Market Update for ASEAN+3 Dec2012

MARKET UPDATE FOR ASEAN+3

December 2012


3 December 2012, 17:00 local time SGT (UTC+8)

MARKET DEVELOPMENTS

• Asian Stocks Swing Between Gain, Loss on China Data, U.S. Budget. Asian stocks swung between gains and losses as Chinese manufacturing data added to signs of recovery while U.S. lawmakers continue to debate over a budget compromise to avert a so-called fiscal cliff. The Nikkei 225 Stock Average gained 0.1 percent in Tokyo and South Korea’s Kospi Index added 0.4 percent. Australia’s S&P/ASX 200 Index climbed 0.6 percent. Hong Kong’s Hang Seng Index dropped 0.9 percent. Chinese stocks fell, dragging the benchmark index to its lowest level in almost four years, as liquor makers and coal producers plunged.

• Crude Trades Near Two-Week High as China Manufacturing Improves. Crude traded close to the highest level in almost two weeks in New York as China’s official manufacturing index rose to a seven-month high, signaling economic recovery in the world’s second-biggest crude consumer. China’s Purchasing Managers’ Index rose to 50.6 in November, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Dec. 1 in Beijing. A reading above 50 indicates expansion.

BREAKING NEWS

GLOBAL

• Geithner Fight on Fiscal Cliff Invokes Pragmatism of Dodd-Frank. When U.S. senators were picking apart the Obama administration’s plan for a stand-alone consumer-protection bureau during negotiations on the financial-rules overhaul, Treasury Secretary Timothy F. Geithner agreed to put it under the Federal Reserve to ensure that Republican lawmakers wouldn’t kill it. Geithner calculated the bureau wouldn’t be affected and backing down would help get the 2010 legislation passed. His compromise illustrates the pragmatic approach Geithner embraced in pressing for Dodd-Frank during his four years at the Treasury and will need to draw on in one final test as the administration’s lead negotiator with Congress on the so-called fiscal cliff.

• Manufacturing in U.S. Probably Cooled as Capital Spending Waned. Manufacturing in the U.S. probably cooled in November as business demand slowed and disruptions from superstorm Sandy limited production, according to economists surveyed before a report today. The Institute for Supply Management’s factory index fell to 51.5 from 51.7 in October, according to the median estimate of 75 economists surveyed by Bloomberg. A reading of 50 marks the dividing line between expansion and contraction. Other figures today may show construction spending increased in October. Less corporate spending on equipment as lawmakers debate the nation’s budget, weaker orders from overseas and disturbances related to the biggest Atlantic storm ever to hit the U.S. are converging to slow manufacturing. A pickup in home construction as well as rebuilding in the wake of Sandy may offer the economy a lift as support from factories wanes.

• Greece Offers 10 Billion-Euro Debt Buyback Key to Securing Aid. Greece offered to spend 10 billion euros ($13 billion) buying back bonds issued earlier this year as the nation attempts to cut a debt load that may threaten future international aid payments. Greece invited holders of bonds to tender their securities in a so-called modified Dutch auction, the Athens-based Public Debt Management Agency said in a statement today on its website. PDMA offered an average maximum purchase price for the bonds maturing from 2023 to 2042 of 34.1 percent. The offer runs to 5 p.m. London time on Dec. 7

• India’s Manufacturing Growth Reaches Five-Month High, PMI Shows. India’s manufacturing growth accelerated to a five-month high in November, a private survey showed, signaling the

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worst of the nation’s economic slowdown may have passed. The purchasing managers’ index rose to 53.7 from 52.9 in October, HSBC Holdings Plc and Markit Economics said in a statement today. A number above 50 indicates growth. Prime Minister Manmohan Singh overhauled policies in September, seeking to lure more foreign investment, contain a budget deficit and avert a credit-rating downgrade. Gross domestic product climbed 5.3 percent last quarter from a year earlier, matching a three-year low, adding pressure on Singh to extend policy changes.

REGIONAL

• China Home Prices Expand Gains on Sentiment. China’s new home prices rose the most in four months as smaller developers marketed more projects amid interest from buyers concerned that prices will start rising again. Prices climbed for a sixth month, increasing 0.26 percent to 8,791 yuan ($1,412) per square meter in November from October, SouFun Holdings Ltd., the country’s biggest real estate website owner, said in an e-mailed statement today, based on its survey of 100 cities.

• China Seen Keeping Growth Target as Manufacturing Gains. China may maintain its annual economic growth target at 7.5 percent next year in a sign the new leadership headed by Xi Jinping won’t tolerate a bigger slowdown from the lowest goal since 2004. Top economic officials meet this month to map out policies for 2013 and may set the target that will be officially announced in March at the annual session of parliament. A goal of 7.5 percent would signal that Xi and Li Keqiang, set to succeed Wen Jiabao as premier, are prepared to expand fiscal and monetary easing should China’s nascent economic recovery falter. A manufacturing gauge rose to a seven-month high in November, data released Dec. 1 showed, adding to evidence growth is rebounding from a three-year low.

• Japan Capital Spending Gains More Than Forecast Last Quarter. Japanese companies increased capital spending more than economists predicted in the three months to September, indicating a contraction in the world’s third-largest economy may be short-lived. Capital spending excluding software rose 2.4 percent in the period from a year earlier, after rising 6.6 percent in the previous quarter, the Ministry of Finance said in Tokyo today. Economists surveyed by Bloomberg had forecast a 1 percent gain. A government report last week showed October production unexpectedly rose the most in 10 months, signaling some resilience in an economy hurt by declines in exports and domestic consumption. The government will use today’s report to revise preliminary gross domestic product data that showed an annualized 3.5 percent contraction in the third quarter.

• Indonesia November Inflation Eases More Than Economists Forecast. Indonesia’s inflation slowed more than economists estimated in November, giving the central bank room to support growth as exports slump. Consumer prices climbed 4.32 percent from a year earlier last month, after a previously reported 4.61 percent gain in October, the statistics bureau said in Jakarta today. The median of 20 estimates in a Bloomberg News survey was for a 4.57 percent increase. Exports fell 7.6 percent in October from a year earlier, after a 9.4 percent drop the previous month.

• Thai Inflation Slows for a Second Month on Fuel Subsidies, Food. Thai inflation slowed for a second month in November on fuel subsidies and easing food prices, supporting the central bank’s decision to refrain from another interest-rate reduction last month. An index of consumer prices rose 2.74 percent last month from a year earlier, the Ministry of Commerce said in Nonthaburi province outside Bangkok today, compared with a 3.32 percent increase reported earlier for October. The median of 15 economists in a Bloomberg News survey was 3.2 percent.

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IFIs NEWS (compiled from their websites)

BIS – Publication: “International Journal of Central Banking (IJCB) - December 2012 issue”

• The BIS has issued the latest edition of the captioned journal. This issue includes: (1) Central Banks' Voting Records and Future Policy; (2) Extracting Deflation Probability Forecasts from Treasurey Yields; (3) DSGE Model Restrictions for Structural VAR Identification; (4) Using Estimated Models to Assess Nominal and Real Rigidities in the United Kingdom; (5) Modeling the Share of Cash Payments in the Economy: An Application to France; (6) Spoilt and Lazy: The Impact of State Support on Bank Behavior in the International Loan Market.

http://www.bis.org/ijcb.htm

IMF – Press Release: New Two-Year US$73 Billion FCL with Mexico

• The IMF has approved a successor two-year arrangement for Mexico under the Flexible Credit Line (FCL) in an amount equivalent to SDR 47.292 billion (about US$73 billion). The Mexican authorities stated their intention to treat the arrangement as precautionary. Mexico’s first FCL arrangement was approved on April 17, 2009 (see Press Release No. 09/130), and was renewed on March 25, 2010 (see Press Release No. 10/114) and January 10, 2011 (see Press Release No. 11/4).

http://www.imf.org/external/np/sec/pr/2012/pr12465.htm

IMF – Public Comments: External Debt Statistics: Guide for Compilers and Users

• The Inter-Agency Task Force of Finance Statistics (TFFS) presents the draft of updated chapters and appendices of the EDS Guide. The update is the result of a cooperative effort of TFFS agencies, as was the case for the 2003 EDS Guide. The TFFS invites external debt statistics compilers and users to provide comments. The drafts of the Conceptual Framework (Part I) and Appendices I, III, and VII were accessible below for public comments by November 23, 2012. The remaining chapters and appendices are accessible below for public comments by January 21, 2013 at [email protected] and [email protected].

http://www.tffs.org/edsguide.htm (Press Release)

http://www.tffs.org/pdf/edsg/edsgprt1appx.pdf (Full Text)

IMF – Public Comments: Revision to Government Finance Statistics Manual 2001 (Draft Chapters)

• The IMF has publicised the draft “Revised GFS Manual” to seek for public comments. The revised guidelines have been harmonized with the updates in other macroeconomic statistical manuals and guides, such as the overarching System of National Accounts 2008, (2008 SNA) and the Balance of Payments and International Investment Position Manual 6th ed., and Public Sector Debt Statistics: Guide for Compilers and Users. Comments are requested by March 15, 2013 at [email protected].

http://www.imf.org/external/np/sta/gfsm/index.htm (Press Release)

http://www.imf.org/external/np/sta/gfsm/pdf/text.pdf (Full Text)

IMF – Working Paper

• The IMF has publicised the following working papers:

• “Systemic Risk from Global Financial Derivatives: A Network Analysis of Contagion and Its Mitigation with Super-Spreader Tax” - Financial network analysis is used to provide firm level bottom-up holistic visualizations of interconnections of financial obligations in global OTC derivatives markets. This helps to identify Systemically Important Financial Intermediaries (SIFIs), analyse the nature of contagion propagation, and also monitor and design ways of increasing robustness in the network.

http://www.imf.org/external/pubs/ft/wp/2012/wp12282.pdf

http://www.bis.org/ijcb.htm


http://www.tffs.org/edsguide.htm

http://www.tffs.org/pdf/edsg/edsgprt1appx.pdf

http://www.imf.org/external/np/sta/gfsm/index.htm

http://www.imf.org/external/np/sta/gfsm/pdf/text.pdf


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• “Striking an Appropriate Balance Among Public Investment, Growth, and Debt Sustainability in Cape Verde” - This paper intends to complement the DSA by addressing aspects currently not covered by the DSA. The paper evaluates public investment scaling-up strategies in Cape Verde by customizing the Buffie and others (2012) model for Cape Verde and conducting various scenario and sensitivity analysis. The paper assesses Cape Verde’s public debt risks, taking into account the link between public investment and growth. The paper concludes that the size of scaling-up and aspects of the economic structure have significant impact on the outcome of the public investment.


• “Taxation and Leverage in International Banking” – This paper explores how corporate taxes affect the financial structure of multinational banks. Guided by a simple theory of optimal capital structure it tests (i) whether corporate taxes induce subsidiary banks to raise their debt-asset ratio in light of the traditional debt bias; and (ii) whether international corporate tax differentials vis-a-vis foreign subsidiary banks affect the intra-bank capital structure through international debt shifting.


OECD – Publication: “Economic Outlook”

• The OECD has issued the captioned report. “The global economy is expected to make a hesitant and uneven recovery over the coming two years. Decisive policy action is needed to ensure that stalemate over fiscal policy in the United States and continuing euroarea instability do not plunge the world back into recession. GDP growth across the OECD is projected to match this year’s 1.4% in 2013, before gathering momentum to 2.3% for 2014.”

http://www.oecd.org/newsroom/globaleconomyfacinghesitantandunevenrecoverysaysoecd.htm

OECD – Publication: “Economic Survey of Spain”

• The OECD has issued the captioned report. “Spain is immersed in a prolonged recession that has been compounded by the continuing crisis in the euro area. The path to recovery has been launched, but will require full implementation of reforms and some additional measures to restore confidence in the financial sector, redress public finances and bring down high unemployment. Adverse conditions will limit the short-term impact of reforms. Indeed, the Survey projects that the Spanish economy will contract by 1.4% in 2013, before returning to a 0.5% growth rate in 2014.”

http://www.oecd.org/economy/spainhasembarkedonthepathtorecoverybutmustcontinuewithreformsoecdsays.htm (Press Release)

http://www.oecd.org/eco/surveys/spain2012.htm (Report)

FOREIGN CURRENCY EXCHANGE RATES

2011 close Previous wk's close 30-Nov 3-Dec % change 2012 YTD

(%chg) China 6.2980 6.2283 6.2266 6.2287 -0.03 1.1 Hong Kong 7.7698 7.7504 7.7503 7.75 0.00 0.3 Indonesia 9,126.0 9,649.0 9,618.0 9,612.0 0.06 -5.1 Japan 76.8 82.4 82.48 82.31 0.21 -6.7 Korea 1,150.8 1,086.1 1,082.9 1,083.0 -0.01 6.3 Malaysia 3.1507 3.0603 3.0394 3.0411 -0.06 3.6 Philippines 43.765 41.05 40.795 40.878 -0.20 7.1 Singapore 1.2906 1.2228 1.2202 1.2206 -0.03 5.7 Thailand 31.5 30.7 30.7 30.7 0.20 2.6 Vietnam 21,031.0 20,865.0 20,850.0 20,850.0 0.00 0.9

Note: Negative values indicate depreciation and positive values indicate appreciation.





http://www.oecd.org/economy/spainhasembarkedonthepathtorecoverybutmustcontinuewithreformsoecdsays.htm

http://www.oecd.org/economy/spainhasembarkedonthepathtorecoverybutmustcontinuewithreformsoecdsays.htm

http://www.oecd.org/eco/surveys/spain2012.htm

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STOCK MARKET INDEX

2011 close Previous wk's close 30-Nov 3-Dec % change 2012 YTD

(%chg) China 2,199.4 2,117.0 1,980.1 1,959.8 -1.03 -10.9 Hong Kong 18,877.4 22,111.3 22,030.4 21,767.9 -1.19 15.3 Indonesia 3,857.9 4,338.9 4,276.1 4,272.0 -0.10 10.7 Japan 8,455.4 9,051.2 9,446.0 9,458.2 0.13 11.9 Korea 1,875.4 1,918.7 1,932.9 1,940.0 0.37 3.4 Malaysia 1,514.6 1,656.1 1,610.8 1,607.3 -0.22 6.1 Philippines 4,422.2 5,424.5 5,640.5 5,672.7 0.57 28.3 Singapore 2,691.1 3,040.8 3,070.0 3,066.1 -0.13 13.9 Thailand 1,025.3 1,306.6 1,324.0 1,328.4 0.33 29.6 Vietnam 350.0 375.3 377.8 379.3 0.38 8.4

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 30-Nov 3-Dec bps change 30-Nov 3-Dec bps change China 2.260 2.260 0.00 3.826 3.825 -0.04 Hong Kong 0.098 0.097 -0.07 0.398 0.398 0.00 Indonesia 4.170 4.168 -0.16 4.906 4.907 0.04 Japan 0.088 0.100 1.25 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.820 2.820 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -15.500 -3.237 1226.30 0.029 -0.179 -20.80 Singapore 0.098 0.098 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.869 2.868 -0.08 Vietnam 1.708 1.950 24.20 7.200 6.467 -73.30

CREDIT DEFAULT SWAP (IN BPS)

29-Nov 30-Nov bps change China 56.5 56.2 -0.28 Hong Kong 43.7 46.5 2.76 Indonesia 122.1 120.6 -1.47 Japan 68.2 67.4 -0.86 Korea 56.0 57.6 1.62 Malaysia 66.2 65.8 -0.36 Philippines 97.2 97.8 0.61 Thailand 82.8 82.6 -0.24 Vietnam 199.7 200.0 0.25

Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. * CDS trades in New York, hence the one day lag in the latest closing price

30-Nov 3-Dec % change Gold Spot (in US$ per ounce)

1,715.0 1,719.7 0.28

Source: Bloomberg

CREDIT RATINGS

S&P Moody's Fitch China AA- Aa3 A+ Hong Kong AAA Aa1 AA+ Indonesia BB+ Baa3 BBB- Japan AA- -- AA Korea A Aa3 A+ Malaysia A- A3 A- Philippines BB+ Ba1 BB+ Singapore AAA -- AAA Thailand BBB+ Baa1 BBB Vietnam BB- B1 B+

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INTERNATIONAL RESERVES (END-MONTH, IN US$ BILLION)

2012 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov

China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 n.a Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 n.a Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 n.a Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 138.6 Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 81.7 n.a Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.5 Vietnam 17.4 19.5 19.9 19.7 20.0 n.a n.a n.a n.a EXTERNAL LIQUIDITY RATIOS

Reserves - latest 3 months imports of goods & services

Short-term external debt

Import cover (Qtrs of imports Reserves over

(US$bn) (US$bn) (US$bn) covered by reserves) short-term debt China 3,285.1 504.3 588.2 6.5 5.6 Hong Kong 301.7 139.0 736.2 2.2 0.4 Indonesia 110.3 50.5 38.3 2.2 2.9 Japan 1,274.2 70.9 2,332.3 18.0 0.5 Korea 323.5 150.9 132.6 2.1 2.4 Malaysia 138.6 58.0 35.4 2.4 3.9 Philippines 81.7 19.7 7.0 4.2 11.6 Singapore 254.2 118.2 923.9 2.2 0.3 Thailand 181.5 67.1 58.9 2.7 3.1 Vietnam 20.0 29.9 6.9 - -

DATA RELEASES FOR THE DAY

Country Indicators Period Last Previous CHINA HSBC Manufacturing PMI Nov 50.5 49.5 INDONESIA Total Imports (YoY)% Oct 10.8 1.2 INDONESIA Exports (YoY)% Nov -7.6 -9.4 INDONESIA Inflation (YoY)% Nov 4.32 4.61 INDONESIA Core Inflation (YoY)% Nov 4.4 4.59 INDONESIA Inflation NSA (MoM)% Nov 0.07 0.16 INDONESIA Money Supply - M2 (YoY)% Oct 18.3 18.2 SOUTH KOREA HSBC Manufacturing PMI Nov 48.2 47.4 SOUTH KOREA Core Consumer Price Index(YoY)% Nov 1.6 2.1 SOUTH KOREA Consumer Price Index (MoM)% Nov -0.4 -0.1 THAILAND Consumer Price Index (YoY)% Nov 2.74 3.32

SELECTED ECONOMIC RELEASES CALENDAR (26 - 30 November 2012)

Expected Release Date Country Indicators Period

12/3/2012 CHINA HSBC Manufacturing PMI Nov INDONESIA Total Imports (YoY)% Oct INDONESIA Inflation (YoY)% Nov INDONESIA Inflation NSA (MoM)% Nov INDONESIA Core CPI (YoY)% Nov INDONESIA Money Supply - M2 (YoY)% Oct

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INDONESIA Exports (YoY)% Nov THAILAND Consumer Price Index (YoY)% Nov SOUTH KOREA HSBC Manufacturing PMI Nov SOUTH KOREA Core Consumer Price Index(YoY)% Nov SOUTH KOREA Consumer Price Index (MoM)% Nov 12/4/2012 THAILAND Consumer Confidence Economic Nov 12/5/2012 SOUTH KOREA Foreign Exchange Reserve (USD bn) Nov PHILIPPINES Consumer Price Index (YoY)% Nov CHINA China HSBC Services PMI Nov HONG KONG Purchasing Managers Index Nov 12/6/2012 SOUTH KOREA GDP (YoY)% 3Q F SOUTH KOREA GDP (QoQ)% 3Q F

12/7/2012 THAILAND Foreign Reserves (USD bn) Nov 30

JAPAN Official Reserve Assets (USD bn) Nov

MALAYSIA Foreign Reserves (USD bn) Nov 30

SINGAPORE Foreign Reserves (USD mn) Nov PHILIPPINES Foreign Reserves (USD mn) Nov MALAYSIA Imports YoY% Oct MALAYSIA Exports YoY% Oct HONG KONG Foreign Currency Reserves (USD bn) Nov

The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.



MARKET DEVELOPMENTS

• Yuan and Yen Led the Rise Among Asian Currencies. China’s yuan strengthened after the central bank raised the currency’s reference rate on increasing signs the economy is rebounding. The currency rose 0.05%. Yen rallies against U.S. dollar and grew by 0.4%. Peso also rose by 0.06%. However, Indonesia Rupiah, Korea Won, Singapore dollar and Thailand Baht slightly depreciated.

• Most Asian Stocks Drop on U.S. Manufacturing while China Shares Jump. Most Asian stocks fell after U.S. manufacturing unexpectedly shrank and American lawmakers grappled with new budget proposals. Losses were limited as China’s Shanghai Composite rebounded from the lowest in almost four years. It rebounded by 0.78%, followed by the rises of 0.75% in Vietnam market and 0.59% in Philippine market. On the other hand, Indonesia market dropped by 1.1% and both Japan and Korea’s markets declined by one-quarter percent.

BREAKING NEWS

GLOBAL

• Euro-Area Finance Chiefs Confident Greek Buyback to Succeed. European finance ministers voiced confidence that Greece will pull off a successful bond buyback, the key element in a revamped effort to stem the debt crisis in the country where it started. Greece began the 10 billion-euro ($13 billion) repurchase of bonds maturing from 2023 to 2042 yesterday, offering a higher-than-planned price in order to increase demand for the debt-reduction measure. “I’m confident it will go well,” French Finance Minister Pierre Moscovici told reporters after euro-area finance chiefs met in Brussels. “It seems to be happening under satisfactory conditions.”.

• EU Nations to Push Toward ECB Bank Supervisor Amid German Doubts. European Union finance ministers will press today toward a common bank supervisor, a key plank in their crisis-fighting strategy, amid German doubts over the system’s scope and timeline. EU finance ministers meeting in Brussels must reach a compromise, French Finance Minister Pierre Moscovici told reporters before a euro-area meeting yesterday. Two European officials also said that a political agreement may be within reach to create a new supervisor at the European Central Bank. Nations have yet to agree on how the ECB oversight would apply to smaller banks or on supervisory voting procedures. German Finance Minister Wolfgang Schaeuble said the oversight --a required first step before banks can directly tap the euro area’s firewall fund -- will take time to set up.

• Manufacturing Contracts in U.S. on Fiscal Concern. Manufacturing unexpectedly contracted in November for the fourth month in the last six as factory managers grew more concerned about the potential economic toll stemming from the so-called fiscal cliff. The Institute for Supply Management’s factory index fell to 49.5, the lowest since July 2009, from 51.7 in October. The median forecast in a Bloomberg survey called for 51.4. Fifty marks the dividing line between expansion and contraction. Construction spending in October jumped by the most in five months, another report showed.

• RBA Cuts Key Rate to Match Half-Century Low as Currency Holds Up. The Reserve Bank of Australia cut its benchmark interest rate to the half-century low set during the 2009 global recession as hiring falters and an elevated currency hurts industries such as manufacturing and tourism. Governor Glenn Stevens and his board reduced the overnight cash-rate target by a quarter percentage point to 3 percent, the central bank said in a statement in Sydney today. The

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sixth cut in the past 14 months was predicted by 20 of 28 economists surveyed by Bloomberg. The rate matches the level reached from April-October 2009 that was the lowest since 1960.

• N.Z. Shadow Board Says Central Bank Should Extend Rate Pause. New Zealand’s central bank should hold the official cash rate at a record-low 2.5 percent at its Dec. 6 meeting, according to the majority of a nine-member panel of economists, academics and company executives. Seven of the so-called shadow board set up by the New Zealand Institute of Economic Research Inc. said Governor Graeme Wheeler should leave the rate unchanged this week, the Wellington-based institute said in an e-mailed statement. Two members preferred a rate cut.

REGIONAL

• China, S. Korea to Boost Use of Local Currencies in Trade. South Korea said it agreed with China to allow banks in both countries to borrow funds from an existing swap arrangement to encourage trade settlement in local currencies. A 64 trillion won ($59 billion) swap line will be made available for loans to allow companies in both countries to settle deals in the won and yuan, according to a statement today from the Finance Ministry and the Bank of Korea. The system is scheduled to start later this month, it said. The agreement is part of a push among emerging countries to internationalize local currencies after the global financial crisis, according to the South Korea statement. Both China and South Korea acknowledge that the use of the won and yuan is “very low” even as trade between the two countries is increasing, it said.

• Japan Tunnel Collapse Threatens to Add to Fiscal Burden. Japan’s fatal tunnel tragedy this week escalated a political debate over infrastructure spending as the nation heads for elections, bringing focus to aging transport networks in the world’s third-largest economy. The 4-kilometer tunnel near Mt. Fuji that saw about 270 concrete slabs each weighing 1.4 tons fall and cause the deaths of nine people was built in the 1970s. Prime Minister Yoshihiko Noda yesterday said while repairs are a priority, the opposition Liberal Democratic Party’s call for broader infrastructure spending is a throwback to “wasteful pork-barrel” projects.

• Philippines May Impose New Cap on Peso Forwards, Tetangco Says. The Philippine central bank is looking at measures to help deal with rising inflows, which may include new limits on currency forwards, amid the fastest economic growth in two years. “It looks like there is less need to stimulate the economy from the monetary policy perspective,” Governor Amando Tetangco said in an e-mailed reply to questions yesterday, adding that changes to the reserve-requirement ratio for lenders and capital controls won’t be necessary at this stage. Bangko Sentral ng Pilipinas is reviewing the risk premium on forwards as one of its tools and is in discussions with banks, he said.

• Toyota Expansion May Buoy Baht as Nissan Spends. A year after Thailand’s worst floods in seven decades devastated the economy, currency forecasters are betting the baht will outperform its Southeast Asian peers next quarter as Japanese companies commit more funds. Nissan Motor Co., Japan’s second-largest automaker, pledged last month to invest 11 billion baht ($359 million) in a second factory as the government is making efforts to prevent a repeat of the disaster that closed plants and deluged industrial estates. Toyota Motor Corp., Asia’s biggest car manufacturer, announced it will boost production in Thailand to cater to increasing demand in emerging markets.


ADB – Press Release: ADB Marks World AIDS Day with New Project in Myanmar

• The ADB is marking World AIDS Day with the launch of a new HIV project in Myanmar, where transmission risks and infection rates are a growing concern. The Myanmar project will support the scaling up of the local response to improve access to HIV prevention services for key

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affected populations including migrant workers, and will strengthen monitoring systems for tracking HIV risks across borders.

http://www.adb.org/news/adb-marks-world-aids-day-new-project-myanmar

BIS – Publication: “Operationalising the selection and application of macroprudential instruments”

• The BIS has publicised the captioned report prepared by a Working Group chaired by José-Manuel González-Páramo, formerly European Central Bank, which aims to help policymakers in operationalising macroprudential policies. Specifically, it draws out three high-level criteria that are key in determining the selection and application of macroprudential instruments: i. the ability to determine the appropriate timing for the activation or deactivation of the instrument; ii. the effectiveness of the instrument in achieving the stated policy objective; and iii. the efficiency of the instrument in terms of a cost-benefit assessment.

http://www.bis.org/publ/cgfs48.htm (Press Release)

http://www.bis.org/publ/cgfs48.pdf (Report)

IMF – Press Release: The Liberalization and Management of Capital Flows—An Institutional View

• The IMF concluded discussions on November 16, 2012 of a staff paper on “The Liberalization and Management of Capital Flows—An Institutional View.” Executive Directors welcomed the opportunity to consider the proposal for a Fund institutional view on capital flows and policies related to them, in their meetings on November 7 and on November 16. They recognized that the institutional view builds on previous Fund policy papers and Board discussions on capital flows, drawing on country experiences and analytical work by Fund staff and others.

http://www.imf.org/external/np/sec/pn/2012/pn12137.htm (Press Release)

http://www.imf.org/external/np/pp/eng/2012/111412.pdf (Staff Paper)



• “Tracking Global Demand for Advanced Economy Sovereign Debt” – “Recent events have shown that sovereign, just like banks, can be subject to runs, highlighting the importance of the investor base for their liabilities. This paper proposes a methodology for compiling internationally comparable estimates of investor holdings of sovereign debt. Based on this methodology, it introduces a dataset for 24 major advanced economies that can be used to track US$42 trillion of sovereign debt holdings on a quarterly basis over 2004-11.”


• “A Tradeoff between the Output and Current Account Effects of Pension Reform” – “We compare the long-term output and current account effects of pension reforms that increase the retirement age with those of reforms that cut pension benefits, conditional on reforms achieving similar fiscal targets. We show the presence of a policy trade-off. Pension reforms that increase the retirement age have a large positive effect on output, but a small (and often negative) effect on the current account. In contrast, reforms that cut pension benefits improve the current account balance but reduce output. Mixed pension reforms, which extend the working life and cut pension benefits, can simultaneously boost output and the current account.”


OECD – Publication: “Settling In: OECD indicators on the integration of immigrants 2012”

• The OECD has issued the captioned report, which provides the first international comparisons of how well countries are doing across a broad range of issues, revealing developments over the past decade. Immigrants made up nearly one in ten people in OECD countries in 2010, up by a

http://www.adb.org/news/adb-marks-world-aids-day-new-project-myanmar

http://www.bis.org/publ/cgfs48.htm

http://www.bis.org/publ/cgfs48.pdf

http://www.imf.org/external/np/sec/pn/2012/pn12137.htm

http://www.imf.org/external/np/pp/eng/2012/111412.pdf



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quarter since 2000. The share of immigrants in Spain trebled between 2000 and 2010, and more than doubled in Iceland and Ireland. Only a few countries did not see large increases, such as France, Germany, the Netherlands and the United States.

http://www.oecd.org/newsroom/progressmadeonimmigrantintegrationbutmoreeffortsneededoneducationandjobsfindsoecd.htm


2011 close Previous wk's close 3-Dec 4-Dec % change 2012 YTD

(%chg) China 6.2980 6.2266 6.2287 6.2258 0.05 1.2 Hong Kong 7.7698 7.7503 7.7501 7.7501 0.00 0.3 Indonesia 9,126.0 9,618.0 9,614.0 9,624.0 -0.10 -5.2 Japan 76.8 82.48 82.25 81.92 0.40 -6.3 Korea 1,150.8 1,082.9 1,083.0 1,083.5 -0.04 6.2 Malaysia 3.1507 3.0394 3.0430 3.0434 -0.01 3.5 Philippines 43.765 40.795 40.9 40.875 0.06 7.1 Singapore 1.2906 1.2202 1.2187 1.2188 -0.01 5.9 Thailand 31.5 30.7 30.6 30.7 -0.13 2.5 Vietnam 21,031.0 20,850.0 20,850.0 20,850.0 0.00 0.9

Note: Negative values indicate depreciation and positive values indicate appreciation. STOCK MARKET INDEX


(%chg) China 2,199.4 1,980.1 1,959.8 1,975.1 0.78 -10.2 Hong Kong 18,877.4 22,030.4 21,767.9 21,793.1 0.12 15.4 Indonesia 3,857.9 4,276.1 4,302.4 4,253.8 -1.13 10.3 Japan 8,455.4 9,446.0 9,458.2 9,432.5 -0.27 11.6 Korea 1,875.4 1,932.9 1,940.0 1,935.2 -0.25 3.2 Malaysia 1,514.6 1,610.8 1,607.4 1,608.0 0.04 6.2 Philippines 4,422.2 5,640.5 5,672.7 5,706.3 0.59 29.0 Singapore 2,691.1 3,070.0 3,065.7 3,062.3 -0.11 13.8 Thailand 1,025.3 1,324.0 1,332.9 1,330.8 -0.16 29.8 Vietnam 350.0 377.8 379.3 382.1 0.75 9.2

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 3-Dec 4-Dec bps change 3-Dec 4-Dec bps change China 2.260 2.260 0.00 3.825 3.832 0.67 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.168 4.168 0.00 4.907 4.909 0.20 Japan 0.100 0.095 -0.50 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.820 2.820 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -3.237 0.829 406.60 -0.179 0.460 63.90 Singapore 0.096 0.096 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.868 2.868 0.00 Vietnam 1.950 2.067 11.70 6.467 6.475 0.80


30-Nov 3-Dec bps change China 56.2 57.6 1.38 Hong Kong 46.5 46.0 -0.47 Indonesia 120.6 122.4 1.79 Japan 67.4 68.8 1.41 Korea 57.6 62.9 5.28 Malaysia 65.8 67.7 1.82 Philippines 97.8 98.5 0.72 Thailand 82.6 84.8 2.27 Vietnam 200.0 198.2 -1.80




Page 5 of 6

3-Dec 4-Dec % change Gold Spot (in US$ per ounce)

1,716.0 1,706.6 -0.55

Source: Bloomberg

CREDIT RATINGS




China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 n.a Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 n.a Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 n.a Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 138.6 Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 81.7 n.a Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.5 Vietnam 17.4 19.5 19.9 19.7 20.0 n.a n.a n.a n.a EXTERNAL LIQUIDITY RATIOS





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DATA RELEASES FOR THE DAY Country Indicators Period Last Previous

THAILAND Consumer Confidence Economic Nov 69.4 68.1



12/3/2012 CHINA HSBC Manufacturing PMI Nov

INDONESIA Total Imports (YoY)% Oct

INDONESIA Inflation (YoY)% Nov

INDONESIA Inflation NSA (MoM)% Nov

INDONESIA Core CPI (YoY)% Nov

INDONESIA Money Supply - M2 (YoY)% Oct

INDONESIA Exports (YoY)% Nov

THAILAND Consumer Price Index (YoY)% Nov

SOUTH KOREA HSBC Manufacturing PMI Nov

SOUTH KOREA Core Consumer Price Index(YoY)% Nov

SOUTH KOREA Consumer Price Index (MoM)% Nov

12/4/2012 THAILAND Consumer Confidence Economic Nov

12/5/2012 SOUTH KOREA Foreign Exchange Reserve (USD bn) Nov

PHILIPPINES Consumer Price Index (YoY)% Nov

CHINA China HSBC Services PMI Nov

HONG KONG Purchasing Managers Index Nov

12/6/2012 SOUTH KOREA GDP (YoY)% 3Q F

SOUTH KOREA GDP (QoQ)% 3Q F




SINGAPORE Foreign Reserves (USD mn) Nov

PHILIPPINES Foreign Reserves (USD mn) Nov

MALAYSIA Imports YoY% Oct

MALAYSIA Exports YoY% Oct

HONG KONG Foreign Currency Reserves (USD bn) Nov The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.



MARKET DEVELOPMENTS

• Yen Declines Versus All Major Peers as BOJ Says Ready for Action. The yen declined at least 0.4 percent versus all of its 16 major counterparts as the prospect of more stimulus measures from the Bank of Japan and gains in equities curbed demand for the currency. Among other regional currencies, Indonesian rupiah also slumped by 0.2%, but South Korea’s Won, Malaysia Ringgit and Philippine Peso gain.

• Asian Stocks Advance Led by China Insurers and Leaders Pledge. Asian stocks rose, with the regional benchmark index headed for its highest close in seven months, as Chinese banks and insurers surged after a rule limiting insurers’ investments in commercial lenders was eliminated and the country’s new leaders pledged to promote “urbanization.” Japan’s Nikkei 225 Stock Average gained 0.4 percent, reversing losses of as much as 0.6 percent. South Korea’s Kospi Index rose and Taiwan’s Taiex Index both advanced 0.6 percent. Hong Kong’s Hang Seng Index rose 2.2 percent.

• Oil Rises From Three-Day Low as China Signals Economic Support. Oil rebounded from the lowest level in three days in New York after China’s leadership signaled it’s ready to boost stimulus if economic growth falters in the world’s second-biggest crude-consuming nation. Futures rose as much as 0.6 percent after dropping for the first time in four days yesterday. Crude for January delivery climbed as much as 55 cents to $89.05 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.03 at 4:11 p.m. Singapore time.

BREAKING NEWS

GLOBAL

• Obama Signals Lesson on Debt Talks Is Standing Firm on Tax Rates. President Barack Obama is hardening his stance in his first post-election confrontation with Republicans, declaring he will make no deal on the country’s fiscal future unless congressional leaders first accept tax rate increases on top earners. During an appearance yesterday on Bloomberg Television, Obama’s first media interview since his re-election, the president paired his ultimatum on taxes with signals he is ready to make concessions to Republican House Speaker John Boehner’s calls for cuts to entitlement programs such as Medicare health insurance for the elderly.

• Finnish Economy Joins Euro Area in Recession on Investment Drop. Finland’s economy unexpectedly joined the euro area in a recession last quarter as the region’s debt crisis weighed on confidence and sapped investments. Gross domestic product contracted 0.1 percent from the prior quarter, when it shrank 1.1 percent, Statistics Finland in Helsinki said on its website today. That missed the estimates of three economist surveyed by Bloomberg for growth of 0.2 percent to 0.4 percent. On an annual basis, GDP fell 1.2 percent.

• Australia’s Weakest Consumption Since 2010 Slows Growth. Australia’s economy slowed last quarter on the weakest consumer demand in 2 1/2 years and tighter government spending, validating the central bank’s decision to cut interest rates. Third-quarter gross domestic product advanced 3.1 percent from a year earlier after a revised 3.8 percent expansion in the April-June period, a Bureau of Statistics report released in Sydney today showed. That matched the median of 25 estimates in a Bloomberg News survey. Growth was 0.5 percent from the previous three months, when the quarterly gain was 0.6 percent.

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• India Service-Industry Growth Slows to a 13-Month Low, PMI Shows. India’s service industries expanded at the slowest pace in 13 months in November, a private survey showed, signaling demand remains subdued as Asia’s third-largest economy struggles. The purchasing managers’ index fell to 52.1 from 53.8 in October, HSBC Holdings Plc and Markit Economics said in a statement today. A number above 50 indicates growth. India’s government overhauled policies in September to pare a budget deficit and allow more foreign investment in industries such as retail and aviation. The $1.8 trillion economy may expand at the weakest pace in a decade this year, according to the International Monetary Fund, adding pressure on Prime Minister Manmohan Singh to widen efforts to revive growth.

• Russian November Inflation Probably Quickened After Slowdown. Russian inflation probably quickened in November after slowing unexpectedly the previous month. Consumer prices advanced 6.6 percent from a year earlier, compared with 6.5 percent in October. Prices rose 0.5 percent in the month, matching the increase in October, a second poll of 18 economists showed. The Moscow-based Federal Statistics Service will report the data today or tomorrow. Russia, the biggest emerging economy to raise interest rates this year, is struggling to restrain price growth after droughts in the U.S. and locally drove up food costs. Policy makers want to cap inflation at 6.5 percent to 7 percent this year, according to central bank Chairman Sergei Ignatiev, and are targeting a 5 percent-6 percent rate in 2013.

REGIONAL

• China Abolishes Limit on Insurer Investment in Banks, CIRC Says. China has abolished a rule limiting insurance companies’ investments in commercial banks as the industry regulator gives insurers more freedom to manage risks. The China Insurance Regulatory Commission didn’t specify in a statement posted on its website yesterday which specific investment restrictions have been eliminated. The CIRC didn’t immediately reply to a fax sent to its Beijing-based press office seeking comments on the release. Chinese insurers were limited to investing in a maximum of two banks if their ownership exceeded 5 percent under rules published in 2006, when the regulator ended a 13-year ban barring insurance firms from expanding into banking and securities businesses. Insurers shouldn’t have more than 3 percent of their total assets invested in banks, according to the 2006 regulation.

• Nishimura Says BOJ Prepared to Ease More as Election Looms. The Bank of Japan is ready to ease further if needed, Deputy Governor Kiyohiko Nishimura said, while also emphasizing those monetary conditions are already loose and urging the government boost growth to end deflation. “The bank has been and will always be ready to take appropriate and decisive action,” Nishimura said in a speech today in Niigata, northwestern Japan. The asset purchase program introduced in 2010 has “already achieved its intended effects” as financial conditions are extremely accommodative. Japan holds its national election on Dec. 16, with opposition front-runner Shinzo Abe calling for unlimited easing until Japan achieves an inflation goal of 2 percent. Nishimura said today the BOJ will continue with powerful monetary easing until its goal of 1 percent inflation is in sight, while prices were unchanged in October from a year earlier.

• Indonesian Bonds Draw Record Inflows as Investors Chase Yields. Foreign funds boosted holdings of Indonesian local-currency sovereign bonds by the most on record in November, lured by some of the highest yields in Asia. Overseas investors added 19.52 trillion rupiah ($2 billion) of rupiah notes last month, the biggest inflow recorded in finance ministry data going back to January 2003, Singgih, a spokesman at the debt management office in Jakarta, said in a mobile-phone text message today. Ownership reached an all-time high of 269.85 trillion rupiah on Nov. 30. Indonesia’s 10-year notes yield 5.27 percent, the second-highest after India among the 13 biggest Asia-Pacific economies, according to data compiled by Bloomberg.

• Philippine November Inflation Slows to Five-Month Low on Food. Philippine inflation slowed to a five-month low in November as food and fuel prices eased. Consumer prices rose 2.8 percent

Page 3 of 6

from a year earlier, after a previously reported 3.1 percent advance in October, the National Statistics Office said in Manila today. Price gains could accelerate as a storm that struck the Philippines this week may damage crops and cause supply disruptions. Bangko Sentral ng Pilipinas sees less need to stimulate the economy, Governor Amando Tetangco said, after gross domestic product expanded 7.1 percent last quarter.


BIS – Working Paper: “Interpreting TARGET2 balances”

• The BIS has publicised the captioned working paper. “The increase in the TARGET2 balance for the Bundesbank has led to a debate in Germany about the appropriate interpretation and policy response, if any. In this paper we review the evidence for the current account financing interpretation, and find it wanting in explaining the data in 2012. TARGET2 balances reflect not only concern regarding actual credit exposures but also potential currency exposures.” http://www.bis.org/publ/work393.pdf

IFC – Press Release: Helps Boost Power Supplies in Developing Countries

• The IFC Is providing a financial package of $17 million to Smart Energy Solutions (SES), a Dubai-based power generation company, to help address temporary electricity shortages in many conflict-affected countries. As part of the package, IFC will provide a loan to SES while acquiring a stake in Jolt Holdings, the owner of SES and a subsidiary or Gulf Capital. The IFC financing will help the company expand into frontier and post-conflict countries in the Middle East, Sub-Saharan Africa, and South Asia, where power outages often cut into productivity and hamper economic growth. http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/052B5BDDC1B6E6E485257ACA00427DCB

IMF – Press Release: Lao P.D.R. — 2012 Round Table Implementation Meeting

• The IMF has publicised the Statement by Sanjay Kalra, IMF Resident Representative, at the captioned event. http://www.imf.org/external/np/dm/2012/112312.htm

IMF – Working Papers

• The IMF has publicised the following working papers: • “Pension Reforms in Japan” –This paper analyzes various reform options for Japan’s public

pension in light of large fiscal consolidation needs of the country. The most attractive option is to increase the pension eligibility age in line with high and rising life expectancy. http://www.imf.org/external/pubs/ft/wp/2012/wp12285.pdf

• “Shadow Banking: Economics and Policy” - This note outlines the basic economics of the shadow banking system, highlights (systemic) risks related to it, and suggests implications for measurement and regulatory approaches. http://www.imf.org/external/pubs/ft/sdn/2012/sdn1212.pdf

UNCTAD – Publication: “Least Developed Countries Report 2012”

• UNCTAD has issued the captioned publication, which analyses the impact of remittances sent to the least developed countries (LDCs), and the effect of "brain drain" from LDCs, and looks at the potential benefits that the very wide LDC diaspora may have for home countries. http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=368&Sitemap_x0020_Taxonomy=Africa and Least Developed Countries;#1389;#Least Developed Countries;#20;#UNCTAD Home (Press Release) http://unctad.org/en/PublicationsLibrary/ldc2012_en.pdf (Report)

World Bank – Press Release: “Second Trade Development Facility for Lao PDR”

http://www.bis.org/publ/work393.pdf

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/052B5BDDC1B6E6E485257ACA00427DCB

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/052B5BDDC1B6E6E485257ACA00427DCB

http://www.imf.org/external/np/dm/2012/112312.htm


http://www.imf.org/external/pubs/ft/sdn/2012/sdn1212.pdf

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=368&Sitemap_x0020_Taxonomy=Africa

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=368&Sitemap_x0020_Taxonomy=Africa

http://unctad.org/en/PublicationsLibrary/ldc2012_en.pdf

Page 4 of 6

• The World Bank has approved US$ 4 million in grant financing for the Second Trade Development Facility (TDF-2), co-financed with a Multi Donor Trust Fund of US$ 10 million with contributions from Australia, the European Union, Germany, and Ireland. The grant builds on the progress of the original US$ 7.6 million project, which was approved in 2008. http://www.worldbank.org/en/news/2012/12/04/firms-entrepreneurs-employees-lao-pdr-benefit-improved-business-environment



(%chg) China 6.2980 6.2266 6.2256 6.2242 0.02 1.2 Hong Kong 7.7698 7.7503 7.7501 7.7501 0.00 0.3 Indonesia 9,126.0 9,618.0 9,624.0 9,642.0 -0.19 -5.4 Japan 76.8 82.48 81.9 82.24 -0.41 -6.6 Korea 1,150.8 1,082.9 1,083.5 1,081.5 0.18 6.4 Malaysia 3.1507 3.0394 3.0441 3.0416 0.08 3.6 Philippines 43.765 40.795 40.88 40.848 0.08 7.1 Singapore 1.2906 1.2202 1.2177 1.2181 -0.03 6.0 Thailand 31.5 30.7 30.7 30.7 0.00 2.6 Vietnam 21,031.0 20,850.0 20,850.0 20,845.0 0.02 0.9



(%chg) China 2,199.4 1,980.1 1,975.1 2,031.9 2.87 -7.6 Hong Kong 18,877.4 22,030.4 21,800.0 22,267.9 2.15 18.0 Indonesia 3,857.9 4,276.1 4,269.7 4,281.9 0.29 11.0 Japan 8,455.4 9,446.0 9,432.5 9,468.8 0.39 12.0 Korea 1,875.4 1,932.9 1,935.2 1,947.0 0.61 3.8 Malaysia 1,514.6 1,610.8 1,607.6 1,612.1 0.28 6.4 Philippines 4,422.2 5,640.5 5,706.3 5,687.7 -0.33 28.6 Singapore 2,691.1 3,070.0 3,062.1 3,079.4 0.56 14.4 Thailand 1,025.3 1,324.0 1,330.1 1,330.1 0.00 29.7 Vietnam 350.0 377.8 382.1 385.7 0.94 10.2

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 4-Dec 5-Dec bps change 4-Dec 5-Dec bps change China 2.360 2.250 -11.00 3.832 3.835 0.28 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.168 4.168 0.00 4.909 4.921 1.20 Japan 0.100 0.095 -0.50 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.820 2.820 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 0.829 1.490 66.10 0.460 0.438 -2.20 Singapore 0.117 0.117 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.868 2.868 0.00 Vietnam 2.067 2.500 43.30 6.475 7.082 60.70


3-Dec 4-Dec bps change China 56.2 59.9 3.68 Hong Kong 46.5 46.6 0.14 Indonesia 120.6 122.2 1.58 Japan 67.4 69.2 1.80 Korea 57.6 64.0 6.33 Malaysia 65.8 71.0 5.19 Philippines 97.8 98.8 0.97 Thailand 82.6 86.2 3.65

http://www.worldbank.org/en/news/2012/12/04/firms-entrepreneurs-employees-lao-pdr-benefit-improved-business-environment

http://www.worldbank.org/en/news/2012/12/04/firms-entrepreneurs-employees-lao-pdr-benefit-improved-business-environment

Page 5 of 6

Vietnam 200.0 200.1 0.15 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk.

* CDS trades in New York, hence the one working day lag in the latest closing price


1,697.6 1,706.5 0.53

Source: Bloomberg

CREDIT RATINGS




China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 n.a Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 n.a Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1 Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 138.6 Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 81.7 n.a Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.5 Vietnam 17.4 19.5 19.9 19.7 20.0 n.a n.a n.a n.a EXTERNAL LIQUIDITY RATIOS






Country Indicators Period Last Previous CHINA China HSBC Services PMI Nov 52.1 53.5 HONG KONG Purchasing Managers Index Nov 52.2 50.5 INDONESIA Consumer Confidence Index Nov 120.1 119.5 SOUTH KOREA Foreign Exchange Reserve (USD bn) Nov 326.09 323.46 PHILIPPINES Consumer Price Index (YoY)% Nov 2.8 3.1

Page 6 of 6



12/3/2012 CHINA HSBC Manufacturing PMI Nov INDONESIA Total Imports (YoY)% Oct INDONESIA Inflation (YoY)% Nov INDONESIA Inflation NSA (MoM)% Nov INDONESIA Core CPI (YoY)% Nov INDONESIA Money Supply - M2 (YoY)% Oct INDONESIA Exports (YoY)% Nov THAILAND Consumer Price Index (YoY)% Nov SOUTH KOREA HSBC Manufacturing PMI Nov SOUTH KOREA Core Consumer Price Index(YoY)% Nov SOUTH KOREA Consumer Price Index (MoM)% Nov 12/4/2012 THAILAND Consumer Confidence Economic Nov 12/5/2012 CHINA China HSBC Services PMI Nov HONG KONG Purchasing Managers Index Nov INDONESIA Consumer Confidence Index Nov

SOUTH KOREA Foreign Exchange Reserve (USD bn) Nov

PHILIPPINES Consumer Price Index (YoY)% Nov 12/6/2012 SOUTH KOREA GDP (YoY)% 3Q F SOUTH KOREA GDP (QoQ)% 3Q F




SINGAPORE Foreign Reserves (USD mn) Nov PHILIPPINES Foreign Reserves (USD mn) Nov MALAYSIA Imports YoY% Oct MALAYSIA Exports YoY% Oct HONG KONG Foreign Currency Reserves (USD bn) Nov




MARKET DEVELOPMENTS

• Indonesian rupiah and Korean won lead Asian currency declines. Rupiah weakened by 0.1% due to domestic dollar demand. Won retreated by 0.15% as Bank of Korea revises third-quarter GDP growth to 0.1% from October estimate of 0.2%. Yen gained against euro and fluctuated between gains and losses vs U.S. dollar. Malaysia’s ringgit retreated by 0.26%, declining a fourth day.

• Asian Stocks Heading for Eight-Month High on U.S. Economic Data. Asian stocks rose, with the regional benchmark index headed for its highest close in eight months, after data on U.S. services and factory orders beat estimates. Japan’s Nikkei 225 Stock Average increased 0.8 percent after the yen traded near a seven-month low, boosting the outlook for Japanese exporters. South Korea’s Kospi Index added 0.1 percent. The Philippine Stock Exchange Index gained 1.3 percent. Hong Kong’s Hang Seng Index lost 0.1 percent. China’s Shanghai Composite Index slipped 0.1 percent after yesterday surging by the most in three months.

• Oil Trades Near One-Week Low as U.S. Gasoline Stockpiles Surge. Oil traded near its lowest price in a week in New York after a government report showed U.S. gasoline inventories increased the most in 11 years. Futures were little changed after declining a second day yesterday as the Energy Department said gasoline stockpiles rose by 7.86 million barrels, the most since Sept. 21, 2001. Demand for the motor fuel slid for a third week even as refineries ran at the highest rate since August. Oil has also dropped amid disagreement between U.S. President Barack Obama and Republican leaders in talks to avert more than $600 billion in automatic tax increases and spending cuts known as the fiscal cliff.

BREAKING NEWS

GLOBAL

• Services in U.S. Unexpectedly Grow at Faster Pace: Economy. Service industries in the U.S. unexpectedly grew at a faster pace in November, showing the biggest part of the economy is weathering concern about looming federal tax increases and spending cuts. The Institute for Supply Management’s non-manufacturing index rose to 54.7 last month from 54.2 in October, the Tempe, Arizona-based group said today. Economists projected a decline to 53.5, according to the median estimate in a Bloomberg survey. Readings above 50 signal expansion.

• ECB Seen Refraining From Rate Cuts as Yields Sink on Bond Plan. The European Central Bank may refrain from cutting interest rates any further after its pledge to buy government bonds lowered borrowing costs and boosted confidence that the euro area can emerge from recession next year. ECB policy makers meeting in Frankfurt today will hold the benchmark rate at a record low of 0.75 percent, according to 56 of 61 economists in a Bloomberg News survey. They will leave the rate there through 2013 and into 2014, a separate survey shows. A month ago, the median forecast was for a rate cut next year.

• Spain Addicted to Draghi’s Support as Reform Drags. Spain is still dependent on Mario Draghi to keep its bond yields under control a year after he started an extraordinary lending program to buy the government time to implement reforms and win back market confidence. After becoming European Central Bank president in November 2011, Draghi’s measures to ease Europe’s debt turmoil include 1trillion euros ($1.3 trillion) to banks via two Longer-Term Refinancing Operations, and a bond-buying plan for nations that request aid.

Page 2 of 6

• U.K. Needs a Yuan Swap to Boost Trade, Ex-PBOC Adviser Says. The U.K. needs to build closer ties with China’s central bank to unleash London’s potential market in offshore yuan trading, according to a former adviser to the People’s Bank of China. While Chancellor of the Exchequer George Osborne, who cut Britain’s growth outlook yesterday, is pushing for London to become an offshore center for yuan trading, the U.K. is falling behind other countries in facilitating foreign-exchange flows through currency swap agreements, Xia Bin said at a meeting of the London Advisory Council for China yesterday. Seventeen countries have currency swap agreements with China and the U.K. isn’t one of them, Xia said.

• RBA’s Lowe Calls Australian Dollar ‘Uncomfortably High’. Australia’s exchange rate is “uncomfortably high” and business confidence subdued, breaking with past experience during interest-rate reductions, Reserve Bank Deputy Governor Philip Lowe said. “Countries that are in relatively good shape and have not seen large-scale expansion of the central bank balance sheet are experiencing stronger currencies than those that are in relatively poor shape,” Lowe said in a speech yesterday in Sydney. “In response to this, interest rates are lower than they otherwise would be to offset some of the effects of an uncomfortably high exchange rate.”.

REGIONAL

• China Developers Chase Rich Buyers Abroad Amid Curbs at Home. Chinese developers are starting to venture overseas, chasing wealthy locals who are buying apartments from New York to Sydney as the government restrains the property market at home. Xinyuan Real Estate Co. in September took control of a lot slated for more than 200 units of housing near New York’s Brooklyn. China Vanke Co., the country’s biggest builder, set up international units to expand overseas after it acquired a Hong Kong developer in May. Shanghai Greenland Group Co. is spending 8 billion yuan ($1.3 billion) on projects in Australia.

• Japan Opposition LDP’s Main Ally Cautions Abe on BOJ Pressure. Japan’s Liberal Democratic Party should tone down its pledges on inflation targeting and increased defense spending, the party's key ally said ahead of Dec. 16 parliamentary elections the LDP is forecast to win. Natsuo Yamaguchi, head of the New Komeito Party, said he is against forcing the Bank of Japan to set an inflation target of 2 percent, something LDP leader Shinzo Abe has repeatedly called for. Abe’s party has pledged to consider changing the law governing the central back to achieve its objective, which Komeito opposes.

• South Korea Pares Estimate of Third Quarter Growth to 0.1%. South Korea’s economy grew less in the third quarter than the central bank initially estimated as Europe’s debt crisis weighed on sentiment and record household debt curtailed spending. Gross domestic product expanded 0.1 percent during the three months through September from the previous quarter, compared with an October estimate of 0.2 percent, Bank of Korea data showed today. The economy expanded 1.5 percent from a year earlier, also less than the bank’s October forecast. Today’s report shows that South Korea is unlikely to meet the central bank’s growth estimate of 2.4 percent for this year, Bank of Korea Director Jung Yung Taek told reporters in Seoul today. While there are signs of improvement, with exports rising the most in nine months from a year earlier in November, Jung said the expansion will “not be strong” in the fourth quarter.

• Rising Philippine Storm Death Toll Taunts Disaster Response. Storm Bopha killed at least 327 people and left 380 missing in the Philippines in the most devastating cyclone to hit the nation this year even after the government said it was better prepared for disasters. Bopha, known locally as Pablo, left a trail of death and destruction in some coastal and mining towns in Mindanao, the region that was also battered a year ago by the most deadly cyclone since 2008. The death toll has climbed to 475, Agence France-Presse reported, citing the military. As the storm heads to Oriental Mindoro, its wind speed slowed to 115 kilometers (71 miles) per hour and gusts weakened to 145 kilometers per hour as of 1 p.m. today, according to the state disaster agency.

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• Singapore Wages May Worsen Fastest Rich-World Inflation. When dozens of Chinese bus drivers held Singapore’s first strike in 26 years last week, the island deported the perpetrators. Getting rid of the soaring prices that are emboldening calls for higher wages won’t be as easy. Rising housing, transportation and business costs have given the city state the fastest inflation among the developed world’s biggest economies. The illegal protest by the SMRT Corp. drivers in late November may herald a further escalation in price pressures, as even foreign laborers whose cheaper wages have helped restrain inflation express dissatisfaction with their incomes.


ADB – Press Release: Appoints New Vice-President

• The ADB appointed Bruce Davis as Vice-President (Administration and Corporate Management) on 5 December. Mr. Davis served more than 30 years at the Australian Agency for International Development (AusAID), which he led as Director General for 10 years spanning 1999-2009. He is currently the Australian Ambassador to Ireland. http://www.adb.org/news/adb-appoints-new-vice-president

IFC – Press Release: IFC Forum Helps Financial Institutions, Regulators Build Partnerships to Support Sustainable Banking

• The IFC is helping banks and other financial stakeholders from nearly 30 countries promote sustainable banking by sharing knowledge on emerging trends in sustainability and good management of environmental and social risks. IFC’s sixth annual Performance Standards Community of Learning, which began today in Washington, brings together 140 participants to share expertise on environmental and social issues such as resource efficiency, climate change, and biodiversity. Bank regulators from Brazil, China, and Indonesia will also discuss their experiences in scaling up sustainable banking through the adoption of policies and voluntary environmental and social initiatives. http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/A3A1FBA3D1E51BF985257ACB004F92A6

IMF – Working Paper: “Fiscal Multipliers and the State of the Economy”

• The IMF has publicised the captioned working paper. “Only a few empirical studies have analyzed the relationship between fiscal multipliers and the underlying state of the economy. This paper investigates this link on a country-by-country basis for the G7 economies (excluding Italy). Our results show that fiscal multipliers differ across countries, calling for a tailored use of fiscal policy. Moreover, the position in the business cycle affects the impact of fiscal policy on output: on average, government spending, and revenue multipliers tend to be larger in downturns than in expansions. This asymmetry has implications for the choice between an upfront fiscal adjustment versus a more gradual approach.” http://www.imf.org/external/pubs/ft/wp/2012/wp12286.pdf

WTO – Publication: “Annual Report (Mid-October 2011 to mid-October 2012)”

• The WTO has issued its annual report on developments in the international trading environment. Director-General Pascal Lamy said: “The world needs a renewed and stronger commitment from all Governments to revitalize the multilateral trading system that can restore economic certainty at a time when it is badly needed. The policy determination to resist inward-looking policies seems to be faltering in some countries, even as the world economy needs more trade to stave off recession.” http://www.wto.org/english/news_e/news12_e/trdev_28nov12_e.htm

http://www.adb.org/news/adb-appoints-new-vice-president

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/A3A1FBA3D1E51BF985257ACB004F92A6

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/A3A1FBA3D1E51BF985257ACB004F92A6


http://www.wto.org/english/news_e/news12_e/trdev_28nov12_e.htm

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(%chg) China 6.2980 6.2266 6.2255 6.2283 -0.04 1.1 Hong Kong 7.7698 7.7503 7.7501 7.75 0.00 0.3 Indonesia 9,126.0 9,618.0 9,644.0 9,653.0 -0.09 -5.5 Japan 76.8 82.48 82.47 82.45 0.02 -6.9 Korea 1,150.8 1,082.9 1,081.5 1,083.1 -0.15 6.3 Malaysia 3.1507 3.0394 3.0413 3.0491 -0.26 3.3 Philippines 43.765 40.795 40.866 40.95 -0.21 6.9 Singapore 1.2906 1.2202 1.2193 1.2197 -0.03 5.8 Thailand 31.5 30.7 30.7 30.7 0.07 2.6 Vietnam 21,031.0 20,850.0 20,845.0 20,850.0 -0.02 0.9



(%chg) China 2,199.4 1,980.1 2,031.9 2,029.2 -0.13 -7.7 Hong Kong 18,877.4 22,030.4 22,270.9 22,249.8 -0.09 17.9 Indonesia 3,857.9 4,276.1 4,286.8 4,293.2 0.15 11.3 Japan 8,455.4 9,446.0 9,468.8 9,545.2 0.81 12.9 Korea 1,875.4 1,932.9 1,947.0 1,949.6 0.13 4.0 Malaysia 1,514.6 1,610.8 1,613.8 1,616.6 0.18 6.7 Philippines 4,422.2 5,640.5 5,687.7 5,763.6 1.33 30.3 Singapore 2,691.1 3,070.0 3,075.9 3,079.1 0.10 14.4 Thailand 1,025.3 1,324.0 1,330.1 1,341.4 0.86 30.8 Vietnam 350.0 377.8 385.7 385.7 0.00 10.2

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 5-Dec 6-Dec bps change 5-Dec 6-Dec bps change China 2.250 2.250 0.00 3.835 3.840 0.51 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.168 4.168 -0.04 4.921 4.922 0.08 Japan 0.100 0.088 -1.25 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.820 2.820 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 1.490 1.465 -2.50 0.438 0.531 9.30 Singapore 0.053 0.053 0.00 0.378 0.377 -0.04 Thailand 2.750 2.750 0.00 2.868 2.868 0.00 Vietnam 2.500 3.050 55.00 7.082 6.917 -16.50


4-Dec 5-Dec bps change China 59.9 60.0 0.11 Hong Kong 46.6 48.0 1.40 Indonesia 122.2 122.5 0.33 Japan 69.2 69.8 0.59 Korea 64.0 63.5 -0.45 Malaysia 71.0 68.5 -2.57 Philippines 98.8 98.7 -0.08 Thailand 86.2 87.5 1.28 Vietnam 200.1 202.5 2.35


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1,693.9 1,688.9 -0.30

Source: Bloomberg

CREDIT RATINGS




China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 n.a Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 n.a Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1 Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 138.6 Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 81.7 n.a Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.5 Vietnam 17.4 19.5 19.9 19.7 20.0 n.a n.a n.a n.a EXTERNAL LIQUIDITY RATIOS





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SOUTH KOREA GDP (YoY)% 3Q F 1.5 1.6 SOUTH KOREA GDP (QoQ)% 3Q F 0.1 0.2



12/3/2012 CHINA HSBC Manufacturing PMI Nov INDONESIA Total Imports (YoY)% Oct INDONESIA Inflation (YoY)% Nov INDONESIA Inflation NSA (MoM)% Nov INDONESIA Core CPI (YoY)% Nov INDONESIA Money Supply - M2 (YoY)% Oct INDONESIA Exports (YoY)% Nov THAILAND Consumer Price Index (YoY)% Nov SOUTH KOREA HSBC Manufacturing PMI Nov SOUTH KOREA Core Consumer Price Index(YoY)% Nov SOUTH KOREA Consumer Price Index (MoM)% Nov 12/4/2012 THAILAND Consumer Confidence Economic Nov 12/5/2012 SOUTH KOREA Foreign Exchange Reserve (USD bn) Nov PHILIPPINES Consumer Price Index (YoY)% Nov INDONESIA Consumer Confidence Index Nov CHINA China HSBC Services PMI Nov HONG KONG Purchasing Managers Index Nov 12/6/2012 INDONESIA Net Foreign Assets (IDR Tln) Nov INDONESIA Foreign Reserves (USD bn) Nov

SOUTH KOREA GDP (YoY)% 3Q F

SOUTH KOREA GDP (QoQ)% 3Q F 12/7/2012 THAILAND Foreign Reserves (USD bn) Nov 30 JAPAN Official Reserve Assets (USD bn) Nov MALAYSIA Foreign Reserves (USD bn) Nov 30 SINGAPORE Foreign Reserves (USD mn) Nov PHILIPPINES Foreign Reserves (USD mn) Nov MALAYSIA Imports YoY% Oct MALAYSIA Exports YoY% Oct HONG KONG Foreign Currency Reserves (USD bn) Nov




MARKET DEVELOPMENTS

• ASEAN Currencies Declined while Plus 3 Currencies Gained. The yen climbed against most major peers after a magnitude 7.3 earthquake struck Japan, mirroring movements in the currency after a record temblor in 2011. Yuan and Won also gained by 0.1%. On the other hand, most ASEAN currencies declined, leading by Rupiah and Ringgit.

• China’s Stocks Rise, Capping Biggest Weekly Gain in 13 Months while Nikkei 225 Falls From Seven-Month High. The Shanghai Composite Index rose 1.6 percent to 2,061.79 at the close, the highest level since Nov. 12. It advanced 4.1 percent this week after sinking to the lowest since January 2009 on Dec. 3. Korea and Philippine stock indices also rose by around half percent while Singapore index rose by 0.8%. On the other hand, the Nikkei 225 slid 0.2 percent to 9,527.39. Thailand and Vietnam stocks declined by 0.3% and 0.5%, respectively.

• Oil Snaps Three Days of Losses on China Output Growth Outlook. Oil rose in New York, snapping three days of losses and trimming a weekly decline after forecasts showing China’s industrial production rose at the fastest pace since March boosted speculation fuel demand will increase. Futures advanced as much as 0.5 percent before a report Dec. 9 that may show China’s output grew 9.8 percent in November from a year earlier, according to the median estimate of economists surveyed by Bloomberg News.

BREAKING NEWS

GLOBAL

• Draghi’s Go-to ECB Seen Risking Credibility Through Overload. Mario Draghi isn’t just battling to save Europe’s monetary union, he’s being asked to run it. The European Central Bank president is taking on more and more responsibility to keep the currency bloc afloat, from propping up bond markets to monitoring fiscal policies and assuming supervision of the region’s 6,000 banks. Economists, academics and officials past and present say the ECB is at risk of becoming overloaded, which could erode the credibility it needs to achieve its primary goal of price stability.

• Greece to Buy Debt It Already Owns to Reach Target. Greece will need to consider buying back debt it already owns through state-controlled banks and pension funds to reach European Union-imposed targets crucial to release international aid. Nationalized lenders hold about 15 billion euros ($19.6 billion), the largest single block, of the bonds targeted in the buyback, according to Gabriel Sterne, an economist at brokerage firm Exotix Ltd. in London. With Greek pension funds owning a further 8 billion euros of securities, more than a third of the 62 billion euros of restructured bonds outstanding are held by state entities.

• Australia Trade Deficit Widens as Capital-Goods Imports Increase. Australia’s trade deficit widened less than economists predicted in October as exports withstood a slower global economy and capital goods purchases increased. Imports outpaced exports by A$2.09 billion ($2.2 billion), compared with a revised A$1.42 billion deficit in September, the Bureau of Statistics said in a report in Sydney today. The median estimate in a Bloomberg News survey of 24 economists was for a deficit of A$2.2 billion.

• IMF Overemphasized Reserve Build-Up Risks, Audit Report Says. The International Monetary Fund overemphasized the risks posed by countries amassing reserve assets, the fund’s internal auditor said in a report that may embolden economies such as China and South Korea that are

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accumulating foreign currencies. “The IMF has not presented a persuasive analysis of why excessive reserves constitute a major problem for the international monetary system,” according to the report by the fund’s Independent Evaluation Office obtained by Bloomberg News. China, which has the world’s largest stockpile of reserves amounting to $3.29 trillion as of Sept. 30, has been accused by the U.S. of keeping its currency weak to promote exports. Developing nations buffeted by the financial turmoil of the late 1990s have defended their accumulation of reserves as buffers that helped them weather the global crisis of 2008.

REGIONAL

• China’s State-Driven Pickup Bypasses Small Companies. China’s growth rebound, forecast to have gathered pace in November, is bypassing smaller businesses in a sign the government may need to step up policy support to secure a more broad-based recovery. Industrial production growth probably accelerated for a third month to 9.8 percent from a year earlier, while retail sales probably rose 14.6 percent, the most since March, according to median estimates in Bloomberg News surveys before data due Dec. 9. At the same time, 80 percent of small businesses polled by a state-run association said they hadn’t seen any “obvious benefits” from government policies.

• BOJ Has Done Too Little, Says Potential Contender for Governor. The Bank of Japan has failed to end more than a decade of deflation by being too cautious, said Takatoshi Ito, a former finance ministry official who is a contender to become the central bank’s next governor. The bank’s board under Governor Masaaki Shirakawa, who steps down in April, has done “too little, too late,” Ito, dean of Tokyo University’s Graduate School of Public Policy, said yesterday in an interview in Tokyo. The BOJ should have started its asset-purchase program earlier and has been “extremely passive in building inflation expectations,” he said.

• Malaysia October Exports Decline as Palm Oil, Gas Shipments Fall. Malaysia’s exports fell for the third time in four months in October as shipments of palm oil and natural gas declined. Overseas shipments dropped 3.2 percent from a year earlier after climbing 2.6 percent in September, the Trade Ministry said in a statement today. The median of 16 estimates in a Bloomberg News survey was for a 3 percent decline. A recession in Europe, looming spending cuts in the U.S. and a slowdown in China’s economy are damping demand for Asian goods and commodities. Purchasing managers’ indexes show manufacturing output is still contracting or barely expanding in some of the region’s biggest export-dependent economies, and Malaysian central bank Governor Zeti Akhtar Aziz said last month the external environment presents risks to growth.

• Singapore Faces Permanently Tight Labor Market, Minister Says. Singapore faces a “permanently tight” job market, Finance Minister Tharman Shanmugaratnam said, urging companies to boost productivity as the government slows the intake of foreign workers. Transport and logistics industries are already experiencing a “serious shortage of labor” as employers find it difficult to attract more Singaporeans, Shanmugaratnam said in a speech in the city state today. Prime Minister Lee Hsien Loong has raised foreign-worker levies and salary thresholds to cool the inflow of non-Singaporeans after the island’s population jumped by more than 1.1 million since mid-2004, driving up property prices and stoking social tensions. The clampdown has driven the jobless rate to a six-quarter low of 1.9 percent, pushing up manpower costs and constraining the central bank’s scope to combat an economic slowdown with monetary easing.

• ADB Raises Southeast Asia Growth Forecasts on Consumption. The Asian Development Bank said that private consumption and investment are bolstering Southeast Asian economies even as the rest of the region is forecast to expand less than initially estimated. Developing Asian economies will grow 6 percent this year and 6.6 percent in 2013, the Manila-based lender said in its Asian Development Outlook 2012 Supplement today as it lowered its forecasts by 0.1

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percentage point for each period. Among the region’s economic areas, it only raised its projections for Southeast Asia, predicting an expansion of 5.3 percent in 2012 from 5.2 percent earlier.


ADB – Publication: “Asian Development Outlook Supplement”

• The ADB has issued the latest edition of the captioned report, which says “The surging economies of Southeast Asia have been a bright spot in developing Asia’s otherwise subdued 2012 growth performance, but the broader region should still pick up steam in 2013. Developing Asia will post growth of 6.0% in 2012 and 6.6% in 2013, 0.1% percentage point lower than anticipated by ADB in October. Robust private consumption in Southeast Asia and a mild economic recovery in People’s Republic of China (PRC) nearly balance out the weaknesses in India’s economy. The report warns that ongoing sluggishness and uncertainty in Europe and the United States mean that risks to the forecasts remain firmly on the downside.” http://www.adb.org/news/southeast-asias-strength-keeps-asia-growth-track-adb-report (Press Release) http://www.adb.org/sites/default/files/pub/2012/ado-2012-supplement-dec2012.pdf (Report)

IFC – Press Release: Launches Sustainable Banking Network for Regulators to Share Green-Credit Expertise

• The IFC has launched the Sustainable Banking Network to help bank regulators in emerging markets develop green-credit policies and environmental and social risk-management guidelines by sharing knowledge and technical resources. The network, led by IFC, is an informal group of bank regulators and banking associations. It will support members in their efforts to develop standards, policies and guidelines for environmental and social best practices in their countries’ banking sectors. It was established in response to requests from several countries attending the first International Green Credit Forum in Beijing in May 2012 who asked IFC to help build a network of regulators who could share insights and experience. http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/A8B99198EAF19FC585257ACC007345DF

IMF – Press Release: 2011 Coordinated Direct Investment Survey (CDIS) Results

• The IMF has released preliminary results from its 2011 annual Coordinated Direct Investment Survey (CDIS). The CDIS is the Fund’s worldwide survey of bilateral foreign direct investment positions. The results, published as an online database, comprise preliminary estimates of positions for end-2011 and revised estimates for 2009‒2010. The IMF will also post revised data for 2009 forward in mid-2013.The end-2011 survey includes data from 86 economies. New participants include Benin, Guatemala, Mali, and Venezuela. http://www.imf.org/external/np/sec/pr/2012/pr12473.htm

IMF – Press Release: Mission on the First Review Under the Extended Credit Facility Arrangement with Bangladesh

• The IMF mission, led by Mr. David Cowen, visited Dhaka November 27–December 6, 2012 to continue discussions on the first review under a three-year Extended Credit Facility arrangement with Bangladesh. Mr Cowen said, “Under the Extended Credit Facility (ECF) arrangement, performance so far has been generally sound. Quantitative targets are broadly on track, with all performance criteria met at end-June 2012—the first test date under the ECF. Progress has also been made on structural measures, notwithstanding additional time needed to build policy consensus for several key reforms.” http://www.imf.org/external/np/sec/pr/2012/pr12472.htm

MIGA – Publication: “World Investment and Political Risk”

http://www.adb.org/news/southeast-asias-strength-keeps-asia-growth-track-adb-report

http://www.adb.org/sites/default/files/pub/2012/ado-2012-supplement-dec2012.pdf

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/A8B99198EAF19FC585257ACC007345DF

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/A8B99198EAF19FC585257ACC007345DF



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• MIGA has issued the latest edition of the captioned survey. It says, “Foreign investors, attracted by stronger economic growth in developing countries while mindful of risks, remain relatively optimistic about these destinations in the short term. This sentiment dovetails with foreign direct investment (FDI) trends that show developing-country flows continue to account for a substantial share of global FDI: in 2012 they are estimated to be 36 percent of inflows and 14 percent of outflows.” http://www.miga.org/news/index.cfm?stid=1837&aid=3410

UNCTAD – Press Release: eRegulations to be extended to four more provinces in Viet Nam

• UNCTAD has announced that its eRegulations system, already operational in Hanoi, Da Nang and Ho Chi Minh City, is to be extended to four more provinces thanks to a new financial contribution from the Government of the Grand Duchy of Luxembourg. http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=370&Sitemap_x0020_Taxonomy=UNCTAD Home;#6;#Investment and Enterprise;#1383;#Business Facilitation (E-Regulation)



(%chg) China 6.2980 6.2266 6.2282 6.2243 0.06 1.2 Hong Kong 7.7698 7.7503 7.7498 7.7501 0.00 0.3 Indonesia 9,126.0 9,618.0 9,649.0 9,695.0 -0.47 -5.9 Japan 76.8 82.48 82.4 82.32 0.10 -6.7 Korea 1,150.8 1,082.9 1,083.1 1,081.6 0.14 6.4 Malaysia 3.1507 3.0394 3.0481 3.0555 -0.24 3.1 Philippines 43.765 40.795 40.93 40.965 -0.09 6.8 Singapore 1.2906 1.2202 1.2198 1.2209 -0.09 5.7 Thailand 31.5 30.7 30.7 30.7 -0.07 2.5 Vietnam 21,031.0 20,850.0 20,850.0 20,840.0 0.05 0.9



(%chg) China 2,199.4 1,980.1 2,029.2 2,061.8 1.60 -6.3 Hong Kong 18,877.4 22,030.4 22,249.8 22,191.2 -0.26 17.6 Indonesia 3,857.9 4,276.1 4,292.6 4,287.5 -0.12 11.1 Japan 8,455.4 9,446.0 9,545.2 9,527.4 -0.19 12.7 Korea 1,875.4 1,932.9 1,949.6 1,957.5 0.40 4.4 Malaysia 1,514.6 1,610.8 1,616.2 1,615.4 -0.05 6.7 Philippines 4,422.2 5,640.5 5,763.6 5,794.2 0.53 31.0 Singapore 2,691.1 3,070.0 3,078.2 3,103.1 0.81 15.3 Thailand 1,025.3 1,324.0 1,339.9 1,335.7 -0.31 30.3 Vietnam 350.0 377.8 385.7 383.8 -0.49 9.7

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 6-Dec 7-Dec bps change 6-Dec 7-Dec bps change China 2.300 2.250 -5.00 3.840 3.843 0.33 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.07 Indonesia 4.168 4.168 0.04 4.922 4.922 0.00 Japan 0.100 0.095 -0.50 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.820 2.820 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 1.465 1.617 15.20 0.531 0.531 0.00 Singapore 0.031 0.031 0.00 0.377 0.376 -0.08 Thailand 2.750 2.750 0.00 2.868 2.868 -0.08 Vietnam 3.050 3.150 10.00 6.917 7.188 27.10

http://www.miga.org/news/index.cfm?stid=1837&aid=3410

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=370&Sitemap_x0020_Taxonomy=UNCTAD

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=370&Sitemap_x0020_Taxonomy=UNCTAD

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5-Dec 6-Dec bps change China 60.0 58.4 -1.62 Hong Kong 48.0 39.5 -8.54 Indonesia 122.5 123.2 0.68 Japan 69.8 75.9 6.14 Korea 63.5 63.8 0.32 Malaysia 68.5 70.4 1.89 Philippines 98.7 98.1 -0.54 Thailand 87.5 87.1 -0.36 Vietnam 202.5 200.4 -2.12



1,699.9 1,699.7 -0.01

Source: Bloomberg

CREDIT RATINGS




China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 111.3 Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 1,270.9 Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1 Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 139.1 Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 82.1 84.1 Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.6 Vietnam 17.4 19.5 19.9 19.7 20.0 n.a n.a n.a n.a EXTERNAL LIQUIDITY RATIOS





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JAPAN Official Reserve Assets (USD bn) Nov 1270.9 1274.2 JAPAN Leading Index Oct 92.5 91.6 JAPAN Coincident Index Oct 90.6 91.5 MALAYSIA Imports YoY% Oct 5.7 9.6 MALAYSIA Exports YoY% Oct -3.2 2.6 MALAYSIA Foreign Reserves (USD bn) Oct 139.1 138.6 PHILIPPINES Foreign Reserves (USD bn) Nov 84.1 82.1 THAILAND Foreign Reserves (USD bn) Nov 30 181.6 181.5



12/3/2012 CHINA HSBC Manufacturing PMI Nov INDONESIA Total Imports (YoY)% Oct INDONESIA Inflation (YoY)% Nov INDONESIA Inflation NSA (MoM)% Nov INDONESIA Core CPI (YoY)% Nov INDONESIA Money Supply - M2 (YoY)% Oct INDONESIA Exports (YoY)% Nov THAILAND Consumer Price Index (YoY)% Nov SOUTH KOREA HSBC Manufacturing PMI Nov SOUTH KOREA Core Consumer Price Index(YoY)% Nov SOUTH KOREA Consumer Price Index (MoM)% Nov 12/4/2012 THAILAND Consumer Confidence Economic Nov 12/5/2012 SOUTH KOREA Foreign Exchange Reserve (USD bn) Nov PHILIPPINES Consumer Price Index (YoY)% Nov INDONESIA Consumer Confidence Index Nov CHINA China HSBC Services PMI Nov HONG KONG Purchasing Managers Index Nov 12/6/2012 INDONESIA Net Foreign Assets (IDR Tln) Nov INDONESIA Foreign Reserves (USD bn) Nov

SOUTH KOREA GDP (YoY)% 3Q F

SOUTH KOREA GDP (QoQ)% 3Q F 12/7/2012 JAPAN Official Reserve Assets (USD bn) Nov JAPAN Leading Index Oct JAPAN Coincident Index Oct MALAYSIA Imports YoY% Oct MALAYSIA Exports YoY% Oct MALAYSIA Foreign Reserves (USD bn) Oct PHILIPPINES Foreign Reserves (USD bn) Nov

THAILAND Foreign Reserves (USD bn) Nov 30




MARKET DEVELOPMENTS

• Asian stocks, excluding Japan, gained after U.S. jobs data topped estimates and China’s factory output and retail sales signaled a quickening economic recovery. The MSCI Asia Pacific excluding Japan Index gained 0.2 percent to 458.95 as of 5:06 p.m. Tokyo time, poised for its highest close since August 4, 2011. A gauge that includes Japan was little changed, having erased gains of as much as 0.3 percent after a report showed China’s November exports increased at a slower pace than analysts forecast. The index climbed in the past three weeks amid signs of recovery in the world’s two largest economies.

• The euro fell toward its lowest level in two weeks after Italy’s Prime Minister Mario Monti said he intends to resign. The euro slid versus most of its 16 major counterparts before a December 13-14 summit of European Union leaders to debate a road map to overhaul the currency bloc. Prime Minister Monti will try to corral his coalition, which includes his predecessor Silvio Berlusconi’s People of Liberty Party, for a vote to pass budget legislation before handing in his “irrevocable resignation,” national President Giorgio Napolitano’s office said. The prime minister will quit immediately if his allies won’t comply, Prime Minister Monti’s spokeswoman said.

• Oil rebounds on China crude processing. Oil rose from the lowest level in three weeks in New York after China’s crude processing climbed to a record and industrial output beat estimates. Futures advanced as much as 0.6 percent after falling the past four days. China’s refining increased 9.1 percent in November from a year ago to 10.2 million barrels a day and industrial production jumped 10.1 percent, the National Bureau of Statistics in Beijing said yesterday. Oil briefly pared gains after customs data today showed China’s exports rose less than estimated. Meanwhile, Saudi Arabia is content with current crude prices, the country’s oil minister said before the Organization of Petroleum Exporting Countries meets on December 12.

• Iron-ore shipments from Australia advanced to a record in October as a strengthening Chinese economy boosted demand. Exports gained 7.6 percent from September to 44.2 million metric tons, according to government data compiled by Bloomberg. Shipments to China climbed 11 percent to 34 million tons, the data show. Iron ore with 62 percent content delivered to the Chinese port of Tianjin climbed 2.2 percent to $121 a dry ton on December 7, the highest since November 19, according to data compiled by The Steel Index Ltd.

BREAKING NEWS

GLOBAL

• The US lawmakers open rhetorical space for budget deal in middle. The US president and House Speaker John Boehner met one-on-one at the White House, with representatives for the two leaders offering no details of the negotiations yet issuing identical statements afterward that “the lines of communication remain open.” While Obama and the White House’s bargaining team insist on raising tax rates for the nation’s highest earners, they are not demanding the precise 39.6 percent top rate spelled out in the president’s budget. And in the past few days, Republican congressional leaders have reiterated their opposition to rate increases without explicitly ruling them out.

• Europe’s banks are calling for a review of tougher financial regulations on the eve of their adoption as the region sinks into a recession. Christian Clausen, president of the European Banking Federation, said the cumulative impact on lenders and the economy of new rules is

Page 2 of 7

unknown because of their piecemeal creation during the global financial crisis. After correctly anticipating Europe won’t be ready to implement tougher standards on schedule, Clausen now wants politicians to allow an impact study to measure the economic cost of all the requirements due to be enforced.

• US and UK regulators will unveil the first cross-border plans to deal with failing global banks. The plans outline proposals to force shareholders and creditors on both sides of the Atlantic to take losses and to ensure sufficient capital exists in the banks’ headquarters to protect taxpayers. Writing in the Financial Times, Martin Gruenberg, chairman of the US Federal Deposit Insurance Corporation, and Paul Tucker, deputy governor of the Bank of England, say this represents the first concrete steps to end the “too big to fail” problem of large international banks. The document states that since big US and UK banks do not currently hold sufficient debt and equity at the top of their group holding structures, regulators will need to take steps to address that.

REGIONAL

• China’s exports rose 2.9 percent in November from a year earlier while imports were unchanged, leading to a trade surplus of $19.6 billion. This trade surplus was lower than the median projection of the markets at $26.9 billion. Meanwhile, industrial output rose 10.1 percent in November from a year earlier and retail sales climbed 14.9 percent, both the fastest pace since March.

• Japan’s final GDP data on Monday showed that output slipped by 0.9 per cent in the three months to September. Meanwhile, the government revised down the previous quarter’s estimate to an annualized 0.1 per cent contraction, matching the textbook definition of a technical recession. On the external sector, the surplus in the current account narrowed to ¥376.9 billion ($4.57 billion) in October before seasonal adjustment. That was slightly larger than the ¥218 billion surplus expected by economists surveyed by Dow Jones Newswires and the Nikkei. Despite the trade deficit, the current-account surplus has been supported by strong portfolio investment income flows, including a significant increase in income from equities and securities.

• South Korea is considering allowing non-state companies to generate coal-fired power for the first time in three decades. As part of its review with the government of the nation’s energy mix, Korea Power is aiming to decide on more than 30 applications from state and private companies to build new plants by the end of the year. Nam Ho Ki, the chairman of Korea Power Exchange, said that South Korea should retain its equal weighting between coal, natural gas and nuclear. And, while he can’t see the country dropping nuclear power, neither does he foresee non-government controlled companies entering the business, after a unit of steelmaker Posco Group made and then withdrew an application to build a nuclear plant.

• The Philippines’ Department of Budget and Management (DBM) has released P933.8 million for a public-private partnership (PPP) project aimed at improving 14 domestic airports. The airports set to receive a night rating are the Tuguegarao, San Jose (Mindoro), Busuanga, Naga, Legazpi, Roxas, Tagbilaran, Dumaguete, Dipolog, Pagadian, Ozamis, Cotabato, Butuan, and Surigao airports. The funds will be used to procure equipment necessary for night landing operations, including airfield lighting systems, communications equipment, power supply systems, air disaster management systems, and other systems for managing air traffic.

• Vietnam begins building $1.37 billion Mekong Delta power plant. The Duyen Hai 3 power station will have a capacity of 1,244 megawatts, with annual projected output of about 7.8 billion kilowatt-hours, the government said on its website. The plant will use about 3.6 million metric tons of domestic coal a year. Vietnam is seeking to curb reliance on hydropower to avoid shortages during the dry season. By building coal-fired capacity it can take advantage of reserves that have made it Southeast Asia’s biggest coal-producing nation after Indonesia. Vietnam’s coal output has more than tripled since 2001, BP Plc data show.

Page 3 of 7


ADB – Publication: “Pacific Economic Monitor (PEM)”

• The ADB has issued the December 2012 edition of the captioned report. It says, “Fiscal positions in small island economies of Kiribati, Nauru, Samoa, Tonga, and Tuvalu improved in 2012, largely due to improved budget performance in the face of a weakening global economic environment.” Three special articles in the latest PEM focus on growth prospects in the Cook Islands, Federated States of Micronesia, Kiribati, Marshall Islands, Nauru, Palau, and Tuvalu, noting that geographical isolation, high transportation costs, low connectivity, and small and often dispersed populations can inhibit private sector job creation and public service delivery. Growth in these economies usually reaches only 1-2% per year, making significant reductions in poverty difficult.

http://www.adb.org/news/improved-budget-management-protects-pacific-countries-against-global-effects

http://www.adb.org/news/smallest-pacific-economies-must-build-links-boost-connections-thrive-adb

ADBI – Event: Annual Conference on Growth and Regional Cooperation and Integration in Asia and the Pacific in 2013 and Beyond

• The ADBI held its 15th Annual Conference on Growth and Regional Cooperation and Integration in Asia and the Pacific in 2013 and Beyond on 30 November 2012. The conference brought together scholars and officials from the region to examine developments in economic and financial integration in Asia, explore policy choices for sustainable growth, and assess the impact of the eurozone crisis and the growth slowdown in the People's Republic of China and India on the region. ADB President Haruhiko Kuroda gave the opening remarks and joined the final panel. Zhang Yunling, a professor and director of international studies at the Chinese Academy of Social Sciences, delivered the keynote speech.

http://www.adbi.org/event/5307.regional.integration.asia.pacific.2013/

BIS – Publication: “BIS Quarterly Review, December 2012”

• The BIS has issued the captioned publication. The BIS Quarterly Review for December 2012 says policy measures and reduced short-term risks buoyed markets.

http://www.bis.org/publ/qtrpdf/r_qt1212.htm (Press Release)

http://www.bis.org/publ/qtrpdf/r_qt1212.pdf (Report)

BIS – Working Paper: “Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes”

• The BIS has issued the captioned working paper. “This paper presents a large panel study on the macroeconomic consequences of natural catastrophes and analyzes the extent to which risk transfer to insurance markets facilitates economic recovery. Our main results are that major natural catastrophes have large and signicant negative effects on economic activity, both on impact and over the longer run. However, it is mainly the uninsured losses that drive the subsequent macroeconomic cost, whereas sufficiently insured events are inconsequential in terms of foregone output. This result helps to disentangle conflicting findings in the literature, and puts the focus on risk transfer mechanisms to help mitigate the macroeconomic costs of natural catastrophes.”


IMF – Publication: “Enhancing Surveillance - Interconnectedness and Clusters - Background Paper”

• The IMF has publicised the captioned background paper. “This paper provides additional detail for the framework discussed in “Enhancing Surveillance – Interconnectedness and Clusters”





http://www.adbi.org/event/5307.regional.integration.asia.pacific.2013/

http://www.bis.org/publ/qtrpdf/r_qt1212.htm

http://www.bis.org/publ/qtrpdf/r_qt1212.pdf


Page 4 of 7

through theoretical and empirical analysis of linkages, including case studies of Saudi Arabia, the Asian supply chain, financial interconnectedness and cross-border policy dependence in banking, and the Sweden-Baltic connections. It also provides a detailed primer on network analysis.”

http://www.imf.org/external/np/pp/eng/2012/031612B.pdf

IMF – Publication: Mexico: Arrangement Under the Flexible Credit Line and Cancellation of the Current Arrangement

• The IMF has publicised the Staff Report; Staff Supplement; and Press Release on the Executive Board Discussion for the captioned arrangement.

http://www.imf.org/external/pubs/ft/scr/2012/cr12327.pdf



• Coordinating Climate and Trade Policies: Pareto Efficiency and the Role of Border Tax Adjustments – “This paper explores the role of trade instruments in globally efficient climate policies, focusing on the central issue of whether some form of border tax adjustment (BTA) is warranted when carbon prices differ internationally. It shows that tariff policy has a role in easing cross-country distributional concerns that can make non-uniform carbon pricing efficient and, more particularly, that Pareto-efficiency requires a form of BTA when carbon taxes in some countries are constrained, a special case being identified in which this has the simple structure envisaged in practical policy discussions.”


• The Need for "Un-consolidating" Consolidated Banks' Stress Tests – “The recent crisis has spurred the use of stress tests as a (crisis) management and early warning tool. However, a weakness is that they omit potential risks embedded in the banking groups’ geographical structures by assuming that capital and liquidity are available wherever they are needed within the group. This assumption neglects the fact that regulations differ across countries (e.g., minimum capital requirements), and, more importantly, that home/host regulators might limit flows of capital or liquidity within a group during periods of stress. This study presents a framework on how to integrate this risk element into stress tests, and provides illustrative calculations on the size of the potential adjustments needed in the presence of some limits on intragroup flows for banks included in the June 2011 EBA stress tests.”


SEACEN – Press Release: 32nd Meeting of SEACEN BOG and 48th SEACEN Governors’ Conference/High-Level Seminar, 22-24 November 2012, Ulaanbaatar, Mongolia

• SEACEN has publicised the Press Communiqué for the captioned meeting. The 32nd Meeting of the Board of Governors of The South East Asian Central Banks (SEACEN) Research and Training Centre, the 48th Governors’ Conference and the High-Level Seminar were held from 22-24 November 2012 in Ulaanbaatar, Mongolia. Delegates from SEACEN member central banks, monetary authorities and strategic partners participated in the event. The Theme of the Conference was “Financial Contagion and Volatile Capital Flow”.

http://www.seacen.org/news/news_detail.aspx?intID=46

UNCTAD – Event: “Maximizing the development impact of remittances and diaspora knowledge in LDCs: Policy implications”

• UNCTAD’s Trade and Development Board continued its fifty-sixth executive session with the captioned high-level debate. Migration and economic development specialists have told the

http://www.imf.org/external/np/pp/eng/2012/031612B.pdf





Page 5 of 7

Trade and Development Board that millions of emigrants from the least developed countries (LDCs) can and should be engaged in advancing progress in their home nations.

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=371&Sitemap_x0020_Taxonomy=Africa and Least Developed Countries;#1389;#Least Developed Countries;#20;#UNCTAD Home

UNCTAD –Press Release: Sweden contributes $2.5 million to UNCTAD programme on investment

• UNCTAD has announced that the Government of Sweden is to contribute 18.3 million Swedish kronor (about US$2.7 million) to UNCTAD's Capacity-Building in Investment for Development project.

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=373&Sitemap_x0020_Taxonomy=UNCTAD Home;#6;#Investment and Enterprise



(%chg) China 6.2980 6.2266 6.2243 6.2401 -0.25 0.9 Hong Kong 7.7698 7.7503 7.7501 7.75 0.00 0.3 Indonesia 9,126.0 9,618.0 9,708.0 9,633.0 0.78 -5.3 Japan 76.8 82.48 82.49 82.28 0.26 -6.7 Korea 1,150.8 1,082.9 1,081.6 1,079.1 0.22 6.6 Malaysia 3.1507 3.0394 3.0557 3.0613 -0.18 2.9 Philippines 43.765 40.795 40.945 40.95 -0.01 6.9 Singapore 1.2906 1.2202 1.2209 1.2228 -0.16 5.5 Thailand 31.5 30.7 30.7 30.7 0.07 2.6 Vietnam 21,031.0 20,850.0 20,840.0 20,840.0 0.00 0.9




OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 7-Dec 10-Dec bps change 7-Dec 10-Dec bps change China 2.250 2.250 0.00 3.843 3.849 0.57 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.168 4.166 -0.20 4.922 4.910 -1.20 Japan 0.095 0.098 0.25 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.830 2.830 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 1.617 -1.148 -276.50 0.531 0.563 3.20 Singapore 0.025 0.025 0.00 0.376 0.377 0.08 Thailand 2.750 2.750 0.00 2.868 2.868 0.00 Vietnam 3.150 3.500 35.00 7.188 7.250 6.20

Page 6 of 7

CREDIT DEFAULT SWAP (IN BPS) 6-Dec 7-Dec bps change China 58.4 58.2 -0.15 Hong Kong 39.5 36.5 -3.00 Indonesia 123.2 123.5 0.32 Japan 75.9 76.0 0.11 Korea 63.8 63.4 -0.42 Malaysia 70.4 73.0 2.65 Philippines 98.1 100.4 2.23 Thailand 87.1 85.5 -1.64 Vietnam 200.4 200.0 -0.38



1,704.1 1,711.5 0.43

Source: Bloomberg

CREDIT RATINGS









Page 7 of 7


Country Indicators Period Last Previous JAPAN Current Account Balance YOY% Oct -29.4 -68.7 JAPAN Current Account Total (JPY bn) Oct 376.9 503.6 SOUTH KOREA Producer Price Index (YoY)% Nov -0.2 0.2 JAPAN Consumer Confidence Nov 39.4 39.7 CHINA New Yuan Loans (RMB bn) Nov 505.2 CHINA Imports YoY% Nov 0.00 2.4 CHINA Exports YoY% Nov 2.9 11.6 CHINA Trade Balance (USD bn) Nov 19.63 31.99 JAPAN Gross Domestic Product (QoQ)% 3Q F -0.9 -0.9 JAPAN GDP Annualized % 3Q F -3.5 -3.5 JAPAN Nominal GDP (QoQ)% 3Q F -0.9 -0.9

SELECTED ECONOMIC RELEASES CALENDAR (26 - 30 November 2012) Expected Release

Date Country Indicators Period 12/10/2012 JAPAN Current Account Balance YOY% Oct JAPAN Current Account Total (JPY bn) Oct SOUTH KOREA Producer Price Index (YoY)% Nov JAPAN Consumer Confidence Nov CHINA New Yuan Loans (RMB bn) Nov CHINA Imports YoY% Nov CHINA Exports YoY% Nov CHINA Trade Balance (USD bn) Nov JAPAN Gross Domestic Product (QoQ)% 3Q F JAPAN GDP Annualized % 3Q F JAPAN Nominal GDP (QoQ)% 3Q F 12/11/2012 PHILIPPINES Total Exports (YoY)% Oct INDONESIA Bank Indonesia Reference Rate% Dec 11 12/12/2012 SOUTH KOREA Unemployment Rate (SA)% Nov SOUTH KOREA Bank Lending to HH (KRW Tln) Nov JAPAN Machine Orders YOY% Oct 12/13/2012 SOUTH KOREA South Korea 7-Day Repo Rate % Dec 13 PHILIPPINES Overseas Remittances (YoY)% Oct HONG KONG Producer Price (YoY)% 3Q HONG KONG Industrial Production (YoY)% 3Q 12/14/2012 THAILAND Foreign Reserves (USD bn) Dec 7 SINGAPORE Retail Sales (YoY)% Oct CHINA Actual FDI (YoY)% Nov JAPAN Industrial Production YOY% Oct F JAPAN Capacity Utilization (MoM)% Oct F CHINA HSBC Flash China Manufacturing PMI Dec SINGAPORE Unemployment Rate (sa)% 3Q F




MARKET DEVELOPMENTS

• Asian stocks outside Japan rose to its highest close in 16 months. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) advanced 0.3 percent to 460.36 as of 3:48 p.m. Tokyo time, heading for its highest close since August 3, 2011. About seven shares rose for every six that fell on the gauge. The measure climbed the past three weeks on signs of recovery in the world’s two largest economies and optimism US lawmakers will make a budget deal to avert the so-called fiscal cliff.

• The dollar held a decline against the euro amid speculation the Federal Reserve will expand monetary stimulus at a two-day meeting starting today. The euro snapped a three-day drop against the yen even as the prospect of a comeback by former premier Silvio Berlusconi sent Italy’s bonds lower. Meanwhile, the Australian dollar reached a five-week low against its New Zealand counterpart after business confidence dropped to the least since 2009.

• Oil trades near one-month low as fuel stockpiles seen rising. The US distillate supplies, including diesel and heating oil, probably rose for a second week while gasoline inventories reached the highest level since April, according to a Bloomberg News survey before an Energy Department report tomorrow. Markets also predicted that the Organization of Petroleum Exporting Countries (OPEC), which supplies about 40 percent of the world’s crude, is expected to maintain its output quota at 30 million barrels a day at its meeting tomorrow.

BREAKING NEWS

GLOBAL

• Prime Minister Mario Monti said that investors shouldn’t expect the imminent demise of his government to lead to a political vacuum that will fuel market turmoil in Italy. The market reaction will be “contained” and investors “shouldn’t fear any decision-making void,” Monti said at a press conference in Oslo. Italy’s government crisis, which pits Monti against billionaire former premier Silvio Berlusconi, is roiling investors and bringing tensions among European Union leaders to the fore. Monti and other EU heads of state and government, who gathered in Oslo to collect the Nobel Peace Prize, are seeking to present a united front as the resurgent Berlusconi hits the campaign trail with his German-skeptic, anti-austerity message.

• Bank of England Governor Mervyn King sees currency risk. He warned the risk of currency wars in the coming year as nations search for new ways to spur their economies in a world of slow growth and few other good options. The comments were part of a broader lament by Mr. King about a world economy out of balance. Mr. King said the world now "desperately" needs countries with large trade surpluses to boost their own domestic economies to rebalance global growth. The traditional policy tool used by central banks to spur growth—lower interest rates—has been pushed to its limits, Mr. King argued.

• The US warned Russia that the activities of a sanctioned Iranian bank in Russia could affect Russian banks that do business with the US. The bank, Moscow-based Mir Business Bank CJSC, has become a conduit for Iranian businessmen looking to keep trade flowing despite severe restrictions on Iran's financial system, according to trade records and Iranian businessmen who use the bank. Russia's Ministry of Foreign Affairs said it saw no problem with Mir's operations in Russia. The bank's "activity contradicts neither Russia's internal legislation nor its international obligations to corresponding resolutions of U.N. Security Council's sanctions against Iran," the ministry said.

Page 2 of 6

REGIONAL

• The Cambodian government collected $683 million in taxes over the first 11 months of this year. According to a statement from Cambodia’s General Department of Taxation (GDT), revenues were collected from various taxes such as tax on profits, withholding tax, salary tax, Value Added Tax, turnover tax, vehicle tax, patent tax and property tax. Last week, the government approved an increase in national budget expenditure to nearly 13 percent for 2013 to more than $3 billion from this year’s $2.7 billion.

• China’s new yuan loans trailed forecasts last month. Banks extended 522.9 billion yuan ($84 billion) of local-currency loans, the People’s Bank of China said on its website. Aggregate financing, an indicator designed to capture other funding sources apart from the bank loans such as trust loans and bond and stock issuance, was 1.14 trillion yuan in November. That’s the lowest since August and compares with 1.29 trillion yuan in October and 958.1 billion yuan in November 2011. Trust loans, one component of aggregate financing, more than doubled from a year earlier to 199.5 billion yuan last month. Net bond issuance fell to 181.7 billion yuan and non-financial company stock sales declined to 10.7 billion yuan.

• Indonesia’s central bank held its benchmark rate unchanged for a 10th straight meeting. Bank Indonesia Governor Darmin Nasution and his board kept the reference rate at a record-low 5.75 percent, the central bank said in Jakarta today. The central bank has refrained from joining neighbors from Thailand to the Philippines in extending rate cuts since a February reduction to support the currency and as growth exceeding 6 percent eased the need for stimulus.

• Japan may scrap nuclear plant sited over active seismic fault. Geologists said on Monday a Japanese nuclear plant may be sited over an active seismic fault, indicating that it will probably be scrapped. All five experts tasked by the Nuclear Regulation Authority (NRA) with investigating the tectonic situation underneath Tsuruga plant in Fukui prefecture said it showed signs of geologically recent movement. Under government guidelines, atomic installations cannot be sited on a fault - the meeting place of two or more of the plates that make up the earth's crust - if it is still classed as active.

• Malaysia warns Lynas to export rare-earths waste. Malaysia's government Monday said Australian rare-earths producer Lynas Corp. must export the waste from its new processing plant in Kuantan or else risk having its operating license revoked in the latest drama surrounding the production of the minerals. The minerals are used in the production of high-tech products from smartphones to wind turbines and missile-guidance systems.


ADB – Press Release: Help PRC Unlock Water Transport Potential of Hunan's Xiang River

• The ADB will provide a $150 million loan to improve the waterway transport system in Hunan province, in the People’s Republic of China (PRC), by making the Xiang River more navigable for larger vessels, improving cargo terminals along the river, and providing landing berths for rural communities.

http://www.adb.org/news/adb-help-prc-unlock-water-transport-potential-hunans-xiang-river

ADB – Publication: “The Quiet Revolution in Staple Food Value Chains: Enter the Dragon, the Elephant and the Tiger”

• The ADB and the International food Policy Research Institute has issued the captioned study report which analyzes domestic rice and potato supply chains in Bangladesh, India and People’s Republic of China (PRC). It finds that the rapid modernization of staple food chains in Asia has allowed farmers to increase control over what they produce, and to whom they sell. The transformation has been particularly dramatic in the PRC, with modern rice mills increasingly buying direct from farmers, cutting out middlemen. In India the spread of modern cool storage

http://www.adb.org/news/adb-help-prc-unlock-water-transport-potential-hunans-xiang-river

Page 3 of 6

facilities is giving consumers year-round access to potatoes, and delivering substantial price advantages to farmers.

http://www.adb.org/news/asias-future-food-security-hinges-modernization-farm-market-chains (Press Release)

http://www.adb.org/sites/default/files/news/fast-facts-quiet-revolution-study.pdf (Report)

BIS – Working Paper: “The financial cycle and macroeconomics: What have we learnt?”

• The BIS has publicised the captioned working paper. It says, “This essay highlights the stylised empirical features of the financial cycle, conjectures as to what it may take to model it satisfactorily, and considers its policy implications. In the discussion of policy, the essay pays special attention to the bust phase, which is less well explored and raises much more controversial issues.”


FSB – Press Release: FSB Regional Consultative Group for the Americas holds its third meeting

• The FSB Regional Consultative Group (RCG) for Americas held its third meeting on 10 Dec 2012 in Hamilton, Bermuda.

http://www.financialstabilityboard.org/press/pr_121210.pdf

IMF – Working Paper: “Inequalities and Growth in the Southern African Customs Union (SACU) Region”

• The IMF has publicised the captioned working paper. It says, “This paper applies the work of Berg and Ostry (2011) to the SACU region, to identify how inequalities have played a role in growth in each of these countries, and elaborates policy options to mitigate the effects of inequalities and foster growth. Lower income inequalities could lead to significant gains, as SACU countries could almost double the duration of their growth periods, with much lower inequalities.”


http://www.adb.org/news/asias-future-food-security-hinges-modernization-farm-market-chains

http://www.adb.org/news/asias-future-food-security-hinges-modernization-farm-market-chains

http://www.adb.org/sites/default/files/news/fast-facts-quiet-revolution-study.pdf




Page 4 of 6



(%chg) China 6.2980 6.2266 6.2401 6.2451 -0.08 0.8 Hong Kong 7.7698 7.7503 7.7501 7.7501 0.00 0.3 Indonesia 9,126.0 9,618.0 9,633.0 9,695.0 -0.64 -5.9 Japan 76.8 82.48 82.36 82.39 -0.04 -6.8 Korea 1,150.8 1,082.9 1,079.1 1,076.7 0.23 6.9 Malaysia 3.1507 3.0394 3.0613 3.0577 0.12 3.0 Philippines 43.765 40.795 40.95 40.941 0.02 6.9 Singapore 1.2906 1.2202 1.2215 1.2217 -0.02 5.6 Thailand 31.5 30.7 30.6 30.6 0.00 2.7 Vietnam 21,031.0 20,850.0 20,840.0 20,856.0 -0.08 0.8



(%chg) China 2,199.4 1,980.1 2,083.8 2,074.7 -0.44 -5.7 Hong Kong 18,877.4 22,030.4 22,276.7 22,323.9 0.21 18.3 Indonesia 3,857.9 4,276.1 4,302.6 4,317.9 0.36 11.9 Japan 8,455.4 9,446.0 9,533.8 9,525.3 -0.09 12.7 Korea 1,875.4 1,932.9 1,957.4 1,964.6 0.37 4.8 Malaysia 1,514.6 1,610.8 1,632.2 1,639.5 0.45 8.3 Philippines 4,422.2 5,640.5 5,757.5 5,831.5 1.28 31.9 Singapore 2,691.1 3,070.0 3,114.3 3,121.2 0.22 16.0 Thailand 1,025.3 1,324.0 1,335.0 1,339.6 0.35 30.7 Vietnam 350.0 377.8 386.7 389.4 0.69 11.2

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 10-Dec 11-Dec bps change 10-Dec 11-Dec bps change China 2.250 2.250 0.00 3.849 3.851 0.25 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.166 4.168 0.12 4.910 4.915 0.52 Japan 0.095 0.095 0.00 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.830 2.830 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -1.148 -3.195 -204.70 0.563 0.344 -21.90 Singapore 0.025 0.025 0.00 0.377 0.378 0.08 Thailand 2.750 2.750 0.00 2.868 2.868 0.00 Vietnam 3.500 4.438 93.80 7.250 7.286 3.60


7-Dec 10-Dec bps change China 58.2 60.0 1.77 Hong Kong 36.5 40.2 3.66 Indonesia 123.5 125.0 1.47 Japan 76.0 74.5 -1.51 Korea 63.4 63.5 0.08 Malaysia 73.0 70.5 -2.50 Philippines 100.4 99.0 -1.40 Thailand 85.5 88.2 2.68 Vietnam 200.0 202.1 2.10



1,713.1 1,709.3 -0.23

Source: Bloomberg

Page 5 of 6

CREDIT RATINGS S&P Moody's Fitch China AA- Aa3 A+ Hong Kong AAA Aa1 AA+ Indonesia BB+ Baa3 BBB- Japan AA- -- AA Korea A Aa3 A+ Malaysia A- A3 A- Philippines BB+ Ba1 BB+ Singapore AAA -- AAA Thailand BBB+ Baa1 BBB Vietnam BB- B1 B+









Country Indicators Period Last Previous PHILIPPINES Total Exports (YoY)% Oct 6.1 22.8 INDONESIA Bank Indonesia Reference Rate% Dec 11 5.75 5.75

Page 6 of 6






MARKET DEVELOPMENTS

• Asian stocks rose amid speculation the Federal Reserve will step up monetary easing. The MSCI Asia Pacific Index advanced 0.5 percent to 126.92 as of 5:25 p.m. in Tokyo, heading for its 10th day of gain, the longest winning streak since July 2009. More than two shares rose for each that fell. The measure advanced 11 percent this year through yesterday as central banks took steps to support economic growth. The Federal Reserve concludes a two-day meeting today as policy makers consider whether to continue with quantitative easing.

• Dollar remains lower versus euro as the Fed concludes meeting. The greenback slid versus most of its 16 major counterparts yesterday amid speculation the Fed will add Treasury purchases to an existing program that buys $40 billion in mortgage bonds each month. The euro was supported ahead of meetings of European Union finance ministers and heads of government this week, while Greece met its bond buyback target. Meanwhile, the Japanese currency fell against all of its peers after North Korea launched a rocket.

• Oil fluctuates as US stockpiles climb before OPEC meets in Vienna to decide the group’s production quota. Crude for January delivery was at $85.90 a barrel, up 11 cents, in electronic trading on the New York Mercantile Exchange at 3:12 p.m. Singapore time. The contract gained 23 cents to $85.79 yesterday, the highest close since Dec. 7. Prices are down 13 percent this year. Brent for January settlement rose 35 cents to $108.36 a barrel on the London-based ICE Futures Europe exchange and was at a premium of $22.46 to West Texas Intermediate. The European benchmark contract is heading for its highest-ever average annual price, at $111.77 a barrel so far this year.

BREAKING NEWS

GLOBAL

• Job openings in the U.S. rose to a four-month high in October. The number of positions waiting to be filled rose by 128,000 to 3.68 million from the prior month, the US Labor Department said yesterday in Washington. More openings lay the groundwork for the accelerated job growth needed to bolster consumer spending, which accounts for about 70 percent of the economy. Meanwhile, payrolls rose by 146,000 in November following a revised 138,000 advance in October that was less than initially estimated. The US Labor Department report on job openings and separations helps show the dynamics behind the monthly employment figures.

• German investor confidence jumped to 7-month high. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations climbed to 6.9 from minus 15.7 in November. ZEW President Wolfgang Franz said in a statement that while Germany’s economy will continue to cool into 2013, it will not have to face a recession as long as the crisis in the euro zone doesn’t deepen once again. As demand wanes from the euro area, some German companies are compensating with exports to faster growing markets outside Europe. Shipments from Germany to non-European Union countries increased 9.9 percent in the third quarter from a year earlier, the Federal Statistics Office said last week, with those to the U.S. surging 25.7 percent.

• Greece is confident bond buyback needed for aid succeeded. Greece drew enough bonds to its buyback of sovereign debt to meet a goal that’s crucial to unlocking aid from the International Monetary Fund and European Union, a government official said. Greece was seeking to use a 10 billion-euro loan from Europe’s bailout fund to retire about 30 billion euros of debt issued

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earlier this year in the biggest sovereign restructuring in history. International bailout funds to Greece have been frozen since June after two elections and a deepening recession.

• Indian consumer prices rose at the fastest pace in three months in November as costs of sugar and vegetables increased. The consumer-price index climbed 9.9 percent from a year earlier, compared with a 9.75 percent advance reported earlier for October, the Statistics Office said in a statement in New Delhi today. Vegetable prices climbed 14.74 percent last month from a year earlier, today’s statement showed, while sugar rose 17 percent and pulses gained 14.19 percent. Prime Minister Manmohan Singh’s government last week won parliamentary endorsement for its decision to allow foreign direct investment in supermarkets, a move it says can help lower food costs.

REGIONAL

• Rice purchases by China may soar fourfold this year after a government policy to support farm incomes drove up domestic prices, the United Nations said. Shipments may reach 2.3 million metric tons to 2.4 million tons, said Concepcion Calpe, a senior economist at the UN’s Food & Agriculture Organization (FAO). That compares a prediction of 2 million tons last month and 600,000 tons in 2011, according to the FAO. Rising imports by China may bolster prices even as world inventories tracked by the FAO swell to a record, boosted by the biggest global crop ever.

• Japan’s machinery orders rose for the first time in three months. Machinery orders, an indicator of capital spending, climbed 2.6 percent in October from the previous month, the Cabinet Office said today in Tokyo. The government dismissed the October's gain as small and lowered its assessment on machinery orders for the first time in four months. They are in a "weakening" trend, the Cabinet Office said, revising the previous wording that described them as "flat."

• The governments of Indonesia and Australia are set to renew a bilateral air service agreement in February 2013. The agreement will allow carriers from both nations to increase the frequency of connections between the two countries. The Indonesian Transportation Ministry’s air transportation director general said the agreement would provide an additional 25,000 seats per week for flights between Indonesian and Australian destinations starting next year. Australian Infrastructure and Transportation Minister Anthony Albanese said Indonesia was one of Australia’s closest and most important neighbors, with transportation serving as a key enabler of economic growth and development between the two countries and the Asia-Pacific region.

• Malaysia's industrial output rose at its fastest pace in five months in October as firm domestic continued to make up for weaker exports. Industrial production in October was up 5.8% from a year earlier, handily beating expectations, the Department of Statistics reported Tuesday. Production in the manufacturing sector was up 5.8%, mining output was up 6.1% and electricity production was up 4.4%. The overall rate was better than the upwardly revised 5% expansion in September. Separately, the Statistics Department said Tuesday that manufacturing sales in October were up 2.6% from a year earlier to 52.9 billion ringgit ($17.3 billion).

• The Philippine congress ratified a bill setting "sin" tax reforms. Both the Senate and the House of Representatives swiftly consented to a bicameral committee report calling for higher taxes on tobacco and alcohol products. The measure is expected to generate P33.96 billion in fresh revenues next year. P23.4 billion will come from tobacco products, while the remaining P4.5 billion and P6.06 billion will respectively come from fermented liquor and distilled spirits. Two tiers were set for both tobacco products and fermented liquor, gradually increasing to settle at a single rate by 2017, along with a combination of ad valorem and specific tax for distilled spirits.

• Coffee growers in Vietnam are curbing sales to seek higher prices after making faster progress on harvesting than last year. Farmers have gathered about 75 percent of the crop, or about 1.1 million metric tons, and sold 360,000 tons, according to the medians of seven trader and shipper

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estimates compiled by Bloomberg. The harvest is set to drop 12 percent to 1.45 million tons from a record 1.65 million tons last season, the survey shows. Curbs on sales from Vietnam may support prices as global supplies increase. Farmers worldwide will gather 56 million 60-kilogram bags of robusta in the 2012-2013 year, up from 53.3 million bags a year earlier, the International Coffee Organization estimates.


ADB – Publication: “Skills Development for Inclusive and Sustainable Growth in Developing Asia”

• The ADB publication looks at the issues, challenges, and potential measures countries could take to develop the skills needed to promote employment, sustain growth, and improve global competitiveness. Shifting away from the factory-driven growth model of the past requires a technically adept market-driven labor force able to generate creative, cutting edge ideas and products. However, the book reveals that Asia’s training systems are struggling to fill employers’ needs. Even those with graduate degrees are lacking market-ready technical skills to be absorbed into the workforce.

http://www.adb.org/news/asia-must-close-skills-gaps-go-high-tech-sustain-future-growth-adb (Press Release)

http://www.adb.org/sites/default/files/pub/2012/skills-development-inclusive-growth-asia-pacific.pdf (Report)

ADB – Press Release: $300 Million for Green Transportation Revolution in the Philippines

• The Asian Development Bank (ADB) is providing $300 million towards a groundbreaking project that will replace 100,000 gasoline-burning tricycles in the Philippines with clean, energy efficient electric tricycles, or E-Trikes. The new E-Trikes, which run on an electric motor and rechargeable lithium-ion battery, will be introduced to Metro Manila and other urban centers across the Philippines under a lease-to-own arrangement. Replacing 100,000 gasoline-powered trikes will enable the Philippine government to save more than $100 million a year in avoided fuel imports, while decreasing annual CO2 emissions by about 260,000 tons.

http://www.adb.org/news/300-million-green-transportation-revolution-philippines-adb

IMF – Press Release: People’s Republic of China—Hong Kong Special Administrative Region—Preliminary Conclusions of the 2012 Article IV Mission

• The IMF mission found that global economic weakness is impacting Hong Kong SAR and real GDP growth is projected to slow to 1¼ percent this year. Next year, GDP growth is expected to recover to around 3 percent as the drag from net exports abates. In line with the cooling economy, consumer price pressures have eased. This has been helped by declining food inflation, tracking developments in the Mainland. Inflation is expected to remain moderate, averaging 3¾ percent this year and 3½ percent next year. The report pointed out that a sharp run-up in house prices raises the risk of an abrupt correction.

http://www.imf.org/external/np/ms/2012/111712.htm

IMF – Press Release: IMF Executive Board Reviews Progress Implementing the Priorities of the 2011 Triennial Surveillance Review

• Directors noted that many of the initiatives undertaken in the last year have already brought significant improvements in the focus of surveillance on interconnections, risks, external

http://www.adb.org/news/asia-must-close-skills-gaps-go-high-tech-sustain-future-growth-adb

http://www.adb.org/sites/default/files/pub/2012/skills-development-inclusive-growth-asia-pacific.pdf

http://www.adb.org/sites/default/files/pub/2012/skills-development-inclusive-growth-asia-pacific.pdf

http://www.adb.org/news/300-million-green-transportation-revolution-philippines-adb

http://www.imf.org/external/np/ms/2012/111712.htm

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stability, and financial stability. Directors viewed the implementation of the Integrated Surveillance Decision as providing the basis for more effective and relevant surveillance in a highly-interconnected world economy and fostering better integration of all surveillance activities. Directors agreed that the emphasis should now be on fully implementing the surveillance priorities in Article IV consultations and multilateral and regional reports.

http://www.imf.org/external/np/sec/pn/2012/pn12139.htm FOREIGN CURRENCY EXCHANGE RATES


(%chg) China 6.2980 6.2266 6.2451 6.2515 -0.10 0.7 Hong Kong 7.7698 7.7503 7.7499 7.75 0.00 0.3 Indonesia 9,126.0 9,618.0 9,695.0 9,631.0 0.66 -5.2 Japan 76.8 82.48 82.52 82.93 -0.49 -7.4 Korea 1,150.8 1,082.9 1,076.7 1,074.9 0.16 7.1 Malaysia 3.1507 3.0394 3.0577 3.0538 0.13 3.2 Philippines 43.765 40.795 40.941 41.01 -0.17 6.7 Singapore 1.2906 1.2202 1.2213 1.2218 -0.04 5.6 Thailand 31.5 30.7 30.6 30.6 -0.03 2.7 Vietnam 21,031.0 20,850.0 20,856.0 20,840.0 0.08 0.9




OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 11-Dec 12-Dec bps change 11-Dec 12-Dec bps change China 2.250 2.260 1.00 3.851 3.855 0.34 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.168 4.173 0.56 4.915 4.925 1.00 Japan 0.095 0.095 0.00 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.840 2.840 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -3.195 -1.425 177.00 0.344 0.116 -22.80 Singapore 0.020 0.020 0.00 0.378 0.377 -0.08 Thailand 2.750 2.750 0.00 2.868 2.866 -0.15 Vietnam 4.438 4.778 34.00 7.286 7.217 -6.90


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CREDIT DEFAULT SWAP (IN BPS) 10-Dec 11-Dec bps change China 60.0 59.0 -1.00 Hong Kong 40.2 39.5 -0.66 Indonesia 125.0 123.9 -1.05 Japan 74.5 74.8 0.27 Korea 63.5 62.6 -0.88 Malaysia 70.5 69.8 -0.67 Philippines 99.0 98.0 -0.98 Thailand 88.2 86.8 -1.35 Vietnam 202.1 202.5 0.39



1,710.0 1,715.0 0.29

Source: Bloomberg

CREDIT RATINGS









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Country Indicators Period Last Previous SOUTH KOREA Unemployment Rate (SA)% Nov 3.0 3.0 SOUTH KOREA Bank Lending to HH (KRW Tln) Nov 461.6 460.5 JAPAN Machine Orders YOY% Oct 1.2 -7.8






MARKET DEVELOPMENTS

• The yen fell to the weakest level in almost nine months against the dollar, and touched an eight-month low versus the euro. This took place before the Bank of Japan’s Tankan survey released tomorrow, which markets say will show big manufacturers in the nation grew more pessimistic. According to the median estimate of economists in a Bloomberg News survey, the BOJ’s quarterly Tankan survey tomorrow will probably show that sentiment among large manufacturers slid to minus 10 from minus 3 in the third quarter.

• Asian stocks rose, led by Japan’s exporters, as Yen weakened. The MSCI Asia Pacific Index gained 0.3 percent to 127.3 as of 4:24 p.m. Tokyo time, poised to advance for an 11th day, the longest winning streak since July 2009. The measure rose 11 percent this year through yesterday as central banks took steps to support economic growth and Japanese shares rallied ahead of an election this weekend. The gauge traded at 14.3 times estimated earnings, compared with 13.8 times for the S&P 500 Index and 12.7 times for the Stoxx Europe 600 Index.

• Oil drops from one-week high amid disagreement on the US budget. Crude for January delivery fell as much as 39 cents to $86.38 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.56 at 2:44 p.m. Singapore time. The contract advanced 98 cents to $86.77 yesterday, the highest close since December 5. Prices are down 12 percent this year, set for the first annual decline since 2008. Brent oil for January settlement on the London-based ICE Futures Europe exchange declined as much as 64 cents, or 0.6 percent, to $108.86 a barrel. It climbed 1.4 percent yesterday, the most since November 19. The European benchmark crude was at a premium of $22.64 to New York-traded West Texas Intermediate.

BREAKING NEWS

GLOBAL

• The Federal Reserve will expand its asset purchase program by buying $45 billion a month of Treasury securities starting in January to spur the economy. This is the first time the Fed linked the outlook for its main interest rate to unemployment and inflation. In a press conference in Washington today after a meeting of the Federal Open Market Committee, Fed Chairman Ben S. Bernanke said that the Fed plans to maintain accommodation as long as needed to promote a stronger economic recovery in the context of price stability. Rates will stay low at least as long as unemployment remains above 6.5 percent and if inflation is projected to be no more than 2.5 percent, the FOMC said in a statement. These thresholds replace the Fed’s earlier view that rates would stay near zero at least through the middle of 2015.

• Eurozone agrees on common bank regulator. Europe took its first big step towards banking union early on Thursday morning, as eurozone finance ministers agreed a plan to cede power to a common bank supervisor in Frankfurt. After almost four months of fraught diplomacy that laid bare deep Franco-German divisions, finance ministers brokered terms for the European Central Bank to begin direct supervision of up to 200 eurozone lenders from early 2014. The reform requires governments to surrender jealously guarded control over national banks, in the most concerted financial integration project since the creation of the single currency. At the same time, Britain, Sweden and other non-eurozone countries outside the banking union won coveted safeguards to check the power of the ECB and maintain some influence over technical standards applying to all EU banks.

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• UK employment hit record levels. The number of people in work increased by 40,000 to 29.6 million in the three months to October, the Office for National Statistics said. But that was the slowest rise since January, confirming that the recent jobs boom was slowing. Unemployment was 2.51 million, down 82,000 on the previous quarter but virtually unchanged on the three months to September. The jobless rate was 7.8 per cent of the workforce, unchanged since last month’s data. That was slightly better than expected by economists, who had forecast a rise to 7.9 percent. The number of people claiming jobseekers’ allowance fell by 3,000 in November to 1.58m, after two months of rises.

REGIONAL

• The National Bank of Cambodia (NCB) launched new clearing system. The NBC has spent many years developing the system with the support of the government and technical assistance from the Asian Development Bank, according to yesterday’s press release. This new clearing system is aimed to build efficiency and to expand clearing and settlement service for inter-bank transfers, the NCB’s director general said. The system will improve the country’s clearing and settlement system so that it is faster, as well as improve business transactions via an electronic system and reduce the use of large amounts of cash.

• Hong Kong regulator toughens IPO rules. Hong Kong's securities regulator announced new rules for initial public offerings in the city that could lead to banks being criminally liable if the companies they sponsor provide untrue information in their listing prospectuses. Under the new rules, the lead banks in an IPO will be fined if they knowingly or recklessly approve the prospectus of a company they sponsor containing false statements. The legislative council still needs to pass the proposal to impose criminal liability on these sponsor firms. From October 1, 2013, the regulator will demand sponsor firms follow a set of steps determined by the regulator to meet the standard of due diligence.

• Indonesia’s Finance Minister urged export-oriented companies and oil and gas producers to repatriate their export earnings currently parked in overseas banks. He said this move would help strengthen US dollar reserves and stabilize the rupiah. The Indonesian central bank has implemented a policy requiring exporters to deposit funds parked overseas in Indonesia-based banks. The central bank has also introduced a short-term US dollar time deposit with an attractive interest rate to retain export earnings at home. However, as reported by the Jakarta Post, in reality the funds have been deposited in domestic banks only on a temporary basis, with exporters opting to move foreign currency proceeds to banks in overseas jurisdictions that provide a clearer regulatory system.

• The Bank of Korea held borrowing costs unchanged. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 2.75 percent after 25 basis-point cuts in July and October, the central bank said in a statement in Seoul today. South Korea’s economic data has given mixed signals and a rapid rebound in growth is unlikely, Governor Kim told reporters today after the bank’s unanimous decision. At the same time, the nation is poised for a moderate export-led recovery and inflation will remain low, the BOK said in a statement, bolstering the view that policy makers will remain on hold.

• Bangko Sentral ng Pilipinas (BSP) maintains policy rates. The Monetary Board at its meeting today decided to maintain the BSP’s key policy interest rates at 3.50 percent for the overnight borrowing or reverse repurchase (RRP) facility and 5.50 percent for the overnight lending or repurchase (RP) facility. The decision is based on the Monetary Board’s assessment that current monetary settings remain appropriate. The Monetary Board is of the view that the manageable inflation outlook and robust domestic growth support keeping policy settings steady.

• Thai’s Board of Investment (BoI) opened its Thailand Overseas Investment Center. This is aimed at strengthening the country's competitiveness by encouraging and directing business

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operators to invest abroad. The government decided to develop the center out of concern the country might lose its competitive advantage over the long term if it does not diversify from relying on capital inflows. The BoI secretary-general Udom Wongviwatchai said the center will provide information and advice to Thai companies lacking international experience. At this stage, the priority destinations are Cambodia, Laos, Myanmar and Vietnam among other emerging markets.


ADB – Press Release: 18th GMS Ministerial Conference in Nanning

• The Ministers attending the captioned conference said, “The next phase of Greater Mekong Subregion (GMS) investments should expand the program into new areas such as multisector investments towards urban development, connecting remote areas with growth centers, and extending existing corridors into Myanmar.”

http://www.adb.org/news/greater-mekong-ministers-adb-plan-next-generation-development-activities (Press Release)

http://www.adb.org/sites/default/files/news/GMS-joint-ministerial-statement.pdf (JMS)

BIS – Working Paper: “Systematic monetary policy and the forward premium puzzle”

• The BIS has issued the captioned working paper. “Is systematic monetary policy a driver of the forward premium puzzle, i.e. the tendency of high interest-rate currencies to appreciate, thus strongly violating Uncovered Interest Parity (UIP)? We address this question by studying a battery of monetary policy rules in a small open economy that is subject to stationary but persistent domestic and foreign shocks. Each rule leads to model-implied UIP violations, which we derive analytically and then calibrate numerically. Our key finding is that only a forward-looking rule based on CPI inflation can account for frequently observed strong UIP violations.”



• The IMF has issued the following working papers:

• Spring Forward or Fall Back? The Post-Crisis Recovery of Firms – “This paper studies corporate performance in the aftermath of the global crisis by examining 6,581 manufacturing firms in 48 developed and developing countries in 2010, identifying factors of resilience as well as vulnerability.”


• What Role Can Financial Policies Play in Revitalizing SMEs in Japan? – “The paper discusses the role the financial sector can play in supporting growth in Japan. Firm-level SME data and sectoral corporate balance sheets show that many SMEs have faced structural challenges of high leverage and low profitability.”


SEACEN – Press Release: Reserve Bank of India Admitted as 19th SEACEN Member

• The SEACEN Centre has announced that the Reserve Bank of India will become the 19th member of the SEACEN Grouping with effect from 1 January 2013. The SEACEN Centre takes this opportunity to welcome Dr. D. Subbarao, Governor, Reserve Bank of India, as a Member of the SEACEN Board of Governors, effective from 1 January 2013.


SEACEN – Press Release: SECOND SEACEN-CEMLA CONFERENCE

http://www.adb.org/news/greater-mekong-ministers-adb-plan-next-generation-development-activities

http://www.adb.org/news/greater-mekong-ministers-adb-plan-next-generation-development-activities

http://www.adb.org/sites/default/files/news/GMS-joint-ministerial-statement.pdf





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• The Second SEACEN-CEMLA Conference was organized in Punta del Este, Uruguay, on 15-16 November 2012. Hosted by the Banco Central Del Uruguay, the timely theme of the Conference was on “partnership with CEMLA to drive cross-regional collaboration among central banks in the Asian and Latin American regions through various strategic initiatives.


World Bank – Press Release: “Country Partnership Strategy (CPS) for Indonesia for 2013 -2014”

• The World Bank Group’s Board of Directors have discussed the latest Joint Country Partnership Strategy (CPS) for Indonesia for the period 2013 -2014 that outlines the Bank Group’s role in sharing development solutions for an emerging Indonesia. Bridging the final two years of President Susilo Bambang Yudhoyono’s administration, the new CPS is closely aligned with the government’s development objectives, updating the Bank Group’s engagement through a lens that -- like the country’s Masterplan for accelerated growth -- is pro-growth, pro-jobs, pro-poor, and pro-environment.

http://www.worldbank.org/en/news/2012/12/11/latest-country-partnership-strategy-indonesia-focuses-growth-equity



(%chg) China 6.2980 6.2266 6.2515 6.2326 0.30 1.0 Hong Kong 7.7698 7.7503 7.75 7.7501 0.00 0.3 Indonesia 9,126.0 9,618.0 9,670.0 9,689.0 -0.20 -5.8 Japan 76.8 82.48 83.26 83.43 -0.20 -7.9 Korea 1,150.8 1,082.9 1,074.9 1,073.0 0.18 7.2 Malaysia 3.1507 3.0394 3.0528 3.0547 -0.06 3.1 Philippines 43.765 40.795 41.01 41.053 -0.10 6.6 Singapore 1.2906 1.2202 1.221 1.2209 0.01 5.7 Thailand 31.5 30.7 30.6 30.7 -0.10 2.6 Vietnam 21,031.0 20,850.0 20,840.0 20,840.0 0.00 0.9



(%chg) China 2,199.4 1,980.1 2,082.7 2,061.5 -1.02 -6.3 Hong Kong 18,877.4 22,030.4 22,503.4 22,445.6 -0.26 18.9 Indonesia 3,857.9 4,276.1 4,337.5 4,320.2 -0.40 12.0 Japan 8,455.4 9,446.0 9,581.5 9,742.7 1.68 15.2 Korea 1,875.4 1,932.9 1,975.4 2,002.8 1.38 6.8 Malaysia 1,514.6 1,610.8 1,649.8 1,650.0 0.01 8.9 Philippines 4,422.2 5,640.5 5,819.8 5,788.0 -0.55 30.9 Singapore 2,691.1 3,070.0 3,141.6 3,154.7 0.42 17.2 Thailand 1,025.3 1,324.0 1,354.6 1,352.6 -0.15 31.9 Vietnam 350.0 377.8 391.1 391.2 0.03 11.8

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 12-Dec 13-Dec bps change 12-Dec 13-Dec bps change China 2.260 2.580 32.00 3.855 3.855 0.03 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.173 4.174 0.08 4.925 4.926 0.16 Japan 0.095 0.098 0.25 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.840 2.840 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -1.425 -0.744 68.10 0.116 0.019 -9.70 Singapore 0.031 0.031 0.00 0.377 0.378 0.08 Thailand 2.750 2.750 0.00 2.866 2.866 0.00 Vietnam 4.778 4.292 -48.60 7.217 7.400 18.30




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CREDIT DEFAULT SWAP (IN BPS) 11-Dec 12-Dec bps change China 59.0 60.3 1.30 Hong Kong 39.5 42.5 3.00 Indonesia 123.9 121.8 -2.15 Japan 74.8 74.4 -0.42 Korea 62.6 61.3 -1.26 Malaysia 69.8 69.7 -0.16 Philippines 98.0 98.9 0.94 Thailand 86.8 86.2 -0.66 Vietnam 202.5 198.0 -4.49



1,711.7 1,697.6 -0.83

Source: Bloomberg

CREDIT RATINGS









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SOUTH KOREA South Korea 7-Day Repo Rate % Dec 13 2.75 2.75 PHILIPPINES Overseas Remittances (YoY)% Oct 5.9 HONG KONG Producer Price (YoY)% 3Q -1.5 -0.7 HONG KONG Industrial Production (YoY)% 3Q -0.1 -2.9



12/10/2012 JAPAN Current Account Balance YOY% Oct JAPAN Current Account Total (JPY bn) Oct SOUTH KOREA Producer Price Index (YoY)% Nov JAPAN Consumer Confidence Nov CHINA New Yuan Loans (RMB bn) Nov CHINA Imports YoY% Nov CHINA Exports YoY% Nov CHINA Trade Balance (USD bn) Nov JAPAN Gross Domestic Product (QoQ)% 3Q F JAPAN GDP Annualized % 3Q F JAPAN Nominal GDP (QoQ)% 3Q F 12/11/2012 PHILIPPINES Total Exports (YoY)% Oct INDONESIA Bank Indonesia Reference Rate% Dec 11 12/12/2012 SOUTH KOREA Unemployment Rate (SA)% Nov SOUTH KOREA Bank Lending to HH (KRW Tln) Nov JAPAN Machine Orders YOY% Oct 12/13/2012 SOUTH KOREA South Korea 7-Day Repo Rate % Dec 13 PHILIPPINES Overseas Remittances (YoY)% Oct HONG KONG Producer Price (YoY)% 3Q HONG KONG Industrial Production (YoY)% 3Q 12/14/2012 THAILAND Foreign Reserves (USD bn) Dec 7 SINGAPORE Retail Sales (YoY)% Oct CHINA Actual FDI (YoY)% Nov JAPAN Industrial Production YOY% Oct F JAPAN Capacity Utilization (MoM)% Oct F CHINA HSBC Flash China Manufacturing PMI Dec SINGAPORE Unemployment Rate (sa)% 3Q F




MARKET DEVELOPMENTS

• Asian stocks swung between gains and losses after surveys showed China’s manufacturing may accelerate this month and pessimism among Japanese producers increased. The MSCI Asia Pacific Index was little changed at 127.17 as of 2:40 p.m. Tokyo time, having swung between losses of 0.3 percent and gains of 0.1 percent. The gauge advanced 12 percent this year through yesterday amid signs the world’s biggest economies are improving and optimism US lawmakers will agree on a budget deal to avert the so-called fiscal cliff. Shares on the Asian benchmark index traded at 14.3 times estimated earnings, compared with 13.7 times for the S&P 500 Index and 12.7 times for the Stoxx Europe 600.

• Euro rises versus dollar, while Yen drops. The euro strengthened for a fifth day against the dollar as European Union leaders pledged to seek a joint strategy for handling failing banks, boosting demand for the region’s assets. The euro gained 0.2 percent to $1.3105 at 8:20 a.m. London time, extending this week’s advance to 1.4 percent. Meanwhile, the yen fell to the weakest since March against the dollar after business confidence slid to the lowest in almost three years.

• Oil rose in New York as a report signaled manufacturing may expand at a faster pace this month in China. Crude for January delivery climbed as much as 71 cents to $86.60 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.57 at 1:33 p.m. Singapore time. The contract fell 88 cents to $85.89 yesterday. Prices are up 0.7 percent this week and down 12 percent this year. Brent for January settlement, which expires today, rose 49 cents to $108.40 a barrel on the London-based ICE Futures Europe exchange. The more actively traded February contract was up 54 cents at $106.99. The European benchmark contract was at a premium of $21.81 to New York-traded WTI. Front-month prices have gained 0.8 percent in 2012.

BREAKING NEWS

GLOBAL

• EU summit delays crucial eurozone moves. The two most controversial proposals put forward by European Council president Herman Van Rompuy – a future eurozone budget and binding economic reform contracts – were nearly stripped entirely from the summit’s communiqué. The document, which was published early on Friday morning, instead said the contracts would be presented as a possible measure in June. But he acknowledged that another variation of that idea – creating a larger budget to help countries facing economic difficulties – had been dropped.

• The Federal Reserve extended until February 2014 a program that lends U.S. dollars to foreign central banks. The U.S. central bank said it will continue to run its dollar swap lines with the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank through February 1, 2014. The Bank of Japan will consider whether to extend the arrangement at its next policy meeting, the Fed said. The Fed's action prevents the program from expiring in February. Used extensively during the financial crisis, the swap lines had been shut in February 2010, but were revived in May 2010 as sovereign-debt problems began to emerge in Europe.

• Swiss National Bank (SNB) maintains ceiling as European woes weigh on franc. The Swiss central bank pledged to uphold its 15-month defense of the franc to protect the economy, with President Thomas Jordan signaling the possibility of further “substantial” currency interventions.

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The SNB maintained the currency ceiling at 1.20 francs per euro today and reiterated that it will uphold the measure “with the utmost determination.” The Zurich-based central bank also kept its benchmark interest rate at zero percent, and said consumer prices will continue to drop in 2013. The SNB’s foreign-currency reserves have surged almost 70 percent over the past year to 424.8 billion francs ($459 billion) at the end of November as policy makers stepped up euro purchases to curb flows sparked by the region’s debt crisis.

• India approved changes to a century-old land law and set up a panel to speed up infrastructure projects. Amendments to the colonial-era Land Acquisition Act may help the government curb often violent protests that have stalled projects for industry and highways. The cabinet committee also allowed the establishment of an infrastructure panel and a 30 percent reduction in the sale of airwaves. The approvals add momentum to Singh’s policy agenda by addressing transportation and energy bottlenecks that have handicapped growth in Asia’s third-largest economy. Singh will head a new panel aimed at speeding up approvals of infrastructure projects. The prime minister is seeking $1 trillion in investments for highways, ports and power plants from 2012 to 2017 to spur development.

REGIONAL

• Cambodia’s Prime Minister urges factories to up wages. In a speech at the inauguration of a new administrative building for the Ministry of Labor, Hun Sen admonished employers, and garment manufacturers in particular, to make the domestic market more attractive to workers, citing Cambodia’s ongoing labor shortage. Meanwhile, in neighboring Thailand, despite looming mass deportations, more than 50,000 Cambodians have successfully registered as legal migrant workers, making themselves eligible for a recently instated 300 baht daily minimum wage – a salary that comes to just under $300 a month, or more than three-and-a-half times the basic salary of a Cambodian garment worker including mandatory bonuses and allowances.

• China's manufacturing expands. The flash reading of the HSBC China Manufacturing Purchasing Managers' Index showed manufacturing activity has expanded for a second straight month, adding to a raft of recent data signaling that the world's second-largest economy is steadily recovering. The reading also pointed to solid economic growth in the fourth quarter. The preliminary reading of HSBC's PMI for December rose to 50.9, compared with a final tally of 50.5 in November, HSBC said Friday. A reading above 50 indicates expansion. Meanwhile, the latest PMI figures indicated that new export orders remained weak, with the reading dropping to 49.5 from 52.0 in November.

• Japan Tankan Business Confidence falls to near 3-year low. The quarterly Tankan index for large manufacturers fell to minus 12 in December from minus 3 in September, the Bank of Japan said in Tokyo today, a fifth straight negative reading and the lowest since March 2010. Big Japanese manufacturers are the most pessimistic in almost three years after a diplomatic dispute with China and Europe’s austerity measures dragged exports to a fifth monthly decline in October. Next quarter, large manufacturers will probably grow less pessimistic, with the outlook index in today’s Tankan at minus 10. Large companies from all industries plan to increase capital spending 6.8 percent in the fiscal year through March 2013, up 0.4 percentage point from the September survey.

• Overseas Filipino Workers (OFWs) ban to Israel was lifted. The Philippine Department of Foreign Affairs (DFA) on Friday lifted its temporary ban on the deployment of new hires to Israel, citing improved security conditions following the ceasefire between Israeli and Hamas forces. On 23 November 2012 the DFA advised Filipinos to defer travel to Gaza and central and southern Israel in view of the Israel-Hamas conflict. The DFA placed parts of Israel on alert levels that barred the deployment of new hires. The Philippine government said that more than 40,000 Filipinos, mostly employed as caregivers, live in Israel, while there are about 120 Filipinos in Gaza.

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• Job growth in Singapore remains high despite more layoffs. Job openings increased, bucking the declines in the preceding two quarters. Overall, the labor market remained tight supported by domestic-oriented activities and tightening in foreign manpower controls. The seasonally adjusted vacancies rose by 13 percent over the quarter to 51,500 in September this year. For every 100 job seekers, there were now 125 job openings, up from 91 in June and 105 in March this year.

• Vietnam and Thailand talk transport development. Transport officials from the two countries are meeting for two days to discuss capacity enhancement for Vietnamese transport and logistics companies to prepare for the creation of the ASEAN Economic Community (AEC). The conference, which is being held December 13 and 14, is discussing the legal framework for trans-border transport, traffic infrastructure development for AEC, and standards for roadway logistics. Speaking at the conference, Nguyen Ngoc Thuyen, deputy director of International Cooperation Department under the Transport Ministry, said Thailand had been very active in helping with the preparation for AEC and had assisted Vietnam in integrating into the community.


IFC – Press Release: IFC and Thailand Hold Transfer Pricing Conference to Help Countries Improve Tax Administration

• The IFC and the Revenue Department of Thailand are holding a three-day conference from December 12-14 to help countries address transfer pricing risks to better secure tax revenues and provide certainty to investors, boosting countries’ prospects for economic growth. The conference, "Transfer pricing in East Asia and the Pacific - Protecting the tax base and building a strong investment climate,” will focus on policy challenges related to transfer pricing and identify solutions to improve tax administration.

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/362B9BDA392DDE9385257AD200287A62

IFC – Press Release: IFC Helps Largest Lao Commercial Bank Improve Trade Financing for Importers and Exporters

• The IFC will provide a trade finance line of $5 million to Banque pour le Commerce Exterieur Lao Public, the largest commercial bank in the Lao People's Democratic Republic. This will allow the bank to help smaller Lao private companies increase trade, generate foreign exchange, and create jobs.

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/751A141525411B1885257AD1001398F8

IMF – Press Release: Statement by IMF Managing Director Christine Lagarde on Greece

• The IMF has issued the captioned MD’s statement. "I welcome the Eurogroup’s decision to support the debt buy back operation for Greece and its assurances to provide additional debt relief if necessary and provided Greece has achieved a primary budget balance in 2013. These steps will ensure that Greece’s debt-to-GDP declines to 124 percent by 2020 and to substantially below 110 percent by 2022. On this basis, I intend to recommend to the Fund’s Executive Board that it completes the first review of Greece's Fund-supported program. I expect that a Board meeting could take place in January.”


IMF – Working Paper: “Global Financial Crisis, Financial Contagion, and Emerging Markets”

• The IMF has issued the captioned working paper. “We propose a two-country DSGE model to investigate the transmission of a global financial crisis that originates from financial frictions in






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the rest of the world. We find that the scale of financial spillovers from the global to the domestic economy and trade openness are key determinants of the severity of the financial crisis for the domestic economy. Our results also suggest that the welfare ranking of alternative monetary policy regimes is determined by the degree of financial contagion, the degree of trade openness as well as the scale of foreign currency denominated debt in the domestic economy.”


World Bank – Publication: “The foundations of financial inclusion: understanding ownership and use of formal accounts”

• The World Bank has published the captioned research paper. It says, “Policy makers can boost the number of people using formal financial services through policies that help reduce the cost, documentation requirements, and travel distance associated with accessing a bank account.”

http://www.worldbank.org/en/news/2012/12/13/new-individual-level-data-financial-inclusion-unbanked-deterred-cost-documentation-travel-requirements (Press Release)

http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469372&menuPK=64166093&entityID=000158349_20121212172254 (Report)



(%chg) China 6.2980 6.2266 6.2326 6.2460 -0.21 0.8 Hong Kong 7.7698 7.7503 7.75 7.7501 0.00 0.3 Indonesia 9,126.0 9,618.0 9,689.0 9,694.0 -0.05 -5.9 Japan 76.8 82.48 83.65 83.79 -0.17 -8.3 Korea 1,150.8 1,082.9 1,073.0 1,074.7 -0.15 7.1 Malaysia 3.1507 3.0394 3.0547 3.0565 -0.06 3.1 Philippines 43.765 40.795 41.053 41.088 -0.09 6.5 Singapore 1.2906 1.2202 1.2214 1.2218 -0.03 5.6 Thailand 31.5 30.7 30.6 30.6 0.00 2.7 Vietnam 21,031.0 20,850.0 20,840.0 20,840.0 0.00 0.9



(%chg) China 2,199.4 1,980.1 2,061.5 2,150.6 4.32 -2.2 Hong Kong 18,877.4 22,030.4 22,445.6 22,606.0 0.71 19.8 Indonesia 3,857.9 4,276.1 4,320.2 4,308.9 -0.26 11.7 Japan 8,455.4 9,446.0 9,742.7 9,737.6 -0.05 15.2 Korea 1,875.4 1,932.9 2,002.8 1,995.0 -0.39 6.4 Malaysia 1,514.6 1,610.8 1,652.8 1,651.3 -0.09 9.0 Philippines 4,422.2 5,640.5 5,788.0 5,707.1 -1.40 29.1 Singapore 2,691.1 3,070.0 3,156.6 3,165.3 0.28 17.6 Thailand 1,025.3 1,324.0 1,353.8 1,358.7 0.36 32.5 Vietnam 350.0 377.8 391.2 392.2 0.26 12.1


http://www.worldbank.org/en/news/2012/12/13/new-individual-level-data-financial-inclusion-unbanked-deterred-cost-documentation-travel-requirements

http://www.worldbank.org/en/news/2012/12/13/new-individual-level-data-financial-inclusion-unbanked-deterred-cost-documentation-travel-requirements

http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469372&menuPK=64166093&entityID=000158349_20121212172254

http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469372&menuPK=64166093&entityID=000158349_20121212172254

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OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 13-Dec 14-Dec bps change 13-Dec 14-Dec bps change China 2.580 2.260 -32.00 3.855 3.857 0.22 Hong Kong 0.097 0.097 0.00 0.398 0.398 0.00 Indonesia 4.174 4.177 0.28 4.926 4.938 1.16 Japan 0.095 0.095 0.00 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.850 2.850 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -0.744 1.709 245.30 0.019 -0.025 -4.40 Singapore 0.028 0.028 0.00 0.378 0.378 0.04 Thailand 2.750 2.750 0.00 2.866 2.866 0.00 Vietnam 4.292 2.875 -141.70 7.400 7.213 -18.70

CREDIT DEFAULT SWAP (IN BPS) 12-Dec 13-Dec bps change China 60.3 58.2 -2.06 Hong Kong 42.5 38.0 -4.50 Indonesia 121.8 121.1 -0.65 Japan 74.4 74.4 0.03 Korea 61.3 60.6 -0.75 Malaysia 69.7 70.5 0.83 Philippines 98.9 96.9 -2.06 Thailand 86.2 85.5 -0.67 Vietnam 198.0 193.8 -4.19



1,697.1 1,697.5 0.02

Source: Bloomberg

CREDIT RATINGS




China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 111.3 Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 1,270.9 Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1 Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 139.1 Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 82.1 84.1 Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.6 Vietnam 17.4 19.5 19.9 19.7 20.0 n.a n.a n.a n.a

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EXTERNAL LIQUIDITY RATIOS






Country Indicators Period Last Previous THAILAND Foreign Reserves (USD bn) Dec 7 182.1 181.6 SINGAPORE Retail Sales (YoY)% Oct -1 2.5 CHINA Actual FDI (YoY)% Nov -0.2 JAPAN Industrial Production YOY% Oct F -4.5 -4.3 JAPAN Capacity Utilization (MoM)% Oct F 1.6 -5.5 CHINA HSBC Flash China Manufacturing PMI Dec 50.9 50.5 SINGAPORE Unemployment Rate (sa)% 3Q F 1.9 1.9



12/10/2012 JAPAN Current Account Balance YOY% Oct JAPAN Current Account Total (JPY bn) Oct SOUTH KOREA Producer Price Index (YoY)% Nov JAPAN Consumer Confidence Nov CHINA New Yuan Loans (RMB bn) Nov CHINA Imports YoY% Nov CHINA Exports YoY% Nov CHINA Trade Balance (USD bn) Nov JAPAN Gross Domestic Product (QoQ)% 3Q F JAPAN GDP Annualized % 3Q F JAPAN Nominal GDP (QoQ)% 3Q F 12/11/2012 PHILIPPINES Total Exports (YoY)% Oct INDONESIA Bank Indonesia Reference Rate% Dec 11 12/12/2012 SOUTH KOREA Unemployment Rate (SA)% Nov SOUTH KOREA Bank Lending to HH (KRW Tln) Nov JAPAN Machine Orders YOY% Oct 12/13/2012 SOUTH KOREA South Korea 7-Day Repo Rate % Dec 13 PHILIPPINES Overseas Remittances (YoY)% Oct HONG KONG Producer Price (YoY)% 3Q HONG KONG Industrial Production (YoY)% 3Q 12/14/2012 THAILAND Foreign Reserves (USD bn) Dec 7 SINGAPORE Retail Sales (YoY)% Oct CHINA Actual FDI (YoY)% Nov JAPAN Industrial Production YOY% Oct F JAPAN Capacity Utilization (MoM)% Oct F CHINA HSBC Flash China Manufacturing PMI Dec

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SINGAPORE Unemployment Rate (sa)% 3Q F The ASEAN+3 Market Update is compiled based on the publicly available information only and is for internal use. The interpretation of this document or any information contained or referred to on the document and the consequences which might be caused by such interpretation will not be the responsibility of AMRO. The information in this document is provided for information purposes only.



MARKET DEVELOPMENTS

• Asia stocks poised to halt 12-day rally; Japan advances. Asian stocks fell, with the regional benchmark index poised to snap its longest rally since 2004. Losses were limited as Japanese shares jumped after a party that backs more economic stimulus returned to power. The MSCI Asia Pacific Index slipped 0.2 percent to 127.13 as of 3:17 p.m. in Tokyo after rising as much as 0.3 percent. The measure capped a 12-day rally on Dec. 14, the longest winning streak since January 2004. The MSCI Asia Pacific Excluding Japan Index fell 0.5 percent to 462.66. Japan’s Nikkei 225 Stock Average rose 0.94 percent to close at the highest level since April 3. South Korea’s Kospi Index dropped 0.6 percent. Hong Kong’s Hang Seng Index fell 0.4 percent, while China’s Shanghai Composite Index rose 0.4 percent and Singapore’s Straits Times Index slid 0.49 percent.

• Oil rises a second day on speculation of more U.S., China demand. Oil rose for a second day in New York, extending its fifth weekly gain in six as signs of economic growth in the U.S. and China stoked speculation that fuel demand will grow. Futures advanced as much as 0.6 percent after the Federal Reserve reported Dec. 14 that industrial output in the U.S. climbed by the most in two years in November. A preliminary purchasing managers’ index showed manufacturing in China expanded at a faster pace this month. Brent for February settlement rose 10 cents to $108.28 a barrel on the London-based ICE Futures Europe exchange. The January contract settled $1.24 higher at $109.15 when it expired Dec. 14. The European grade was at a premium of $20.81 to WTI, down from $22.42 on Dec. 14.

BREAKING NEWS

GLOBAL

• Mario Monti’s resignation may slow year of Euro agreement. Italian Prime Minister Mario Monti’s looming resignation this week may threaten progress in fighting the three-year debt crisis even as European leaders wrap up the year with newly won breathing room. Monti, under pressure from euro-area and business leaders to enter the Italian election campaign, plans to quit once parliament passes his budget this week. Former Prime Minister Silvio Berlusconi withdrew support from Monti’s government of non-politicians Dec. 6. The Italian upper house starts debate today on the budget, which will then pass to the lower house. The European Union summit last week closed out a year in which policy makers bolstered the 17-nation single currency by setting up fiscal rules for indebted states, a permanent bailout fund, a central-bank bond-buying program and a road map for tighter banking and fiscal union. Work was overshadowed this month when Berlusconi pulled his support and pledged to return to power for the fourth time, only to backtrack as long as Monti forms what he called a “coalition of moderates.”

• US banks call for easing of Basel III. US banks are making a last-minute push to ease new global liquidity requirements, arguing that they would need to come up with an additional $800bn in easy-to-sell assets under the proposed standards. The banks argue that they have increased their holdings of liquid assets by $700bn – or about half the $1.5tn shortfall identified in the US at the end of 2010. Rather than raising the difference, they want to relax new Basel III bank safety rules.

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• India forecasts lowest growth in decade, sees scope for rate cut. India’s economy may grow at the slowest pace in a decade in the current financial year, according to forecasts by the Finance Ministry, which predicts inflation will slow enough to allow interest-rate cuts. Asia’s third-largest economy may expand about 5.7 percent to 5.9 percent in the year through March, less than an earlier estimate of as much as 7.85 percent, the ministry said in a mid-year review presented in Parliament today. That would be the smallest gain since the year ended March 31, 2003, when gross domestic product grew 4 percent. The Reserve Bank of India, which decides on monetary policy tomorrow, has so far resisted calls from Finance Minister Palaniappan Chidambaram for lower rates, opting to keep the repurchase rate at 8 percent to damp inflation in October while reducing the cash reserve ratio. To revive confidence in an economy with one of Asia’s worst performing currencies this year, Prime Minister Manmohan Singh in recent months pushed through policy overhauls to allow more foreign investment in retail and curbed energy subsidies.

REGIONAL

• China aims to keep 2013 policy prudent. China will maintain its proactive fiscal stance and prudent monetary policy in 2013 in a bid to cushion the world's second-largest economy against global headwinds, Xinhua News Agency reported after the Central Economic Work Conference concluded yesterday. "A proactive fiscal policy will be adopted with tax reforms and structural tax cuts, while prudent monetary policy will focus on operational flexibility," it said. Top officials in the two-day meeting - which is chaired by new Communist Party chief Xi Jinping and sets the country's priorities and tone for the economy for next year, realized that China still faces a lot of risks and challenges. The economic growth is unbalanced and the operating costs of enterprises keep climbing, it said, adding potential risks exist in the financial sector.

• China scraps QFII limit on sovereign funds, central banks. China scrapped a ceiling on investments by overseas sovereign wealth funds and central banks in its capital markets, part of government efforts to encourage long-term foreign ownership and shore up slumping equities. Sovereign funds, central banks and monetary authorities can now exceed the $1 billion limit that still applies to other qualified foreign institutional investors, according to revised regulations posted Dec. 14 on the State Administration of Foreign Exchange’s website. The statement did not mention a new ceiling or an increase in the total investment quota allowed under the program also known as QFII. China would “definitely” expand the foreign-currency quota provided under the QFII program once the current allotments of $80 billion are filled, Guo Shuqing, chairman of the China Securities Regulatory Commission, said last month. Regulators have since 2003 approved a combined QFII quota of $36.04 billion as of Nov. 30 under the program which allows foreign investors to buy RMB-denominated securities, the SAFE said on Dec. 11.

• LDP landslide win clears pipes for Japan fiscal spigot. The magnitude of the Liberal Democratic Party’s win in Japan’s election yesterday smoothens the path for fiscal stimulus in early 2013 as incoming Prime Minister Shinzo Abe seeks to end the economy’s contraction. The two-thirds majority won by an LDP-led coalition in the lower house enables it to override most decisions by the opposition-controlled upper house. The upper chamber will still have a say on Abe’s picks for central bank leadership, as votes on nominations can’t be overridden. The scale of the victory may accelerate a recovery from recession next year even amid Japan’s status as the nation with the world’s biggest public debt. The yen fell to a 20-month low against the dollar today as markets assess the chance of further pressure on the Bank of Japan to expand asset purchases this week for the fourth time in three months.

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• Singapore concludes Europe Free-Trade talks as exports decline. Singapore concluded negotiations on a free-trade agreement with the European Union, boosting efforts to deepen access to overseas markets as a global economic slowdown hurts exports from the island nation. The government said that talks on the EU trade accord had concluded after almost three years, with the European bloc agreeing to eliminate tariffs on all imports from Singapore over five years. The island will allow duty-free access for all incoming shipments from the region immediately, the city’s Ministry of Trade and Industry said in a statement. European and Asian leaders last month called for unfettered commerce and warned against protectionism as the sovereign-debt crisis threatens to undermine trade ties. Singapore’s exports unexpectedly fell for the third time in four months in November as electronics shipments slumped and sales to the U.S. and Europe faltered.

• Amid risks, Thailand to show continued economic growth. Bank of Thailand Governor Prasarn Trairatvorakul highlighted Global economic uncertainties, the United States' fiscal cliff, public debt crisis in the euro zone as well as political change in Japan as risk factors to the Thai economy next year. "The Monetary Policy Committee is of the view that the global economy would continue expanding, but with some risks which pose more pressure than inflation. The monetary policies will thus remain relaxed. The current policy rate at 2.75 percent is lower than inflation, which is to accommodate economic expansion," he said. The central bank forecasts 4.6-4.7 percent growth rate for 2013. For economic stability, the Bank of Thailand is now in discussion with the Finance Ministry over measures to curb household debt, particularly among people earning less than Bt10,000 a month. There is no conclusion yet whether Thailand needs a new regulatory body. Prasarn admitted that the government’s policies on minimum wage hike, first-car buyer scheme and first-home buyer scheme partially drove up household debt. He noted that it is essential that all should learn to save more for long-term financial stability.

• Myanmar takes the long view. Myanmar is identifying its development priorities as work continues on the transition to an open 21st century economy after six decades of isolation, repression and economic stagnation. 30-year national development plan will set priorities as well as roles for international institutions and investors. In the initial stages, financial support from international organisations, including the World Bank, International Monetary Fund and the Asian Development Bank will play a big role, according to Dr Khin Shwe, a senator and member of National Assembly. The government is now drafting the National Development Plan, which will cover all development over the next 30 years, he said at a recent ceremony to mark the opening of a representative office by Siam Commercial Bank in Yangon. The long-term plan will encompass plans for poverty alleviation, human resource development, investment and trade sector development, industrial, financial sector and currency development, as well as regional and sectoral plans. The long-term plan also incorporates the current five-year plan for 2011-16, under which the government targets 7.7% annual average GDP growth.


BIS&IOSCO – Publication: “Disclosure framework and assessment methodology”

• The BIS’ Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) have published a disclosure framework and assessment methodology for their Principles for financial market infrastructures (PFMIs), the new international standards for financial market infrastructures. The disclosure framework is intended to promote consistent and comprehensive public disclosure by FMIs in line with the

Page 4 of 6

requirements of the PFMIs; and the assessment methodology provides guidance for monitoring and assessing observance with the PFMIs. http://www.bis.org/publ/cpss106.pdf

Basel Committee – Press Release: Implementation of the Basel III Framework

• At its meeting on 13-14 December, the Basel Committee on Banking Supervision discussed the progress of its members in implementing the capital adequacy reforms within Basel III. The number of member jurisdictions that have published the final set of Basel III regulations effective from the start date of 1 January 2013 is 11. These include Australia, Canada, China, Hong Kong SAR, India, Japan, Mexico, Saudi Arabia, Singapore, South Africa and Switzerland. Seven other jurisdictions - Argentina, Brazil, the European Union, Indonesia, Korea, Russia and the United States - have issued draft regulations, and have indicated they are working towards issuing final versions as quickly as possible. Turkey will issue draft regulations early in 2013. http://www.bis.org/press/p121214a.htm

FSB – Press Release: FSB Regional Consultative Group for the Commonwealth of Independent States holds its second meeting

• The FSB Regional Consultative Group (RCG) for the Commonwealth of Independent States held its second meeting on 14 Dec 2012 in Moscow, Russia. http://www.financialstabilityboard.org/press/pr_121214.pdf

IMF – Publication: “Economic Diversification in LICs: Stylized Facts and Macroeconomic Implications”

• The IMF has publicised the captioned staff discussion note. “Limited diversification is an underlying characteristic of many low-income countries (LICs). This Staff Discussion Note will have three objectives. First, to review and extend the evidence, from the existing literature and ongoing IMF work, that points to diversification as a crucial aspect of the development process. A major focus will be on cross-country and cross-regional differences in the pace of diversification. Second, to draw lessons from the experiences of those countries that have successfully diversified their economies. Third, to analyze the relationship between diversification, growth, and volatility. http://www.imf.org/external/pubs/ft/sdn/2012/sdn1213.pdf

UNCTAD – Publication: “Handbook of Statistics 2012”

• UNCTAD has issued the captioned publication. It says, “The expanding contribution of developing countries to the global economy, led by shipbuilding and the manufacture of electronics, is revealed.” http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=376&Sitemap_x0020_Taxonomy=Statistics;#20;#UNCTAD Home (Press Release)



(%chg) China 6.2980 6.2460 6.2460 6.2370 0.14 1.0 Hong Kong 7.7698 7.7501 7.7501 7.7501 0.00 0.3 Indonesia 9,126.0 9,694.0 9,694.0 9,699.0 -0.05 -5.9 Japan 76.8 83.52 83.52 83.8 -0.33 -8.4 Korea 1,150.8 1,074.7 1,074.7 1,072.4 0.21 7.3 Malaysia 3.1507 3.0565 3.0565 3.0574 -0.03 3.1 Philippines 43.765 41.088 41.088 41.06 0.07 6.6 Singapore 1.2906 1.2193 1.2193 1.2206 -0.11 5.7 Thailand 31.5 30.6 30.6 30.6 0.10 2.8 Vietnam 21,031.0 20,840.0 20,840.0 20,850.0 -0.05 0.9


http://www.bis.org/publ/cpss106.pdf

http://www.bis.org/press/p121214a.htm


http://www.imf.org/external/pubs/ft/sdn/2012/sdn1213.pdf

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STOCK MARKET INDEX


(%chg) China 2,199.4 2,150.6 2,150.6 2,160.3 0.45 -1.8 Hong Kong 18,877.4 22,606.0 22,606.0 22,513.6 -0.41 19.3 Indonesia 3,857.9 4,308.9 4,308.9 4,315.9 0.16 11.9 Japan 8,455.4 9,737.6 9,737.6 9,828.9 0.94 16.2 Korea 1,875.4 1,995.0 1,995.0 1,983.1 -0.60 5.7 Malaysia 1,514.6 1,652.0 1,652.0 1,648.6 -0.21 8.8 Philippines 4,422.2 5,707.1 5,707.1 5,623.9 -1.46 27.2 Singapore 2,691.1 3,168.4 3,168.4 3,153.0 -0.49 17.2 Thailand 1,025.3 1,358.5 1,358.5 1,359.3 0.06 32.6 Vietnam 350.0 392.2 392.2 393.6 0.36 12.5

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 14-Dec 17-Dec bps change 14-Dec 17-Dec bps change China 2.260 2.260 0.00 3.857 3.861 0.36 Hong Kong 0.097 0.096 -0.07 0.398 0.398 0.00 Indonesia 4.177 4.178 0.08 4.938 4.942 0.44 Japan 0.095 0.095 0.00 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.850 2.850 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 1.709 1.046 -66.30 -0.025 0.582 60.70 Singapore 0.044 0.044 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.866 2.866 0.00 Vietnam 2.875 2.500 -37.50 7.213 7.233 2.00


13-Dec 14-Dec bps change China 58.2 58.0 -0.24 Hong Kong 38.0 40.2 2.25 Indonesia 121.1 123.1 1.94 Japan 74.4 76.0 1.67 Korea 60.6 60.6 -0.04 Malaysia 70.5 70.7 0.21 Philippines 96.9 97.3 0.47 Thailand 85.5 85.9 0.38 Vietnam 193.8 190.0 -3.80



1,696.2 1,690.5 -0.33

Source: Bloomberg

CREDIT RATINGS


Page 6 of 6









Country Indicators Period Last Previous PHILIPPINES Overseas Remittances (YoY)% Oct 8.5 5.9 SINGAPORE Non-oil Domestic Exports (YoY)% Nov -2.5 7.9 SINGAPORE Electronic Exports (YoY)% Nov -16.5 -0.8


Expected Release Date

Country Indicators Period

12/17/2012 CHINA Actual FDI (YoY)% Nov

PHILIPPINES Overseas Remittances (YoY)% Oct

SINGAPORE Non-oil Domestic Exports (YoY)% Nov

SINGAPORE Electronic Exports (YoY)% Nov

PHILIPPINES Budget Deficit/Surplus (PHP bn) Nov

12/18/2012 HONG KONG Unemployment Rate SA% Nov

PHILIPPINES Unemployment Rate% Oct

12/19/2012 MALAYSIA CPI YoY % Nov

JAPAN All Industry Activity Index (MoM) % Oct

JAPAN Merchnds Trade Exports YoY % Nov

JAPAN Merchnds Trade Balance Total (JPY bn) Nov

12/20/2012 HONG KONG CPI - Composite Index (YoY)% Nov

12/21/2012 THAILAND Foreign Reserves (USD bn) Dec 14

MALAYSIA Foreign Reserves (USD bn) Dec 14

HONG KONG Bal of Paymts - Overall (HKD bn) 3Q

HONG KONG Bal of Paymts - Current A/C (HKD bn) 3Q




MARKET DEVELOPMENTS

• Asian stocks head for nine-month high on U.S. Budget. Asian stocks rose, with the regional benchmark index headed for the highest close since March, as U.S. President Barack Obama made concessions in negotiations to break the budget impasse, according to a person familiar with the talks. The MSCI Asia Pacific Index gained 0.4 percent to 127.83 as of 3:23 p.m. in Tokyo, headed for the highest closing price since March 27. Japan’s Nikkei 225 Stock Average advanced 0.96 percent, extending an eight-month high, while China’s Shanghai Composite Index gained 0.1 percent. Hong Kong’s Hang Seng Index lost 0.08 percent and Singapore’s Straits Times Index rose 0.14 percent.

• Gold climbed from a one-week low, gaining with other commodities including oil, on optimism U.S. lawmakers will reach agreement on the budget to avert automatic spending cuts. Silver rose from the lowest in more than a month. Spot gold rose as much as 0.3 percent to $1,703.35 an ounce, and traded at $1,701.70 an ounce at 3:52 p.m. in Singapore, advancing for a second day. It dropped to $1,686.70 yesterday, the lowest price since Dec. 7. Gold for February delivery gained 0.3 percent to $1,702.90 an ounce on the Comex in New York.

BREAKING NEWS

GLOBAL

• Obama offer raises tax increase threshold to $400,000. President Barack Obama made a new budget offer that would raise taxes by $1.2 trillion and increase tax rates for households earning more than $400,000 a year, up from $250,000, said a person familiar with the talks. Obama’s plan would cut $1.22 trillion in federal spending, including interest savings, said the person, who spoke on condition of anonymity. It would change the inflation measure used to calculate Social Security benefit increases. In his offer, Obama would increase the U.S. debt limit for two years. Obama presented the offer to Boehner today, the person said. Obama and Boehner met for 45 minutes today at the White House for the third time in nine days as they try to prevent the so-called fiscal cliff. Boehner spokesman Brendan Buck, in an e-mailed statement tonight, called the offer “a step in the right direction” though he said it “cannot be considered balanced.” He said the offer included $1.3 trillion in revenue and $930 billion in spending cuts. That calculation doesn’t count $290 billion in lower interest payments as part of the spending cut. Interest savings are a byproduct of tax and spending decisions. Buck said the speaker hopes to continue negotiations.

• Draghi predicts ECB policy will foster Euro-area recovery. European Central Bank President Mario Draghi said ECB policies and governance reforms in the euro area have revived confidence that will help foster a gradual economic recovery in the second half of next year. A commitment in July to preserve the euro at any cost and the establishment of a single banking supervisor have improved financial-market sentiment, Draghi said in Brussels. One priority for 2013 is now to create a single resolution mechanism to complete Europe’s banking union, he said. “The impression that one has of this year, at least of the second part of this year, is of a gradual improvement in financing conditions which is one of the reasons why we foresee a beginning of a recovery in the second part of next year,” Draghi said in testimony at the European Parliament’s Economic and Monetary Affairs Committee. Still, “the medium-term outlook for economic activity remains challenging.” The Frankfurt-based ECB cut its economic forecasts earlier this month, predicting the 17-nation region will contract 0.5 percent this year and 0.3 percent in 2013.

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• Moody’s seeks feedback on changes to its sovereign rating method. Moody’s Investors Service is seeking feedback on changes to the way it rates governments to boost transparency after being criticized for its methodology. The proposed changes will place more importance on economic growth and event risk of countries among its metrics, the world’s second-largest credit-rating company said in a statement today. The system will continue to focus on a nation’s institutional and fiscal strength, it said. In the past year, ratings companies have been criticized for issuing sovereign-debt downgrades that countries including Portugal, Greece and Ireland say triggered their need for bailouts from the European Union and the International Monetary Fund.

REGIONAL

• Abe shift on BOJ shows Volcker moment may loom in Japan. Japan’s incoming Prime Minister Shinzo Abe backed the central bank when it raised interest rates in 2006, a move he now says was a mistake. His shift may signal less tolerance for deflation in the third-largest economy. Abe, whose party swept to victory in elections for the lower house of Parliament two days ago, will have the chance to reshape the Bank of Japan next year, when the terms of its governor and two deputies expire. Abe said he told central bank Governor Masaaki Shirakawa today that he wants an accord with a 2 percent inflation target. The BOJ is forecast to boost its asset purchases as soon as Dec. 20. American policy makers by the late 1970s recognized the broader costs of inflation to competitiveness and productivity, and backed then-Federal Reserve Chairman Volcker’s efforts to contain it. Any similar shift by Japan with respect to ending deflation would diminish incentives to save and make it more attractive to borrow, a potential recipe for faster growth.

• Foreign Investment in China Falls. China's foreign direct investment fell 5.4 percent in November from a year earlier, the government said, while an official warned that increasing international competition presents a challenge to China's ability to keep foreign investment. China attracted $8.29 billion of foreign direct investment in November, the Ministry of Commerce said in a statement. In addition to the 5.4 percent drop compared with a year ago, the figure represents a slight decline from October's $8.31 billion. FDI in the January-November period fell 3.6 percent from a year earlier to $100 billion. China "faces large pressure" to maintain growth in foreign investment due to a sluggish global economy, concerns around the world that China's foreign investment environment is deteriorating, and the divergence of some investment flows to other emerging markets, Ministry of Commerce spokesman Shen Danyang said at a news conference. "So we have to be well prepared mentally, and try to maintain stable growth of FDI by all means next year," he said.

• Philippines estimates impact of storm Bopha to be felt next year. The Philippine government estimates the economic impact of storm Bopha at 32 billion pesos ($780 million) or about 0.3 percent of the nation’s gross domestic product, Economic Planning Secretary Arsenio Balisacan said. The amount includes production losses, foregone revenues and damage to infrastructure and crops, Balisacan said in a briefing in Manila today. The storm’s impact will be minimal in the fourth quarter, with its effect felt in 2013, he said. Storm Bopha struck the Philippines earlier this month, killing more than 1,000 people after rains caused landslides and floods. The government may spend 10 billion pesos on reconstruction in the affected areas, Budget Secretary Butch Abad said yesterday. The economy may expand 6.5 percent this year, with third-quarter growth of 7.1 percent probably sustained in the October-December period, Balisacan said. Construction will grow robustly next year, he said, even as an elevated peso threatens competitiveness.

• Indonesia's Growth in 2013 Seen at 6.3 percent. Indonesia is expected to grow 6.3 percent in 2013 after expanding this year by 6.1 percent, the World Bank said on Tuesday. The World Bank, in a statement, projected that inflation next year will be 4.9 percent, compared with 4.3 percent in 2012. For the fourth quarter of this year, it sees inflation at 4.4 percent, and it projects 5.4

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percent for the last quarter of 2013. The bank sees exports growing 1.1 percent this year and 3.8 percent in 2013, while imports are seen increasing 3.9 percent in 2012 and 3.1 percent next year. Indonesia's budget deficit is seen at 1.7 percent of gross domestic product next year compared with 2.5 percent this year while investment growth was forecast at 11.2 percent in 2013 compared with this year's 10.3 percent. The World Bank statement said the GDP projection for 2013 assumes that domestic consumption and investment growth remain strong, with gradually improving growth in Indonesia's major trading partners supporting a modest recovery in exports.

• The International Atomic Energy Agency (IAEA) has made a number of recommendations, suggestions and proposals to develop Vietnam’s nuclear infrastructure. The ideas were presented during a 10-day seminar reviewing Vietnam’s nuclear infrastructure held by the Ministry of Science and Technology in coordination with IAEA, which concluded on December 14 in Hanoi. During the seminar, IAEA experts discussed the content of all 19 issues in IAEA approved nuclear infrastructure development. They focused on seven key issues relating to nuclear development that require Vietnam’s consideration, including legal basis, regulations, human resource development, and financial and budget management. Addressing the event, Deputy Minister of MoST Vu Khai highly valued the cooperation and support from IAEA and other countries for Vietnam’s nuclear power programme. He asked the agency and international experts to consider Vietnam’s feedback, and coordinate with the Vietnamese side to complete the country’s Integrated Nuclear Infrastructure Review.


ADB & ILO – Press Release: ADB, ILO Reaffirm Support for Core Labor Standards

• The ADB and the ILO issued a joint statement in Manila on 17 December, saying that “ADB and ILO will promote creation of decent work in developing Asia and the Pacific in order to reduce poverty and vulnerability.” http://www.adb.org/news/adb-ilo-reaffirm-support-core-labor-standards

ADBI – Publication: “Infrastructure for Asian Connectivity”

• The ADBI has published the captioned book, a follow-up volume to “Infrastructure for a Seamless Asia”, the most downloaded book on the ADBI website. This book addresses the prospects and challenges concerning both soft and hard infrastructure development in Asia and provides a framework for achieving Asian connectivity through regional infrastructure cooperation towards a seamless Asia. http://www.adbi.org/book/2012/12/12/5383.infrastructure.asian.connectivity/

ADBI – Publication: “The Global Financial Crisis and Asia: Implications and Challenges”

• The ADBI has published the captioned book, which aims to identify and analyze the impact of the 2007–2009 global financial crisis on Asian economies and to assess the short-term and longer-term policy responses to the crisis in terms of their effectiveness and sustainability. http://www.adbi.org/book/2012/12/12/5384.global.financial.crisis.asia.implications.challenges/

IMF – Press Release: Completes Eighth Review Under the Extended Fund Facility with Ireland and Approves €0.89 billion Disbursement

• The IMF has completed the eighth review of Ireland’s performance under an economic program supported by a three-year, SDR 19.4658 billion (about €22.79 billion or about US$29.99 billion) arrangement under the Extended Fund Facility (EFF), or the equivalent of about 1,548 percent of Ireland’s IMF quota. The completion of the review enables the disbursement of an amount equivalent to SDR 0.758 billion (about €0.89 billion or about US$1.17 billion), bringing total disbursements under the EFF to SDR 16.5434 billion (about €19.37 billion or about US$25.49 billion).

http://www.adb.org/news/adb-ilo-reaffirm-support-core-labor-standards

http://www.adbi.org/book/2012/12/12/5383.infrastructure.asian.connectivity/

http://www.adbi.org/book/2012/12/12/5384.global.financial.crisis.asia.implications.challenges/

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IMF – Press Release: IMF Staff Concludes Discussions for the 2012 Article IV Consultation and First Review under the PLL Arrangement with Morocco

• The IMF’s staff team visited Morocco December 5-18, 2012 to conduct the 2012 IMF Article IV Consultation and the First Review under the Two-Year Precautionary and Liquidity Line (PLL). The Executive Board of the IMF approved a 24-month arrangement under the PLL in an amount equivalent to SDR 4.1 billion (about US$6.2 billion, 700 percent of quota) in August 2012. It said, “Morocco’s sound economic fundamentals and overall strong record of policy implementation have contributed, over the years, to a solid macroeconomic performance. This record helped the country qualify last August for a PLL arrangement, which aims to provide insurance against external shocks. The PLL also contributed to strengthen market confidence, as reflected by the lowering of CDS spreads in August. Staff’s assessment is that the authorities’ program is on track.” http://www.imf.org/external/np/sec/pr/2012/pr12489.htm

IMF – Press Release: Statement by the IMF Spokesman on Argentina

• The IMF has issued the following statement on the quality of the official data reported to the IMF by Argentina. “As required by the Executive Board’s decision of September 17, 2012 on Argentina, today IMF management has submitted a report to the Executive Board on Argentina’s response to concerns raised by the IMF respecting the quality of the official data reported to the IMF for the Consumer Price Index for Greater Buenos Aires (CPI-GBA) and Gross Domestic Product (GDP). I expect this report will be given due consideration by the Board sometime in late January. The Fund has no further comment on the report and its contents at this time.” http://www.imf.org/external/np/sec/pr/2012/pr12488.htm

IMF – Working Paper: “Optimal Oil Production and the World Supply of Oil”

• The IMF has issued the captioned working paper. “We study the optimal oil extraction strategy and the value of an oil field using a multiple real option approach. We show that decisions are very sensitive to expectations on the equilibrium oil price using a mean reverting model of the oil price where the equilibrium price is also a random variable. Oil production was cut during the 2008–2009 crisis, and we find that the cut in production was larger for OPEC, for countries facing a lower discount rate, as predicted by the model, and for countries whose governments’ finances are less dependent on oil revenues. However, the net present value of a country’s oil reserves would be increased significantly (by 100 percent, in the most extreme case) if production was cut completely when prices fall below the country's threshold price. If several producers were to adopt such strategies, world oil prices would be higher but more stable.” http://www.imf.org/external/pubs/ft/wp/2012/wp12294.pdf

OECD – Publication: “Closing the Gender Gap: Act Now”

• The OECD has published the captioned report. It said, “Gains in female education attainment have contributed to a worldwide increase in women’s participation in the labour force, but considerable gaps remain in working hours, conditions of employment and earnings. In OECD countries men earn on average 16% more than women in similar full-time jobs. At 21%, the gender gap is even higher at the top of the pay scale, suggesting the continued presence of a glass ceiling. Even though there has been progress in narrowing the gender gap in pay, especially in employment, this is not enough and much remains to be done in many countries.” http://www.oecd.org/gender/closingthegap.htm





http://www.oecd.org/gender/closingthegap.htm

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(%chg) China 6.2980 6.2460 6.2370 6.2325 0.07 1.1 Hong Kong 7.7698 7.7501 7.7502 7.7503 0.00 0.3 Indonesia 9,126.0 9,694.0 9,699.0 9,706.0 -0.07 -6.0 Japan 76.8 83.52 83.89 83.9 -0.01 -8.5 Korea 1,150.8 1,074.7 1,072.4 1,073.2 -0.07 7.2 Malaysia 3.1507 3.0565 3.0574 3.0547 0.09 3.1 Philippines 43.765 41.088 41.06 41.08 -0.05 6.5 Singapore 1.2906 1.2193 1.2194 1.2196 -0.02 5.8 Thailand 31.5 30.6 30.6 30.6 -0.03 2.8 Vietnam 21,031.0 20,840.0 20,840.0 20,840.0 0.00 0.9



(%chg) China 2,199.4 2,150.6 2,160.3 2,162.5 0.10 -1.7 Hong Kong 18,877.4 22,606.0 22,513.6 22,494.7 -0.08 19.2 Indonesia 3,857.9 4,308.9 4,315.9 4,301.4 -0.33 11.5 Japan 8,455.4 9,737.6 9,828.9 9,923.0 0.96 17.4 Korea 1,875.4 1,995.0 1,983.1 1,993.1 0.51 6.3 Malaysia 1,514.6 1,652.0 1,648.6 1,659.4 0.66 9.6 Philippines 4,422.2 5,707.1 5,623.9 5,636.6 0.23 27.5 Singapore 2,691.1 3,168.4 3,158.7 3,163.0 0.14 17.5 Thailand 1,025.3 1,358.5 1,359.1 1,358.2 -0.06 32.5 Vietnam 350.0 392.2 393.6 393.4 -0.06 12.4

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 17-Dec 18-Dec bps change 17-Dec 18-Dec bps change China 2.260 2.290 3.00 3.861 3.866 0.56 Hong Kong 0.096 0.096 0.00 0.398 0.398 0.00 Indonesia 4.178 4.180 0.20 4.942 4.944 0.12 Japan 0.098 0.095 -0.25 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.860 2.860 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 1.046 2.160 111.40 0.582 0.604 2.20 Singapore 0.110 0.110 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.866 2.865 -0.08 Vietnam 2.500 1.938 -56.20 7.233 6.583 -65.00


14-Dec 17-Dec bps change China 58.0 57.4 -0.60 Hong Kong 40.2 40.8 0.51 Indonesia 123.1 124.0 0.94 Japan 76.0 76.4 0.39 Korea 60.6 60.3 -0.27 Malaysia 70.7 68.9 -1.77 Philippines 97.3 97.3 -0.08 Thailand 85.9 85.0 -0.88 Vietnam 190.0 190.0 0.00



1,698.3 1,701.1 0.17

Source: Bloomberg

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Country Indicators Period Last Previous CHINA Actual FDI (YoY)% Nov -5.4 -0.2 HONG KONG Unemployment Rate SA% Nov 3.4 3.4 PHILIPPINES Unemployment Rate% Oct 6.8 7.0

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Date Country Indicators Period




















MARKET DEVELOPMENTS

• Asian stocks rise on US. Optimism and BOJ easing prospects. The MSCI Asia Pacific Index gained 1.1 percent to 129.36 at 5:52 p.m. in Tokyo with about four stocks rising for each that fell. Japan’s Nikkei 225 Stock Average advanced 2.4 percent. Hong Kong’s Hang Seng Index added 0.6 percent while China’s Shanghai Composite Index and Singapore’s Straits Times Index were little changed. European shares continued to drift higher as expectations built that a budget deal in the United States is close, though traders reckoned any positive outcome is largely baked into the price.

• Brent futures edged up near $109 a barrel, tracking a rally in most other risk assets on expectations that a budget crisis in the United States will be resolved, saving the world's top oil consumer from slipping into recession. Brent crude edged up 6 cents to $108.90 a barrel by 0740 GMT, after settling $1.20 higher. U.S. oil gained 7 cents to $88.00, after ending 73 cents higher and breaking above the 50-day moving average of $87.64.

BREAKING NEWS

GLOBAL

• Spain’s $185 billion restructuring test for Rajoy cleanup. A rush by recession-hit Spanish businessmen and consumers to refinance their loans will test Prime Minister Mariano Rajoy’s pledge of a “definitive” cleanup of the nation’s crisis-hit banks. Spain’s banks have restructured about 140 billion euros ($185 billion) of loans outside the country’s crippled real estate industry, according to Oliver Wyman, a consulting firm that did a stress test of Spanish lenders. Bad loans surged to a record 11.2 percent of total lending, the Bank of Spain said yesterday. Spain has ordered banks to recognize 84 billion euros of losses to purge their balance sheets of real estate as Rajoy recapitalizes at least four failed lenders with about 40 billion euros of European bailout funds. The strategy focuses on soured property assets and may neglect impending losses on loans to firms and homeowners as the economy shrinks, analysts say.

• Boehner seeks to sell tax boost to anti-tax Republicans. House Speaker John Boehner is trying to sell a tax increase for top earners to fellow Republicans whose opposition to tax increases for anyone is a central part of their identity and pitch to voters. Under Boehner’s “plan B,” tax rates would rise on income of more than $1 million a year, which President Barack Obama’s administration and other Democrats immediately rejected as inadequate. House Rules Committee staffers were working tonight to prepare a text of the measure to set up a Dec. 20 vote. Fewer than two weeks remain to avert more than $600 billion in automatic spending cuts and tax increases, known as the fiscal cliff, set to start in January. Boehner’s decision to set up a second legislative track complicates the situation, which had been focused on the intensifying talks between the speaker and the president.

• Hollande to unveil softened French bank reform. France's long-awaited bank reform is expected to fall well short of President Francois Hollande's campaign pledge for a "long war" on the financial sector as the country's fading economic fortunes have trumped the urge for stringent regulation. The overhaul, to be announced on Wednesday, will ultimately hit only a sliver of banks' profit, according to a leaked draft of the bill. That will hand a victory to top banks like BNP Paribas and Societe Generale, reflecting months of intense lobbying. French Finance Minister Pierre Moscovici hit back at critics who say the law does not go far enough by saying his aim was also to defend French interests. The draft reform requires banks to ring-fence

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proprietary trading activities in separate, self-funded entities by 2015, while sparing activities such as market-making, hedging and private-equity financing. Regulatory oversight of these activities will be ramped up.

REGIONAL

• World Bank raises East Asia outlook, sees China growing 8.4 pct in 2013. The World Bank raised its 2013 economic growth forecasts for China and developing East Asia on Wednesday, and said the region remained resilient despite the lacklustre performance of the global economy. "For 2013, we expect the region to benefit from continued strong domestic demand and a mild global recovery that would nudge the contribution of net exports to growth back into positive territory, a trend projected to continue into 2014," the World Bank said in its latest East Asia and Pacific Economic Update. "Most countries in the region have retained their strong macroeconomic fundamentals and should be able to withstand external shocks," it added, although it warned of risks such as a sharp drop in investment growth in China that could shake global confidence and a U.S. failure to reach an agreement on tax increases and spending cuts before the end of the year. The World Bank said China was expected to expand by 8.4 percent next year, fuelled by fiscal stimulus and the faster implementation of large investment projects. The latest forecast is higher than the 8.1 percent figure cited in an October report.

• Japan exports slide even as Yen decline improves ’13 outlook. Japan’s exports fell for a sixth month in November and the trade deficit swelled, underscoring the challenge that incoming Prime Minister Shinzo Abe faces in reviving growth. Shipments slid 4.1 percent from a year earlier, the Finance Ministry said in Tokyo today. The median forecast of 23 economists was for a 5.5 percent decline. Imports rose 0.8 percent leaving a deficit of 953.4 billion yen ($11.3 billion), the third-largest on record. The cumulative trade deficit for the first 11 months of 2012 was 6.28 trillion yen, more than double the record deficit in 1980. Exports to the U.S. exceeded those to China for the first time since December 2008, excluding seasonal factors, the ministry said. Exports to China fell 14.5 percent from the previous year as shipments of construction equipment tumbled almost 75 percent and cars dropped 68 percent by value, improving from an 84 percent decline in October. Exports to the European Union dropped 19.9 percent, while those to the U.S. rose 5.3 percent. Increasing purchases of mobile phones from Korea and China accounted for some of the rise in imports, the ministry said.

• Indonesia looks east in infrastructure catch-up. Indonesia’s government will emphasize building infrastructure projects on its eastern islands in 2013 as it seeks to spread development across the archipelagic nation to boost economic growth. “The government must balance infrastructure improvement in areas that haven’t been developed with those that have,” Deputy Public Works Minister Achmad Hermanto Dardak said in an interview yesterday. “We will finish roads in Sumatra, Kalimantan and Sulawesi to connect the provinces on those islands, and we will build roads in Papua.” Indonesia must shift the share of total spending from subsidies into social programs and infrastructure to sustain growth, attract investment and reduce poverty, according to the World Bank. Faster economic growth is stretching the capacity of roads and ports as goods flow through the world’s largest archipelago, which covers 5,300 kilometers (3,300 miles) across more than 17,000 islands along the equator.

• ADB unveils new work strategy for Cambodia. The Asian Development Bank yesterday announced a three-year pipeline of $525 million to boost growth in Cambodia, as it launched its new three-year rolling Country Operations Business Plan (COBP) for 2013-2015. The so-called indicative assistance pipeline includes concessional loans of $491 million for national and regional projects and programs and $34.78 million in grants for national and regional technical assistance. The program includes $260.3 million in co-financing from external sources. It will support 14 national and five regional projects, including projects to commercialise rice production, improve provincial and rural roads, and rehabilitate irrigation systems. The annually

http://topics.bloomberg.com/finance-ministry/

http://www.customs.go.jp/toukei/shinbun/trade-st_e/2012/2012104e.pdf

http://phnompenhpost.com/2012121960354/Business/adb-unveils-new-work-strategy-for-cambodia.html

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updated COBP shows how the ADB will support the government for the next three years, according to ADB country director for Cambodia, Eric Sidgwick.

• Philippine leader signs $59 billion anti-poverty budget for 2013. Philippine President Benigno Aquino on Wednesday signed into law a 2 trillion peso (S$59 billion) budget for 2013, vowing to use higher taxes on tobacco and alcohol to boost programmes to reduce poverty. Education, health, agriculture and a cash-transfer scheme for the poor are the key priorities of the appropriations, which are 10.5 per cent higher than the 2012 national budget, he said during the signing ceremony. "We designed this budget as an instrument to give the common man the power to control and improve his life," Mr Aquino said. He thanked parliament for passing earlier this month a controversial rise in "sin taxes" on tobacco and alcohol products, which is expected to bring in over $800 million in extra revenues next year.

• Asia business sentiment edges up in Q4, but global worries persist. Business sentiment among Asia's top companies improved slightly in the fourth quarter, reversing two consecutive quarters of declines, while global economic uncertainty remained the biggest concern for the region's firms. The Thomson Reuters/INSEAD Asia Business Sentiment Index rose to 63 in the fourth quarter from 62 in the third quarter of 2012, having peaked at 80 in the first quarter of 2011. A reading above 50 indicates an overall positive outlook, while one below 50 points to pessimism. The results showed a stark contrast between companies in Southeast Asia, a region of about 600 million people now benefiting from an increase in foreign investment and which showed some of the highest positive readings, and manufacturing-heavy northeast Asia, which is more susceptible to the global economic downturn and had some of the lowest index readings. China, where exports support an estimated 200 million jobs, showed the most positive response in the northeast Asian region, but companies in other export-focused economies such as Japan, South Korea and Taiwan remained more cautious.


BIS – Working Papers

• The BIS has publicised the following working papers: • Why do firms issue abroad? Lessons from onshore and offshore corporate bond finance in

Asian emerging markets http://www.bis.org/publ/work401.pdf

• The future of financial globalisation http://www.bis.org/publ/bppdf/bispap69.pdf

• Capital Flows and the Risk-Taking Channel of Monetary Policy http://www.bis.org/publ/work400.pdf

• Global safe assets http://www.bis.org/publ/work399.pdf

• The great leveraging http://www.bis.org/publ/work398.pdf

• Financial Globalisation and the Crisis http://www.bis.org/publ/work397.pdf

Based Committee – Public Comments: “Revisions to the Basel Securitisation Framework”

• The Basel Committee is performing a broader review of its securitisation framework for regulatory capital requirements, and publicised the draft proposal as a consultative document. Comments on the proposals should be submitted by Friday 15 March 2013 by e-mail to: [email protected]. http://www.bis.org/press/p121218.htm (Press Release) http://www.bis.org/publ/bcbs236.pdf (Consultative Document)


http://www.bis.org/publ/bppdf/bispap69.pdf





http://www.bis.org/press/p121218.htm

http://www.bis.org/publ/bcbs236.pdf

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FSB – Public Comments: “Recovery and Resolution Planning”

• The FSB has publicised the public responses to the captioned consultative document on Recovery and Resolution Planning issued on 2 November. http://www.financialstabilityboard.org/publications/r_121102.pdf (Consultative Document) http://www.financialstabilityboard.org/press/c_121218.htm (Comments)

IMF – Publication: “Indonesia: Financial Sector Assessment Program—Basel Core Principles Assessment—Detailed Assessment of Compliance”

• The IMF has publicised the captioned paper. http://www.imf.org/external/pubs/ft/scr/2012/cr12335.pdf

IMF – Working Paper: “Income and Democracy: Lipset's Law Revisited”

• The IMF has publicised the captioned working paper. “We revisit Lipset‘s law, which posits a positive and significant relationship between income and democracy. Using dynamic and heterogeneous panel data estimation techniques, we find a significant and negative relationship between income and democracy: higher/lower incomes per capita hinder/trigger democratization.” http://www.imf.org/external/pubs/ft/wp/2012/wp12295.pdf

UNCTAD – Event: “Competition agencies celebrate World Competition Day”

• Competition agencies across the globe have joined together to celebrate World Competition Day, which marks the thirty-second anniversary of the adoption by the General Assembly, on 5 December 1980, of the United Nations Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices (UN Set). http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=380&Sitemap_x0020_Taxonomy=Competition Law and Policy;#20;#UNCTAD Home;#1385;#International Trade and Commodities

World Bank – Appointment: World Bank Group Announces Bertrand Badré as Managing Director for Finance and CFO

• World Bank Group President Jim Yong Kim today announced the appointment of Bertrand Badré as Managing Director for Finance and Chief Financial Officer. Badré, a French national, is currently serving as the Group Chief Financial Officer at Société Générale. http://www.worldbank.org/en/news/2012/12/18/world-bank-group-announces-bertrand-badre-managing-director-finance-cfo

World Bank – Publication: “East Asia and Pacific Economic Update, December 2012 – Remaining Resilient”

• The World Bank has publicised the captioned report. Economies of developing East Asia and Pacific remained resilient despite the lackluster performance of the global economy. The World Bank’s latest East Asia and Pacific Economic Update projects the region will grow at 7.5 percent in 2012, lower than the 8.3 percent registered in 2011, but set to recover to 7.9 percent in 2013. http://www.worldbank.org/en/news/2012/12/19/east-asia-and-pacific-economic-update-december-2012-remaining-resilient

WTO – Press Release: “Trade Policy Review: United States of America”

• The eleventh review of the trade policies and practices of the United States of America takes place on 18 and 20 December 2012. The basis for the review is a report by the WTO Secretariat and a report by the Government of the United States of America. http://www.wto.org/english/tratop_e/tpr_e/tp375_e.htm

http://www.financialstabilityboard.org/publications/r_121102.pdf

http://www.financialstabilityboard.org/press/c_121218.htm



http://www.worldbank.org/en/news/2012/12/18/world-bank-group-announces-bertrand-badre-managing-director-finance-cfo

http://www.worldbank.org/en/news/2012/12/18/world-bank-group-announces-bertrand-badre-managing-director-finance-cfo

http://www.worldbank.org/en/news/2012/12/19/east-asia-and-pacific-economic-update-december-2012-remaining-resilient

http://www.worldbank.org/en/news/2012/12/19/east-asia-and-pacific-economic-update-december-2012-remaining-resilient

http://www.wto.org/english/tratop_e/tpr_e/tp375_e.htm

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(%chg) China 6.2980 6.2460 6.2325 6.2309 0.03 1.1 Hong Kong 7.7698 7.7501 7.75 7.7502 0.00 0.3 Indonesia 9,126.0 9,694.0 9,706.0 9,691.0 0.15 -5.8 Japan 76.8 83.52 84.21 84.32 -0.13 -8.9 Korea 1,150.8 1,074.7 1,073.2 1,072.5 0.07 7.3 Malaysia 3.1507 3.0565 3.0547 3.0553 -0.02 3.1 Philippines 43.765 41.088 41.08 41.04 0.10 6.6 Singapore 1.2906 1.2193 1.2171 1.2197 -0.21 5.8 Thailand 31.5 30.6 30.6 30.6 -0.07 2.8 Vietnam 21,031.0 20,840.0 20,840.0 20,853.0 -0.06 0.9



(%chg) China 2,199.4 2,150.6 2,162.5 2,162.2 -0.01 -1.7 Hong Kong 18,877.4 22,606.0 22,494.7 22,623.4 0.57 19.8 Indonesia 3,857.9 4,308.9 4,301.4 4,275.9 -0.59 10.8 Japan 8,455.4 9,737.6 9,923.0 10,160.4 2.39 20.2 Korea 1,875.4 1,995.0 1,993.1 1,993.1 0.00 6.3 Malaysia 1,514.6 1,652.0 1,659.4 1,665.6 0.37 10.0 Philippines 4,422.2 5,707.1 5,636.6 5,752.4 2.05 30.1 Singapore 2,691.1 3,168.4 3,156.8 3,159.4 0.08 17.4 Thailand 1,025.3 1,358.5 1,362.9 1,374.8 0.87 34.1 Vietnam 350.0 392.2 393.4 398.6 1.32 13.9

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 18-Dec 19-Dec bps change 18-Dec 19-Dec bps change China 2.290 2.400 11.00 3.866 3.874 0.78 Hong Kong 0.096 0.096 0.00 0.398 0.398 0.00 Indonesia 4.180 4.182 0.24 4.944 4.944 0.00 Japan 0.095 0.088 -0.75 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.860 2.860 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 2.160 1.887 -27.30 0.604 0.457 -14.70 Singapore 0.074 0.074 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.865 2.865 0.00 Vietnam 1.938 1.781 -15.70 6.583 6.700 11.70


17-Dec 18-Dec bps change China 57.4 58.0 0.59 Hong Kong 40.8 38.0 -2.76 Indonesia 124.0 123.0 -1.02 Japan 76.4 75.0 -1.43 Korea 60.3 59.7 -0.61 Malaysia 68.9 69.6 0.66 Philippines 97.3 96.3 -0.96 Thailand 85.0 87.3 2.26 Vietnam 190.0 193.7 3.74



1,671.2 1,674.8 0.22

Source: Bloomberg

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Country Indicators Period Last Previous MALAYSIA CPI YoY % Nov 1.3 1.3 JAPAN All Industry Activity Index (MoM) % Oct 0.2 -0.3 JAPAN Merchandise Trade Exports YoY % Nov -4.1 -6.5 JAPAN Merchandise Trade Balance Total (JPY bn) Nov -953.4 -549.0

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MARKET DEVELOPMENTS

• Asian shares slip as U.S. budget talks sour and BOJ eases. Asian shares retreated from near 17-month highs and commodities fell as negotiations to avert a U.S. fiscal crunch turned to personal taunts, putting at risk a timely solution as well as the health of the world's largest economy. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 percent but held near its highest in nearly 17 months. Japan’s Nikkei 225 Stock Average declined 1.2 percent with the yen rising against all of its 16 major counterparts. South Korea’s Kospi Index rose 0.3 percent and Hong Kong’s Hang Seng Index rose 0.16 percent. China’s Shanghai Composite Index gained 0.3 percent. The dollar extended losses to fall 0.6 percent to 83.93 yen after the BOJ's decision from around 84.20 before the announcement. The euro slid 0.6 percent against the yen to 110.94 yen, sharply retreating from a 16-month high of 112.59 yen reached on Wednesday.

BREAKING NEWS

GLOBAL

• US 'fiscal cliff' talks turn sour, Obama threatens veto. The conflict over the stalled "fiscal cliff" talks grew more heated Wednesday and threatened to become even more so Thursday when the action is expected to shift for the first time to the floor of the U.S. House of Representatives. In the absence of a bipartisan agreement, the Republican leadership of the House plans to move a bill of its own to the floor to avert the steep tax hikes and budget cuts set for January. But instead of serving as a show of unity for Republicans in their wrangling with Democratic President Barack Obama, the so-called Republican "Plan B," which was still evolving late Wednesday, was exposing internal fractures because it includes a tax hike on those earning $1 million or more, dividing anti-tax conservatives. The planned action by Republicans angered President Barack Obama, who accused opponents of holding a personal grudge against him. As a year-end deadline nears, Obama and House of Representatives Speaker John Boehner are locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and spending cuts that could badly damage an already weak economy. Obama said he was puzzled over what was holding up the talks and told Boehner's Republicans to stop worrying about scoring "a point against the president" or forcing him into concessions "just for the heck of it."

• U.K. inflation debt set for worst year in decade on index review. U.K. inflation-protected bonds are poised for their worst year in more than a decade as government proposals to change the way it calculates a gauge of retail prices threaten to lower payments on the debt. Britain’s 290 billion-pound ($470 billion) market for securities linked to the retail-price index handed investors a loss of 0.7 percent as of Dec. 18, a reversal from its spot as the top performer in developed markets last year, when the bonds returned 21.4 percent. Jil Matheson, the national statistician, will announce Jan. 10 her recommendation for adjusting the retail-price index to address anomalies in clothing-price calculations.

• Australia abandons budget plans as tax take tumbles. Australia's government abandoned a long-held pledge to return its budget to surplus, blaming a painfully high local currency, lower export earnings and lower company profits for blowing a massive hole in tax takings. Treasurer Wayne Swan said cutting spending further to achieve its pledge of a small surplus in the fiscal year to end June 2013 would threaten economic growth and be "self-defeating". "Dramatically lower tax revenue now makes it unlikely that there will be a surplus in 2012-13," Swan told reporters in Canberra on Thursday, adding that revenue in the July-October period was A$3.9

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billion ($4.1 billion) lower than had been forecast. "At this stage I don't think it would be responsible to cut harder or further in 2012-13 to fill the hole in the tax system, if that puts jobs or growth at risk," he said. Swan's comments will be a major blow to the Labor minority government, well behind in opinion polls and due to face elections in the second half of 2013. It has long promised to deliver a surplus in the year ending June 30, 2013.

REGIONAL

• Under pressure, Bank of Japan boosts stimulus again. The Bank of Japan delivered its third dose of monetary stimulus in four months on Thursday in a prelude to more aggressive action next year, as it faces intensifying pressure from the country's next leader for stronger efforts to beat deflation. It also signalled setting a higher inflation target at its next meeting in January, when a new government will be in place ready to negotiate with the central bank. Shinzo Abe, whose opposition Liberal Democratic Party won Sunday's election by a landslide, has put the central bank's independence on the line by repeatedly calling for a binding 2 percent inflation target, double its current price goal. Feeling the heat, the central bank expanded its asset-buying and lending programme by 10 trillion yen ($119 billion) to 101 trillion yen, a widely expected move that barely moved markets. With the latest move, the BOJ has expanded asset purchases five times this year, the most frequent activity during a single year in a decade. The last time it eased so many times was in 2001, when Japan was battling a domestic banking crisis. The BOJ now has a 1 percent inflation target in place, and defines a range of zero to 2 percent consumer inflation as a desirable level of long-term price growth. The central bank said it would review that guideline next month. It will probably clarify that, after 1 percent inflation is in sight, it will aim to achieve 2 percent inflation. The yen has fallen almost 9 percent against the dollar since September, as Abe's emergence as the likely next prime minister raised expectations of more expansionary policy and spending.

• South Koreans Elect First Woman President. South Koreans elected conservative lawmaker Park Geun-hye, who has been familiar to them since she was the young daughter of the general who ruled the country in the 1960s and 1970s, to be their next president and first woman leader. Ms. Park will take office in late February for a single five-year term, succeeding President Lee Myung-bak, who beat her for the conservative party's presidential nomination in 2007 and then won the general election in a landslide. Ms. Park's victory relieves some pressure on South Korea's biggest businesses, which were intensely criticized during the campaign for unfair treatment of smaller businesses and consumers. Ms. Park plans new regulations on them, though less than Mr. Moon proposed, and will be working with a compliant parliament controlled by her party.

• HKMA warns of risk to economy from soaring property prices. The Hong Kong Monetary Authority has sounded another warning about the risk of runaway home prices to the economy, which also faces a poor short-term outlook because of weak foreign demand. In its latest quarterly report on the health of the city's economy and the banking sector, the authority said the city could be thrown back into recession if the European sovereign debt crisis escalated and if the United States failed to moderate tax increase and government spending cuts due to take effect next month. On the domestic front, the authority said the disconnect between housing prices and economic fundamentals had become more acute, citing a 23.2 per cent increase in home prices in the 12 months to October while economic growth was forecast by the government to be only 1.2 per cent this year. It said the overheating property market - fuelled by protracted negative real interest rates (the result of near-zero nominal interest rates and high inflation) - could pose a risk to homebuyers' future ability to service their mortgages, if they were forced to borrow too much compared with their income.

• Warning on Thailand’s public debt. The country could save expenditures for stimulus programmes to fund social welfare and enact policies to reduce inequality and raise the skill

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level of the population, says the World Bank. The bank expects Thai public debt to reach 50 percent of GDP by the end of 2013, up from 45 percent at the end of this year. The rapid increase in public debt from hidden liabilities and continued consumption spending could eat away funds for social investment, although so far it remains under control. Matthew Verghis, the World Bank's lead economist for Southeast Asia, said the debt of state-owned enterprises has already been counted in the estimated public debt, and almost all of it is baht-denominated and long-term in maturity, so the public debt will remain sustainable. But hidden liabilities from specialised financial structures, notably paddy pledging, could be significant. The World Bank forecasts spending on the various stimulus schemes to decrease to 2.4 percent of GDP next year and 2 percent thereafter from 5.4 percent this year due to the expiry of some programmes such as the first-time car buyer tax rebate

• Vietnam has nearly 1 million jobless people. Vietnam, whose population is about 88 million, had nearly 1 million out-of-work people and 1,369,000 underemployed as of October 1, 2012, according to the General Statistical Office of Vietnam. Of the 53.1 million people in Vietnam over the age of 15, 70 percent are laborers in rural areas and, as of that date, 984,000 were unemployed, accounting for 2.01 percent of the population in working age, GSO said. This is one of the results of the 2012 job survey report for the Jan-October period carried out by GSO and the International Labour Organisation and announced in Hanoi on Tuesday. Meanwhile, underemployed people made up 2.74 percent of the population in working age, the agency said. Such a situation has occurred due to the economy's failure to create enough jobs for unemployed or underemployed people of working ages. The unemployment rate in the first nine months of this year was 3.3 percent in urban areas and 1.42 percent in rural regions. The country’s highest unemployment rate belonged to Ho Chi Minh City, where 3.92 percent of its population was jobless. It was followed by the 2.21 percent rate in the Mekong Delta area, north central Vietnam and the coastal central provinces. In Hanoi, the rate was 2.15 percent while the lowest rate, 0.77 percent, was recorded in midland and northern mountainous areas. On September 24, ILO announced new assistance projects worth $5 million for Vietnam.


IMF – Press Release: Independent Evaluation Office Report on International Reserves

• The IMF’s management and staff thanked the Independent Evaluation Office (IEO) for the report evaluating the Fund’s work on reserve accumulation and related issues. “As recognized by the IEO, research by the Fund on reserve accumulation has been at the forefront of the academic debate, and good progress has been made by staff in developing a theoretical framework and concrete methodologies to ascertain reserve adequacy,” Managing Director Christine Lagarde said in a statement. http://www.imf.org/external/np/sec/pr/2012/pr12494.htm (Press Release) http://www.ieo-imf.org/ieo/files/completedevaluations/IR_Main_Report.pdf (Report) http://www.ieo-imf.org/ieo/files/completedevaluations/IR_Staff_Response.pdf (Staff Response) http://www.ieo-imf.org/ieo/files/completedevaluations/IR_Summing_Up_by_Acting_Chair.pdf (Sum up of Board Meeting)

IMF – Publication: Asia in 2013: Grounds for Optimism, but Challenges Ahead

• The IMF has publicised the captioned article in its Survey Magazine: Countries & Regions. It mentioned the following points:

• Economic momentum in Asia set to pick up gradually in 2013 • Regional challenges including aging population, inclusive growth come into focus • After 2012 Annual Meetings, IMF to further strengthen engagement with Asia http://www.imf.org/external/pubs/ft/survey/so/2012/CAR121812D.htm


http://www.ieo-imf.org/ieo/files/completedevaluations/IR_Main_Report.pdf

http://www.ieo-imf.org/ieo/files/completedevaluations/IR_Staff_Response.pdf

http://www.ieo-imf.org/ieo/files/completedevaluations/IR_Summing_Up_by_Acting_Chair.pdf

http://www.imf.org/external/pubs/ft/survey/so/2012/CAR121812D.htm

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(%chg) China 6.2980 6.2460 6.2309 6.2306 0.00 1.1 Hong Kong 7.7698 7.7501 7.75 7.7501 0.00 0.3 Indonesia 9,126.0 9,694.0 9,691.0 9,655.0 0.37 -5.5 Japan 76.8 83.52 84.41 83.94 0.56 -8.5 Korea 1,150.8 1,074.7 1,072.5 1,074.9 -0.22 7.1 Malaysia 3.1507 3.0565 3.0553 3.0563 -0.03 3.1 Philippines 43.765 41.088 41.04 41.095 -0.13 6.5 Singapore 1.2906 1.2193 1.2185 1.2193 -0.07 5.8 Thailand 31.5 30.6 30.6 30.6 -0.10 2.7 Vietnam 21,031.0 20,840.0 20,860.0 20,850.0 0.05 0.9



(%chg) China 2,199.4 2,150.6 2,162.2 2,168.4 0.28 -1.4 Hong Kong 18,877.4 22,606.0 22,623.4 22,659.8 0.16 20.0 Indonesia 3,857.9 4,308.9 4,275.9 4,254.8 -0.49 10.3 Japan 8,455.4 9,737.6 10,160.4 10,039.3 -1.19 18.7 Korea 1,875.4 1,995.0 1,993.1 1,999.5 0.32 6.6 Malaysia 1,514.6 1,652.0 1,665.6 1,670.6 0.30 10.3 Philippines 4,422.2 5,707.1 5,752.4 5,797.7 0.79 31.1 Singapore 2,691.1 3,168.4 3,158.6 3,173.0 0.46 17.9 Thailand 1,025.3 1,358.5 1,378.4 1,373.7 -0.34 34.0 Vietnam 350.0 392.2 398.6 399.7 0.27 14.2

OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 19-Dec 20-Dec bps change 19-Dec 20-Dec bps change China 2.400 2.650 25.00 3.874 3.881 0.67 Hong Kong 0.096 0.094 -0.29 0.398 0.398 0.00 Indonesia 4.182 4.184 0.16 4.944 4.942 -0.20 Japan 0.100 0.090 -1.00 0.319 0.319 0.00 Korea 2.750 2.750 0.00 2.860 2.860 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 1.887 1.821 -6.60 0.457 0.331 -12.60 Singapore 0.056 0.056 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.865 2.865 0.00 Vietnam 1.781 1.806 2.50 6.700 6.750 5.00


18-Dec 19-Dec bps change China 58.0 58.3 0.35 Hong Kong 38.0 42.5 4.50 Indonesia 123.0 123.0 -0.02 Japan 75.0 76.3 1.30 Korea 59.7 59.6 -0.09 Malaysia 69.6 69.5 -0.10 Philippines 96.3 97.5 1.16 Thailand 87.3 85.8 -1.49 Vietnam 193.7 200.0 6.26

Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk.


1,667.2 1,670.7 0.21

Source: Bloomberg

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Country Indicators Period Last Previous HONG KONG CPI - Composite Index (YoY)% Nov 3.7 3.8

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MARKET DEVELOPMENTS

• Asian Stocks fall as Republicans cancel Budget-Plan vote. The MSCI Asia Pacific Index slipped 0.6 percent to 128.39 as of 3:15 p.m. in Tokyo, reversing a 0.6 percent gain that was driven by reports which added to signs the U.S economy is recovering. Japan’s Nikkei 225 Stock Average fell 0.7 percent with trading volume 72 percent above the 30-day average as the yen advanced against all of its 16 major counterparts. South Korea’s Kospi Index fell 0.95 percent. The nation may get a growth boost next year as incoming president Park Geun Hye abandons fiscal restraint and increases spending on welfare. Hong Kong’s Hang Seng Index fell 0.7 percent, while China’s Shanghai Composite Index dropped 0.7 percent. Singapore’s Straits Times Index slid 0.38 percent. U.S. stock-index futures tumbled and the dollar and yen are being bought and risk assets dumped in Asian trade.

• The Philippine Stock Exchange Index climbed to a record and government bonds advanced on speculation the nation will win an investment-grade rating next year after Standard & Poor’s raised its credit outlook to positive. S&P cut Cyprus’s long-term debt rating for the third time in five months, citing a rising risk of default as the government’s short-term financing is “increasingly vulnerable.” Indonesia’s rupiah weakened 0.4 percent amid concern about a widening current-account deficit. India’s rupee lost 0.5 percent.

BREAKING NEWS

GLOBAL

• House scraps vote on Boehner’s tax plan lacking support. House Republican leaders canceled a planned vote on Speaker John Boehner’s plan to allow higher tax rates for annual income above $1 million, throwing already-stalled budget talks deeper into turmoil. “The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner said in a statement. He called on President Barack Obama and Senate Majority Leader Harry Reid to come up with legislation to avoid more than $600 billion of tax increases and spending cuts scheduled to start in January. The failure is a setback to Boehner, casting doubt on his ability to muster votes from Republicans to pass any compromise that would win support from Obama and in the Democratic-led Senate. Anti-tax advocates within his party didn’t want to support a bill that would let some taxes go up, and now Boehner may have to rely on Democratic votes.

• German consumer morale drops to lowest in over a year. German consumer morale dropped for the fourth month running to its lowest level in more than a year as shoppers become increasingly wary of the effect the euro zone debt crisis is having on Europe's largest economy. Market research group GfK said on Friday its forward-looking consumer sentiment indicator, based on a survey of around 2,000 Germans, eased to 5.6 heading into January from a downwardly revised 5.8 in December. The GfK data also showed that German consumers' willingness to make purchases plummeted to the lowest since May 2010 and their expectations for economic development also fell. Expectations for future earnings improved again after dropping the previous month, pointing to a short-lived downturn in Germany. GfK said consumers now expected the German economy to go through a weak phase in coming months.

http://topics.bloomberg.com/tokyo/

http://topics.bloomberg.com/japan/

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REGIONAL

• Beijing vows to cut taxes, limit local borrowing. The Ministry of Finance pledged to offer greater support to job-creating small companies through tax and fee cuts, to regulate local government borrowings and to maintain a reasonable size of central government investment in infrastructure next year. The pledges, made at the ministry's annual meeting chaired by Minister Xie Xuren yesterday, suggested Beijing would likely adopt a more proactive fiscal policy to support the economy. The steps are in line with the policy tone set by the Central Economic Work Conference last weekend. However, comments on curbing local government debt highlighted Beijing's concerns about risks in so-called shadow banking, a method used increasingly by city and provincial authorities to finance investment after regulators tightened bank lending.

• Li Keqiang calls for income growth, freer investment. China’s rapid GDP growth must translate into higher income for ordinary people, Vice Premier Li Keqiang said, as the incoming leadership signals a shift in priorities for the world’s second-largest economy. Mr Li, No. 2 in the Politburo standing committee, said China will lower barriers to private investment and delegate more power to local governments to approve projects, the People’s Daily, the mouthpiece of China’s ruling communist party, reported on its website yesterday. Mr Li’s comments at a meeting with local officials in Beijing on Dec. 19 came after new leaders said they will seek higher“quality and efficiency” of growth next year. China has set an initial target for 2013 expansion of 7.5 percent, two bank executives and a regulatory official briefed on the matter told Bloomberg earlier this week.

• Korea set for growth boost after Park’s pledges to spend. South Korea may get a growth boost next year as incoming president Park Geun Hye abandons fiscal restraint and increases spending on welfare. Ms Park, who takes office in February, may plan as much as 20 trillion won ($18.6 billion) in additional spending, according to Nomura International Ltd. Extra government outlays will account for 0.8 percentage point of a likely 3 percent economic expansion in 2013, Standard Chartered Bank Korea estimates. Outgoing President Lee Myung Bak’s fiscal record offers Park “significant leeway in policy,” according to Moody’s Investors Service, which raised South Korea’s sovereign rating this year, as did Fitch Ratings and Standard & Poor’s. One possible cost: missing the target that Lee set for further reducing the nation’s budget deficit next year to a six-year low of 0.3 percent of gross domestic product.

• Asean and India now strategic partners. Asean and India took their relationship to new heights as they marked 20 years of ties yesterday, pronouncing each other "strategic partners" and finalising a free trade agreement on services and investment. The strategic partnership paves the way for the relationship between the Southeast Asian bloc and the South Asian power to move beyond the current emphasis on economics and into deeper political and security cooperation. The FTA on services and investment, which follows a goods agreement signed in 2009, is expected to boost annual Asean-India trade from the current US$75 billion to US$200 billion by 2020. The momentous declarations were made at the Asean-India summit, which saw leaders from the 10 Asean states gathering in New Delhi at the invitation of Indian Prime Minister Manmohan Singh. The 11 nations adopted a vision statement pledging cooperation on traditional and non-traditional security challenges, food and energy security, and more frequent dialogue on political issues.

• Vietnam's president hopes for swift conclusion of free trade talks with South Korea. Vietnamese President Truong Tan Sang voiced hope for a swift conclusion of negotiations with South Korea on forging a bilateral free trade deal but noted that an agreement should take each other's interests into consideration. In an interview with Yonhap News Agency on Thursday at the Presidential Palace, Mr Sang also said he expected closer cooperation with South Korea as the two nations marked the 20th anniversary of diplomatic ties on Friday. "The two nations are working together to expand bilateral trade to US$20 billion earlier than the target year of 2015, and then further to US$30 billion," President Sang said. South Korea and Vietnam have seen

http://topics.bloomberg.com/china/

http://politics.people.com.cn/n/2012/1220/c1024-19964472.html

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their trade volume rise sharply in recent years from US$9.68 billion in 2009 to $18.54 billion last year. In an effort to further boost trade, the two sides launched free trade negotiations, with the first round of talks held in September.


FSB – Press Release: Legal advice on matters regarding Switzerland as the potential domicile for the Global Legal Entity Identifier (LEI) Foundation

• The FSB Secretariat has issued a request for information from legal professionals, and experts in Swiss law, to provide a legal opinion on a number of questions regarding Switzerland as the domicile for the Global LEI Foundation (or similar entity such as an Association) operating the Central Operating Unit of the Global LEI System. http://www.financialstabilityboard.org/publications/r_121220.pdf

IFC – Press Release: IFC Capitalization Fund Invests in ACLEDA Bank to Support Growth, Access to Finance in Cambodia

• The IFC Capitalization Fund has made its first investment in Cambodia via a $40 million subordinated loan to ACLEDA Bank Plc to support the bank in extending more financing to micro, small and medium enterprises as well as its regional expansion. IFC Capitalization Fund is a global equity and subordinated-debt fund founded by IFC, a member of the World Bank Group, and the Japan Bank for International Cooperation. The fund, managed by IFC Asset Management Company, a wholly owned subsidiary of IFC, aims to support banks considered vital to the financial system of emerging-market countries. http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/6F5461910104015485257ADA006286BE

IMF – Event: Regional Workshop on Building an Enabling Environment for Islamic Banking and the Development of the Government Sukuk Market

• Responding to increased interest in developing Islamic finance, the International Monetary Fund (IMF), Central Bank of Tunisia (CBT), ) and the Islamic Development Bank (IsDB), organized a three-day regional conference in Tunis on December 17 to exchange knowledge and share experience in building technical capacity in Islamic Banking and Sukuk Markets. http://www.imf.org/external/np/sec/pr/2012/pr12502.htm

IMF – Press Release: European Union: Financial Sector Assessment, Preliminary Conclusions by the IMF Staff

• Financial Sector Assessment Program (FSAP) team led by the Monetary and Capital Markets Department of the International Monetary Fund (IMF) visited the European Union (EU) during November 27–December 13, 2012, to conduct a first-ever overall EU-wide assessment of the soundness and stability of the EU’s financial sector (EU FSAP). The EU FSAP builds on the 2011 European Financial Stability Exercise (EFFE) and on recent national FSAPs in EU member states. http://www.imf.org/external/np/sec/pr/2012/pr12500.htm

IMF – Press Release: IMF Executive Board Discusses Quota Formula Review

• On November 28, 2012, the Executive Board of the International Monetary Fund (IMF) held further discussions on the review of the quota formula. Executive Directors welcomed the opportunity to continue discussions on the quota formula review. They took note of the simulations in the latest staff paper that sought to build on the previous discussion, as reflected in the summing up of the September meeting, with a view to narrowing the remaining differences. Directors reiterated their commitment to concluding the review by January 2013, and again underlined the importance of flexibility and compromise from all sides. http://www.imf.org/external/np/sec/pn/2012/pn12145.htm (Press Release) http://www.imf.org/external/np/pp/eng/2012/110812a.pdf (Staff Paper) http://www.imf.org/external/np/pp/eng/2012/110812b.pdf (Statistical Appendix)

http://www.financialstabilityboard.org/publications/r_121220.pdf

http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/6F5461910104015485257ADA006286BE




http://www.imf.org/external/np/pp/eng/2012/110812a.pdf

http://www.imf.org/external/np/pp/eng/2012/110812b.pdf

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IMF – Press Release: IMF Executive Board Reviews Progress Toward Implementation of the 2010 Quota and Governance Reform

• The IMF has reviewed progress toward implementation of the 2010 Governance and Quota Reform Package. As of December 14, 2012, 145 members having 77.1 percent of Fund quotas had consented to their proposed quota increases under the 14th General Review of Quotas. As of the same date, 129 members having 70.2 percent of the total voting power had accepted the proposed amendment to reform the Fund’s Executive Board. In order for the proposed amendment to reform the Executive Board to enter into force, acceptance by three-fifths of the Fund’s 188 members having 85 percent of the Fund’s total voting power is required. For the quota increases under the 14th General Review of Quotas to become effective, the entry into force of the proposed amendment to reform the Executive Board, as well as the consent to the quota increase by members having not less than 70 percent of total quotas as of November 5, 2010, is required. http://www.imf.org/external/np/sec/pr/2012/pr12499.htm

IMF – Working Paper The IMF has publicised the following working papers: • The Rising Resilience of Emerging Market and Developing Economies

http://www.imf.org/external/pubs/ft/wp/2012/wp12300.pdf • Bank Debt in Europe “Are Funding Models Broken”

http://www.imf.org/external/pubs/ft/wp/2012/wp12299.pdf • Information Rigidity and the Expectations Formation Process: A Simple Framework and New

Facts http://www.imf.org/external/pubs/ft/wp/2012/wp12296.pdf

• Trade Flows, Multilateral Resistance, and Firm Heterogeneity http://www.imf.org/external/pubs/ft/wp/2012/wp12297.pdf

• Global Bonding: Do U.S. Bond and Equity Spillovers Dominate Global Financial Markets? http://www.imf.org/external/pubs/ft/wp/2012/wp12298.pdf

IMF & World Bank – Press Release: US$176 million Debt Relief for the Union of the Comoros

• The IMF and the World Bank’s International Development Association (IDA) have decided to support US$176 million in debt relief for the Comoros, representing a 59 percent reduction of its future external debt service over a period of 40 years. The Boards of Directors of both institutions determined that the Union of the Comoros has fulfilled the requirements to reach the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative, the stage at which the HIPC debt relief becomes irrevocable and the country will benefit from the Multilateral Debt Relief Initiative (MDRI). http://www.worldbank.org/en/news/2012/12/20/imf-world-bank-announce-176-million-debt-relief-union-comoros

World Bank – Publication: International Debt Statistics 2013

• The World Bank has issued the captioned statistics. Net external debt inflows and aggregate net capital inflows (debt and equity) to developing countries fell in 2011, driven by a sharp contraction in net inflows from official creditors and a collapse of portfolio equity flows. The downturn was partially offset by inflows from commercial banks, sustained access to international bond markets and a rise in foreign direct investment. http://www.worldbank.org/en/news/2012/12/20/world-bank-releases-international-debt-statistics (Press Release) http://data.worldbank.org/data-catalog/international-debt-statistics (Statistics)

WTO – Press Release: Japan offers CHF 395,604 to WTO training programme for developing countries







http://www.worldbank.org/en/news/2012/12/20/imf-world-bank-announce-176-million-debt-relief-union-comoros

http://www.worldbank.org/en/news/2012/12/20/imf-world-bank-announce-176-million-debt-relief-union-comoros

http://www.worldbank.org/en/news/2012/12/20/world-bank-releases-international-debt-statistics

http://data.worldbank.org/data-catalog/international-debt-statistics

Page 5 of 7

• Japan has donated CHF 395,604 to the Doha Development Agenda Global Trust Fund (DDAGTF) and this new contribution brings its contribution up to CHF 9.1 million. This donation will finance technical assistance programmes and training activities for developing and least developed countries. The aim is to better adapt their practices and laws to WTO rules and disciplines, improve the implementation of their obligations and enhance the exercise of their membership rights. http://www.wto.org/english/news_e/pres12_e/pr684_e.htm



(%chg) China 6.2980 6.2460 6.2306 6.2302 0.01 1.1 Hong Kong 7.7698 7.7501 7.75 7.7501 0.00 0.3 Indonesia 9,126.0 9,694.0 9,655.0 9,728.0 -0.75 -6.2 Japan 76.8 83.52 84.39 84.16 0.27 -8.7 Korea 1,150.8 1,074.7 1,074.9 1,074.4 0.05 7.1 Malaysia 3.1507 3.0565 3.0563 3.0603 -0.13 3.0 Philippines 43.765 41.088 41.095 41.135 -0.10 6.4 Singapore 1.2906 1.2193 1.2183 1.2201 -0.15 5.8 Thailand 31.5 30.6 30.6 30.6 0.07 2.7 Vietnam 21,031.0 20,840.0 20,860.0 20,855.0 0.02 0.8



(%chg) China 2,199.4 2,150.6 2,168.4 2,153.3 -0.69 -2.1 Hong Kong 18,877.4 22,606.0 22,659.8 22,506.3 -0.68 19.2 Indonesia 3,857.9 4,308.9 4,254.8 4,250.2 -0.11 10.2 Japan 8,455.4 9,737.6 10,039.3 9,940.1 -0.99 17.6 Korea 1,875.4 1,995.0 1,999.5 1,980.4 -0.95 5.6 Malaysia 1,514.6 1,652.0 1,670.6 1,658.9 -0.70 9.5 Philippines 4,422.2 5,707.1 5,797.7 5,823.9 0.45 31.7 Singapore 2,691.1 3,168.4 3,175.5 3,163.6 -0.38 17.6 Thailand 1,025.3 1,358.5 1,377.4 1,373.2 -0.30 33.9 Vietnam 350.0 392.2 399.7 396.8 -0.73 13.4

OVERNIGHT LENDING RATE (%)

3-MONTH INTERBANK LENDING RATE (%) 20-Dec 21-Dec bps change 20-Dec 21-Dec bps change China 2.650 2.420 -23.00 3.881 3.883 0.23 Hong Kong 0.094 0.093 -0.07 0.398 0.398 0.00 Indonesia 4.184 4.189 0.56 4.942 4.952 1.00 Japan 0.100 0.088 -1.25 0.319 0.315 -0.42 Korea 2.750 2.750 0.00 2.860 2.860 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines 1.821 1.693 -12.80 0.331 -0.078 -40.90 Singapore 0.020 0.020 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.865 2.865 0.00 Vietnam 1.806 1.750 -5.60 6.750 6.880 13.00


19-Dec 20-Dec bps change China 58.3 64.0 5.66 Hong Kong 42.5 45.5 3.00 Indonesia 123.0 130.5 7.54 Japan 76.3 80.2 3.87 Korea 59.6 64.0 4.41 Malaysia 69.5 74.5 5.00 Philippines 97.5 103.0 5.53 Thailand 85.8 91.5 5.74 Vietnam 200.0 204.9 4.87


http://www.wto.org/english/news_e/pres12_e/pr684_e.htm

Page 6 of 7


1,647.9 1,651.4 0.21

Source: Bloomberg

CREDIT RATINGS










Country Indicators Period Last Previous THAILAND Foreign Reserves (USD bn) Dec 14 182.6 182.1 MALAYSIA Foreign Reserves (USD bn) Dec 14 139.2 139.1 HONG KONG Bal of Paymts - Overall (HKD bn) 3Q 37.86 -7.11 HONG KONG Bal of Paymts - Current A/C (HKD bn) 3Q 29.21 -9.35

Page 7 of 7






















MARKET DEVELOPMENTS

Most Asian Stocks Rise as Gold Miners, China Banks Gain. Most Asian stocks gained, led by gold producers and Chinese banks. Trading volume was low across the region ahead of the Christmas holiday amid speculation U.S. lawmakers will miss a deadline on budget talks. Alacer Gold Corp. (AQG) led producers of the precious metal higher. China Construction Bank Corp., the nation’s second-largest lender, advanced 1.1 percent. Korea Gas Corp. (036460) slid 4.9 percent in Seoul after the world’s largest buyer of liquefied natural gas delayed the sale of asset-back securities. About eight stocks gained for every seven that fell on the MSCI Asia Pacific excluding Japan Index, which rose 0.1 percent as of 5:22 p.m. in Hong Kong. Equity markets in Japan are closed today and markets in Australia, Hong Kong and Singapore shut early today. Time is running out for U.S. lawmakers to strike a budget deal by year end to avoid triggering more than $600 billion in tax increases and spending cuts. The MSCI Asia Pacific Index (MXAP), which includes Japanese shares, dropped less than 0.1 percent to 128.23 today. Asia’s benchmark stock index has climbed about 13 percent in 2012 as central banks from Europe to the U.S. and Japan boosted stimulus measures to support economic growth.

Yen Declines After Abe Says He May Change BOJ Law. The yen declined versus most major peers after incoming Japanese Prime Minister Shinzo Abe said he will consider changing the law governing the central bank unless it boosts its inflation target to 2 percent next month. The currency fell toward a 20-month low against the dollar even after data showed that futures traders trimmed bearish bets on the yen from a five-year high. The greenback remained stronger versus the euro amid concern U.S. lawmakers will fail to avert the so-called fiscal cliff of tax increases and spending cuts, supporting demand for haven assets. The yen fell 0.2 percent to 84.37 per dollar at 7:05 a.m. in London from the close in New York on Dec. 21. It touched 84.62 on Dec. 19, the weakest since April 12, 2011. The Japanese currency slid 0.2 percent to 111.29 per euro. The dollar was little changed at $1.3192 per euro, after gaining 0.4 percent on Dec. 21.

BREAKING NEWS

GLOBAL

Monti ready to lead next government. Mario Monti, Italy’s technocrat prime minister, has ended weeks of speculation over his future by declaring his readiness to shed his neutrality and seek office early next year if he sees “credible” support emerging for his reform programme. Presenting his “Monti agenda” for Italy and Europe at an eagerly anticipated press conference on Sunday, the former EU commissioner spoke of the “moral imperative” driving his decision. But he later admitted that his tentative move into politics carried “many risks” and a “high probability of not succeeding”. Widely respected abroad for pulling Italy from the brink of financial meltdown when he replaced Silvio Berlusconi’s discredited government 13 months ago, Mr Monti – who has never run for elected office – is more often cursed at home for driving up taxes and unemployment in Italy’s longest postwar recession.

Republicans agonise over need to change. Shortly after the crushing defeat of his party in the re-election of President Barack Obama, Rand Paul, the Republican senator from Kentucky, said it was time to “adapt, evolve or become extinct”. “That sounds pretty harsh but they say the definition of insanity is doing the same thing over and over again and expecting a different result”. Other senior Republican figures, including Paul Ryan, the defeated vice-presidential candidate, and Marco Rubio, the Florida senator, who are eying 2016 presidential bids, have espoused the message of evolution. But the political impasse over the fiscal cliff – the impact of

http://www.bloomberg.com/quote/MXAP:IND

http://www.bloomberg.com/quote/AQG:AU

http://www.bloomberg.com/quote/AQG:AU

http://www.bloomberg.com/quote/036460:KS

http://topics.bloomberg.com/australia/

http://topics.bloomberg.com/singapore/


http://topics.bloomberg.com/europe/

http://www.bloomberg.com/quote/8315:JP

http://topics.bloomberg.com/london/

http://topics.bloomberg.com/new-york/

http://www.ft.com/intl/cms/s/0/c0d26a10-4d20-11e2-8b70-00144feab49a.html

http://www.ft.com/intl/cms/s/0/8c3b6028-4b85-11e2-b821-00144feab49a.html

Page 2 of 6

$600bn in automatic spending cuts and tax rises next year – has shown the Grand Old Party to be unable or unwilling to do things differently. The Republicans are divided over the significance of the November defeat and between forces that say it is time to abandon the politics of intransigence and others who say this is the moment to dig in and defend their principles.

Home Sales, Values Probably Increased: U.S. Economy Preview. Purchases of new houses probably rose to the highest level in more than two years and the value of existing properties increased, confirming the real-estate market is now a bright spot in the U.S. expansion, economists said before reports this week. New-home sales climbed to a 380,000 annual rate in November, the most since April 2010. House prices in 20 cities rose 4 percent in the 12 months ended October, the best year-over-year performance since June 2010, other figures may show. Homebuilders such as KB Home (KBH) are benefitting from increasing demand after a one-point drop in the jobless rate over the past year helped shore up consumer sentiment and record-low mortgage rates made buying more affordable. Other data may show that the prospect of tax increases and government spending cuts next year began to hurt confidence this month, raising the risk that households will hold back in early 2013.

REGIONAL

China Pledges Rural Reforms to Boost Incomes, Consumption. China said it will better protect farmers’ land rights and boost rural incomes and public services to help narrow the divide with urban areas. The government will increase agricultural subsidies and ensure “reasonable returns” from planting crops, the official Xinhua news agency reported on Dec. 22, citing an annual work conference to set rural policy. The goals, which include increasing rural incomes by at least as much as those in urban areas, reflect a new leadership’s focus on reforming the land system and addressing wealth disparities as it encourages migration into towns and cities to boost consumption. Li Keqiang, set to take over from Wen Jiabao as premier in March, is championing urbanization as a growth engine.

Malaysia Opposition Seeks Petronas Policy Shift: Southeast Asia. Malaysian opposition leader Anwar Ibrahim, set to challenge Prime Minister Najib Razak in polls early next year, will press the state energy company to boost investments in overseas oil fields while easing local exploration. Anwar would probably reduce the 30 billion ringgit ($9.8 billion) of dividend Petroliam Nasional Bhd. pays the government every year to free up funds for energy assets abroad, Rafizi Ramli, strategic director at Anwar’s People’s Justice Party, said in an interview. Petronas, as the company is known, paid C$5.2 billion ($5.2 billion) for Canadian shale-gas producer Progress Energy Resources Corp. this month.

Singapore’s Inflation Rate Eased to Two-Year Low in November. Singapore’s inflation slowed to a two-year low in November as gains in costs of housing and transportation eased. The CPI rose 3.6 percent from a year earlier, after climbing 4 percent in October, the Department of Statistics said in a statement today. The November core inflation rate was 2 percent. The Southeast Asian nation tightened monetary policy in 2012 while neighbors from Thailand to the Philippines cut interest rates, spurring gains in the currency even as the government predicts GDP will rise at the slowest pace in three years. The MAS predicts inflation will average more than 4.5 percent this year and will be in a 3.5 percent-to-4.5 percent range in 2013.



The IMF has publicised the following working papers:

Accounting for Reserves – Views on the effectiveness of sterilized reserve intervention vary. This paper argues that capital controls reconcile these views. We find strong and highly

http://www.bloomberg.com/quote/NHSLTOT:IND

http://www.bloomberg.com/quote/SPCS20Y%25:IND

http://www.bloomberg.com/quote/KBH:US

http://topics.bloomberg.com/mortgage-rates/


http://topics.bloomberg.com/wen-jiabao/

http://topics.bloomberg.com/anwar-ibrahim/


http://topics.bloomberg.com/thailand/

http://topics.bloomberg.com/philippines/

http://topics.bloomberg.com/interest-rates/

Page 3 of 6

robust evidence that sterilized intervention is fully offset by outflows of private money in countries without controls, while controls partially block this offset. For a country with extensive capital controls, every dollar in additional reserves increases the current account by some 50 cents. This is mainly offset by an opposite adjustment in the current account of the United States—the dominant reserve currency issuer with the deepest and most liquid bond markets—with a smaller diversion to other emerging markets.


The Determinants of Banks' Liquidity Buffers in Central America – Banks’ liquidity holdings are comfortably above legal or prudential requirements in most Central American countries. While good for financial stability, high systemic liquidity may nonetheless hinder monetary policy transmission and financial markets development. Using a panel of about 100 commercial banks from the region, we find that the demand for precautionary liquidity buffers is associated with measures of bank size, profitability, capitalization, and financial development.


IMF – Press Release: Approves Extension of Temporary Interest Waiver for Low-Income Countries

The Executive Board of the IMF has approved the extension of the exceptional interest waiver on concessional loans by two years to end-December 2014 in view of the global economic crisis. The Board also approved a one-year postponement of the next review of Poverty Reduction and Growth Trust (PRGT) interest rates to end-2014. The Executive Board’s decision was taken on a lapse of time basis.

The Board had endorsed temporary relief of interest payments on all outstanding concessional loans for PRGT-eligible members in 2009, waiving all interest payments on PRGT loans through December 2011. At the occasion of the first bi-annual review under the Poverty Reduction and Growth Trust (PRGT) interest rate mechanism, Executive Directors agreed to extend the exceptional interest rate waiver to December 2012 in view of downside risks to the global economic outlook.


World Bank – Press Release: The World Bank and Morocco Partner to Manage Currency Risk

The World Bank executed a US$1 billion currency swap transaction for Morocco to manage its exposure to the US dollar from a recent bond issuance. This transaction supports Morocco’s currency risk management strategy by hedging against fluctuations between the US dollar, in which bond payments will be made, and the Euro.

http://www.worldbank.org/en/news/2012/12/21/world-bank-morocco-partner-manage-currency-risk


2011 close

Previous wk's close

21-Dec 24-Dec % change 2012 YTD

(%chg)

China 6.2980 6.2302 6.2302 6.2332 -0.05 1.0

Hong Kong 7.7698 7.7502 7.7502 7.7505 0.00 0.2

Indonesia 9,126.0 9,728.0 9,728.0 9,796.0 -0.69 -6.8

Japan 76.8 84.24 84.24 84.43 -0.23 -9.0

Korea 1,150.8 1,074.4 1,074.4 1,074.2 0.02 7.1

Malaysia 3.1507 3.0603 3.0603 3.0648 -0.15 2.8

Philippines 43.765 41.135 41.135 41.129 0.01 6.4

Singapore 1.2906 1.2208 1.2208 1.2202 0.05 5.8

Thailand 31.5 30.6 30.6 30.6 0.00 2.8

Vietnam 21,031.0 20,855.0 20,855.0 20,850.0 0.02 0.9







Page 4 of 6

STOCK MARKET INDEX

2011 close

Previous wk's close


(%chg)

China 2,199.4 2,153.3 2,153.3 2,159.1 0.27 -1.8

Hong Kong 18,877.4 22,506.3 22,506.3 22,541.2 0.16 19.4

Indonesia 3,857.9 4,250.2 4,250.2 4,250.2 0.00 10.2

Japan 8,455.4 9,940.1 9,940.1 9,940.1 0.00 17.6

Korea 1,875.4 1,980.4 1,980.4 1,981.8 0.07 5.7

Malaysia 1,514.6 1,658.9 1,658.9 1,669.4 0.64 10.2

Philippines 4,422.2 5,823.9 5,823.9 5,823.9 0.00 31.7

Singapore 2,691.1 3,163.6 3,163.6 3,168.6 0.16 17.7

Thailand 1,025.3 1,373.2 1,373.2 1,374.7 0.10 34.1

Vietnam 350.0 396.8 396.8 399.7 0.74 14.2


3-MONTH INTERBANK LENDING RATE (%)

21-Dec 24-Dec bps change 21-Dec 24-Dec bps change

China 2.420 2.300 -12.00 3.883 3.888 0.48

Hong Kong 0.093 0.000 -9.29 0.398 0.398 0.00

Indonesia 4.189 4.189 0.00 4.952 4.952 0.00

Japan 0.088 0.095 0.75 0.315 0.315 0.00

Korea 2.750 2.750 0.00 2.860 2.860 0.00

Malaysia 3.000 3.000 0.00 3.210 3.210 0.00

Philippines 1.693 1.693 0.00 -0.078 -0.078 0.00

Singapore 0.020 0.036 0.00 0.378 0.378 -0.08

Thailand 2.750 2.750 0.00 2.865 2.865 0.00

Vietnam 1.750 1.750 0.00 6.880 7.089 20.90


21-Dec 24-Dec bps change

China 64.6 64.6 0.03

Hong Kong 45.6 45.6 0.03

Indonesia 132.0 132.0 -0.02

Japan 73.9 76.1 2.24

Korea 64.1 64.3 0.22

Malaysia 76.4 76.7 0.25

Philippines 106.9 106.8 -0.12

Thailand 92.7 92.7 0.03

Vietnam 210.9 210.9 -0.01


21-Dec 24-Dec % change

Gold Spot (in US$ per ounce)

1,657.2 1,665.5 0.50

Source: Bloomberg

CREDIT RATINGS

S&P Moody's Fitch

China AA- Aa3 A+

Hong Kong AAA Aa1 AA+

Indonesia BB+ Baa3 BBB-

Japan AA- -- AA

Korea A Aa3 A+

Malaysia A- A3 A-

Philippines BB+ Ba1 BB+

Singapore AAA -- AAA

Thailand BBB+ Baa1 BBB

Vietnam BB- B1 B+

Page 5 of 6


2012

31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov

China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a

Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a

Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 111.3

Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 1,270.9

Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1

Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 139.1

Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 82.1 84.1

Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a

Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.6

Vietnam 17.4 19.5 19.9 19.7 20.0 n.a n.a n.a n.a


Reserves - latest

3 months imports of goods & services


Import cover (Qtrs of imports

Reserves over

(US$bn) (US$bn) (US$bn) covered by reserves) short-term debt

China 3,285.1 504.3 588.2 6.5 5.6

Hong Kong 301.7 139.0 736.2 2.2 0.4

Indonesia 111.3 50.5 38.3 2.2 2.9

Japan 1,270.9 70.9 2,332.3 17.9 0.5

Korea 326.1 150.9 132.6 2.2 2.5

Malaysia 139.1 58.0 35.4 2.4 3.9

Philippines 84.1 19.7 7.0 4.3 12.0

Singapore 254.2 118.2 923.9 2.2 0.3

Thailand 181.6 67.1 58.9 2.7 3.1

Vietnam 20.0 29.9 6.9 - -


SINGAPORE CPI (YoY)% Nov 3.6 4.0

VIETNAM Imports YTD (YoY)% Dec 7.1 6.8

VIETNAM Exports YTD (YoY)% Dec 18.3 18.4

VIETNAM CPI (YoY) % Dec 6.81 7.08

SELECTED ECONOMIC RELEASES CALENDAR (24 - 28 December 2012)

Expected Release


24/12/2012

SINGAPORE CPI (YoY)% Nov

VIETNAM Imports YTD (YoY)% Dec

VIETNAM Exports YTD (YoY)% Dec

VIETNAM CPI (YoY) % Dec

25/12/2012

VIETNAM Industrial Production Index YoY % Dec

VIETNAM Retail Sales YTD (YoY)% Dec

SOUTH KOREA SK Consumer Confidence Dec

26/12/2012

THAILAND Customs Imports (YoY)% Nov

THAILAND Customs Exports (YoY)% Nov


VIETNAM GDP Constant Prices YTD (YoY)% 4Q

SINGAPORE Industrial Production YoY% Nov

SOUTH KOREA Business Survey- Non-Manufacturing Jan

SOUTH KOREA Business Survey- Manufacturing Jan

27/12/2012

HONG KONG Imports YoY% Nov

HONG KONG Exports YoY% Nov

Page 6 of 6

HONG KONG Trade Balance (HKD bn) Nov

JAPAN Industrial Production YOY% Nov P

JAPAN National CPI YoY % Nov

SOUTH KOREA Current Account in (USD mn) Nov

PHILIPPINES Total Imports (YoY)% Oct

PHILIPPINES Trade Balance (USD mn) Oct

JAPAN National CPI Ex Food, Energy YoY % Nov

JAPAN Jobless Rate % Nov

JAPAN Job-To-Applicant Ratio Nov

SOUTH KOREA Industrial Production (YoY)% Nov

SOUTH KOREA Industrial Production (MoM)% Nov

28/12/2012

THAILAND Total Trade Balance (USD mn) Nov

THAILAND Total Imports YOY% Nov

THAILAND Total Exports YOY% Nov

THAILAND Current Account Balance (USD mn) Nov

THAILAND Business Sentiment Index Nov




MARKET DEVELOPMENTS

Yen Falls to 85 Per Dollar as Abe to Be Sworn in. The yen weakened past 85 per dollar for the first time since April 2011 before Shinzo Abe is sworn in as Japan’s prime minister today amid expectations he will push the central bank to increase cash infusions into a deflation-plagued economy. The yen slid against all its major counterparts as minutes of the Bank of Japan (8301)’s November meeting showed that a board member suggested conducting open-ended asset purchases. South Korea’s won was near the highest in 15 months as overseas investors bought local shares. China’s yuan, Indonesia’s rupiah, Malaysia’s ringgit, the Philippines’ peso, Singapore’s dollar, Thailand’s baht and Vietnam’s dong depreciated against the US dollar by 0.02 percent, 0.05 percent, 0.05 percent, 0.05 percent, 0.20 percent, 0.20 percent, 0.05 percent, respectively.

Most Asia Stocks Rise as Yen Drops; Samsung Gains. Most Asian stocks rose, with the regional benchmark index trading less than 1 percent from its highest close for the year, as the yen dropped before the swearing in of a new, more pro-stimulus government. Equity markets in Hong Kong, Australia and New Zealand are closed today for holidays. The MSCI Asia Pacific Index climbed 13 percent this year as of yesterday as U.S. and Chinese economies showed signs of recovery and central banks around the world took action to shore up growth. Nikkei, Yen Japan’s Nikkei 225 Stock Average rose 1.49 percent as the yen touched 85.37 per dollar, the weakest since April 2011. South Korea’s Kospi Index climbed 0.02 percent while data showed the nation’s consumer confidence failed to improve this month. China’s, Indonesia’s, Malaysia’s, the Philippines’, Singapore’s, Thailand and Vietnam’s stock index indicated an increase of 0.25 percent, 0.59 percent, 0.13 percent, 0.15 percent, 0.40 percent, 0.31 percent and 1.19 percent, respectively.

BREAKING NEWS

GLOBAL

Gold Declines on U.S. Economic Recovery, Budget-Deal Optimism. Gold dropped for the first time in four days as optimism that the U.S. economy is recovering and lawmakers will reach a budget deal damped demand for the metal as a protection of wealth. Platinum and palladium advanced. Spot gold fell as much as 0.4 percent to $1,651.62 an ounce and was at $1,654.85 at 1:14 p.m. in Singapore. It lost 2.3 percent last week, the most since the period to June 22, after data showed that consumer spending, durable-goods orders and industrial output increased in November. A separate report showed the largest economy grew at a 3.1 percent annual rate last quarter. The U.S. may be a “bright spot” for the global economy in 2013, according to Huang Guobo, who oversees management of the $3.3 trillion foreign-exchange reserves in China, the largest foreign lender to the U.S. government. President Barack Obama and House Speaker John Boehner have not yet been able to reach a deal to avert more than



http://topics.bloomberg.com/south-korea/


http://topics.bloomberg.com/hong-kong/

http://topics.bloomberg.com/australia/

http://topics.bloomberg.com/new-zealand/


http://topics.bloomberg.com/consumer-confidence/

http://topics.bloomberg.com/u.s.-economy/

http://topics.bloomberg.com/consumer-spending/

http://topics.bloomberg.com/consumer-spending/


http://topics.bloomberg.com/barack-obama/

http://topics.bloomberg.com/john-boehner/

Page 2 of 6

$600 billion in automatic spending cuts and tax increases from Jan. 1, known as the fiscal cliff.

Grand Bargain Shrinks as Congress Nearing U.S. Budget Deadline. The deal that seems possible to fix the U.S. budget is getting smaller and smaller. Five days before a deadline that would trigger more than $600 billion in tax increases and spending cuts that could cause a U.S. recession, Congress will return Dec. 27 amid calls for action in the Senate. The politics of progress there are easier than in the Republican-controlled House of Representatives, which balked last week at Speaker John Boehner’s plan for tax increases on income above $1 million. Still, the House would have to sign off next. Boehner and President Barack Obama have been unable to agree on the tax-rate increase on top earners Obama wants or the cuts to entitlement programs that Boehner sought, complicating the chances of getting a package done. The trouble is, Senate Majority Leader Harry Reid, a Nevada Democrat, and Minority Leader Mitch McConnell, a Kentucky Republican, need to come up with something that also can get through the House, which has balked at any tax increases. Senate Republicans don’t want to be on the record supporting higher taxes unless they know the House also would pass it.

Oil Rises on Lawmakers’ Fiscal Cliff Meeting, Stockpile Report. Oil rose in New York for the first time in three days as President Barack Obama and the U.S. Congress prepared to assemble to discuss a budget solution to meet a year-end deadline. Prices gained as much as 0.7 percent before Democrats and Republicans plan to convene tomorrow for talks aimed at avoiding more than $600 billion in tax gains and spending cuts, known as the fiscal cliff, which are scheduled to take effect Jan. 1. U.S. crude stockpiles probably fell last week to the lowest in 10 weeks as refineries kept utilization at a high rate and imports decreased. West Texas Intermediate crude for February delivery climbed as much as 60 cents to $89.21 a barrel in electronic trading on the New York Mercantile Exchange. It was at $88.97 at 1:36 p.m. Singapore time. Futures slid 5 cents to $88.61 on Dec. 24. Prices have lost 10 percent this year. The volume for all WTI contracts was down 71 percent from the 100-day average. There was no floor or electronic trading yesterday because of the Christmas holiday. Brent oil for February settlement on the London-based ICE Futures Europe exchange advanced as much as 57 cents, or 0.5 percent, to $109.37 a barrel. The number of contracts trading was 55 percent lower than the 100-day average. The European benchmark crude was at a premium of $20.28 to WTI after closing at $20.19 on Dec. 24.

REGIONAL

India Joins Indonesia Facing Heightened Policy Dilemma: Economy. Central banks in Indonesia and India, with the worst-performing currencies among Asian emerging markets this year, will face more challenges in 2013 as they balance inflation risks with the need to boost growth. The Reserve Bank of India must deal with “conflicting cues” from elevated prices and an economic slowdown, complicating policy decisions even after it recently signaled there is room to lower interest rates, Mizuho Corporate Bank Ltd. economist Vishnu Varathan said. Indonesia’s inflation may be at the upper end of the central bank’s targeted range, forcing it to raise borrowing costs “aggressively,” according to HSBC Holdings Plc. Demand for higher wages, reduced government subsidies and greater capital inflows may drive up price pressures in the world’s fastest-growing region.



http://www.bloomberg.com/quote/DOEASCRD:IND

http://topics.bloomberg.com/indonesia/

http://topics.bloomberg.com/india/

http://topics.bloomberg.com/emerging-markets/

http://topics.bloomberg.com/emerging-markets/

http://topics.bloomberg.com/vishnu-varathan/

http://www.bloomberg.com/quote/IDBIRATE:IND

Page 3 of 6

Shinzo Abe Approved as Japan’s Prime Minister by Parliament. Japan’s parliament confirmed Shinzo Abe as the nation’s seventh prime minister in six years, returning him to the office he left in 2007 after his party regained power in a landslide election victory last week. The lower and upper houses of parliament approved Abe’s nomination in Tokyo today. The new prime minister will announce his Cabinet later today. Abe, 58, faces a recession, a diplomatic dispute with China and an election for control of the upper house that’s seven months away. The new prime minister has already had an effect, with the yen falling around 6 percent since mid-November on his pledges to boost fiscal spending and force the Bank of Japan (8301) to do more to end deflation.

Japan’s Incoming Coalition Agrees on 2% Inflation Target. Japan’s incoming Prime Minister Shinzo Abe agreed with his coalition ally Natsuo Yamaguchi of the New Komeito Party on a policy package that includes “bold monetary easing” to reach an inflation target of 2 percent. The accord, announced yesterday in Tokyo, bolstered the position of Abe’s Liberal Democratic Party in the lower house of parliament a day before he’s poised to take the government’s helm and unveil his Cabinet. The New Komeito party had cautioned in the campaign before this month’s election that forcing the central bank to reach a 2 percent inflation target risked undermining its independence. With the incoming coalition now unified on policy objectives, the yen added to a retreat that saw it slide through 85 per dollar today for the first time since April 2011.


ADB – Press Release: ADB's 2012 in Review

The ADB has issued a photo essay of its 2012 in review.

http://www.adb.org/news/photo-essay/busy-12-months-adbs-2012-review

WTO – Press Release: Indonesia nominates Minister Mari Pangestu for post of WTO Director-General

The WTO has announced that Indonesia, on 19 December 2012, nominated Minister Mari Pangestu for the post of WTO Director-General to succeed the current Director-General, Mr Pascal Lamy, whose term of office expires on 31 August 2013. A formal General Council meeting will be held on 29 January 2013 where candidates will present themselves to the membership. The selection process will conclude with a decision by the General Council no later than 31 May 2013.

http://www.wto.org/english/news_e/news12_e/dgsel_idn_24dec12_e.htm


2011 close

Previous wk's close


(%chg)

China 6.2980 6.2302 6.2341 6.2354 -0.02 1.0

Hong Kong 7.7698 7.7502 7.7504 7.7506 0.00 0.2

Indonesia 9,126.0 9,728.0 9,794.0 9,799.0 -0.05 -6.9

Japan 76.8 84.24 84.79 85.37 -0.68 -10.0

Korea 1,150.8 1,074.4 1,074.2 1,073.3 0.08 7.2

Malaysia 3.1507 3.0603 3.0668 3.0684 -0.05 2.7

Philippines 43.765 41.135 41.129 41.15 -0.05 6.4

Singapore 1.2906 1.2208 1.221 1.2234 -0.20 5.5

Thailand 31.5 30.6 30.6 30.7 -0.20 2.6

Vietnam 21,031.0 20,855.0 20,840.0 20,850.0 -0.05 0.9








http://topics.bloomberg.com/liberal-democratic-party/

http://www.adb.org/news/photo-essay/busy-12-months-adbs-2012-review

http://www.wto.org/english/news_e/news12_e/dgsel_idn_24dec12_e.htm

Page 4 of 6

STOCK MARKET INDEX

2011 close

Previous wk's close


(%chg)

China 2,199.4 2,153.3 2,213.6 2,219.1 0.25 0.9

Hong Kong 18,877.4 22,506.3 22,541.2 22,541.2 0.00 19.4

Indonesia 3,857.9 4,250.2 4,250.2 4,275.1 0.59 10.8

Japan 8,455.4 9,940.1 10,080.1 10,230.4 1.49 21.0

Korea 1,875.4 1,980.4 1,981.8 1,982.3 0.02 5.7

Malaysia 1,514.6 1,658.9 1,669.4 1,671.6 0.13 10.4

Philippines 4,422.2 5,823.9 5,823.9 5,832.8 0.15 31.9

Singapore 2,691.1 3,163.6 3,168.6 3,181.3 0.40 18.2

Thailand 1,025.3 1,373.2 1,378.3 1,382.6 0.31 34.8

Vietnam 350.0 396.8 401.3 406.1 1.19 16.0




China 2.500 2.300 -20.00 3.892 3.895 0.31

Hong Kong 0.094 0.094 0.00 0.398 0.398 0.00

Indonesia 4.189 4.193 0.36 4.952 4.954 0.28

Japan 0.088 0.088 0.00 0.309 0.309 0.00

Korea 2.750 2.750 0.00 2.860 2.860 0.00

Malaysia 3.000 3.000 0.00 3.210 3.210 0.00

Philippines 1.693 -1.025 -271.80 -0.078 0.305 38.30

Singapore 0.055 0.055 0.00 0.378 0.378 0.08

Thailand 2.750 2.750 0.00 2.865 2.865 0.00

Vietnam 2.375 3.333 95.80 7.125 6.933 -19.20



China 64.93 64.92 -0.01

Hong Kong 45.60 45.58 -0.02

Indonesia 131.69 131.30 -0.39

Japan 76.31 81.00 4.69

Korea 64.48 64.76 0.28

Malaysia 76.89 77.18 0.29

Philippines 103.56 103.26 -0.30

Thailand 92.99 93.10 0.11

Vietnam 210.47 209.88 -0.59




1,658.3 1,658.5 0.01

Source: Bloomberg

CREDIT RATINGS

S&P Moody's Fitch

China AA- Aa3 A+



Japan AA- -- AA

Korea A Aa3 A+

Malaysia A- A3 A-




Vietnam BB- B1 B+

Page 5 of 6


2012


China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a

Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a

Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 111.3

Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 1,270.9

Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1

Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 139.1

Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 82.1 84.1

Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a

Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.6



Reserves - latest




Reserves over


China 3,285.1 504.3 588.2 6.5 5.6

Hong Kong 301.7 139.0 736.2 2.2 0.4

Indonesia 111.3 50.5 38.3 2.2 2.9

Japan 1,270.9 70.9 2,332.3 17.9 0.5

Korea 326.1 150.9 132.6 2.2 2.5

Malaysia 139.1 58.0 35.4 2.4 3.9

Philippines 84.1 19.7 7.0 4.3 12.0

Singapore 254.2 118.2 923.9 2.2 0.3

Thailand 181.6 67.1 58.9 2.7 3.1

Vietnam 20.0 29.9 6.9 - -


THAILAND Customs Imports (YoY)% Nov 24.53 21.61

Customs Exports (YoY)% Nov 26.86 15.57

Customs Trade Balance (USD million) Nov -1454 -2470

VIETNAM GDP Constant Prices YTD (YoY)% 4Q 5.0 4.7

SINGAPORE Industrial Production (YoY)% Nov 3.1 -2.1

SELECTED ECONOMIC RELEASES CALENDAR (24 - 28 December 2012) Expected Release


24/12/2012





25/12/2012




26/12/2012



THAILAND Customs Trade Balance (USD million) Nov



SINGAPORE Industrial Production (YoY)% Nov



27/12/2012

HONG KONG Imports (YoY)% Nov

HONG KONG Exports (YoY)% Nov

Page 6 of 6


JAPAN Industrial Production (YOY)% Nov P

JAPAN National CPI (YoY) % Nov









28/12/2012


THAILAND Total Imports (YOY)% Nov

THAILAND Total Exports (YOY)% Nov






MARKET DEVELOPMENTS

Yen Touches 16-Month Low versus Euro before Japan CPI. The yen slid to a 16-month low against the euro before data tomorrow that may show a decline in Japan’s consumer prices, fanning speculation Prime Minister Shinzo Abe will push the central bank to boost cash infusions. The currency touched the lowest since September 2010 versus the dollar after Abe said in a media briefing yesterday that “bold’ monetary policy is one of the three pillars of his economic measures. The Japanese yen depreciated by 0.42 percent to 85.7 yens per dollar. While, the Chinese yuan and the Hong Kong dollar lost 0.03 percent and 0.01 percent, respectively, against the US dollar. Other Asian currencies appreciated slightly against the US dollar. The Indonesian rupiah appreciated by 0.68 percent at 9,733.0 rupiah per dollar, the Malaysian ringgit and the Korean won gained by 0.21 percent and 0.10 percent, respectively.

Asian Stocks Advance as Yen Weakens to 27-Month Low. Asian stocks rose, with the regional benchmark index headed for a second month of advance, as the yen touched a 27-month low on prospects for more stimulus and China’s industrial companies’ profit gained. Japanese shares rose to their highest since just before last year’s record earthquake and tsunami. The Nikkei 225 Stock Average added 0.91 percent, heading for the highest close since March 10, 2011, the day before an earthquake and tsunami devastated north eastern Japan and triggered meltdowns at a nuclear power plant. South Korea’s Kospi index gained 0.26 percent, while Hong Kong’s Hang Seng Index rose 0.35 percent. Singapore’s Straits Times Index, Malaysia’s stock index, Thailand’s SET index and Vietnam’s VN-index climbed 0.11 percent, 0.22 percent, 0.48 percent and 0.95 percent, respectively. In contrast, China’s composite index, Indonesia’s JCI index and the Philippines’ PSEi index fell by 0.60 percent, 0.11 percent and 0.65 percent, respectively.

BREAKING NEWS

GLOBAL

Home Prices in U.S. Increase More Than Forecast: Economy. Home prices climbed more than forecast in October, indicating a rebounding real-estate market will bolster the U.S. economy for the first time in seven years. The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from October 2011, the biggest 12-month advance since May 2010, the group said today in New York. Property values will probably keep heading higher as record-low mortgage rates, a growing population and an improving economy spur demand for housing. The turnaround in real estate is buoying household confidence and wealth, one reason why consumer spending is improving even as concern mounts that lawmakers will fail to stave off looming tax increases.

Analyst Indicted on Insider-Trading Charges Tied to IBM. Australian financial analyst Trent Martin was indicted in the U.S. on charges stemming from an alleged insider-trading scheme tied to International Business Machines Corp. (IBM)’s $1.2 billion


http://www.kantei.go.jp/jp/96_abe/statement/2012/1226kaiken.html



http://topics.bloomberg.com/hong-kong/


http://topics.bloomberg.com/home-prices/

http://topics.bloomberg.com/u.s.-economy/

http://www.bloomberg.com/quote/SPCS20Y%25:IND

http://topics.bloomberg.com/new-york/

http://topics.bloomberg.com/mortgage-rates/

http://www.bloomberg.com/quote/IBM:US

Page 2 of 6

acquisition of SPSS Inc. Martin was charged with conspiracy and securities fraud, federal prosecutors in Manhattan said yesterday in a statement. Martin also faces a civil suit over the alleged scheme filed by the U.S. Securities and Exchange Commission. Prosecutors and the SEC didn’t identify where Martin worked when the alleged crimes occurred. According to the SEC’s complaint, Martin left a New York brokerage in September 2009 to join a “related” firm in Stamford, Connecticut, where he remained until November 2010. Prosecutors said that Martin, 33, learned confidential information from a corporate lawyer, not identified in court papers, who was working on the IBM deal and with whom he was close friends.

Toyota Settles Acceleration Claims for Over $1 Billion. Toyota Motor Corp., Asia’s biggest automaker, will take a $1.1 billion charge to settle U.S. consumer claims that the value of their vehicles diminished because of recalls related to unintended acceleration. The settlement, pending approval from a judge in federal court in Santa Ana, California, will cover costs such as cash payments to customers, Toyota said in a statement yesterday. The deal is valued at $1.2 billion to $1.4 billion, a record in the U.S. in terms of financial scale and number of vehicles, according to Seattle-based law firm Hagens Berman, which represented plaintiffs. The accord highlights how more than three years after Toyota began recalling a record number of vehicles -- totalling more than 10 million units from 2009 to 2010 -- the maker of the Camry is still dealing with the aftermath of problems related to unintended acceleration. Lawsuits claiming personal injuries and deaths caused by such incidents remain pending, with the first federal trial set for February in Santa Ana.

REGIONAL

Chinese Industrial Companies’ Profits Climb for Third Month. Chinese industrial companies’ profits rose for a third month in November, supporting a rebound in economic growth that may ease the transition to the nation’s new leadership. Net income gained 22.8 percent from a year earlier to 638.5 billion yuan ($102 billion), the National Bureau of Statistics said today in Beijing, after a 20.5 percent rise in October. The world’s second-biggest economy is set for the first pickup in growth in eight quarters after the government accelerated investment-project approvals and boosted spending on infrastructure. The new Communist Party leadership led by Xi Jinping is seeking to sustain the recovery without fueling property-price bubbles or adding to bad-loan risks in the banking system.

Korea Cuts 2013 Growth Estimate as European Crisis Linger. South Korea lowered its growth forecasts for this year and for 2013 in the first revisions since a new president was elected on Dec. 19. GDP growth will expand 3 percent next year, the Finance Ministry said in a statement in Sejong, less than the 4 percent predicted in September. Growth may be 2.1 percent this year, versus a previous 3.3 percent estimate. The update brings the government’s forecasts closer to those of private economists and the central bank as Europe’s debt crisis caps demand for the nation’s exports. The pace of expansion next year may partly depend on the extent of any extra spending by president-elect Park Geun Hye, who will take office in February. The Bank of Korea said today that it will support the recovery while also examining possible economic imbalances arising from the extended duration of its accommodative monetary policy stance.

http://www.justice.gov/usao/nys/pressreleases/December12/TrentMartinIndictPR.php

http://topics.bloomberg.com/stamford/

http://topics.bloomberg.com/connecticut/


http://pressroom.toyota.com/releases/toyota+settlement+litigation+value+customers+dec26.htm

http://topics.bloomberg.com/yuan/

http://www.bloomberg.com/quote/NBSZ:CH

http://topics.bloomberg.com/south-korea/



http://topics.bloomberg.com/bank-of-korea/

Page 3 of 6

Cement Magnate’s Son Aso Takes Reins of Shrinking Japan Economy. Taro Aso, son of a cement magnate and a champion of pork-barrel spending when prime minister, became Japan’s sixth finance chief in three years, auguring expanded fiscal stimulus in the world’s third-largest economy. Aso, 72, will also serve as deputy prime minister and financial services minister in Prime Minister Shinzo Abe’s administration, Chief Cabinet Secretary Yoshihide Suga said in Tokyo yesterday. Fumio Kishida is foreign minister, while Akira Amari was named economy minister. The finance minister’s first task will be to deliver on his party’s pledge of a “large-scale” supplementary budget to stimulate the economy, which is forecast to shrink for a third straight quarter. At issue will be averting any sell-off in the bond market as the nation grapples with debt in excess of twice the size of GDP and as Aso calls for a new plan to restore fiscal health. The Liberal Democratic Party must establish its own “framework” to curb spending and debt expansion, Aso told reporters early this morning after the Cabinet was sworn in by Emperor Akihito. Aso said he won’t adhere to limits made by the previous government to cap new bond issuance for the fiscal year ending March 31 to 44 trillion yen ($514 billion).

Peso Yield Premium Lures Union in Upgrade Bet: Southeast Asia. Philippine peso bonds will beat the nation’s dollar debt in 2013 as investors lured by the chance of an investment-grade rating favor the higher-yielding notes, according to Union Investment Privatfonds and Jyske Bank A/S. The 4.95 percent local-currency securities due January 2021 that were sold internationally yield 3.37 percent, compared with 2.3 percent for similar-maturity dollar debt. The peso is the best-performing Southeast Asian currency this year, with a 6.5 percent rally against the dollar, and will gain 3.7 percent in 2013. President Benigno Aquino signed a law to increase tobacco and liquor taxes on Dec. 20, prompting Standard & Poor’s to raise the country’s credit-rating outlook from stable to positive a few hours later. Aquino has cut the budget deficit, cracked down on tax evaders and made progress in tackling corruption since he took office in 2010, while the Philippine economy grew 7.1 percent in the third quarter, the fastest pace in Southeast Asia.


ADBI – Working Paper: “The Persistence of Current Account Balances and its Determinants: The Implications for Global Rebalancing”

The ADBI has publicised the captioned working paper. “This paper examines the statistical nature of the persistency of current account balances and its determinants. With the assumption that stationary current account series ensures the long-run budget constraint while countries may experience "local non-stationarity" in current account balances, the authors examine the dynamics of current account balances across a panel of 70 countries.”

http://www.adbi.org/files/2012.12.13.wp400.persistence.current.acct.bal.determinants.pdf

IMF – Publication: Financial Statements

The IMF has publicised the Financial Statements as of 31 October 2012.

http://www.imf.org/External/Pubs/FT/quart/2013fy/103112.pdf





http://www.bloomberg.com/quote/JYSK:DC

http://topics.bloomberg.com/benigno-aquino/

http://topics.bloomberg.com/standard-%26-poor%27s/

http://topics.bloomberg.com/budget-deficit/

http://topics.bloomberg.com/southeast-asia/

http://topics.bloomberg.com/southeast-asia/



http://www.imf.org/External/Pubs/FT/quart/2013fy/103112.pdf

Page 4 of 6


2011 close

Previous wk's close


(%chg)

China 6.2980 6.2302 6.2354 6.2370 -0.03 1.0

Hong Kong 7.7698 7.7502 7.7504 7.7512 -0.01 0.2

Indonesia 9,126.0 9,728.0 9,799.0 9,733.0 0.68 -6.2

Japan 76.8 84.24 85.34 85.7 -0.42 -10.4

Korea 1,150.8 1,074.4 1,073.3 1,072.2 0.10 7.3

Malaysia 3.1507 3.0603 3.0684 3.062 0.21 2.9

Philippines 43.765 41.135 41.15 41.125 0.06 6.4

Singapore 1.2906 1.2208 1.2227 1.2223 0.03 5.6

Thailand 31.5 30.6 30.7 30.7 0.03 2.6

Vietnam 21,031.0 20,855.0 20,850.0 20,837.0 0.06 0.9


2011 close

Previous wk's close


(%chg)

China 2,199.4 2,153.3 2,219.1 2,205.9 -0.60 0.3

Hong Kong 18,877.4 22,506.3 22,541.2 22,619.8 0.35 19.8

Indonesia 3,857.9 4,250.2 4,275.1 4,270.2 -0.11 10.7

Japan 8,455.4 9,940.1 10,230.4 10,323.0 0.91 22.1

Korea 1,875.4 1,980.4 1,982.3 1,987.4 0.26 6.0

Malaysia 1,514.6 1,658.9 1,671.6 1,675.3 0.22 10.6

Philippines 4,422.2 5,823.9 5,832.8 5,794.9 -0.65 31.0

Singapore 2,691.1 3,163.6 3,180.8 3,184.2 0.11 18.3

Thailand 1,025.3 1,373.2 1,382.2 1,388.8 0.48 35.5

Vietnam 350.0 396.8 406.1 410.0 0.95 17.1




China 2.300 2.090 -21.00 3.895 3.896 0.07

Hong Kong 0.094 0.094 0.07 0.398 0.398 0.00

Indonesia 4.193 4.204 1.16 4.954 4.988 3.36

Japan 0.088 0.095 0.75 0.309 0.309 0.00

Korea 2.750 2.750 0.00 2.870 2.870 0.00

Malaysia 3.000 3.000 0.00 3.210 3.210 0.00

Philippines -1.025 -1.803 -77.80 0.305 -0.014 -31.90

Singapore 0.110 0.110 0.00 0.378 0.378 0.00

Thailand 2.750 2.750 0.00 2.865 2.865 0.00

Vietnam 3.333 3.750 41.70 6.933 7.300 36.70



China 64.92 64.83 -0.09

Hong Kong 45.58 45.60 0.02

Indonesia 131.30 131.49 0.19

Japan 81.00 81.42 0.42

Korea 64.76 64.68 -0.08

Malaysia 77.18 77.09 -0.09

Philippines 103.26 103.36 0.10

Thailand 93.10 93.19 0.09

Vietnam 209.88 210.03 0.15




1,657.2 1,657.8 0.04

Source: Bloomberg

Page 5 of 6

CREDIT RATINGS

S&P Moody's Fitch

China AA- Aa3 A+



Japan AA- -- AA

Korea A Aa3 A+

Malaysia A- A3 A-




Vietnam BB- B1 B+


2012


China 3,305.0 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a

Hong Kong 294.6 295.6 291.9 295.0 296.3 298.2 301.2 301.7 n.a

Indonesia 110.5 116.4 111.5 106.5 106.6 109.0 110.2 110.3 111.3

Japan 1,288.7 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 1,270.9

Korea 316.0 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1

Malaysia 135.7 135.9 136.0 134.2 134.5 134.9 137.5 138.3 139.1

Philippines 76.1 76.5 76.1 76.1 79.8 80.7 82.0 82.1 84.1

Singapore 243.6 246.1 237.7 243.4 244.1 246.2 252.1 254.2 n.a

Thailand 179.3 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.6



Reserves - latest




Reserves over


China 3,285.1 504.3 588.2 6.5 5.6

Hong Kong 301.7 139.0 736.2 2.2 0.4

Indonesia 111.3 50.5 38.3 2.2 2.9

Japan 1,270.9 70.9 2,332.3 17.9 0.5

Korea 326.1 150.9 132.6 2.2 2.5

Malaysia 139.1 58.0 35.4 2.4 3.9

Philippines 84.1 19.7 7.0 4.3 12.0

Singapore 254.2 118.2 923.9 2.2 0.3

Thailand 181.6 67.1 58.9 2.7 3.1

Vietnam 20.0 29.9 6.9 - -


HONG KONG

Imports (YoY)% Nov 9.0 3.3

Exports (YoY)% Nov 10.5 -2.8

Trade Balance (HKD bn) Nov -44.1 -42.7

SELECTED ECONOMIC RELEASES CALENDAR (24 - 28 December 2012) Expected Release


24/12/2012





25/12/2012




26/12/2012



Page 6 of 6







27/12/2012














28/12/2012


THAILAND Total Imports (YOY)% Nov

THAILAND Total Exports (YOY)% Nov






MARKET DEVELOPMENTS

• Japan and China’s Stocks Lead the Rise. The Nikkei 225 gained 1 percent on the year’s last trading day to close at 10,428.55, the highest since March 10, 2011. The measure gain 23 percent in 2012. Meanwhile, China’s stocks rose, capping a fourth week of gains for the benchmark index. Consumer companies jumped, while brokerages led financial companies to the biggest advance among industry groups this week. Vietnam and Indonesia markets also rose by 0.9% and 0.7%, respectively. Only Thailand market fell by 0.2%.

• Yen Slides to 28-Month Low on Declines in CPI, Factory Output. The yen sank to a 28-month low after data showing drops in Japanese consumer prices and factory output fanned speculation the central bank will heed government calls to step up cash infusions to end deflation. Meanwhile, Indonesia Rupiah fell by 0.7%.

• Oil Heads for Biggest Weekly Gain Since August on Budget Talks. Oil rose in New York, extending the biggest weekly gain since August, as U.S. lawmakers scheduled talks aimed at averting tax increases and spending cuts that threaten the economy of the world’s largest crude consumer. Futures advanced as much as 0.7 percent and are up 3 percent this week. Oil also rose after an industry report showed U.S. stockpiles shrank last week.

BREAKING NEWS

GLOBAL

• Labor Market, Housing in U.S. Strengthen Into 2013. The labor market and housing strengthened, signaling the U.S. expansion may withstand the fiscal impasse. Applications for unemployment-insurance payments fell by 12,000 to 350,000 in the week ended Dec. 22, bringing the average over the past month to the lowest level in more than four years, Labor Department figures showed today in Washington. Purchases of new houses rose 4.4 percent in November to a 377,000 annual pace, the highest level since April 2010, according to data from the Commerce Department. A third report showed consumer confidence slumped this month.

• Obama Eyes $108 Billion Annual Asia Prize Vying With China Trade. Barack Obama sent his secretary of state, Hillary Clinton, to Asia for a record 86 days in his first term, including – for the first time -- stops in all 10 members of the Association of Southeast Asian Nations. Obama himself became the first sitting commander-in-chief to visit Myanmar, a nation the International Monetary Fund says may be the next economic frontier in Asia. As in the wake of U.S. Commodore Matthew Perry’s 1850s voyages to Japan, American companies are seeking greater opportunities, with General Electric Co. and Ford Motor Co. backing Obama’s plan for an 11-country Pacific trade deal that could bring in $108 billion a year. Instead of Perry’s gunships, what may propel Asian nations toward Obama’s vision is concern from Japan to Vietnam that China’s ascendance may pose a threat.

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• Spain Alone in Lifting 2013 Bond Sales as Aid Looms. Spain will be alone in asking bond buyers for more cash next year, as five of the euro-region’s six biggest borrowers reduce the amount for sale, according to estimates from Lloyds Banking Group Plc and Morgan Stanley. Spain sold 97.1 billion euros ($128 billion) of bonds this year, exceeding its funding target without assistance from the European Central Bank’s bond buying program. While Germany, Italy, France, the Netherlands and Belgium are forecast to lower the amount of debt they sell in 2013, Spain probably will raise its issuance to 110 billion euros.

• IPOs Slump to Lowest Level Since Financial Crisis After Facebook. Initial public offerings in 2012 slumped to the lowest level since the financial crisis as signs of an economic slowdown and Facebook Inc.’s disappointing debut curbed demand and prompted companies to push back sales. IPOs have raised $112 billion worldwide this year, the least since 2008, according to data compiled by Bloomberg. Initial sales in western Europe dropped to one-third of last year’s level, while concern about China’s economy helped cut proceeds in Asia by almost half. U.S. offerings raised $41 billion, little changed from last year, as Facebook’s IPO spurred a monthlong drought in U.S. deals.

REGIONAL

• Bonds Exceed Stock Sales by 14 Times on Li Support. Chinese companies raised 14 times more selling bonds than stocks this year and policy makers have given the market a pivotal role in reviving the world’s second-largest economy in 2013. Debt offerings increased 54 percent to a record 4.1 trillion yuan ($657 billion), data compiled by Bloomberg show. Issuance of equity fell 14 percent to 277 billion yuan as the Shanghai Composite Index eked out a 0.7 percent gain. Average yields on top-rated corporate bonds maturing in three years dropped 20 basis points to 4.69 percent. That compares with the 2.59 percent yield on company notes globally. Vice Premier Li Keqiang, set to replace Premier Wen Jiabao in March, pledged along with other leaders to expand availability of funds in the economy next year and is weaning companies off a dependence on bank loans.

• Japan’s Production Slumps to 2011 Quake-Aftermath Low. Japan’s industrial output tumbled more than forecast to the lowest level since the aftermath of the record 2011 earthquake, bolstering the case for Prime Minister Shinzo Abe to unleash large-scale stimulus. The 1.7 percent drop in November from October exceeded all 27 forecasts in a Bloomberg News survey, a government report showed today in Tokyo. The nation also remained mired in deflation, with consumer prices excluding fresh food dropping 0.1 percent from a year before, compared with a central bank goal of 1 percent and Abe’s desired target of 2 percent.

• Inflation Goal Unmet Boosts JGB Demand to ’05 High. Japanese government bond sales drew the highest demand in seven years in 2012, driven by deflation that new Prime Minister Shinzo Abe says policy makers haven’t done enough to defeat. Securities maturing between 2 and 30 years drew average bids valued at 4.81 times the amount on offer, the highest so-called bid-to-cover ratio since a 14.6 reading in 2005, according to Bloomberg data. That compares with an all-time high of 3.16 for Treasuries in 2012 and shows demand for debt that’s driven Japan’s 10-year rate down 19 basis points this year to 0.795 percent, the lowest annual close on record.

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• South Korea’s Output Exceeds Estimates as Recovery Takes Hold. South Korea’s industrial output exceeded estimates in November and the current-account surplus rose to a record, signaling that a growth recovery may take hold in Asia’s fourth-largest economy. Output rose 2.3 percent from October when it advanced 0.7 percent, Statistics Korea said today. The median estimate of 10 economists in a Bloomberg News survey was for a 0.8 percent gain. Production gained 2.9 percent from a year earlier. The surplus was $6.9 billion.

• Philippine Peso Completes Best Year Since 2007 on Upgrade Bets. The Philippine peso completed its best annual advance since 2007, spurred by the fastest economic growth in Southeast Asia and speculation that the nation is on track to win its first investment-grade rating. Standard & Poor’s raised its outlook on the country’s BB+ debt rating to positive from stable last week and said an upgrade is possible in 2013 as public finances improve. The peso reached its strongest level since March 2008 last month after official data showed the $225 billion economy grew 7.1 percent last quarter, the fastest pace in two years. Its rally in 2012, Asia’s best exchange-rate performance after South Korea’s won, prompted the central bank to impose limits this week on banks’ non-deliverable currency forwards positions.


IMF – Working Paper: “Macroprudential Policies and Housing Prices—A New Database and Empirical Evidence for Central, Eastern, and Southeastern Europe”

• The IMF has publicised the captioned working paper. “Several countries in Central, Eastern and Southeastern Europe used a rich set of prudential instruments in response to last decade’s credit and housing boom and bust cycles. We collect detailed information on these policy measures in a comprehensive database covering 16 countries at a quarterly frequency. We use this database to investigate whether the policy measures had an impact on housing price inflation. Our evidence suggests that some—but not all—measures did have an impact. These measures were changes in the minimum CAR and non-standard liquidity measures (marginal reserve requirements on foreign funding, marginal reserve requirements linked to credit growth).” http://www.imf.org/external/pubs/ft/wp/2012/wp12303.pdf

MIGA – Press Release: Welcomes São Tomé and Principe as New Member Country

• MIGA has announced that São Tomé and Principe has become MIGA’s 178th member country. São Tomé and Principe’s membership in MIGA means that direct foreign investment into the country is eligible for the agency’s political risk insurance. This insurance protects investments against the risks of transfer restriction, expropriation, breach of contract, non-honoring of sovereign financial obligations, and war and civil disturbance. Investors from the São Tomé and Principe going into other developing countries may also receive coverage for their investments from MIGA. http://www.miga.org/news/index.cfm?stid=1837&aid=3418

UNCTAD – Press Release: UNCTAD and ASEAN identify critical issues in harmonizing e-commerce laws

• UNCTAD has issued a press release that senior Southeast Asian officials assessed cyber-legislation and made recommendations for the harmonization of e-commerce laws at a joint ASEAN/UNCTAD workshop held in Cebu, the Philippines, on 10 and 11 November


http://www.miga.org/news/index.cfm?stid=1837&aid=3418

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2012. The outcome was reported to the twelfth ASEAN Telecommunications Senior Officials’ Meeting (TELSOM). http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=383&Sitemap_x0020_Taxonomy=Technology and Logistics;#1713;#Information and Communication Technologies;#1570;#Science, Technology and Innovation;#20;#UNCTAD Home



(%chg) China 6.2980 6.2302 6.2370 6.2321 0.08 1.1 Hong Kong 7.7698 7.7502 7.752 7.7515 0.01 0.2 Indonesia 9,126.0 9,728.0 9,731.0 9,798.0 -0.68 -6.9 Japan 76.8 84.24 86.1 86.2 -0.12 -10.9 Korea 1,150.8 1,074.4 1,072.2 1,070.5 0.15 7.5 Malaysia 3.1507 3.0603 3.0603 3.0617 -0.05 2.9 Philippines 43.765 41.135 41.125 41.075 0.12 6.5 Singapore 1.2906 1.2208 1.2228 1.2229 -0.01 5.5 Thailand 31.5 30.6 30.6 30.6 0.07 2.7 Vietnam 21,031.0 20,855.0 20,837.0 20,840.0 -0.01 0.9



(%chg) China 2,199.4 2,153.3 2,205.9 2,233.3 1.24 1.5 Hong Kong 18,877.4 22,506.3 22,619.8 22,666.6 0.21 20.1 Indonesia 3,857.9 4,250.2 4,281.9 4,310.2 0.66 11.7 Japan 8,455.4 9,940.1 10,323.0 10,395.2 0.70 22.9 Korea 1,875.4 1,980.4 1,987.4 1,997.1 0.49 6.5 Malaysia 1,514.6 1,658.9 1,674.2 1,680.0 0.35 10.9 Philippines 4,422.2 5,823.9 5,794.9 5,812.7 0.31 31.4 Singapore 2,691.1 3,163.6 3,183.9 3,193.2 0.29 18.7 Thailand 1,025.3 1,373.4 1,397.2 1,394.9 -0.17 36.0 Vietnam 350.0 396.8 410.0 413.7 0.92 18.2


3-MONTH INTERBANK LENDING RATE (%) 27-Dec 28-Dec bps change 27-Dec 28-Dec bps change China 2.090 2.290 20.00 3.896 3.897 0.04 Hong Kong 0.094 0.094 0.00 0.398 0.398 0.00 Indonesia 4.204 4.242 3.72 4.988 5.021 3.32 Japan 0.095 0.095 0.00 0.309 0.309 0.00 Korea 2.750 2.750 0.00 2.870 2.870 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -1.803 -69.010 -6720.70 -0.014 0.042 5.60 Singapore 0.099 0.099 0.00 0.378 0.378 0.00 Thailand 2.750 2.750 0.00 2.865 2.866 0.08 Vietnam 3.750 4.417 66.70 7.300 7.475 17.50




http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=383&Sitemap_x0020_Taxonomy=Technology

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=383&Sitemap_x0020_Taxonomy=Technology

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* CDS trades in New York, hence the one day lag in the latest closing price.


1,664.1 1,660.8 -0.20

Source: Bloomberg

CREDIT RATINGS










Country Indicators Period Last Previous INDONESIA Money Supply - M2 (YoY)% Dec 17.4 18.3

JAPAN

Industrial Production YOY% Nov P -5.8 -4.5 National CPI YoY % Nov -0.2 -0.4 National CPI Ex Food, Energy YoY % Nov -0.5 -0.5 Jobless Rate % Nov 4.1 4.2 Job-To-Applicant Ratio Nov 0.8 0.8

SOUTH KOREA

Current Account in (USD mn) Nov 6877.7 5280.1 Industrial Production (YoY)% Nov 2.9 -0.8 Industrial Production (MoM)% Nov 2.3 0.6

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PHILIPPINES Total Imports (YoY)% Oct 4.3 3.6 Trade Balance (USD mn) Oct -832 -483

THAILAND

Total Trade Balance (USD mn) Nov 627 -146 Total Imports (YOY)% Nov 24.1 21.2 Total Exports (YOY)% Nov 27.1 14.4 Current Account Balance (USD mn) Nov 392 199 Business Sentiment Index Nov 52.0 52.1

SELECTED ECONOMIC RELEASES CALENDAR (24 - 28 December 2012)



24/12/2012





25/12/2012




26/12/2012









27/12/2012














28/12/2012

INDONESIA Money Supply - M2 (YoY)% Dec

JAPAN Industrial Production YOY% Nov P

JAPAN National CPI YoY % Nov









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THAILAND Total Imports YOY% Nov

THAILAND Total Exports YOY% Nov






MARKET DEVELOPMENTS

• Most Asian Stocks Drop as U.S. Budget Talks Stall. Most Asian stocks declined, paring this year’s advance, with a deadline looming for the U.S. Congress to reach a budget agreement before the so-called fiscal cliff of automatic tax increases and spending cuts takes effect. The MSCI Asia Pacific excluding Japan Index was little changed at 466.33 as of 11:36 a.m. in Hong Kong. About four shares fell for every three that rose. Japan’s Nikkei 225 Stock Average posted the biggest annual advance since 2005, surging 23 percent, and the benchmark MSCI Asia Pacific Index gained 14 percent in 2012 as central banks from the U.S., Europe, Japan and China took action to spur economic growth.

• U.S. Stock Futures Rise as Congress Works Toward Deal. U.S. stock futures rose, paring the decline indicated for the Standard & Poor’s 500 Index at today’s open, as Congress worked to reach a budget agreement before the so-called fiscal cliff takes effect in two days.S&P 500 index (SPX) futures expiring in March rose 0.5 percent to 1,390.4 at 11:22 a.m. in Hong Kong. Because the contract kept falling after equity exchanges closed on Dec. 28, the rebound today implies the benchmark gauge for American shares will open about 0.5 percent below its Dec. 28 close of 1,402.43 when stock trading resumes. Dow Jones Industrial Average futures gained 46 points, or 0.4 percent, to 12,823 today.

• Oil Heads for Annual Loss as U.S. Budget Talks Near Deadline. Oil fluctuated in New York, heading for its first annual loss since 2008, as U.S. lawmakers tried to bridge disagreements over how to avert tax increases and spending cuts that threaten the world’s largest economy.West Texas Intermediate futures were little changed after sliding for two days as U.S. Senate Majority Leader Harry Reid said “there’s still significant differences” between Democrats and Republicans with one day remaining to avoid the fiscal cliff. A purchasing managers’ index for China by HSBC Holdings Plc and Markit Economics showed a reading of 51.5 for December, the highest in 19 months and the second above 50, which indicates an expansion.

• Gold Set to Extend Annual Advance as U.S. Budget Deadline Nears. Gold advanced, poised for a 12th annual gain, as U.S. lawmakers struggled to reach a budget deal before automatic tax increases and spending cuts start to take effect from tomorrow, boosting demand for a haven. Gold for immediate delivery advanced as much as 0.3 percent to $1,660.60 an ounce and was at $1,660.10 at 9:35 a.m. in Singapore. Prices have gained 6.2 percent this year as central banks from Europe to the U.S. to China pledged additional stimulus to spur economic growth.

BREAKING NEWS

GLOBAL

• Taxes to Rise for Workers as Budget Deal Still Elusive. With taxes set to increase for almost every U.S. worker at midnight, Congress hasn’t reached a budget deal that Democrats and Republicans say is necessary to prevent a blow to the U.S. economy. Private talks between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell that began Dec. 28 stalled yesterday because of disputes over income tax

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rates, the estate tax and other issues. McConnell, a Kentucky Republican, reached out to Vice President Joe Biden in an effort to break the impasse, while staffers worked into the night trading and reviewing offers.

• Merkel Calls for German Patience as Euro Crisis ‘Far From Over’. German Chancellor Angela Merkel said the economic environment will be more difficult in 2013 than this year, and that Europe’s sovereign debt crisis is “far from over,” though progress has been made. Financial-market tensions have abated after the European Central Bank unveiled its Outright Monetary Transactions bond- buying plan on Sept. 6, pledging to spend as much money as needed to restore confidence in bond markets. The program provides support to debt-strapped nations as long as they sign up to economic reforms. The European Stability Mechanism, which is helping the Spanish government recapitalize the country’s banks, was established Sept. 27 after Germany ratified the agreement. About 200 of the 17-nation euro area’s biggest lenders will come under direct ECB oversight when the single supervisor becomes operational, targeted for March 2014. In the meantime, the 500 billion-euro ($661 billion) ESM could aid banks directly using its own procedures and asking ECB supervisors to step in. The fund could act as a resolution mechanism as well as providing capital to ailing banks, as long as certain conditions are met.

• U.K. Risk of Triple-Dip Recession Recedes. U.K. executives’ confidence for 2013 improved this month, indicating the risk of a triple-dip recession has receded, according to Lloyds Bank. An index of business sentiment rose to 40 from 35 in November, the unit of Lloyds Banking Group Plc said in a report in London today. A gauge measuring the outlook for the economy increased to 20 from 17, which Lloyds said is consistent with “broadly flat underlying growth” at the end of this year. Britain’s economy emerged from a recession in the third quarter, helped by a boost from the London Olympic Games. While the Bank of England has said gross domestic product may decline this quarter in what will be a “zigzag” pattern of output, it forecasts a gradual recovery through 2013.

• BRIC Dominance Ebbs as State Meddling Means Equities Trail World. Stocks in the biggest developing markets are lagging behind global equities for a record third year as faster economic growth proves no lure for investors amid concerns over government interference in markets. The MSCI BRIC Index (MXBRIC) of shares in Brazil, Russia, India and China rose 11 percent this year, trailing the MSCI All-Country World Index by 1.6 percentage points. The trend will probably persist in 2013, according to John-Paul Smith, a Deutsche Bank AG strategist. Mutual funds that invest in BRIC nations have posted $1.65 billion of outflows as Brazilian politicians intervened to cut utility rates, China maintained control of its biggest companies and Russian businesses spent shareholder money on projects favored by the government.

REGIONAL

• China Manufacturing Pickup Shows Rebound Gains Traction. China’s manufacturing unexpectedly expanded at the fastest pace in 19 months in December, boosting optimism that a recovery in the world’s second-biggest economy is gaining traction. The final reading of a Purchasing Managers’ Index was 51.5 in December, according to a statement from HSBC Holdings Plc and Markit Economics today. That compares with the 50.9 preliminary reading on Dec. 14 and a final 50.5 in November. A level above 50 indicates expansion.

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• Japan Rebuke to G-20 Nations May Signal More Moves to Weaken Yen. Japanese purchases of foreign bonds to weaken the yen may become more likely as the nation rejects trading partners’ rights to criticize its currency policies. “Foreign countries have no right to lecture us,” Finance Minister Taro Aso told reporters at a briefing in Tokyo on Dec. 28. He said that the U.S. should have a stronger dollar and questioned whether major Group of 20 nations had stuck to pledges from 2009 to avoid competitive currency devaluations. Japan’s new Prime Minister Shinzo Abe may accept trade friction as a cost of spurring growth and countering deflation through a looser monetary policy and weaker yen. The currency is set to complete its biggest annual decline in seven years after Abe’s Liberal Democratic Party secured a landslide victory in this month’s lower-house election. During his campaign, Abe said foreign-bond purchases were a possible monetary tool.

• South Korea’s Inflation Slows Even as Economy Gaining Momentum. South Korea’s inflation eased to the slowest pace in four months in December, staying below the nation’s price target even as an economic recovery shows signs of gaining momentum. Consumer prices increased 1.4 percent from a year earlier after a 1.6 percent gain in November, Statistics Korea said in an e-mailed statement today. The median estimate in a Bloomberg News survey of 13 economists was for a 1.5 percent gain. Prices rose 0.2 percent from the previous month.

• Singapore Price Risks Persist as Economy Seen Entering Recession. Singapore may grapple with elevated inflationary pressures for a third year in 2013, reducing scope for the central bank to provide stimulus to an economy that probably entered a technical recession this quarter. GDP contracted in the final three months of 2012 from the previous quarter, according to five of 10 economists in a Bloomberg News survey, where the median was for an annualized expansion of 0.3 percent. A decline would lead to the country’s first recession since 2009. The report will be released at 8 a.m. on Jan. 2. Elevated housing, transportation and business costs have resulted in one of the fastest inflation rates in the developed world even as growth slows. The Monetary Authority of Singapore tightened policy this year by allowing faster currency gains in an export-dependent economy at risk from an uneven U.S. recovery and Europe’s protracted sovereign debt crisis.


Basel Committee – Publication: Fourth FAQs on Basel III's counterparty credit risk and exposures to central counterparties

• The Basel Committee on Banking Supervision has issued frequently asked questions (FAQs) on Basel III's counterparty credit risk rules and the interim framework for bank exposures to central counterparties (CCPs). To promote consistent global implementation of those requirements, the Committee has agreed to periodically review frequently asked questions and publish answers along with any technical elaboration of the rules text and interpretative guidance that may be necessary. http://www.bis.org/press/p121228.htm (Press Release) http://www.bis.org/publ/bcbs237.pdf (FAQs)

IMF – Statistics: Currency Composition of Official Foreign Exchange Reserves (COFER) – 2012Q3

• The IMF has publicised the COFER as of the end of 2012Q3, which is an IMF database that keeps end-of-period quarterly data on the currency composition of official foreign exchange reserves. http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf

WTO – Press Release: Korea nominates Minister Taeho Bark for post of WTO Director-General

http://www.bis.org/press/p121228.htm

http://www.bis.org/publ/bcbs237.pdf

http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf

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• The WTO has issued a press release that the Republic of Korea has nominated Minister for Trade Taeho Bark for the post of WTO Director-General to succeed the current Director-General, Mr Pascal Lamy, whose term of office expires on 31 August 2013. http://www.wto.org/english/news_e/news12_e/dgsel_kor_28dec12_e.htm



(%chg) China 6.2980 6.2322 6.2322 6.2291 0.05 1.1 Hong Kong 7.7698 7.7514 7.7514 7.7515 0.00 0.2 Indonesia 9,126.0 9,679.0 9,679.0 9,793.0 -1.16 -6.8 Japan 76.8 85.96 85.96 86.05 -0.10 -10.7 Korea 1,150.8 1,070.5 1,070.5 1,064.4 0.58 8.1 Malaysia 3.1507 3.0613 3.0613 3.0595 0.06 3.0 Philippines 43.765 41.005 41.005 41.048 -0.10 6.6 Singapore 1.2906 1.2239 1.2239 1.2227 0.10 5.6 Thailand 31.5 30.6 30.6 30.6 0.03 2.8 Vietnam 21,031.0 20,840.0 20,840.0 20,843.0 -0.01 0.9



(%chg) China 2,199.4 2,233.3 2,233.3 2,262.8 1.32 2.9 Hong Kong 18,877.4 22,666.6 22,666.6 22,656.9 -0.04 20.0 Indonesia 3,857.9 4,316.7 4,316.7 4,316.7 0.00 11.9 Japan 8,455.4 10,395.2 10,395.2 10,395.2 0.00 22.9 Korea 1,875.4 1,997.1 1,997.1 1,997.1 0.00 6.5 Malaysia 1,514.6 1,681.3 1,681.3 1,676.5 -0.29 10.7 Philippines 4,422.2 5,812.7 5,812.7 5,812.7 0.00 31.4 Singapore 2,691.1 3,191.8 3,191.8 3,167.1 -0.77 17.7 Thailand 1,025.3 1,391.9 1,391.9 1,391.9 0.00 35.8 Vietnam 350.0 413.7 413.7 413.7 0.00 18.2


3-MONTH INTERBANK LENDING RATE (%) 28-Dec 31-Dec bps change 28-Dec 31-Dec bps change China 2.300 3.900 160.00 3.897 3.900 0.31 Hong Kong 0.094 0.096 0.21 0.398 0.398 0.00 Indonesia 4.242 4.242 0.00 5.021 5.021 0.00 Japan 0.095 0.095 0.00 0.309 0.309 0.00 Korea 2.750 2.750 0.00 2.870 2.870 0.00 Malaysia 3.000 3.000 0.00 3.210 3.210 0.00 Philippines -69.010 -69.010 0.00 0.042 0.042 0.00 Singapore 0.064 0.064 0.00 0.378 0.378 -0.08 Thailand 2.750 2.750 0.00 2.866 2.866 0.00 Vietnam 4.417 4.417 0.00 7.475 7.475 0.00



Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. * CDS trades in New York, hence the one day lag in the latest closing price.

http://www.wto.org/english/news_e/news12_e/dgsel_kor_28dec12_e.htm

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1,655.7 1,663.3 0.46

Source: Bloomberg CREDIT RATINGS



2012 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec

China 3,298.9 3,206.1 3,240.0 3,240.0 3,272.9 3,285.1 n.a n.a n.a Hong Kong 295.6 291.9 295.0 296.3 298.2 301.2 301.7 305.2 n.a Indonesia 116.4 111.5 106.5 106.6 109.0 110.2 110.3 111.3 n.a Japan 1,289.5 1,277.7 1,270.5 1,272.8 1,273.2 1,277.0 1,274.2 1,270.9 n.a Korea 316.8 310.9 312.4 314.4 316.9 322.0 323.5 326.1 n.a Malaysia 135.9 136.0 134.2 134.5 134.9 137.5 138.3 139.1 139.2 Philippines 76.5 76.1 76.1 79.8 80.7 82.0 81.7 83.9 n.a Singapore 246.1 237.7 243.4 244.1 246.2 252.1 254.2 255.8 n.a Thailand 178.5 172.6 174.7 175.3 179.2 183.6 181.5 181.6 182.4 Vietnam 19.5 19.9 19.7 20.0 n.a n.a n.a n.a n.a EXTERNAL LIQUIDITY RATIOS






Country Indicators Period Last Previous SOUTH KOREA Consumer Price Index (YoY)% Dec 1.4 1.6 SOUTH KOREA Core Consumer Price Index(YoY)% Dec 1.2 1.3 SOUTH KOREA Consumer Price Index (MoM)% Dec 0.2 -0.4 HONG KONG Govt Mthly Budget Surp/Def (HKD bn) Nov 21.5 CHINA HSBC Manufacturing PMI Dec 51.5 50.5

SELECTED ECONOMIC RELEASES CALENDAR (31 December 2012 – 4 January 2013)



12/31/2012 SOUTH KOREA Consumer Price Index (YoY)% Dec HONG KONG Govt Mthly Budget Surp/Def (HKD bn) Nov

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SOUTH KOREA Core Consumer Price Index(YoY)% Dec SOUTH KOREA Consumer Price Index (MoM)% Dec CHINA HSBC Manufacturing PMI Dec 1/1/2013 CHINA PMI Manufacturing Dec SOUTH KOREA Ext Trade - Imports (YoY)% Dec SOUTH KOREA Ext Trade - Export (YoY)% Dec 1/2/2013 INDONESIA Core Inflation (YoY)% Dec THAILAND Consumer Price Index (YoY)% Dec THAILAND Core CPI (YoY)% Dec SOUTH KOREA HSBC Manufacturing PMI Dec INDONESIA Consumer Confidence Index Dec INDONESIA Total Imports (YoY)% Nov INDONESIA Exports (YoY)% Nov INDONESIA Inflation (YoY)% Dec INDONESIA Inflation NSA (MoM)% Dec INDONESIA Total Trade Balance (USD mn) Nov SINGAPORE GDP (YoY)% 4Q A SINGAPORE GDP (QoQ)% 4Q A 1/3/2013 HONG KONG Retail Sales - Volume (YoY)% Nov HONG KONG Retail Sales - Value (YoY)% Nov INDONESIA Net Foreign Assets (IDR Tln) Dec INDONESIA Foreign Reserves (USD bn) Dec 1/4/2013 SOUTH KOREA Foreign Exchange Reserve (USD bn) Dec SOUTH KOREA South Korea FDI (YoY)% 4Q HONG KONG Purchasing Managers Index Dec CHINA China HSBC Services PMI Dec JAPAN Official Reserve Assets (USD bn) Dec


Documents

Market Update for ASEAN+3 Dec2012