Market Snapshot. OPEC Strikes Output Deal, US Stocks Rally Ahead of FOMC Meeting. Monday, 12 December 2016 THE DAY AHEAD OVERVIEW

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1 Market Snapshot Monday, 12 December 2016 OPEC Strikes Output Deal, US Stocks Rally Ahead of FOMC Meeting THE DAY AHEAD Japan posts November s machine tool orders China releases a raft of data, including November s new yuan loans, outstanding loan growth and M2 money supply. The Philippines releases its Consumer Confidence index reading for 4Q. OVERVIEW OPEC strikes a deal with non-cartel member states over the weekend to cut output. Oil prices jump 4% on Monday morning. US equities post fresh records on Friday as investors remain bullish on the country s economic prospects. Pharmaceutical and technology shares rally. European stocks advance as markets cheer the European Central Bank s (ECB) decision to extend its stimulus programme. But shares in troubled Italian bank Monte dei Paschi di Siena drop after the ECB denies it more time to raise cash. Asian equities finish mixed on Friday. Japan s Nikkei 225 closes at a fresh high for the year. DEVELOPED MARKET EQUITIES US Wall Street stocks surged to fresh records yet again Friday, with all three major indices jumping to new highs for the second straight session. Optimism about a new era of economic growth ushered in by the US elections unleashed bullish sentiment for US stocks. Gains in US markets were biggest in the Dow, which jumped 0.72% to 19,756.85, closing in on the 20,000 threshold and adding another to a string of record closes. The S&P 500 index moved up 0.59% to 2, and the tech-heavy Nasdaq Composite finished up 0.50% to 5, Pharmaceutical shares rallied, with Dow members Pfizer and Merck winning 2.46% and 1.85% and biotech Amgen 2.03%. Large technology companies were also strong. Apple and Microsoft both gained 1.63% and Google parent Alphabet 1.66%. Coca-Cola jumped 2.49% as it announced that Muhtar Kent will step down as chief executive in May to be replaced by president and chief operating officer James Quincey. AFP. EUROPE Stocks in Europe pushed higher on Friday on upbeat sentiment following the European Central Bank s (ECB) extended stimulus program. The pan- European Stoxx 600 index climbed 0.97% to France s CAC 40 advanced by 0.60 to 4,764.07, the UK s FTSE 100 moved up 0.33% to 6, and Germany s DAX added 0.22% to 11,203.63, respectively. However, Milan s index ended 0.73% lower, dragged down by Monte dei Paschi di Siena (BMPS), whose stock tumbled over 10% after reports the ECB had denied it more time to raise the cash it needs to avoid being wound down. BMPS on Wednesday asked the ECB for two more weeks to find the funds, saying political instability created by Prime Minister Matteo Renzi's resignation had left investors reluctant to commit funds. But the ECB's supervisory board was reported to have said "no" Friday, upping pressure on the Italian government to bail out the ailing institution. AFP. EQUITY MARKETS Shown in local currency terms. S&P 500 DJ Euro Stoxx 600 Nikkei-225 MSCI Asia ex-japan MSCI Emerging Markets -0.5% -0.2% 0.6% 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: 1.2% 4.0% 5.0% 3.0% 4.0% 2.0% 3.0% 2.0% 0.0% 0.0%

2 Market Snapshot 12 December JAPAN Tokyo stocks opened higher on Monday, with exporters rising on a weak yen as energy issues gained on a weekend deal to cut oil production by non-opec states. The benchmark Nikkei 225 index, which ended last week at a fresh high for the year, added 0.92 percent, or points, to 19, in the first few minutes of trade. Tokyo's benchmark stock index on Friday closed at a fresh high for the year, continuing a global rally sparked by the European Central Bank's decision extend its stimulus programme. The Nikkei 225 climbed 1.23%, or points, to end the day at 18, Over the week, the index tacked on 3.09%. The broader Topix index of all first-section shares was up 0.84%, or points, at 1, It gained 3.20% over the week. On Friday, Japanese shares also won support from a rise in the dollar against the yen, which boosts exporters' profits. Sony jumped 3.28% while Toyota was up 0.27%. Nintendo surged 3.64% after its US head confirmed to Bloomberg News that it expects to see 20 million downloads for its keenly awaited new Super Mario game for iphones. Banking giant Mitsubishi UFJ rose 2.23%, while rival Mizuho Financial Group was up 1.09%. Energy-linked shares soared on the back of stronger crude oil prices, with Inpex up 4.13% and Japan Petroleum 5.36% higher. AFP. ASIAN EQUITIES CHINA On Friday, the Shanghai Composite index advanced 0.54% to 3, but the Shenzhen Composite index fell 0.35% to 2, Blue chip stocks had a good day, and heavy-weighted shares in the construction, banking and non-bank financials sectors all increased more than 4%. China State Construction Engineering Corp surged 8.71%, almost hitting the exchange s daily limit. However, the ChiNext index of small-cap technology stocks in Shenzhen finished at a four-month low at 2, Market observers think that the bullishness in blue chip stocks may have sunk smallcap shares. HONG KONG Hong Kong s Hang Seng Index declined 0.44% to 22,760,98 on Friday with gaming stocks battered by a report in the South China Morning Post that Macau intended to limit daily cash withdrawals for China UnionPay ATM card holders. Shares in casino operators plunged, but pared losses towards the end of the session: Sands China finished down by 7.87%, Wynn Macau fell 7.09% and Galaxy Entertainment lost 7.04%. The Monetary Authority of Macau and China UnionPay later said in separate statements their policies on cash withdrawals for Mainland China issued cards remained unchanged. REST OF ASIA Australia s S&P/ASX 200 edged 0.38% to 5, higher on Monday morning from OPEC s lift. The ASX 200 rose to its highest level since August on Friday, finishing up 0.31% to 5, Gains in the Big Four bank stocks propelled the index higher: ANZ rose 1.32%, NAB was up 1.26%, Commonwealth Bank added 1.18% and Westpac finished up 0.47%. Energy stocks also advanced as oil prices held on to recent gains. However, resource stocks retreated. Syrah Resources fell 2.91% and South 32 was down 2.33%. In early Monday trading, South Korea s benchmark Kospi index crept 0.15% higher to 2, On Friday, the Kospi index fell 0.31% to 2, after posting gains of around 2% on Thursday. Sentiment was cautious during the session. The Kospi slipped for the third consecutive week as the country remains mired in political uncertainty. After the market s close, it was announced that the country s parliament voted to impeach President Park Geun-hye over an influence-peddling scandal. Parliament s vote will be reviewed by the Constitutional Court and it could take up to 180 days before Park is removed from office and new elections held, CNBC reported. Taiwanese shares rose on Friday for despite profit-taking. The Taiex Index crept up to close 0.18% higher at 9, points, marking its third consecutive week of rise. Financial stocks were among the most highly traded. Yuanta Financial led its peers, gaining 1.69%. Cathay Financial and Fubon Financial added 0.71% and 0.59%, respectively. Index heavyweights Equity Markets Returns of equity indices around the world, in local currency terms. Index Close Overnight YTD US DJIA % 13.38% S&P % 10.55% NASDAQ % 8.73% Europe Euro Stoxx % -2.85% Germany DAX % 4.29% France CAC % 2.74% UK FTSE % 11.40% Asia MSCI AxJ % 6.22% Japan Nikkei % -0.20% China SHCOMP % -8.65% Hong Kong Hang Seng % 3.86% Taiwan TWSE % 12.65% South Korea Kospi % 3.23% Indonesia JCI % 15.57% Malaysia KLCI % -3.02% Singapore STI % 2.55% India Sensex % 2.41% Emerg. Mkt MSCI EM % 10.54% Government Bonds Benchmark yields of major 10-year government bonds. Latest yield Previous yield Change (bps) US 2.47% 2.41% 6.04 Germany 0.37% 0.38% Japan 0.06% 0.05% 1.20 China 3.12% 3.09% 2.30 Taiwan 1.13% 1.09% 3.75 South Korea 2.20% 2.16% 4.30 Indonesia 7.66% 7.54% Singapore 2.41% 2.33% 7.79 India 6.44% 6.40% 4.20 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 12 December also advanced with Formosa Petrochemical Corp jumping 1.79%. Taiwan Semiconductor Manufacturing Co (TSMC), the world s largest contract chipmaker, added 0.27%. TSMC s November sales, released after the market s close, showed a 46.7% y/y surge to NTD93.03 billion. FIXED INCOME US Treasury prices fell on Friday as investors digested fresh US economic data and the ECB s extended asset purchase program. The yield on the twoyear note fell 1.2 bps to %, the 10-year yield gained 6.0 bps to % and the 30-year yield was up 4.8 bps to %. US consumers were more upbeat. The preliminary December reading of the University of Michigan consumer sentiment index soared to 98.0, exceeding expectations. Meanwhile, wholesale inventories fell 0.4% in October, meeting expectations, as sales surged. This suggests that the economy could experience a boost, supporting the case for an interest rate hike. Separately, the yield on Germany s 10-year Bund fell 1.8 bps to %. COMMODITIES Oil prices climbed on Monday as investors cheered a fresh agreement by oil producers to cut output and support prices. West Texas Intermediate (WTI) jumped 4.50% to USD53.82 a barrel and Brent crude was up 4.25% to USD56.64 a barrel. Eleven countries agreed on early Sunday Asia to cut their oil output, teaming up with the OPEC cartel in an exceptional bid to end the world's glut of crude and reverse a dramatic fall in income. Russia and 10 other non-opec states will reduce their production by more than half a million barrels per day (bpd), OPEC announced. FX Round-up (as of New York close) Last Overnight change The deal will take effect from the start of 2017 and last for six months, though it may be extended depending on market conditions. Among the other countries that will contribute cuts Kazakhstan agreed to reduce production by 20,000 bpd, Mexico 100,000 bpd, Oman 40,000 bpd and Azerbaijan 35,000 bpd, according to Bloomberg. The deal also includes Malaysia, Bahrain, Equatorial Guinea, Sudan, South Sudan and Brunei. Oil prices had climbed Friday as hopes grew of a deal. In late European business, WTI crude stood at USD51.50 a barrel, 66 cents up on the day, while Brent rose 44 cents to USD54.33 a barrel. AFP. CURRENCIES The US dollar gained for the second day on Friday as the market anticipates that the US Federal Reserve will hike rates at their upcoming policy meeting this week. The US Dollar Index (DXY), which measures the strength of the American currency against six major peers, advanced 0.48% to Positive consumer sentiment and wholesale inventories data released Friday strengthened the case in the eyes of investors that the Fed will raise interest rates. Meanwhile, the euro weakened against the US dollar for the second day on Friday as the ECB extended its asset purchase program to December Notwithstanding the reduction in bonds purchased a month to EUR60 billion from EUR80 billion, the central bank reserved the right to buy more, if needed. The EUR retreated 0.51% to Source: Bloomberg News, DBS Group Research and Vickers (DBS), Dow Jones Newswires, Reuters, Agence France-Presse, CNBC, FactSet, Marketwatch.com 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 5 December 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 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-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 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

4 Market Snapshot 12 December Bond risk rating changes Effective Bond Name Issuer Risk rating New Existing Reason 02-Dec-16 RCOMIN 6 1/2 11/06/20 RELIANCE COMMUNICATION 5 4 Moody's downgraded paper rating from Ba3 to B1 05-Dec-16 CGB /18/17 CHINA GOVERNMENT BOND 2 1 Re-rated based on Fitch issuer rating of A+ 05-Dec-16 CGB /01/20 CHINA GOVERNMENT BOND 2 1 Re-rated based on Fitch issuer rating of A+ 05-Dec-16 CGB /22/21 CHINA GOVERNMENT BOND 2 1 Re-rated based on Fitch issuer rating of A+ 05-Dec-16 CGB /11/16 CHINA GOVERNMENT BOND 2 1 Re-rated based on Fitch issuer rating of A+ Information updated as of 5 December 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 Disclaimers and Important Notice The information herein is published by DBS Bank Ltd. ( DBS Bank ) and is for information only. This publication is intended for DBS Bank and its subsidiaries or affiliates (collectively DBS ) and clients to whom it has been delivered and may not be reproduced, transmitted or communicated to any other person without the prior written permission of DBS Bank. This publication is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into, for cash or other consideration, any transaction, and should not be viewed as such. This publication is not intended to provide, and should not be relied upon for accounting, legal or tax advice or investment recommendations and is not to be taken in substitution for the exercise of judgment by the reader, who should obtain separate legal or financial advice. DBS does not act as an adviser and assumes no fiduciary responsibility or liability (to the extent permitted by law) for any consequences financial or otherwise. The information and opinions contained in this publication has been obtained from sources believed to be reliable but DBS makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose. Opinions and estimates are subject to change without notice. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment. To the extent permitted by law, DBS accepts no liability whatsoever for any direct indirect or consequential losses or damages arising from or in connection with the use or reliance of this publication or its contents. The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.

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