EM ASIA CREDIT: MNI EM Credit Market Update - Asia
Asia EM is a bit of a mixed bag this morning, though the bias is tighter, with our India $ proxy (EXIMBK 1/33) the outperformer (-3bp). China Vanke reported results this morning, which showed a marked deterioration in profitability, though they continue to have the support of the main shareholder, Shenzhen Metro Group. In other results, Samsung Electronics Q1 numbers were solid, but the future remains unclear under trade tariffs. In contrast, LG Energy Q1 results were weak, again noting the economic backdrop. The company will cut capex by at least 30% in 2025, and won't have any new funding needs as a result. Overall negative. No new issues announced today.
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JGBS AUCTION: Better Result For Today’s 2Y Supply
The 2-year bond auction showed improved demand today. The low price came in slightly above the forecasted 100.055, according to a Bloomberg poll, while the cover ratio rose to 3.4085x from 3.1637x. The auction tail also shortened slightly compared to the previous month.
- The auction took place with the 2-year yield standing slightly higher than last month’s outing, hovering just below the highest level since 2008 set last week.
- However, the 2/5 and 2/10 yield curves were 5-10bps steeper compared to the previous month's auction.
- The result is likely to be seen as constructive given it followed Friday’s Tokyo CPI release, a key leading indicator for national inflation, which printed higher than expectations across all measures.
- Demand metrics contrasted with the mixed results seen in the 5-year auction earlier this month and likely reflect heightened demand for haven assets as concern over the health of the US economy continues to grow.
- Post-auction, the 2-year yield has richened by approximately 0.5bp.
JGBS AUCTION: 2-Year JGB Auction Results
The Japanese Ministry of Finance (MoF) sells Y1,978.8bn 2-Year JGBs:
- Average Yield: 0.863% (prev. 0.826%)
- Average Price: 100.071 (prev. 99.948)
- High Yield: 0.869% (prev. 0.833%)
- Low price: 100.060 (prev. 99.935)
- % Allotted At High Yield: 46.8270% (prev. 62.4996%)
- Bid/Cover: 3.4085x (prev. 3.1637x)
ASIA STOCKS: India Inflows Intensify as Taiwan Goes the other Way.
With tariff headlines dominating, India is considering lowering tariffs on US agriculture products as strong inflows continue into the country. Taiwan and South Korea enjoyed a short respite in flows, only for that to turn significantly negative again with Indonesia and Malaysia out.
- South Korea: Recorded outflows of -$513m Friday, bringing the 5-day total to -$228m. 2025 to date flows are -$4,095m. The 5-day average is -$46m, the 20-day average is -$75m and the 100-day average of -$93m.
- Taiwan: Had outflows of -$1,028m Friday, with total outflows of -$2,607m over the past 5 days. YTD flows are negative at -$17,432. The 5-day average is -$521m, the 20-day average of -$614m and the 100-day average of -$255m.
- India: Saw inflows of +$947m as of the 27th, with a total inflow of +$3,231m over the previous 5 days. YTD outflows stand at -$12,796m. The 5-day average is +$646m, the 20-day average of -$14m and the 100-day average of -$144m.
- Thailand: Recorded outflows of -$67m yesterday, totaling -$121m over the past 5 days. YTD flows are negative at -$1,128m. The 5-day average is -$24m, the 20-day average of -$30m the 100-day average of -$18m.
- Philippines: Saw inflows of +$1m yesterday, with net outflows of -$34m over the past 5 days. YTD flows are negative at -$214m. The 5-day average is -$7m, the 20-day average of +$2m the 100-day average of -$7m.
