short-term external debt (US$bn) 540.9 752.6 44.6 2,147.9 126.7 32.9 9.8 964.3 63.0 10.0
Import cover (Qtrs of imports covered by reserves) 6.6 2.0 2.0 15.6 2.1 2.5 4.8 2.2 2.6 -
Reserves over short-term debt 6.4 0.4 2.4 0.6 2.6 4.3 8.4 0.3 2.8 -
Page 7 of 9
Import cover is computed by dividing international reserves with 3-month worth of imports of goods and services using latest available data from balance of payments statistics. Short-term debts are liabilities due in 1 year or less; data are as of 4Q 2012, except for Indonesia and Korea, which are 1Q 2013, and Vietnam, which is end-2011. For Vietnam, the figure refers to Private Creditor and not short-term debt.
DATA RELEASES FOR THE DAY Economies
SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN JAPAN JAPAN THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND
Indicators
Industrial Production (YoY)% Industrial Production (MoM)% Job-To-Applicant Ratio Jobless Rate % Nat’s CPI Ex Fresh Food YoY % National CPI YoY % Industrial Production MOM% Foreign Reserves (USD bn) Business Sentiment Index Total Exports YOY% Total Imports YOY% Current Account Balance (USD mn) Total Trade Balance (USD mn)
Period
Last
May May May May May May May P Jun 21 May May May May May
Previous
-1.4 -0.4 0.90 4.1 0.0 -0.3 2.0 172.8
1.7 0.8 0.89 4.1 -0.4 -0.7 0.9 176.5
-5.1 -4.9 -1051 535
3.7 8.5 -3361 -1620
SELECTED ECONOMIC RELEASES CALENDAR (24 – 28 JUNE 2013) Expected Release Date
6/24/2013
6/25/2013
6/26/2013
6/27/2013 6/28/2013
Economies
Indicators
Period
VIETNAM
CPI (YoY) %
June
SINGAPORE
CPI (YoY) %
May
HONG KONG
Current Account
1Q
HONG KONG SOUTH KOREA PHILIPPINES PHILIPPINES HONG KONG HONG KONG HONG KONG VIETNAM VIETNAM VIETNAM VIETNAM VIETNAM SOUTH KOREA SOUTH KOREA SINGAPORE THAILAND THAILAND SOUTH KOREA JAPAN SOUTH KOREA SOUTH KOREA JAPAN
Balance of Payments - Overall SK Consumer Confidence Trade Balance (USD mn) Total Imports (YoY)% Exports YoY% Imports YoY% Trade Balance (HKD bn) Imports YTD (YoY)% Exports YTD (YoY)% Retail Sales YTD (YoY)% Industrial Production Index YoY % GDP Constant Prices YTD (YoY)% Business Survey- Manufacturing Business Survey- Non-Manufacturing Industrial Production YoY% Customs Exports (YoY)% Customs Imports (YoY)% Current Account in (USD mn) All Industry Activity Index (MoM) % Industrial Production (YoY)% Industrial Production (MoM)% Job-To-Applicant Ratio
1Q Jun Apr Apr May May May Jun Jun Jun Jun 2Q Jul Jul May May May May Apr May May May
Page 8 of 9
JAPAN JAPAN JAPAN JAPAN THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND PHILIPPINES
Jobless Rate % National CPI Ex Food, Energy YoY % National CPI YoY % Industrial Production YOY% Foreign Reserves (USD bn) Business Sentiment Index Total Exports YOY% Total Imports YOY% Current Account Balance (USD mn) Total Trade Balance (USD mn) Budget Deficit/Surplus (PHP bn)
May May May May P Jun 21 May May May May May May
The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.
Page 9 of 9