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Friday, 06 August 2010 Asian Markets

News Highlights
Foreign Exchange Rates (as at 05 Aug 2010)
As at 06 Aug Asian High Asian Low NY High NY Low
n Asian currencies edged higher against the USD on Thur,
SGD 1.3535 1.3545 1.3520 1.3543 1.3509
MYR 3.1560 3.1795 3.1500 - - ahead of US nonfarm payroll late Fri. However, overnight
IDR 8,935 8,964 8,922 - - market mood turned cautious after the disappointing US
THB 32.07 32.15 32.08 - - weekly jobless claims data which hit 3-month high, and
PHP 44.93 45.27 45.01 - - ahead of the key nonfarm payroll report later this evening,
TWD 31.82 31.90 31.78 - - which suggests uncertainty is likely to overshadow in today's
KRW 1,166.00 1,170.60 1,164.50 - -
HKD 7.7630 - - 7.7656 7.7627
session. In Asian session on Thur, PHP rose 0.5% to 45.02/
CNY 6.7705 6.7761 6.7690 - - USD from Wed close of 45.22. KRW climbed for a fifth
straight day, rising 0.2% to 1,166.45/USD. TWD edged
slightly higher on Thur, up by 0.1% higher at 31.85/USD.
UOB’s Estimation of SGD NEER (as at 05 Aug 2010)
IDR firmed 0.1% to 8,935/USD on Thur after Indonesia
Assuming 2.5% on each side of the pivot point:
Lower-End ...........................................................................1.4113 reported higher-than-expected 2Q GDP growth of 6.2%, but
Upper-End ...........................................................................1.3425 the unit's upside was capped by authorities' concerns about
Mid-Point ..........................................................................1.3769 the currency's strength. MYR strengthened 0.4% to 3.1560/
USD.
Interest Rates
Current Next CB Meet UOB’s Forecast n With Asian units generally firmer against the USD on Thur,
SGD 3-Mth SIBOR 0.55% - - SGD slipped 0.1% to 1.3540/USD, vs. 1.3521 on Wed,
MYR O/N Policy Rate 2.75% 02 Sep 2.75% relieving pressure on the trade-weighted S$ which had hit
IDR O/N Rate 6.50% 03 Sep 6.50% above the 2% band earlier this week. This morning, the
THB 1-Day Repo 1.50% 25 Aug 1.75% trade-weighted index eased further, to 1.6% above the
PHP O/N Reverse Repo 4.00% 26 Aug 4.00%
midpoint, vs. 1.8% on Thur. Given current trading trend,
TWD Discount Rate 1.375% 26 Sep 1.50%
KRW Base Rate 2.25% 12 Aug 2.50% the SGD NEER index should hover within the 1.5-2.0%
HKD Base Rate 0.50% - 0.50% range above the midpoint, which implies USD/SGD of
CNY 1-Yr Wking Capital 5.31% - 5.58% 1.3450-1.3540.

n RMB firmed on Thur to close at 6.7719/USD, from 6.7722

Stock Indices (as at 05 Aug 2010)
Closing % chg on Wed, despite the unit's central parity weakened before
Singapore Straits Times 3006.76 +0.16 the start of trade. The midpoint for the RMB saw its first
Kuala Lumpur Composite 1362.08 -0.05 decline in 5 days, after being fixed at 6.7783/USD on Thur
Jakarta Composite 3044.94 +2.07 morning. Offshore NDF prices are still muted, wit prices
Bangkok SET 874.92 +0.87 factoring in an RMB appreciation of 1.3% over the next 12
Philippines Composite 3521.10 +0.50
months, compared to 1.5% late Wed. The subdue price
Taiwan TAIEX 7936.85 -0.45
Seoul Composite 1783.86 -0.30 action in recent weeks reflects the realization that a steady
Hong Kong Hang Seng 21551.72 +0.01 USD/RMB could still result in RMB appreciating on a trade-
Shanghai SE Composite IX 2620.76 -0.67 weighted basis, depending on the movements in EUR/USD
Mumbai Sensex 30 18172.83 -0.24 and USD/JPY, in particular. This morning, the RMB central
parity was set firmer at 6.7730/USD from 6.7783 on Thur.
Key Events
Date Event n Asian equity markets were mostly higher on Thurs, as some
risk taking remaining on the table, boosted by strong earnings
report from Japanese automaker Toyota. Nikkei 225 jumped
1.7% to 9,653.92, keeping above its 25-day moving
average. Chinese equity market retreated on Thur as investors
were unnerved by news that the CBRC asked Chinese banks
to stress test on a scenario that included at least 50% fall in
property prices. Shanghai Composite fell 0.7% to 2,620.76.
 Asian Markets
Friday, 06 August 2010
p2

Hang Seng index ended flat at 21,551.72. In Taiwan, Taiex
retreated from a three-month high, led by electronics stocks,
and fell 0.5% to 7,936.85. Kospi eased 0.3% to 1,783.36,
as foreigners turned net sellers for the first time in 12 sessions.
In regional markets, STI gained 4.89 points or 0.2% to
3,006.76, with a volume totaling 1.9bn shares. KLCI edged
up 0.1% while Jakarta composite rose 1.0% underpinned
by a stronger-than-expected 2Q GDP report. Philippine
equity index gained 17.52 points to 3,521.10, while SET
moved up 7.58 points, or 0.87%, to close at 874.92 on
Thursday, extending its YTD gain to 19%.
n Overnight US markets ended a listless session modestly
lower Thur as investors focused on the job market after a
disappointing weekly jobless claims report. The Dow fell 5
points, or less than 0.1%. S&P 500 index slid 1.5 points, or
0.1%, and Nasdaq composite lost 10 points, or 0.5%. The
weekly initial jobless claims climbed 19,000 to 479,000,
the highest figure in three months, compared with an
upwardly revised 460,000 the previous week and consensus
call of 455,000.
n China's PBoC reiterated in the 2Q monetary policy report
on Thur that it will maintain moderately loose monetary
policy in the second half. Also noted that inflation risks persist
as domestic growth stabilizes, and there's "still a need to
strengthen the management of inflation expectations."
n Taiwan's consumer prices rose for a seventh straight month
after the fastest economic growth in more than 30 years
boosted wages and flood damage stoked food costs. July
CPI in Taiwan rose 1.3%y/y vs. consensus view of 1.2% and
1.18% in May.
n Indonesia's central bank deputy governor Halim Alamsyah
said on Thur it does not want the IDR to be too strong
because this could hurt economic competitiveness.
n Indonesia GDP growth for 2Q came in stronger than
expected at 6.2%y/y, above consensus forecast of 6% and
the 5.7% pace in 1Q. Growth momentum is likely to peak
in 3Q and full year growth should come in comfortably
above 6%, which would pressure on BI on its interest policy
stance during the second half of this year.
n Taiwan and Singapore said they were exploring a trade
agreement in what would be a major breakthrough for
Taiwan after decades of being overshadowed by China.

Economic Indicators
Local Time Indicators Mth Actual UOB Forecast Mkt Forecast Previous
05/08
0900 PH CPI y/y Jul 3.9 - 4.1 3.9%
0900 PH CPI nsa m/m Jul 0.2 - 0.4 0.2%
1600 TW CPI y/y Jul 1.31 - 1.27 1.19%
1600 TW WPI y/y Jul 5.34 - 6.10 7.01%
1620 TW Foreign Exchange Reserves-US$ Jul 370.11 - - 362.38

06/08
1530 TH Foreign Reserves Jul 30 - - 150.1b
1730 MA Foreign Reserves Jul 30 - - 94.81b

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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