UOB Economic-Treasury Research

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Monday, 08 March 2010 Asian Markets

1.57
Foreign Exchange Rates (as at 05 March 2010) USD/SGD
As at 08 Mar Asian High Asian Low NY High NY Low 1.52
SGD 1.4010 1.4024 1.4005 1.4021 1.3982
MYR 3.3420 3.3720 3.3550 - 1.47
IDR 9,230 9,370 9,225 - -
THB 32.64 32.66 32.60 32.66 32.62 1.42
PHP 46.06 46.14 46.05 - -
TWD 31.920 32.040 31.906 - - 1.37
KRW 1134.00 1145.00 1140.10 - -
HKD 7.7621 7.7635 7.7630 7.7640 7.7620 1.65
CNY 6.8258 6.8269 6.8255 - - 1.60
Upper-end: 2.5%
1.55 Central Tendency
1.50
UOB’s Estimation of SGD NEER (as at 08 March 2010)
Assuming 2.5% on each side of the pivot point: 1.45
Lower-End ...........................................................................1.4654 1.40
USD/SGD Lower-end: 2.5%
Upper-End ...........................................................................1.3939 1.35
Mid-Point ............................................................................1.4016 1.30
Jan 07 Jul 07 Mar 08 Oct 08 May 09 Jan 10

News Highlights 114

Mid-point of Estimated Policy Band
Upper-end
n For the week ahead, heavy data and news flows are lined 110
up in Asia, coupled with central bank decisions from
106
Thailand (Wed), and South Korea and the Philippines (both
Lower-end
Thur) which are all expected to keep rates on hold, though 102
SGD NEER
Bank Negara Malaysia's surprise rate hike last Fri suggests
risks of normalization may have risen. China's data releases 98
dominate the calendar beginning on Wed with trade data Jan 07 Jul 07 Mar 08 Oct 08 May 09 Jan 10
and the remaining Feb figures will be on Thur, and the new 3.80
loans data no doubt will be watched closely after a series of USD/MYR
3.70
administrative measures to dampen credit growth, including
two reserve requirement ratio hikes in the first two months 3.60
of this year and a lowered credit growth target for 2010. 3.50
Meanwhile, China's annual National People's Congress will
3.40
take place through 15 Mar and will result in further
comments on Chinese economic front. Overall we should 3.30
see continued improvements in data on low comparison
bases although it would be important to see the 6.86
improvements in nominal amounts. With improvements in USD/RMB
6.85
data and on the back of better-than-expected US nonfarm
6.84
payrolls on Fri and Greek govt's ability to raise funds last
Thur, investors are expected to continue to bias towards risk 6.83
assets for now. A flurry of official comments on RMB last
6.82
week is expected to continue to keep the hope of a
revaluation alive, which would be positive for Asian 6.81
currencies. Jan 09 Apr 09 Jul 09 Oct 09 Jan 10
 Asian Markets
Monday, 08 March 2010
p2

Interest Rates
n As a recap, Asian currencies last week ended higher against
Current Next CB Meet UOB’s Forecast
the USD, led by riskier units like KRW and THB as risk SGD 3-Mth SIBOR 0.67% - -
appetite as Greece took steps to address austerity measures MYR O/N Policy Rate 2.25% 13 May 2.00%
and raised a EUR5bn bond issue, and US nonfarm payrolls IDR O/N Rate 6.50% 06 Apr 6.50%
for Feb turned out to be better than expected. A surprise rate THB 1-Day Repo 1.25% 10 Mar 1.25%
PHP O/N Reverse Repo 4.00% 11 Mar 4.00%
hike from Bank Negara Malaysia on Fri also provided some TWD Discount Rate 1.25% - 1.25%
lift. KRW climbed 1.7% for the week to 1,140.3/USD, the KRW Base Rate 2.00% 11 Mar 2.00%
strongest level since 21 Jan. THB rose 1.2% to 32.64/USD, HKD Base Rate 0.50% - 0.50%
as investors returned to local equities after protests by CNY 1-Yr Wking Capital 5.31% - 4.77%
supporters of former PM Thaksin passed without a major
incidence last week after a court order to confiscate part of Stock Indices (as at 05 March 2010) Closing % chg
his assets. MYR climbed 1.1% to 3.3635/USD, gaining for
Singapore Straits Times 2790.29 +0.78
the fourth consecutive week. Elsewhere, PHP gained 0.2% Kuala Lumpur Composite 1299.78 +1.22
last week to 46.058/USD and TWD climbed 0.2% to 32.02/ Jakarta Composite 2578.77 +0.51
USD. IDR rose 1.3% to 9,215 and China's yuan was little Bangkok SET 723.96 -0.94
changed at 6.8266. Philippines Composite 3069.63 +1.17
Taiwan TAIEX 7666.26 +1.27
Seoul Composite 1634.57 +1.01
n SGD last week gained a more moderate 0.4% to end at Hong Kong Hang Seng 20787.97 +1.03
1.4016/USD, as risk appetite returned on better than Shanghai SE Composite IX 3031.06 +0.25
expected US nonfarm payroll report for Feb, with losses better Mumbai Sensex 30 16994.49 +0.13
than expected at 36,000 jobs following a revised -26,000
jobs in January (from -20k) and expectations of -68,000 jobs,
3400
amid the impact of severe winter weather in parts of the STI
country. Unemployment rate in February remained 2900
unchanged from the previous month at 9.7% vs. expectation
of 9.8%. USD/SGD on Fri moved within a narrow range of 2400
1.3982-1.4024, as the SGD NEER remained near the top of
1900
the policy band, hovering at around 2.0% above the
midpoint this morning. With risk appetite appears to be 1400
returning and stirring expectations of RMB appreciation, the
trade-weighted S$ index is expected to remain supported 1350
KLCI
but kept below the top of the policy band of 2.5%, which 1250
means the USD/SGD pair should be supported at around 1150
1.3945 for now. 1050
950
n RMB held steady against the USD on Friday after Chinese 850
Premier Wen Jiabao's remarks on exchange-rate policy at 750
the National People's Congress suggested Beijing will likely
850
keep its currency stable in the near term. The RMB ended
flat at 6.8265/USD vs. 6.8264 late Thursday. Earlier on Fri, 750 SET
the central parity was set at 6.8266/USD, up marginally from 650
6.8265 on Thursday. The 1Y NDF market priced in an
550
implied appreciation of 2.6% for the RMB late Fri, largely
consistent with recent price trends. Meanwhile, in China's 450
first explicit comments on policy exit, PBoC Zhou Xiaochuan 350
also said on Sat that China would eventually move away
25500
from the current stable exchange rate policy but gave no
timetable. This morning, the RMB central parity was fixed at HSI
6.8266/USD this morning, and is unchanged from last 20500
Friday's fixing, and is likely a move to dampen appreciation
expectations. 15500

10500
Jan 09 Apr 09 Jul 09 Oct 09 Jan 10

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Email: EcoTreasury.Research@UOBgroup.com

n Asian equity markets last week: rose for a second week last
week as risk taking activities returned. Nikkei 225 increased
2.4% for the week, its largest gain this year. However, amidst
a period of policy uncertainty, Shanghai Comp slipped 0.7%
for the week on concern bank lending may slow and interest
rates will rise as inflation accelerates. Hang Seng Index rose
0.9% for the week. Elsewhere, most of the regional markets
ended the week higher with STI up 1.43% after gaining 0.8%
on Fri, while KCLI rose 2.3% last week. US equity markets
rose by substantial margins on Friday, on the back of a better-
than-expected nonfarm payrolls report for Feb. The Dow and
S&P 500 reached their best closing levels in over a month,
rising by 2.3% and 3.1% for the week, respectively, while
the Nasdaq gained 3.9% for the week, closing at an eighteen-
month high.
n China on Friday pledged to rein in soaring real estate prices,
curb speculative investment and expand low-cost housing
amid fears of a damaging property bubble in the fast-growing
economy. In an address to the annual session of parliament,
Premier Wen Jiabao said the govt would crack down on
illegal practices aimed at driving up prices to ensure the
"steady and sound development of the real estate market…
and will resolutely curb the precipitous rise of housing prices
in some cities and satisfy people's basic need for housing,".
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Asian Markets
Monday, 08 March 2010
p3
n PBoC Gov Zhou Xiaochuan said on Sat at the sidelines of
NPC meeting that the USD is an extremely important currency
and China is concerned about its value. Earlier, the PBoC
said in a statement to keep the RMB exchange rate basically
stable in 2010 and said it would be flexible in implementing
its fairly loose pro-growth monetary policy.
n PBoC deputy governor Su Ning said on Sat that it will be
very difficult to rebalance Chinese trade through
appreciation of the RMB and a one-off revaluation of the
currency was not the solution either.
n China's Commerce Minister Chen Deming said on Sat that
it might take two to three years for China's exports to recover
to the level reached before the global financial crisis struck
in 2008. China's exports plunged 16% in 2009 and, to help
them rebound, the ministry pledged in a statement to
maintain stable export policies, including rebating tax on
goods shipped overseas.
n Ahead of the opening of the Universal Studios Singapore,
Singapore Tourism Board (STB) said visitor arrivals could hit
between 11.5mn - 12.5mn in 2010- up by as much as 30%
from 2009. This will translate into tourism receipts of S$17.5-
18.5bn. This compares to 9.7mn visitors in 2009 and
S$12.4bn in tourism revenues.
 Asian Markets
Monday, 08 March 2010
p4

Asia Key Data/Events Ahead

A week of heavy data and news flows is lined up in Asia, coupled with central bank decisions from Thailand (Wed), and South
Korea and the Philippines (both Thur) which are all expected to keep rates on hold, though Bank Negara Malaysia's surprise rate
hike last Fri suggests risks of normalization may have risen. China's data releases dominate the calendar beginning on Wed with
external trade data, while the remaining Feb figures will be out on Thur, and the new loans data no doubt will be watched closely
after a series of administrative measures to dampen credit growth, including two reserve requirement ratio hikes in the first two
months of this year and a lowered credit growth target for 2010. These Chinese data releases also descend right in the middle of the
annual NPC session (5-15 Mar), and could stir up debates especially within the context of housing market bubbles, rich-poor gap,
and other issues. Note also that the US National Association for Business Economics (NABE) annual conference will be featuring a
number of key speakers on 8-9 Mar which will express their latest thinking on financial sector reform and economic outlook.

Mon 08 Mar
CN National People's Congress annual meetings (5-15 Mar)
TW Exports for Feb (mkt: 32.5%y/y; prev: 75.8%)
US NABE 2010 Econ Policy Conference "The New Normal?", including a speech from FDIC's Bair on financial sector regulation

Tue 09 Mar
CN National People's Congress annual meetings (5-15 Mar)
US NABE 2010 Econ Policy Conference "The New Normal?" with speakers from NY Fed, White House econ adviser Romer,
Chicago Fed Pres Evans

Wed 10 Mar
CN National People's Congress annual meetings (5-15 Mar)
PH Exports for Jan (prev: 23.6%y/y)
CN Exports for Feb (38.3%y/y; prev: 21%)
TH BOT rate decision (mkt: o/n repo rate unchanged at 1.25%; prev: unchanged)

Thur 11 Mar
CN National People's Congress annual meetings (5-15 Mar)
KR BoK rate decision (mkt: 7D repo rate unchanged at 2%; prev: unchanged)
CN CPI for Feb (mkt: 2.5%y/y; prev: 1.5%)
CN industrial production for Feb (mkt: 19.6%y/y; prev: 18.5%)
CN M2 money supply (mkt: 25%y/y; prev: 26%)
CN new loans (mkt: +600bn m/m; prev: +1390bn)
CN retail sales (mkt: 18.7%y/y; prev: 17.5%)
MY industrial production for Feb (mkt: 11.9%y/y; prev: 8.9%)
PH BSP rate decision (mkt: o/n borrowing rate unchanged at 4%; prev: unchanged)

Fri 12 Mar
CN National People's Congress annual meetings (5-15 Mar)
SG retail sales for Jan (prev: -5%y/y)

URL: www.uob.com.sg/research
Email: EcoTreasury.Research@UOBgroup.com
 Asian Markets
Monday, 08 March 2010
p5

Economic Indicators
Local Time Indicators Mth Actual UOB Forecast Mkt Forecast Previous
05/03
0900 PH CPI y/y Feb 4.2 - 4.3 4.3%
0900 PH CPI nsa Feb 0.4 - 0.5 0.2%
1530 TH Foreign Reserves Feb 26 141.8 - - 140.6b
1600 TW CPI y/y Feb 2.35 - 2.14 0.26%
1600 TW WPI y/y Feb 5.87 - - 6.74%
1620 TW Foreign Exchange Reserves-US$ Feb 352.73 - - 350.71b
1730 MA Foreign Reserves Feb 26 96.85 - - 96.93B
1801 MA Exports y/y Jan 37.0 - 31.3 18.7%
1801 MA Imports Jan 31.0 - 32.0 23.3%
1801 MA Trade Bal Jan 12.93 - 10.2 12.1b

08/03
1600 TW Exports y/y Feb - 32.9 75.8%
1600 TW Imports y/y Feb - 39.1 114.7%
1600 TW Trade bal in US$ Feb - 1.44 $2.49b
1700 HK Foreign Currency Reserves Feb - - 257.1b
1700 SG Foreign Reserves Feb - - $189.62b

09/03
0001 CH Manpower survey 2Q - - 14%
0001 HK Manpower survey 2Q - - 13%
0001 SG Manpower survey 2Q - - 22%
0001 TW Manpower survey 2Q - - 22%
1100 SK PPI y/y Feb - - 2.8%

10/03
0900 PH Exports y/y Jan - 32.6 23.8%
1300 CH Trade Bal (USD) Feb - 7.15 14.17b
1300 CH Exports y/y Feb - 38.3 21.0%
1300 CH Imports y/y Feb - 38.0 85.5%
1630 THB 1-Day Repo Mar 10 1.25 1.25 1.25%

11/03
1000 CH Producer Pr Ind y/y Feb - 5.1 4.3%
1000 CH Purchasing Pr Ind y/y Feb - 8.5 5.5%
1000 CH CPI y/y Feb - 2.5 1.5%
1000 CH Retail Sales y/y Feb - 18.1 -
1000 CH Industrial Prod y/y Feb - 19.0 -
1000 KRW Base Rate Mar 2.00 2.00 2.00%
1130 TH Consumer Confidence Econ Feb - - 71.9
1201 MA Industrial Prod y/y Jan - 11.9 8.9%
1600 PHP O/N Reverse Repo Mar 11 4.00 4.00 4.00%
1300 SG Retail Sales y/y Jan - - -5.0%
1300 SG Retail Sales m/m sa Jan - - -0.9%

12/03
1530 TH Foreign Reserves Mar 5 - - 141.8b
1730 HK Industrial Prod y/y 4Q - - -8.6%
1730 HK Producer Pr y/y 4Q - - -2.0%

Jimmy Koh Suan Teck Kin, CFA Ho Woei Chen Chow Penn Nee
(65) 6539 3545 (65) 6539 3922 (65) 6539 3948 (65) 6539 3923
Jimmy.KohCT@UOBgroup.com Suan.TeckKin@UOBgroup.com Ho.WoeiChen@UOBgroup.com Chow.PennNee@UOBgroup.com
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URL: www.uob.com.sg/research
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