Warrants Highlight

Monetary easing in China too?

Weakening industrial production
Last weekend, China’s National Bureau of Statistics (NBS) announced that industrial production continued to slow, growing at 8.9% year on year in August as compared to 9.2% in July. President Hu said that economic expansion faces “notable downward pressure” and that the government has an “arduous task of creating jobs for new entrants to the labour force”. Officials in the Chinese government announced that it had approved new roads, railways and urban infrastructure which have a combined value of about US$158bil.

Higher CPI
Consumer price inflation in August increased 2% year on year. According to NBS, “Food prices, which account for nearly one-third of the prices used to calculate the CPI climbed 3.4% in August from a year earlier”. The Xinhua news agency reported that this was mainly due to heavy rains which affected vegetable supplies in addition to the global price hikes.

Although inflation is below the Chinese government’s overall inflation target of 4%, it is still higher than the 1.8% inflation in July and a higher inflation would limit the room for further monetary easing. The central bank of China had previously cut its lending and deposit rates twice this year and investors were expecting the government to do more especially after President Hu Jintao reiterated that China will work to balance “steady and robust growth, adjusting economic structure and managing inflation expectations”. He continued to pledge that he will boost domestic demand and ensure “basic price stability”.

Trade surplus widens
Yesterday, China released exports data which increased by 2.7% year on year and imports unexpectedly fell 2.6% year on year. This widened the country’s trade surplus to $26.7bil in August.

The fall in imports could signify that domestic demand has slowed and the 2.7% growth in exports is a far cry from the government’s goal of a gain of about 10% for 2012. China’s biggest customers are the European Union as well as the US which is facing a recession and a slowdown respectively.

The Asian markets were choppy on Monday due to the weak trade data which was made known in the midst of the Asian trading session.

What is China A50 Index
The FTSE A50 Index tracks the performance of the 50 largest A-share companies listed on the Shanghai and Shenzhen stock exchange.

New Macquarie warrants
Macquarie has new warrants listings over HSI and DBS this morning.

Singapore Market Wrap

Small Gains compared to Friday's Rally

The Asian markets mostly ended flat yesterday as traders digested a list of economic data released over the weekend. The Chinese industrial production increased by 8.9% year-on-year, its third month of slowdown; while its retail sales rose by 13.2%. Reports on Monday showed that China's exports rose and imports declined in August.

The STI fell 0.1% day-on-day (dod) to close at 3,008.72.

STI 3100MBeCW121031 (Q1AW) exercise level 3,100.*
STI 2950MBePW121031 (Q0ZW) exercise level 2,950.*

F&N outperformed STI
F&N rose 2.0% yesterday to close at $8.55, just 4 cents away from its August high of $8.59. The Business Times reported that Thai Beverage has approached some banks in Singapore for funds to support a general offer for F&N.

Heineken has agreed to buy Asia Pacific Breweries and Asia Pacific Investment Pte Ltd for a consideration of $5.6bn. F&N shareholders will be voting for the sale and capital reduction on 28th September.

Call warrant F & N MB eCW121204 (Q3XW) exercise price $8.80.*

Wilmar hitting new lows
Malaysian palm oil giant, Wilmar, gave away its Friday's gains as the stock fell 1.9% to $3.05. Yesterday, the Malaysian Palm Oil Board announced that stockpiles rose 5.8% to 2.12mn tons in August, the highest level since October. Exports rose 10% to 1.43mn tons. The Nov palm oil futures which have been falling for the past 4 days, managed to reverse the trend by rising 0.3% day-on-day to RM2,937 / ton.

Indonesian palm oil producer, Indofood Agri, fell 0.7% yesterday to $1.365.

Call warrant Wilmar MBeCW130102 (Q5QW) exercise price $3.15.*
Put warrant Wilmar MBePW130116 (Q5RW) exercise price $3.15.*

Call warrant IndoAgriMBeCW121101 (QD6W) exercise price $1.50.*

Overnight Market Wrap

Concerns about Greece brought equity markets lower

The S&P broke its 5-day rally on reports that Greece may not be able to qualify for further aid. The S&P closed at 1429.08, down 0.6% day on day.

Yesterday, Greece acknowledged that it was having problems persuading its lenders to accept their cost cutting plans and this is a problem since the plan is essential to them getting their aid in order to avoid bankruptcy. Greece offered to cut public sector expenses, but Troika officials wanted a bolder plan of reducing the number of civil servants.

In the US, consumer credit unexpectedly declined, in line with the slowdown in hiring this year as well as pessimism in the economy. With the US releasing disappointing economic data, money market traders are expecting the Fed to keep interest rates low for about 3 more years, until mid 2015. Previously, they were estimating that interest rates would be raised by the end of 2013.

Overnight Markets

Indices	Last	Change
STI	3008.72	-0.1%
HSI	19827.20	0.1%
DJIA	13254.30	-0.4%
S&P 500	1429.08	-0.6%
Nasdaq	3104.02	-1.0%
China A50	7332.53	-0.1%

Corporate News

Corporate Announcements

Cosco secured a contract valued over US$200mn to build a semi submersible accommodation rig.

Ex-dividend dates:
Wed 26 Sep: SGX ($0.15)
Tue 6 Nov: Olam ($0.05)