Market Snapshot. Stocks Canter into Year of the Horse with Bears for Company. Monday, 03 February 2014 THE DAY AHEAD DEVELOPED MARKET EQUITIES

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1 Market Snapshot Monday, 03 February 2014 Stocks Canter into Year of the Horse with Bears for Company WHAT S NEWS US GDP grows 3.2% on-quarter in 4Q-13. Euro zone inflation eases to 0.7% in January, the lowest in almost four years. Jobless rate stays at 12%. Japan's inflation accelerates to 1.6% on-year in December. THE DAY AHEAD EQUITY MARKETS S&P 500 DJ Euro Stoxx 600 Nikkei % -0.6% -0.2% Indonesia reports its latest inflation and trade data. From the US, the ISM manufacturing sentiment report for January and construction spending in December are due. DEVELOPED MARKET EQUITIES Stocks Down on Soft Earnings, EM Concerns US markets galloped away from gains to commence the new Lunar year, dragged by soft corporate earnings and mixed domestic data. The Dow tumbled 0.9% on Friday, closing January 5.3% down, the worst performance since May The S&P 500 fell 0.7%, ending the month 3.1% lower, while the Nasdaq slipped 0.5%. Amazon's earnings missed forecasts, weighed by poor sales from the crucial holiday season. It also warned of a possible operating loss this quarter, citing higher shipping costs. Chevron, US' second largest oil firm, reported a 32% fall in 4Q-13 profit on smaller refining margins and weaker production. Mattel, a top global toy company, delivered weaker-than-expected results, dragged by a revenue decline in its core brands. Google's 4Q earnings topped estimates, despite weaker prices for online ads and greater losses at its Motorola unit. The division is planned to be sold to China's Lenovo. Separately, Wal-Mart trimmed its 4Q and full-year profit outlook, citing a tough winter. In macro news, initial jobless claims rose more-than-expected last week, the Commerce Department said. The final reading for University of Michigan's consumer confidence fell in January. Pending home sales tumbled in December to a two year low on weaker demand due to the cold weather. On a more upbeat note, consumer spending, which contributes more than two-thirds to domestic economic activity, grew 0.4% on-month in December, topping forecasts. GDP grew 3.2% on-quarter in 4Q- 13, closing the year on a solid footing. Together with the 4.1% pace seen a quarter ago, the US recorded the biggest half-year growth last seen in For the full-year 2013, the economy expanded 1.9%. MSCI Asia ex-japan MSCI Emerging Markets Shown in local currency terms, as of the last business day. US TREASURY YIELD CURVE The curve shows the yield to maturity of current US bills, notes and bonds. All data is as of the close of the last business day. CALENDAR Event Period Survey Prior ID CPI (YoY) Jan % ID Trade Balance (IDR) Dec mil US ISM Manufacturing Jan US Construction Spending (MoM) Dec 0.40% 1.00% Source: Bloomberg, DBS Group Research 1M 3M 6M 1YR 2YR 3YR 5YR 7YR 10YR 30YR 1M 3M 6M 1YR 2YR 3YR 5YR 7YR 10YR 30YR One year ago Last Close 4.0% 5.0% 3.0% 4.0% 3.0% 2.0% 2.0% 1.0% 1.0%

2 Market Snapshot 3 February Europe equities fell, hurt by concerns an Emerging Markets, or EM, rout will dent corporate earnings. According MSCI data, European firms have a much larger exposure to EMs as compared to American or Japanese companies. Global equities were battered after a sell-off in EM stocks over concerns an additional trim to Fed bond purchases will dry up liquidity in these markets. Meanwhile, luxury group LVMH's results met estimates, driven by higher sales in its fashion and leather-goods unit. Competitor Salvatore Ferragamo also reported revenue that was in line with forecasts in 4Q-13. Separately, bloc inflation surprisingly eased to 0.7% in January, the lowest in almost four years. The number was weaker than forecasts for a 0.9% annual rate. Unemployment rate remained elevated at 12%, unchanged since October 13. Japan equities dipped 0.6% to end January 8.5% down, the worst monthly loss since May Industrial output rose 1.1% on-month in December, supported by stronger demand ahead of April's sales tax increase. The figure was shy of forecasts for 1.3% increase. Consumer inflation accelerated to an annual pace of 1.6%, driven up by higher costs for fresh food and electricity. ASIA EQUITIES Asia Down as EM Concerns Resurface Asia equities ended down ahead of the Lunar New Year holiday, as concerns over EMs resurfaced after the US Federal Reserve announced further tapering to its stimulus. Starting February, the Fed will purchase USD65 billion worth of debt each month. Hong Kong s Hang Seng fell 0.5%. China s SHCOMP dipped 0.8% on weak factory report. The final reading for HSBC/Markit China manufacturing PMI ticked down to 49.5 in January, the first contraction in six months. Activity in China tends to slow down in the beginning of the year as factories close to observe a week-long Lunar New Year holiday. In Southeast Asia, Singapore s STI ended 0.7% lower, while Malaysia s KLSE tacked on 0.9% on bargain hunting ahead of the long weekend. All three bourses will reopen today. Philippines' GDP expanded 7.2% in 2013, after recording a 6.8% gain a year ago. Numbers from both years marked the fastest growth pace since the 1950s. This also means the country is one of the fastest-growing economies in Asia last year, after China. India s Sensex ended flat as investors stayed in the sidelines on growth-related concerns. The government downgraded its official GDP figure for the last fiscal year to 4.5%, slower than the initial estimate of 5.0%. FIXED INCOME US Treasuries gained, ending January on a strong note, as weakness in global equities sent investors rushing to the safe-haven. Benchmark 10-year note rose 12/32 to yield 2.651%, while the 30- year bond gained 19/32, yielding 3.603%. COMMODITIES Oil on the Nymex fell as traders worried over the emerging markets outlook after the Fed decided to taper its stimulus further by USD10 billion. Equity Markets Returns of equity indexes around the world, in local currency terms. Index Close Overnight YTD US DJIA % -5.30% S&P % -3.56% NASDAQ % -1.74% Europe Euro Stoxx % -1.75% Germany DAX % -2.57% France CAC % -3.03% UK FTSE % -3.54% Asia MSCI AxJ % -5.11% Japan Nikkei % -8.45% China SHCOMP % -3.92% Hong Kong Hang Seng % -5.45% Taiwan TWSE % -1.73% South Korea Kospi % -3.49% Indonesia JCI % 3.38% Malaysia KLCI % -3.37% Singapore STI % -4.43% India Sensex % -3.10% Emerg. Mkt MSCI EM % -6.60% Government Bonds Benchmark yields of major 10-year government bonds. Latest yield Previous yield Change (bps) US 2.64% 2.69% Germany 1.66% 1.72% Japan 0.62% 0.63% China 4.53% 4.53% 0.00 Taiwan 1.63% 1.63% 0.00 South Korea 3.62% 3.62% 0.00 Indonesia 9.03% 8.97% 6.30 Singapore 2.46% 2.46% 0.00 India 8.78% 8.82% Commodity futures Prices of one-month futures contracts, grouped by commodity type. Close 1-day change 1-yr high 1-yr low WTI crude ($/bbl) % Gold ($/oz.) % Copper ($/ton) % Corn (cents/bu.) % Soybean (cents/bu.) % Wheat (cents/bu.) % Coffee (cents/lb) % Sugar (cents/lb) % Source: Bloomberg, as at the close of the last business day. O/N refers to overnight. YTD refers to year-to-date returns. Gold futures ticked down Friday, weighed by weaker physical demand from China, the world's largest bullion buyer. Source: Bloomberg, DBS Group Research and Vickers (DBS), Dow Jones Newswires, Reuters, Agence France-Presse

3 Market Snapshot 3 February CURRENCIES The AUD continued to rise ahead of the Reserve Bank of Australia's first policy meeting this year, due tomorrow. Consensus expects the benchmark rate to stay steady at a record low 2.50%. The EUR fell as soft euro zone inflation data boosted concerns the European Central Bank may take action soon to fight deflation. Inflation surprisingly eased to 0.7% in January, the lowest in almost four years. The number was weaker than forecasts for a 0.9% annual rate. The ECB will meet this week. The NZD ticked down, weighed by further comments from Reserve Bank of New Zealand Governor Graeme Wheeler that "the exchange rate remains a considerable headwind for the economy" despite solid business and consumer confidence. This came after he earlier mentioned the central bank will return interest rates to more-normal levels "soon". Source: Bloomberg, DBS Group Research and Vickers (DBS), Dow Jones Newswires, Reuters, Agence France-Presse FX Round-up Currencies as of New York close. Last Overnight change Day high Day low EUR/USD % GBP/USD % USD/JPY % AUD/USD % NZD/USD % USD/CAD % USD/SGD % AUD/SGD % NZD/SGD % GBP/SGD % EUR/SGD % EUR/AUD % AUD/NZD % XAU/USD % Source: Bloomberg. SGD Against Major Currencies USD/SGD AUD/SGD NZD/SGD GBP/SGD EUR/SGD 88 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 USD Against Major Currencies EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD 90 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Source: Bloomberg. Technical Summary Short-term technical readings with a two-week horizon. All figures are as of the last business day. Currency Short term Direction Support 1 Support 2 Resistance 1 Resistance 2 EUR/USD Range GBP/USD Range USD/JPY Range AUD/USD Bearish NZD/USD Range USD/CAD Bullish USD/SGD Bullish AUD/SGD Range NZD/SGD Range GBP/SGD Bullish EUR/SGD Range EUR/AUD Range AUD/NZD Range XAU/USD Range Source: DBS CIO Office. Note: These are short-term technical readings with a two-week horizon. All figures are as of last business day.

4 Market Snapshot 3 February Insights Feature Indonesia: A Closer Look at FDI Indonesia s foreign direct investment reached a record USD28.6 billion in 2013 which is encouraging as domestic investment moderated slightly in 2H-13. This year, the Investment Coordinating Board (BKPM) is targeting a 15% growth in FDI. Based on the current growth pace of outward foreign investment by Indonesian companies, it works out to a net rise in FDI by some USD20 billion. And because we expect the current account deficit to ease to USD26 billion in 2014, this means 75% of the gap would be financed by long-term stable inflows up from 55% in 2013, and a positive. This 15% target may seem ambitious, with last summer s turbulence in domestic markets, moderation in 2013 GDP growth, and underlying confidence in the rupiah remaining low. The upcoming elections may also give rise to additional uncertainties. But for those with a longer-term perspective, Indonesia still offers many opportunities. Its middle class is growing, and consumption growth is still among the fastest in the region. FDI and competitiveness data is also positive. In terms of competitiveness, Indonesia has moved up 12 notches on the World Economic Forum s Global Competitive Index for It s now just one place below Thailand, and 21 above the Philippines. There has been a huge investment drive into commodities since the early 2000s, and the manufacturing sector has pretty much been neglected. FDI into manufacturing has seen a notable improvement in recent years to USD15.8 billion in 2013 from USD3.3 billion in The rupiah s sharp depreciation in 2013 has made local costs even cheaper, meaning strong FDI flows into manufacturing may persist. The challenges: economic policy uncertainty, and slow progress of liberalisation in many sectors. Rising Share of Manufacturing FDI Japan s share of FDI into Indonesia has risen markedly to 16.5% in 2013 from just 4.4% in Late last year, BKPM Chief Siregar also said Japan investors have pledged USD3.5 billion of new investment up till mid-2015, with the automotive and electronics industries being the key focus. Thailand s political deadlock could also be an interesting factor. Japan carmakers have been quoted saying they may revisit future plans and could redirect investment elsewhere in the region. So while Thailand has long maintained a competitive edge over Indonesia, particularly in manufacturing, the latest bout of political deadlock could mean more FDI for Indonesia. Source: DBS Group Research Source report: DBS Group Research: Economics, A Closer Look at FDI. 29 January Summarised by DBS Group Wealth Management /CIO Office. Bond risk rating changes Effective Bond Name Issuer New Risk rating Existing Reason 22/1/2014 ARRFP 4 7/8 01/21/19 AUTOROUTES PARIS-RHIN-RH 3 4 Tenor Reduction 23/1/2014 VW 3 1/4 01/21/19 VOLKSWAGEN INTL FIN NV 2 3 Tenor Reduction 23/1/2014 NAB 4 1/2 01/22/19 NATIONAL AUSTRALIA BANK 1 2 Tenor Reduction 27/1/2014 LLOYDS 15 01/22/29 LBG CAPITAL NO.2 PLC 4 5 Tenor Reduction Information updated as of 28 January 2014.

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