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PH 2nd-fastest growing bond market in East Asia as of Q3, says ADB

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The bond market in the Philippines was the second-fastest growing among emerging economies in East Asia as of the third quarter, as the country’s buoyant economy boosted appetite for peso-denominated instruments.

The Asian Development Bank said in a recent report that outstanding bonds in the local bond market registered one of the fastest growth rates in the region as of end-September, as economic problems in Europe and the United States prompted investors to seek higher yields in Asia.

The Philippines was one of the most preferred sites for portfolio investments given a favorable outlook on its economy, the ADB said.

According to the ADB report, the outstanding amount of local currency-denominated bonds from the Philippines reached a dollar equivalent of $91 billion as of the end of September, up by 21.8 percent from that in the same period last year.

Only Singapore posted a faster growth rate of 25.8 percent.

In absolute terms, however, the amount of outstanding bonds in the Philippine market was lower than that for most countries in the region.

Industry players admit that the country’s capital market remains small compared with its regional counterparts.

Growth rates and outstanding amounts of bond markets in the region are as follows: Vietnam, 21.1-percent growth to $21 billion; Malaysia, 20.7-percent growth to $318 billion; South Korea, 16.2-percent growth to $1.37 trillion; China, 12.5-percent growth to $3.65 trillion; and Hong Kong, 3.7-percent growth to $176 billion.

Contradicting the trend in the region, the bond market of Indonesia fell by 0.6 percent to $110 billion.

For the entire region, the outstanding amount of bonds thus stood at $6.24 trillion, rising year on year by 13.9 percent.

“Volatility spillover was directly transmitted to Asian local bond markets during the US and eurozone crises,” said the ADB as it noted the shift in investor appetite to instruments issued from emerging Asian markets.

It said the appetite for portfolio instruments from emerging Asian economies was also reflected in the increase in demand for equities, currencies and money market instruments in the region.

Data on the Philippines also showed that of the P3.8 trillion (or $91 billion) in outstanding bonds by the end of September, about P3.3 trillion was accounted for by government securities while corporate bonds accounted for the balance of P500 billion.

The outstanding amount of Philippine government securities represented a year-on-year growth of 14.7 percent, while that of corporate bonds marked an annual growth rate of 26.1 percent, the ADB said.

Although the increase in foreign portfolio investments is a welcome development, monetary officials said excessive amounts and steep increase could be destabilizing to an economy.

They said these can cause sharp and sudden appreciation of the local currency against the US dollar, adversely affecting exporters.

This is why the Bangko Sentral ng Pilipinas has implemented several measures against excessive inflows.


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Tags: bond market , Bonds and t-bills , East Asia , Philippines

  • rodben

     Always Philippines economy sounds good,but how many years more the Philippines remove in the list as a 3rd world country? 26yrs already since EDSA.

    • http://pulse.yahoo.com/_TJ2TJXPNBDRDQCG3A223KYFGYA michael

      Hello sir, actually, the term 1st world, 2nd world and 3rd world, doesn’t have much to do with economic status, but it has much to do with military alliances.

      During the Cold War the definitions are as follows:
      1st world: U.S and her NATO allies
      2nd world: USSR and her Warsaw Pact Allies
      3rd World: Neither NATO nor Warsaw Pact

      It just so happens that the the US and her NATO allies were the richest countries at the time and that most of the poor countries were in the 3rd world category.

      Which is why 3rd world became synonymous with poor. 

      but Japan was actually included in the 3rd world category despite being tremendously wealthy.

      Today most economist use the term

      DevelopedIndustrialized

      Newly industrialized

      Developing

      Under Developed
      and 

      Heavily in debt poor countries

      We belong to the Newly industrialized category, and yes the list above is in order. You may google it if you like. 

      Hope this helps sir

  • Vertical Propulsion

    Go Philippines!!!

  • im_earth

     hope pinoy money savings will grow faster too and debt interest will lower ! :D



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