Market Snapshot. US Stocks Lose Steam as Traders Eye Labour Data. Tuesday, 22 October 2013 THE DAY AHEAD DEVELOPED MARKET EQUITIES

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1 Market Snapshot Tuesday, 22 October 2013 US Stocks Lose Steam as Traders Eye Labour Data HEADLINES US equities flat-lined as investors avoided making fresh bets ahead of key labour data today. Asia ended mixed on the lack of regional cues. EQUITY MARKETS S&P 500 Euro Stoxx % THE DAY AHEAD Nikkei % In the US, spotlight will be on the highly-anticipated, delayed labour data for September. The unemployment rate is expected to stay steady at 7.3%. Also on tap: nonfarm payrolls. China will release the property prices report for September. MSCI Asia ex-japan MSCI Emerging Markets 0.1% DEVELOPED MARKET EQUITIES US Stocks Flat-Lined, Mixed Earnings on the Table US equities flat-lined as investors avoided making fresh bets ahead of key labour data due today. A fresh batch of mixed corporate results also doused the earnings-related fanfare over the weekend. McDonald s said third-quarter revenue missed estimates, blaming the continued weakness in the Asia Pacific region. After the closing bell, Netflix reported its profit almost quadrupled to USD31.8 million on higher subscriber base, locally and globally. Meanwhile, JP Morgan is reported to have reached a tentative USD13 billion settlement with the US government relating to the sales of bad mortgages. This may erode the bank s bottom line this year. On the data front, existing home sales declined 1.9% on-month in September, a sign rising mortgage rates have eased some pressures off the recovering housing markets. Europe shares ended mixed, despite upbeat earnings updates from the region s heavyweights. SAP reported better-than-expected results and affirmed its full-year outlook, while Philips said its net profits almost tripled in the latest quarter. According to Thomson Reuters Starmine data, the initial numbers for the European results season have been encouraging. Earnings so far beat estimates by an average of 3.3%, in contrasts to a broadly inline performance in the US. Japan equities rose 0.9% despite reports of slower-than-expected export growth. However, Bank of Japan Governor Haruhiko Kuroda maintained an upbeat assessment of the economy, saying it is making a steady recovery and this will continue. Shown in local currency terms, as of the last business day. US TREASURY YIELD CURVE 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% 2.0% 3.0% 2.0% 1.0% 1.0% 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 TW Unemployment Rate Sep % CH Property Prices Sep US Unemployment Rate Sep 7.30% 7.30% US Nonfarm Payrolls Sep 180K 169K Source: Bloomberg, DBS Group Research

2 Market Snapshot 22 October ASIA EQUITIES Asia Ends Mixed on Lack of Regional Cues China stocks tacked on 1.6%, driven by a rally in environmentalprotection names after reports of deteriorating air quality in the country. Elsewhere, Premier Li Keqiang said China s economy has a solid foundation to maintain its steady and healthy growth. He also said economic reforms initiatives will help the country to unleash new growth drivers. Hong Kong equities closed 0.4% as investors bought technology plays after news of Google crossing the USD1,000 mark. Taiwan s TWSE fell 0.3%, dragged by concerns on weak 4Q outlook for notebook and panel makers. Southeast Asia stocks started the week barely higher on the lack of cues. Singapore's STI rose 0.1%, Malaysia's KLCI gained 0.2% and Indonesia s JCI surged 0.7%. India equities closed 0.1% higher, supported by gains in Larsen and Toubro after it reported better-than-expected results last week. FIXED INCOME The US Treasury continued its losing streak as investors remained comfortable on the sidelines ahead of key labour data today. The Federal Reserve has repeatedly said the country s unemployment rate is key to its tapering decision. Benchmark 10-year notes fell 6/32 to yield 2.609% while the 30-year bonds declined 16/32, yielding 3.681%. COMMODITIES Crude oil fell to below USD100 a barrel, the first time since July, on delayed reports of rising inventories and weaker demand. The Energy Information Administration said US stockpiles rose for four straight weeks to the highest level last seen in June. It also said sluggish demand from refiners sent inventory four million barrels higher in the week ended 11 October. Gold futures held a notch higher as investors await for key US employment data due today. Elsewhere, gold importers in India are reportedly paying record premiums amid strong demand just ahead of the peak festival season in early November. Source: Bloomberg, DBS Group Research and Vickers (DBS), Dow Jones Newswires, Reuters, Agence France-Presse Equity Markets Returns of equity indexes around the world, in local currency terms. Index Close Overnight YTD US DJIA % 17.46% S&P % 22.33% NASDAQ % 29.82% Europe Euro Stoxx % 14.90% Germany DAX % 16.48% France CAC % 17.46% UK FTSE % 12.82% Asia MSCI AxJ % 2.30% Japan Nikkei % 41.35% China SHCOMP % -1.76% Hong Kong Hang Seng % 3.45% Taiwan TWSE % 9.35% South Korea Kospi % 2.80% Indonesia JCI % 6.06% Malaysia KLCI % 6.73% Singapore STI % 0.91% India Sensex % 7.55% Emerg. Mkt MSCI EM % -1.19% Government Bonds Benchmark yields of major 10-year government bonds. Latest yield Previous yield Change (bps) US 2.60% 2.58% 0.02 Germany 1.85% 1.83% 0.02 Japan 0.63% 0.62% 0.01 China 4.13% 4.11% 0.02 Taiwan 1.71% 1.56% South Korea 3.45% 3.44% 0.01 Indonesia 7.43% 7.46% Singapore 2.22% 2.21% 0.01 India 8.60% 8.55% 0.05 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.

3 Market Snapshot 22 October CURRENCIES The aussie continued rising to a fresh four-month high, supported by resilient iron, Australia s biggest export. Focus now will be on third-quarter inflation data due Wednesday. It will provide investors with insights on whether the central bank has rooms to cut rates further this year, in addition to the eight cuts it has announced. The US dollar rose against the Yen, rebounding from an eightmonth low in anticipation of highly-anticipated labour reports from the US. The unemployment rate is expected to remain steady at 7.3%. 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 86 Apr-13 Jun-13 Aug-13 Oct-13 USD Against Major Currencies EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD 86 Apr-13 Jun-13 Aug-13 Oct-13 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 Bullish GBP/USD Bullish USD/JPY Range AUD/USD Bullish NZD/USD Bullish USD/CAD Range USD/SGD Bearish AUD/SGD Bullish NZD/SGD Bullish GBP/SGD Range EUR/SGD Range EUR/AUD Bearish 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 22 October Asian Insights Feature Singapore: Growth Revision On the Cards? We have to take the Singapore advance GDP estimates with a pinch of salt. They were based on two months of data. Given the small and open nature of the economy, a lot can happen in a month that can skew the final outcome. Moreover, figures within the services and construction sectors are often subjected to significant revisions. In fact, there were countless occasions in the past when the difference between the advance numbers and the final figures was significant. For instance, the advance growth reading for 2Q-13 was initially reported at -1.1% on-quarter, seasonally adjusted annual rate (saar). But it was eventually revised to 0.1%. That is, from a contraction to an expansion. Subsequently, the 3Q-13 GDP growth was reported at -1.5% onquarter, saar but was eventually revised down to -4.6%. That s a massive 3.1% difference. In addition, GDP growth for 1Q-13 changed from a contraction of 1.4% on-quarter, saar to an expansion of 2.3%. From negative to positive again, and by a full 3.7% points. So when the third quarter advance GDP data for the economy announced recently reported a better-than-expected reading of - 1.0% on-quarter, saar, you have to take the reported number with a pinch of salt. Do not be surprised if there is going to be a significant revision to the numbers. And in our opinion, the revision will be downwards. The reason behind this is the manufacturing sector could possibly disappoint. Industrial production, or IPI, growth has averaged 3.3% on-year in July to August. The advance estimate of 4.5% on-year for IPI in 3Q essentially assumed the production output will surge by about 7% in September. That will make it the strongest monthly growth since June last year. And odds are against the number given fairly weak export performance in September. Headline non-oil domestic exports fell by 1.2% on-year with poor showings from both key electronics and pharmaceutical segments. Yet, the main driver was the petrochemical cluster, which saw sales up by 35.3% on-year. Increase capacity in the petrochemical industry probably has led to this strong growth. Indeed, petrochemical exports have been expanding by about 20%-30% over the last three months. This may be the reason why officials are optimistic on the manufacturing growth in the third quarter and announced the better-than-predicted advance GDP figures. So stay tuned for September s industrial production this week, which will provide a clearer picture on the economic growth and of course, whether a massive revision in the advance GDP estimates will be on the cards. Singapore GDP Growth Q12 advance reading: -0.1% -10 Singapore GDP growth -20 (% on-quarter) Dec-09 Sep-10 Jun-11 Mar-12 Dec-12 Sep-13 Source: Bloomberg Source report: DBS Group Research. Daily Breakfast Spread, 21 October Summarised by DBS Group Wealth Management /CIO Office. Bond risk rating changes Effective Bond Name Issuer New Risk rating Existing Reason 11/10/2013 NBADUH 4 1/2 09/11/14 NATIONAL BK OF ABU DHABI 1 2 S&P upgraded the paper credit rating from A+ to AA- 11/10/2013 NBADUH 3 1/4 03/27/17 NATIONAL BK OF ABU DHABI 1 2 S&P upgraded the paper credit rating from A+ to AA- 11/10/2013 NBADUH 5 03/07/18 NATIONAL BK OF ABU DHABI 1 2 S&P upgraded the paper credit rating from A+ to AA- 11/10/2013 NBADUH 5 03/07/18 NATIONAL BK OF ABU DHABI 1 2 S&P upgraded the paper credit rating from A+ to AA- Information updated as of 17 October 2013.

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