Regional Market Focus Phillip Securities Research Pte Ltdresearch.cyberquote.com.hk/page/htm/kc/share... · 4.326 points or 0.63% to close at 678.100. As many as 116 shares declined,

MICA (P) 081/12/2011 Ref No: RM2012_0143 1 of 17

Regional Market Focus

Phillip Securities Research Pte Ltd

25 July 2012

Morning Market Commentary MORNING MARKET COMMENTARY - 25 July 2012 - STI: +0.53% to 2998.4 - FTSE Asia Pac ex-Japan: -0.11% to 544 - Euro Stoxx 50: -1.27% to 2151.5 - S&P500: -0.90% to 1338.3 MARKET OUTLOOK: Chinese stocks bounced off slightly from the absolute low of this 3yr bear market. Preliminary PMI readings have suggested that the rate of contraction has continued to ease (see Macro Data). Our take: the economy's rebalancing slowdown is seen in the odd situation of falling industrial production and industrial sales & profit, while employment, incomes, retail sales, services PMI, while not blistering, are holding their own. With inflation low and the policy bag full, we aren't penciling in hard landing, fingers crossed. Its hard to see Chinese stocks rising or falling hard from here, but are inclined to think that with valuations at historical lows at 8-9x trailing p/e, those with a long horizon, and able to stomach the see-saw ride can consider it a long term investing point of entry (iShares A50: 2823.HK). The rest of the Equity world is still in a risk off with concerns over Spain. UPS cut its estimates going forward and forecasted that the US will grow 1% in 2H12. We don't disagree. Regular readers will know that we thought the short-term rally overextended. The inter-market picture continues to signal risk off: with dollar strengthening, 10yr treasury yield sinking even further (price rise), while the S&P500, commodities and crude falling. So time for caution if you're on the long side, or consider building short positions (phillipCFD has available: STI, HSI, S&P, Dow, US Tech). As we think absolute returns for stocks everywhere over the next 6mths could prove difficult, we favour ASEAN markets - the KLCI, JCI, SETI, PSEI, STI - to be relatively more resilient. For the first 4, domestic demand and pro-growth govt policy counteracts a weak external environment. As for the STI, about +60% of EPS comes from ASEAN-EM. In addition average dividend yields are 50-100bp points higher than most other indices, which, along with the SGD's relative safe haven status, makes it an attractive buy in these yield starved times. Overall though, we favour Fixed Income (ETF tickers in brackets) over Stocks given our global slowdown, receding inflation outlook. A repressed rate environment, is inducing a global search for yield beyond the traditional safe havens of Treasuries (TLT: NYSE), Bunds, Gilts, SGS (A35:SGX), which are nonetheless still rising. Portfolios hard pressed for yield will likely have to explore beyond the safe havens, thus we like dollar denominated EM sovereigns (EMB:NYSE), dollar denominated Asian Sovereigns & Corporates (N6M:SGX and O9P:SGX), and US Corporate Debt (VCLT:NYSE). Dividend stocks are also likely to be a spillover beneficiary. Our SG Sector Strategist is still overweight the high yielding defensives, Aviation Services (SIAEC, SATS), and REITS. For our larger trend outlook: Global Macro & Markets, 12 Apr. Singapore Sector Strategy: Sector Strategy, 1 July Singapore Sector Reports: Banks / Transport / Telcos / Property / REITS / Thematic Regional Strategy: Indon, 17 July / HK, 22 June / Thai, 18 June / S'pore, 8 June / M'sia, 30 May / China, 24 May MACRO DATA: China’s HSBC flash index advanced to 49.5 in July, compared to June’s final reading of 48.2, indicating a slower contraction in the nation’s business activities of small and medium enterprises due to the earlier two benchmark rate cuts. A separate report shows that the nation’s leading index rose slightly in June to 234.9 in June, from May’s 234.7, and coincidence index rose to 219.8 in June from May’s 218.7. The improvement performance shows the earlier loosening of government might be slowly taking effects. Going forward, we would expect more actions by government if needed as easing inflation has given the government more scope to do so. Hong Kong’s export fell by 4.8% y-y in June, compared to a market estimated gain of 1.8% y-y, after the 5.2% y-y gain in May. Import fell by 2.9% y-y in June, compare to a market estimated 1.5% y-y gain, after the 4.6% y-y gain in May. By trading partners, export to China, which makes up over 50% of the total export, fell by 3.9% y-y in June due to the weakening demand from the slower China growth, compared to the 9.5% y-y growth in May. Export to US fell by 5.2% y-y in June, compared to the 12% y-y drop in May. Due to the dim outlook for export, which account for over 200% of Hong Kong’s GDP, we expect Hong Kong‘s GDP growth would slump to between 1% to 2% for the whole year 2012, compared to the 5% full year growth in 2011. In the Eurozone, economic activity continued to contract for the sixth consecutive month in July. Specifically, the flash July composite PMI -combination of both the manufacturing as well as services sectors- registered 46.4, similar to last month’s reading. However, the seemingly stable headline PMI masked signs of weakness - (i) EZ manufacturing output actually declined at the fastest pace since May 2009. (ii) Germany -the largest economy in the bloc- also saw its services output contracting and manufacturing production declining at its steepest rate in over 3 years. As we have guided previously in our MN commentary, core economies in the bloc (such as Germany and France) are not immune from the EU sovereign debt crisis. Looking ahead, we opine that sluggish domestic as well as external demand -along with weak economic sentiment- are likely to continue to weigh on growth for the bloc as a whole. In Vietnam, inflation eased from 6.9% y-y in June to 5.35% in July - the weakest pace in more than 2.5 years. The moderation in inflation is largely due to (i) weak domestic demand as well as (ii) slow credit growth as banks are wary of extending new loans in view of significant level of non-performing loans. Looking ahead, we still expect monetary policy to remain accommodative on account of slowdown in growth and easing inflation.

Regional Market Focus

25 July 2012

2 of 17

Singapore STI rose 0.53% to end Tuesday at 2998. Market activity was thin with only 946

million shares traded with value of $998 million. There were 195 gainers vs 142 decliners. Market managed to find some cheers after HSBC China manufacturing PMI showed an improvement. However we see no reason to pop the champagne yet as all indicators point to a slowdown. Index resistance will likely be capped at 3000.

As we progress through the reporting season, defensive stocks by and large are still maintaining their earnings momentum.

Close +/- % +/-FSSTI 2998.44 15.95 0.53P/E (x) 9.84P/Bv (x) 1.37

3.62Dividend Yield

STRAITS TIMES INDEX

2500

2700

2900

3100

3300

7/24 10/24 1/24 4/24 7/24

Source: Bloomberg

Thailand Thai stocks traded in the green for most of the session on Tue after a better-than-

expected PMI data from China but volatility was extremely high amid European debt pressure, which triggered sporadic bouts of profit taking along the way.

Even though the SET index ended the session slightly higher yesterday, gains appeared unsustainable in the absence of catalysts to drive the market further higher. The risk also remains to the downside as euro zone debt crisis has continued to cloud the market. Internal factors remain the same. The main economic event today will be the Bank of Thailand’s Monetary Policy Committee rate-setting meeting. The MPC is expected to leave its policy interest rate unchanged at 3.00%. The rate decision is unlikely to have a significant impact on the market. Overall we believe the Thai stock market may face wild swings amid a risk to the downside but support levels of 1181-1170 would remain intact. Growing market fears could also spur hopes of new economic stimulus especially when the US Federal Reserve is due to meet next week.

For short-term strategy, we still advise investors to hold only companies expected to report strong results or pay high interim dividends.

Resistance on the main index is pegged at 1192-1200 and support at 1181-1170 today.

Close +/- % +/-SET INDEX 1187.64 2.53 0.21P/E (x) 15.07P/Bv (x) 2.09

3.63Dividend Yield

STOCK EXCH OF THAI INDEX

800

900

1000

1100

1200

1300

1400

7/24 10/24 1/24 4/24 7/24

Source: Bloomberg

Indonesia

Indonesian stocks ended mostly lower Tuesday (24/07), with the JCI retreated

below 4,000. The composite index fell 17.680 points or 0.44% to close at 3,992.113. The decline included 6 of the index’s major sectors, with infrastructure sector lost 0.97%, agriculture sector trimmed 0.84% and miscellaneous industry dropped 0.81%. LQ 45, the index trailing Indonesia’s blue-chip stocks, shed 4.326 points or 0.63% to close at 678.100. As many as 116 shares declined, 111 shares advanced, and 95 shares unchanged Tuesday on the Indonesia stock exchange, where 2.235 billion shares worth IDR 2.894 trillion traded on the regular board. Foreign investors posted net sales totaled at IDR 130.743 billion.

The JCI potentially extend its decline today, as concern over Euro-zone debt turmoil, particularly of Greece continues. We expect the composite index to trade within the range of 3,950 and 4,025 today.

Close +/- % +/-JCI Index 3992.11 -17.68 -0.44P/E (x) 17.48P/Bv (x) 2.65

2.35Dividend Yield

JAKARTA COMPOSITE INDEX

3000

3200

3400

3600

3800

4000

4200

4400

7/24 10/24 1/24 4/24 7/24

Source: Bloomberg

Regional Market Focus

25 July 2012

3 of 17

Sri Lanka The prevailing sluggish movements continued across the day and all indices

retained in the negative region. It was evident that particularly, retailer interest has diminished amidst the bearish market, which has resulted in the decline in investor activity. ASPI experienced a 7.41 points drop and closed at 4,874.36. Performance of the blue chips companies too narrowed to a large extent demonstrating a further drop of 4.07points on MPI to end at 4,281.82. The daily turnover was a moderate LKR 519Mn; and reported crossings on HNB.X, COMB.X, DIST and DPL provided the highest portion of the daily turnover.

Blue chip companies led the subscription list to the turnover today. COMB.X,

HNB.X, DPL and DIST provided LKR 85Mn, 65Mn, 54Mn, 48Mn individual turnovers respectively. Reported volume was 16.9Mn and this was a 61% increase over the previous day. DPL emerged as the counter with highest traded shares with 4.4Mn shares changing hands. In addition, COMB.X and PABC were also heavily traded today. 234 counters engaged in trading today. Ceylon Printers became the top gainer while Huejay was the top looser for the day. The recorded net foreign inflow was LKR 251Mn.

Close +/- % +/-CSEALL Index 4874.36 -7.41 -0.15P/E (x) 10.18P/Bv (x) 1.55

2.85

Dividend Yield

SRI LANKA COLOMBO ALL SH

4500

5000

5500

6000

6500

7000

7500

7/24 10/24 1/24 4/24 7/24

Source: Bloomberg

Australia

The Australian share market closed slightly higher on Tuesday in a major turnaround from the day before, as cautious investors were encouraged by better Chinese manufacturing data. The benchmark S&P/ASX200 index was up 4.3 points or 0.1 per cent to 4,133.2 with the national turnover of 1.59 billion securities worth $3.19 billion, with 342 stocks up, 557 down and 370 unchanged.

The Australian market looks set to open lower following falls on Wall Street

overnight, on mounting concerns about Europe's sovereign debt crisis and lacklustre corporate earnings in the US. The SFE Futures 200 is indicating for a downward start, 31 points lower or 0.75% to 4,054.

On the economic news front for Wednesday, the Australian Bureau of Statistics

(ABS) releases the Consumer Price Index (CPI) number for the June quarter at 11:30am local time.

Close +/- % +/-S&P/ASX 200 INDEX 4133.23 4.29 0.10P/E (x) 14.13P/Bv (x) 1.66

6.83Dividend Yield

STANDARD & POORS/ ASX 200 INDEX

3800

4000

4200

4400

4600

4800

7/24 10/24 1/24 4/24 7/24

Source: Bloomberg

Hong Kong

Close +/- % +/-HSI INDEX 18903.20 -150.27 -0.79P/E (x) 9.21P/Bv (x) 1.32

3.85Dividend Yield

HANG SENG INDEX

16000

17000

18000

19000

20000

21000

22000

23000

24000

7/24 10/24 1/24 4/24 7/24

Source: Bloomberg

Regional Market Focus

25 July 2012

4 of 17

Singapore

SIA Engineering Co. Ltd – Results Recommendation: Buy Previous close: S$4.08 Fair value: S$5.00

Higher business volume led to increase in sales

Record contributions from its Rolls Royce JVs

Change in policy reduced depreciation exp. by S$0.8mn

Maintain Buy with unchanged target price of S$5.00

Thailand

Quality Houses – Company Preview Recommendation: NEUTRAL Previous close: Bt1.73 Fair value: Bt1.76

Presales grew in line with expectation in 2QCY12.

Net profit is expected to grow 4% q-q but to lower 14% y-y in 2QCY12.

We raise our CY12 net profit forecast by 49% to reflect gains on sales of three buildings but leave our pre-ex profit forecast unchanged.

Shares prices already factored in gains on sales of investment and they are trading near historical P/E range. We therefore downgrade rating on QH shares to ‘NEUTRAL’ with a target price of Bt1.76/share.

Regional Market Focus

25 July 2012

5 of 17

Market News

US U.S. stocks slumped, sending the Standard & Poor’s 500 Index down for a third straight day, amid concern Europe’s debt crisis is

worsening and after United Parcel Service Inc. lowered its earnings forecast. Equities pared losses amid speculation the Federal Reserve may act to boost growth. UPS, the largest package-delivery company and considered an economic bellwether, tumbled 4.6 percent. AT&T Inc. (T), the biggest U.S. phone company, lost 2.1 percent amid sluggish sales after signing up fewer wireless customers. Apple Inc. (AAPL), the most valuable company, sank 5 percent at 4:51 p.m. New York time on disappointing results. (Source: Bloomberg)

Apple Inc. (AAPL)’s profit and sales fell short of analysts’ projections for only the second time since 2003 as customers held off on

iPhone purchases while waiting for a new model to be introduced later in the year. Net income climbed 21 percent to $8.82 billion, or $9.32 a share, in the period that ended June 30, Cupertino, California- based Apple said today in a statement. Sales rose 23 percent to $35 billion. Analysts had predicted profit of $10.37 a share on revenue of $37.2 billion, the average of estimates compiled by Bloomberg. Shares fell 6 percent in late trading. (Source: Bloomberg)

New Oriental Education & Technology Group Inc. (EDU), China’s largest private-education provider, was sued by investors in its U.S.-

registered shares after the Securities and Exchange Commission began investigating the company. The American depositary receipts fell 57 percent over two days after New Oriental said July 17 that the SEC was probing the consolidation of its units’ financial statements. The plunge capped nine consecutive trading days of declines, the ADRs’ longest losing streak since the Beijing-based company’s initial public offering in 2006. Investors in New Oriental ADRs, led by Kin Shing Wong, are seeking compensatory damages for the stock losses and class action, or group status for the lawsuit filed yesterday in Los Angeles federal court. In their complaint, the investors cited a July 18 research report alleging New Oriental inflated cash balances to obtain approval from its auditor, using franchises and other fees. (Source: Bloomberg)

Singapore Two plots of land at Tuas South Street 6 and 7 have been launched for sale by public tender. The two sites, launched by JTC

Corporation under the Industrial Government Land Sales (IGLS) Programme, are zoned B2, with a maximum permissible gross plot ratio of 1.0. The first site (Plot 31) at Tuas South Street 6, has a land area of 0.86ha. The second site (Plot 26) at Tuas South Street 7, has a land area of 1.01 ha. Both sites have a lease term of 22 years, in line with the government's effort to make industrial property more affordable, and are targeted at industrialists who need to custom-build their own facilities. (Source: BT Online)

THE Ministry of Finance (MOF) is seeking feedback on its proposed changes to the Income Tax Act, which relate to changes announced

in Budget 2012. These include the provision of a one-off SME cash grant capped at $5,000 to help companies with higher business costs and more and faster cash upfront for investments under the Productivity and Innovation Credit Scheme, as well as changes to enhance the earned income relief to $8,000 and $12,000 for elderly and handicapped persons. Amendments to the Act will also refine existing tax policies and tax administration, including enhancements to CPF Minimum Sum Topping-Up Scheme. (Source: BT Online)

NTUC's Hospitality and Consumer Business Cluster on Tuesday unveiled the Integrated Progressive Wage model that will help 3,000

rank and file workers and executives in the hotel sector earn higher wages and have multiple career paths. The wage model, devised in conjunction with local hoteliers, aims to raise wages progressively through productivity and build a Singaporean Core of managers and supervisors in the hotel sector. (Source: BT Online)

Hong Kong

China, the world’s biggest steel producer, is exporting at the highest level in two years, exacerbating a global glut that may hurt competitors from ArcelorMittal (MT) to U.S. Steel (X)Corp. Monthly shipments abroad rose to 8.7 percent of domestic output last month, the highest proportion since July 2010. Chinese steel mills, set for a record production in 2012, are ramping up overseas sales to avoid a softer domestic market, where prices for the commodity have dropped to a two-year low. (Source: Bloomberg)

The International Monetary Fund said China’s slowing economy faces significant downside risks and relies too much on investment,

urging leaders to boost consumption and channel citizens’ savings away from housing. While the economy “seems to be undergoing a soft landing,” achieving it is a key challenge, the Washington-based IMF said in a statement today. “China is well placed to respond forcefully, if needed, to a deterioration of the external environment, in particular through fiscal policy,” the IMF said. It repeated an assessment that the yuan is “moderately” undervalued, which China disputed. The IMF’s assessment highlights the tension between China’s efforts to stem a six-quarter slowdown in economic growth and limiting threats to longer-term expansion by tilting more toward consumption. Leaders have cut interest rates and stepped up investment as the ruling Communist Party prepares for a once-a- decade leadership handover starting later this year. (Source: Bloomberg)

Regional Market Focus

25 July 2012

6 of 17

Thailand Foreign investors remained net sellers of Thai equities worth Bt1,144.01mn on Tue. (Source: Bisnews) The yellow-shirt People’s Alliance for Democracy threatens to hold a mass gathering if the government does not withdraw the

reconciliation bills from parliamentary session agenda. The new parliamentary session is scheduled to begin on Aug 1. (Source: Bisnews)

The Bank of Thailand’s Monetary Policy Committee, which meets today, is expected to leave its policy interest rate on hold at 3.00%. The cabinet agreed to extend the exemption of diesel from excise tax for another month to Aug 31, 2012 following a rise in global oil

prices and it also approved the establishment of the 17-member committee for selection of a company to lay out a water management system with 395 companies already expressing interest to bid for the project. (Source: Krungthep Turakij)

Indonesia Bank Indonesia diversifies the foreign currency (forex) reserves in yuan-denominated bonds in the framework of risk management.

Public Relations Director of Bank Indonesia, said the investment is made after the signing of cooperation agreement with The People's Bank of China (BPOC) on July 21, 2012. With the signing of Agency Agreement on Bond Investment in the Interbank Bond Market of China between China’s central banks and Bank Indonesia, Bank Indonesia is allowed to invest in China's interbank bond market. China's interbank bond market is the largest yuan-denominated bond market in China (worth RMB 21.36 trillion in 2011), which is currently accessible only to domestic investors or non-domestic investors which are granted permission from The People's Bank of China as the authority. Meanwhile Indonesia's forex market is also not so deep, so turbulence will drop the exchange rate. Therefore, in order to invest, Bank Indonesia should allocate 30 percent of forex reserves and the remaining 10 percent should act as standby fund in case of a sudden reversal. This is important because in the last two months, Bank Indonesia has intervened around USD 10 billion. (Source: Indonesia Finance Today)

The government focuses on revising the four sectors included in the Negative Investement List (DNI) to encourage greater investment

inflows for 2012 and meet the target of ASEAN Integrity by 2015. The World Bank’s report entitled Rising to the Present and Future Challenges mentions that amid the declining external demand and the high volatility of financial markets, there are a number of policy changes in Indonesia’s trade and investment. On the investment side, the government indicates the preparation of DNI to encourage more foreign investments in several industries, including pharmaceutical, healthcare, telecommunications and education. Currently, foreign investment is regulated in the Presidential Decree No. 36 Year 2010 concerning List of Closed and Open Business Sectors with Requirements in the Field of Investment. The Investment Coordinating Board (BKPM) recorded that in the first quarter of 2012, investment realization amounted to IDR 71.2 trillion (USD 7.54 billion), an increase of 32.9 percent, compared to the same period last year. The realization consisted of domestic investment of IDR 19.7 trillion (26.67 percent) and foreign investment of IDR 51.5 trillion (73.13 percent). (Source: Indonesia Finance Today)

Sri Lanka

Sri Lanka will turn off electricity across the country for three hours daily until July 28, the state-run power firm said on Tuesday, after

technical problems have knocked out almost a quarter of its generating capacity. The nationwide power cut, which starts on Tuesday, was implemented after Sri Lanka's 300 megawatt MW.L Chinese-built coal power plant at Norocholai failed last week for a fifth time since it was commissioned in March last year. Sri Lanka has lost another 100 MW from a combined diesel power plant, and an extended drought has decimated hydro power's contribution to the national grid. (Source: reuters.com)

The International Monetary Fund, which has just fully disbursed a $2.6 billion loan to Sri Lanka, said on Monday it has begun talking with

authorities in Colombo about arranging a new credit called an extended fund facility. Last Friday, the IMF disbursed the last tranche of the existing loan -- $415 million -- following an assessment of the government's policy reforms. Koshy Mathai, the IMF's resident representative in Sri Lanka, said there has been a "very preliminary discussion" with the government on a new facility. He said the IMF wanted to "move to a new kind of arrangement, a sort of higher level of arrangement, where we are able to focus on macroeconomic goals we already have." (Source: brecorder.com)

Regional Market Focus

25 July 2012

7 of 17

Australia The Australian economy could withstand a downturn in China or the break-up of the Eurozone, Reserve Bank governor Glenn Stevens

has declared, in a call for greater public confidence in our economic strength. In an upbeat assessment of the nation's prospects, Mr Stevens said the RBA did not anticipate a collapse in house prices and saw a growing number of foreign companies investing in Australia because of its standout performance since the global financial crisis. "It is slowly becoming better recognised that the Australian economy's relative performance, against a very turbulent international background, has been remarkably good," he told a business lunch in Sydney yesterday. Mr Stevens said sceptics about the nation's economic potential had focused on its exposure to China, its high housing prices and the dependence of banks on international financial markets. "The common element is that recent relative success owes a certain amount to things that will not continue - to luck - and that our luck may be about to turn," he said. Mr Stevens said concern about a slowdown in China had been exaggerated, while Australia's house prices were the most affordable in a decade. Banks were also in good shape, and were paying back their foreign debts. (Source: The Australian)

Unions have turned on each other in a fight over billions of dollars in retirement savings as officials race to secure cash for their favoured

superannuation funds ahead of looming government reforms. Opening a new flank in historic demarcation battles, union leaders are warring over the right to collect savings from hundreds of thousands of workers under Labor's industrial relations regime. The disputes are being likened to a "land grab" for up to $10 billion in annual super contributions in a system that has come under fire from the Productivity Commission for lacking fairness and competition. Critics of the regime fear the moves will cement the position of the unions and their preferred funds before Labor or a future Coalition government can act on the commission's proposals to open the system to greater choice. In one dispute, the National Union of Workers has escalated a row with the Transport Workers Union over contributions to an industry super fund that has five NUW officials on its board. (Source: The Australian)

The Productivity Commission has warned it will take a hard line on business claims for extra carbon tax compensation, and said it may

recommend that aid should be cut if it uncovered industries making windfall gains. The commission conceded that it faced a difficult job untangling the impact of the carbon tax from other factors such as currency fluctuations, unrelated changes in costs and the normal ebb and flow of business. “Even with good data, establishing a causal link between the carbon pricing mechanism and competitiveness, separate to other forces influencing competitiveness, will be a challenging exercise,” a consultation paper issued by the commission warns. Under the carbon tax, the commission has to assess the impact of the tax on industries such aluminium, which received generous federal handouts. It will also review claims by companies that they are being unfairly disadvantaged by the tax. Companies requesting a review must show their industry is being “significantly adversely impacted” by the carbon price, that this is likely to “persist” and either give rise to overseas relocation or “premature” closure. “To project the world price and Australian production, the impact of foreign carbon policies on foreign producers would need to be estimated. The informational and data requirements for this task are substantial, to say the least,” the paper said. (Source: The Financial Review)

Regional Market Focus

25 July 2012

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Dollar Index +0.36% Gold 1,580.95 +0.02%

Crude oil -3.86% US Treasury 10yr Yield 1.388 -0.01%

DJI -0.82% S&P 500 INDEX 1,338.31 -0.90%

SHCOMP +0.24%

Source: Bloomberg

10000

11000

12000

13000

14000

Jul-1

1

Aug-11

Sep-11

Oct-1

1

Nov-11

Dec-11

Jan-1

2

Feb

-12

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

70

75

80

85

Jul-1

1

Aug

-11

Sep

-11

Oct-1

1

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

1200

1400

1600

1800

2000

Jul-1

1

Aug-11

Sep-11

Oct-1

1

Nov-11

Dec-11

Jan-1

2

Feb

-12

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

70

80

90

100

110

120

Jul-1

1

Aug-11

Sep-11

Oct-1

1

Nov-11

Dec-11

Jan-1

2

Feb

-12

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

Jul-1

1

Aug-11

Sep-11

Oct-1

1

Nov-11

Dec-11

Jan-1

2

Feb

-12

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

2000

2300

2600

2900

Jul-1

1

Aug-11

Sep-11

Oct-1

1

Nov-11

Dec-11

Jan-1

2

Feb

-12

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

1000

1100

1200

1300

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1500

Jul-1

1

Aug-11

Sep-11

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1

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-12

Mar-1

2

Apr-1

2

May-1

2

Jun-1

2

Regional Market Focus

25 July 2012

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Source: Bloomberg

Major World Indices

JCI -0.44% 3,992.11

HSI -0.79% 18,903.20

KLCI -0.22% 1,632.57

NIKKEI -0.24% 8,488.09

KOSPI 0.25% 1,793.93

SET 0.21% 1,187.64

SHCOMP 0.24% 2,146.59

SENSEX 0.24% 16,918.08

ASX 0.10% 4,133.23

FTSE 100 -0.63% 5,499.23

DOW -0.82% 12,617.32

S&P 500 -0.90% 1,338.31

NASDAQ -0.94% 2,862.99

COLOMBO -0.15% 4,874.36

STI 0.53% 2,998.44

Regional Market Focus

25 July 2012

10 of 17

Singapore

Top 10 Value Last % Chg Chg Value ('k) Top 10 Volume Last % Chg Chg Volume ('k)

FRASER AND NEAVE 8.00 +1.01 +0.080 151,734 GSH CORP LTD 0.09 +3.41 +0.003 42,799

SINGAP TELECOMM 3.46 +0.29 +0.010 62,450 GOLDEN AGRI-RESOURCES LTD 0.73 +0.00 +0.000 39,107

DBS GROUP HLDGS 14.58 +0.97 +0.140 55,644 GENTING SINGAPORE PLC 1.30 +0.78 +0.010 35,089

KEPPEL CORP LTD 11.19 +1.18 +0.130 51,911 HLH GROUP LTD 0.03 -3.85 -0.001 33,142

GENTING SINGAPOR 1.30 +0.78 +0.010 45,488 NOBLE GROUP LTD 1.05 +0.00 +0.000 27,528

OCBC BANK 9.36 +0.65 +0.060 39,617 JB FOODS LTD 0.34 +3.03 +0.010 21,417

UNITED OVERSEAS 19.42 +1.25 +0.240 34,365 FRASER AND NEAVE LTD 8.00 +1.01 +0.080 18,818

NOBLE GROUP LTD 1.05 +0.00 +0.000 28,893 SINGAPORE TELECOM LTD 3.46 +0.29 +0.010 17,974

GOLDEN AGRI-RESO 0.73 +0.00 +0.000 28,260 SINO GRANDNESS FOOD 0.48 +6.67 +0.030 17,666

GLOBAL LOGISTIC 2.24 -1.32 -0.030 25,025 TOP GLOBAL LTD 0.01 +0.00 +0.000 16,407

Hong Kong

Top 10 Value Last % Chg Chg Value ('k) Top 10 Volume Last % Chg Chg Volume ('k)

CNOOC LTD 14.82 -4.02 -0.62 1,578,030 BEIJING YU SHENG 0.14 -6.76 -0.01 239,010

HSBC HLDGS PLC 62.05 -1.66 -1.05 1,335,572 BANK OF CHINA-H 2.82 +0.36 +0.01 163,031

CHINA MOBILE 86.70 +0.87 +0.75 1,023,950 GOME ELECTRICAL 0.76 +0.00 +0.00 155,829

CHINA CONST BA-H 4.81 -0.62 -0.03 648,191 IND & COMM BK-H 4.12 -0.24 -0.01 155,373

IND & COMM BK-H 4.12 -0.24 -0.01 642,345 DRAGONITE INTERN 0.11 +10.10 +0.01 149,590

CHINA LIFE INS-H 20.80 -0.95 -0.20 532,152 CHINA CONST BA-H 4.81 -0.62 -0.03 133,948

PETROCHINA CO-H 9.42 -1.36 -0.13 499,962 INTERCHINA HLDGS 0.41 -17.35 -0.09 133,150

BANK OF CHINA-H 2.82 +0.36 +0.01 459,937 CNOOC LTD 14.82 -4.02 -0.62 106,267

TENCENT HOLDINGS 226.80 -0.26 -0.60 434,883 DEJIN RESOURCES 0.09 +32.86 +0.02 72,269

AIA GROUP LTD 26.75 +0.19 +0.05 400,177 SINOPOLY BATTERY 0.31 +10.91 +0.03 69,420

Thailand

Top 10 Value Last % Chg Chg Value ('k) Top 10 Volume Last % Chg Chg Volume ('k)

CHAROEN POK FOOD 32.75 -2.24 -0.75 1,772,218 NATION MULTIMEDI 1.52 +10.95 +0.15 467,676

PTT PCL 321.00 -1.53 -5.00 1,350,986 THAI-GERMAN PRO 0.44 +10.00 +0.04 247,051

TOTAL ACCESS COM 82.50 +3.45 +2.75 1,285,629 TEERA-MONGKOL IN 1.71 +29.55 +0.39 216,523

PTT EXPL & PROD 155.50 -1.27 -2.00 1,236,994 NAWARAT PATANAKA 0.83 +1.22 +0.01 151,362

KASIKORNBANK PCL 162.50 +1.56 +2.50 997,190 ROYAL CERAMIC 1.56 +12.23 +0.17 142,621

SIAM COMM BK PCL 149.00 +1.36 +2.00 931,795 BANGKOK LAND PCL 0.81 +0.00 +0.00 138,264

ADVANCED INFO 204.00 +2.00 +4.00 773,724 UNION MOSAIC IND 4.98 +6.41 +0.30 126,888

PTT GLOBAL CHEM 57.75 -0.43 -0.25 746,275 JASMINE INTL PCL 3.36 +0.00 +0.00 116,834

INDORAMA VENTURE 28.75 -3.36 -1.00 700,071 SUPERBLOCK PCL 1.00 -2.91 -0.03 112,893

NATION MULTIMEDI 1.52 +10.95 +0.15 691,046 BTS GROUP HOLDIN 0.79 +0.00 +0.00 100,648

Indonesia

Top 10 Value Last % Chg Chg Value ('mn) Top 10 Volume Last % Chg Chg Volume ('k)

ASTRA INTERNATIO 6,350 -0.78 -50.00 207,763 BAKRIELAND DEV 65 0.00 0.00 225,989

BANK RAKYAT INDO 6,350 -0.78 -50.00 156,514 TRADA MARITIME 880 1.15 10.00 150,820

UNITED TRACTORS 21,150 0.24 50.00 156,033 ENERGI MEGA PERS 130 0.78 1.00 131,491

TELEKOMUNIKASI 8,750 -2.23 -200.00 137,466 BUKIT ULUWATU VI 440 1.15 5.00 130,753

TRADA MARITIME 880 1.15 10.00 131,224 BUMI RESOURCES M 420 16.67 60.00 104,800

BANK MANDIRI 7,400 0.00 0.00 127,430 BEKASI FAJAR IND 570 5.56 30.00 94,836

PERUSAHAAN GAS N 3,775 0.67 25.00 126,237 SENTUL CITY TBK 220 -2.22 -5.00 72,928

INDOCEMENT TUNGG 19,150 1.32 250.00 78,755 ALAM SUTERA REAL 475 -1.04 -5.00 65,824

INDOFOOD SUKSES 5,400 0.93 50.00 70,708 BAKRIE SUMATERA 179 0.00 0.00 53,419

SEMEN GRESIK TBK 12,000 1.69 200.00 63,974 BUMI RESOURCES 1,070 2.88 30.00 48,112

Sri Lanka

Top 10 Value Last % Chg Chg Value ('k) Top 10 Volume Last % Chg Chg Volume ('k)

JOHN KEELLS HLDG 178.40 -0.39 -0.70 16,204 FREE LANKA CAPIT 1.80 0.00 0.00 575

CENTRAL FINANCE 128.70 0.00 0.00 124 LAUGFS GAS LT-NV 13.00 -2.99 -0.40 188

CARSON CUMBERBAT 460.20 -0.15 -0.70 21,201 JOHN KEELLS HLDG 178.40 -0.39 -0.70 91

LAUGFS GAS LT-NV 13.00 -2.99 -0.40 2,451 CENTRAL FINANCE 128.70 0.00 0.00 1

HOTEL SIGIRIYA 75.00 -1.32 -1.00 70 HVA FOODS LTD 12.60 -1.56 -0.20 67

HVA FOODS LTD 12.60 -1.56 -0.20 838 JOHN KEELLS HOTE 12.30 0.82 0.10 166

JOHN KEELLS HOTE 12.30 0.82 0.10 2,024 RICHARD PIERIS 6.90 1.47 0.10 441

SHAW WALLACE HED 205.00 2.50 5.00 696 UNION BANK OF CO 13.30 0.76 0.10 8

UNION BANK OF CO 13.30 0.76 0.10 111 SWARNAMAHAL FINA 6.20 -3.13 -0.20 252

ABANS ELEC PLC 100.10 -2.53 -2.60 225 ASIA ASSET FINAN 2.60 0.00 0.00 63

Source: Bloomberg

Regional Market Focus

25 July 2012

11 of 17

Australia

Top 10 Value Last % Chg Chg Value ('k) Top 10 Volume Last % Chg Chg Volume ('k)

BHP BILLITON LTD 30.930 1.24 0.38 500,566 GREEN ROCK ENERGY LTD 0.003 0.00 0.00 87,334

RIO TINTO LTD 51.760 0.47 0.24 185,790 GOLD ANOMALY LTD 0.007 16.67 0.00 52,440

FORTESCUE METALS 4.040 -0.25 -0.01 168,218 ISONEA LTD 0.003 50.00 0.00 47,192

TELSTRA CORP 3.860 -0.77 -0.03 165,172BILLABONG INTERNATIONAL

LTD1.315 19.55 0.22 46,670

WESTPAC BANKING 22.620 0.31 0.07 159,207 GOLDEN GATE PETROLEUM LTD 0.010 -9.09 0.00 46,224

COMMONW BK AUSTR 54.780 0.07 0.04 135,019 ANTISENSE THERAPEUTICS LTD 0.018 12.50 0.00 44,453

NATL AUST BANK 23.660 -0.13 -0.03 82,969 TELSTRA CORP LTD 3.860 -0.77 -0.03 42,509

WOODSIDE PETRO 32.950 1.92 0.62 79,953 FORTESCUE METALS GROUP 4.040 -0.25 -0.01 42,345

AUST AND NZ BANK 22.750 -0.31 -0.07 79,762 MOOTER MEDIA LTD 0.003 -25.00 0.00 31,604

WESFARMERS LTD 32.220 0.37 0.12 76,182 PETREL ENERGY LTD 0.050 -3.85 0.00 30,213

Source: Bloomberg

Commodities % Chg Chg Last Price of S$1 Price of US$1

GOLD SPOT (US$/OZ) +0.02 +0.25 1,580.95 0.7743 1.0233

SILVER SPOT (US$/OZ) -0.03 -0.01 26.99 0.8091 1.0212

WTI Cushing Crude Oil Spot Price (US$/bbl) +0.42 +0.37 88.28 0.6575 1.2053

0.5111 1.5503

0.7924 1.0000

Commodities % Chg Chg Last 5.0620 6.3870

Malaysian Rubber Board Standard (MYR/kg) -0.34 -3.00 884.00 6.1475 7.7581

PALM OIL (MYR/Metric Tonne) -1.67 -50.00 2,947.00 61.9500 78.1900

910.4698 1149.0400

Index % Chg Chg Last 2.5204 3.1808

DOLLAR INDEX SPOT +0.36 +0.30 84.01 25.1902 31.7900

Source: Bloomberg

CANADIAN DOLLAR

EURO

BRITISH POUND

Currencies

AUSTRALIAN DOLLAR

Commodities & Currencies

JAPANESE YEN

KOREAN WON

MALAYSIAN RINGGIT

THAI BAHT

US DOLLAR

CHINA RENMINBI

HONG KONG DOLLAR

Maturity Today Yesterday Last Week Last Month

3 Months 0.07 0.07 0.07 0.06

6 Months 0.12 0.12 0.13 0.13

2 Years 0.21 0.21 0.23 0.30

3 Years 0.27 0.27 0.33 0.41

5 Years 0.54 0.56 0.62 0.75

10 Years 1.39 1.43 1.51 1.68

30 Years 2.45 2.50 2.60 2.76

Yield Spread (10 yrs - 3 mths)

Yield Spread (10 yrs - 2 yrs)

US Treasury Yields

1.32

1.18

Source: Data provided by ValuBond – http://w w w .valubond.com

Regional Market Focus

25 July 2012

12 of 17

Date Statistic For Survey Prior Date Statistic For Survey Prior

7/25/2012 MBA Mortgage Applications 20-Jul -- 16.90% 7/26/2012 Industrial Production MoM SA Jun -0.80% 1.80%

7/25/2012 New Home Sales Jun 371K 369K 7/26/2012 Industrial Production YoY Jun 2.80% 6.60%

7/25/2012 New Home Sales MoM Jun 0.40% 7.60% 7/31/2012 Credit Card Bad Debts Jun -- 16.4M

7/26/2012 Durable Goods Orders Jun 0.30% 1.10% 7/31/2012 Credit Card Billings Jun -- 3250.8M

7/26/2012 Durables Ex Transportation Jun 0.10% 0.40% 7/31/2012 Bank Loans & Advances (YoY) Jun -- 22.50%

7/26/2012 Cap Goods Orders Nondef Ex Air Jun 0.10% 1.60% 7/31/2012 M1 Money Supply (YoY) Jun -- 7.40%

7/26/2012 Cap Goods Ship Nondef Ex Air Jun 0.60% 0.40% 7/31/2012 M2 Money Supply (YoY) Jun -- 6.70%

7/26/2012 Initial Jobless Claims 21-Jul 380K 386K 7/31/2012 Unemployment Rate (sa) 2Q P -- 2.10%

7/26/2012 Continuing Claims 14-Jul 3300K 3314K 8/1/2012 Electronics Sector Index Jul -- 50.4

7/26/2012 Bloomberg Consumer Comfort 22-Jul -- -37.9 8/1/2012 Purchasing Managers Index Jul -- 50.4

7/26/2012 Pending Home Sales MoM Jun 0.30% 5.90% 8/7/2012 Foreign Reserves Jul -- $243.38B

7/26/2012 Pending Home Sales YoY Jun 12.10% 15.30% 8/8/2012 Automobile COE Open Bid Cat A 8-Aug -- 68656

7/26/2012 Kansas City Fed Manf. Activity Jul 4 3 8/8/2012 Automobile COE Open Bid Cat B 8-Aug -- 90501

7/27/2012 GDP QoQ (Annualized) 2Q A 1.40% 1.90% 8/8/2012 Automobile COE Open Bid Cat E 8-Aug -- 92700

7/27/2012 Personal Consumption 2Q A 1.30% 2.50% 11-24 AUG GDP (annualized) (QoQ) 2Q F -- -1.10%

Date Statistic For Survey Prior Date Statistic For Survey Prior

7/25/2012 Customs Exports (YoY) Jun 4.50% 7.68% 7/31/2012 Money Supply M1 - in HK$ (YoY) Jun -- 3.80%

7/25/2012 Customs Imports (YoY) Jun 13.55% 18.17% 7/31/2012 Money Supply M2 - in HK$ (YoY) Jun -- 4.60%

7/25/2012 Customs Trade Balance Jun -$900M -$1740M 7/31/2012 Money Supply M3 - in HK$ (YoY) Jun -- 4.50%

7/25/2012 Benchmark Interest Rate 25-Jul 3.00% 3.00% 7/31/2012 Govt Mthly Budget Surp/Def HK$ Jun -- -9.4B

7/27/2012 Foreign Reserves 20-Jul -- $174.7B 8/2/2012 Retail Sales - Value (YoY) Jun -- 8.80%

7/27/2012 Forw ard Contracts 20-Jul -- $29.5B 8/2/2012 Retail Sales - Volume (YoY) Jun -- 5.80%

7/27/2012 Total Capacity Utilization ISIC Jun -- 75.9 8/3/2012 Purchasing Managers Index Jul -- 49.8

7/27/2012 Mfg. Production Index ISIC NSA Jun -0.8 5.53 8/7/2012 Foreign Currency Reserves Jul -- $294.9B

7/27/2012 Mfg. Production Index ISIC SA Jun -- 190.21 8/10/2012 GDP (YoY) 2Q -- 0.40%

7/31/2012 Total Exports YOY% Jun -- 6.70% 8/10/2012 GDP sa (QoQ) 2Q -- 0.40%

7/31/2012 Total Exports in US$ Million Jun -- $20549M 8/16/2012 Unemployment Rate SA Jul -- 3.20%

7/31/2012 Total Imports YOY% Jun -- 16.80% 8/17/2012 Composite Interest Rate Jul -- 0.42%

7/31/2012 Total Imports in US$ Million Jun -- $19975M 8/21/2012 CPI - Composite Index (YoY) Jul -- 3.70%

7/31/2012 Total Trade Balance Jun -- $574M 8/28/2012 Exports YoY% Jul -- -4.80%

7/31/2012 Current Account Balance (USD) Jun -- -$1540M 8/28/2012 Imports YoY% Jul -- -2.90%

US Singapore

Economic Announcement

Source: Bloomberg Source: Bloomberg

Thailand Hong Kong

Source: Bloomberg Source: Bloomberg

Regional Market Focus

25 July 2012

13 of 17

Date Statistic For Survey Prior Date Statistic For Survey Prior

8/1/2012Indonesia July Markit

Manufacturing PMI24-27 JUL Exports YoY% May -- -9.20%

8/1/2012 Inflation (YoY) Jul -- 4.53% 24-27 JUL Imports YoY% May -- -3.30%

8/1/2012 Inflation NSA (MoM) Jul -- 0.62% 7/31/2012 CPI Moving Average (YoY) Jul -- 5.80%

8/1/2012 Core Inflation (YoY) Jul -- 4.15% 7/31/2012 CPI (YoY) Jul -- 9.30%

8/1/2012 Exports (YoY) Jun -- -8.50% 8/7/2012 Repurchase Rate 7-Aug -- 7.75%

8/1/2012 Total Imports (YoY) Jun -- 16.10% 8/7/2012 Reverse Repo Rate 7-Aug -- 9.75%

8/1/2012 Total Trade Balance Jun -- -$486M 09-20 AUG Exports YoY% Jun -- --

8/1/2012 Consumer Confidence Index Jul -- 114.4 09-20 AUG Imports YoY% Jun -- --

01-07 AUG Danareksa Consumer Confidence Jul -- 92.4 8/30/2012 CPI Moving Average (YoY) Aug -- --

03-06 AUG Foreign Reserves Jul -- $106.50B 8/30/2012 CPI (YoY) Aug -- --

03-06 AUG Net Foreign Assets (IDR Tln) Jul -- 968.45T 10-20 SEP Exports YoY% Jul -- --

8/6/2012 GDP Constant Price (YoY) 2Q -- 6.30% 10-20 SEP Imports YoY% Jul -- --

8/6/2012 GDP Constant Price (QoQ) 2Q -- 1.40% 14-28 SEP GDP (YoY) 2Q -- 7.90%

07-13 AUG Money Supply - M1 (YoY) Jun -- 22.50% 9/18/2012 Repurchase Rate 18-Sep -- --

07-13 AUG Money Supply - M2 (YoY) Jun -- 20.90% 9/18/2012 Reverse Repo Rate 18-Sep -- --

Date Statistic For Survey Prior

7/25/2012 Conference Board Leading Index May -- -1.40%

7/25/2012 DEWR Internet Skilled Vacancies Jun -- -0.70%

7/25/2012 Consumer Prices (QoQ) 2Q 0.60% 0.10%

7/25/2012 Consumer Prices (YoY) 2Q 1.30% 1.60%

7/25/2012 CPI - Trimmed Mean (QoQ) 2Q 0.60% 0.30%

7/25/2012 CPI - Trimmed Mean (YoY) 2Q 1.90% 2.20%

7/25/2012 CPI - Weighted Median (QoQ) 2Q 0.60% 0.40%

7/25/2012 CPI - Weighted Median (YoY) 2Q 1.90% 2.10%

7/31/2012 HIA New Home Sales (MoM) Jun -- 0.70%

7/31/2012 Private Sector Credit MoM% Jun -- 0.50%

7/31/2012 Private Sector Credit YoY% Jun -- 4.00%

7/31/2012 Building Approvals (MoM) Jun -- 27.30%

7/31/2012 Building Approvals (YoY) Jun -- 9.30%

8/1/2012 AiG Performance of Mfg Index Jul -- 47.2

8/1/2012 House Price Index QoQ 2Q -- -1.10%

Source: Bloomberg

Source: Bloomberg

Indonesia

Australia

Sri Lanka

Source: Bloomberg

PHILLIP RESEARCH STOCK SELECTION SYSTEMS

BUY >15% upside from the current price

HOLD Trade within ± 15% from the current price

SELL >15% downside from the current price

We do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors

like (but not limited to) a stock's risk reward profile, market sentiment, recent rate of share price appreciation, presence or

absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final

recommendation

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Phillip Capital – Regional Member Companies

SINGAPORE

Phillip Securities Pte Ltd

Raffles City Tower 250, North Bridge Road #06-00

Singapore 179101 Tel : (65) 6533 6001 Fax : (65) 6535 6631

Website : www.poems.com.sg

MALAYSIA

Phillip Capital Management Sdn Bhd

B-2-6 Megan Avenue II 12 Jln Yap Kwan Seng 50450 Kuala Lumpur Tel : (603) 2166 8099 Fax : (603) 2166 5099

Website : www.poems.com.my

HONG KONG

Phillip Securities (HK) Ltd

11-12/F United Centre 95 Queensway, Hong Kong

Tel : (852) 2277 6600 Fax : (852) 2868 5307

Website : www.poems.com.hk

THAILAND

Phillip Securities (Thailand) Public Co Ltd

15/F, Vorawat Building 849 Silom Road

Bangkok Thailand 10500 Tel : (622) 635 7100 Fax : (622) 635 1616

Website : www.poems.in.th

JAPAN

The Naruse Securities Co Ltd

4-2, Nihonbashi Kabutocho Chuo Ku, Tokyo Japan 103-0026

Tel : (81) 03-3666-2101 Fax : (81) 03-3664-0141

Website : www.naruse-sec.co.jp

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120 Cannon Street London EC4N 6AS

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