ByAnjani TrivediandChao Deng
Government bonds across Asia rallied Wednesday as investors fled
to safety with oil and other commodities posting fresh losses, and
worries over slowing global growth re-emerging.
Yields, which move inversely to prices, on 10-year benchmark
government bonds accelerated their fall, hitting multiyear lows
across the region. South Korean 10-year bond yields fell to a fresh
record low, while Indonesian and Indian bonds dropped to their
lowest in more than a year.
Falling oil and commodity prices, along with spluttering growth
weigh on inflation expectations, which have been dropping across
Asia. Lower inflation over time makes fixed income securities
attractive.
As oil posted fresh lows Tuesday after talk from the United Arab
Emirates' oil minister signaled the Organization of the Petroleum
Exporting Countries would stand pat on its November decision to
keep output steady, the World Bank cut its forecast for global
growth to 3.0% in 2015, down from an earlier forecast of 3.4%. The
bank lowered its growth forecasts for all developing economies by
more than half a percentage point to 4.8%. Oil continued to trade
lower in Asia Wednesday.
Bonds in Malaysia, which were suffering from lower oil prices
until last week, were at their lowest in over a month. Yields on
Malaysian bonds dropped 0.12 percentage points in the last two
days, compared with 10-Year U.S. Treasurys, which have dropped 0.03
percentage points over the same time. Still, the Malaysian ringgit
traded close to its lowest in over five years.
Copper prices fell to their lowest level in more than five years
in line with plummeting crude oil prices in early Asia trade,
ignoring relatively steady copper import data from China for the
month of December.
The Japanese yen touched its strongest level against the U.S.
dollar in more than a month at Yen117.34, from Yen117.92 on
Tuesday.
Stocks in Japan and Australia fell Wednesday, but they rose in
China, where banks led gains. The Nikkei Stock Average was off by
1.2% while the S&P ASX 200 was down 1.5%. Stocks in Malaysia,
one of the few net exporters of oil among Asian countries, were
down 0.2%.
The losses tracked a lower close in the U. S.amid shifting views
about the European Central Bank's expected stimulus and a
monthslong oil-price decline. U.S. crude-oil futures have fallen
5.4% this week alone to $45.74 a barrel.
Japan's market has stalled since early December amid concerns
about whether Prime Minister Shinzo Abe's economic program will
work in the near term. On Wednesday, the government said it would
borrow less than Yen40 trillion ($340 billion) for the first time
in seven years to finance spending, as it tries to balance its core
budget deficit. It also said it would issue a larger proportion of
long-term debt in the fiscal year starting in April.
Stocks in Australia were falling for the third straight trading
day, led down by BHP Billiton Ltd. and Rio Tinto Ltd. which each
fell 3.8% and 4.6% respectively.
In China, financial stocks led gains, ahead of December data on
yuan loans. Analysts are expecting a strong rise--Haitong
International for example expects new loans to reach 900 billion
yuan, compared with a 800 billion yuan consensus.
China Citic Bank Corp. Ltd. was up 4.0%, Shanghai Pudong
Development Bank was up 2.7% and Bank of China Ltd. was up 2.6%.
The benchmark Shanghai Composite Index was up 0.2% while the Hang
Seng Index gained 0.1%.
Daniel Inman contributed to this article
Write to Anjani Trivedi at anjani.trivedi@wsj.com and Chao Deng
at Chao.Deng@wsj.com
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