Macquarie is pleased to list the following new index warrants this morning

The rally came despite an unexpectedly weak Q2 GDP number. Singapore's economy contracted at a seasonally adjusted rate of 1.1% according to advance estimates from the Ministry of Trade and Industry. The contraction was mainly due to the slowing of the manufacturing sector, especially in the biomedical manufacturing output. On the bright side, IE Singapore announced on Tuesday that June’s Non-Oil Domestic Exports (Nodx) grew by 6.8% year-on-year.

HSI – awaiting more actions from Mr. Wen
Unlike the STI, the HSI still has a lot of catch up to do, having only recovered less than half of May’s decline. One of the main concerns is the slowing down of the Chinese economy. On Monday, Chinese Premier Wen Jiabao warned that the economic rebound is not yet guaranteed and difficult times may persist for a while. However, he did mention that further actions will be taken in the second half of the year.

This year, the Chinese government has cut the banks’ Reserve Requirement Ratio (RRR) two times (Feb, May) and cut the interest rates twice (June, July). Investors are expecting more cuts after China’s Consumer Price Index (CPI) declined in June to a 29-month low, giving the policy makers more room to boost the economy.

Singapore Market Wrap

Optimism builds on hopes of monetary easing

Asian markets rallied yesterday with HSI taking the lead. The HSI closed at 19559.05, up 1.7% day on day (dod) while the STI's performance was lacklustre, closing at 3028.96, inching up only 0.4% dod.

The markets were buoyed after Fed's Chairman Ben Bernanke's testament eased concerns on inflation, as investors stayed hopeful of additional monetary easing by the Fed. In addition, Premier Wen Jiabao kept his options open by suggesting that the Chinese government could cut bank's reserve requirements and encourage corporate lending so as to "revive economic growth", as quoted from Bloomberg. With hints of further monetary easing by the central banks, investors across Asia are growing more optimistic.

Call STI 2950MBeCW120831 (QE8W) exercise level 2,950.*
Call STI 3200MBeCW130328 (Q0QW) exercise level 3,200.*
Put STI 2850MBePW120831 (QE9W) exercise level 2,850.*
Put STI 2700MBePW130328 (Q0RW) exercise level 2,700.*

DBS bid for Bank Danamon
Yesterday, Indonesian authorities issued new regulations to cap bank ownership but seemed to favour the US$7.2bil bid by DBS for Bank Danamon. Under the new regulations, which will take effect immediately, financial investors are only allowed to take a maximum of 40% stake in an Indonesian company with the exception of financially strong listed banks with a tier-1 capital ratio of more than 6%.

This is good news for Southeast Asia's largest lender DBS, which has a tier-1 capital of 12.7% and had submitted a bid for Bank Danamon in April earlier this year. DBS would be able to complete their bid as long as they can get a recommendation from Singapore's regulator.

DBS closed at $14.55, up 1.5% dod.

Call warrant DBS MB eCW120904 (QC6W) exercise price $14.00.*
Call warrant DBS MB eCW121101 (QZ1W) exercise price $15.00.*
Put warrant DBS MB ePW121001 (QO9W) exercise price $13.00.*

OCBC to sell shares in F&N and APB
OCBC and its partners have sold their stakes of F&N and APB for a combined S$3.22bil. As posted on the SGX, this divestment is in line with the bank's strategy of divesting its non-core assets and reinvesting in its core financial businesses. The group will realise a post-tax gain of approximately S$1.15bil and the transaction's targeted completion is within 90 days from the announcement.

OCBC closed at $9.49, up 2.0% dod.

Call warrant OCBC Bk MBeCW121101 (QY0W) exercise price $9.20.*
Put warrant OCBC Bk MBePW121105 (QZ3W) exercise price $8.40.*

Overnight Market Wrap

Weak US data failed to dampen investor's optimism

Yesterday Spanish 10-year bonds crossed the 7% threshold and Germany's parliament finally approved a European aid package for the Spanish Banks.

In the US, corporate earnings this season seems better than expected, with 52 out of 75 companies in the S&P beating estimates. However, sales of existing homes unexpectedly fell 5.4% mom, missing analyst estimates of a 1.5% gain. Initial jobless claims also increased to 386K compared to 350K last week.

Though the markets saw weak data from the US, investors were more hopeful that global central banks will pump in more liquidity into the markets. The S&P closed at 1376.51, up 0.3% dod, while US 10-year Treasuries rose 1 basis point to 1.5%.

Overnight Markets

Indices	Last	Change
STI	3028.96	0.4%
HSI	19559.05	1.7%
DJIA	12943.36	0.3%
S&P 500	1376.51	0.3%
Nasdaq	2965.90	0.8%
China A50	7680.02	0.6%

Corporate News

Corporate Announcements

Introduction:
OCBC will sell its 8.7mn shares a in Asia Pacific Breweries to Kindest Place Groups at $45 per share for a total of $389mn. It has also entered into a separate sale and purchase agreement with Thai Beverage to sell its 46.2mn shares in Fraser and Neave to Thai Beverage at $8.88 per share for a total of $410mn.

Results announcements:
Thu 19 Jul: Keppel Corp 2Q12
Wed 25 Jul: Biosensors 1Q13, SIA 1Q13
Fri 27 Jul: SGX 4Q12
Mon 1 Aug: Cosco 2Q12, CapitaLand 2Q12
Thu 2 Aug: SembCorp Marine 2Q12, OCBC 2Q12
Tue 7 Aug: UOB 2Q12
Tue 14 Aug: IndoFood Agri 2Q12

Ex-dividend dates:
Mon 6 Aug: SingTel ($0.09 final)