1H emerging East Asia bond markets up 18.8% — ADB

The Asian Development Bank (ADB) on Monday said currency bond markets in emerging East Asia, including the Philippines, rose by almost a fifth as of end-June with $4.8 trillion worth of paper outstanding. According to the Manila-based bank’s quarterly publication “Asia Bond Monitor," the increase was fueled by a 24-percent annual growth of the corporate bond market, an increasingly significant source of funding for the private-sector investment. The multilateral lender said that the emerging East Asian bond markets have “seen strong foreign investment. “Emerging East Asia is experiencing strong foreign portfolio capital inflows as investors chase higher returns in local markets," Iwan Azis, head of ADB’s Office of Regional Economic Integration, said in a statement. While much of that investment has come from outside Asia, some has also come from within the region, the bank said. “The risks to the outlook for Asia’s local currency bond markets are now tilted to the downside. Nevertheless, a slowdown in the developed economies, volatile capital inflows and inflationary pressures are still threats," Azis pointed out. Governments in the region have continued with policy reforms and other innovations to deepen domestic markets, expand cross-border transactions, and lengthen maturity profiles, the ABD noted. Currency bond issuance in emerging East Asia totaled $938 billion in the second quarter of 2010, higher than 6.5 percent in the same period last year but 11.7 percent lower than in the first quarter of 2010, the ADB said. The bank noted that total central bank bill and bond sales fell 25.7 percent on quarterly basis due to a reduction in sterilization activities — a process of manipulating the value of a domestic currency relative to another. Meanwhile, the ADB said emerging East Asia’s sales of bonds denominated in US dollars, euros, and yen “are on track to match, if not exceed," the record $63.2 billion of issuance in 2009. In the first half of 2010, emerging East Asia’s bond sales reached $31.8 billion with an additional $14.5 billion sold from July to mid-August. Apart from the Philippines, emerging East Asia includes China (mainland and Hong Kong), Indonesia, Korea, Malaysia, Singapore, Thailand, and Vietnam. —Jesse Edep/VS, GMANews.TV