MICA (P) 081/12/2011 Ref No: RM2012_0121 1 of 17

Regional Market Focus

Phillip Securities Research Pte Ltd

25 June 2012

Morning Market Commentary - STI: -0.07% to 2828.1 - MSCI Far East ex-Japan: -1.51% to 447.6 - Euro Stoxx 50: -0.57% to 2186.8 - S&P500: +0.72% to 1335 MARKET OUTLOOK:

Tactically, equity markets may face a sideways drift with downside pressure as the "rally on policy expectation" has stalled for 2 days now (in US and Asia) as the scale of twist2 underwhelmed. The underlying fundamentals is a slowing global economy, with markets looking ahead to rising recession risks in 2013 as large scale fiscal withdrawals in the US and EZ will likely worsen the slowdown. Any further continuance of a tactical rally from here would need to see other central banks join in the wave of easing, and more decisive action from the Eurozone. On the Eurozone front, the meeting of the big4 chiefs - Germany, France, Italy, Spain on Friday has yielded a document that outlines some of the things that will be thrashed out on Thursday's bigger summit: (1) banking union to break the link between bank bailouts threatening sovereign debt sustainability - a single regulator, common deposit insurance mechanism, a resolution fund (i.e. bailout) funded by a financial transaction tax; (2) to go beyond balanced budget commitments (under the New Fiscal Compact) toward joint liability & fiscal integration - on joint liability Germany's Merkel is not opposed per se unless there is fiscal oversight, and that just means fiscal union backed by a political union (see our Strategy paper "Road to Fiscal Union" dated 29 Nov 11 for an explanation). As political union is going to be a slow project and markets move quite much faster, what markets will looking for on Thursday would at least be a blueprint on how Europe will get there. On the immediate we expect proposals for a banking union as more achievable as the funding for a bank bailout fund, if funded by a financial transaction tax would alleviate the need for further sovereign funded bailouts. The European Redemption Fund, which is joint-liability, but pay-your-share, debt mutualisation fund for debt in excess of 60% to GDP would also be discussed as a means of reducing refinancing risk for troubled nations, but the fact that this requires a certain degree of fiscal oversight is likely to start the ball rolling for eventual fiscal union. (Our general guidance in our morning notes and formal reports has been, as we weren't confident that econ/earnings data could outperform to drive markets, some combination of policy safety nets needs to occur in order to reverse consolidation/correction. The market in anticipation of policy did rally, but the Fed's announced twist2 was too small in size, so other central banks now need to do more if the market is to not punctuate its overall downward trajectory with a sharper short term rally. Longer term, we are still giving the heads up that post 6th November 12 USA presidential elections, markets could again be challenging going into 2013 - the US and EZ are under current law obliged to undertake tremendous fiscal tightening.). For our larger trend outlook: Global Macro & Markets, 12 Apr. Singapore Sector Strategy: Sector Strategy, 1 June Singapore Sector Reports: Banks / Transport / Telcos / Property / REITS / Thematic Regional Strategy: HK, 22 June / Thai, 18 June / S'pore, 8 June / M'sia, 30 May / China, 24 May / Indon, 29 March MACRO DATA: In Malaysia, inflation continued to remain benign. Headline inflation eased for the seventh consecutive month to 1.7% y-y in May (led by

higher food prices), compared to 1.9% in the preceding month. Given the slowing global growth, it is tempting to forecast a rate cut to mitigate the growth downside given the benign inflation context. However, in view of the impending elections, we maintain our view that BNM will continue to stand pat till after, and re-assess its policy rate position post-elections (barring any extreme event in the global macro environment). In Europe, Germany’s business climate index fell to 105.3 in June, the lowest level over 2 years, compared to 106.9 in May. IFO services

confidence fell to 21.3 in June, after May’s 24.8. The nation’s growth is weakening as austerity measures across Europe curb demand for German goods. China’s June NMI flash business sentiment index slumped to 51.92 from May’s 54.40, marking a second straight monthly fall, indicating

weakening business activities. This is aligned with the earlier reported June HSBC flash PMI, which dropped to 48.1 after May’s 48.4. The nation’s slowdown in growth is on-going despite the earlier 25 bps benchmark rate cut. Taiwan’s unemployment rate increased to 4.25% sa in May, from April’s 4.19% as the slowing growth of China and Europe turmoil hurt the

economy’s export, which makes up over two thirds of Taiwan’s economy. An earlier report shows Taiwan’s export orders fell by 3.04% y-y in May, the fifth fall in 6 months, compared to the 3.52% y-y drop in April. Following domestic energy price hikes, the central bank so far has kept policy unchanged.

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Singapore The STI remained relatively unchanged closing down 0.07% to 2,828.1. Trading

volumes was 1.16bn shares with low value of S$758.1mn. More than half of the STI component stocks closed in the red with SembCorp Marine as the largest loser, closing down 2.2%. Basic Materials outperformed the market, while Oil & Gas sector underperformed, possibly mirroring the longer term downtrend in oil prices.

Close +/- % +/-FSSTI 2828.09 -2.06 -0.07P/E (x) 9.28P/Bv (x) 1.29

3.86Dividend Yield

STRAITS TIMES INDEX

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Source: Bloomberg

Thailand The composite SET index stayed in negative territory throughout the session last

Fri as weak economic data out of several countries fueled concerns about global economic slowdown, sending commodities prices sharply lower. Thai stocks also took a beating as energy shares accounted for a significant proportion of market capitalization

Overall market sentiment remains weak amid concerns about a global economic slowdown in the face of Europe’s debt crisis. The market is now paying close attention to European debt solution after leaders of Germany, France, Italy and Spain agreed on a 130bn euros package to revive euro zone economic growth. The Jun 28-29 EU summit will also be more closely watched by the market in terms of cooperation within the bloc and lending program as well as the loosening of the austerity measures. These uncertainties would bring high levels of volatility to the stock market along the way and the bias may be to the downside on persistent European debt worries. Heading into the final week of the second quarter, the quarter-end ritual of institutional window dressing could however probably help temper the market’s decline somewhat but we believe it may not be a major catalyst for strong market rally for the time being. Overall we expect the SET index to trade in a range of 1143-1160 today.

For short-term strategy, scale back equity exposure if the SET index closes below 1143.

Today we peg resistance for the SET index at 1155-1160 and support at 1150-1143.

Close +/- % +/-SET INDEX 1152.91 -6.14 -0.53P/E (x) 14.83P/Bv (x) 2.04

3.73Dividend Yield

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Source: Bloomberg

Indonesia

The Jakarta composite index closed 12.265 points or 0.31% lower to 3,889.523 Friday (22/06), with six of its nine main sectors driven the index into negative territory. Mining shares fared worst, with the sector’s index dropped 2.33%, while consumer goods sector and property and construction sector trimmed 1.06% and 1.03% respectively. Miscellaneous industry and infrastructure shares in contrast kept the index from falling further with 2.70% and 0.48% advances. The LQ 45 index also finished lower, trimmed 3.673 points or 0.55% to IDR 663.853. More than 130 constituent shares fell, 80 shares rose, and 95 shares nearly unchanged Friday on the Indonesia stock exchange, where 5.212 billion shares worth IDR 2.971 trillion changed hands on the regular board. Foreign investors accumulated total net sell of IDR 462.94 billion.

We expect the JCI to advance today, trailing global equity markets, although the climb may only be limited and sparked by bargain hunting. We estimate the JCI to trade in the range within the support at 3,858 and resistance at 3,922 with positive bias today.

Close +/- % +/-JCI Index 3889.52 -12.27 -0.31P/E (x) 19.71P/Bv (x) 2.60

2.44Dividend Yield

JAKARTA COMPOSITE INDEX

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Source: Bloomberg

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Sri Lanka The discounted market gained some positive momentum during the week,

amidst surpassing the index above 5,000 points. First Three days of the week recorded considerably impressive appreciation on both indices. However the selling pressure in the market was observed towards the end of the week.

All Share price Index (ASPI) and Milanka Price Index (MPI) increased by 47.94 points and 28.53 points respectively by end of the week. The ASPI closed the day at 5039.15; losing 02.92 points compared to the previous day, the week ended with ASPI gaining 0.96%. The MPI lost 28.79 points compared to the previous day and closed at 4478.51 while gaining 0.64% during the trading week. An introduction; the Ramboda Falls Limited (RFL.N0000) commenced trading on Monday and generated a turnover of LKR 15.9Mn on the very first day giving a return of more than 200%. The total market turnover for the week was LKR 2.65Bn, an increase of 41.88% compared to the previous week. 206.3Mn shares changed hands during the week. This is an increase of 42.76% compared to the previous week.

The foreign investor participation increased during the week and foreign investors recorded a net inflow of LKR 77. The market’s PER(X) and PBV(X) stood at 13.81 and 1.79 respectively by Friday.

Close +/- % +/-CSEALL Index 5039.15 -2.92 -0.06P/E (x) 10.78P/Bv (x) 1.61

2.68

Dividend Yield

SRI LANKA COLOMBO ALL SH

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Source: Bloomberg

Australia

The Australian share market was weighed down on Friday by fears about the global economy after disappointing manufacturing data from China, Europe and the U.S. The major Australian benchmark index ‘S&P/ASX 200’ was down 39.4 points or 0.96% to 4048 on light share trading volume. The market returned the week’s gains, with Thursdays poor economic indicators knocking investors’ confidence followed by Moody's Investor Services slashing the ratings of 15 of the world's biggest banks

A weekend that was quiet on the economic front should see the Australian markets follow U.S leads on opening up slightly higher. The SFE 200 futures are pointing upward 13 points or 0.32% to 4014. Today the market will be keeping an eye out for the RBA Assistant Governor (Financial Markets) Guy Debelle speaking at around 2pm local time.

Close +/- % +/-S&P/ASX 200 INDEX 4048.21 -39.36 -0.96P/E (x) 13.82P/Bv (x) 1.62

6.71Dividend Yield

STANDARD & POORS/ ASX 200 INDEX

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Source: Bloomberg

Hong Kong

Local stocks dropped. The HSI and HSCEI lost 269 points and 159 points to 18995 and 9504 respectively. Market volume was 37.961 billion.

HSI lost 10 SMA (19152), compared to previous trading day, the trading volume rose 19.8%, due to Moody downgraded 15 large banks’ credit rating, including HSBC, we expect the other credit agencies may also downgrade the banks’ credit rating, investors are suggested to stand on sideline and wait for a clear trading signal, aggressive investors are suggested to use derivatives for grasping the downward trend during trading hours.

We peg resistance for the HSI at 19300 and support at 18800

Close +/- % +/-HSI INDEX 18995.13 -269.94 -1.40P/E (x) 9.24P/Bv (x) 1.32

3.80Dividend Yield

HANG SENG INDEX

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6/23 9/23 12/23 3/23

Source: Bloomberg

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Singapore

Equity Screen – Update

Screen out stocks with current P/E below 5-yr historical mean, average positive 5-yr EPS growth rate across the universe of stocks listed in SGX

17 undervalued stocks with positive earnings are being filtered

Three “hidden” gems and five “covered” gems could be in your radar

Regional Strategy – Hong Kong Market Weight

Generally speaking, the Hong Kong growth has been trending lower since 4q10 due to the global macro environment, which is slowdown and heightened risks from Europe weighing on sentiment.

International trading is the most important factor of Hong Kong economy, as both export and import are over 200% of the region’s total GDP. China, who accounts for around 50% of Hong Kong’s total export and import (i.e. over 100% Hong Kong GDP) experiences a moderating growth and has adversely affected the region’s GDP growth for the past few quarters. Moreover, the growth rate of consumption, which accounts for over 70% of real GDP, topped in 2q11 and has trended down since then. Tourism grows at a rate of over 15% y-y, mainly because of the increasing visitors from inland China. The most recent reading of industrial production (1q12) indicates a second straight quarterly contraction from a year ago.

Property Market in Hong Kong is much scarier than the rest of China, as residential property price to income ratio has reached historically high, even exceeding the June 1997 level where last property bubble burst. Though the concern could be partially mitigated by the increasing demand from inland wealthy buyers, going forward it may not be sustainable. Currently there is no conclusive evidence of crisis but we would like to keep our clients aware of the increasing risk.

Over the long term, inflation in Hong Kong follows a similar pattern as inflation in mainland China. Besides that fact that China inflation has eased to 3.0% in May, slowdown in growths of export/import indices also points to a cooling inflation. Therefore we expect that HK inflation would likely continue stepping down into 3q12, but may rebound later as more loosening policies to support growth by Beijing government come into effect. We forecast the whole year inflation to be around 3.5% and the whole year GDP growth to be between 1% and 2%, a slump from 2011’s 5%, due to a global slowdown, macro risks from Europe weighing on global economic sentiment, and moderating China growth.

HSI is a Marketweight on growth and EPS risk. It could be attractive enough to Overweight because of its low P/E ratio, but only if there might be a significant revival in demand, for example thru a fiscal stimulus from the PRC government, rather than a monetary stimulus as loan demand is weak anyway. Balancing the risk in the property market, uncertainty in trade, and the attractive P/E ratio, we assign a Marketweight rating to HSI.

Thailand

Thai Airways International – Company Update Recommendation: BUY Previous close: Bt22 Fair value: Bt34

THAI reported that its cabin factor, percent of seats sold in the first two months of 2QCY12 rose to 74.92% from 68.65% in the same period last year but passenger yield - revenue from ticket price per passenger per kilometer - dropped as a result of promotional campaign, ticket price cuts and a weaker euro against the baht. Note that up to 30% of its revenues are in euro terms. Bookings in Jun 2012 were also higher than a year ago.

THAI is starting to see some but limited fuel hedging losses in some contracts as jet fuel prices have dropped below the lower end of the collar in hedging agreement. Due to rising passenger traffic, we stick to our view that losses in 2QCY12 will be less than 2QCY11 and THAI is expected to see FX gain in 2QCY12.

We leave our CY12 operating profit outlook for THAI unchanged at Bt4,928.29mn. We maintain a ‘BUY’ call on THAI with a target price of Bt34/share.

Bangkok Bank – Company Update Recommendation: BUY Previous close: Bt181 Fair value: Bt216

We expect BBL to post a 2QCY12 net profit of Bt7.99bn, down 1.2% q-q but up 7.9% y-y.

In our view, there is scope for the bank’s loan growth to surpass the full-year target of 6-8% given that 5MYTD loans grew 5.3% led by demand from corporate and large SME segments.

We maintain a ‘BUY’ call on BBL with a target price of Bt216/ share.

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Market News

US Treasuries rose, snapping a decline from last week, before Italy and Spain auction debt tomorrow amid concern the fiscal crisis in the

euro bloc is growing. U.S. Treasuries are beating all other fixed-income securities in the nation for the first time in three quarters as investors around the world seek the safest assets. European Union leaders will hold a two-day summit starting June 28. “The ideal thing will be for EU leaders to lay out a grand plan for fiscal union, but the suspicion is that they will again fall short of that,” said Peter Jolly, head of market research at National Australia Bank Ltd. (NAB) in Sydney. “That’s going to keep Treasury yields low.” The U.S. 10-year yield declined two basis points, or 0.02 percentage point, to 1.66 percent as of 9:50 a.m. in Tokyo, Bloomberg Bond Trader data show. The 1.75 percent note due in May 2022 advanced 5/32, or $1.56 per $1,000 face amount, to 100 27/32. The yield increased 10 basis points last week. Italy plans to sell inflation-linked securities maturing in 2016 and 2026 tomorrow as well as 3 billion euros ($3.76 billion) of zero-coupon bonds. Spain will auction three- and six-month bills. (Source: Bloomberg)

Oil rose for a second day in New York after Tropical Storm Debby shut rigs and disrupted production in the Gulf of Mexico. Futures advanced as much as 1.2 percent after climbing 2 percent on June 22. About 23 percent of output in the Gulf was halted before Debby shifted eastward yesterday, according to the U.S. Bureau of Safety and Environmental Enforcement. The storm has now moved away from offshore oil and natural gas-production areas where companies including ConocoPhillips, Anadarko Petroleum Corp. and BP Plc stopped production. “The tropical storm affects crude prices and also affects the market for refined products,” Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said in a telephone interview yesterday. “Storms can affect the market of refined products more than a few years ago because the U.S. is now exporting a significant amount.” Oil for August delivery gained as much as 92 cents to $80.68 a barrel in electronic trading on the New York Mercantile Exchange, and was at $80.04 at 9:18 a.m. Sydney time. The contract increased $1.56 to $79.76 on June 22. Prices are 19 percent lower this year. Brent oil for August settlement rose 57 cents, or 0.6 percent, to $91.55 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $11.51, from $11.22 on June 22. Gasoline for July delivery gained as much as 4.17 cents, or 1.6 percent, to $2.6116 a gallon on the New York Mercantile Exchange. (Source: Bloomberg)

Singapore Singapore companies have been making more overseas acquisitions in the first half of the year, prompted in part by the stronger

Singapore dollar, and the search for growth markets. Total cross-border activity reached US$14.8 billion in the first half of this year, up 17.6 per cent from the first half of 2011, driven by Singapore's acquisitions abroad that grew almost three-fold this quarter to US$9.6 billion from the first quarter of 2012, data from Thomson Reuters shows. Year-to-date, the value of outbound acquisitions by Singapore companies totalled US$12.8 billion, which was a 55.5 per cent jump from the same period last year, and marked the highest semi-annual volume since the second half of 2007. Bolstering the deal value was the announced US$7.4 billion acquisition of Indonesia's Bank Danamon by DBS Group in April. (Source: BT Online)

The prospect of more turbulence wrought by anaemic global economic growth and unpredictable fuel prices is accelerating changes within the Asian aviation industry. The International Air Transport Association (Iata) expects airline profits to plunge 62 per cent in 2012 to US$3 billion, equal to a 0.5 per cent margin on sales. This is a downward revision from its earlier central case forecast of US$3.5 billion. But, as Iata's chief economist Brian Pearce noted, revenues may not slow as much, with capacity being added at a slower pace than expected, supporting yields, while (hopefully) business and consumer confidence hold steady. "However, we expect Brent oil prices to average US$115 a barrel, up from our previous forecast," he pointed out. "This added cost pressure has resulted in profits being cut." But, as Singapore Airlines' (SIA) CEO Goh Choon Phong told this paper recently, the problem for aviation isn't the price of fuel, per se. The industry can handle stubbornly high fuel costs - as it did in 2008 - if traffic demand remains robust. But traffic has been anything near stable or predictable of late. (Source: BT Online)

Hong Kong Some Chinese economic indicators are being inflated by roughly 1 or 2 percentage points as local officials falsify statistics to mask the

extent of the nation’s slowdown, the New York Times reported, citing company executives in China and Western economists. Government officials in some cities and provinces are overstating economic output, tax receipts, corporate revenue and profits, the paper said, citing executives and economists who requested anonymity for fear of jeopardizing their relationships with Chinese authorities. They are urging companies to keep separate sets of books, showing improving business results and tax payments that do not exist, the newspaper said. (Source: Bloomberg)

China’s banking regulator proposed keeping a cap on local government loans to curtail defaults while encouraging funding for railways, roads and affordable homes, a person with direct knowledge of the matter said. The China Banking Regulatory Commission suggested limiting loans to local government financing vehicles to levels reached at the end of 2011, according to a person with knowledge of the matter who asked not to be named because the proposal is confidential. The watchdog made the recommendation in a report sent to the cabinet after Premier Wen Jiabao’s call last month for the government to focus on growth, the person said. (Source: Bloomberg)

LDK Solar Co. fell the most in three weeks, leading declines in Chinese stocks traded in New York, on prospects the world’s second-largest maker of wafers will report a fourth consecutive quarter of losses. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in New York rose 0.3 percent to 90.16 by 2:52 p.m. yesterday. LDK Solar tumbled 7.9 percent to $2.11, the most since May 29. Suntech Power Holdings Co., the world’s biggest solar-panel maker, rose 3.7 percent, after First Solar Inc. (FSLR) said it will resume construction of a power plant in California. (Source: Bloomberg)

Thailand Foreign investors remained net sellers of Thai shares worth Bt1,790.25mn last Fri. (Source: Bisnews) The Energy Policy and Planning Office said there is still a need to revamp the LPG pricing structure in the transport sector though global

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market prices have dropped by half from 1Q12 while the government under the plan would maintain the LPG price freeze for the transport industry until mid-Aug 2012. (Source: Bisnews)

The BoT said the B/E issues had started to drop back to realistic levels after fees to the FIDF were imposed on B/Es and they must be included in the calculation of reserves. Meanwhile the SEC is studying the impact of the delay in reduction of bank deposit guarantee ceiling and warns of overheating as a result of considerable loan growth. (Source: Bisnews)

Indonesia Although there has been no positive sign of global economic recovery, there is no reason for Indonesia to panic. By the end of the year,

Bank Indonesia projects economy will grow by 6.3-6.7 percent. Executive Director of Global Economics, Commodities and Strategy Research of Goldman Sachs Singapore, confirmed the projection is consistent with the weakening global economic outlook, amounting to 3.3 percent in 2012. The uncertainty of crisis handling in the euro zone, the stalling of United States economic recovery, and the slowdown of China’s growth are constraining global demand. Indonesia’s growth projection is still above the average growth rate of the ASEAN-5 by 4.7 percent in 2012. ASEAN-5 consists of Indonesia, Malaysia, Philippines, Thailand and Singapore. His expects Indonesia's economic growth will rebound in 2013 to 6.3 percent, one of which affected by the recovery of global demand. The fundamental factors and market will be a short-term risk for Indonesia’s economy. Market factor is related to the balance of payments and the weakening of the rupiah against the US dollar. Indonesia's balance of payments showed a deficit in the first quarter of 2012, following the oil trade deficit. (Source: Indonesia Finance Today)

The government anticipates the possibility of a crisis happening in Spain. The crisis in Spain and Greece has yet to affect Indonesia's government securities market, which still attracts investors. Data from the Directorate General of Debt Management shows that foreign ownership in government bonds in April 2012 amounted to IDR 228.87 trillion (USD 24.26 billion), or 29.63 percent of the total tradable government securities of IDR 772.33 trillion. Foreign ownership fell to IDR 224 trillion or 28.57 percent of the total IDR 783.92 trillion tradable government securities on June 18, 2012. The government will anticipate any decline in export to not impact economic growth by increasing the government’s spending. Data from Central Bureau of Statistics (BPS) states that export of non-oil and gas (oil) from Indonesia to the European Union (EU) in January-April 2011 amounted to USD 6.66 billion, down nine percent to USD 6.06 billion compared to the same period in 2012. In January-April 2011, non-oil export to the EU reached 13.31 percent of the total non-oil exports of USD 50.02 billion. While in the same period in 2012, the contribution of import decreased to 11.85 percent of the total non-oil exports of USD 51.15 billion. (Source: Indonesia Finance Today)

Sri Lanka

Sri Lanka is looking for an extended fund facility from the International Monetary Fund (IMF) after the current $2.6 billion loan programme ends, the central bank said on Thursday. An IMF mission last week said Sri Lanka had shown interest in further financial support. “It is not a bailout package. The area (we’re) looking at is the extended fund facility,” Central Bank Governor Aj ith Nivard Cabraal told Reuters in an interview. “It is available to many countries which need not necessarily be in a balance of payments difficulty. Of course, it is still too early to say. But if we are going for a package, what we are talking about, the ideal situation would be the package should suit development activities also.” The IMF may disburse the last tranche of around $420 million by July if it satisfied with the island nation’s economic performance, bringing the current $2.6 billion loan programme to an end. (Source: dailytimes.com.pk)

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Australia Economic uncertainty and tough domestic conditions are expected to keep a lid on takeover activity among Australian corporates as

deal-making sputters to three-year low. According to preliminary Thomson Reuters data, exclusive to The Australian, announced mergers and acquisition activity this year is off 54.1 per cent compared with the first half of last year, to $US 45.1 billion ($45bn), the weakest six months since 2009. Completed activity – crucial to investment banks that generally win the majority of fees once deals close – is down a larger 61 per cent, highlighting the earnings pressures that have forced a market-wide reduction in staff. Conditions are also tough globally, with announced activity down 25 per cent, as the US suffers the weakest M & A levels since 2003. “M&A is notoriously very cyclical and volatile. WE are just experiencing what feels like a very low point in the cycle and global financial crisis 11,” O’Sullivan Partners partner Garren Cronin said. “Maybe we see some light in 2013, but then again we thought that of 2012. In Australia, the average deal size has fallen to $US99 million from $US178m and outbound activity has slid 79.2 per cent, pulling down cross-border transactions 45 per cent. Domestic M&A is down 71 per cent and has trended lower for the past year, as the European debt crisis, tepid US recovery and a slowdown in China keep companies on the sidelines. (Source: The Australian)

Mining industry-owned Wiggins Island Coal Export Terminal has selected four miners for its second-stage expansion at Gladstone but it is unclear if key partner Xstrata will sign up as pressures mount on its $6 billion Wandoan coal development. If the Swiss mining giant does not come on board, it could mean development of the Surat Basin coal region in Queensland and an associated $1.2bn Southern Missing Link railway planned by QR National is delayed by up to two years to 2018, analysts say. It is understood that London listed Xstrata and locally listed Stanmore Coal, Cockatoo Coal and Aquila Resources have been allocated capacity for the second stage of the Wiggins terminal. The signing of capacity commitment deeds had been scheduled for last week but it is understood this has been pushed back to this week. With the signing, the four parties will have to pay a combined $160 million for early works. Xstrata, which has been allocated 22 million tonnes of the 32 million tonnes available through the expansion, will be liable for about $110m, sources say. Once source involved in the port deal confirmed Xstrata remained the big unknown but said all indications were it would go ahead with the $110m payment. (Source: The Australian)

Then number of resource projects under construction will drop from 98 now to just 13 by 2015 if the worsening global outlook prevents further projects getting the go-ahead. This estimate by the federal Bureau of Resources and Energy Economics underlines the vulnerability of the investment boom that is lifting Australia’s economy above its global peers. The pipeline of projects that were under consideration but had yet to receive approval froze when the global financial crisis struck in 2008. Work continued on projects where construction had already begun, but the tally of projects under consideration fell as resource groups abandoned planned expansion. It was the go-ahead for the $45 billion Gorgon LNG project in May 2009, at a time when it was widely believed Australia had sunk into recession, like the rest of the advanced world that provided a ray of hope that the resources sector could pull Australia out of the global economic mire. Gorgon was followed by commitments to a further six liquefied gas projects based on both coal-seam and offshore natural gas, raising the total investment in the sector to $164bn. To put this figure into context, it represents about 12 per cent of GDP on just seven projects (although the investment is spent over a number of years). The rest of the resource sector has also been lifting investment, with more than $60bn committed to minerals and related infrastructure projects. But with many of these projects well advanced and approaching completion, it takes a continuing flow of approved new projects to support this level of investment. The pipeline of projects in the planning state and awaiting go-ahead has remained at about $250bn since 2009, with new projects filling the gaps as the big LNG projects moved to construction. The backlog includes another 12 LNG projects worth about $45bn, 33 iron ore projects worth $50bn and 73 coal projects worth $40bn. What happens to these projects depends on the Chinese economy. (Source: The Australian)

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Dollar Index 82.40 +0.17% Gold 1,572.45 -0.11%

Crude oil 79.36 -1.66% US Treasury 10yr Yield 1.655 +0.00%

DJI 12,640.78 +0.53% S&P 500 INDEX 1,335.02 +0.72%

SHCOMP 2,260.88 -1.40%

Source: Bloomberg

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21.51.71.92.12.32.52.72.93.13.3

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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

2000

2300

2600

2900

Jun-1

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

1000

1100

1200

1300

1400

1500

Jun-1

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

Regional Market Focus

25 June 2012

9 of 17

Source: Bloomberg

Major World Indices

JCI -0.31% 3,889.52

HSI -1.40% 18,995.13

KLCI 0.10% 1,603.07

NIKKEI -0.29% 8,798.35

KOSPI -2.21% 1,847.39

SET -0.53% 1,152.91

SHCOMP -1.40% 2,260.88

SENSEX -0.35% 16,972.51

ASX -0.96% 4,048.21

FTSE 100 -0.95% 5,513.69

DOW 0.53% 12,640.78

S&P 500 0.72% 1,335.02

NASDAQ 1.17% 2,892.42

COLOMBO -0.06% 5,039.15

STI -0.07% 2,828.09

Regional Market Focus

25 June 2012

10 of 17

Top Value & Volume

Singapore

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

OLAM INTERNATION 1.89 +1.62 +0.030 54,556 NEXT-GENERATION SATELLITE 0.01 +10.00 +0.001 102,506

SAKARI RES LTD 1.37 +4.60 +0.060 36,404 GSH CORP LTD 0.08 +6.94 +0.005 98,031

NOBLE GROUP LTD 1.12 +0.00 +0.000 33,756 MAXI-CASH FINANCIAL 0.39 +30.00 +0.090 85,375

GOLDEN AGRI-RESO 0.64 +0.00 +0.000 32,992 GOLDEN AGRI-RESOURCES LTD 0.64 +0.00 +0.000 51,529

MAXI-CASH FINANC 0.39 +30.00 +0.090 32,327 UNITED FIBER SYSTEM LTD 0.06 +0.00 +0.000 41,361

SEMBCORP MARINE 4.54 -2.16 -0.100 30,132 AUSSINO GROUP LTD 0.17 +8.44 +0.013 40,985

KEPPEL CORP LTD 10.10 -1.08 -0.110 30,158 NOBLE GROUP LTD 1.12 +0.00 +0.000 30,171

GENTING SINGAPOR 1.44 +1.06 +0.015 27,774 OLAM INTERNATIONAL LTD 1.89 +1.62 +0.030 29,489

SINGAP TELECOMM 3.16 +0.32 +0.010 25,756 UPP HOLDINGS LTD 0.32 +4.92 +0.015 28,005

DBS GROUP HLDGS 13.66 -0.65 -0.090 25,191 SAKARI RESOURCES LTD 1.37 +4.60 +0.060 27,331

Hong Kong

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

EVERGRANDE REAL 3.83 -3.53 -0.14 1,921,713 EVERGRANDE REAL 3.83 -3.53 -0.14 489,842

CNOOC LTD 14.38 -4.01 -0.60 1,226,698 IND & COMM BK-H 4.31 -1.15 -0.05 193,715

AIA GROUP LTD 25.85 -0.39 -0.10 893,737 BANK OF CHINA-H 2.90 -0.34 -0.01 185,328

HSBC HLDGS PLC 67.45 -1.17 -0.80 877,633 CHINA CONST BA-H 5.22 -1.32 -0.07 127,254

IND & COMM BK-H 4.31 -1.15 -0.05 834,212 LENOVO GROUP LTD 6.68 -1.33 -0.09 113,880

CHINA MOBILE 81.20 -0.98 -0.80 833,471 CST MINING GROUP 0.14 +2.17 +0.00 91,870

TENCENT HOLDINGS 222.80 -2.62 -6.00 774,439 CNOOC LTD 14.38 -4.01 -0.60 84,605

LENOVO GROUP LTD 6.68 -1.33 -0.09 768,207 UNITED GENE HIGH 0.03 -8.11 -0.00 84,310

CHINA CONST BA-H 5.22 -1.32 -0.07 665,694 RENHE COMMERCIAL 0.34 -2.90 -0.01 83,542

CHINA OVERSEAS 16.76 +0.96 +0.16 590,319 AGRICULTURAL-H 3.00 -1.32 -0.04 62,656

Thailand

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

PTT GLOBAL CHEM 54.50 -3.11 -1.75 2,280,601 JASMINE INTL PCL 3.08 -1.28 -0.04 166,498

PTT PCL 314.00 -2.18 -7.00 2,057,895 KRISDA MAHANAKOR 0.37 +2.78 +0.01 149,216

SIAM COMM BK PCL 142.00 +0.00 +0.00 1,532,416 KEPPEL THAI PROP 1.41 +20.51 +0.24 109,902

BANGKOK BANK PUB 181.00 -0.82 -1.50 1,399,038 BTS GROUP HOLDIN 0.80 -1.23 -0.01 102,774

KASIKORNBANK PCL 159.00 +1.60 +2.50 1,279,408 MDX PLC 3.80 -12.44 -0.54 101,953

SIAM CEMENT PCL 322.00 -1.83 -6.00 1,245,892 SANSIRI PUB CO 2.20 +0.00 +0.00 94,113

THAI OIL PCL 57.50 -2.54 -1.50 688,013 SOLARTRON PCL 1.80 +4.05 +0.07 84,825

INDORAMA VENTURE 27.50 -2.65 -0.75 664,201 IRPC PCL 3.62 -3.72 -0.14 72,025

SHIN CORP PCL 58.50 -0.43 -0.25 646,250 RAIMON LAND PCL 1.57 -1.26 -0.02 70,599

PTT EXPL & PROD 168.50 -0.30 -0.50 644,734 QUALITY HOUSES 1.71 +1.79 +0.03 66,342

Indonesia

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

ASTRA INTERNATIO 6,850 3.01 200.00 388,320 BUMI RESOURCES 1,210 -2.42 -30.00 229,357

BUMI RESOURCES 1,210 -2.42 -30.00 275,728 ENERGI MEGA PERS 138 0.73 1.00 227,137

UNITED TRACTORS 21,700 -1.81 -400.00 258,793 BAKRIELAND DEV 76 -3.80 -3.00 221,346

BANK RAKYAT INDO 5,950 -1.65 -100.00 118,023 TRADA MARITIME 830 -3.49 -30.00 137,948

TRADA MARITIME 830 -3.49 -30.00 113,731 BAKRIE SUMATERA 187 0.54 1.00 128,584

BANK MANDIRI 7,200 -0.69 -50.00 113,231 ALAM SUTERA REAL 500 -3.85 -20.00 124,610

TELEKOMUNIKASI 7,750 -1.27 -100.00 90,553 PANIN FINANCIAL 122 -1.61 -2.00 114,600

PERUSAHAAN GAS N 3,475 2.96 100.00 90,157 DELTA DUNIA MAKM 405 2.53 10.00 92,339

ALAM SUTERA REAL 500 -3.85 -20.00 62,167 SUGIH ENERGY 127 -19.11 -30.00 68,439

INDO TAMBANGRAYA 36,400 -2.02 -750.00 57,678 SENTUL CITY TBK 220 -2.22 -5.00 61,800

Sri Lanka

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

SEYLAN BANK PLC 59.90 6.21 3.50 156,608 DIALOG AXIATA PL 6.30 1.61 0.10 8,136

JOHN KEELLS HLDG 193.90 -1.07 -2.10 146,085 SEYLAN BANK PLC 59.90 6.21 3.50 2,611

CENTRAL FINANCE 129.00 -0.62 -0.80 79,947 EXPOLANKA HOLDIN 6.10 -3.17 -0.20 2,299

DIALOG AXIATA PL 6.30 1.61 0.10 51,111 FREE LANKA CAPIT 1.80 -5.26 -0.10 1,619

COMMERCIAL BK 100.50 -0.40 -0.40 32,546 HVA FOODS LTD 13.20 -0.75 -0.10 1,154

CARSON CUMBERBAT 466.40 0.11 0.50 18,429 NATION LANKA FIN 9.00 0.00 0.00 1,010

HVA FOODS LTD 13.20 -0.75 -0.10 15,032 AMANA TAKAFUL 1.70 0.00 0.00 979

EXPOLANKA HOLDIN 6.10 -3.17 -0.20 14,041 TESS AGRO LTD 2.50 -3.85 -0.10 928

HATTON NATL BANK 147.00 0.00 0.00 10,867 JOHN KEELLS HLDG 193.90 -1.07 -2.10 750

NATION LANKA FIN 9.00 0.00 0.00 9,083 PC HOUSE LTD 7.00 0.00 0.00 608

Source: Bloomberg

Regional Market Focus

25 June 2012

11 of 17

Austrilia

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

BHP BILLITON LTD 31.520 -2.11 -0.68 349,453 SUNDANCE RESOURCES LTD 0.360 7.46 0.03 81,904

COMMONW BK AUSTR 51.690 -0.17 -0.09 178,334 LAKES OIL NL 0.005 0.00 0.00 40,791

RIO TINTO LTD 56.020 -1.55 -0.88 171,548 GREEN ROCK ENERGY LTD 0.004 0.00 0.00 38,902

AUST AND NZ BANK 21.280 -1.39 -0.30 145,319 TELSTRA CORP LTD 3.600 0.00 0.00 34,105

NATL AUST BANK 23.170 0.13 0.03 143,709 LYNAS CORP LTD 0.945 0.00 0.00 31,431

WESTPAC BANKING 20.750 -1.10 -0.23 127,971 FORTESCUE METALS GROUP 4.910 2.51 0.12 27,087

FORTESCUE METALS 4.910 2.51 0.12 131,062 PORT BOUVARD LTD 0.021 5.00 0.00 25,938

TELSTRA CORP 3.600 0.00 0.00 123,327 ENERJI LTD 0.010 -9.09 0.00 25,478

NEWCREST MINING 23.050 -2.95 -0.70 88,199 FOCUS MINERALS LTD 0.037 -2.63 0.00 23,508

WOODSIDE PETRO 31.360 -2.24 -0.72 80,608 ANTISENSE THERAPEUTICS LTD 0.018 5.88 0.00 22,215

Source: Bloomberg

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

GOLD SPOT (US$/OZ) -0.11 -1.75 1,572.45 0.7795 1.0059

SILVER SPOT (US$/OZ) -0.73 -0.20 26.91 0.8047 1.0264

WTI Cushing Crude Oil Spot Price (US$/bbl) +1.95 +1.52 79.36 0.6241 1.2562

0.5030 1.5589

0.7840 1.0000

Commodities % Chg Chg Last 4.9910 6.3653

Malaysian Rubber Board Standard (MYR/kg) -2.32 -21.00 885.50 6.0849 7.7609

PALM OIL (MYR/Metric Tonne) +3.38 +98.00 3,000.00 63.0700 80.4400

908.0865 1158.2100

Index % Chg Chg Last 2.5017 3.1908

DOLLAR INDEX SPOT +0.17 +0.14 82.40 24.9236 31.7900

Source: Bloomberg

JAPANESE YEN

KOREAN WON

MALAYSIAN RINGGIT

THAI BAHT

US DOLLAR

CHINA RENMINBI

HONG KONG DOLLAR

CANADIAN DOLLAR

EURO

BRITISH POUND

Currencies

AUSTRALIAN DOLLAR

Commodities & Currencies

Maturity Today Yesterday Last Week Last Month

3 Months 0.06 0.06 0.07 0.07

6 Months 0.13 0.13 0.13 0.13

2 Years 0.30 0.29 0.27 0.28

3 Years 0.41 0.40 0.37 0.40

5 Years 0.75 0.72 0.67 0.73

10 Years 1.68 1.61 1.57 1.73

30 Years 2.76 2.68 2.68 2.81

Yield Spread (10 yrs - 3 mths)

Yield Spread (10 yrs - 2 yrs)

US Treasury Yields

1.62

1.38

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

Regional Market Focus

25 June 2012

12 of 17

Date Statistic For Survey Prior Date Statistic For Survey Prior

6/25/2012 Chicago Fed Nat Activity Index MAY -- 0.11 -- 6/25/2012 CPI (MOM) - NSA MAY 0.30% 0.50%

6/25/2012 New Home Sales MAY 346K 343K -- 6/25/2012 CPI (YoY) MAY 5.10% 5.40%

6/25/2012 New Home Sales MoM MAY 0.70% 3.30% -- 6/26/2012 Industrial Production MoM SA MAY 2.60% -3.50%

6/25/2012 Dallas Fed Manf. Activity JUN -- -5.1 -- 6/26/2012 Industrial Production YoY MAY 6.50% -0.30%

6/26/2012 S&P/CS 20 City MoM% SA APR 0.20% 0.09% -- 6/29/2012 Credit Card Bad Debts MAY -- 18.0M

6/26/2012 S&P/CS Composite-20 YoY APR -2.00% -2.57% -- 6/29/2012 Credit Card Billings MAY -- 2971.0M

6/26/2012 S&P/CaseShiller Home Price Ind APR -- 134.1 -- 6/29/2012 Bank Loans & Advances (YoY) MAY -- 24.00%

6/26/2012 Consumer Confidence JUN 64 64.9 -- 6/29/2012 M1 Money Supply (YoY) MAY -- 7.80%

6/26/2012 Richmond Fed Manufact. Index JUN -- 4 -- 6/29/2012 M2 Money Supply (YoY) MAY -- 6.40%

6/27/2012 MBA Mortgage Applications 22-Jun -- -0.80% -- 7/3/2012 Electronics Sector Index JUN -- 50.8

6/27/2012 Durable Goods Orders MAY 0.50% 0.20% -- 7/3/2012 Purchasing Managers Index JUN -- 50.4

6/27/2012 Durables Ex Transportation MAY 0.80% -0.60% -- 7/4/2012 Automobile COE Open Bid Cat A 4-Jul -- 59004

6/27/2012 Cap Goods Orders Nondef Ex Air MAY -- -1.90% -- 7/4/2012 Automobile COE Open Bid Cat B 4-Jul -- 85400

6/27/2012 Cap Goods Ship Nondef Ex Air MAY -- -1.40% -- 7/4/2012 Automobile COE Open Bid Cat E 4-Jul -- 84389

6/27/2012 Pending Home Sales MoM MAY 1.00% -5.50% -- 07-09 JUL Foreign Reserves JUN -- $237.71B

Date Statistic For Survey Prior Date Statistic For Survey Prior

25-26 JUN Customs Exports (YoY) MAY 0.0065 -0.0367 6/26/2012 Exports YoY% MAY -- 5.60%

25-26 JUN Customs Imports (YoY) MAY 0.08 0.0787 6/26/2012 Imports YoY% MAY -- 5.00%

25-26 JUN Customs Trade Balance MAY -$1200M -$2867M 6/26/2012 Trade Balance MAY -- -42.9B

26-28 JUNMfg. Production Index ISIC NSA

(YoY)MAY -- 0.54 6/29/2012 Money Supply M1 - in HK$ (YoY) MAY -- 8.70%

26-28 JUN Mfg. Production Index ISIC SA MAY -- 180.07 6/29/2012 Money Supply M2 - in HK$ (YoY) MAY -- 5.70%

26-28 JUN Total Capacity Utilization ISIC MAY -- 62.2 6/29/2012 Money Supply M3 - in HK$ (YoY) MAY -- 5.50%

6/29/2012 Foreign Reserves 41082 -- -- 6/29/2012 Govt Mthly Budget Surp/Def HK$ MAY -- 0.5B

6/29/2012 Forw ard Contracts 41082 -- -- 7/3/2012 Retail Sales - Value (YoY) MAY -- 11.40%

6/29/2012 Total Exports YOY% MAY -- -0.035 7/3/2012 Retail Sales - Volume (YoY) MAY -- 7.60%

6/29/2012 Total Exports in US$ Million MAY -- $16630M 03-05 JUL Purchasing Managers Index JUN -- 49.4

6/29/2012 Total Imports YOY% MAY -- 0.09 7/6/2012 Foreign Currency Reserves JUN -- $291.9B

6/29/2012 Total Imports in US$ Million MAY -- $17364M 7/19/2012 Unemployment Rate SA JUN -- 3.20%

6/29/2012 Total Trade Balance MAY -- -$734M 7/19/2012 Composite Interest Rate JUN -- 0.39%

6/29/2012 Current Account Balance (USD) MAY -- -$1516M 7/23/2012 CPI - Composite Index (YoY) JUN -- 4.30%

6/29/2012 Overall Balance in US$ Million MAY -- -$1008M 7/24/2012 Exports YoY% JUN -- --

Source: Bloomberg Source: Bloomberg

Source: Bloomberg

Thailand Hong Kong

US Singapore

Economic Announcement

Source: Bloomberg

Regional Market Focus

25 June 2012

13 of 17

Date Statistic For Survey Prior Date Statistic For Survey Prior

7/2/2012 Indonesia June Markit 6/29/2012 CPI Moving Average (YoY) JUN -- 5.60%

7/2/2012 Inflation (YoY) JUN -- 4.45% 6/29/2012 CPI (YoY) JUN -- 7.00%

7/2/2012 Inflation NSA (MoM) JUN -- 0.07% 7/10/2012 Repurchase Rate 10-Jul -- 7.75%

7/2/2012 Core Inflation (YoY) JUN -- 4.14% 7/10/2012 Reverse Repo Rate 10-Jul -- 9.75%

7/2/2012 Exports (YoY) MAY -- -3.50% 10-20 JUL Exports YoY% MAY -- -9.20%

7/2/2012 Total Imports (YoY) MAY -- 11.70% 10-20 JUL Imports YoY% MAY -- -3.30%

7/2/2012 Total Trade Balance MAY -- -$641M 7/31/2012 CPI Moving Average (YoY) JUL -- --

7/2/2012 Consumer Confidence Index JUN -- 109 7/31/2012 CPI (YoY) JUL -- --

02-06 JUL Danareksa Consumer Confidence JUN -- 91.3 8/7/2012 Repurchase Rate 7-Aug -- --

03-06 JUL Foreign Reserves JUN -- $111.53B 8/7/2012 Reverse Repo Rate 7-Aug -- --

03-06 JUL Net Foreign Assets (IDR Tln) JUN -- 1015.99T 09-20 AUG Exports YoY% JUN -- --

07-13 JUL Money Supply - M1 (YoY) MAY -- 23.30% 09-20 AUG Imports YoY% JUN -- --

07-13 JUL Money Supply - M2 (YoY) MAY -- 20.20% 8/30/2012 CPI Moving Average (YoY) AUG -- --

7/12/2012 Bank Indonesia Reference Rate 12-Jul -- 5.75% 8/30/2012 CPI (YoY) AUG -- --

12-20 JUL Total Local Auto Sales JUN -- 95499 10-20 SEP Exports YoY% JUL -- --

Date Statistic For Survey Prior

6/28/2012 HIA New Home Sales (MoM) MAY -- 6.90%

6/28/2012 Job vacancies MAY -- 0.70%

6/29/2012 Private Sector Credit MoM% MAY -- 0.40%

6/29/2012 Private Sector Credit YoY% MAY -- 3.80%

7/2/2012 AiG Performance of Mfg Index JUN -- 42.4

7/2/2012 RPData-Rismark House PX Actual MAY -- -1.40%

7/2/2012 TD Securities Inflation MoM% JUN -- 0.00%

7/2/2012 TD Securities Inflation YoY% JUN -- 1.80%

7/2/2012 RBA Commodity Price Index Au JUN -- 99.5

7/2/2012 RBA Commodity Index SDR JUN -- -9.90%

7/3/2012 Building Approvals (MoM) MAY -- -8.70%

7/3/2012 Building Approvals (YoY) MAY -- -24.10%

7/3/2012 RBA CASH TARGET 3-Jul -- 3.50%

7/4/2012 AiG Performance of Service JUN -- 43.5

7/4/2012 Retail Sales s.a. (MoM) MAY -- -0.20%

Australia

Sri Lanka

Source: Bloomberg

Source: Bloomberg

Source: Bloomberg

Indonesia

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BUY >15% upside from the current price

HOLD Trade within ± 15% from the current price

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