MICA (P) 081/12/2011 Ref No: RM2012_0144 1 of 18

Regional Market Focus

Phillip Securities Research Pte Ltd

26 July 2012

Morning Market Commentary - STI: -0.25% to 2990.9 - FTSE Asia Pac ex-Japan: -0.60% to 540.7 - Euro Stoxx 50: +0.35% to 2159.1 - S&P500: -0.03% to 1337.9 MARKET OUTLOOK: US and European markets were a bit undecided in a string of mixed news yesterday, Europe reels ever more into recession as German, UK and Asian data was weak, US new home sales print was below consensus, Apples earnings below expectations, lingering effects of UPS forecast cut, but on the upside, speculation of turning the ESM into a bank so that it can tap the ECB's unlimited firepower. We think the likelihood of the ESM becoming a bank is quite high now, given where Spanish yields are now (>7%). While politicians work on a long drawn out process of closer integration, the central banks have to step in. The underlying is that fundamentals continue to be weak, and overall equity market trends ex-ASEAN, are still lower, but bouts of positiveness on policy will occur - the next one being the ESM turned into a bank. Markets anticipate this, as the dollar halted advance yesterday, and crude bounced off minor support. The larger inter-market picture though, continues to corroborate the economics to signal risk off: with dollar & treasuries uptrend, MSCI world and commodities overall downtrend. (phillipCFD has available: STI, HSI, S&P, Dow, US Tech). As we think absolute returns for stocks everywhere till 1q12 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. Global Macro, Asset Strategy: 26 July Singapore 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 US new home sales for June was -8.4%m-m, +15.1%y-y. Surprising on the downside as the consensus expected a on-month increase. We note that sales was still higher on-year, underscoring the housing recovery. It could be that as new home inventories have been whittled down to less than 5 months supply, buyers are moving onto buying existing homes. In any case, no change to our US outlook: it is slowing, housing being the only bright spot. And fiscal uncertainty is just adding to it. Recession risk in 1H13 is certainly there. In Germany, business confidence - as measured by the German IFO Business Climate index- continued to slump for the third consecutive month to a 28-month low (i.e. 103.3) in July. Other signs of weakness have also emerged. In July, Germany -the largest economy in the bloc- 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) 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 Germany’s growth. The UK economy is likely to remain mired in a recession on account of anemic demand -on both the domestic as well as external fronts. In 2Q12, economic growth continued to contract by 0.7% q-q sa (the sharpest contraction since 1Q09), following the decline of 0.3% registered in the preceding quarter. While the Bank of England has already announced another 50 billion pound of gilt purchases earlier this month, we do not rule out interest rate cuts (from a record low of 0.5 percent) and larger asset purchases should economic conditions deteriorate further. Consistent with our base case, Bank of Thailand (BoT) stood pat in July, maintaining the benchmark one-day bond repurchase rate at 3.0% for the fourth consecutive meeting. Other data released also showed Thai exports faltering in June -declining by 2.5% y-y, reversing from growth of 7.7% in the preceding month. As guided in our Thai regional strategy report, sluggish external demand (particularly on the EU front) as well as global macro uncertainties are likely to weigh on exports despite the easing of supply chain disruptions. Nonetheless, we opine that the central bank although likely to stand pat, markets can take comfort that there is still room for BoT to cut rates (likely a 25bps rate cut) to stimulate the economy if necessary as core inflation remains well within the target range. South Korea’s consumer confidence index fell to 100 in July, the lowest reading in 5 months, after June’s 101, reflecting a weak growth momentum and dim global outlook. The expected inflation rate over the next year was 3.6percent in July, down from 3.7 percent last month, according to today’s e-mailed BOK statement. Consumer prices increased 2.2 percent in June from a year earlier, the slowest pace in 32 months. Japan’s export fell by 1.4% m-m in June, extending the 0.6% m-m contraction in May. Import fell by 6.5% m-m, after the 1.6% m-m gain in May. On y-y basis, export fell by 2.3% y-y, compared to the 10.0% y-y gain in May, and import fell by 2.2% y-y, compared to the 9.3% y-y gain in May. By trading partners, export to US rose by a slower 15.1% y-y in June, compared to May’s 38.1% y-y gain. Export to China contracted 7.3% y-y in June, after the 3.0% y-y gain in May. The nation’s export is curbed by the stronger currency because funds flow from Europe to Japan for safe haven. Going forward, the Japanese government would likely take actions to intervene the exchange rate if yen keep getting stronger. Australia’s CPI growth quickened in 2q12, rising by 0.5% q-q, after the 0.1% q-q pace in 1q12. CPI for food and non-alcoholic beverage rose by 0.6% q-q in 2q12, ending the earlier 3 consecutive q-q drops, after the 2.1% q-q drop in 1q12. The local currency rose as investors pared bets Reserve Bank of Australia Governor Glenn Stevens will lower the 3.5 percent benchmark rate next month. The central bank reduced borrowing costs in May and June as Europe’s debt crisis threatened global growth and China’s economy slowed. It kept rates unchanged this month, citing stronger domestic growth momentum. A separate report shows that the nation’s leading index for May advanced 0.4% to 123.6 from April, ending the earlier 3 consecutive monthly drops.

Regional Market Focus

26 July 2012

2 of 18

Singapore STI fell 0.25% on Wednesday to end at 2990. Traded volume was 1.2 billion

shares with value of $1.33 billion. There were 140 gainers vs 218 decliners. We see general weakness in the market. If not for the 4.3% rise in F&N, STI would have suffered deeper losses.

Corporate earnings reported to date remain mixed. We are overweight on the defensives aviation services and REIT sectors.

Close +/- % +/-FSSTI 2990.92 -7.52 -0.25P/E (x) 9.82P/Bv (x) 1.37

3.63Dividend Yield

STRAITS TIMES INDEX

2500

2700

2900

3100

3300

7/25 10/25 1/25 4/25 7/25

Source: Bloomberg

Thailand Thai stocks traded in the red for most of the session on Wed amid mixed

sentiment in regional markets but the composite SET index managed to finish the day up slightly. Foreign investors remained net sellers of Thai shares worth Bt3.80bn on Wed.

Overseas equity markets rebounded slightly on better-than-expected results from US companies while sluggish housing data with a drop in both home sales and house prices fueled hopes that the US Federal Reserve would act soon to provide more stimulus to the economy. However, Europe’s sovereign debt crisis remained worrisome. In the latest developments, Moody’s Investors Service changed the outlook on the provisional (P) Aaa long-term rating of the European Financial Stability Facility (EFSF) to negative from stable, a blow to a fund that was supposed to backstop struggling EU members. Credit ratings agency Egan-Jones also cut Italy’s sovereign rating to CCC-plus from B-plus with a negative outlook, citing the country’s stumbling regional governments. Foreign selling in the Thai stock market also accelerated to the tune of nearly Bt3.8bn yesterday, which could bring more volatility to the market along the way. Overall we believe Thai stocks may finish the session little changed today. We expect the SET index to trade in a range of 1181-1200.

For short-term strategy, investors should be cautious in trading but may raise equity weighting back to 50% of the portfolio after the SET index could build some base.

Today we peg resistance for the SET index at 1192-1200 and support at 1181-1170.

Close +/- % +/-SET INDEX 1188.62 0.98 0.08P/E (x) 15.15P/Bv (x) 2.09

3.63Dividend Yield

STOCK EXCH OF THAI INDEX

800

900

1000

1100

1200

1300

1400

7/25 10/25 1/25 4/25 7/25

Source: Bloomberg

Indonesia

The JCI ended slightly up after flat sessions, despite broad declines across Asian stock markets Wednesday (25/07). The composite index of Indonesian stocks added 8.726 points or 0.22% to close at 4,000.839 after making the intraday low at 3,964.808 and high at 4,004.855. The index’s advance included shares in six of the nine main sectors, with infrastructure sector climbed 0.78%, property and construction sector gained 0.73% and basic industry sector added 0.62%. Commodity shares however declined as the US dollar rose, with mining sector fell 1.32% and agriculture sector trimmed 0.52%. LQ 45, the index trailing Indonesia’s blue-chip shares, added 0.712 points or 0.10% to 678.812. More than 130 shares ended positive, 89 shares closed weaker, and 97 shares remained unchanged Wednesday on the Indonesia Stock Exchange, 1.835 billion shares worth IDR 2.756 trillion (USD 290.863 million) traded on the regular board. Foreign participants posted net sales totaling IDR 664.189 billion (USD 70.21 million).

We expect the JCI to trade higher today, however with narrow range. The drop in US home sales may spark speculation that the US Federal Reserve may take new steps to bolster growth. However the assumption would likely be treated with caution. The composite index’s support and resistance will likely be at 3,950 and 4,030 respectively.

Close +/- % +/-JCI Index 4000.84 8.73 0.22P/E (x) 17.52P/Bv (x) 2.66

2.34Dividend Yield

JAKARTA COMPOSITE INDEX

3000

3200

3400

3600

3800

4000

4200

4400

7/25 10/25 1/25 4/25 7/25

Source: Bloomberg

Regional Market Focus

26 July 2012

3 of 18

Sri Lanka Market experienced high volatilities across the day and recovery phase was

observed within the 2nd half of the day. Retailer’s interest extended to speculative driven stocks with significant price appreciations and high traded volumes. The recovery attributed to all the indices to regain in to green territory. All the indices concluded the day with a positive sentiment. The benchmark ASPI stood at 4,883.88, gaining 9.52 points. Increasing 7.59 points, MPI ended the day at 4,289.41points. The S&P SL20 Price Index gained 1.07 points and closed at 2,761.99. The market capitalization was LKR 1.86Tn.

The reported turnover was LKR 276Mn. Bank Finance and Insurance and Diversified Holdings were the best performing sectors for the day.

A total of 20.5Mn shares changed hands during the trading day which is an increase of 21.09% against the previous day. Price gainers outnumbered the price losers by 126:62. The market recorded a net foreign inflow of LKR 22.3Mn.

Close +/- % +/-CSEALL Index 4883.88 9.52 0.20P/E (x) 10.20P/Bv (x) 1.56

2.85

Dividend Yield

SRI LANKA COLOMBO ALL SH

4500

5000

5500

6000

6500

7000

7500

7/25 10/25 1/25 4/25 7/25

Source: Bloomberg

Australia

On Wednesday, the Australian share market closed slightly lower as fears that Spain may be headed for a financial bailout overshadowed weaker domestic inflation figures. The major benchmark S&P/ASX200 index fell 9.3 points or 0.23 per cent to 4,123.9. The national turnover was 1.22 billion securities worth $3.53 billion, with 543 stocks down, 334 up and 350 unchanged. The Australian Bureau of Statistics figures showed the consumer price index rose 0.5 per cent in the June quarter for an annual rate of 1.2 per cent.

The Australian market looks set to open higher despite a mixed lead from Wall Street where investors digested strong earnings reports from several major companies and weaker than expected numbers on new home sales. The SFE Futures 200 is indicating a positive start, upwards of 3 points or 0.07 per cent to 4,085.

Close +/- % +/-S&P/ASX 200 INDEX 4123.95 -9.29 -0.22P/E (x) 14.09P/Bv (x) 1.65

6.84Dividend Yield

STANDARD & POORS/ ASX 200 INDEX

3800

4000

4200

4400

4600

4800

7/25 10/25 1/25 4/25 7/25

Source: Bloomberg

Hong Kong

Close +/- % +/-HSI INDEX 18877.33 -25.87 -0.14P/E (x) 9.20P/Bv (x) 1.31

3.86Dividend Yield

HANG SENG INDEX

16000

17000

18000

19000

20000

21000

22000

23000

24000

7/25 10/25 1/25 4/25 7/25

Source: Bloomberg

Regional Market Focus

26 July 2012

4 of 18

Singapore

SATS Ltd –Results (Derrick Heng) Recommendation: Neutral Previous close: S$2.81 Fair value: S$2.65 3.8% growth in underlying net profit Higher than expected revenue growth Staff cost surprised on the upside Margin pressures at the core business Downgrade to Neutral with TP of S$2.65 Ascendas Hospitality Trust – IPO (Travis Seah) Recommendation: Non-rated Previous close: N.A.

A-HTrust’s initial portfolio consists of 10 quality hotels with valuation of c.S$1,057mn.

At the IPO price of S$0.88, A-HTrust is trading at 8.6% above its book value compared to CDL HT at 29.7% of NAV premium.

Given the strong sponsor and strategic collaboration with Accor, we opine the stock is fairly value with some potential upsides for the attractive yield of 7.9%.

Golden Agri-Resources Ltd - Company Preview Recommendation: Accumulate Previous Close: S$0.715 Fair Value: S$0.73

CPO to soybean oil spread widens

Supportive factors pushing CPO prices up

Price target raised to $0.77 GLOBAL MACRO, ASSET STRATEGY The Global Rush for Yield In our last Global Macro & Markets on the 12th April, we guided then that Equities were liable for a correction, yet would likely stage a rally before 4q12 on policy (or policy anticipation). We pretty much had this as global equities corrected on average ~11% in May only to have many markets rally +10% since June (8% MSCI World). We said also in GMM 12th April that Equities will again find it challenging going into 2013. We still believe this and think absolute returns for equities everywhere will be under pressure. We are just Neutral at best on an absolute returns basis even for equity markets Overweighted for relative resilience. We are in a global economic slowdown, made worse by fiscal uncertainty in the US. On a relative return basis – we continue to expect ASEAN equities (CIMB ASEAN40 ETF, QS0:SGX or M62:SGX) to outperform (Overweight) on domestic demand offsetting somewhat the weak external environment. Of note, in our Morning Commentary 19th July we formally included the Singapore market (ES3:SGX or G3B:SGX) – the STI & MSCI SG – in the ASEAN category as: (1) it has diverged significantly from NE Asian markets since June start, and (2) +60% of EPS comes from ASEAN-EM. The safe haven SGD and higher than average dividend yield also make it an attractive destination in the global search for yield. We are generally Marketweight NE Asia as the trade exposed region is vulnerable to the global economic slowdown. Having said that, we think China (2823.HK) itself should be Overweighted for those with a risk appetite and very long term horizon, as valuations are a gift, income and employment growth is high even as the economy rebalances itself. The policy bag is also full. US and Europe are an Underweight as we think the market has underestimated the rising recession risks for the US, made worse by the impending fiscal tightening. Europe itself also faces prolonged tightening under the New Fiscal Compact to probably render a recession like 2013. (See inside for ETF proxies) Given our macro outlook, we favour Bonds over Equities. We are Bullish absolute returns for Fixed Income over the next 6-9 months and we are Overweight longer dated US Treasuries (TLH:NYSE ; TLT:NYSE), longer dated US Corporates (LQD:NYSE ; VCLT:NYSE), US$ denominated EM Sovereigns (EMB:NYSE), US$ denominated Asian Sovereigns & Corporates (N6M:SGX ; O9P:SGX), while Marketweight Treasuries of <10yrs, and Marketweight Asian debt of local currency denomination. • Table summary of Asset Strategy Pg.12 • PhillipETF recommended ETFs to trade the markets mentioned Pg.12 • PhillipCFD has long/short for the FSSTI, HSI, KLCI, S&P500, Dow, US Tech • UT investors please contact your FA for Portfolio matters.

Regional Market Focus

26 July 2012

5 of 18

Thailand

BEC World – Company Preview Recommendation: REDUCE Previous close: Bt55 Fair value: Bt49

We expect BEC to achieve new record quarterly net profit of Bt1,294mn in 2QCY12, up 26.88% y-y thanks to higher total revenue and lower effective tax rate.

For 1HCY12, we forecast BEC to report a profit growth of 29.32% y-y. We also expect BEC to pay a 1HCY12 dividend of Bt1/share.

Strong momentum in ad spending is likely to continue on the back of continued domestic economic expansion and windfalls from the London 2012 Olympic Games in London in 3QCY12.

We keep our CY12 net profit outlook for BEC at Bt4,667.55mn. What remains to be seen is how much the imminent ad rate hike will give a boost to revenue. Our target price is also unchanged at Bt49/share. We lower our rating on BEC to ‘REDUCE’ from ‘NEUTRAL’ as we believe much of strong earnings expectations for 2QCY12 have already played into the recent share price surge.

Delta Electronics – Company Preview Recommendation: BUY Previous close: Bt23.20 Fair value: Bt27.50

We expect DELTA to post 2QCY12 net profit of Bt854mn, down 6% y-y but up 20% q-q on higher sales and wider gross margin.

Sales in the second half of the year would be weaker than expected as sluggish economy appears to have negative impact on clients’ orders.

We reiterate a ‘BUY’ rating on DELTA shares with a target price of Bt27.50/share.

Regional Market Focus

26 July 2012

6 of 18

Market News

US Morgan Stanley (MS), trading at less than half of its liquidation value, could be worth as much as $32 a share in a breakup, said Michael

Mayo, an analyst at CLSA Ltd. Short-sellers betting against Morgan Stanley would be “blown to Neptune” if the New York-based investment bank heeds calls for the biggest U.S. financial firms to be split into pieces, Mayo, 49, said today in an interview on Bloomberg Television’s “Street Smart.” The stock gained 2.7 percent to close at $12.96 in New York. James Gorman, Morgan Stanley’s chief executive officer, said last week that the firm will continue to shrink its fixed- incometrading unit, cutting so-called risk-weighted assets 30 percent from the third quarter of 2011 by the end of 2014. Mayo said that reduction should be closer to two-thirds. (Source: Bloomberg)

Facebook Inc. (FB), owner of the largest social network, is working with HTC Corp. to build its own smartphone for release as soon as

mid-2013, people with knowledge of the matter said. The companies had intended to release the device as early as the end of this year, and pushed back the timetable to give HTC more time to work on other products, said some of the people, who requested anonymity because the plans aren’t public. Facebook is also developing a modified operating system for the device and has assembled a team of former Apple Inc. (AAPL) programmers to improve its iPhone application, people said. (Source: Bloomberg)

The Standard & Poor’s 500 Index (SPX) erased gains in the final hour of trading as a rally in bank and industrial shares wasn’t enough to

overcome disappointing results at Apple (AAPL)Inc. and an unexpected drop in new home sales. A gauge of homebuilders in S&P indexes slumped 3.2 percent. Apple tumbled 4.3 percent as iPhone sales missed forecasts. Netflix Inc. (NFLX), the largest video-subscription service, plunged 25 percent after raising doubts on user growth. JPMorgan Chase & Co. (JPM) and Citigroup Inc. rose at least 1.2 percent. Boeing Co. (BA) and Caterpillar Inc. (CAT) added more than 1.4 percent, pacing gains in industrial shares, after raising their earnings forecasts. About five stocks rose for every four falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 slid less than 0.1 percent to 1,337.89, after gaining 0.4 percent earlier. The benchmark gauge has lost 2.8 percent in four days. The Dow Jones Industrial Average rose 58.73 points, or 0.5 percent, to 12,676.05. Volume for exchange-listed stocks in the U.S. was 6.6 billion shares, or about in line with the three-month average. (Source: Bloomberg)

Singapore Singapore share prices opened higher on Thursday with the Straits Times Index up 14.48 points to 3,005.76. Volume was 85.4 million

shares worth S$96.4 million. Gainers outnumbered losers 81 to 35. (Source: BT Online) Singapore's central bank has ordered banks in the city-state to review the way benchmark interbank borrowing rates are set, as

regulators worldwide scrutinise the troubled Libor system. "We've directed the banks to take a look at their processes and have an independent review done," Teo Swee Lian, deputy managing director of the Monetary Authority of Singapore (Mas), told a news conference on Wednesday. Regulators in Singapore and other major financial centres are looking into reforming interbank borrowing rates following suspected rigging of the London interbank offered rate (Libor). More than a dozen banks are under investigation in the United States, United Kingdom and Japan for allegations they tried to manipulate interbank rates. British bank Barclays was fined US$453 million last month after it admitted its traders tried to rig its rate submissions. (Source: BT Online)

Jardine Cycle & Carriage Limited has disposed its entire interest, less than 5 per cent of the issued share capital, in a company. Of the

US$135 million cash consideration, Jardine C&C expects to recognise a net gain of US$56 million for the financial year ending December 31, 2012. Proceeds from the disposal will be used to reduce borrowings and for general working capital. Had the disposal taken place earlier on Jan 1, 2011, the group's earnings per share would have jumped 5.5 per cent to US$3.06, and net tangible assets per share would have inched 0.4 per cent higher to US$10.82 had it taken place on Dec 31, 2011. (Source: BT Online)

Hong Kong

Hong Kong’s largest gold-storage facility, which can hold about 22 percent of the bullion now in Fort Knox, will open in September to meet rising demand from banks and the wealthy, according to owner Malca-Amit Global Ltd. The facility, located on the ground floor of a building within the international airport compound, has capacity for 1,000 metric tons, said Joshua Rotbart, general manager for the Hong Kong-based company’s Malca-Amit Precious Metals unit. Two of the vaults may hold assets, including gold, for banks and financial institutions, and others will be used for diamonds, jewelry, fine art and precious metals, said Rotbart. The move in Hong Kong reflects increased demand for gold in Asia even as the commodity struggles to sustain its rally into a 12th year. Gold-demand growth in China, the world’s second- largest user after India last year, is slowing, according to the World Gold Council. Vault charges will depend on each customer’s operations, according to Rotbart, who declined to give a figure for the venture’s cost beyond millions of dollars. (Source: Bloomberg)

Hong Kong allowed non-residents to purchase an unlimited amount of yuan, seeking to defend its position as the global hub for

international trade and finance in the currency. While conversion at the offshore rate will start Aug. 1, the buyers will need to seek permission to send the currency into China, Hong Kong Monetary Authority Deputy Chief Executive Eddie Yue told a news conference

today. The 20,000 yuan ($3,130) daily conversion quota on the city’s permanent residents at the onshore rate will be kept unchanged and a maximum of 80,000 yuan can be sent into the mainland every day, he said. Hong Kong’s biggest banks have been lobbying China to relax restrictions on the city’s yuan business as competition from London and Singapore intensifies. The halt in the yuan’s appreciation against the U.S. dollar this year has damped appetite among residents for assets denominated in the Chinese currency, with the city’s yuan deposits dropping 35 billion yuan in the first five months to 554 billion yuan. (Source: Bloomberg)

Regional Market Focus

26 July 2012

7 of 18

Thailand Foreign investors remained net sellers of Thai equities worth Bt3,795mn on Wed. (Source: Bisnews) The Bank of Thailand’s Monetary Policy Committee left its benchmark one-day R/P rate on hold at 3.0% at yesterday’s rate setting

meeting. The central bank also cut its 2012 GDP growth forecast to 5.7% from 6% and slashed the full-year export growth target to 7% from 8%. (Source: Krungthep Turakij)

Thailand’s exports in Jun 2012 shrank 2.5% y-y, leaving Thailand with a trade deficit of US$550mn, according to data from the Ministry

of Commerce. For 1HCY12, Thailand posted a trade deficit of up to US$10,344mn. (Source: Post Today)

Indonesia The government says the unemployment rate of 6.32 percent in February 2012 is one of the lowest in the world, lower than the

performance in August 2011 with 6.56 percent. Next year, unemployment rate is targeted to fall to 5.8-6.1 percent, still above the world’s natural rate. Deputy Minister of National Development Planning said the world’s natural rate is estimated at 4 to 5 percent. Thus, the current achievement makes Indonesia one of the countries with the lowest unemployment rates in the world. The government will strive to achieve next year’s unemployment rate projection with the economic growth target of 6.8-7.2 percent. Meanwhile Chairman of the Standing Committee on Educational Policy and Human Resources, Indonesian Chamber of Commerce and Industry, said this year's unemployment rate is not due to lack of jobs that can be absorbed, but because of the low level of education that does not fit the needs of the industry. Therefore, 63 percent of workforce in Indonesia today is entering the informal sector. (Source: Indonesia Finance Today)

Decrease in bond yields in a number of countries and the worsening global condition will encourage capital inflow into Indonesia. Head

of Fiscal Policy Office of the Ministry of Finance said as of now the government securities (Surat Berharga Negara/SBN)’s market is still pretty good. As quoted by Bloomberg, on Monday, the United States’ 10-year government bond yield fell five basis points to 1.41 percent. England’s 10-year government bond yield fell to a record low to 1.407 percent, while Finland’s government bond yield fell to 1.368 percent. Germany’s two-year government bond yields fell to minus 0.08 percent and Japan’s five-year government bonds fell to 0.17 percent – the lowest since June 2003. The current SBN yield is quite low at below six percent, but still attractive to investors. Capital inflow is expected to increase at the end of the year. Although European condition worsens, the government does not change the publishing schedule of SBN, as investors’ interest in bonds is still pretty good. Data from the Directorate General of Debt Management, Ministry of Finance, states that foreign ownership in the SBN on July 13 reached IDR 231.45 trillion (USD 24.53 billion), or 29.08 percent of the total tradable SBN of IDR 795.93 trillion. On July 20, foreign ownership increased to IDR 233.42 billion or 29.21 percent of IDR 799.20 trillion tradable SBN. (Source: Indonesia Finance Today)

Sri Lanka

Sri Lanka's Treasuries yields edged lower across maturities at Wednesday's (25th July) auction, with the six month yield falling, though

longer term bond prices remained steady. The 3-month yield fell 01 basis point to 11.35 percent, the 6-month yield fell 06 basis points to 12.85 percent and the 12-month yield fell 01 basis point to 13.15 percent. The debt office confirmed that it has sold 30 billion rupees in bills to real bidders after offering 18 billion rupees of bills for roll-over. Two year bonds maturing on April 01, 2014 were quoted around 13.72/80 percent, bond maturing on July 15, 2012 were quoted at 13.80/90 percent and April -1, 2016 bond were quoted around 14.08/15 percent. A state bank was selling bonds heavily for several days in the market, helping keep rates up. The state has given Ceylon Petroleum Corporation bonds to settle some debts with state entities. The rupee also weakened slightly to 130.90/131.05 levels also amid heavy state bank buying. (Source: LBO)

Sri Lanka external trade has continued to contract in May with exports falling 15.1 percent to 710.1 million US dollars and imports easing

6.4 percent to 1,575 million dollars. The Central Bank confirmed that industrial exports has fallen 16.2 percent to 636 million US dollars with apparel falling 13.5 percent to 278.2 million US dollars and rubber goods 17.9 percent to 64.1 million US dollars with price falls also seen in raw materials including cotton. The fall in imports was led by intermediate goods which fell 10 percent to 972.5 million US dollars while consumer goods fell 11 percent to 268.5 million US dollars. The central bank expressed that spending on non-food consumer goods fell by 15 percent and car imports fell 31.1 percent. Investment goods rose 11.4 percent to 331.9 million US dollars with machinery rising 9.6 percent to 164.5 million US dollars and building material rising 23.3 percent to 93.7 million US dollars. The trade gap grew only 2.1 percent to 865.0 million US dollars. (Source: LBO)

Regional Market Focus

26 July 2012

8 of 18

Australia Farmers around Australia who have squirrelled away wheat and barley harvested last year on their properties in the hope of better prices

are making hay while the US wilts. But Australian consumers will be forced to pay more for eggs, bread, bacon, chicken and even milk as a direct consequence of the devastating US drought. Bread prices are tipped to climb 10 per cent by the end of the year, while the Australian Egg Corporation warned yesterday that eggs would soon cost an extra 50c a dozen. The worst US drought in 56 years, accompanied by harsh heatwaves, has ruined ripening maize and soybean crops, sending world prices for corn, oilseeds and grains skyrocketing as fears of shortages set in. Global wheat prices have risen 54 per cent in six months ago and are up 35 per cent in Australia in the same period. Savvy wheat farmers such as South Australia's Paul Simmons, who hung on to about 40 per cent of his harvest last November and stored it away in farm silos, are now benefiting from the leap in world grain prices. Hard wheat sold in December at harvest earned the Tailem Bend grower about $270 a tonne; two weeks ago, when he sold the last 300 tonnes he had saved, the price had jumped to $298 a tonne. At its highest point four days ago, the world wheat price hit $US350 a tonne before dropping back slightly to $US324.50 on the Chicago Exchange yesterday. "I wish I'd hung on to more now," Mr Simmons said on his Coomandook farm yesterday. "I think I sold out a bit early, looking at what happened this past week. "But I needed the cash - that's always the way with farming; it's a struggle between needing the money to buy inputs to put your next crop in and hanging on to sell the last crop as long as you can until prices get better." (Source: The Australian)

Australia’s inflation rate has dropped to a 13-year low, freeing the Reserve Bank to cut interest rates and dampening concerns that the resources boom will spark more widespread price rises. Consumer prices rose only 1.2 per cent over the year to June, the lowest annual increase since 1999. "Wage pressures from the booming resource sector aren't flowing into the rest of the economy," said John Peters, a senior economist at Commonwealth Bank, who said fears the resource boom would fan inflation had been a worry for the Reserve Bank. Mr Peters said a lack of demand for services was "helping put a lid on price growth outside the mining sector", noting the relatively rapid rate of growth of goods and services not affected by the strong Australian dollar had abated in the June quarter. Big falls in the price of domestic holidays, cakes, biscuits, and audio and computing equipment limited consumer price increases over the three months to June to 0.5 per cent, offset by increases in the price of furniture, fruit and vegetables and medical services. Rents rose 1.1 per cent in the June quarter, while the price of electricity fell 0.8 per cent. Wayne Swan said the low rate was "a remarkable achievement". The Reserve Bank's preferred measure of consumer inflation, which strips out volatile items, was 2 per cent over the year to June, at the lower end of the Reserve Bank's target band of 2-3 per cent, and in line with the bank's and most economists' recent forecasts. Economists agreed the bank has room to cut further but most expected it to wait a few months. (Source: The Australian)

Peabody Energy, the world's biggest non-government coalminer, has warned that Australian coalmines face more cutbacks and closures amid slumping prices and rising costs, with the St Louis-based giant also singling out the poor performance at its Australian mines and the carbon tax. Peabody, which paid $US5 billion for Macarthur Coal last year, has cut production and earnings forecasts, yesterday saying third-quarter profit would be up to $US100m ($97.4m) lower than June-quarter earnings before interest, tax, depreciation and amortisation of $US453m. The guidance ranges "reflect expectations for continued Australian challenges, including performance at contractor-operated mines, a longwall move, lower thermal coal pricing, a temporary shift in the mix of metallurgical coal and the introduction of the carbon tax", chief financial officer Mike Crews said after the company's quarterly profit results were released late on Tuesday. The company also slashed 2 million tonnes from this year's production guidance because of poor performance at its mines and a substantial weakening of coal markets in recent months. Peabody president Greg Boyce said he expected the thermal coal market to tighten, partly because of flooding by "amazing growth" from Indonesia while Indian demand had failed to fire. "Potentially, some of the very high-end cost-curve mines out of Australia will begin to cut back as well," Mr Boyce said. Peabody's comments followed a 30 per cent slump in thermal coal prices in the past year to about $US80 a tonne. This is expected to weigh heavily on Australian miners' results next month. Prices have slumped because of increased coal exports from the US as low-priced shale gas is favoured by power stations, unexpectedly low demand from China and India, and more exports from Indonesia. (Source: The Australian)

Regional Market Focus

26 July 2012

9 of 18

Dollar Index -0.57% Gold 1,604.45 -0.06%

Crude oil +0.58% US Treasury 10yr Yield 1.398 +0.01%

DJI +0.47% S&P 500 INDEX 1,337.89 -0.03%

SHCOMP -0.49%

Source: Bloomberg

10000

11000

12000

13000

14000

Jul-1

1

Sep-11

Nov-11

Jan-1

2

Mar-1

2

May-1

2

70

75

80

85

Jul-1

1

Sep

-11

Nov-1

1

Jan-1

2

Mar-1

2

May-1

2

1200

1400

1600

1800

2000

Jul-1

1

Sep-11

Nov-11

Jan-1

2

Mar-1

2

May-1

2

70

80

90

100

110

120

Jul-1

1

Sep-11

Nov-11

Jan-1

2

Mar-1

2

May-1

2

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

Jul-1

1

Sep-11

Nov-11

Jan-1

2

Mar-1

2

May-1

2

2000

2300

2600

2900

Jul-1

1

Sep-11

Nov-11

Jan-1

2

Mar-1

2

May-1

2

1000

1100

1200

1300

1400

1500

Jul-1

1

Sep-11

Nov-11

Jan-1

2

Mar-1

2

May-1

2

Regional Market Focus

26 July 2012

10 of 18

Source: Bloomberg

Major World Indices

JCI 0.22% 4,000.84

HSI -0.14% 18,877.33

KLCI 0.15% 1,635.09

NIKKEI -1.44% 8,365.90

KOSPI -1.37% 1,769.31

SET 0.08% 1,188.62

SHCOMP -0.49% 2,136.15

SENSEX -0.43% 16,846.05

ASX -0.22% 4,123.95

FTSE 100 -0.02% 5,498.32

DOW 0.47% 12,676.05

S&P 500 -0.03% 1,337.89

NASDAQ -0.31% 2,854.24

COLOMBO 0.20% 4,883.88

STI -0.25% 2,990.92

Regional Market Focus

26 July 2012

11 of 18

Singapore

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

FRASER AND NEAVE 8.35 +4.38 +0.350 276,140 IHH HEALTHCARE BHD 1.23 +10.06 +0.112 100,968

IHH HEALTHCARE B 1.23 +10.06 +0.112 122,999 GSH CORP LTD 0.09 -2.20 -0.002 57,272

SINGAP TELECOMM 3.42 -1.16 -0.040 63,250 SINCAP GROUP LTD 0.28 +37.50 +0.075 46,398

DBS GROUP HLDGS 14.51 -0.48 -0.070 58,992 NOBLE GROUP LTD 1.03 -1.44 -0.015 37,914

KEPPEL CORP LTD 10.93 -2.32 -0.260 55,671 JB FOODS LTD 0.37 +7.35 +0.025 36,353

OCBC BANK 9.29 -0.75 -0.070 54,837 FRASER AND NEAVE LTD 8.35 +4.38 +0.350 34,118

GENTING SINGAPOR 1.29 -0.77 -0.010 40,750 GENTING SINGAPORE PLC 1.29 -0.77 -0.010 31,711

NOBLE GROUP LTD 1.03 -1.44 -0.015 38,965 EQUATION CORP LTD 0.01 +7.69 +0.001 31,485

CAPITALAND LTD 2.94 +1.73 +0.050 30,095 GOLDEN AGRI-RESOURCES LTD 0.72 -2.05 -0.015 25,402

UNITED OVERSEAS 19.48 +0.31 +0.060 26,865 HLH GROUP LTD 0.03 +4.00 +0.001 23,726

Hong Kong

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

HSBC HLDGS PLC 62.25 +0.32 +0.20 1,359,263 GOME ELECTRICAL 0.65 -14.47 -0.11 669,163

CHINA MOBILE 87.20 +0.58 +0.50 1,267,654 DEJIN RESOURCES 0.15 +59.14 +0.06 350,692

CHINA CONST BA-H 4.88 +1.46 +0.07 1,196,077 IND & COMM BK-H 4.15 +0.73 +0.03 262,258

CNOOC LTD 14.78 -0.27 -0.04 1,147,311 CHINA CONST BA-H 4.88 +1.46 +0.07 246,904

IND & COMM BK-H 4.15 +0.73 +0.03 1,078,023 GCL-POLY ENERGY 1.15 -6.50 -0.08 192,406

PING AN INSURA-H 59.25 -1.17 -0.70 766,551 SEMICONDUCTOR MA 0.29 +7.41 +0.02 164,274

PETROCHINA CO-H 9.31 -1.17 -0.11 748,310 BANK OF CHINA-H 2.83 +0.35 +0.01 159,030

HUTCHISON WHAMPO 67.30 -1.61 -1.10 656,330 EVERGRANDE REAL 3.48 -5.95 -0.22 140,503

CHINA LIFE INS-H 20.85 +0.24 +0.05 634,064 CHINA TELECOM-H 3.94 +5.07 +0.19 117,436

CHINA UNICOM HON 10.98 +5.58 +0.58 603,501 SOUTH SEA PETROL 0.10 -4.00 -0.00 115,442

Thailand

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

CHAROEN POK FOOD 31.75 -3.05 -1.00 5,107,271 NATION MULTIMEDI 1.46 -3.95 -0.06 380,502

PTT PCL 318.00 -0.93 -3.00 1,523,106 THAI-GERMAN PRO 0.43 -2.27 -0.01 206,414

TOTAL ACCESS COM 84.25 +2.12 +1.75 1,074,264 TEERA-MONGKOL IN 1.71 +0.00 +0.00 158,104

PTT EXPL & PROD 153.00 -1.61 -2.50 1,473,578 NAWARAT PATANAKA 0.81 -2.41 -0.02 31,648

KASIKORNBANK PCL 165.50 +1.85 +3.00 1,110,641 ROYAL CERAMIC 1.42 -8.97 -0.14 302,528

SIAM COMM BK PCL 152.50 +2.35 +3.50 964,441 BANGKOK LAND PCL 0.81 +0.00 +0.00 209,541

ADVANCED INFO 208.00 +1.96 +4.00 769,716 UNION MOSAIC IND 4.82 -3.21 -0.16 127,506

PTT GLOBAL CHEM 57.25 -0.87 -0.50 747,993 JASMINE INTL PCL 3.38 +0.60 +0.02 102,848

INDORAMA VENTURE 29.50 +2.61 +0.75 462,278 SUPERBLOCK PCL 0.99 -1.00 -0.01 100,658

NATION MULTIMEDI 1.46 -3.95 -0.06 577,761 BTS GROUP HOLDIN 0.79 +0.00 +0.00 29,343

Indonesia

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

ASTRA INTERNATIO 6,350 0.00 0.00 342,243 BAKRIELAND DEV 65 0.00 0.00 107,915

BANK RAKYAT INDO 6,350 0.00 0.00 42,708 TRADA MARITIME 890 1.14 10.00 133,109

UNITED TRACTORS 21,150 0.00 0.00 145,299 ENERGI MEGA PERS 130 0.00 0.00 59,105

TELEKOMUNIKASI 8,850 1.14 100.00 152,507 BUKIT ULUWATU VI 460 4.55 20.00 4,096

TRADA MARITIME 890 1.14 10.00 117,009 BUMI RESOURCES M 425 1.19 5.00 46,139

BANK MANDIRI 7,500 1.35 100.00 103,580 BEKASI FAJAR IND 580 1.75 10.00 16,826

PERUSAHAAN GAS N 3,825 1.32 50.00 116,174 SENTUL CITY TBK 220 0.00 0.00 8,460

INDOCEMENT TUNGG 18,900 -1.31 -250.00 107,806 ALAM SUTERA REAL 470 -1.05 -5.00 111,472

INDOFOOD SUKSES 5,400 0.00 0.00 113,058 BAKRIE SUMATERA 179 0.00 0.00 20,599

SEMEN GRESIK TBK 11,850 -1.25 -150.00 31,625 BUMI RESOURCES 1,060 -0.93 -10.00 14,999

Sri Lanka

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

JOHN KEELLS HLDG 177.00 -0.78 -1.40 30,280 FREE LANKA CAPIT 1.90 5.56 0.10 2,975

DFCC BANK 110.00 4.46 4.70 24,238 PCH HOLDINGS LTD 13.60 7.09 0.90 1,243

ODEL PLC 23.00 27.07 4.90 20,263 PIRAMAL GLASS CE 5.20 0.00 0.00 1,095

PCH HOLDINGS LTD 13.60 7.09 0.90 16,234 HVA FOODS LTD 13.50 7.14 0.90 995

CARSON CUMBERBAT 450.00 -2.22 -10.20 14,040 ODEL PLC 23.00 27.07 4.90 947

HVA FOODS LTD 13.50 7.14 0.90 13,171 SMB LEASING PLC 1.00 0.00 0.00 933

COMMERCIAL BK 97.70 0.72 0.70 10,277 SWARNAMAHAL FINA 6.20 0.00 0.00 877

PAN ASIA BANKING 17.00 0.00 0.00 8,577 VALLIBEL POWER 5.00 -1.96 -0.10 700

SEYLAN BNK-NON V 25.50 2.00 0.50 6,303 E-CHANNELLING 4.70 0.00 0.00 591

FREE LANKA CAPIT 1.90 5.56 0.10 5,641 PAN ASIA BANKING 17.00 0.00 0.00 505

Source: Bloomberg

Regional Market Focus

26 July 2012

12 of 18

Australia

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

BHP BILLITON LTD 30.850 -0.26 -0.08 493,092 TELSTRA CORP LTD 3.890 0.78 0.03 38,028

NATL AUST BANK 23.820 0.68 0.16 159,947 ALUMINA LTD 0.640 -3.03 -0.02 36,802

COMMONW BK AUSTR 54.860 0.15 0.08 155,947 TITAN ENERGY LTD 0.016 0.00 0.00 29,356

RIO TINTO LTD 51.010 -1.45 -0.75 174,454 STRAITS RESOURCES LTD 0.235 -7.84 -0.02 24,459

WESTPAC BANKING 22.450 -0.75 -0.17 152,656 FORTESCUE METALS GROUP 4.110 1.73 0.07 23,990

TELSTRA CORP 3.890 0.78 0.03 147,292 BEACH ENERGY LTD 1.090 6.34 0.07 21,820

NEWCREST MINING 22.150 4.58 0.97 114,805 BHP BILLITON LTD 30.850 -0.26 -0.08 16,016

FORTESCUE METALS 4.110 1.73 0.07 97,936 LYNAS CORP LTD 0.795 -1.24 -0.01 15,538

AUST AND NZ BANK 22.640 -0.48 -0.11 80,238 ARRIUM LTD 0.765 -4.38 -0.04 14,646

WESFARMERS LTD 31.980 -0.74 -0.24 77,931 BILLABONG INTERNATIONAL 1.320 0.38 0.01 14,373

Source: Bloomberg

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

GOLD SPOT (US$/OZ) -0.06 -0.90 1,604.45 0.7729 1.0284

SILVER SPOT (US$/OZ) -0.13 -0.04 27.36 0.8090 1.0177

WTI Cushing Crude Oil Spot Price (US$/bbl) +0.58 +0.51 88.79 0.6556 1.2126

0.5134 1.5482

0.7949 1.0000

Commodities % Chg Chg Last 5.0790 6.3896

Malaysian Rubber Board Standard (MYR/kg) +0.17 +1.50 885.50 6.1669 7.7585

PALM OIL (MYR/Metric Tonne) -1.37 -40.50 2,906.50 62.1800 78.2200

914.2607 1150.1400

Index % Chg Chg Last 2.5235 3.1759

DOLLAR INDEX SPOT -0.57 -0.48 83.52 25.1431 31.6300

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 0.08 0.07 0.07 0.06

6 Months 0.13 0.12 0.12 0.13

2 Years 0.21 0.21 0.22 0.29

3 Years 0.28 0.27 0.30 0.39

5 Years 0.55 0.54 0.60 0.70

10 Years 1.40 1.39 1.49 1.60

30 Years 2.45 2.45 2.59 2.67

Yield Spread (10 yrs - 3 mths)

Yield Spread (10 yrs - 2 yrs)

US Treasury Yields

1.32

1.19

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

Regional Market Focus

26 July 2012

13 of 18

Date Statistic For Survey Prior Date Statistic For Survey Prior

7/26/2012 Durable Goods Orders Jun 0.30% 1.10% 7/26/2012 Industrial Production MoM SA Jun -0.80% 1.80%

7/26/2012 Durables Ex Transportation Jun 0.10% 0.40% 7/26/2012 Industrial Production YoY Jun 2.80% 6.60%

7/26/2012 Cap Goods Orders Nondef Ex Air Jun 0.10% 1.60% 7/31/2012 Credit Card Bad Debts Jun -- 16.4M

7/26/2012 Cap Goods Ship Nondef Ex Air Jun 0.60% 0.40% 7/31/2012 Credit Card Billings Jun -- 3250.8M

7/26/2012 Initial Jobless Claims 21-Jul 380K 386K 7/31/2012 Bank Loans & Advances (YoY) Jun -- 22.50%

7/26/2012 Continuing Claims 14-Jul 3300K 3314K 7/31/2012 M1 Money Supply (YoY) Jun -- 7.40%

7/26/2012 Bloomberg Consumer Comfort 22-Jul -- -37.9 7/31/2012 M2 Money Supply (YoY) Jun -- 6.70%

7/26/2012 Pending Home Sales MoM Jun 0.30% 5.90% 7/31/2012 Unemployment Rate (sa) 2Q P -- 2.10%

7/26/2012 Pending Home Sales YoY Jun 12.10% 15.30% 8/1/2012 Electronics Sector Index Jul -- 50.4

7/26/2012 Kansas City Fed Manf. Activity Jul 4 3 8/1/2012 Purchasing Managers Index Jul -- 50.4

7/27/2012 GDP QoQ (Annualized) 2Q A 1.40% 1.90% 8/7/2012 Foreign Reserves Jul -- $243.38B

7/27/2012 Personal Consumption 2Q A 1.30% 2.50% 8/8/2012 Automobile COE Open Bid Cat A 8-Aug -- 68656

7/27/2012 GDP Price Index 2Q A 1.50% 2.00% 8/8/2012 Automobile COE Open Bid Cat B 8-Aug -- 90501

7/27/2012 Core PCE QoQ 2Q A 1.80% 2.30% 8/8/2012 Automobile COE Open Bid Cat E 8-Aug -- 92700

7/27/2012 U. of Michigan Confidence Jul F 72 72 11-24 AUG GDP (annualized) (QoQ) 2Q F -- -1.10%

Date Statistic For Survey Prior Date Statistic For Survey Prior

7/27/2012 Foreign Reserves 20-Jul -- $174.7B 7/31/2012 Money Supply M1 - in HK$ (YoY) Jun -- 3.80%

7/27/2012 Forw ard Contracts 20-Jul -- $29.5B 7/31/2012 Money Supply M2 - in HK$ (YoY) Jun -- 4.60%

7/27/2012 Total Capacity Utilization ISIC Jun -- 75.9 7/31/2012 Money Supply M3 - in HK$ (YoY) Jun -- 4.50%

7/27/2012Mfg. Production Index ISIC NSA

(YoY)Jun -0.8 5.53 7/31/2012 Govt Mthly Budget Surp/Def HK$ Jun -- -9.4B

7/27/2012 Mfg. Production Index ISIC SA Jun -- 190.21 8/2/2012 Retail Sales - Value (YoY) Jun -- 8.80%

7/31/2012 Total Exports YOY% Jun -- 6.70% 8/2/2012 Retail Sales - Volume (YoY) Jun -- 5.80%

7/31/2012 Total Exports in US$ Million Jun -- $20549M 8/3/2012 Purchasing Managers Index Jul -- 49.8

7/31/2012 Total Imports YOY% Jun -- 16.80% 8/7/2012 Foreign Currency Reserves Jul -- $294.9B

7/31/2012 Total Imports in US$ Million Jun -- $19975M 8/10/2012 GDP (YoY) 2Q -- 0.40%

7/31/2012 Total Trade Balance Jun -- $574M 8/10/2012 GDP sa (QoQ) 2Q -- 0.40%

7/31/2012 Current Account Balance (USD) Jun -- -$1540M 8/16/2012 Unemployment Rate SA Jul -- 3.20%

7/31/2012 Overall Balance in US$ Million Jun -- -$2774M 8/17/2012 Composite Interest Rate Jul -- 0.42%

7/31/2012 Business Sentiment Index Jun -- 53.8 8/21/2012 CPI - Composite Index (YoY) Jul -- 3.70%

8/1/2012 Consumer Price Index (YoY) Jul -- 2.56% 8/28/2012 Exports YoY% Jul -- -4.80%

8/1/2012 Consumer Price Index NSA (MoM) Jul -- 0.16% 8/28/2012 Imports YoY% Jul -- -2.90%

Source: Bloomberg Source: Bloomberg

Source: Bloomberg

Thailand Hong Kong

US Singapore

Economic Announcement

Source: Bloomberg

Regional Market Focus

26 July 2012

14 of 18

Date Statistic For Survey Prior Date Statistic For Survey Prior

8/1/2012Indonesia July Markit

Manufacturing PMI7/31/2012 CPI Moving Average (YoY) Jul -- 5.80%

8/1/2012 Inflation (YoY) Jul -- 4.53% 7/31/2012 CPI (YoY) Jul -- 9.30%

8/1/2012 Inflation NSA (MoM) Jul -- 0.62% 8/7/2012 Repurchase Rate 7-Aug -- 7.75%

8/1/2012 Core Inflation (YoY) Jul -- 4.15% 8/7/2012 Reverse Repo Rate 7-Aug -- 9.75%

8/1/2012 Exports (YoY) Jun -- -8.50% 09-20 AUG Exports YoY% Jun -- -15.10%

8/1/2012 Total Imports (YoY) Jun -- 16.10% 09-20 AUG Imports YoY% Jun -- -6.40%

8/1/2012 Total Trade Balance Jun -- -$486M 8/30/2012 CPI Moving Average (YoY) Aug -- --

8/1/2012 Consumer Confidence Index Jul -- 114.4 8/30/2012 CPI (YoY) Aug -- --

01-07 AUG Danareksa Consumer Confidence Jul -- 92.4 10-20 SEP Exports YoY% Jul -- --

03-06 AUG Foreign Reserves Jul -- $106.50B 10-20 SEP Imports YoY% Jul -- --

03-06 AUG Net Foreign Assets (IDR Tln) Jul -- 968.45T 14-28 SEP GDP (YoY) 2Q -- 7.90%

8/6/2012 GDP Constant Price (YoY) 2Q -- 6.30% 9/18/2012 Repurchase Rate 18-Sep -- --

8/6/2012 GDP Constant Price (QoQ) 2Q -- 1.40% 9/18/2012 Reverse Repo Rate 18-Sep -- --

07-13 AUG Money Supply - M1 (YoY) Jun -- 22.50% 9/28/2012 CPI Moving Average (YoY) Sep -- --

07-13 AUG Money Supply - M2 (YoY) Jun -- 20.90% 9/28/2012 CPI (YoY) Sep -- --

Date Statistic For Survey Prior

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%

8/1/2012 House Price Index YoY 2Q -- -4.50%

8/1/2012 RBA Commodity Price Index Au Jul -- 97.5

8/1/2012RBA Commodity Index SDR

YoY%Jul -- -10.50%

8/1/2012 RPData-Rismark House PX Actual Jul -- 1.00%

8/2/2012 Trade Balance Jun -- -285M

8/2/2012 Retail Sales s.a. (MoM) Jun -- 0.50%

8/2/2012 Retail Sales Ex Inflation(QoQ) 2Q -- 1.80%

8/3/2012 AiG Performance of Service Jul -- 48.8

Australia

Sri Lanka

Source: Bloomberg

Source: Bloomberg

Source: Bloomberg

Indonesia

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

GENERAL DISCLAIMER

This publication is prepared by Phillip Securities (Hong Kong) Ltd (“Phillip Securities”). By receiving or reading this

publication, you agree to be bound by the terms and limitations set out below.

This publication shall not be reproduced in whole or in part, distributed or published by you for any purpose. Phillip

Securities shall not be liable for any direct or consequential loss arising from any use of material contained in this

publication.

The information contained in this publication has been obtained from public sources which Phillip Securities has no reason

to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”)

contained in this publication are based on such information and are expressions of belief only. Phillip Securities has not

verified this information and no representation or warranty, express or implied, is made that such information or Research

is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in this

publication is subject to change, and Phillip Securities shall not have any responsibility to maintain the information or

Research made available or to supply any corrections, updates or releases in connection therewith. In no event will Phillip

Securities be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of

the information or Research made available, even if it has been advised of the possibility of such damages.

Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this material are as of the date

indicated and are subject to change at any time without prior notice.

This material is intended for general circulation only and does not take into account the specific investment objectives,

financial situation or particular needs of any particular person. The products mentioned in this material may not be suitable

for all investors and a person receiving or reading this material should seek advice from a financial adviser regarding the

suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of

that person, before making a commitment to invest in any of such products.

This publication should not be relied upon as authoritative without further being subject to the recipient’s own independent

verification and exercise of judgment. The fact that this publication has been made available constitutes neither a

recommendation to enter into a particular transaction nor a representation that any product described in this material is

suitable or appropriate for the recipient. Recipients should be aware that many of the products which may be described in

this publication involve significant risks and may not be suitable for all investors, and that any decision to enter into

transactions involving such products should not be made unless all such risks are understood and an independent

determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein

with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.

Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of a security. Any decision to

purchase securities mentioned in this research should take into account existing public information, including any

registered prospectus in respect of such security.

Disclosure of Interest

Analyst Disclosure: Neither the analyst(s) preparing this report nor his associate has any financial interest in or serves as

an officer of the listed corporation covered in this report.

Firm’s Disclosure: Phillip Securities does not have any investment banking relationship with the listed corporation covered

in this report nor any financial interest of 1% or more of the market capitalization in the listed corporation. In addition, no

executive staff of Phillip Securities serves as an officer of the listed corporation.

Phillip Securities (HK)Phillip Securities (HK)Phillip Securities (HK)Phillip Securities (HK) Ltd Ltd Ltd Ltd

2

Availability

The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or

entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the

applicable law or regulation or which would subject Phillip Securities to any registration or licensing or other requirement,

or penalty for contravention of such requirements within such jurisdiction.

© 2011 Phillip Securities (Hong Kong) Limited

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

UNITED KINGDOM King & Shaxson Ltd

6th Floor, Candlewick House

120 Cannon Street London EC4N 6AS

Tel : (44) 207 426 5950 Fax : (44) 207 626 1757

Website : www.kingandshaxson.com