Warrants Highlight

Chinese Figures - Disappointing on the Downside

China released a list of major economic indicators last week, shedding more light on its slowing economy. Most figures were disappointing on the downside, prompting speculations that the government may introduce more stimuli very soon. The following are some of the highlights:

Industrial Production fell to the weakest in more than 3 years increasing 9.2% year-on-year, compared to 9.5% in June. At the same time, the Producer Price Index contracted 2.9%. The weak demand could be part of the de-stocking process as industries reduce their inventories.

Consumer Price Index fell to a 30-month low of 1.8%, removing the concerns of runaway consumer inflation. Pork and other food prices helped bringing the figure down in July. However, some economists are expecting that food prices may rise in the near future due to the effects of El Nino which already caused flooding in some parts of China.

Fiscal spending accelerated to 37.1% year-on-year in July, more than double June's figure of 17.7%. This showed that the government is stepping effort to fight the economic slowdown. Spending on affordable housing rose 39.2%, while spending on transportation grew 34.9%

Key Macro Data this week
Tue 14 Aug: PRC Actual FDI (Jul), US PPI (Jul), US Adv Retail Sales (Jul
Wed 15 Aug: SG Retail Sales (Jun), US CPI (Jul), US Industrial Production (Jun),
Thu 16 Aug: US Initial Jobless Claims, US Housing Starts (Jul), US Building Permits
Fri 17 Aug: US U. of Michigan Confidence (Aug Prelim)

Separately, Macquarie is proud to list the following new warrants this morning:

Singapore Market Wrap

Singapore economy contracts

Singapore's economy showed a contraction of 0.7% in 2Q, sorely missing Bloomberg's survey of a 0.5% expansion when compared to the previous quarter. The lacklustre performance was in part due to a slowdown in electronics manufacturing even as pharmaceuticals clocked in admirable numbers. This is consistent with the earlier downward revision of the Singapore government's growth outlook to 1.5%, with the central bank warning that growth could fall below 1% if the trio economies of US, China and Europe deteriorate significantly.

Meanwhile, Chinese figures on Friday added nervousness to investors as trade data came in rather soft, fueling worries of a further slowdown in the Chinese economy. It didn't help matters that industrial output and retail sales data earlier in the week disappointed as well.

The STI closed at 3054.2, up 0.1% wow while the HSI closed at 20136.12, up 2.4% wow.

Call STI 2950MBeCW120831 (QE8W) exercise level 2,950.*
Put STI 2850MBePW120831 (QE9W) exercise level 2,850.*

HSI20200MBeCW120830 (QS5W) exercise level 20,200.*
HSI19800MBePW120830 (QS7W) exercise level 19,800.*

Kep corp wins contracts of US$950mil
Before the STI started trading on Friday, Keppel Corporation announced on the SGX that it had won two contracts, totalling about US$950mil. The contracts were from Petrobras-led consortiums, for the fabrication and integration of topside modules on the Floating Production Storage and Offloading vessels.

The FPSOs will have identical work scopes with Chief Operating Officer, Mr Chow Yew Yuen mentioning that "undertaking two similar projects will enable them to maximise their efficiencies and add value to their customer". Also, they are proud that their BrasFEL shipyard has "established a track record of quality deliveries".

Keppel Corporation closed at $11.40, up 1.2% wow.

Call warrant KepCorp MBeCW121101 (Q0AW) exercise price $11.50.*
Call warrant KepCorp MBeCW130103 (MV8W) exercise price $10.909.*
Call warrant KepCorp MBeCW121203 (Q4LW) exercise price $12.50.*
Put warrant KepCorp MBePW121204 (Q4FW) exercise price $11.00 *
Long dated call warrant KepCorp MBeCW130603 (M8PW) exercise price $11.818.*

NOL- laggard amongst STI constituents
On Wednesday, NOL announced their 2Q2012 results after the STI closed for Singapore's National Day celebrations. According to Bloomberg, analysts expected a US$4.1mil loss but NOL results fared worse. The company announced a US$118mil loss this second quarter and attributed the loss to a one-time charge of US$112mil due to "organizational restructuring and the sale of obsolete vessels to make room for more efficient ships".

NOL fell on Friday as investors were appalled with the magnitude of their loss. In addition, Chinese exports came in slower-than-expected and container-shipping companies fell, with NOL leading the fall. Incidentally, the counter was also the laggard amongst the 30 STI constituents on Friday.

NOL closed at $1.165, down 0.4% wow, with the counter falling 4.1% on Friday compared to Wednesday's close.

Call warrant NOL MB eCW121203 (QK8W) exercise price $1.10.*
Call warrant NOL MB eCW121101 (QE0W) exercise price $1.30.*

Overnight Market Wrap

US markets rally on speculation of more monetary easing

On Friday, the US indices rose with the S&P closing at 1405.87, up 0.2% day-on-day. Investors bought on speculation that the Fed, ECB and the Bank of England will come together for more monetary loosening. Earlier this month, Mario Draghi said that the ECB will work to lower borrowing costs and that the bank will work "within its mandate to maintain price stability". Chancellor Angela Merkel backed his plans for the bond purchasing program.

Italian Prime Minister Mario Monti warned of a potential European Union breakup if there is no greater urgency of lowering government borrowing costs. His statement stirred up some optimism among investors on hopes that the ECB may be pressured to ease monetary policies further.

Overnight Markets

Indices	Last	Change
STI	3054.20	0.1%
HSI	20136.10	-0.7%
DJIA	13208.00	0.3%
S&P 500	1405.87	0.2%
Nasdaq	3020.86	0.1%
China A50	7595.44	-0.5%

Corporate News

Corporate Announcements

F&N 3Q12 net profit fell 20.1% year-on-year to $140.5mn.

Genting 2Q12 net profit fell 43% year-on-year to US$138.5mn.

Results announcements:
Mon 13 Aug: Noble 2Q12
Tue 14 Aug: IndoFood Agri 2Q12, Wilmar 2Q12, Singtel 1Q13, STX OSV 2Q12
Tue 28 Aug: Olam 4Q12

Ex-dividend dates:
Wed 15 Aug: DBS ($0.28), SembMarine ($0.05)
Thu 30 Aug: Sakari ($0.02), UOB ($0.20)
Wed 26 Sep: SGX ($0.15)