Market Snapshot. Four US Stock Indices Hit Record Highs. Tuesday, 22 November 2016 THE DAY AHEAD OVERVIEW

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1 Market Snapshot Tuesday, 22 November 2016 Four US Stock Indices Hit Record Highs THE DAY AHEAD The US will release its Richmond Fed manufacturing and existing home sales numbers. Market consensus expects existing home sales to decline by 0.7% m/m. Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent to speak on policy. Euro Area Consumer Confidence numbers for November are due. OVERVIEW The four main US stock market indices the Dow Jones Industrial Average, the S&P 500, the Nasdaq and the Russell 2000 hit record highs simultaneously. The oil price jumps on OPEC optimism and the value of the US dollar retreats. The biggest gainers on Wall Street are energy stocks. Amazon and Facebook also post robust gains. US President-Elect Donald Trump releases a video outlining his policy priorities, including pulling America out of the Trans Pacific Partnership (TPP) and setting up a list of bilateral trade deals. He also pledges to rescind many fossil fuel regulations. European markets are largely flat. Asian markets were mixed on Monday, but with significant gains in Tokyo thanks to a weaker yen. DEVELOPED MARKET EQUITIES US The Dow Jones Industrial Index, the S&P 500, the Nasdaq and the Russell 2000 Index recorded all-time peaks on Monday for the first time since According to MarketWatch, the last time the first three of those indices had closed at simultaneous record highs was for two sessions back in mid- August. The S&P 500 surged points or 0.8% to close at a record The previous S&P 500 high was recorded on August 15 this year. Ten of the 11 main S&P 500 sectors gained. Energy led gains, while Real Estate was the only loser. The Dow finished 0.5% higher at 18, while the tech-heavy Nasdaq Composite gained 0.9% to The Russell 2000, which tracks smaller stocks, was up by 0.5% to finish at US stocks surged to record highs as companies ended a five-quarter profit slump, according to Bloomberg. President-Elect Donald Trump s plans for infrastructure and tax cuts has fuelled optimism that both fiscal and consumer spending will increase, thereby benefitting US stocks. Investors are now pricing in 100% probability of a US Fed rate hike next month, compared to 68% at the beginning of November. EUROPE Equities finished the day with gains after reversing an intra-day slide of 0.8%. This was helped by a rally in commodity producers on the back of a weaker US dollar and higher oil prices. The Euro Stoxx 600 climbed 0.3% to points. The Index was trading at a Forward P/E of 15.7x, at last close. European stocks have been trading in a tight range this year and still weaker than its post-brexit levels. Investors are cautiously looking ahead to the calendar of political events coming up in Europe, including the Italian referendum on 4 December. EQUITY MARKETS Shown in local currency terms. S&P 500 DJ Euro Stoxx 600 Nikkei-225 MSCI Asia ex-japan MSCI Emerging Markets -0.1% 0.2% 0.3% 0.7% 0.8% US TREASURY YIELD CURVE Shows the yield to maturity of current US bills, notes, and bonds. 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 Source: DBS CIO Office, Bloomberg, as of the last business day. Visit the Markets Movers page for more insights: 4.0% 5.0% 3.0% 4.0% 2.0% 3.0% 2.0% 1.0% 1.0% 0.0% 0.0%

2 Market Snapshot 22 November JAPAN In early Tuesday trading, Tokyo stocks were up by 0.07% to 18, points. On Monday they extended their recent rally as the US dollar consolidated gains against the yen. The Nikkei 225 rose 0.77% to points. Agence France Presse reported that investors had also bet on a US interest rate rise next month. The greenback has soared to near six-month highs against the yen since Donald Trump's presidential election win on a platform of huge infrastructure spending and tax cuts. This could fan inflation and force the Federal Reserve to raise rates, AFP suggested. The dollar's rise has been a boon for Japan's exporters as it makes their goods cheaper overseas and boosts repatriated profits. ASIAN EQUITIES CHINA The Shanghai Composite rose 0.79% to close at points on Monday a 10-month high. The Shenzhen Composite ended the day up as well by 0.36% to points. Reuters said the rise in markets came as investors bet that a weaker Chinese yuan will boost both inflation and Chinese exports. The insurance sector was a big winner with China Life Insurance up by 7.8%. The yuan fell for a 12 consecutive session on Monday to be a t a new eight-year low. The people s Bank of China (PBOC) et the daily fixing 189 basis points weaker at Trading is allowed up to 2 per cent either side of the reference point for the day. The South China Morning Post said the yuan s descent has become steeper in the days since Donald Trump s surprise presidential election win. It pointed to the President-Elect s call for trade tariffs on China, which he described a currency manipulator during his campaign. HONG KONG The Hang Seng ended a choppy trading session on Monday up by just 0.06% to points. China Life also surged 4.96% in Hong Kong. Pingan shares were also 3.34% higher. Casino stocks also jumped. Sands China was up by 3.25% and Galaxy Entertainment climbed 1.67%. Semiconductor makers and retailers lost ground, the South China Morning Post reported. REST OF ASIA In South Korea on Tuesday morning the Kospi was ahead by 0.67% to points. On Monday, the Kospi fell 0.43% to points. The Yonhap news service said institutional and retail investors sold out amid firming expectations of a December interest rate rise by the Federal Reserve. Chipmaker SK Hynix lost 2.98 points. Cosmetics maker AmorePacific fell by 3.76%. But other big names were up by the closing bell: Samsung Electronics by 0.44%, Hyundai Motor by 3.09% and Kia Motors by 0.95%. In Australia, the ASX 200 was up by 1.04% to points. On Monday, it was down by 0.2% to close at points as the Aussie dollar sank against the greenback. the Sydney Morning Herald said the AUD has lost 6% in value since the 8 November election of Donald Trump. The big news of the day was building material maker Boral s USD1.86 billion deal to buy US building supplies firm, Headwaters. Meanwhile Westpac was among the winners, rising 0.52% while ANZ lost 0.46%. Energy stocks were up: Woodside by 1.3%, Origin by 2.6% and Santos by 2.8%. FIXED INCOME Ten-year US Treasuries gained on Monday when yields dropped to 2.29% from 2.31% as the sell-off in US bonds took a breather. The 10-year Treasury yield was near a one-year high last week at 2.35% after the Trump victory boosted confidence of increased spending, tax cuts and higher inflation. Indeed, the rise in yields through last Friday marked the largest two-week rise since November 2001, according to MarketWatch. Investors are now pricing in 100% probability of the Fed raising rates in the December FOMC meeting. Elsewhere. Italian bonds gained slightly, as yields dropped to 2.07% from 2.09% while German bunds was relatively flat, with yields stabilizing at 0.274%. Equity Markets Returns of equity indices around the world, in local currency terms. Index Close Overnight YTD US DJIA % 8.79% S&P % 7.55% NASDAQ % 7.22% Europe Euro Stoxx % -6.99% Germany DAX % -0.54% France CAC % -2.32% UK FTSE % 8.58% Asia MSCI AxJ % 2.96% Japan Nikkei % -4.87% China SHCOMP % -9.07% Hong Kong Hang Seng % 2.02% Taiwan TWSE % 8.43% South Korea Kospi % 0.24% Indonesia JCI % 12.09% Malaysia KLCI % -3.85% Singapore STI % -2.29% India Sensex % -1.35% Emerg. Mkt MSCI EM % 6.71% Government Bonds Benchmark yields of major 10-year government bonds. Latest yield Previous yield Change (bps) US 2.32% 2.35% Germany 0.27% 0.27% 0.20 Japan 0.03% 0.04% China 2.89% 2.90% Taiwan 1.41% 1.30% South Korea 2.13% 2.14% Indonesia 7.85% 7.83% 1.80 Singapore 2.35% 2.35% India 6.31% 6.43% 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. YTD refers to year-to-date returns.

3 Market Snapshot 22 November COMMODITIES Oil climbed to a three-week high after Iran s oil minister said it is highly probably that OPEC would reach a consensus at the upcoming OPEC talks at the end of this month, according to Bloomberg. Iraq also said it would offer plans to help reach an agreement. December West Texas Intermediate (WTI) crude surged 3.9% to settle at USD47.49, supported by the renewed push by OPEC members to resolve differences ahead of its 30 November meeting. Vladimir Putin, representing non-opec Russia, also said there was a high probability that an agreement to curb oil production could be reached at the 30 November OPEC meeting. Gold advanced from its lowest since February, settling at USD1214, supported by a weaker US Dollar. Silver was also up 0.2% to USD CURRENCIES The US Dollar weakened against its major peers on Monday after 10 consecutive days of gains for the greenback. According to data from Commodity Futures Trading Commission, the wagers among large speculators for the US currency to rise against eight major peers climbed by only 15 contracts to a net in the week through 15 November. The Bloomberg Dollar Spot Index, which tracks the US dollar against its 10 major peers, fell 0.4% on Monday. Last week, the US Dollar Index (DXY) hit its highest level since April The stronger US dollar has been supported by expectations of higher US rates and expansionary fiscal stimulus under President-Elect Trump. Investors are now pricing in 100% probability of the Fed raising rates next month. The USD/JPY was relatively flat, settling at on Monday while the EUR/USD was stronger at 1.063, compared to its previous day s closing of Source: Bloomberg News, DBS Group Research and Vickers (DBS), Dow Jones Newswires, Reuters, Agence France-Presse, CNBC, FactSet, Marketwatch.com FX Round-up (as of New York close) Last Overnight change FX Technical Outlook Day high Day low Currency Levels Q4 2016F Q1 2017F Q2 2017F Q3 2017F EUR/USD % EUR/USD GBP/USD % USD/JPY USD/JPY % GBP/USD AUD/USD % AUD/USD NZD/USD % NZD/USD USD/CAD % USD/SGD USD/SGD % USD/CNH AUD/SGD % USD/INR NZD/SGD % USD/IDR GBP/SGD % Source: DBS CIO Office, as of 12 October EUR/SGD % AUD/NZD % USD/IDR % USD/INR % XAU/USD % Source: Bloomberg, as of last business day. SGD Against Major Currencies USD/SGD AUD/SGD NZD/SGD GBP/SGD EUR/SGD 80 May-16 Jul-16 Sep-16 Nov-16 Source: Bloomberg, as of last business day. Notes: Forecasts are in respect of end-of-quarter levels. The information contained in this publication is not investment research or a research recommendation. It is intended only to provide the observations and views of the DBS CIO Office, which may be different from, or inconsistent with, the observations and views of the DBS Bank research department or other DBS Bank personnel. USD Against Major Currencies EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD 80 May-16 Jul-16 Sep-16 Nov-16

4 Market Snapshot 22 November Bond risk rating changes Effective Bond Name Issuer Risk rating New Existing Reason 10-Nov-16 BATSLN 3 5/8 11/09/21 BAT INTL FINANCE PLC 2 3 Tenor Reduction 10-Nov-16 SPOST 3 1/2 03/30/20 SINGAPORE POST LIMITED 3 2 S&P downgraded paper rating from A- to BBB+ 11-Nov-16 TEVA /10/21 TEVA PHARMACEUT FIN BV 3 4 Tenor Reduction 11-Nov-16 ITCIT 5 3/8 03/19/20 ITALCEMENTI FINANCE 3 4 Moody's upgraded paper rating from Ba1 to Baa3 11-Nov-16 CMFP 4 3/4 04/04/17 CIMENTS FRANCAIS 3 4 Moody's upgraded paper rating from Ba1 to Baa3 Information updated as of 11 November GLOSSARY General Product Risk Rating A 5-point scale, 1-5, indicates the relative rating of potential loss; 1 being the lowest and 5 being the highest. Bond Risk Rating Credit Rating (S&P / Moody's) AAA AA Outstanding Tenor (Up to X Years) Perpetual 1 2 A 2 3 BBB 3 BB B & Below 5 4 Equity Sector Classification Valuation Terminology Sector Equities Cond: Consumer Discretionary EPS: Earnings Per Share Cons: Consumer Staples P/E: Price to Earnings Ratio Enrs: Energy P/B: Price to Book Ratio Finl: Financials EG: Earnings Growth Hlth: Health Care Indu: Industrials Bonds Inft: Information Technology YTM: Yield to Maturity Matr: Materials YTC: Yield to Call Prop: Property YTP: Yield to Put

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