Market Snapshot. US Equities Up Despite Poor Jobs Data. Wednesday, 23 October 2013 THE DAY AHEAD DEVELOPED MARKET EQUITIES US TREASURY YIELD CURVE

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1 Market Snapshot Wednesday, 23 October 2013 US Equities Up Despite Poor Jobs Data WHAT S NEWS US jobs data fell short of expectations as hiring slowed. The unemployment rate meanwhile, fell to 7.2%, a 5-year low. China housing shows no sign of slowing with home prices in major cities up between 16%-20% on-year. EQUITY MARKETS S&P 500 Euro Stoxx % THE DAY AHEAD In Singapore and Malaysia, inflation data will be released. The US will unveil home prices data, crucial to US Federal Reserve monetary policy direction. Nikkei-225 MSCI Asia ex-japan 0.9% DEVELOPED MARKET EQUITIES US Stocks Push Higher on Lousy September Jobs Data US equities closed higher despite a lousy September jobs report with investors taking the data and interpreting it as a stimulus extension from the US Federal Reserve. The S&P 500 closed to a record high, and is over 23% higher year-to-date. The DJIA closed 0.5% up while the Nasdaq was 0.2% in the green. The jobs report sent stocks, bonds and gold higher. Market euphoria was pinned on the delayed release of September s jobs report. The Labor Department said 148,000 jobs were added in September, well below a Dow Jones Newswires survey of analysts expecting a 180,000 figure. Concerns over the strength of the US economy resurfaced following the data dump with the partial US government shutdown likely to contribute to even poorer figures for the final quarter. From January-March, US job growth averaged 207,000 jobs per month, while the April-June figure was at 182,000. The last quarter produced a 143,000 average. The Fed has tied its USD85 billion a month easy money programme to the US unemployment rate falling below 6.5%. It is now at 7.2% - a five-year low. Europe shares advanced as companies ranging from Novatis and Reckitt Benckiser raised earnings forecasts and the US jobless rate fell to a five-year low. The DJ Stoxx 600 climbed 0.6% despite poor September jobs growth data from the US, with expectations of more poor numbers to come. Elsewhere, Bloomberg News said the European Central Bank will require the region s largest banks to hold a capital buffer of around 8% for risk-weighted assets. Japan equities changed little as investors cast a wary eye to the release of US labour data. A stronger US dollar during the Asian 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 SI CPI (YoY) Sep 2.00% -- TA Industrial Production (YoY) Sep -0.45% -- MA CPI (YoY) Sep 2.30% -- US House Price Index (MoM) Aug Source: Bloomberg, DBS Group Research 0.1% 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%

2 Market Snapshot 23 October trading day also helped Japanese exporters. Automaker Toyota rose 1.1% while Canon closed 0.6% higher. ASIA EQUITIES Asia Ends Mostly Lower; China Property Still Hot China stocks lost ground as banks were hit hard after reports said the People s Bank of China refrained from injecting funds via reverse repurchase agreements the 2 nd such suspension since July. Ping An lost 2.3% while the Bank of China fell 1.1%. The Chinese government said home prices in its top four cities Beijing, Shanghai, Shenzhen and Guangzhou saw their biggest jump since the government recalibrated its calculation method in All four rose between 16%-20% in September. Sixty-nine of 70 Chinese cities surveyed showed increases. China should have some upside bias ahead of the gathering of top Communist leaders in November, where more economic reform measures are expected to be announced, analysts said. Hong Kong equities were dragged 0.5% lower by heavily indexed China Mobile. China Mobile fell 3.4% at the close after tepid thirdquarter earnings from the telecommunications giant. Trading volume was lower as investors kept an eye on the US jobs data release. Southeast Asia stocks closed mostly higher on expectations of more Fed stimulus ahead of the US jobs report. Singapore's STI rose 0.5%, its ninth increase in the past 10 days. Malaysia's KLCI gained 0.1% while Indonesia s JCI fell. India equities fell as investors took profit after three weeks of solid gains on the Sensex. Reliance Industries, the second largest company on the bourse by market value, fell 1.1% after a gain of 5% the previous three sessions. FIXED INCOME US Treasuries eked out gains as investors sent the benchmark 10- year yield to a three-month low after a weak non-farm payrolls report. The uninspiring jobless reading eased market fears that the US Federal Reserve were going to reduce USD85 billion a month asset-purchase programme soon. The 10-year note fell nine basis points to 2.51%, its lowest since the third week of July. Yields move inversely to prices. COMMODITIES Crude oil fell below the psychological USD100 per barrel mark for the first time since July with US inventories likely to show gains for a fifth straight week tomorrow after a four-week increase of nearly 19 million barrels of crude. Delayed data showed US stockpiles had risen four million barrels for the week ending October 11. The partial US government shutdown should also ease oil usage in the world s largest consumer nation. Elsewhere, the US said domestic crude output, led by hydraulic fracturing and horizontal drilling techniques known as fracking, is at its highest since It rose 20.6% onyear. Gold futures rose to a one-month high as investors bet a slowdown in hiring would mean the US Federal Reserve would keep its stimulus measures intact in the near-term and at its current pace. 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 % 18.04% S&P % 23.03% NASDAQ % 30.14% Europe Euro Stoxx % 15.55% Germany DAX % 17.54% France CAC % 17.97% UK FTSE % 13.53% Asia MSCI AxJ % 2.12% Japan Nikkei % 41.54% China SHCOMP % -2.58% Hong Kong Hang Seng % 2.91% Taiwan TWSE % 9.34% South Korea Kospi % 2.96% Indonesia JCI % 4.54% Malaysia KLCI % 6.79% Singapore STI % 1.36% India Sensex % 7.40% Emerg. Mkt MSCI EM % -1.00% Government Bonds Benchmark yields of major 10-year government bonds. Latest yield Previous yield Change (bps) US 2.51% 2.60% Germany 1.80% 1.85% Japan 0.62% 0.63% 0.00 China 4.14% 4.13% 0.01 Taiwan #VALUE! #VALUE! #VALUE! South Korea 3.44% 3.45% Indonesia 7.35% 7.43% Singapore 2.21% 2.22% India 8.61% 8.60% 0.01 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 23 October CURRENCIES The dollar was lower after the US reported its non-farm payroll hiring came in at 148,000 in September, well below expectations of a 180,000 increase. The Fed s easy money programme is generally seen as USD-negative. The aussie was at a near-four month high ahead of inflation data expected to show core consumer prices going up. In other news, the Australian government voted to raise its debt ceiling by twothirds to AUD500 billion to avoid any US-style political wrangling over fiscal policy. Singapore and China will introduce direct currencies trading as China also agreed to a CNY50 billion quota for financial institutions in Singapore to invest in China s domestic securities under its Qualified Foreign Institutional Investor programme. Singapore also doubled its currency swap arrangement with China and started yuan clearing services earlier this year. 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 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Market Snapshot 23 October Asian Insights Feature South Korea: Slowdown in 3Q Temporary The preliminary estimate of 3Q GDP is scheduled for release this Friday. We expect growth to decelerate to a seasonally adjusted 0.8% on-quarter from a strong 1.1% in 2Q (above consensus of 0.9%). In annualized terms, growth in the first three quarters should have averaged 3%, which is not a bad number compared to the long-term trend of 4%. Based on the monthly indicators, exports and private consumption should have held up well in 3Q. The competitiveness of key export products and the diversification of market exposure helped Korean exporters to cope with the intensive challenges this year including Japan s yen depreciation and China s slowdown. Meanwhile, thanks to a strong external position, Korea s financial markets remained relatively calm in 3Q despite talk of US quantitative easing tapering and capital flight from many other emerging markets. Stability in the equity and FX markets in turn lent support to domestic consumer confidence. The 3Q slowdown should largely come from construction investment and government consumption, as a result of the reduction in fiscal stimulus. Property market activity fell notably in 3Q as a temporary cut of real estate acquisition tax expired in end-june. Government spending on welfare should have also fallen due to the front-loading of this year s budget in 1H13. We think the slowdown is temporary. Fiscal policy will remain supportive of growth next year. The net fiscal balance is expected to remain in a deficit equivalent to 1.8% of GDP in 2014, according to the government s budget proposal unveiled last month. In August, the government also announced a permanent reduction of the real estate acquisition tax, beginning in January After all, there is still adequate room for manoeuvre on fiscal policy, given that the government debt level remains relatively low and public financing is well supported by domestic private savings. We maintain the forecast that GDP growth will pick up to 3.5% next year from an estimated 2.8% this year. South Korea GDP Growth Source: Bloomberg Korea GDP (%, on-year) 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 18 October 2013.

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