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UOB Economic-Treasury Research

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Wednesday, 11 August 2010 Asian Markets


News Highlights
Foreign Exchange Rates (as at 10 Aug 2010)
As at 11 Aug Asian High Asian Low NY High NY Low
n Asian currencies and stocks fell on Tue on the back of
SGD 1.3546 1.3542 1.3482 1.3573 1.3502
MYR 3.1575 3.1570 3.1415 - - concerns over weaker-than-expected imports data from
IDR 8,950 8,957 8,935 - - China. KRW fell 0.9% to an intraday low of 1,170.70 while
THB 31.96 31.99 31.96 - - TWD ended weaker at 31.855/USD vs 31.782 on Mon. In
PHP 44.98 45.08 44.88 - - the SE Asian markets, MYR fell to 3.15/USD Tue from 3.1415
TWD 31.75 31.85 31.73 - - on Mon while IDR eased to 8,955/USD from Mon's 8,930.
KRW 1,177.20 1,170.70 1,162.50 - -
HKD 7.7638 - - 7.7650 7.7630
Indonesia's Fin Min said the recent surge in IDR is largely
CNY 6.7717 6.7750 6.7660 - - driven by capital inflows and will likely be temporary. THB
exited the Asian session a tad weaker at 31.960/USD vs
31.950/USD Mon. Thai PM Abhisit said THB's recent
UOB’s Estimation of SGD NEER (as at 11 Aug 2010)
appreciation has not hurt exports. Following the trade data,
Assuming 2.5% on each side of the pivot point:
Lower-End ...........................................................................1.4123 China's July inflation, industrial production and FAI data
Upper-End ...........................................................................1.3434 are scheduled for release today. The data is expected to
Mid-Point ..........................................................................1.3779 show a spike in inflation due to floods in parts of the
country and a slowdown in the economy.
Interest Rates
Current Next CB Meet UOB’s Forecast n USD/SGD touched a high of 1.3573 during the Ldn/NY
SGD 3-Mth SIBOR 0.55% - - session on Tue, sharply higher compared with Mon's high
MYR O/N Policy Rate 2.75% 02 Sep 2.75% of 1.3486 in line with the broad USD rebound yesterday.
IDR O/N Rate 6.50% 03 Sep 6.50% SGD NEER was trading at 1.5% above the mid-point this
THB 1-Day Repo 1.50% 25 Aug 1.75% morning, down from 1.7% yesterday. Given the pullback in
PHP O/N Reverse Repo 4.00% 26 Aug 4.00%
risk-taking, USD/SGD is likely to trade a range of 1.35-1.36
TWD Discount Rate 1.375% 26 Sep 1.50%
KRW Base Rate 2.25% 12 Aug 2.50% today.
HKD Base Rate 0.50% - 0.50%
CNY 1-Yr Wking Capital 5.31% - 5.58% n Asian stock indexes ended lower across-the-board on Tue,
as ensuing concerns over weakening demand in China
followed the disappointing imports data for July.
Stock Indices (as at 10 Aug 2010)
Closing % chg Furthermore, data showing firm property prices in China
Singapore Straits Times 2984.29 -0.36 caused renewed worries over tightening measures in the
Kuala Lumpur Composite 1359.71 -0.07 country. The Shanghai CI fell 2.9% yesterday while Hang
Jakarta Composite 3057.16 -0.83 Seng Index ended 1.5% lower. In Singapore, the STI closed
Bangkok SET 861.95 -1.51 0.4% lower with trade volume easing to 1.4 bn shares on
Philippines Composite 3525.81 +0.03
Tue from 1.6 bn last Fri. Asian stocks have negative cues
Taiwan TAIEX 7976.74 -0.72
Seoul Composite 1781.13 -0.50 from the fall in US stock indexes overnight. The Nikkei
Hong Kong Hang Seng 21473.60 -1.50 opened down by more than 1% this morning.
Shanghai SE Composite IX 2595.27 -2.89
Mumbai Sensex 30 18219.99 -0.37 n RMB ended lower at 6.7720/USD yesterday vs 6.7671 on
Mon after the PBoC reversed course to set the central parity
Key Events markedly weaker at 6.7745/USD in the morning from
Date Event Mon's record high of 6.7685/USD. The RMB has
appreciated by 0.77% against USD since June 19
announcement. Despite the weaker spot RMB, the NDF
market was steady yesterday. 12-mth RMB was at 6.6620/
USD, pricing in appreciation of 1.7% against USD from the
weaker fixing on Tue compared with 1.5% on Mon. The
PBoC set the RMB central parity slightly weaker at 6.7768/
USD this morning.
Asian Markets
Wednesday, 11 August 2010
p2

of y/y increase despite the decline in sales and the resilient


n China's exports grew a stronger-than-expected 38.1% y/y prices suggest that the govt will keep a tight rein over the
in July (mkt: 35.5%), but this has slowed from 43.9% in June, real estate market although more tightening measures could
partly due to the withdrawal of export tax rebates for some be less likely.
commodities from July 15. However, imports growth was
below expectation at 22.7% y/y (mkt: 30.0%) as it moderated n National Economic Research Institute Head Fan Gang said
from 34.1% in June. As a result, the trade surplus surged to that the RMB could rise by a large pace in the medium term,
its 18-month high of US$28.7 bn in July from US$20.0 bn citing the 22% appreciation against USD between 2005-
in June. The attention was on the imports data rather than 2008. He expects USD to remain under pressure.
stronger exports. The weaker-than-expected imports raised
concerns over investment and consumption slowdown in n Malaysia's industrial production rose a weaker-than-
China. Meanwhile, the large trade surpluses will continue expected 9.4% y/y in June (mkt: 11.1%), easing from 12.3%
to draw pressure on the RMB. US Senator Charles Schumer expansion in May.
took the opportunity to pile pressure on the RMB yesterday
with a hearing on China's currency practice by the House n Indonesia raised IDR4 tn in a bond auction on Tue with
Ways and Means Committee due on Sep 15. yields falling on expectation of a cut in issuance ahead.

n Property prices in 70 of China's large and medium sized n South Korea's military said it would "act resolutely" against
cities were flat m/m in July but rose 10.3%y/y, easing from military provocations from North Korea which fired shells
11.4% growth in June. This was the 14th consecutive month into the Yellow Sea border on Mon evening.

Economic Indicators
Local Time Indicators Mth Actual UOB Forecast Mkt Forecast Previous
10/08
0800 SG GDP q/q 2Q F 24.0 - 25.2 45.7%
0800 SG GDP y/y 2Q F 18.8 - 19.3 16.9%
0900 PH Total Exports y/y Jun 33.4 - 25.0 37.3%
1050 CH Exports y/y Jul 38.1 - 35.0 43.9%
1050 CH Imports y/y Jul 22.7 - 30.0 34.1%
1058 CH Trade Bal (USD) Jul 28.73 - 19.6 20.02b
1201 MA Industrial Prod y/y Jun 9.4 - 11.8 12.3%

11/08
0700 SK Unemployment rate sa Jul 3.7 - - 3.5%
1000 CH PPI y/y Jul - 6.0 6.4%
1000 CH Purchasing Pr Ind y/y Jul - - 10.8%
1000 CH CPI y/y Jul - 3.3 2.9%
1000 CH Retail Sales y/y Jul - 18.5 18.3%
1000 CH Ind Prod y/y Jul - 13.4 13.7%
1130 TH Consumer Confidence Econ Jul - - 69.1

12/08
0900 KRW Base Rate Aug 2.50 2.38 2.25%

13/08
1300 SG Retail Sales y/y Jun - -3.4 -3.4%
1300 SG Retail Sales m/m sa Jun - 0.5 -0.9%
1300 SG Retail Sales ex auto Jun - - 7.8%
1530 TH Foreign Reserves Aug 6 - - 151.5b
1630 HK GDP y/y 2Q - 6.3 8.2%
1630 HK GDP sa q/q 2Q - 2.0 2.4%

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
Disclaimer: This analysis is based on information available to the public. Although the information contained herein is believed to be reliable, UOB Group makes no representation as to the
accuracy or completeness. Also, opinions and predictions contained herein reflect our opinion as of date of the analysis and are subject to change without notice. UOB Group may have
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