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Tuesday, 10 August 2010 Asian Markets

News Highlights
Foreign Exchange Rates (as at 09 Aug 2010)
As at 10 Aug Asian High Asian Low NY High NY Low
n USD/Asians mostly eased on Mon as the greenback
SGD 1.3492 1.3474 1.3458 1.3486 1.3465
MYR 3.1490 3.1480 3.1370 - - retreated broadly after the weaker-than-expected non-farm
IDR 8,932 8,936 8,922 - - payrolls data in US on Fri. TWD touched a high of 31.660/
THB 31.96 32.01 31.95 - - USD before closing at 31.782/USD, up 0.1% from Fri. KRW
PHP 44.89 44.93 44.80 - - rose 0.5% to an intraday high of 1,155.70/USD before
TWD 31.65 31.81 31.66 - - paring gains to end at 1,160.10 on Mon. In the regional
KRW 1,162.90 - - - -
HKD 7.7619 - - 7.7630 7.7610
markets, MYR strengthened to 3.1415/USD vs 3.1475 on
CNY 6.7667 6.7680 6.7628 - - Fri while IDR rose marginally to 8,930/USD from 8,940 on
Fri. THB rose to a high of 31.95/USD during the Asian session
on Mon compared with 32.08 late Fri. The BoT said THB
UOB’s Estimation of SGD NEER (as at 10 Aug 2010)
has appreciated slightly too fast in the past week but the Fin
Assuming 2.5% on each side of the pivot point:
Lower-End ...........................................................................1.4093 Min suggested that the appreciation was unavoidable due
Upper-End ...........................................................................1.3406 to the strength in the Asian economies. USD/Asians could
Mid-Point ..........................................................................1.3750 recover some losses ahead of the FOMC tonight but
attention will be on China's trade data for July this morning.
A stronger set of data could lift sentiment. Market is
Interest Rates
Current Next CB Meet UOB’s Forecast expecting the exports growth to moderate to around 34%y/
SGD 3-Mth SIBOR 0.55% - - y in July from 43.9%y/y in June as the withdrawal of export
MYR O/N Policy Rate 2.75% 02 Sep 2.75% tax rebates for some commodities in July could have led to
IDR O/N Rate 6.50% 03 Sep 6.50% some frontloading of exports in June.
THB 1-Day Repo 1.50% 25 Aug 1.75%
PHP O/N Reverse Repo 4.00% 26 Aug 4.00%
n For the rest of the week, focus is on the Chinese data for
TWD Discount Rate 1.375% 26 Sep 1.50%
KRW Base Rate 2.25% 12 Aug 2.50% July, including NDRC house prices, money supply, new
HKD Base Rate 0.50% - 0.50% RMB loans, CPI, PPI, retail sales, industrial production and
CNY 1-Yr Wking Capital 5.31% - 5.58% FAI. Local news suggest that new RMB loans were RMB500+
bn in July (June: RMB603.4 bn), helping the banking sector
towards the RMB7.5 bn lending cap for the year and thus
Stock Indices (as at 09 Aug 2010)
Closing % chg easing pressure for monetary policy tightening in China. The
Singapore Straits Times - - Bank of Korea monetary policy meeting on Thur is expected
Kuala Lumpur Composite 1360.66 +0.02 to see the central bank hiking its benchmark Base Rate by a
Jakarta Composite 3082.60 +0.72 further 25bps to bring it to 2.50%. This will be led by the
Bangkok SET 875.18 +0.01 recovery in Korea's economy although inflationary pressure
Philippines Composite 3524.70 +0.24
is fairly contained. We expect the BoK to hike interest rates
Taiwan TAIEX 8034.49 +0.89
Seoul Composite 1790.17 +0.36 by a total of 75bps this year to 2.75% by end-2010. On Fri,
Hong Kong Hang Seng 21801.59 +0.57 Hong Kong is scheduled to release its 2Q10 GDP data
Shanghai SE Composite IX 2672.53 +0.53 which is expected to ease to 6.3% y/y from 8.2% in 1Q10.
Mumbai Sensex 30 18287.50 +0.79 Thai markets will be closed on 12-13 Aug.

Key Events n USD/SGD has recovered to around 1.35 this morning after
Date Event slipping below the level on Mon to trade to a low of 1.3458.
On the trade-weighted basis, SGD is currently trading steady
at 1.7% above the policy mid-point this morning with the
2% threshold corresponding to USD/SGD at 1.3470. This
morning, Singapore's 2Q10 GDP growth was revised lower
to 18.8% y/y from 19.3% in the advance estimates with 1H10
GDP registering an expansion of 17.9% y/y. The revision
was mainly due to weaker manufacturing and construction
 Asian Markets
Tuesday, 10 August 2010
p2

sectors. The MTI maintained its full-year growth forecast at
13.0-15.0% as it expects growth momentum to ease in 2H10.
n RMB ended firmer at 6.7671/USD on Mon, up from Fri's
close of 6.7683 after the PBoC set the central parity at a
post-revaluation high of 6.7685 in the morning (Fri:
6.7730). This also boosted RMB in the NDF market with the
12-mth rising to 6.6665/USD and pricing in 1.5%
appreciation against USD (vs the fixing). The RMB could
reverse some strength today as the PBoC set the RMB
central parity weaker at 6.7745 this morning.
n Stock indexes in Asia were mostly firmer on Mon despite
the disappointment in the US non-farm payrolls data on
Fri. The Nikkei fell 0.7% but Hang Seng Index and Shanghai
CI rose more than 0.5% yesterday. In the region, the Jakarta
CI rose 0.7% while Thai and Malaysian stock indexes ended
near-flat. This morning, Nikkei opened in the positive
territory, reflecting the gains in the US stock indexes
overnight. The DJIA edged up 0.4% on Mon.
n Taiwan's July exports came in stronger-than-expected at
38.5% y/y, rising from 34.1% in June. Imports grew 42.7%
y/y in July vs 40.4% in June.
n Thai Constitutional Court has begun trial against the ruling
Democrat Party over allegations of misuse of a THB29 mn
state grant and an undeclared political donation.

Singapore Focus:
Singapore's 2Q GDP came in lower compared to the advance estimates, growing 18.8% y/y and 24.0% q/q saar (adv est: 19.3%
y/y, and 26.0% q/q saar). The slower growth was due to the weaker manufacturing and construction sectors, which expanded
44.5% y/y (adv est: 45.5%) and 11.5% y/y (adv est:13.5%) respectively. The services sector was just a tad weaker than in advance
estimates at 11.2% compared to 11.4%.

We're starting to see manufacturing tapering off already, as industrial output grew at the slowest pace in 4 months in Jun, after
exceptionally strong expansion in May and Apr. The slower expansion came primarily from pharmaceutical manufacturing, which
saw a moderation in growth pace from the extraordinarily strong rate of 122.5% y/y in May and 102.1% y/y in Apr. We continue
to see a slowing down in manufacturing growth pace in the second half of this year, given the lack of clarity on the recovery
process in the US, and Europe's sovereign debt problem also far from being solved. As for services, although the sector expanded
at a slower pace in the second quarter, on a q/q saar basis, we think the sector will continue to keep up the growth pace as tourism-
related sectors and financial services continue its growth momentum. Our full year forecast remains unchanged at 13.8%, taking
into account a contraction in the 3Q on a q/q saar basis. We are still maintaining our forecast at 5.0% for 2011.

Economic Indicators
Local Time Indicators Mth Actual UOB Forecast Mkt Forecast Previous
09/08
1100 SK PPI y/y Jul 3.4 - - 4.6%
1600 TW Total Exports y/y Jul 38.5 - 31.0 34.1%
1600 TW Total Imports y/y Jul 42.7 - 39.7 40.4%

10/08
0800 SG GDP q/q 2Q F 24.0 - 25.2 26.0%
0800 SG GDP y/y 2Q F 18.8 - 19.3 19.3%
0900 PH Total Exports y/y Jun - 25.0 37.3%
1201 MA Industrial Prod y/y Jun - 11.8 12.6%
CH Trade Bal (USD) Jul - 19.6 20.02b
CH Exports y/y Jul - 35.0 43.9%
CH Imports y/y Jul - 30.0 34.1%

11/08
0700 SK Unemployment rate sa Jul - - 3.5%
1000 CH PPI y/y Jul - 6.0 6.4%
1000 CH Purchasing Pr Ind y/y Jul - - 10.8%

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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