PP 7767/09/2010(025354)

Economic Highlights
Global
•
MARKET DATELINE

13 April 2010

1 Asian Currencies Surged In Anticipation Of China Letting

The Renminbi Appreciates

2 OECD Composite Leading Indicator Points To Continue

Economic Expansion

3 China’s Money Supply And Loan Growth Slowed Down In

March

4 India’s Industrial Production Moderated In February

Tracking The World Economy...

Today’s Highlight

Asian Currencies Surged In Anticipation Of China Letting The Renminbi Appreciates

As the US President prepares to meet Chinese President in Washington this week to discuss among others, the issue of
an undervalue renminbi, currency traders are betting on a repeat of five years ago of what had happened to the regional
currencies. This is because an appreciating currency will boost China’s power to buy Malaysian palm oil to Indonesian
coal and Indian copper, helping these countries’ economies as well. At the same time, the renminbi’s revaluation may
also enable Asian nations to do the same with their own currencies without hurting exports.

Previously, the Thai baht, Korean won, Singapore dollar (S$), Indonesia rupiah, Philippines peso and the ringgit rose by
9.6%, 9.2%, 5.8%, 5.8%, 5.0% and 3.4% against the US dollar in the 12 months after officials in Beijing relaxed the
foreign-exchange regime in July 2005. The euro also appreciated by 4.7%, while the renminbi by 3.5% against the US
dollar during the same period. The Japnese yen, Indian rupee and Taiwan dollar, on the other hand, fell by 2.0%, 5.5%
and 1.3% respectively against the US dollar during the same period.

Investors are expecting the renminbi to appreciate by between 5-8% in a year. The twelve-month non-deliverable
renminbi forwards traded at RMB6.6255/US$ in Hong Kong yesterday, indicating that the currency will climb 3% from the
spot rate of 6.8257. The contracts touched RMB6.6055/US$ on 9 April, the strongest since 19 January. Similarly,
economists expect Singapore will let its currency advance to keep inflation from accelerating after the economy recovered
from a recession in 2009. The rising cost of imports will also spur Taiwan to let its dollar appreciate. The Singapore
and Taiwan dollars are perceived to be the most managed currencies in the region by some investors.

As a result, the ringgit, rupee, rupiah, won, baht and peso appreciated by 6.1%, 4.6%, 4.1%, 3.6%, 2.9% and 2.9%
respectively against the US dollar year-to-date. Similarly, the S$ and Taiwan dollar strengthened by 0.7% and 1.5%
respectively against the US dollar during the same period. Major currencies like the euro and yen, on the other hand,
fell by 5.6% and 1.3% against the US dollar during the same period, while the renminbi remained stable as it has been
pegged to the US dollar since July 2008. The ringgit was running ahead of the regional currency, as Bank Negara Malaysia
was the first country in this region that has started to normalise its monetary conditions and investors are expecting more
to come. Meanwhile, Bank Negara issued a statement to state that the ringgit’s strength reflects its economic fundamentals
and the country has never relied on the exchange rate for trade competitiveness.

Peck Boon Soon

(603) 9280 2163
Please read important disclosures at the end of this report.
bspeck@rhb.com.my

A comprehensive range of market research reports by award-winning economists and analysts are Page 1 of 3
exclusively available for download from www.rhbinvest.com
 13 April 2010

OECD Composite Leading Indicator Points To Continue Economic Expansion

◆ OECD composite leading indicator’s 12-month rate of change strengthened to 10.1% in February, from
+9.3% in January. This was the sixth consecutive month of increase, pointing to a continue expansion in economic
activities. Stronger growth was reflected in a pick-up in the US and Canada’s sub-indices, which strengthened to
10.9% and 9.7% respectively in February, the fifth consecutive month of picking up and from the corresponding
rates of +9.4% and 8.7% in January. These were aided by stronger growth in the Euroland and UK’s sub-indices,
suggesting that economic activities are likely to improve in Europe in the months ahead. The recovery, however,
will likely be gradual, as France and Italy are beginning to show signs of slower growth. In Asia, Japan and India’s
sub-indices continued to strengthen during the month. These were, however, offset partially by a slowdown in China
and Indonesia’s sub-indices, suggesting that these countries are showing tentative signs of a slower pace of
economic expansion. Economic activities in Russia and South Africa will also likely sustain its expansion as indicated
by an improvement in these countries’ sub-indices during the month, but economic activities in Brazil already
showed signs of moderation. As a whole, the strengthening in OECD composite leading indicator’s 12-month rate
of change suggests that the global economy will continue its uptrend. However, it is beginning to show
tentative signs of easing, on account of sovereign debt problems in some European countries, normalisation of
monetary conditions and tightening measures undertaken by policymakers in Asia to control asset price inflation.

Asian Economies

China’s Money Supply And Loan Growth Slowed Down In March

◆ China’s money supply, M2, slowed down to 22.5% yoy in March, from +25.5% in February and a peak of
+29.7% yoy in November. This was the fourth straight month of slowing down, indicating that the tightening
measures introduced by the authorities to control the rapid expansion in new credit have yielded positive results.
Consequently, loan growth slowed down to 24.1% yoy in March, the slowest in 13 months and from +29.3%
in February and a peak of +33.8% in December. In the same vein, new lending slackened to RMB510.7bn, from
RMB700.1bn in February and a high of RMB1,390.0bn in January. Indeed, new loans extended by banks slowed
down to an average of about RMB867bn a month in 1Q 2010, from an average of RMB1,527bn a month in the
corresponding period of 2009.

India’s Industrial Production Moderated In February

◆ India’s industrial production moderated to 15.1% yoy in February, from +16.7% in January. The was the
second straight month of easing but growth remained strong, indicating that economic activities will likely sustain
its expansion in 1Q 2010, after recording a slower growth of 6.0% yoy in the 4Q. The slowdown in industrial
activities was due to a moderation in manufacturing and mining output. These were, however, mitigated by a pick-
up in electricity output. A sustained growth in industrial activities, coupled with acceleration in inflation rate,
prompted India’s Finance Minister Mukherjee to reverse some of the tax cuts initiated in 2009 in the budget tabled
on 26 February. This includes raising the excise tax on almost all consumer products to 10% from 8% and
increased customs duty on overseas purchases of crude oil. Similarly, the Reserve Bank of India, in an unscheduled
move, raised its key policy rate by 25 basis points to 5.0% on 19 March. Indeed, the Reserve Bank of India also
left the door open for a further increase in interest rate in its April policy review. Meanwhile, the country’s
benchmark wholesale-price inflation accelerated to 9.89% yoy in February, the fastest pace since October 2008.

A comprehensive range of market research reports by award-winning economists and analysts are Page 2 of 3
exclusively available for download from www.rhbinvest.com
 13 April 2010

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI
and RHB Investment Bank Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under
such circumstances as may be permitted by applicable law. The opinions and information contained herein are based on
generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to
opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This
report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not
warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall
give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an interest
in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual
financial circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for
all investors. RHBRI recommends that investors independently evaluate particular investments and strategies, and encourages
investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an
investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents
accepts any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and
financing activities as well as providing investment banking and financial advisory services. In the ordinary course of its trading,
brokerage, banking and financing activities, any member of the RHB Group may at any time hold positions, and may trade or
otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans of any
company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding
company and the respective directors, officers, employees and agents of each of them. Investors should assume that the
“Connected Persons” are seeking or will seek investment banking or other services from the companies in which the securities
have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been
reviewed by, and may not reflect information known to, professionals in other business areas of the “Connected Persons,”
including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have
received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive
factors and firm revenues.

A comprehensive range of market research reports by award-winning economists and analysts are Page 3 of 3
exclusively available for download from www.rhbinvest.com