Asia Bond Monitor - June 2016

Publication | June 2016

Bond yields in most emerging East Asian markets fell between 1 March and 15 May amid a weak global economy. The exceptions were the People’s Republic of China (PRC) and the Philippines, where yields generally picked up.

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In March, ADB forecasted that developing Asia’s growth would decelerate from 5.9% in 2015 to 5.7% in 2016 and 2017. In April, the International Monetary Fund cut its 2016 global growth forecast to 3.2%, down from 3.4% in January. Against this backdrop, bond yields in emerging East Asia generally decreased between 1 March and 15 May, including yields for 10-year local currency (LCY) government bonds.

Emerging East Asian equity markets were up in all economies except Indonesia and Malaysia between 1 March and 15 May. The region’s currencies also generally strengthened against the US dollar during the review period, with the Korean won appreciating the most, followed by the Malaysian ringgit. Credit default swap spreads fell in emerging East Asian markets, indicating reduced perceptions of default risk.

The size of emerging East Asia’s LCY bond market expanded to $9.608 billion at the end of March, up 3.9% quarter-on-quarter and 20.4% year-on-year in the first quarter (Q1) of 2016. The PRC’s bond market remained the largest in the region, accounting for a 67.7% share of emerging East Asia’s total bond stock at the end of March. The next two largest LCY bond markets were those of the Republic of Korea and Malaysia.

Drivers of sovereign bond yields in emerging Asia

Inflation has consistently shown to be a significant factor in determining yields. However, the impacts of consumer price inflation and producer price inflation on yields differ across economies, which suggests the need for tailored policy prescriptions depending on the drivers of consumer and producer inflation in a given economy.

Domestic liquidity is also an important yield driver. To the extent that it influences inflation and economic growth, there is a role for monetary authorities in promoting bond market liquidity.

The global economic environment also affects the region’s bond yields, emphasizing the importance of domestic macroeconomic stability and bond market resilience in the face of global uncertainty.

About the publication

The Asia Bond Monitor reviews recent developments in East Asian local currency bond markets along with the outlook, risks, and policy options. It covers the 10 members of the Association of Southeast Asian Nations plus the People’s Republic of China; Hong Kong, China; and the Republic of Korea.


  • Highlights
  • Global and Regional Market Developments
  • Bond Market Developments in the First Quarter of 2016
  • Policy and Regulatory Developments
  • Drivers of Sovereign Bond Yields in Emerging Asia
  • Market Summaries
    • People's Republic of China
    • Hong Kong, China
    • Indonesia
    • Republic of Korea
    • Malaysia
    • Philippines
    • Singapore
    • Thailand
    • Viet Nam

Additional Details

  • Economics
  • Finance sector development
  • Banking and non-bank financial institutions
  • Financial markets and institutions
  • Regional cooperation and integration
  • China, People's Republic of
  • Hong Kong, China
  • Indonesia
  • Korea, Republic of
  • Malaysia
  • Philippines
  • Singapore
  • Thailand
  • Viet Nam
  • 92
  • 8.5 x 11
  • RPS168158-2
  • 978-92-9257-493-2 (print)
  • 978-92-9257-494-9 (electronic)
  • 2219-1518 (print)
  • 2219-1526 (electronic)

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