MCI (P) 194/11/2012 Ref No: RM2013_0158 1 of 16

Regional Market Focus

Phillip Securities Research Pte Ltd

20 August 2013

Hong Kong

China Merchants Bank (3968HK3968-20130820.pdf.HK) – Better-than-expected profit growth with increased risks of asset quality Closing price: HKD14.42 Target price: HKD17.79

The income and the net margin in the first half of 2013 of Anton Oilfields increased by 31% and 28% year-on-year respectively and reached to 1060 million yuan and 170 million yuan and this growth is lower than the data at the same period of 2012 and also slightly lower than our financial forecasting. In the first half year, although the company's year-on-year growth ratio of the number of completed service is only 10%, the company keeps the excellent profitability by introducing various advanced technologies.

According to CMB’s 1H2013 result announced last week, it maintained stable profit growth that accumulate net profits achieved to RMB26.271 billion, up 12.39% y-y, equivalent to the EPS of RMB1.22 with the year-on-year growth rate of 12.96%,slightly higher than our expectation;

The main reasons of profit growth are not only the stable increase of interest income but also the strong growth of intermediate business income. As at the end of June, the Group’s net commission fee increased largely by 45.5% y-y to RMB14.164 billion, around 10.7% higher than our estimation for Bloomberg;

After the large growth as high as 22% in 2012, the asset growth of CMB started to slow down in 1H2013. However, the growth rate of total asset in 2Q was much higher than 1Q’s 3.09% due to the strong increase of investment assets such as amounts held under resale agreements. As at the end of June, the Group’s total assets increased by 11.81% to RMB3.81 trillion compared with the end of 2012, with net assets of RMB212.343 billion, slightly lower than that of 1Q, equivalent to the BVPS of RMB9.84, 6% higher than that of 2012;

We concern about the quality of loans, and it showed that there was the deterioration of CMB’s asset quality with the consistent increase of both amount and ratio of NPLs since 3Q2012. As at the end of 2Q2013, the Group’s NPL ratio up 0.1ppts to 0.71% compared with the end of 2012, with the amount of RMB14.925 billion, increased by RMB3.231 billion. Meanwhile, the converge ratio dropped 47.07ppts to 304.72%;

CMB has large capital pressure with the lower CAR compared with the peers. By the end of 2Q, the Tier 1 Ratio and CAR of CMB recorded to 8.0% and 10.72%, down 0.34 and 0.69ppts respectively compared with the end of 2012. To ease the capital pressure, CMB announced a new financing plan last week that the application of the Group’s Rights Issue in H Shares had been approved by the CSRC that CMB could issue no more than 680 million overseas foreign rights shares, all being ordinary shares, to the holders of such shares. With the other Rights Issue in A Shares, CMB will fund RMB35 billion in A+H Shares this time to increase the capital. We believe the Tier-1 Ratio will be increased by 1.8ppts by the end of this year if the financing plan will be completed within 2H;

In all, the profit performance of CMB maintains stable, and we concern about its asset quality and the CAR in future. We believe CMB’s operation now starts enter the mature stage, and the profit growth will be slowed down continually in future. However, we still hold confidence in CMB’s competitive business model and brand influence, based on 3-stage DDM, we cut its 12-m TP to HK$17.79, 23.4% higher than the latest closing price, equivalent to 9.2xP/E and P/B2.1x in 2014 respectively, and we maintain Buy rating.

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Thailand

Shin corporation - Trade Flash Recommendation: BUY Previous close: Bt45.75 Fair value: Bt97

INTUCH registered the first-half net profit of Bt7,700.67mn, up 9.87% y-y. The company announced to pay an interim dividend of Bt2.37/share for 1HCY13 performance. The stock will go ex-dividend on Aug 22 and payment on Sep 10.

We project CY13 net profit to grow 23.95% y-y to Bt17,090mn.

We rate INTUCH a ‘BUY’ with an NAV target price of Bt97/share. Supalai - Company Results Recommendation: BUY Previous close: Bt15 Fair value: Bt23.40

SPALI’s 2QCY13 results came in weaker than expected.

Earnings momentum appears to be strong in the second half of year as revenue backlog to be recognized remains elevated.

We maintain a ‘BUY’ rating on SPALI with a target price of Bt23.40/share. Sri Trang Agro-Industry - Company Results Recommendation: BUY Previous close: Bt14.10 Fair value: Bt16.40

STA swung to a net profit of Bt308mn in 2QCY13 from a net loss of Bt401mn in 2QCY12.

We cut back our CY13 pre-exceptional earnings outlook for STA but huge ex-items are expected to drive CY13 net profit higher CY12.

Management sticks to its capacity expansion plan in terms of TSR plant and rubber plantation to accommodate future growth.

We reiterate a ‘BUY’ call on STA with a Bt16.40/share target price. Minor International – Company Results Recommendation: BUY Previous close: Bt23.00 Fair value: Bt29.00

MINT posted a 23.3% y-y rise in 2QCY13 net profit to Bt429.17mn driven by a solid growth in restaurant business, which reported the strongest sales growth among all businesses of 15.4% y-y.

The number of food outlets to be opened in 2HCY13 will be higher than in 1HCY13. In hotel business, occupancy rate and average RevPar look set to remain on the rise in 2HCY13 on the back of rising tourist numbers. In real estate business, another 11% of total sellable area of the St. Regis Residences is scheduled to be realized as revenue in 2HCY13. The portfolio of hotel properties under management contracts would expand further in 2HCY13.

We leave our CY13 earnings view for MINT unchanged. We call MINT shares a ‘BUY’ with a Bt29/share target price

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Strategy

SECTOR/STRATEGY REPORTS: - Sector Reports: Banking, 8 Jul / Telecommunications, 5 June / Commodities, 29 May / Offshore & Marine, 27 May - Country Strategy: China & HK 5 July / S’pore, 18 Jun / Thai, 17 Jun - Global Macro, Asset Strategy: 8 Jul, Update

Morning Commentary

STI: -0.76% to 3173.3 KLCI: -0.55% to 1778.4 JCI: -5.58% to 4313.5 SET: -3.27% to 1398.5 HSI: -0.24% to 22463 HSCEI: -0.21% to 10199 Nikkei: +0.79% to 13758 ASX200: -0.03% to 5112.5 S&P500: -0.59% to 1646.1 Nifty: -1.69% to 5414.8 MARKET OUTLOOK: This week’s webinar re-iterates that a correction in equities is underway, in line with our warning in last Monday’s webinar and last Friday’s morning commentary. Still, we expect this to be a near term correction and that the larger uptrend re-assert itself at some point. We will flag clients when we think that will be in our morning commentary and Monday webinars. The webinar can be viewed in our archive at http://www.uniphillip.com/ > Education Programs > Phillip Securities Research Webinar (PhillipCFDs and ETFs for trading the market outlook can be found in the webinar slides above or the Global Macro report below. PhillipUT Wrap Account offers tactical asset allocation of unit trusts without front loading sales charge.)

Macro Data

Japan exports rose by 12.2% y-y in July, slightly trailing the market expected 12.8% y-y pace but improved over the 7.4% y-y gain in June. Imports rose significantly by by 19.6% y-y in July, beating the market expected 16% y-y growth, compared to the 11.8% y-y gain in June. The weak yen is expected to continue bolstering the nation's exports. Source: Phillip Securities Research Pte Ltd

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Singapore The Straits Times Index (STI) ended 24.20 points lower or -0.76% to 3,173.33,

taking the year-to-date performance to +0.20%. The outperforming sectors today were represented by the FTSE ST

Telecommunications Index which gained +0.71%. The two biggest stocks of the FTSE ST Telecommunications Index are SingTel (+0.81%) and StarHub (+0.48%). The underperforming sector was the FTSE ST Industrials Index, which declined -2.28% with Jardine Matheson Holdings and Jardine Strategic Holdings posting declines of -4.44% and -5.33% respectively. The FTSE ST Health Care Index declined -1.21%.

The STI may face continued pressure on the back of continued concerns over potential tapering of QE.

We peg near-term support at 3,100, while downward pressure is expected to continue from current levels.

Top picks for the year are Pan United (Accumulate, TP: S$1.27), SGX (Buy, TP: S$8.30) & Keppel Corp (Accumulate, TP: S$12.25).

Close +/- % +/-FSSTI 3173.33 -24.20 -0.76P/E (x) 13.06P/Bv (x) 1.40

3.27Dividend Yield

STRAITS TIMES INDEX

2500

2700

2900

3100

3300

3500

3700

8/21 11/21 2/21 5/21

Source: Bloomberg

Thailand The composite SET index lost as much as 47.28 points on Mon after data

showed the Thai economy unexpectedly slipped into mild recession in 2Q13 and the NESDB slashed its 2013 GDP growth forecast for the country to 3.8%-4.3% and concerns about a possible QE tapering in the US also added to market nervousness.

The market lacked strong positive triggers for an upmove while overseas markets remained focused on the timing of a possible QE tapering in the US, which could possibly take place this Sep at the soonest and Thai GDP miss helped accelerate the pace of net foreign selling in the Thai stock market to the tune of more than Bt3.6bn on Mon. Foreign investors also held a net short position of more than 1.7k contracts in derivatives market.

Local politics will be another factor to watch, especially the controversies about the 2014 fiscal budget bill, the Bt2trn infrastructure loan bill and charter amendment bill.

If the SET index fails to hold above a key psychological level of 1400 points, we advise investors to scale back equity exposure to 25% of the portfolio and play wait and see. Even though yesterday’s sharp tumble could set the stage for an intraday bounce, we think it may be best to wait until the main index can break above 1420 points.

Resistance for the SET index is pegged at 1400-1420 and support at 1375-1350 today.

Close +/- % +/-SET INDEX 1398.48 -47.28 -3.27P/E (x) 15.41P/Bv (x) 2.21

3.11Dividend Yield

STOCK EXCH OF THAI INDEX

900

1000

1100

1200

1300

1400

1500

1600

1700

8/20 11/20 2/20 5/20

Source: Bloomberg

Regional Market Focus

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Indonesia

The Jakarta Composite Index (JCI) sharply declined Monday (19/08), amid fear that the Rupiah may further weaken if the US Federal Reserve begin its bond purchase tapering as soon as September, and as data showed widening current account deficit in the second quarter. The JCI plunged 5.58%, or 255.136 points, to end at 4,313.518. The sharp drop on Monday included all nine major industry groups, led by basic industry sector with the steepest fall of 7.46%, followed by construction, property and real estate sector with 6.38%-loss, and finance sector with 6.34%-decline. LQ45, the index trailing Indonesia’s blue-chip stocks, off 50.772 points, or 6.69%, to 708.085. The steep decline in stocks on Monday occurred amid investors’ sell-offs after data from Bank Indonesia showed current account deficit in the second quarter widened to USD 9.8 billion, or 4.4% of the GDP for the quarter. The Rupiah fell to 10,495 against the US dollar on Monday, and the yield on 10-year notes rose to 8.37%, the highest seen since March 2011. But Bank Indonesia said that pressure on the country's current account deficit will ease in the second half of the year due to an improvement in the financial and capital account. Decliners outran gainers 292 to 20 Monday on the Indonesia Stock Exchange, where 3.91 billion shares worth IDR 5.99 trillion changed hands on the regular market. Foreign investors’ transactions accumulated to a total net sale of IDR 1.78 trillion.

Indonesian stocks may further decline today, as global stock markets remained bearish at large, amid speculations that the US Federal Reserve may taper its bond purchase as soon as next month. On the upside, however, investors may look for bargain blue-chip stocks after a steep drop yesterday. We expect the JCI to trade in negative territory today, with support and resistance at 4,160 and 4,613, respectively.

Close +/- % +/-JCI Index 4313.52 -255.14 -5.58P/E (x) 17.72P/Bv (x) 2.55

2.31Dividend Yield

JAKARTA COMPOSITE INDEX

3400

3900

4400

4900

5400

8/23 11/23 2/23 5/23

Source: Bloomberg

Sri Lanka The Market witnessed a slight drop during the day ending its four consecutive

days rally, resulting in the indices to conclude on a mixed note; this was mainly due to the inactive participation of the investors which prevailed on most parts of the trading day. Having gathered a total of 102.97 points (1.67%) during the past 4 trading days, the ASPI index closed 8.87 points (or -0.14%) lower at 6,224.34. However, the S&P SL20 managed to breathe in within the green terrain at 3,494.18 gaining a tiny 2.63 points or 0.08%. As at the daily closure the total market capitalization stood at LKR 2.56Tn, indicating a year to date gain of 18.27%. The market PER and PBV stood at 17.63 and 2.37 respectively. The daily turnover of LKR 1.13Bn was predominantly supported by 2 negotiated transactions worth LKR 872.81Mn accounting a share of nearly 80%; the daily turnover noted an increase of 89.64% against the previous trading day. With regard to the sectorial contribution, Bank Finance & Insurance (BFI) sector topped the list providing LKR 904.45Mn; the sector witnessed considerable investor interest logging 939 trades, hence resulting in a total volume of 15.54Mn shares being traded. Diversified Holdings (DIV) sector also performed well adding LKR 91.41Mn to the turnover. The two sectors BFI & DIV accounted to almost 90% of the aggregate turnover for the day. A total of 27.20Mn shares were traded within the day. Price losers outstripped the price gainers by 110:64. Foreign participants appeared to be bullish during the day for the fourth consecutive trading day, resulting in a net foreign inflow of LKR 849.31Mn; foreign purchases for the day amounted to LKR 956.06Mn and selling amounted to LKR 106.75Mn. Moreover, this pushed the year to date net foreign inflow (LKR 18.18Bn) above the LKR 18Bn mark for the first time during the year. As at the daily closure, the USD stood at LKR 133.25/- selling & LKR 130.05/- buying.

Close +/- % +/-CSEALL Index 6224.34 -8.87 -0.14P/E (x) 12.38P/Bv (x) 1.68

2.55

Dividend Yield

SRI LANKA COLOMBO ALL SH

4500

5000

5500

6000

6500

7000

8/20 11/20 2/20 5/20

Source: Bloomberg

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Australia The Australian share market on Monday moved lower with CBA and TLS going

ex-dividend. The benchmark S&P/ASX200 index was 1.4 points, or 0.03 per cent lower to 5,112.5.

Today (20/08/13), the Australian market looks set to open lower after Wall Street continued its downward trend on mediocre economic news and higher bond yields.

In economic news on Tuesday, the Reserve Bank of Australia is due to release the minutes of its monthly board meeting. The Australian Bureau of Statistics releases the International merchandise import figures for July, while the Commonwealth Bank business sales indicator for July is also due out.

In equities news, BHP Billiton, Arrium, QBE, Ansell, Tassal Group, Commonwealth Property Office Fund and Sonic Healthcare are among the companies expected to post full year results, while Oil Search, Invocare and Coca-Cola Amatil are slated to release first half results. The National Australia Bank is scheduled to give its third quarter trading update.

Close +/- % +/-S&P/ASX 200 INDEX 5112.53 -1.33 -0.03P/E (x) 23.05P/Bv (x) 2.01

5.71

STANDARD & POORS/ ASX 200 INDEX

Dividend Yield

3800

4000

4200

4400

4600

4800

5000

5200

5400

8/20 11/20 2/20 5/20

Source: Bloomberg

Hong Kong

HSI dropped 54 points or 0.24% to 22,643. CEI lost 21 points or 0.21% to 10,199. Trading volume reduced to HKD44.307 billion only.

Due to concerns of adjustment of national electricity price in Oct, Huaneng Power (902.HK), Huadian Power (1071.HK) and China Power (2380.HK) lost 9.4%, 7.8% and 7.7% respectively.

State Council released “Broadband China” strategy and implementation plan, China Fiber Optic (3777.HK) and O-Net Comm GP (877.HK) gained 15.4% and 14.3% respectively.

UBS quoted saying by AAC Tech’s management that AAC Tech’s 3Q sales is expected to have close to double-digit growth only, trailed market estimates. AAC Tech (2018.HK) dropped 7.8%.

Technically, next resistance and support will be at 22,800 and 22,238 respectively.

Close +/- % +/-HSI INDEX 22463.70 -54.11 -0.24P/E (x) 10.43P/Bv (x) 1.43

3.35Dividend Yield

HANG SENG INDEX

17000

18000

19000

20000

21000

22000

23000

24000

25000

8/20 11/20 2/20 5/20

Source: Bloomberg

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Market News

US U.S. stocks fell, giving the Standard & Poor’s 500 Index its first four-day decline of the year, after energy shares dropped and Treasury

yields jumped to a two-year high as investors awaited signals this week on the Federal Reserve’s stimulus plans. Apache Corp. (APA) tumbled 4.6 percent, leading energy stocks to the biggest decline among 10 groups in the S&P 500 as crude prices fell. Exxon Mobil Corp. (XOM) dropped for the 18th time in 19 days. Intel Corp. gained 1.7 percent after Piper Jaffray Cos. raised its rating on the shares. Edwards Group (EVAC) Ltd. surged 18 percent after Atlas Copco AB agreed to buy the company for $1.2 billion. The S&P 500 dropped 0.6 percent to 1,646.06 at 4 p.m. in New York, the lowest level since July 8. The Dow Jones Industrial Average slipped 70.73 points, or 0.5 percent, to 15,010.74. About 5.3 billion shares exchanged hands on U.S. exchanges today, 16 percent below the three-month average. The benchmark 10-year yield jumped to 2.88 percent. (Source: Bloomberg)

Investors are favoring U.S. stocks over emerging markets by the most ever as fund flows and volatility measures show institutions are

increasingly seeking the relative safety of American equities. Almost $95 billion was poured into exchange-traded funds of American shares this year, while developing-nation ETFs saw withdrawals of $8.4 billion, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index (SPX) trades at 16 times profit, 70 percent more than the MSCI Emerging Markets Index. A measure of historical price swings indicates the U.S. market is the calmest in more than six years compared with shares from China, Brazil, India and Russia. Cash is draining from emerging-market ETFs and flowing into U.S. stock funds at the fastest rate on record as bulls say an unprecedented third year of higher earnings growth will support the S&P 500 even as the Federal Reserve begins to remove stimulus. Developing-nation investors say the ETFs will lure more cash after equity valuations reached a four-year low. (Source: Bloomberg)

Singapore FORMER property developer China Mining International's mandate to pursue metal mining businesses in China has been given a new

lease of life, with a reverse takeover (RTO) set to transform the firm into a pure mining company. The proposed RTO will see a firm called China Geological Exploration Holdings (CGE) inject some of its mining assets into China Mining International in a friendly deal. CGE is fully owned by the Geo-exploration and Mineral Development Bureau of the Henan province, a government bureau responsible for resource mining and exploration activities in both China and overseas. The bureau holds about 200 licences to mining concessions in China, and 96 licences in over 20 other countries, its deputy director, Wang Jian Ping, told reporters on Monday. (Source: Business Times)

IN a move that might broaden retail participation in the market, the Singapore Exchange (SGX) is proposing to reduce the standard size

of securities traded from 1,000 units to 100 units and one unit eventually. In a briefing this afternoon, SGX head of securities Nels Friets said this will enable retail investors with a limited amount of money to diversify into blue chips. The change to a lot size of 100 units is targeted to be implemented in the first quarter of next year. For example, the minimum investment required to buy one lot of UOB shares is currently S$21,440, or 1,000 x S$21.44 a share, before commissions and other costs. With the change to a lot size of 100 units, investors will now need to commit only S$2,144 per lot. (Source: Business Times)

Thailand The Bank of Thailand said Thailand only slipped into a technical recession in the second quarter of 2013 after the unusually strong

growth in the fourth quarter of 2012. What remains to be seen is how much the government’s consumption-boosting measures and public investments will provide a boost to the overall economy. (Source: Krungthep Turakij)

Kasikorn Research Center expects Thailand’s economy to grow by 4.5% next year from an estimated 4% this year after the global economy shows signs of a recovery in the second half of this year. (Source: Krungthep Turakij)

The National Economic and Social Development Board (NESDB) cut its 2013 GDP growth forecast for Thailand to 3.8%-4.3% from a previous estimate of 4.2%-5.2%, citing delays in government’s investment projects and domestic political instability. The NESDB also slashed its 2013 export growth target to 5.0% from 7.6%. (Source: Krungthep Turakij)

The Bank of Thailand said a mild GDP contraction in the second quarter of this year reported by the NESDB was in line with the central bank’s forecast and economic growth may be weak going forward. (Source: Post Today)

The digital TV auction will be delayed to Dec 2013 or Jan 2014 to ensure the process runs smoothly, says Col Natee Sukonrat, chairman of the National Broadcasting and Telecommunications Commission's broadcasting committee. He expects digital TV will start broadcasting around Feb or Mar next year, later than the previous expected date of Dec 5. The information of memorandum (IM) for the auction will be announced on Aug 27and the regulator will clarify some doubtful IM details to potential bidders on Sep 3. The auction document costing Bt1mn will be sold from Sep 10-12 and the NBTC will explain details about it on Oct 15. The NBTC will open applications from Oct 28-29 and will announce qualified applicants within 45 days. The auction will be held within 30 days and the regulator will announce the certification of the auction within 15 days. (Source: Bangkok Post)

Indonesia President Susilo Bambang Yudhoyono set out the national budget on Friday and announced that the government has projected 6.4

percent economic growth for 2014. The government set growth at 6.8 percent economic growth in the 2013 State Budget, but revised expectations down to 6.3 percent in June’s revised budget. Next year’s inflation target has been marked at 4.5 percent, while the rupiah is projected to trade at an average IDR 9,750 against the US dollar. The three-month treasury bill (SPN) was expected to stand at 5.5 percent. Oil production, meanwhile, is expected to be 870,000 barrels per day, while natural gas extraction has been pitched at 1,240,000 barrels of oil equivalent per day. (Source: Jakarta Globe)

The government is optimistic that Indonesia will still flooded with the flow of foreign capital if the Federal Reserve, the Fed, does the

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tapering of Quantitative Easing (QE) in September 2013. The Minister of Finance said that the reduction of US QE will be faced by improving the investment climate and macroeconomic stability. Tapering of QE will affect capital flows that will come out both in form of foreign direct investment (FDI) and portfolio so that to face this condition, the government set up a policy. On the policy, the most important is to maintain a stable macro and make the investment climate attractive again. (Source: Indonesia Finance Today)

Sri Lanka Credit to the state spiked in June 2013 to 36.7 billion rupees, up from only 5.7 billion in May, crowding out loans to private citizens to 11.5

billion rupees from 18.3 billion a month earlier. Credit to the central government rose to 1,259.1 billion rupees in June, up 24.6 percent from a year earlier, picking up pace from 19.3 percent in May. Borrowings from local currency books rose to 883.3 billion rupees, up from 845.7 billion rupees. Credit to state enterprises rose to 338.9 billion rupees up 5.7 billion rupees from May but June also saw some currency depreciation and two thirds of SOE credit is FOREX denominated. SOE credit was up 23 percent in June from a year earlier, slowing from 24.9 percent a month earlier. Credit to private enterprises rose 11.5 billion rupees to 2,433.0 billion rupees and was up 8.9 percent, slowing from 9.3 percent a month earlier. (Source: lankabusinessonline.com)

A low inflation level maintained by Sri Lanka's central bank is likely to support its credit rating in the future. Sri Lanka's inflation eased to

6.1 percent in the 12 months to July from after spiking to 9.8 percent in February following a steep depreciation of the currency over the past 12 months. That inflation had been kept at single digits for 4.5 years and from next year a mid-single digit inflation of 4-6 percent will be targeted. Sri Lanka has a 'B+' rating, four levels below investment grade from S&P. Sri Lanka is planning to reach investment grade or at least 'BBB-' in the next three to four years. Exchange rate flexibility will also help improve, the rating. Sri Lanka fiscal side was still weak with about 70 percent debt to gross domestic product ratio and the tax base was narrow and expenditure inflexible, But S&P expects tighter fiscal policy in the future, and higher economic growth to help reduce the debt. A lower inflation target is likely bring greater stability to the economy. (Source: lankabusinessonline.com)

Australia National Australia Bank has posted a rise in third quarter cash profit to $1.5 billion, driven by its lower bad debts in its troubled British

division and gains in retail banking. Rounding out results from the banks, NAB today posted cash earnings, in line with expectations and up 2 per cent on the quarterly average in the first half. (Source: The Australian)

Coca-Cola's Australian distributor said today a soft drinks price war had taken the shine off its first-half earnings, with little sign of a return

to growth over the rest of the year. CCA, 29 per cent-owned by the US beverage giant, said its net profit for the six months through June fell 12.3 per cent to $215.9 million. The result was dragged down by a 10 per cent slide in Australian beverage earnings following a costly discounting war with Pepsi Co. (Source: The Australian)

The corporate regulator will today announce a crackdown on the $18 billion boom in "hybrid" financial instruments, which the Australian

Securities & Investments Commission is concerned poses an increased risk in superannuation portfolios, particularly the $450bn self-managed super funds sector. Melbourne-based ASIC commissioner John Price will sound a warning today to buyers that hybrid investments are being mislabelled as a safe form of investment almost like bank deposits, but they are as risky as traditional share investments, where prices can fluctuate and so investors' underlying capital is similarly affected. (Source: The Australian)

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Hong Kong Everbright Securities Co. (601788) faces possible fines and more restrictions on its business after an unprecedented stock trading error

that threatens to erode confidence in China’s equity market. The China Securities Regulatory Commission banned the state-controlled brokerage, the country’s 12th-largest by revenue, from proprietary trading for three months after 23.4 billion yuan ($3.8 billion) of erroneous buy orders on Aug. 16. Everbright, whose shares resume trading today, said it mispriced 10 million yuan of government bonds in a trade yesterday. The stock trades prompted the regulator’s second investigation of the brokerage this year, following a probe of an initial public offering that Everbright worked on. The CSRC, which described the Aug. 16 incident as the first of its kind, is seeking to stamp out fraud and abuse to lure investors back to the world’s second-worst performing stock market in the past four years. “It wouldn’t be surprising, as market participants and investors eagerly await, if the regulators hand down a harsh penalty and hefty fines to ensure that similar incidents will not happen again,” said Hubert Tse, a Shanghai-based partner at the law firm Boss & Young who’s not involved in the case. “The CSRC is likely to come to a decision fairly soon, probably in weeks.” The regulator hasn’t said when it will finish its investigation, or what further penalties it could impose. It didn’t respond to requests for comment by telephone and fax on whether it will include the bond trade in its investigation of the stock purchases. (Source: Bloomberg)

Wilbur Ross, the billionaire investor in struggling industries, says Chinese limits on shipbuilding will help the cargo market overcome the

excess of carriers that led to the worst slump on record. The China Association of the National Shipbuilding Industry said last month about 30 percent of the country’s shipyards will close in five years and the government enacted a three-year plan to limit capacity Aug. 4. Ross, part of an investment group that spent $900 million on fuel tankers in 2011, said China will avoid a repeat of its most recent construction program, the biggest by one nation in history. The boom sent ship earnings to at least a 23-year low. Investors are becoming more bullish because construction has slumped 61 percent from its 2009 peak and demolition of obsolete vessels is near a record. Shares of Monaco-basedScorpio Tankers (STNG) Inc. rose 37 percent this year and will climb another 17 percent in 12 months, while Frontline 2012 Ltd. (FRNT) will advance 43 percent, analyst estimates show. “The combination of reducing order books and increased scrappage will result in a better balance between supply and demand by late 2014 or early 2015 in most segments,” Ross, the founder of WL Ross & Co., said in an Aug. 13 e-mail. “I’m less worried than I was.” The ClarkSea Index, a measure of earnings for vessels across the merchant fleet, averaged $9,053 a day this year, the lowest annual figure since at least 1990, according to Clarkson Plc, the world’s largest shipbroker. (Source: Bloomberg

China’s new home prices rose the most since January 2011 in the nation’s four major cities, led by a 17 percent jump in Guangzhou and

Shenzhen, on speculation the government will refrain from imposing tighter curbs.Beijing and Shanghai prices both increased 14 percent in July as 69 of 70 cities tracked by the government climbed from a year earlier, according to a statement by the National Bureau of Statistics yesterday. For the third month in a row, the eastern city of Wenzhou was the only one to post a decline.(Source: Bloomberg)

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81.28 +0.07% 293.07 +0.20%

110.10 -0.96% 2.880 +0.06%

1,365.98 +0.11% 15,010.74 -0.47%

515.79 -1.07% MSCI SEA 828.98 -2.65%

2,823.35 -1.08% 54.1

Dollar Index

Gold (US$/Oz)

ThomReuters/JefferiesCRB

DJI

Crude oil, Brent (US$/bbl) US Treasury 10yr Yield

Euro Stoxx 50

Source: Bloomberg

MSCI Asia x-Japan

JPM Global Composite PMI SA

1.201.401.601.802.002.202.402.602.803.00

Aug-12

Sep-12

Oct-1

2

Nov-12

Dec-12

Jan-1

3

Feb

-13

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

700

750

800

850

900

950

1,000

Aug-12

Sep-12

Oct-1

2

Nov-12

Dec-12

Jan-1

3

Feb

-13

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

11,000

12,000

13,000

14,000

15,000

16,000

Aug-12

Sep-12

Oct-1

2

Nov-12

Dec-12

Jan-1

3

Feb

-13

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

2,0002,1002,2002,3002,4002,5002,6002,7002,800

Aug-12

Sep-12

Oct-1

2

Nov-12

Dec-12

Jan-1

3

Feb

-13

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

48

49

50

51

52

53

54

55

56

Aug-12

Sep-12

Oct-1

2

Nov-12

Dec-12

Jan-1

3

Feb

-13

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

Aug-12

Sep-12

Oct-1

2

Nov-12

Dec-12

Jan-1

3

Feb

-13

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

Aug-13

78

80

82

84

Aug-1

2

Sep-1

2

Oct-1

2

Nov-1

2

Dec-1

2

Jan-1

3

Feb

-13

Ma

r-13

Apr-1

3

Ma

y-13

Jun-1

3

Jul-1

3

Aug-1

3

260

280

300

320

340

Aug-1

2

Sep-1

2

Oct-1

2

Nov-1

2

Dec-1

2

Jan-1

3

Feb

-13

Ma

r-13

Apr-1

3

Ma

y-13

Jun-1

3

Jul-1

3

90

100

110

120

130

Aug

-12

Sep

-12

Oct-1

2

Nov-1

2

Dec-1

2

Jan-1

3

Feb-1

3

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

440

460

480

500

520

540

560

580

Aug-12

Sep-12

Oct-1

2

Nov-12

Dec-12

Jan-1

3

Feb

-13

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

Regional Market Focus

20 August 2013

11 of 16

Valuations of Major Regional Markets

14.6 1.40

13.5 2.21

10.7 1.43

14.2 2.55

14.7 2.01

Source: Bloomberg

Jakarta Stock Exchange Composite Index, P/B (X)

Straits Times Index, Forward P/E (X)

Hang Seng Index, Forward P/E (X)

Straits Times Index, P/B (X)

Stock Exchange of Thailand, Forward P/E (X) Stock Exchange of Thailand, P/B (X)

Jakarta Stock Exchange Composite Index,

Hang Seng Index, P/B (X)

S&P/ASX 200 Index, Forward P/E (X) S&P/ASX 200 Index, P/B (X)

10

12

14

16

18

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

1.0

1.2

1.4

1.6

1.8

2.0

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

1.0

1.5

2.0

2.5

3.0

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

8

10

12

14

16

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

1.01.21.41.61.82.02.2

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

8

10

12

14

16

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

2.22.42.62.83.03.23.43.6

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

10

12

14

16

18

20

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

1.4

1.6

1.8

2.0

2.2

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

8

10

12

14

16

18

Dec-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

Dec-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

Dec-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

Dec-1

2

Ma

r-13

Ju

n-1

3

Regional Market Focus

20 August 2013

12 of 16

Source: Bloomberg

World Index

JCI -5.58% 4,313.52

HSI -0.24% 22,463.70

KLCI -0.55% 1,778.36

NIKKEI 0.79% 13,758.13

KOSPI -0.13% 1,917.64

SET -3.27% 1,398.48

SHCOMP 0.83% 2,085.60

SENSEX -1.56% 18,307.52

ASX -0.03% 5,112.53

FTSE 100 -0.53% 6,465.73

DOW -0.47% 15,010.74

S&P 500 -0.59% 1,646.06

NASDAQ -0.38% 3,589.09 COLOMBO -0.14% 6,224.34

STI -0.76% 3,173.33

Regional Market Focus

20 August 2013

13 of 16

Date Statistic For Survey Prior Date Statistic For Survey Prior

8/20/2013 Chicago Fed Nat Activity Index Jul -0.1 -0.13 8/21/2013 Automobile COE Open Bid Cat A 41507 -- 7555600.00%

8/21/2013 MBA Mortgage Applications 16-Aug -- -0.047 8/21/2013 Automobile COE Open Bid Cat B 41507 -- 7760000.00%

8/21/2013 Existing Home Sales Jul 5.15M 5.08M 8/21/2013 Automobile COE Open Bid Cat E 41507 -- 7798900.00%

8/21/2013 Existing Home Sales MoM Jul 1.40% -1.20% 8/23/2013 CPI NSA MoM Jul 0.30% 0.20%

8/22/2013

Fed Releases Minutes from Jul 30-

31 FOMC Meeting 8/23/2013 CPI YoY Jul 2.10% 1.80%

8/22/2013 Initial Jobless Claims 41503 330K 320K 8/26/2013 Industrial Production SA MoM Jul -- -3.10%

8/22/2013 Continuing Claims 41496 2970K 2969K 8/26/2013 Industrial Production YoY Jul -- -0.059

8/22/2013 Markit US PMI Preliminary Aug 54.2 -- 8/30/2013 Credit Card Bad Debts Jul -- 21.1M

8/22/2013 House Price Index MoM Jun 0.006 0.007 8/30/2013 Credit Card Billings Jul -- 3475.9M

8/22/2013 House Price Purchase Index QoQ 2Q 0.024 0.0195 8/30/2013 Money Supply M1 YoY Jul -- 18.30%

8/22/2013 Bloomberg Economic Expectations Aug -- -5 8/30/2013 Money Supply M2 YoY Jul -- 9.10%

8/22/2013 Bloomberg Consumer Comfort 41504 -- -2660.00% 8/30/2013 Bank Loans and Advances YoY Jul -- 17.70%

8/22/2013 Leading Index Jul 0.50% 0.00% 9/3/2013 Electronics Sector Index Aug -- 5030.00%

8/22/2013 Kansas City Fed Manf. Activity Aug 600.00% 600.00% 9/3/2013 Purchasing Managers Index Aug -- 51.8

8/23/2013 New Home Sales Jul 487K 497K 9/4/2013 Automobile COE Open Bid Cat A 41521 -- --

Date Statistic For Survey Prior Date Statistic For Survey Prior

20-23 AUG Car Sales Jul -- 106018 8/20/2013 CPI Composite YoY Jul 0.048 0.041

8/21/2013 BoT Benchmark Interest Rate 21-Aug 0.025 0.025 8/27/2013 Exports YoY Jul -- -0.002

8/23/2013 Foreign Reserves 16-Aug -- $172.2B 8/27/2013 Imports YoY Jul -- 0.014

8/23/2013 Forw ard Contracts 16-Aug -- $23.7B 8/27/2013 Trade Balance Jul -- -49.7B

26-28 AUG Customs Exports YoY Jul -- -0.0338 8/30/2013 Budget Balance HKD Jul -- -16.7B

26-28 AUG Customs Imports YoY Jul -- 3.01% 8/30/2013 Money Supply M1 HKD YoY Jul -- 0.181

26-28 AUG Customs Trade Balance Jul -- -$1915M 8/30/2013 Money Supply M2 HKD YoY Jul -- 0.096

8/28/2013

Mfg Production Index ISIC NSA

YoY Jul -- -350.00% 8/30/2013 Money Supply M3 HKD YoY Jul -- 0.097

8/28/2013 Mfg Production Index ISIC SA Jul -- 175.7 9/2/2013 Retail Sales Value YoY Jul -- 0.147

8/28/2013 Capacity Utilization ISIC Jul -- 64.1 9/2/2013 Retail Sales Volume YoY Jul -- 0.134

8/30/2013

Bloomberg Aug. Thailand

Economic Survey 9/4/2013 HSBC/Markit PMI Aug -- 49.7

8/30/2013 Foreign Reserves 41509 -- -- 9/6/2013 Foreign Reserves Aug -- $299.9B

8/30/2013 Forw ard Contracts 41509 -- -- 11-16 SEP Manpow er Survey 4Q -- 0.14

8/30/2013 Exports YoY Jul -- -0.035 9/12/2013 Industrial Production YoY 2Q -- 0.005

8/30/2013 Exports Jul -- $18818M 9/12/2013 PPI YoY 2Q -- 0.006

Source: BloombergSource: Bloomberg

Source: Bloomberg

Thailand Hong Kong

Source: Bloomberg

US Singapore

Economic Announcement

Regional Market Focus

20 August 2013

14 of 16

Date Statistic For Survey Prior Date Statistic For Survey Prior

16-20 AUG Local Auto Sales Jul -- 104265 16-28 AUG Exports YoY Jun -- -1.50%

16-20 AUG Motorcycle Sales Jul -- 659504 16-28 AUG Imports YoY Jun -- -1.70%

41516

Bloomberg Aug. Indonesia

Economic Survey 8/30/2013 CPI Moving Average YoY Aug -- 8.30%

9/2/2013 HSBC/Markit Manufacturing PMI Aug -- 5070.00% 8/30/2013 CPI YoY Aug -- 6.10%

9/2/2013 CPI YoY Aug -- 8.61% 05-28 SEP Exports YoY Jul -- --

9/2/2013 CPI NSA MoM Aug -- 3.29% 05-28 SEP Imports YoY Jul -- --

9/2/2013 CPI Core YoY Aug -- 0.0444 16-30 SEP GDP YoY 2Q -- 0.06

9/2/2013 Exports YoY Jul -- -0.045 9/17/2013 CBSL Repurchase Rate 41534 -- 0.07

41519 Imports YoY Jul -- -6.80% 9/17/2013 CBSL Reverse Repo Rate 41534 -- 9.00%

41519 Trade Balance Jul -- -$847M 9/30/2013 CPI Moving Average YoY Sep -- --

02-05 SEP Danareksa Consumer Confidence Aug -- 82 9/30/2013 CPI YoY Sep -- --

02-10 SEP Consumer Confidence Index Aug -- 108.4 07-28 OCT Exports YoY Aug -- --

02-10 SEP Money Supply M1 YoY Jul -- 0.102 07-28 OCT Imports YoY Aug -- --

02-10 SEP Money Supply M2 YoY Aug -- 0.119 10/15/2013 CBSL Repurchase Rate 41562 -- --

03-09 SEP Foreign Reserves Aug -- $92.67B 10/15/2013 CBSL Reverse Repo Rate 41562 -- --

Date Statistic For Survey Prior

8/20/2013 RBA Policy Meeting - August

8/21/2013 Westpac Leading Index MoM Jun -- 0.002

8/21/2013 DEWR Skilled Vacancies MoM Jul -- -0.018

8/22/2013 Conference Board Leading Index Jun -- 0

8/28/2013 CBA/HIA House Affordability 2Q -- 69.7

8/28/2013 Construction Work Done 2Q -- -0.02

8/29/2013 HIA New Home Sales MoM Jul -- 3.40%

8/29/2013 Private Capital Expenditure 2Q -- -4.70%

8/30/2013 Private Sector Credit MoM Jul -- 0.004

8/30/2013 Private Sector Credit YoY Jul -- 3.10%

9/2/2013 AiG Perf of Mfg Index Aug -- 4200.00%

9/2/2013 RPData/Rismark House Px MoM Aug -- --

9/2/2013 TD Securities Inflation MoM Aug -- 0.005

9/2/2013 TD Securities Inflation YoY Aug -- 2.70%

9/2/2013 Building Approvals YoY Jul -- -13.00%

Source: Bloomberg

Indonesia

Australia

Sri Lanka

Source: BloombergSource: Bloomberg

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Total ReturnTotal ReturnTotal ReturnTotal Return RecommendationRecommendationRecommendationRecommendation RatingRatingRatingRating RemarksRemarksRemarksRemarks >+20%>+20%>+20%>+20% BuyBuyBuyBuy 1111 >20% upside from the current price>20% upside from the current price>20% upside from the current price>20% upside from the current price

+5% to +20%+5% to +20%+5% to +20%+5% to +20% AccumulateAccumulateAccumulateAccumulate 2222 +5% to +20%upside from the curren+5% to +20%upside from the curren+5% to +20%upside from the curren+5% to +20%upside from the current pricet pricet pricet price ----5% to +5%5% to +5%5% to +5%5% to +5% NeutralNeutralNeutralNeutral 3333 Trade within ± 5% from the current priceTrade within ± 5% from the current priceTrade within ± 5% from the current priceTrade within ± 5% from the current price ----5% to 5% to 5% to 5% to ----20%20%20%20% ReduceReduceReduceReduce 4444 ----5% to 5% to 5% to 5% to ----20% downside from the current price20% downside from the current price20% downside from the current price20% downside from the current price

<<<<----20%20%20%20% SellSellSellSell 5555 >20%downside from the current price>20%downside from the current price>20%downside from the current price>20%downside from the current price

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