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MARKET UPDATE FOR ASEAN+3 January 2013


MARKET UPDATE FOR ASEAN+3 2 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

European Stocks Rise, Dollar Drops on U.S. Budget Bill. European stocks advanced, extending last year’s 13 percent global rally, metals and oil gained while the dollar and Japanese yen weakened after U.S. lawmakers passed a bill that averted spending cuts and tax gains threatening a recovery in the world’s biggest economy. The Stoxx Europe 600 Index jumped 1.1 percent as of 8:28 a.m. in London, heading for its highest close since May 2011. Copper in London gained 2.2 percent as oil in New York rose 1 percent. The yen tumbled 1.1 percent to 115.77 per euro, the biggest drop in a week, and the Dollar Index, which tracks six peers, fell 0.4 percent. Treasury 10-year notes and German government bonds retreated. Oil Heads for Three-Month High as U.S. House Passes Budget Bill. Oil rose in New York, heading for the highest close in three months, after the U.S. House passed a Senateapproved deal that will avert tax increases and spending cuts that threatened growth in the world’s biggest economy. Futures increased as much as 1.1 percent after legislation to avoid the so-called fiscal cliff was passed by a vote of 257-167 in the House today after Republicans abandoned an effort to add spending cuts to the Senate’s plan. A government gauge of China’s manufacturing showed a third month of expansion yesterday, a sign that the recovery in the world’s second- biggest oil consumer will extend to this year. Gold Rallies to Two-Week High as U.S. House Passes Budget Bill. Gold rose to a twoweek high, gaining with other commodities as the dollar weakened, after U.S. lawmakers passed legislation averting income-tax rises for most workers, easing concern that a recovery in the world’s biggest economy may be derailed. Silver, platinum and palladium climbed. Spot gold increased as much as 0.7 to $1,684.75 an ounce, the highest price since Dec. 18, and was at $1,681.52 at 4:05 p.m. Singapore time. Cash bullion ended 2012 up 7.1 percent for a 12th year of gains. Silver, platinum and palladium added at least 0.3 percent. The U.S. House of Representatives’ 257-167 vote broke a yearlong impasse over how to head off the $600 billion in automatic tax increases and spending cuts known as the fiscal cliff that began taking effect yesterday. The Senate had earlier passed the bill 89-8 and it goes to President Barack Obama for his signature. The dollar weakened 0.4 percent against a six- currency basket while oil and base metals climbed.

BREAKING NEWS GLOBAL •

Bipartisan House Backs Tax Deal Vote as Next Fight Looms. The U.S. House passed a bill undoing income tax increases for more than 99 percent of households, giving a victory to President Barack Obama even as Republicans vowed to fight him in coming weeks for spending cuts in exchange for raising the debt ceiling. The 257-167 vote just after 11 p.m. last night capped a tension-filled day as Republicans balked at a bipartisan Senate measure. House Speaker John Boehner ordered a vote even though 151 of 236 Republicans, including Majority Leader Eric Cantor, ultimately voted no. Obama said he’d sign the bill into law.


Bond Tab for Biggest Economies Seen Falling $220 Billion. The world’s leading economies will have $220 billion less sovereign debt to refinance in 2013, cutting supply after every major government bond market rallied for the first time since the 2008 financial crisis. The amount of bills, notes and bonds coming due for the Group of Seven nations plus Brazil, Russia, India and China will drop to $7.38 trillion from $7.60 trillion in 2012, according to data compiled by Bloomberg. Japan, the U.K., Germany, France, Italy and Brazil will see a decline, while the U.S., Canada, Russia, India and China will face an increase. Pound Jumps to 16-Month High on Fiscal-Cliff Deal. The pound rose to its strongest level in 16 months against the dollar as U.S. lawmakers passed legislation to avert automatic spending cuts and tax increases, reducing demand for the U.S. currency as a haven. Sterling also appreciated versus the yen before a report today that economists said will show U.K. manufacturing stabilized last month. The gauge based on a survey of purchasing managers was unchanged at 49.1 in December, Markit Economics and the Chartered Institute of Purchasing and Supply will say today, according to the median estimate of 29 economists surveyed by Bloomberg News. The measure has recovered from a three-month low of 47.3 in October. U.K. government bonds slumped. The pound appreciated 0.4 percent to $1.6317 at 8:14 a.m. London time, after reaching $1.6381, the strongest level since Aug. 30, 2011. Against the euro, the pound slipped 0.2 percent to 81.34 pence. The 10-year gilt yield rose eight basis points to 1.91 percent. Australia Home Prices Drop for Second Year as Consumers Cautious. Australian home prices fell for the second-straight year as sluggish consumer sentiment dented the impact of interest rate cuts. House and apartment prices across the nation’s eight state and territory capitals fell 0.4 percent in the 12 months to Dec. 31, according to the RP Data-Rismark home value index, after a 3.8 percent decline in 2011. Prices are expected to rise in 2013, with increases constrained to levels between inflation and wage growth, RP Data said.

REGIONAL •

Hu Jintao Says China to Step Up Efforts to Support Growth. China will work toward bolstering global economic growth in 2013, President Hu Jintao said in a New Year’s Eve address, amid optimism that a recovery in the world’s second-biggest economy is gaining traction. The nation will “step up efforts to promote strong, sustainable and balanced growth in the world economy,” Hu said in the speech broadcast by state radio and television. China achieved stable economic development in 2012 and will seek to do the same this year while making restructuring of its growth model a focus, he said. Hu’s last New Year’s Eve address before he steps down as president in March signaled Chinese leaders’ confidence the economy may be rebounding after a seven-quarter slowdown. A recovery may facilitate the transfer of power to Xi Jinping, appointed head of the Communist Party in November and set to become president, as authorities seek to assuage discontent sparked by corruption and a widening income gap. Yen, Dollar Fall After U.S. Congress Passes Bill to Avert Cliff. The yen and dollar weakened against most major counterparts as U.S. lawmakers passed legislation to avert the so-called fiscal cliff of automatic spending cuts and tax increases, reducing demand for refuge assets. The Dollar Index (DXY) dropped as the House of Representatives approved a bill that prevents income taxes from rising for most U.S. workers. The yen fell past 87 per dollar for the first time in 2 1/2 years after Japan’s Prime Minister Shinzo Abe reiterated his intention to weaken the nation’s currency. Page 2 of 6


South Korea’s won reached a 16-month high as Finance Minister Bahk Jae Wan said the nation is reviewing possible currency measures. Indonesia inflation slows a second month. Indonesia’s inflation slowed for a second month in December, supporting the central bank’s decision to hold off interest-rate increases as exports slump. Consumer prices climbed 4.3 percent from a year earlier last month, after a previously reported 4.32 percent gain in November, the statistics bureau said in Jakarta today. The median estimate in a Bloomberg News survey of 15 economists was 4.2 percent. Bank Indonesia has kept borrowing costs unchanged for 10 straight meetings as exports tumbled and the rupiah weakened. Price pressure in Southeast Asia’s largest economy may rise as a planned increase in electricity tariffs and minimum wages take effect, with a possible reduction in fuel subsides also weighing. Singapore GDP Topped Survey Last Quarter, Avert Recession. Singapore’s economy expanded more than economists estimated last quarter, averting a recession even after the central bank refrained from monetary stimulus as it sought to contain elevated inflation. GDP rose an annualized 1.8 percent in the three months to Dec. 31 from the previous period, when it contracted a revised 6.3 percent, the Trade Ministry said in a statement today. The median of 11 estimates in a Bloomberg News survey was for a 1.6 percent expansion. The economy grew 1.2 percent last year, less than a quarter of 2011’s pace.

IFIs NEWS (compiled from their websites) ADB – Press Release: Online Registration Opens for ADB's 46th Annual Meeting •

The ADB has opened online media registration for the 46th Annual Meeting of ADB’s Board of Governors, to be held at the India Expo Mart Limited in Greater Noida, about 50 km outside Delhi, India from 2-5 May 2013, which will remain open until 20 April 2013. http://www.adb.org/news/online-registration-opens-adbs-46th-annual-meeting

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2011 close 31-Dec 2-Jan close China 6.2980 6.2322 6.2306 6.2331 Hong Kong 7.7698 7.7514 7.7503 7.7518 Indonesia 9,126.0 9,679.0 9,793.0 9,653.0 Japan 76.8 85.96 86.75 87.14 Korea 1,150.8 1,070.5 1,064.4 1,063.6 Malaysia 3.1507 3.0613 3.0580 3.0354 Philippines 43.765 41.005 41.005 40.852 Singapore 1.2906 1.2239 1.2218 1.2204 Thailand 31.5 30.6 30.6 30.3 Vietnam 21,031.0 20,840.0 20,840.0 20,840.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change

2013 YTD (%chg)

-0.04 -0.02 1.45 -0.45 0.08 0.74 0.37 0.11 0.82 0.00

STOCK MARKET INDEX 2011 close China Hong Kong Indonesia Japan Korea Malaysia Philippines

2,199.4 18,877.4 3,857.9 8,455.4 1,875.4 1,514.6 4,422.2

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7

31-Dec 2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7

2-Jan 2,269.1 23,312.0 4,346.5 10,395.2 2,031.1 1,676.2 5,861.0

% change

2013 YTD (%chg)

0.00 2.89 0.69 0.00 1.71 -0.76 0.83

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Singapore Thailand Vietnam

2,691.1 1,025.3 350.0

3,191.8 1,391.9 413.7

3,167.1 1,391.9 413.7

OVERNIGHT LENDING RATE (%) 31-Dec 2-Jan bps change 3.860 3.860 0.00 0.096 0.096 0.00 4.242 4.224 -1.80 0.095 0.095 0.00 2.750 2.750 0.00 3.000 3.000 0.00 -69.010 -3.660 6535.00 0.038 0.038 0.00 2.750 2.750 0.00 4.417 4.500 8.30

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

3,202.3 1,409.2 418.4

1.11 1.24 1.12

3-MONTH INTERBANK LENDING RATE (%) 31-Dec 2-Jan bps change 3.900 3.900 0.00 0.398 0.398 -0.04 5.021 4.992 -2.88 0.309 0.309 0.00 2.870 2.870 0.00 3.210 3.210 0.00 0.042 -0.081 -12.30 0.378 0.377 -0.08 2.866 2.866 0.00 7.475 7.287 -18.80

CREDIT DEFAULT SWAP (IN BPS) 1-Jan 2-Jan bps change China 66.36 63.00 -3.36 Hong Kong 45.63 45.60 -0.03 Indonesia 135.98 131.02 -4.96 Japan 81.72 79.87 -1.85 Korea 68.01 63.27 -4.75 Malaysia 77.85 74.00 -3.85 Philippines 105.70 102.85 -2.85 Thailand 94.52 88.85 -5.67 Vietnam 211.31 207.94 -3.37 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. 31-Dec Gold Spot (in US$ per ounce)

2-Jan

1,675.4

% change

1,682.9

0.45

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec n.a n.a n.a n.a n.a 139.2 n.a n.a 182.4 n.a

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EXTERNAL LIQUIDITY RATIOS Reserves - latest (US$bn)

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

3 months imports of goods & services (US$bn)

3,285.1 305.2 111.3 1,270.9 326.1 139.2 83.9 255.8 182.4 20.0

504.3 139.0 50.5 70.9 150.9 58.0 19.7 118.2 67.1 29.9

Short-term external debt (US$bn)

588.2 736.2 38.3 2,332.3 132.6 35.4 7.0 923.9 58.9 6.9

DATA RELEASES FOR THE DAY

Country

Indicators

CHINA SOUTH KOREA SOUTH KOREA INDONESIA THAILAND THAILAND SOUTH KOREA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA SINGAPORE SINGAPORE

PMI Manufacturing Ext Trade - Imports (YoY)% Ext Trade - Export (YoY)% Core Inflation (YoY)% Consumer Price Index (YoY)% Core CPI (YoY)% HSBC Manufacturing PMI Total Imports (YoY)% Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) GDP (YoY)% GDP (QoQ)%

Import cover (Qtrs of imports covered by reserves)

6.5 2.2 2.2 17.9 2.2 2.4 4.3 2.2 2.7 -

12/31/2012

1/1/2013

1/2/2013

Country

SOUTH KOREA HONG KONG SOUTH KOREA SOUTH KOREA CHINA CHINA SOUTH KOREA SOUTH KOREA INDONESIA THAILAND THAILAND SOUTH KOREA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA SINGAPORE SINGAPORE

5.6 0.4 2.9 0.5 2.5 3.9 11.9 0.3 3.1 -

Period

Last

Previous

Dec Dec Dec Dec Dec Dec Dec Nov Nov Dec Dec Nov 4Q A 4Q A

50.6 -5.3 -5.5 4.4 3.63 1.78 50.1 9.92 -4.6 4.30 0.54 -478 1.1 1.8

50.6 0.7 3.9 4.4 2.74 1.85 48.2 10.8 -7.6 4.32 0.07 -1547 0.3 -5.9

SELECTED ECONOMIC RELEASES CALENDAR (31 December 2012 – 4 January 2013)

Expected Release Date

Reserves over short-term debt

Indicators

Consumer Price Index (YoY)% Govt Mthly Budget Surp/Def (HKD bn) Core Consumer Price Index(YoY)% Consumer Price Index (MoM)% HSBC Manufacturing PMI PMI Manufacturing Ext Trade - Imports (YoY)% Ext Trade - Export (YoY)% Core Inflation (YoY)% Consumer Price Index (YoY)% Core CPI (YoY)% HSBC Manufacturing PMI Total Imports (YoY)% Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) GDP (YoY)% GDP (QoQ)%

Period

Dec Nov Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Nov Nov Dec Dec Nov 4Q A 4Q A

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1/3/2013

1/4/2013

HONG KONG HONG KONG INDONESIA INDONESIA SOUTH KOREA SOUTH KOREA HONG KONG CHINA JAPAN

Retail Sales - Volume (YoY)% Retail Sales - Value (YoY)% Net Foreign Assets (IDR Tln) Foreign Reserves (USD bn) Foreign Exchange Reserve (USD bn) South Korea FDI (YoY)% Purchasing Managers Index China HSBC Services PMI Official Reserve Assets (USD bn)

Nov Nov Dec Dec Dec 4Q Dec Dec Dec

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.

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MARKET UPDATE FOR ASEAN+3 3 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

European Stocks Rise Amid Swiss Rally on U.S. Budget Deal. European (SXXP) stocks climbed, extending a 22-month high, as Swiss shares rallied following a U.S. budget deal that stopped automatic spending cuts and tax increases from coming into force. U.S. index futures fell, while Asian shares outside Japan advanced. The Stoxx Europe 600 Index gained 0.4 percent to 286.32 at 8:08 a.m. in London. The Swiss Market Index jumped 2.2 percent as the equity gauge opened for the first time since Dec. 28. Futures on the Standard & Poor’s 500 Index expiring in March fell 0.3 percent, while the MSCI Asia Pacific Excluding Japan Index climbed 0.4 percent. Asian Stocks Rise on U.S. Manufacturing, China Services. Asian stocks rose, pushing a regional equities index to its highest level in 17 months, after an expansion of U.S. manufacturing and China’s services industries fueled optimism in the global economic recovery. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) rose 0.4 percent to 478.15 as of 4:22 p.m. in Hong Kong, adding to yesterday’s biggest gain in three months. More than two shares increased for each that fell. A close at this level would be the highest since August 2011. Markets in mainland China and Japan are closed today for holidays. Oil Drops From Highest in Three Months on Signs Gains Excessive. Oil slid for the first time in three days in New York on speculation that its surge to the highest level in three months yesterday may have been excessive. Futures lost as much as 0.7 percent after rallying 2.6 percent in the past two days as U.S. lawmakers passed a bill to undo automatic tax increases and spending cuts that threatened growth in the world’s biggest oil-consuming country. Crude declined today as technical indicators showed futures may have risen too quickly for further gains to be sustainable, according to data compiled by Bloomberg. Gold Trades Near Two-Week High as Stimulus Set to Be Sustained. Gold traded near a two-week high as expectations that policy makers around the world will continue to support their economies increased demand for a store of value. Spot gold was at $1,686.65 an ounce at 3:12 p.m. in Singapore after swinging between gains and losses. The metal reached $1,694.81 yesterday, the most expensive since Dec. 18, rallying with stocks, copper and oil after U.S. lawmakers passed a bill averting automatic spending cuts and tax rises, heading off the so-called fiscal cliff that had threatened the recovery.

BREAKING NEWS GLOBAL •

Budget Deal Lets More Savers Switch to Roth 401(k). U.S. workers willing to take tax pain today in exchange for tax-free gains on earnings in their 401(k) retirement accounts later have a new avenue to do so. The budget legislation passed by Congress Jan. 1 lets 401(k) participants convert any money in their tax-deferred accounts to a so-called Roth 401(k) account, if their employer offers one, which can be withdrawn tax-free in retirement. The change is projected to raise $12.2 billion in revenue over 10 years, according to the Joint Committee on Taxation, and help defray the cost of delaying spending cuts that had been set to take effect this month. The conversion opportunity can benefit people with significant balances, the up-front money to pay taxes now with


funds outside their retirement account and years of tax-free earnings ahead of them or their heirs. Conversions to Roth 401(k)s had been limited to certain funds and to plans that allowed the switches. The law opens the opportunity to more workers who hold $5 trillion in employer-sponsored defined contribution plans including 401(k)s. Basel Becomes Babel as Conflicting Rules Undermine Safety. The first Basel agreement on global banking regulation, adopted in 1988, was 30 pages long and relied on simple arithmetic. The latest update, known as Basel III, runs to 509 pages and includes 78 calculus equations. The complexity is emblematic of what happened over the past four years as governments that injected $600 billion to rescue failing banks during the worst financial crisis since the Great Depression devised ways to make the global banking system safer. Those efforts have been stymied by conflicting laws, divergent accounting standards and clashing rules adopted by nations to protect their interests, all of which have created new risks. While higher capital requirements, curbs on banks trading with their own money and other rules have reduced risk, they have magnified the complexity of supervision, according to two dozen regulators, bankers and analysts interviewed by Bloomberg News. Even if the new regulations can be enforced, they don’t go far enough to ensure safety, said Robert Jenkins, a member of the Bank of England’s financial policy committee. U.K. House Prices Fall 0.1% as Property Market Ends Fragile Year. U.K. house prices declined last month and may fall “modestly” over 2013 because of a weak economic recovery, Nationwide Building Society said. The average cost of a home slipped 0.1 percent to 162,262 pounds ($264,000) in December, the Swindon, England-based customer-owned lender said in an e-mailed report today. From a year earlier, values were down 1 percent.. Aussie, N.Z. Dollars Weaken on U.S. Debt Ceiling Concern. The Australian dollar retreated from near a two-week high as concern U.S. lawmakers will struggle to agree on raising the nation’s debt ceiling overshadowed the bill they passed to avert the socalled fiscal cliff. The Aussie slid versus most of its 16 major counterparts as officials in the world’s biggest economy turned their attention to a debate over raising the $16.4 trillion debt limit. An increase will be needed as early as mid-February, according to the U.S. Congressional Budget Office. The New Zealand dollar, also known as the kiwi, reversed a gain from yesterday as U.S. stock futures fell.

REGIONAL •

China Poised for 2013 Rebound as Debt Risks Rise for Xi. Incoming President Xi Jinping may find China’s investment-driven economic recovery in the Year of the Snake jeopardized by mounting risks in the finance industry. Gross domestic product is poised to expand 8.1 percent this year, up from 7.7 percent in 2012, according to the median estimate of economists surveyed last month by Bloomberg News. At the same time, an increase in lending fueled by trust companies and underground banks enhances the risk of loan defaults that would be “severely damaging” to the economy, Standard Chartered Plc says. The danger is that an economic rebound lulls policy makers into complacency, delaying market-driven changes needed to reduce dependence on investment for growth. Xi needs to rev up consumption and services and ensure credit is diverted from inefficient state enterprises to growth-generating private companies, said David Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department.. Japan’s Aso Targets Myanmar Markets Amid China Rivalry. Japan’s Finance Minister Taro Aso met with Myanmar’s president and senior officials today in a sign the nation plans to tap a market of 64 million people that has been dominated by China. The trip is Page 2 of 6


Aso’s first foreign visit since Prime Minister Shinzo Abe’s cabinet took office last month. It coincides with the U.S. and the United Nations expressing concern over government strikes against ethnic rebels in Myanmar’s north. Japan’s push into the nation bordering India and China may produce trade opportunities for its stagnating economy while helping Myanmar President Thein Sein meet a pledge to attract labor-intensive industries to create jobs. Competing Chinese and Japanese efforts risk further straining relations between Asia’s two biggest economies, already at odds over islands in the East China Sea. Korea Bonds Rise a Fourth Day on Rate-Cut Speculation; Won Gains. South Korea’s three-year bonds rose for a fourth day on speculation the central bank will cut interest rates as early as next week to slow gains in the won, Asia’s best-performing currency last year. Policymakers at the Bank of Korea meet Jan. 11 to review borrowing costs. The central bank kept the benchmark seven-day repurchase rate at 2.75 percent last month after cuts of 25 basis points each in July and October. The government lowered its growth forecasts for 2012 and 2013 in December. The won touched a 16-month high today, after erasing an earlier loss. Thai Billionaire Extends Deadline for F&N Offer. A group led by Overseas Union Enterprise Ltd. (OUE) extended a deadline for a S$13.1 billion ($10.7 billion) bid for Fraser & Neave Ltd., prolonging its battle with a Thai billionaire for control of the Singapore conglomerate. The OUE-led group pushed back the date on its S$9.08 per share bid to Jan. 14, according to a stock exchange statement today. Thai billionaire Charoen Sirivadhanabhakdi yesterday moved the closing date on his S$8.88 per share offer until Jan. 10.

IFIs NEWS (compiled from their websites) IMF – Press Release: Comments on U.S. “Fiscal Cliff” Measures •

The IMF has issued the following statement: “We welcome the action by the U.S. Congress to avoid sudden tax increases and spending cuts, including through an extension of unemployment benefits during 2013. In the absence of Congressional action the economic recovery would have been derailed. However, more remains to be done to put U.S. public finances back on a sustainable path without harming the still fragile recovery. Specifically, a comprehensive plan that ensures both higher revenues and containment of entitlement spending over the medium term should be approved as soon as possible. In addition, it is crucial to raise the debt ceiling expeditiously and remove remaining uncertainties about the spending sequester and expiring appropriation bills.” http://www.imf.org/external/np/sec/pr/2013/pr1301.htm

IMF – Publication: Managing Director's Interview with Maeil Business: S. Korea needs to pursue ‘different kind of growth’ to promote fairness, efficiency •

The IMF has publicised the transcript of an interview by Korea’s Maeil Business to MD Christine Lagarde. http://www.imf.org/external/np/vc/2013/010213.htm

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close close China 6.2306 6.2322 Hong Kong 7.7503 7.7514

2-Jan 6.2331 7.7507

3-Jan 6.2325 7.7513

% change 0.01 -0.01

2013 YTD (%chg)

0.0 0.0

Page 3 of 6


Indonesia 9,793.0 9,679.0 9,653.0 9,653.0 Japan 86.75 85.96 87.34 87.13 Korea 1,064.4 1,070.5 1,063.6 1,061.7 Malaysia 3.058 3.0613 3.0354 3.0308 Philippines 41.005 41.005 40.852 40.735 Singapore 1.2218 1.2239 1.2205 1.2218 Thailand 30.6 30.6 30.3 30.4 Vietnam 20,840.0 20,840.0 20,840.0 20,843.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

0.00 0.24 0.18 0.15 0.29 -0.11 -0.07 -0.01

0.0 0.2 0.2 0.2 0.3 -0.1 -0.1 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7 3,191.8 1,391.9 413.7

2-Jan

3-Jan

2,269.1 23,312.0 4,346.5 10,395.2 2,031.1 1,674.7 5,861.0 3,201.7 1,407.5 418.4

OVERNIGHT LENDING RATE (%) 2-Jan 3-Jan bps change 3.860 3.860 0.00 0.096 0.096 0.00 4.224 4.212 -1.16 0.095 0.095 0.00 2.750 2.750 0.00 3.000 3.000 0.00 -3.660 0.499 415.90 0.019 0.019 0.00 2.750 2.750 0.00 4.500 4.357 -14.30

% change

2,269.1 23,398.6 4,399.3 10,395.2 2,019.4 1,692.7 5,934.1 3,224.8 1,411.4 419.3

0.00 0.37 1.21 0.00 -0.58 1.07 1.25 0.72 0.28 0.22

2013 YTD (%chg) 0.0 0.4 1.2 0.0 -0.6 1.1 1.2 0.7 0.3 0.2

3-MONTH INTERBANK LENDING RATE (%) 2-Jan 3-Jan bps change 3.900 3.900 0.00 0.398 0.398 0.00 4.992 4.994 0.12 0.309 0.309 0.00 2.870 2.870 0.00 3.210 3.210 0.00 -0.081 0.032 11.30 0.377 0.377 0.00 2.866 2.867 0.08 7.287 7.610 32.30

CREDIT DEFAULT SWAP (IN BPS) 2-Jan 3-Jan bps change China 60.21 58.59 -1.62 Hong Kong 50.50 43.50 -7.00 Indonesia 129.80 126.65 -3.14 Japan 76.66 76.45 -0.21 Korea 61.00 59.65 -1.35 Malaysia 71.93 70.50 -1.43 Philippines 101.00 97.67 -3.33 Thailand 89.96 85.84 -4.11 Vietnam 203.27 203.00 -0.27 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.

Gold Spot (in US$ per ounce)

2-Jan 1,686.9

3-Jan

% change

1,685.9

-0.06

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan

S&P AAAAA BB+ AA-

Moody's Aa3 Aa1 Baa3 --

Fitch A+ AA+ BBBAA

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Korea Malaysia Philippines Singapore Thailand Vietnam

A ABB+ AAA BBB+ BB-

Aa3 A3 Ba1 -Baa1 B1

A+ ABB+ AAA BBB B+

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

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec n.a n.a n.a n.a n.a 139.2 n.a n.a 182.4 n.a

EXTERNAL LIQUIDITY RATIOS Reserves - latest (US$bn)

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

3 months imports of goods & services (US$bn)

3,285.1 305.2 111.3 1,270.9 326.1 139.2 83.9 255.8 182.4 20.0

504.3 139.0 50.5 70.9 150.9 58.0 19.7 118.2 67.1 29.9

Short-term external debt (US$bn)

588.2 736.2 38.3 2,332.3 132.6 35.4 7.0 923.9 58.9 6.9

DATA RELEASES FOR THE DAY

Country

HONG KONG HONG KONG INDONESIA INDONESIA

Indicators

Retail Sales - Volume (YoY)% Retail Sales - Value (YoY)% Net Foreign Assets (IDR Tln) Foreign Reserves (USD bn)

Import cover (Qtrs of imports covered by reserves)

Nov Nov Dec Dec

Period

Reserves over short-term debt

6.5 2.2 2.2 17.9 2.2 2.4 4.3 2.2 2.7 -

5.6 0.4 2.9 0.5 2.5 3.9 11.9 0.3 3.1 -

Last

Previous

8.1 9.5

3.6 4.0 1034.39 111.29

SELECTED ECONOMIC RELEASES CALENDAR (31 December 2012 – 4 January 2013)

Expected Release Date

12/31/2012

1/1/2013

1/2/2013

Country

SOUTH KOREA HONG KONG SOUTH KOREA SOUTH KOREA CHINA CHINA SOUTH KOREA SOUTH KOREA INDONESIA THAILAND THAILAND SOUTH KOREA

Indicators

Consumer Price Index (YoY)% Govt Mthly Budget Surp/Def (HKD bn) Core Consumer Price Index(YoY)% Consumer Price Index (MoM)% HSBC Manufacturing PMI PMI Manufacturing Ext Trade - Imports (YoY)% Ext Trade - Export (YoY)% Core Inflation (YoY)% Consumer Price Index (YoY)% Core CPI (YoY)% HSBC Manufacturing PMI

Period

Dec Nov Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec

Page 5 of 6


1/3/2013

1/4/2013

INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA SINGAPORE SINGAPORE HONG KONG HONG KONG INDONESIA INDONESIA SOUTH KOREA SOUTH KOREA HONG KONG CHINA JAPAN

Total Imports (YoY)% Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) GDP (YoY)% GDP (QoQ)% Retail Sales - Volume (YoY)% Retail Sales - Value (YoY)% Net Foreign Assets (IDR Tln) Foreign Reserves (USD bn) Foreign Exchange Reserve (USD bn) South Korea FDI (YoY)% Purchasing Managers Index China HSBC Services PMI Official Reserve Assets (USD bn)

Nov Nov Dec Dec Nov 4Q A 4Q A Nov Nov Dec Dec Dec 4Q Dec Dec Dec

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.

Page 6 of 6


MARKET UPDATE FOR ASEAN+3 4 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

European Stocks Fall as Fed Sees End to Bond Purchases. European (SXXP) stocks fell before U.S. jobs data and as Federal Reserve minutes showed some policy makers said it may be appropriate to end the $85 billion monthly bond- purchase program in 2013. U.S. index futures were little changed, while Asian shares outside Japan dropped. The Stoxx Europe 600 Index lost 0.2 percent to 286.36 at 8:05 a.m. in London. Futures on the Standard & Poor’s 500 Index expiring in March were little changed, while the MSCI Asia Pacific Excluding Japan Index retreated 0.5 percent. Treasuries Fall a Fourth Day as Economists See Job Gains. Treasuries dropped for a fourth day, making them the world’s worst-performing bonds, as economists said a report will show the U.S. unemployment rate held at the lowest level since 2008. Government securities maturing in 10 years and longer handed investors a 4.72 percent loss in the past month, the biggest decline of 144 debt indexes tracked by Bloomberg and the European Federation of Financial Analysts Societies. Treasuries headed for their steepest weekly drop since March as lawmakers passed a budget to avert taxes and spending cuts that threatened to throw the economy into recession, while the Federal Reserve said it will probably end monthly debt purchases this year. Asian Stocks Outside Japan Decline on Fed; Nikkei Jumps. Asian stocks outside Japan fell, paring the biggest weekly advance in more than a month, after Federal Reserve policy makers said they will probably end their $85 billion monthly bond-purchase program sometime this year. Japanese equities jumped as markets reopened from holidays. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) declined 0.7 percent to 475.18 as of 4:41 p.m. in Tokyo, trimming the week’s advance to 1.91 percent. The measure advanced 1.94 percent in the period ending Nov. 30. Japan’s Nikkei 225 Stock Average (NKY) gained 2.8 percent on its first trading day of 2013 after U.S. lawmakers passed a bill averting spending cuts and tax increases scheduled to come into effect this year. Oil Slips a Second Day in New York on U.S. Jobless Claims. Oil trimmed its fourth weekly gain after U.S. Federal Reserve policy makers signaled they may end a stimulus program this year, raising concern the economic recovery may falter in the world’s biggest crude user. Prices dropped as much as 0.9 percent, trimming crude’s weekly increase to 1.4 percent. Members of the Federal Open Market Committee said they will probably end their $85 billion monthly bond purchases sometime in 2013, according to minutes of its latest meeting released yesterday. The U.S. unemployment rate may have held at 7.7 percent, the lowest since December 2008, according to the median forecast of economists surveyed by Bloomberg ahead of a Labor Department report today. Gold Seen Rallying From Worst Streak in Eight Years. Gold traders expect prices to rebound from the longest weekly losing streak in eight years as mounting concern that U.S. lawmakers are doing too little to control the budget deficit spurs demand for a protection of wealth. Twenty analysts surveyed by Bloomberg expect prices to rise next week, five were bearish and a further two were neutral. While hedge funds cut bullish bets to a four-month low last week as prices slid for a fifth week, investors are holding a near- record amount in gold-backed exchange-traded products that are now valued at $138.9 billion, data compiled by Bloomberg show.


BREAKING NEWS GLOBAL •

Fed Debated QE End in 2013 Amid Concern Over Total Assets. Federal Reserve officials, expressing concern over their swelling balance sheet, began debating an end to their unprecedented bond-buying as early as this year even while preparing to boost stimulus to a new record. “Several” members of the Federal Open Market Committee said it would “probably be appropriate to slow or stop purchases well before the end of 2013,” according to minutes of their Dec. 11-12 meeting released yesterday. A “few” others were willing to let the program run to the end of the year while “a few others” didn’t give a time frame. Chairman Ben S. Bernanke is exploring the timing for concluding his four-year campaign to cut borrowing costs and combat unemployment through unorthodox monetary easing. The FOMC minutes reveal concern over the challenge of shrinking a balance sheet that may grow to more than $4 trillion while potentially distorting financial markets and providing less kick to growth. German Retail Sales Rise as Jobless Rate Near Record Low. German retail sales rose in November as unemployment close to a two-decade low encouraged spending. Sales, adjusted for inflation and seasonal swings, increased 1.2 percent from October, when they dropped 1.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a 0.8 percent gain, according to the median of 16 estimates in a Bloomberg News survey. Sales fell 0.9 percent from a year earlier. The statistics office said overall in 2012 sales fell between 0.1 percent and 0.3 percent against the previous year, after inflation was taken into account. German unemployment increased less than economists predicted in December and the jobless rate held at 6.9 percent even as Europe’s debt crisis curbed investment and spending. Business confidence improved for a second month in December after factory orders and exports rose, signaling the country is unlikely to slide into recession. U.K.’s Labour to Strip Benefits From Unemployed If Job Refused. The U.K.’s opposition Labour Party called for a compulsory jobs guarantee for the long-term unemployed, making state welfare payments dependent on paid employment. The party’s treasury spokesman, Ed Balls, said the guarantee would initially be for adults who are out of work for 24 months or more, though Labour would seek to reduce this to 18 or 12 months over time. The party said there are currently 129,400 adults over the age of 25 who have been out of work for 24 months or more, a rise of 88 percent in a year. To pay for the jobs guarantee, which Balls estimates would cost 1 billion pounds ($1.6 billion), he would reverse Prime Minister David Cameron’s decision not to limit tax relief to 20 percent on pension contributions for people earning over 150,000 pounds a year.. Aussie Dollar Falls as China, Australia Indexes Decline. Australia’s dollar fell against its U.S. counterpart, trimming a weekly gain, after service-industry indexes in the South Pacific nation and China declined. Australian bonds dropped, pushing benchmark 10year yields to the highest in more than four months after gains in Asian stocks curbed demand for haven assets. The so-called Aussie and New Zealand’s dollar were supported against the yen amid speculation the Japan’s central bank will boost stimulus to weaken its currency..

REGIONAL •

China Services Growth Slows Even as New Business Picks Up. China’s services industries’ growth slowed in December, a private survey showed, even as a pickup in new business added to the likelihood that the economy accelerated for the first time in Page 2 of 6


eight quarters. The services Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics today was at 51.7 after 52.1 in November. Companies added workers at the fastest pace in more than two years and were “optimistic” business would improve, HSBC said in a statement. Japan Stocks Jump as Market Reopens, Yen Lifts Exporters. Japanese stocks advanced, with the Nikkei 225 Stock Average closing at its highest since March 2011, as shares chased gains among Asian markets following a four-day holiday and a weaker yen boosted the earnings outlook for exporters including Toyota Motor Corp. Toyota jumped 6.4 percent as Japan’s currency fell to its lowest since July 2010 against the dollar. Fanuc Corp. (6954), which supplies robots used in Chinese factories, climbed 3.9 percent after a manufacturing report earlier this week added to signs the world’s second-largest economy is recovering. Japan Exchange Group Inc., created by the merger of the country’s two biggest bourses, plunged 9.7 percent in its Tokyo trading debut. The Nikkei 225 climbed 2.8 percent to close at 10,688.11 in Tokyo, gaining the most on an opening day since 2002. The broader Topix Index climbed 3.3 percent to 888.51. Japanese shares caught up with a rally in Asian markets this week that came after the U.S. Congress passed legislation to avert more than $600 billion in automatic tax increases and spending cuts that might have pushed the economy into a recession.. Won, Ringgit Lead Weekly Advance in Asia on U.S. Budget Deal. South Korean’s won and Malaysia’s ringgit led gains in Asian currencies this week after the U.S. averted $600 billion of tax increases and spending cuts, easing the risk of a slowdown in the world’s largest economy. The Bloomberg-JPMorgan Asia Dollar Index touched a 16-month high yesterday and regional stocks rallied 1.8 percent in the last four days after Congress passed a bill on Jan. 1 that makes the George W. Bush-era income-tax cuts permanent for most workers, while letting them expire for top earners. Regional currencies fell today after minutes of a Federal Reserve meeting released yesterday in Washington indicated a probable end to the monetary authority’s bond-buying program this year. South Korea Cites Bias in Move to Ban Japanese Ship Lines. South Korea’s government is moving to bar foreign shipping lines from contracts in the state-run energy sector as it supports domestic companies struggling to recover from the global downturn. Statecontrolled Korea Electric Power Corp. (KEP) on Dec. 21 held an auction for its five units that effectively restricted participants to domestic shipping lines for the first time. The contracts, worth about $2 billion, require bidders to partner with another South Korean company and build nine ships in local shipyards that will carry coal from such countries as Australia. South Korea’s biggest shipping lines may be set to benefit from the restrictions after Hanjin Shipping Co. (117930), Hyundai Merchant Marine Co. (011200) and STX Pan Ocean Co. (028670) posted losses in the first nine months of 2012. The move also threatens to further heighten economic tensions with Japan, whose carriers hauled about 25 percent of South Korea’s coal shipments in 2011.

IFIs NEWS (compiled from their websites) IMF – Publication: “Anti-Money Laundering and Combating the Financing of Terrorism Inclusion in Surveillance and Financial Stability Assessments - Guidance Note” •

The IMF has publicised the captioned policy paper. “This note provides guidance on the inclusion of AML/CFT issues in surveillance and financial stability assessments (FSAs). Specifically, it provides a framework for the treatment of cases where money laundering or terrorist financing (ML/TF) and related underlying crimes (i.e., “predicate crimes” or “predicate offenses”) are so serious as to threaten domestic stability, Page 3 of 6


balance of payments stability, the effective operation of the International Monetary System—IMS— (in the case of Article IV surveillance), or the stability of the domestic financial system (in the case of FSAs).” http://www.imf.org/external/np/pp/eng/2012/121412a.pdf IMF – Working Paper: “Growth Forecast Errors and Fiscal Multipliers” •

The IMF has publicised the captioned working paper. “This paper investigates the relation between growth forecast errors and planned fiscal consolidation during the crisis. We find that, in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected, with the relation being particularly strong, both statistically and economically, early in the crisis. A natural interpretation is that fiscal multipliers were substantially higher than implicitly assumed by forecasters. The weaker relation in more recent years may reflect in part learning by forecasters and in part smaller multipliers than in the early years of the crisis.” http://www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 3-Jan 4-Jan close China 6.2306 6.2322 6.2325 6.2306 Hong Kong 7.7503 7.7514 7.7507 7.7515 Indonesia 9,793.0 9,679.0 9,653.0 9,788.0 Japan 86.75 85.96 87.24 88.22 Korea 1,064.4 1,070.5 1,061.7 1,063.7 Malaysia 3.058 3.0613 3.0308 3.0468 Philippines 41.005 41.005 40.735 40.925 Singapore 1.2218 1.2239 1.226 1.2291 Thailand 30.6 30.6 30.4 30.5 Vietnam 20,840.0 20,840.0 20,840.0 20,843.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.03 -0.01 -1.38 -1.11 -0.19 -0.53 -0.46 -0.25 -0.36 -0.01

2013 YTD (%chg)

0.0 0.0 -1.4 -1.0 0.0 -0.4 -0.2 -0.7 -0.6 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7 3,191.8 1,391.9 413.7

3-Jan 2,269.1 23,398.6 4,399.3 10,395.2 2,019.4 1,692.7 5,934.1 3,224.8 1,408.4 419.3

OVERNIGHT LENDING RATE (%) 3-Jan 4-Jan bps change 3.860 2.440 -142.00 0.096 0.096 0.00 4.212 4.208 -0.44 0.095 0.095 0.00 2.750 2.750 0.00 3.000 3.000 0.00 0.499 1.187 68.80 0.019 0.019 0.00 2.750 2.750 0.00 4.357 4.125 -23.20

4-Jan 2,277.0 23,331.1 4,410.0 10,688.1 2,011.9 1,692.6 5,971.5 3,223.8 1,414.4 426.1

% change 0.35 -0.29 0.24 2.82 -0.37 0.00 0.63 -0.03 0.43 1.62

2013 YTD (%chg) 0.3 0.1 1.5 2.8 -0.9 1.1 1.9 0.7 0.5 1.8

3-MONTH INTERBANK LENDING RATE (%) 3-Jan 4-Jan bps change 3.900 3.900 0.04 0.398 0.398 0.00 4.994 4.979 -1.44 0.309 0.309 0.00 2.870 2.870 0.00 3.210 3.210 0.00 0.032 0.172 14.00 0.377 0.377 0.00 2.867 2.868 0.08 7.610 6.750 -86.00

Page 4 of 6


CREDIT DEFAULT SWAP (IN BPS) 3-Jan 4-Jan bps change China 58.90 56.50 -2.40 Hong Kong 43.50 43.42 -0.09 Indonesia 125.45 125.82 0.37 Japan 75.50 75.74 0.24 Korea 59.64 58.34 -1.30 Malaysia 69.55 69.50 -0.05 Philippines 97.58 97.34 -0.25 Thailand 86.15 86.01 -0.14 Vietnam 200.81 204.02 3.22 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. 3-Jan Gold Spot (in US$ per ounce)

4-Jan

1,664.0

% change

1,640.0

-1.44

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec n.a n.a n.a n.a 327.0 139.2 n.a n.a 181.6 n.a

EXTERNAL LIQUIDITY RATIOS

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

Reserves latest

3 months imports of goods & services

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

3,285.1 305.2 111.3 1,270.9 327.0 139.2 83.9 255.8 181.6 20.0

504.3 139.0 50.5 70.9 150.9 58.0 19.7 118.2 67.1 29.9

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 6.9

Import cover (Qtrs of imports covered by reserves) 6.5 2.2 2.2 17.9 2.2 2.4 4.3 2.2 2.7 -

Reserves over short-term debt 5.7 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

Page 5 of 6


DATA RELEASES FOR THE DAY

Country

SOUTH KOREA THAILAND HONG KONG CHINA PHILIPPINES

Indicators

Foreign Exchange Reserve (USD bn) Foreign Reserves (USD bn) Purchasing Managers Index China HSBC Services PMI Consumer Price Index (YoY)%

Period

Dec Dec 28 Dec Dec Dec

Last

Previous

326.97 181.6 51.7 51.7 2.9

326.09 182.4 52.2 52.1 2.8

SELECTED ECONOMIC RELEASES CALENDAR (31 December 2012 – 4 January 2013)

Expected Release Date

12/31/2012

1/1/2013

1/2/2013

1/3/2013

1/4/2013

Country

SOUTH KOREA HONG KONG SOUTH KOREA SOUTH KOREA CHINA CHINA SOUTH KOREA SOUTH KOREA INDONESIA THAILAND THAILAND SOUTH KOREA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA SINGAPORE SINGAPORE HONG KONG HONG KONG INDONESIA INDONESIA SOUTH KOREA THAILAND HONG KONG CHINA PHILIPPINES

Indicators

Consumer Price Index (YoY)% Govt Mthly Budget Surp/Def (HKD bn) Core Consumer Price Index(YoY)% Consumer Price Index (MoM)% HSBC Manufacturing PMI PMI Manufacturing Ext Trade - Imports (YoY)% Ext Trade - Export (YoY)% Core Inflation (YoY)% Consumer Price Index (YoY)% Core CPI (YoY)% HSBC Manufacturing PMI Total Imports (YoY)% Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) GDP (YoY)% GDP (QoQ)% Retail Sales - Volume (YoY)% Retail Sales - Value (YoY)% Net Foreign Assets (IDR Tln) Foreign Reserves (USD bn) Foreign Exchange Reserve (USD bn) Foreign Reserves (USD bn) Purchasing Managers Index China HSBC Services PMI Consumer Price Index (YoY)%

Period

Dec Nov Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Nov Nov Dec Dec Nov 4Q A 4Q A Nov Nov Dec Dec Dec Dec 28 Dec Dec Dec

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.

Page 6 of 6


MARKET UPDATE FOR ASEAN+3 7 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Asian Stocks Drop After Seven-Week Rally. Asian stocks fell, with the regional benchmark retreating after posting its longest streak of weekly gains since March last year. The MSCI Asia Pacific Index fell 0.3 percent to 131.56 as of 4:25 p.m. Tokyo time, erasing gains of as much as 0.3 percent earlier and heading for its first decline in five days. The gauge posted its seventh weekly advance last week, the longest winning streak since March last year, after U.S. Congress approved a budget deal and manufacturing reports from China and the U.S. added to signs of a global recovery. Japan’s Nikkei 225 Stock Average slipped 0.8 percent, after gaining 2.8 percent on Jan. 4, the best opening day for the gauge since 2002. Australia’s S&P/ASX 200 Index (AS51) lost 0.1 percent, while South Korea’s Kospi Index was little changed. Hong Kong’s Hang Seng Index swung between gains and losses. China’s Shanghai Composite Index added 0.4 percent. The Philippine Stock Exchange Index climbed 1.2 percent to a record close.

Oil Falls in New York After Biggest Weekly Gain in Four Months. Oil fell in New York on speculation the biggest weekly advance in almost four months was excessive even amid signs of economic growth in the U.S., the world’s biggest crude consumer. Crude for February delivery declined as much as 53 cents to $92.56 a barrel and was at $92.62 in electronic trading on the New York Mercantile Exchange at 4:06 p.m. Singapore time. The contract rose 17 cents to $93.09 on Jan. 4, the highest settlement since Jan. 2. Prices slid 7.1 percent last year.

BREAKING NEWS GLOBAL •

Banks Win Watered Down Liquidity Rule to Prevent Lending Squeeze. Global central bank chiefs agreed to water down and delay a planned bank liquidity rule to counter warnings that the proposal would strangle lending and stifle the economic recovery. Lenders will be allowed to use an expanded range of assets including some equities and securitized mortgage debt to meet the so-called liquidity coverage ratio (or LCR), following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. Banks will also have an extra four years to fully comply with the measure. The LCR would force banks to hold enough easy-to-sell assets to survive a 30-day credit squeeze. It’s a key component of a package of capital and liquidity measures, known as Basel III, drawn up to avoid a repeat of the 2008 financial crisis. Under yesterday’s deal, banks’ would only have to meet 60 percent of the LCR obligations by 2015, and the full rule would be phased in annually through 2019, according to an e-mailed statement from the Group of Governors and Heads of Supervision.


U.K. Companies More Optimistic on Economy in 2013, Surveys Show. U.K. businesses are more optimistic on the economic outlook this year as tensions related to the euroregion debt crisis ease, according to separate surveys of finance directors and manufacturing executives published today. Chief financial officers at some of Britain’s biggest companies see a 40 percent chance of the economy falling back into recession, down from about 43 percent in the third quarter, according to a survey by Deloitte LLP published in London today. Britain’s economy is likely to return to growth this year, according to a Bloomberg News survey of economists last month. Still, services unexpectedly shrank for the first time in two years in December and a construction index fell to a six-month low, clouding the economic outlook. Manufacturers expect the improvement this year will be driven by exports, with half of companies predicting growth in overseas sales.

REGIONAL •

Abe Seen Spending 12 Trillion Yen to Boost Japan’s Economy. The Japanese government will announce around 12 trillion yen ($136 billion) in fiscal stimulus measures to boost the nation’s shrinking economy, Japanese media reported today. The extra budget for this fiscal year through March will include 5-6 trillion yen for public works spending, the Yomiuri newspaper reported. Prime Minister Shinzo Abe told business leaders today that he hopes to compile the stimulus measures this week. The spending may help to accelerate a recovery from recession as Abe pledges to boost growth and end deflation in the world’s third-largest economy. While Japan’s public debt is more than twice gross domestic product, Finance Minister Taro Aso said last week that the government doesn’t need to adhere to a 44 trillion-yen cap on new bond issuance in this fiscal year.

Korea Seen Resisting Rate Cut as Won Threatens Exports. The Bank of Korea may refrain from cutting rates at its first meeting since President Park Geun Hye’s election even as Asia’s best-performing currency of the past year threatens exports and a weakening yen aids Japan. All 10 economists surveyed by Bloomberg News forecast borrowing costs will remain at 2.75 percent on Jan. 11. At the same time, seven of 16 economists in a separate survey see a 25 basis-point reduction by March. The government led by incoming President Park already plans a fiscal boost in the first half of the year by allocating 72 percent of budget spending for 2013, or $200 billion. South Korea’s currency is up 9.3 percent against the dollar. “The economy is on a recovery path but the tepid momentum is making policy makers pretty nervous, as their latest decision on fiscal front-loading suggests,” said Lee Sang Jae, a senior economist at Hyundai Securities Co. in Seoul. “We may see a rate cut in March or April if there is no clear sign of faster and sustained economic recovery.”

Page 2 of 6


Rupiah Drops Most in Seven Months on Concern Inflows Will Slow. Indonesia’s rupiah dropped the most in seven months on concern capital inflows will slow after the Federal Reserve said it may halt its stimulus program, and as the current-account gap worsens amid falling exports. Indonesia’s exports contracted for an eighth month in November. Its current account shortfall was likely 2.5 percent of gross domestic product last year, more than the central bank forecast of 2.4 percent, Barclays Plc economist said last week. “The rupiah is still on a depreciating trend,” said Raditya Ariwibowo, a Jakartabased treasury analyst at PT Bank Negara Indonesia. “Inflows will slow after the Fed halts its stimulus, while exports continue falling as long as the global economy remains soft.” The rupiah fell 1.4 percent to 9,793 per dollar as of 9:11 a.m. in Jakarta, the biggest decline since June 7, prices from local banks compiled by Bloomberg show. The currency touched 9,800, the lowest level since Sept. 15, 2009.

Japan's Government Pushes New Business Role in Myanmar. Taro Aso, a week after becoming Japan's new finance minister, put aside pressing domestic issues for a trip to Myanmar to cement Tokyo's role in the largely untapped market. During his three-day stay, the 72-year-old Mr. Aso held talks with decision makers including President Thein Sein. Mr. Aso confirmed to Mr. Thein Sein that Japan would waive much of its ¥500 billion ($6 billion) in debt claims and would offer ¥50 billion in fresh loans, building on a commitment from the previous Japanese government, despite concerns from some Western countries that it is acting too hastily to build ties with Myanmar's militarydominated government. Japan is using its official yen loan programs to help Japanese businesses crack open the market. Last month, Japan won a contract to develop Thilawa, one of the three pioneer special economic zones in Myanmar.

IFIs NEWS (compiled from their websites) Basel Committee– Press Release: Basel Committee on Banking Supervision (BCBS) Charter •

The Group of Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision, have endorsed a new Charter for the Committee http://www.bis.org/bcbs/charter.htm

Basel Committee– Press Release: Group of Governors and Heads of Supervision endorses revised liquidity standard for banks •

The Group of Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision, have met to consider the Basel Committee's amendments to the Liquidity Coverage Ratio (LCR) as a minimum standard. It unanimously endorsed them. This agreement is a clear commitment to ensure that banks hold sufficient liquid assets to prevent central banks becoming the "lender of first resort". http://www.bis.org/press/p130106.htm

Page 3 of 6


Basel Committee – Speech: Speaking note from a press conference following a meeting of the GHOS •

The Basel Committee on Banking Supervision has publicised the script of the remarks by Mervyn King, Chairman of the Governors and Heads of Supervision (GHOS) and Governor of the Bank of England, at a press conference, Bank for International Settlements, Basel, 6 January 2013. http://www.bis.org/speeches/sp130106.htm

BIS – Statistics: Statistics on payment, clearing and settlement systems in the CPSS countries - Figures for 2011 •

The BIS has issued an annual publication that provides data on payments and payment, clearing and settlement systems in the CPSS countries. This version of the statistical update contains data for 2011 and earlier years. There are detailed tables for each individual country as well as a number of comparative tables. http://www.bis.org/publ/cpss107.htm

IFIs NEWS (compiled from their websites) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 4-Jan 7-Jan close China 6.2306 6.2306 6.2306 6.2298 Hong Kong 7.7503 7.7513 7.7513 7.7508 Indonesia 9,793.0 9,788.0 9,788.0 9,670.0 Japan 86.75 88.15 88.15 87.71 Korea 1,064.4 1,063.7 1,063.7 1,063.8 Malaysia 3.058 3.0468 3.0468 3.0427 Philippines 41.005 40.925 40.925 40.913 Singapore 1.2218 1.2272 1.2272 1.2323 Thailand 30.6 30.5 30.5 30.5 Vietnam 20,840.0 20,843.0 20,843.0 20,840.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.01 0.01 1.22 0.50 -0.01 0.13 0.03 -0.41 -0.03 0.01

2013 YTD (%chg)

0.1 0.0 -0.2 -0.4 0.0 -0.2 -0.1 -1.0 -0.5 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7 3,191.8 1,391.9 413.7

4-Jan 2,277.0 23,331.1 4,410.0 10,688.1 2,011.9 1,692.6 5,971.5 3,225.2 1,416.7 426.1

OVERNIGHT LENDING RATE (%) 4-Jan 7-Jan bps change 2.440 2.120 -32.00 0.096 0.097 0.07 4.208 4.197 -1.04 0.095 0.098 0.25 2.750 2.750 0.00 3.000 3.000 0.00

7-Jan 2,285.4 23,329.8 4,392.4 10,599.0 2,011.3 1,694.2 6,044.9 3,223.1 1,420.1 434.2

% change 0.37 -0.01 -0.40 -0.83 -0.03 0.09 1.23 -0.07 0.24 1.91

2013 YTD (%chg) 0.7 0.1 1.1 2.0 -1.0 1.2 3.1 0.7 0.9 3.8

3-MONTH INTERBANK LENDING RATE (%) 4-Jan 7-Jan bps change 3.900 3.903 0.28 0.398 0.398 0.00 4.979 4.958 -2.08 0.309 0.309 0.00 2.860 2.860 0.00 3.210 3.210 0.00

Page 4 of 6


Philippines Singapore Thailand Vietnam

1.187 0.023 2.750 4.125

-1.089 0.023 2.750 3.583

-227.60 0.00 0.00 -54.20

0.172 0.377 2.868 6.750

0.016 0.377 2.868 7.000

-15.60 0.00 0.00 25.00

CREDIT DEFAULT SWAP (IN BPS) 4-Jan 7-Jan bps change China 58.80 58.50 -0.30 Hong Kong 43.72 44.21 0.49 Indonesia 126.06 125.35 -0.71 Japan 72.56 72.09 -0.47 Korea 59.00 60.50 1.50 Malaysia 69.62 71.76 2.13 Philippines 97.22 96.00 -1.22 Thailand 86.83 86.63 -0.20 Vietnam 202.62 202.35 -0.28 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. 4-Jan Gold Spot (in US$ per ounce)

7-Jan

1,656.1

% change

1,652.6

-0.21

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec n.a 317.3 112.8 n.a 327.0 139.2 84.2 259.3 181.6 n.a

EXTERNAL LIQUIDITY RATIOS

China Hong Kong Indonesia Japan Korea Malaysia

Reserves latest

3 months imports of goods & services

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

3,285.1 317.3 112.8 1,270.9 327.0 139.2

504.3 144.7 50.5 70.9 150.9 58.0

572.8 711.2 38.3 2,255.1 132.6 32.4

Import cover (Qtrs of imports covered by reserves) 6.5 2.2 2.2 17.9 2.2 2.4

Reserves over short-term debt 5.7 0.4 2.9 0.6 2.5 4.3

Page 5 of 6


Philippines Singapore Thailand Vietnam

84.2 259.3 181.6 20.0

19.3 118.2 67.2 29.9

8.0 924.3 57.2 6.9

DATA RELEASES FOR THE DAY

Country

INDONESIA SINGAPORE PHILIPPINES HONG KONG

Indicators

Foreign Reserves (USD bn) Foreign Reserves (USD mn) Foreign Reserves (USD mn) Foreign Currency Reserves (USD bn)

Dec Dec Dec Dec

Period

4.4 2.2 2.7 -

Last

112.78 259.31 84.2 317.3

SELECTED ECONOMIC RELEASES CALENDAR (7 January 2013 – 11 January 2013)

Expected Release Date

1/7/2013

1/9/2013

1/10/2013

1/11/2013

Country

INDONESIA INDONESIA SINGAPORE PHILIPPINES HONG KONG THAILAND MALAYSIA MALAYSIA SOUTH KOREA JAPAN THAILAND CHINA CHINA CHINA CHINA PHILIPPINES INDONESIA SOUTH KOREA CHINA CHINA CHINA JAPAN JAPAN SOUTH KOREA

Indicators

Consumer Confidence Index Foreign Reserves (USD bn) Foreign Reserves (USD mn) Foreign Reserves (USD mn) Foreign Currency Reserves (USD bn) Benchmark Interest Rate Imports YoY% Exports YoY% Unemployment Rate (SA)% Official Reserve Assets (USD bn) Consumer Confidence Economic New Yuan Loans (RMB bn) Imports YoY% Exports YoY% Trade Balance (USD bn) Total Exports (YoY)% Bank Indonesia Reference Rate% Bank Lending to HH (KRW Tln) Foreign Exchange Reserves (USD bn) Consumer Price Index (YoY)% Producer Price Index (YoY)% Current Account Balance YOY% Current Account Total (JPY bn) South Korea 7-Day Repo Rate %

10.5 0.3 3.2 -

Previous

111.29 255.77 83.9 305.2

Period

Dec Dec Dec Dec Dec Jan 9 Nov Nov Dec Dec Dec Dec Dec Dec Dec Nov Jan 10 Dec Dec Dec Dec Nov Nov Jan 11

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.

Page 6 of 6


MARKET UPDATE FOR ASEAN+3 8 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Asian Stocks Drop for Second Day as Japan Exporters Fall. Asian stocks fell, sending the regional benchmark index lower for a second day, as Japanese exporters declined after the yen strengthened. The MSCI Asia Pacific Index slipped 0.7 percent to 130.55 as of 4:07 p.m. Tokyo time, erasing gains of as much as 0.3 percent. The regional benchmark gauge posted its seventh weekly advance last week, the longest winning streak since March last year, after the U.S. Congress approved a budget deal and manufacturing reports from China and the U.S. added to signs of a global recovery. The Nikkei 225 fell 0.9 percent, a second day of declines. South Korea’s Kospi Index dropped 0.7 percent, while Australia’s S&P/ASX 200 Index slid 0.6 percent. Hong Kong’s Hang Seng Index slid 0.9 percent and China’s Shanghai Composite Index retreated 0.4 percent.

Oil Trades Near Four-Month High as Run Rates, Supply Seen Rising. Oil traded near the highest level in almost four months in New York before a government report that may show refinery utilization rose and stockpiles increased in the U.S., the world’s biggest crude-consuming nation. Crude for February delivery was at $93.29 a barrel, up 10 cents, in electronic trading on the New York Mercantile Exchange at 2 p.m. Sydney time. The contract increased 10 cents to $93.19 yesterday, the highest settlement since Sept. 18.

BREAKING NEWS GLOBAL •

Wages a Balm for U.S. Workers Facing Payroll-Tax Shock. An improving job market is boosting wages and providing needed relief just as every American worker gets hit with a tax increase. Hourly earnings climbed 0.3 percent on average in December for a second month, the biggest back-to-back increase since the economic recovery began in mid-2009, Labor Department figures showed Jan. 4. Combined with a lengthening of the workweek, that brought the average weekly paycheck to $818.69, up 1.2 percent from October and the steepest two-month gain since February- March 2007, before the recession began. The boost comes just as the fiscal pact passed by Congress last week lets the payroll tax used to pay for Social Security benefits rise to 2010 levels, reducing paychecks by $41.67 from someone earning $50,000 who is paid twice a month. The higher salaries, together with the lowest gasoline prices in almost a year, will provide a lift to household spending, which accounts for about 70 percent of the world’s largest economy.

Holiday Sales Fail to Boost U.K.The holiday trading period failed to significantly boost sales in the U.K.'s struggling retail sector, data from the British Retail Consortium


showed Tuesday, adding to fears that the economy contracted in the final quarter of 2012. Total sales, which include sales at stores that have opened in the past 12 months, rose 1.5% in December, compared with an increase of 1.8% in November. Retail sales were subdued for most of 2012 as consumers remained reluctant to spend in the face of stagnant wage growth, relatively high inflation, and the government's continuing austerity measures. The subdued BRC retail-sales figures follow a survey of purchasing managers released Friday that showed activity in the U.K.'s dominant services sector fell for the first time in two years in December 2012. •

German Exports Dropped More Than Forecast in November. German exports declined more than economists forecast in November as the sovereign debt crisis weighed on euro-area demand. Exports adjusted for working days and seasonal changes fell 3.4 percent from October, when they unexpectedly rose 0.2 percent, the Federal Statistics Office in Wiesbaden said today. That’s the steepest decline in more than a year. Economists had forecast a 0.5 percent drop, according to the median of 9 estimates in a Bloomberg News survey. Imports fell 3.7 percent from October. The big problem has been subdued demand in neighboring economies, and November saw a particularly weak level of activity in other euro-area countries,” said the head of European research at Standard Chartered Bank in London. “On a positive front, we think that the German economy should grind higher in the coming quarters.”

Pakistan Seen Needing IMF Bailout as Rupee Plunges Before Vote. Pakistan may require an International Monetary Fund bailout after a tumble in foreign reserves and a plunge in its currency to a record low, as a struggling economy saps support for the government before a general election. The rupee has slid 7 percent versus the dollar in the past year, with reserves down about 19 percent to $13.8 billion on a trade gap and aid repayments. “The rupee is under serious pressure,” said an economist at Standard Chartered in Karachi. “The central bank doesn’t have the ability to defend it.” “To restore stability in the foreign-exchange markets, they need IMF endorsement,” said exCommerce Minister Mohammad Zubair Khan, now a World Bank adviser. Pakistan is evaluating a possible loan from the IMF as a buffer against shocks, Saleem H. Mandviwalla, the minister of state for finance, told reporters. An earlier, partially disbursed $11.3 billion IMF loan program expired in September 2011 after Pakistan failed to meet the conditions attached to it. The nation has to repay about $7.5 billion to the lender from 2012 to 2015, Moody’s Investors Service said in July.

Australia Posts Widest Trade Gap Since ’08 on Record Imports. Australia’s trade deficit widened in November to the most since 2008 as transport equipment helped drive imports to a record, while overseas shipments of iron ore gained in the mining-driven economy. Imports outpaced exports by A$2.64 billion ($2.77 billion), compared with a revised A$2.44 billion shortfall in October, the Bureau of Statistics said in a report in Sydney today, the widest since March 2008. The data underscore central bank Page 2 of 7


Governor Glenn Stevens’s decision to reduce interest rates four times last year as commodity prices retreated. Policy makers are trying to revive demand outside of a resources boom that may crest in the first half of 2013, while a higher currency is fueling imports. “People are happy to use the high Aussie dollar to spend where it’s affordable,” said a Sydney-based economist at JPMorgan Chase & Co. who noted a jump in imported cars. “Exports seem to be stabilizing.” Exports rose 1 percent to A$24.7 billion, while imports advanced 2 percent to A$27.3 billion. Coal shipments abroad dropped 2 percent, the report showed, while transport equipment imports surged 57 percent.

REGIONAL •

Japan to Buy ESM Bonds Using Forex Reserves to Help Weaken Yen. Japan will buy bonds issued by the European Stability Mechanism to help weaken the yen, Finance Minister Taro Aso said. The bond transactions will be funded by the country’s foreign exchange reserves, Aso told reporters today in Tokyo. The nation hasn’t decided on the purchase amount, he said. Buying ESM bonds may help Prime Minister Shinzo Abe push down the yen while avoiding criticism of his currency policies from trading partners such as the U.S. and South Korea. “The Europeans would be happy to see Japan buy ESM bonds, so Japan can avoid criticism from abroad and at the same time achieve its objective,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official. The yen pared gains after Aso’s comments, falling to as low as 87.83 per dollar. The U.S. criticized Japan for undertaking unilateral sales of the yen in 2011, after Group of Seven economies jointly intervened to weaken the currency in the aftermath of the record earthquake and tsunami that year.

Gold Lures Japan Pension Funds as Government Pledges Inflation. Japanese pension funds, the world’s second-largest pool of retirement assets after the U.S., will more than double their gold holdings in the next two years as the government seeks to target inflation to bolster economic growth, according to an adviser to the funds. Assets held by Japanese pension funds in gold-backed exchange-traded products may expand to 100 billion yen ($1.1 billion) by 2015 from less than 45 billion yen at present, said Itsuo Toshima, who represented the Tokyo office of World Gold Council for 23 years through 2011. New Prime Minister Shinzo Abe’s pledge to spur inflation to 2 percent and end the yen’s appreciation means Japanese pension funds now have to hedge against rising prices and a currency declines after two decades of stagnation. They’re set to jump into gold after 12 straight years of gains with the precious metal now 14 percent below its all-time high reached 2011. Gold priced in yen reached a record a week ago.

China growth can beat 8 percent for 20 years on reform, Lin says. China’s economy has the potential to grow annually over the next 20 years should the nation reduce support for state companies and unshackle banks, according to Lin Yifu, a former World Bank chief economist. To harness its potential, the country needs to widen income distribution and cap “widespread” corruption, he said. Lin predicted that China’s gross domestic product Page 3 of 7


will rise as much as 8.5 percent this year, driven by investment in infrastructure, upgrades of equipment and machinery, and personal consumption. China can sustain such a fast pace of growth in the long term by using technologies created in developed economies at relatively low cost, Lin said. China is following 13 other countries that have maintained an expansion rate of more than 7 percent annually for 25 years, including Singapore and South Korea, he said. Chinese banks need to be given more freedom to set interest rates, according to Lin. The current economic model sees lenders channel cheap capital to companies controlled by the government and “elites, sowing the ground for corruption,” he said.

Malaysia Funds Subway With First Exchange Bonds. Malaysia, Southeast Asia’s biggest local-currency bond market, will let retail investors fund Kuala Lumpur’s new subway as it starts marketing its first exchange-traded notes to individuals. DanaInfra Nasional Bhd., the state-owned company that’s financing the rail network, is kicking off the offerings and plans to complete the sale of Islamic bonds by Feb. 8, according to a statement today. The notes will pay a minimum profit rate of 3.7 percent, depending on demand and market interest, it said. The country joins Indonesia, Thailand and the Philippines in tapping the general public for funds and providing an alternative investment to bank deposits and equities. Malaysia sold a record amount of debt last year as companies help fund the government’s $444 billion development program to build railways, roads and power plants. Malaysia had $318 billion of debt outstanding as of Sept. 30, compared with $265 billion in Thailand and $237 billion in Singapore, according to data from the Asian Development Bank. The government’s development spending helped contribute to one of the highest levels of debt in Southeast Asia at 51.8 percent of gross domestic product. That compares with 24.1 percent in Indonesia, 50.9 percent in the Philippines and 44.9 percent in Thailand, according to data compiled by Bloomberg.

IFIs NEWS (compiled from their websites) BIS – Press Release: BIS appoints Peter Zöllner to head its Banking Department •

The BIS has announced the appointment of Peter Zöllner as Head of its Banking Department. His appointment takes effect on 1 May 2013 and is for a five-year term. Mr Zöllner's appointment fills the vacancy being created by the retirement of Günter Pleines, who has been at the BIS since 1981 and has headed its Banking Department since 2005. Mr Zöllner is currently a Member of the Governing Board and Executive Director for Financial Market Operations at the Central Bank of the Republic of Austria (OeNB). http://www.bis.org/press/p130107a.htm

BIS – Press Release: Christian Noyer to continue as Chairman of BIS Board •

The BIS has announced the re-election of Christian Noyer, Governor of the Bank of France, for a second three-year term as Chairman of the BIS Board. The term will commence on 7 March 2013 after the expiration of Mr Noyer's current term of office. He first assumed his responsibilities as Chairman of the BIS Board on 7 March 2010. Page 4 of 7


http://www.bis.org/press/p130107b.htm BIS – Publication: “Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools” •

The Basel Committee has issued the full text of the revised Liquidity Coverage Ratio (LCR) following endorsement on 6 January 2013 by its governing body - the Group of Central Bank Governors and Heads of Supervision (GHOS). The LCR is an essential component of the Basel III reforms, which are global regulatory standards on bank capital adequacy and liquidity endorsed by the G20 Leaders. http://www.bis.org/publ/bcbs238.htm (Press Release) http://www.bis.org/publ/bcbs238.pdf (Publication)

IMF – Press Release: Statement at the Conclusion of the Visit by IMF Director Masood Ahmed to Egypt •

Mr. Masood Ahmed, Director of the Middle East and Central Asia Department of the IMF, visited Cairo on January 7, 2012. At the conclusion of his visit, Mr. Ahmed made the following statement: “The IMF remains committed to support Egypt in addressing its increasing economic challenges and moving to a more inclusive model of economic growth through a socially-balanced homegrown program. I am encouraged by the authorities’ commitment to take steps necessary to achieve fiscal and external sustainability. Following our discussions today, and based on the work that is to be carried out, we agreed that an IMF technical team would visit Cairo in the coming weeks to resume discussions on possible IMF financial support.” http://www.imf.org/external/np/sec/pr/2013/pr1306.htm

IFIs NEWS (compiled from their websites) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 7-Jan 8-Jan close China 6.2306 6.2306 6.2298 6.2241 Hong Kong 7.7503 7.7513 7.7508 7.7516 Indonesia 9,793.0 9,788.0 9,670.0 9,827.0 Japan 86.75 88.15 87.79 87.4 Korea 1,064.4 1,063.7 1,063.8 1,062.9 Malaysia 3.058 3.0468 3.0427 3.0422 Philippines 41.005 40.925 40.913 40.82 Singapore 1.2218 1.2272 1.2323 1.2288 Thailand 30.6 30.5 30.5 30.4 Vietnam 20,840.0 20,843.0 20,840.0 20,840.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.09 -0.01 -1.60 0.45 0.08 0.02 0.23 0.28 0.13 0.00

2013 YTD (%chg) 0.1 0.0 -1.8 -0.1 0.1 -0.2 0.1 -0.7 -0.4 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7 3,191.8

7-Jan 2,285.4 23,329.8 4,392.4 10,599.0 2,011.3 1,694.2 6,044.9 3,223.1

8-Jan 2,276.1 23,111.2 4,397.5 10,508.1 1,997.9 1,687.3 6,048.9 3,205.1

% change -0.41 -0.94 0.12 -0.86 -0.66 -0.41 0.07 -0.56

2013 YTD (%chg) 0.3 -0.9 1.2 1.1 -1.6 0.7 3.2 0.1

Page 5 of 7


Thailand Vietnam

1,391.9 413.7

1,391.9 413.7

1,420.1 434.2

OVERNIGHT LENDING RATE (%) 7-Jan 8-Jan bps change 2.120 1.620 -50.00 0.097 0.097 0.00 4.197 4.188 -0.96 0.098 0.100 0.25 2.750 2.750 0.00 3.000 3.000 0.00 -1.089 0.370 145.90 0.029 0.029 0.00 2.750 2.750 0.00 3.583 3.450 -13.30

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

1,416.9 447.2

-0.23 2.99

0.7 6.9

3-MONTH INTERBANK LENDING RATE (%) 7-Jan 8-Jan bps change 3.903 3.903 0.01 0.398 0.398 0.00 4.958 4.960 0.12 0.309 0.309 0.00 2.860 2.850 -1.00 3.210 3.210 0.00 0.016 -0.078 -9.40 0.377 0.377 0.00 2.868 2.868 0.00 7.000 6.875 -12.50

CREDIT DEFAULT SWAP (IN BPS) 7-Jan 8-Jan bps change China 58.50 60.00 1.50 Hong Kong 43.81 42.50 -1.31 Indonesia 124.31 129.82 5.51 Japan 70.93 72.42 1.49 Korea 60.40 62.18 1.78 Malaysia 68.40 73.00 4.60 Philippines 94.50 96.67 2.17 Thailand 86.50 86.99 0.49 Vietnam 201.88 205.33 3.44 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. 7-Jan Gold Spot (in US$ per ounce)

8-Jan

1,646.9

% change

1,651.5

0.28

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec n.a 317.3 112.8 n.a 327.0 139.2 84.2 259.3 181.6 n.a

Page 6 of 7


EXTERNAL LIQUIDITY RATIOS

Reserves latest

3 months imports of goods & services

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

3,285.1 317.3 112.8 1,270.9 327.0 139.2 84.2 259.3 181.6 20.0

504.3 144.7 50.5 70.9 150.9 58.0 19.3 118.2 67.2 29.9

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 6.9

DATA RELEASES FOR THE DAY

Country

Indicators

INDONESIA

Consumer Confidence Index

Dec

Import cover (Qtrs of imports covered by reserves) 6.5 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

Period

Last

116.4

SELECTED ECONOMIC RELEASES CALENDAR (7 January 2013 – 11 January 2013)

Expected Release Date

1/7/2013

1/9/2013

1/10/2013

1/11/2013

Country

INDONESIA INDONESIA SINGAPORE PHILIPPINES HONG KONG THAILAND MALAYSIA MALAYSIA SOUTH KOREA JAPAN THAILAND CHINA CHINA CHINA CHINA PHILIPPINES INDONESIA SOUTH KOREA CHINA CHINA CHINA JAPAN JAPAN SOUTH KOREA

Indicators

Consumer Confidence Index Foreign Reserves (USD bn) Foreign Reserves (USD mn) Foreign Reserves (USD mn) Foreign Currency Reserves (USD bn) Benchmark Interest Rate Imports YoY% Exports YoY% Unemployment Rate (SA)% Official Reserve Assets (USD bn) Consumer Confidence Economic New Yuan Loans (RMB bn) Imports YoY% Exports YoY% Trade Balance (USD bn) Total Exports (YoY)% Bank Indonesia Reference Rate% Bank Lending to HH (KRW Tln) Foreign Exchange Reserves (USD bn) Consumer Price Index (YoY)% Producer Price Index (YoY)% Current Account Balance YOY% Current Account Total (JPY bn) South Korea 7-Day Repo Rate %

Reserves over short-term debt 5.7 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 Previous

120.1

Period

Dec Dec Dec Dec Dec Jan 9 Nov Nov Dec Dec Dec Dec Dec Dec Dec Nov Jan 10 Dec Dec Dec Dec Nov Nov Jan 11

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.

Page 7 of 7


MARKET UPDATE FOR ASEAN+3 9 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Asian Stocks Climb on U.S. Earnings. Asian stocks climbed, halting a two- day retreat, as Japan’s Nikkei 225 (NKY) Stock Average reversed losses after the yen weakened. The MSCI Asia Pacific Index climbed 0.4 percent to 131.28 as of 3:30 p.m. Tokyo time, erasing earlier losses of as much 0.3 percent. The benchmark gauge posted its seventh weekly advance last week, the longest winning streak since March, after the U.S. Congress approved a budget deal and Japanese shares rallied on expectations the new government would call for more stimulus. The Nikkei 225 increased 0.7 percent, reversing a loss of 1 percent. The Philippine Stock Exchange Index (PCOMP) climbed 0.7 percent, heading for a record close. Australia’s S&P/ASX 200 Index added 0.4 percent. Hong Kong’s Hang Seng Index rose 0.2 percent, while China’s Shanghai Composite Index slipped 0.6 percent. South Korea’s Kospi Index lost 0.3 percent.

Gold Advances After Biggest Gain in a Week on Chinese Demand. Gold extended gains after climbing the most in a week yesterday amid signs of increased demand in China before the Lunar New Year. Spot gold gained as much as 0.3 percent to $1,664.10 an ounce and was at $1,662.35 at 3:07 p.m. in Singapore. Prices rose 0.8 percent yesterday, the most since Jan. 2, as data showed imports by China from Hong Kong climbed to a seven-month high in November. Volumes for cash bullion of 99.99 percent purity on the Shanghai Gold Exchange yesterday were almost double the daily average in 2012, data tracked by Bloomberg show.

Oil Fluctuates on Signs U.S. Crude, Fuel Stockpiles Increasing. Oil fluctuated in New York after an industry report showed rising stockpiles in the U.S., the world’s biggest crude-consuming nation. U.S. crude inventories increased 2.4 million barrels last week, the American Petroleum Institute said. An Energy Department report today may show supplies rose 2 million barrels, according to a Bloomberg News survey of analysts. Crude for February delivery was at $92.98 a barrel in electronic trading on the New York Mercantile Exchange, down 17 cents, at 1:14 p.m. Singapore time. The contract settled at $93.19 on Jan. 7, the highest since Sept. 18. Prices dropped 7.1 percent last year after three years of gains. The Energy Department raised its oil price projections for 2013 and forecast that global consumption will expand to a record. WTI will average $89.54 a barrel this year, up 1.3 percent from the December estimate of $88.38, it said yesterday in its monthly Short-Term Energy Outlook.


BREAKING NEWS GLOBAL •

Euro-Zone Unemployment Hits New High. The euro-zone unemployment rate rose to a fresh high in November as a net 113,000 people lost their jobs, leaving record numbers without work. The European Union's official statistics agency Eurostat said on Tuesday that in November, 18.82 million people were unemployed in the euro zone, a jobless rate of 11.8%, up from 11.7% in October and 10.6% in November 2011. Among people age 24 and under, the rate was much higher, standing at 24.4%, up from 24.2% in October, to hit the highest level since records began in 1995. Until the jobs picture improves, people are unlikely to boost purchases of homes, autos and other big-ticket items needed to spur consumer spending, which makes up the bulk of gross domestic product. This suggests euro-zone GDP, which has failed to grow since the third quarter of 2011, likely contracted at the end of last year and may continue to do so in early 2013.

Euro Zone Fund's First Debt Issue Posts Solid Sales. The euro zone's long-term bailout fund took its first step into public debt markets on Tuesday, selling €1.927 billion ($2.517 billion) of treasury bills shortly after Japan committed to remaining a key investor in the European financial rescue project. The European Stability Mechanism received solid demand in its first short-term debt auction, which signaled a shift in the way euro-area countries that face unsustainable borrowing costs will be financed. The region's temporary rescue fund, the European Financial Stability Facility, conducted its last bill auction in December. The ESM will be the main fund behind any new rescue programs, and is likely to sell its first longer-term bond in the second half of this year. The ESM will alternately issue three-month and six-month bills twice a month, with plans to build up a bill stock of €18.5 billion by the end of the first quarter. The fund is rated Aa1 by Moody's Investors Service, and AAA by Fitch Ratings. The bailout of the Spanish banking sector is set to be transferred to the ESM from the EFSF. In 2013, the EFSF plans to raise between €55 billion and €60 billion for aid programs in Greece, Ireland and Portugal.

Australia Retail Sales Unexpectedly Fall on Weak Household Goods. Australian retail sales unexpectedly declined for the first time in four months in November as consumers spent less on household goods and clothing in an economy with a weaker employment outlook. Sales dropped 0.1 percent to A$21.5 billion ($22.6 billion) from a month earlier, when they were unchanged, the Bureau of Statistics said in Sydney today. The result compares with the median forecast for a 0.3 percent gain in a Bloomberg News survey of 15 economists, none of whom predicted a decline. The data underpins Reserve Bank of Australia Governor Glenn Stevens’ decision to make five rate reductions -- totaling 1.75 percentage points from November 2011 to December -- as he seeks to buttress a slowing economy. The benchmark rate is at 3 percent, matching a half-century low, as policy makers seek to stimulate industries outside of mining, where investment is expected to peak this year. Spending on household goods fell 0.9 Page 2 of 8


percent, and consumers spent 0.6 percent less on clothing and footwear, today’s report showed, while food retailing was unchanged.

REGIONAL •

China Loan Share at Record Low Shows Financing Risks. China’s bank loans as a share of funding in the economy may have fallen to a record low, highlighting the growth of alternative financing channels that have prompted warnings of rising credit risks. New yuan loans probably dropped 14 percent last month from a year earlier, according to the median projection in a Bloomberg News survey of 37 analysts ahead of data due by Jan. 15. That would give bank lending a 55 percent share of aggregate financing for 2012, based on UBS AG estimates, the least in figures dating to 2002. The decline underscores the waning ability of official loan data to capture the scale of debt in the world’s second-largest economy as borrowers and investors turn to less-regulated, higher-return shadow-banking products. The People’s Bank of China is putting greater emphasis on aggregate financing and the International Monetary Fund says the growth of nonbank credit poses “new challenges to financial stability. “China’s economic performance in 2013 will be significantly affected by how seriously Chinese regulators are going to treat non-bank financing,” said Shi Lei, a Beijing- based analyst with broker Founder Securities Co., who has provided research advice to China’s securities regulator.

BOJ to Work More Closely With Abe at Regular Policy Meetings. Prime Minister Shinzo Abe will meet Bank of Japan Governor Masaaki Shirakawa at a gathering of policy makers and business leaders that may decide the fate of a potential government-central bank inflation accord. The Council on Economic and Fiscal Policy will meet for the first time in four years today after it was abolished by the previous government. Cabinet members, academics and business leaders including Toshiba Corp. President Norio Sasaki will attend. The council offers Abe a channel through which to exert pressure on the BOJ as he calls for the central bank to double its 1 percent inflation goal. Finance Minister Taro Aso said last week that a formal inflation accord between the government and the BOJ may be unnecessary if the meetings are held regularly. The council is a mechanism for coordinating policy between ministries that allows business people and academics to speak up and put pressure on politicians, Feldman said. Minutes of the meetings will become available three business days after they are held, according to the Cabinet Office.

China-Japan Dispute Takes Rising Toll of Top Asian Economies. The last time a dispute between Japan and China blew up in 2010 over eight uninhabited islands, the economic fallout lasted less than a month. This time, the spat is prolonging a recession in the world’s third-largest economy. Four months after Chinese consumers staged a boycott of Japanese products over the islands in the East China Sea, sales of Japanese autos in China have yet to recover, Chinese factories began to favor South Korean component Page 3 of 8


suppliers, and the U.S. has displaced China as Japan’s largest export market. “As Japan’s politics turn decisively to the right, more and frequent spats between Japan and China are expected,” said Liu Li-Gang, chief economist for Greater China Australia and New Zealand Banking Group Ltd. who used to work for the World Bank. “Both economies will lose in the end. Japan will lose a big market, and China will not be able to leverage on Japan’s technology and investment for growth.” •

South Korea Adds Workers as December Jobless Rate Holds at 3%. South Korea’s workforce expanded last month, with the unemployment rate unchanged from November as jobs increased in manufacturing and in the service sector. The jobless rate was at 3 percent in December, Statistics Korea said. The median estimate in a Bloomberg News survey of 11 economists was for a rate of 3 percent. The number of employed people increased by 277,000, or 1.1 percent, to 24.4 million last month from a year earlier. Incoming President Park Geun Hye has vowed to make it more difficult for companies to fire employees and to increase assistance for low-income workers burdened with record household debt. The nation will create 320,000 jobs this year, the Finance Ministry said in a Dec. 27 report, down from an estimated 440,000 million new positions in 2012. “The unemployment rate looks good, but it is unlikely to help lift domestic consumption,” Ma Ju Ok, an economist at Kiwoom Securities Co. in Seoul said before the release. “There are many workers in temporary positions.” The seasonally unadjusted jobless rate was at 2.9 percent in December, up 0.1 percent from November, today’s report showed.

Malaysia Exports Rebounded in November on Electronics, Petroleum. Malaysia’s exports rebounded at a stronger pace than economists estimated in November as shipments of electronics and petroleum products increased. Overseas shipments gained 3.3 percent from a year earlier after declining 3.2 percent in October, the Trade Ministry said in a statement today. The median of 16 estimates in a Bloomberg News survey was for 2.3 percent growth. The World Bank last month raised its outlook for emerging East Asia nations, citing China’s recovery, even as the export- dependent region faces risks from Europe’s protracted sovereign debt crisis. Malaysia’s economic growth has exceeded 5 percent in the five quarters through September, underscoring the central bank’s decision to keep interest rates unchanged since July 2011. Imports climbed 4.3 percent in November from a year earlier, after gaining 5.7 percent the previous month, today’s report showed. The trade surplus narrowed to 9.3 billion ringgit ($3.1 billion) from 9.6 billion ringgit in October. The government expects trade to grow 5 percent this year, Bernama news service said this week, citing International Trade and Industry Minister Mustapa Mohamed.

Thailand Holds Interest Rate a Second Time as Outlook Improves. Thailand kept its policy interest rate unchanged for a second straight meeting as signs that the global economy is recovering brightened the prospect for exports. The Bank of Thailand held Page 4 of 8


its one-day bond repurchase rate at 2.75 percent, it said in Bangkok today, as predicted by all 22 economists in a Bloomberg survey. The decision was unanimous, the monetary policy committee said. Prime Minister Yingluck Shinawatra’s government has extended subsidies, raised minimum wages and increased infrastructure investments to shield growth after the floods of 2011. Central bank Governor Prasarn Trairatvorakul said last month the global economy has bottomed out, with Thai exports of items from rice to electronics expected to recover in the first half of the year and “really grow” in the second half. Inflation accelerated to a 13-month high in December as subsidies failed to counter rising prices of food and fuel. The central bank, which unexpectedly reduced borrowing costs in October, uses core inflation to guide policy and expects price gains will stay below its target of 3 percent this year. •

Myanmar Poses Significant Risks for Investors. Companies and investors seeking to do business in Myanmar will face significant risks as they try to get off the ground. The country, which has been on the fast track of reform, has been welcomed back to the international community with some rounds of sanctions being suspended and others being lifted altogether. But risks remain. There are longstanding and widespread corruption issues, ethnic conflicts have erupted in the wake of new openness and Myanmar lags far behind its neighbors in development. “As reform moves forward, it’s taking root in very shallow soil,” said Suzanne DiMaggio, vice president of global policy programs of the Asia Society, in an interview. “That makes it risky.”

IFIs NEWS (compiled from their websites) IMF – Press Release: 2012 Article IV Consultation with Cambodia •

The IMF has issued a press release that, on December 3, 2012, the Executive Board of the IMF concluded the Article IV consultation with Cambodia. “Executive Directors commended Cambodia’s resilient economic performance and the authorities’ prudent policies. They agreed that the outlook is favorable but stressed the importance of rebuilding policy buffers to guard against risks, including from external spillovers and high domestic credit growth. Over the medium term, further efforts are needed to diversify the economy and achieve stronger, broad-based growth.” http://www.imf.org/external/np/sec/pn/2013/pn1301.htm (Press Release) http://www.imf.org/external/pubs/ft/scr/2013/cr1302.pdf (Staff Paper)

IMF – Working Paper •

The IMF has publicised the following working papers: •

Macroeconomic Model Spillovers and Their Discontents – “The Great Recession underlined that policies in some countries can have profound spillovers elsewhere. Sadly, the solution of simulating large macroeconomic models to measure these spillovers has been found wanting. We propose using event studies to calibrate market reactions to particular policy announcements, and report results for U.S. monetary and fiscal policy announcements in 2009 and 2010 that are plausible and event-specific.” Page 5 of 8


http://www.imf.org/external/pubs/ft/wp/2013/wp1304.pdf •

Capital Requirements for Over-the-Counter Derivatives Central Counterparties – “The central counterparties dominating the market for the clearing of over-thecounter interest rate and credit derivatives are globally systemic. Employing methodologies similar to the calculation of banks’ capital requirements against trading book exposures, this paper assesses the sensitivity of central counterparties’ required risk buffers, or capital requirements, to a range of model inputs. Our results suggest that there are considerable benefits from having prudential authorities adopt a more prescriptive approach to for central counterparties’ risk buffers, in line with recent enhancements to the capital regime for banks.” http://www.imf.org/external/pubs/ft/wp/2013/wp1303.pdf

IFIs NEWS (compiled from their websites) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 8-Jan 9-Jan close China 6.2306 6.2306 6.2241 6.2261 Hong Kong 7.7503 7.7513 7.7513 7.7518 Indonesia 9,793.0 9,788.0 9,827.0 9,663.0 Japan 86.75 88.15 87.05 87.61 Korea 1,064.4 1,063.7 1,062.9 1,061.6 Malaysia 3.058 3.0468 3.0422 3.0378 Philippines 41.005 40.925 40.82 40.79 Singapore 1.2218 1.2272 1.2292 1.2265 Thailand 30.6 30.5 30.4 30.4 Vietnam 20,840.0 20,843.0 20,840.0 20,840.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.03 -0.01 1.70 -0.64 0.12 0.14 0.07 0.22 0.13 0.00

2013 YTD (%chg) 0.1 0.0 -0.1 -0.3 0.2 -0.1 0.2 -0.5 -0.2 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7 3,191.8 1,391.9 413.7

8-Jan 2,276.1 23,111.2 4,397.5 10,508.1 1,997.9 1,688.9 6,048.9 3,205.5 1,417.3 447.2

OVERNIGHT LENDING RATE (%) 8-Jan 9-Jan bps change 1.620 2.090 47.00 0.097 0.097 0.00 4.188 4.186 -0.16 0.100 0.093 -0.75 2.750 2.750 0.00 3.000 3.000 0.00 0.370 2.426 205.60 0.033 0.033 0.00 2.750 2.750 0.00 3.450 3.825 37.50

9-Jan 2,275.3 23,218.5 4,362.9 10,578.6 1,991.8 1,689.5 6,091.2 3,218.5 1,425.0 448.8

% change -0.03 0.46 -0.79 0.67 -0.31 0.03 0.70 0.41 0.54 0.36

2013 YTD (%chg) 0.3 -0.4 0.4 1.8 -1.9 0.9 3.9 0.5 1.2 7.3

3-MONTH INTERBANK LENDING RATE (%) 8-Jan 9-Jan bps change 3.903 3.903 0.02 0.398 0.398 0.00 4.960 4.960 0.00 0.309 0.309 0.00 2.840 2.840 0.00 3.210 3.210 0.00 -0.078 -0.058 2.00 0.377 0.377 0.00 2.868 2.867 -0.08 6.875 7.000 12.50

Page 6 of 8


CREDIT DEFAULT SWAP (IN BPS) 8-Jan 9-Jan bps change China 61.72 63.13 1.41 Hong Kong 42.50 42.33 -0.17 Indonesia 129.41 133.50 4.10 Japan 72.04 72.33 0.29 Korea 63.03 66.16 3.13 Malaysia 74.19 77.05 2.86 Philippines 96.78 98.36 1.58 Thailand 90.75 90.50 -0.25 Vietnam 204.60 205.50 0.90 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. 8-Jan Gold Spot (in US$ per ounce)

9-Jan

1,659.1

% change

1,665.8

0.40

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec n.a 317.3 112.8 n.a 327.0 139.2 84.2 259.3 181.6 n.a

EXTERNAL LIQUIDITY RATIOS

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

Reserves latest

3 months imports of goods & services

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

3,285.1 317.3 112.8 1,270.9 327.0 139.2 84.2 259.3 181.6 20.0

504.3 144.7 50.5 70.9 150.9 58.0 19.3 118.2 67.2 29.9

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 6.9

Import cover (Qtrs of imports covered by reserves) 6.5 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

Reserves over short-term debt 5.7 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

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DATA RELEASES FOR THE DAY

Country

THAILAND MALAYSIA MALAYSIA SOUTH KOREA

Indicators

Benchmark Interest Rate Imports YoY% Exports YoY% Unemployment Rate (SA)%

Period

Jan 9 Nov Nov Dec

Last

2.75 4.3 3.25 3

SELECTED ECONOMIC RELEASES CALENDAR (7 January 2013 – 11 January 2013)

Expected Release Date

1/7/2013

1/9/2013

1/10/2013

1/11/2013

Country

INDONESIA INDONESIA SINGAPORE PHILIPPINES HONG KONG THAILAND MALAYSIA MALAYSIA SOUTH KOREA JAPAN THAILAND CHINA CHINA CHINA CHINA PHILIPPINES INDONESIA SOUTH KOREA CHINA CHINA CHINA JAPAN JAPAN SOUTH KOREA

Indicators

Consumer Confidence Index Foreign Reserves (USD bn) Foreign Reserves (USD mn) Foreign Reserves (USD mn) Foreign Currency Reserves (USD bn) Benchmark Interest Rate Imports YoY% Exports YoY% Unemployment Rate (SA)% Official Reserve Assets (USD bn) Consumer Confidence Economic New Yuan Loans (RMB bn) Imports YoY% Exports YoY% Trade Balance (USD bn) Total Exports (YoY)% Bank Indonesia Reference Rate% Bank Lending to HH (KRW Tln) Foreign Exchange Reserves (USD bn) Consumer Price Index (YoY)% Producer Price Index (YoY)% Current Account Balance YOY% Current Account Total (JPY bn) South Korea 7-Day Repo Rate %

Previous

Period

Dec Dec Dec Dec Dec Jan 9 Nov Nov Dec Dec Dec Dec Dec Dec Dec Nov Jan 10 Dec Dec Dec Dec Nov Nov Jan 11

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.

Page 8 of 8


MARKET UPDATE FOR ASEAN+3 10 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Asian Stocks Rise on China Exports Data. The MSCI Asia Pacific Index (MXAP) rallied 0.7 percent to 131.98 as of 3:31 p.m. Tokyo time, on track for its highest close since August 2011. The benchmark gauge capped seven straight weeks of gains last week as the U.S. Congress approved a budget deal and Japanese shares rallied on expectations the nation’s new leadership would call for more stimulus. The Nikkei 225 Stock Average (NKY) increased 0.7 percent, advancing for a second day. South Korea’s Kospi Index rose 0.8 percent. Australia’s S&P/ASX 200 Index gained 0.3 percent. Hong Kong’s Hang Seng Index increased 0.6 percent, while China’s Shanghai Composite Index swung between gains and losses.

Oil Rises First Time in Three Days on Surge in Chinese Exports. Oil rose in New York for the first time in three days after China’s exports increased more than forecast in December, signaling growth in the world’s second- largest crude consumer. West Texas Intermediate futures gained as much as 0.5 percent after China’s customs administration reported exports jumped by 14 percent in December from a year earlier, exceeding the 5 percent median forecast in a Bloomberg News survey. U.S. crude stockpiles were up 1.3 million barrels last week, Energy Department data showed yesterday. Crude for February delivery advanced as much as 43 cents to $93.53 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.48 at 2:39 p.m. Singapore time. The contract settled at $93.10 yesterday, the lowest since Jan. 4. Prices lost 7.1 percent in 2012 after three years of gains.

BREAKING NEWS GLOBAL •

OECD Inflation Rate Falls. The annual inflation rate across developed economies fell in November on lower energy prices, opening the way for leading central banks to shore up faltering economies through additional stimulus measures. Figures from the Organization for Economic Cooperation and Development Wednesday showed consumer prices in its 34 member countries rose 1.9% in the 12 months to November, compared with 2.2% in the 12 months to October. November's decline followed three straight months of increases and brought the rate back to July's level. If sustained over coming months, falling inflation rates across so many leading economies would give central banks more room to cut key interest rates or provide other forms of stimulus to counter a global economic slowdown. Among OECD members, the annual rate of inflation was highest in Turkey, where prices rose 6.3%, while prices in Switzerland were 0.4% lower than in October 2011. Prices also fell in Japan, by 0.2%. Among large


developing economies, the inflation rate fell in Indonesia and India. It picked up in China, Brazil and South Africa. •

France Sets Deadline to Overhaul Labor Laws. French unions and employers are starting what the government calls a last-ditch bid to agree on broad changes to labor laws, a process President François Hollande initiated with the hope of reassuring investors that the country can loosen its employment market without mass protests and disruption. Representatives from the country's five largest unions are to sit down on Thursday to negotiate with employers, who want to make it easier for French companies to adjust working hours and pay, along with reducing risks associated with hiring and firing. In return, unions want laws to protect workers from being exploited in short-term contracts without benefits and to encourage employers to create permanent contracts. Large French companies are laying off thousands of workers and many executives say it is no longer competitive to do business in the euro zone's second-largest economy. French companies have lost ground in particular to their German peers, which have used more-flexible contracts with their workers—and lower hourly labor costs—to fuel export strength.

Greek State Firms are Facing Closure. Greek lawmakers on Wednesday approved a law to close hundreds of state-linked bodies in a bid to fulfill promises to international creditors, a move that threatens to spark fresh union opposition and pose yet another challenge to the country's fragile coalition government. In the debate leading up to the vote, Greece's minister for public administration, Antonis Manitakis, said the law would shutter some 200 largely obscure and, in many cases, redundant state bodies. The move threatens several thousands of civil servants, would be followed by hundreds more closures in the months ahead, and shift public services to the private sector. Since the start of its debt crisis in 2009, Greece has promised to slash its bloated and deeply dysfunctional public sector. By the end of 2015, it aims to shed some 150,000 civil servants, from the nearly 900,000 employed at the end of 2010.

REGIONAL •

Japan’s Abe Urges 2% Inflation as Shirakawa Attends Meeting. The Bank of Japan should aim for 2 percent inflation, Prime Minister Shinzo Abe said at the first meeting in four years of a panel that brings together government and central bank officials. The government and the BOJ should strengthen cooperation to achieve the price goal, Abe said yesterday in Tokyo during a section of the Council on Economic and Fiscal Policy meeting that was open to the press. BOJ Governor Masaaki Shirakawa told reporters after the meeting that it was “meaningful” and that the bank is in close cooperation with the government. The BOJ will introduce a 2 percent inflation target at its next board meeting on Jan. 21-22, the Asahi newspaper reported today. Consumer prices excluding fresh food, a benchmark monitored by the central bank, haven’t advanced 2 percent for any year since 1997, when a national sales tax was increased. Speaking at a press conference after the meeting, Minister for Economic Revitalization Akira Amari Page 2 of 9


said that Shirakawa pledged to listen to views presented at the meeting. Abe said that deciding monetary policy was up to the BOJ, according to Amari. Abe revived the council after it was abolished by the previous government. •

China Exports Elevate Trade Surplus. China's trade surplus rose sharply in December, a sign that the country's recovery may be picking up steam as demand for its exports improves. Various economic data have been signaling that China's economy has been accelerating since September after several quarters of slowing growth. But until the December trade data the recovery appeared to be largely been driven by domestic factors, as economies in Europe and the U.S. remained tepid. The monthly trade surplus widened to $31.6 billion in December from $19.6 billion in November, the General Administration of Customs said Thursday. Exports soared 14.1% in December from a year earlier, the fastest pace in seven months, and up from just 2.9% growth in November. Economists had expected a 4.6% rise. Imports rose 6.0% after being flat in November, above expectations for a 3.3% rise. For the full year of 2012 China's trade surplus widened substantially, but the increase was driven more by weakening imports than by strengthening exports. Exports for 2012 rose 7.9% from a year earlier, down from 20.3% growth in 2011. Imports rose 4.3%, down from 11.8% growth the previous year.

Inflation Fears Heat Up in Chilly China. China's coldest winter in almost three decades is stoking inflation fears as some food and energy prices rise amid an unusual cold snap. Lower-than-average temperatures in northern China and unusually cold weather in China's south are fueling demand for natural gas and disrupting agricultural production. China's consumer-price index, the country's primary inflation gauge, likely edged up 2.4% in December, following November's 2% rise. The average temperature in China between the end of November and this past weekend were the lowest in more than 28 years, according to the China Meteorological Administration. The weather, which has damaged vegetable crops and disrupted shipments, is partly to blame for the surge in food prices in China over the past two months. Food prices in China's major cities have risen for more than nine straight weeks since the end of October, led by a surge in vegetable prices, according to Ministry of Commerce data. Food prices account for about a third of China's consumer-price-index basket. Meanwhile, higher heating demand has led to tight natural-gas supplies in China.

Hong Kong’s Central Rents to Extend Drop as Banks Cut Costs. Hong Kong’s Central district office rental, the most expensive globally, is set to extend its biggest decline since the global credit crisis, according to the world’s two biggest realtors. Banks and brokerages, faced with slowing corporate finance activities, are giving up space in Central for locations in the city where rents can be two-thirds lower. The average rent for prime offices in Central dropped 12 percent from a year earlier to about HK$98.80 ($12.75) a square foot a month at the end of the third quarter, according to Seattlebased Colliers. That was the biggest drop since 2008. With financial services companies Page 3 of 9


migrating their back offices -- and sometimes the entire operations -- away from Central, almost all other major office districts in Hong Kong posted gains in rental rates and drops in vacancies last year. •

Philippine November Exports Rise Less Than Economists Estimated. Philippine exports rose at a slower pace than economists estimated in November, as a strong peso and a faltering global recovery hurt demand for apparel and minerals. Overseas shipments increased 5.5 percent from a year earlier to $3.55 billion after gaining 6.1 percent in October, the National Statistics Office said in Manila today. The median of eight estimates in a Bloomberg News survey was 20.1 percent. A recession in Europe and an uneven U.S. economic recovery are damping demand for Asian goods. Exports of apparel slipped 13 percent in November from a year earlier, while mineral goods declined 22.4 percent, today’s report showed. Shipments to the U.S. fell 8.6 percent. Overseas sales made up about 20 percent of Philippine gross domestic product last year. The economy may expand 6 percent to 7 percent this year, central bank Deputy Governor Diwa Guinigundo told state-owned television on Jan. 7.

Malaysia’s November Output Growth Accelerates on Manufacturing. Malaysian industrial output growth quickened in November to the fastest in six months as the global economy’s recovery boosts demand for Asian goods. Production at factories, utilities and mines rose 7.5 percent from a year earlier after gaining a revised 6.4 percent in October, the statistics department said in a statement today. The median of 16 estimates in a Bloomberg News survey was for a 5.9 percent increase. Malaysia’s exports rebounded at a stronger pace than estimated in November on bigger shipments of electronics and petroleum products, a report showed yesterday. Manufacturing output gained 7.6 percent in November from a year earlier, after a revised 6.6 percent increase the previous month, today’s report showed. Mining rose 7.5 percent, while electricity production grew 6 percent.

Vietnam Diplomat Takes ASEAN Reins. A soft-spoken career diplomat on Wednesday became the first Vietnamese representative to take the helm of the Association of Southeast Asian Nations, saying he would follow the course set by his predecessors in steering the region toward maritime security in the South China Sea and formal economic integration in the course of his five-year term. Le Luong Minh, who has served as Vietnam's deputy foreign minister and representative to the United Nations, succeeds Thailand's Surin Pitsuwan, who as secretary-general faced unprecedented divisions among the 10 member countries in the past year over China's assertive claims over the South China Sea. While Mr. Minh stressed that the maritime dispute remains a priority, the most important item on his agenda will be to continue to work on establishing a formal community of wide-ranging political, economic and social ties across Asean member states by the end of 2015. The initiative includes introducing the Asean Economic Community, a regional bloc that will reduce trade and investment Page 4 of 9


barriers in an area home to almost 10% of the world's population and an economy of about $2 trillion. IFIs NEWS (compiled from their websites) Basel Committee – Publication: “Principles for effective risk data aggregation and risk reporting” •

The Basel Committee on Banking Supervision has issued Principles for effective risk data aggregation and risk reporting. The principles are intended to strengthen banks' risk data aggregation capabilities and internal risk reporting practices. They complement other international initiatives underway and will allow banks to comply effectively with them. Implementation of the principles will strengthen risk management at banks - in particular, G-SIBs - thereby enhancing their ability to cope with stress and crisis situations. http://www.bis.org/press/p130109.htm (Press Release) http://www.bis.org/publ/bcbs239.pdf (Publication)

IFC – Press Release: Helps Establish Peak Reinsurance to Improve Access to Insurance Services in Asia Pacific •

The IFC is making a $82 million equity investment in Peak Reinsurance Company Limited, a newly established non-life reinsurer in Hong Kong, to expand and improve access to quality insurance services in Asia Pacific. IFC has worked with Fosun International (Fosun), one of the largest Chinese private investors and our long-term strategic partner, over the past two years to support the establishment of Peak Re. Fosun is investing about $468 million in the company as its majority founding shareholder. With Fosun and IFC’s support, Peak Re will insure the risks of primary insurers across Asia to help expand their operations. The company aims to reach around 100 insurance clients in seven emerging Asian markets such as China, India, and Indonesia in the next five years. http://www.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/F09103026D7A98F285257AE E0029F930

IMF – Press Release: Experts to Discuss Design of Fiscally Sustainable and Equitable Pension Systems in Asia •

The world’s leading experts and practitioners on pension issues gathered in Tokyo with policy makers from 16 Asian countries to discuss how advanced and emerging Asian countries can address their pension challenges in a sustainable and equitable manner. The two-day conference, Designing Fiscally Sustainable and Equitable Pension Systems in Asia in the Post-Crisis World, was organized by the International Monetary Fund (IMF) Fiscal Affairs Department and the IMF Regional Office for Asia and the Pacific (OAP), with the generous support of the Japanese Government. http://www.imf.org/external/np/sec/pr/2013/pr1308.htm

IMF – Publication: “Poverty Reduction and Growth Trust Interest Rate Mechanism Extension of Temporary Interest Rate Waiver” •

The IMF has publicised the captioned policy paper. “This paper proposes a further extension of the exceptional interest waiver by two years, to end-2014. This paper also proposes to further extend to April 2013 the existing subsidization of the rate of charge Page 5 of 9


on outstanding Emergency Natural Disaster Assistance and Emergency Post-Conflict Assistance purchases by PRGT-eligible members.” http://www.imf.org/external/np/pp/eng/2012/121412b.pdf IMF – Working Paper: “A Modern History of Fiscal Prudence and Profligacy” •

The IMF has publicised the captioned working paper. “We draw on a newly collected historical dataset of fiscal variables for a large panel of countries—to our knowledge, the most comprehensive database currently available—to gauge the degree of fiscal prudence or profligacy for each country over the past several decades. Using Bohn’s (1998) approach and other tests for fiscal sustainability, we document how the degree of prudence or profligacy varies significantly over time within individual countries. We find that such variation is driven in part by unexpected changes in potential economic growth and sovereign borrowing costs.” http://www.imf.org/external/pubs/ft/wp/2013/wp1305.pdf

OECD – Press Release: Winner of Global Data Visualisation Competition •

The OECD has announced the winner of its first-ever global data visualization challenge. Entries from around the world were based on the OECD’s data-rich Education at a Glance report and focused on the economic costs and return on investment in education - both for the individual and for society. http://www.oecd.org/newsroom/oecdannounceswinnerofglobaldatavisualizationcomp etition.htm

WTO – Press Release: Laos ratifies membership package, will join WTO on 2 February •

The WTO announced that Laos informed the WTO on 3 January 2013 that it has ratified its membership agreement. Under WTO procedures, that means Laos will officially become the WTO’s 158th member on 2 February. http://www.wto.org/english/news_e/news13_e/acc_lao_08jan13_e.htm

IFIs NEWS (compiled from their websites) FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 9-Jan 10-Jan close China 6.2306 6.2306 6.2261 6.2245 Hong Kong 7.7503 7.7513 7.7522 7.7518 Indonesia 9,793.0 9,788.0 9,663.0 9,867.0 Japan 86.75 88.15 87.88 88.19 Korea 1,064.4 1,063.7 1,061.6 1,060.3 Malaysia 3.058 3.0468 3.0378 3.0299 Philippines 41.005 40.925 40.79 40.675 Singapore 1.2218 1.2272 1.227 1.2263 Thailand 30.6 30.5 30.4 30.4 Vietnam 20,840.0 20,843.0 20,840.0 20,840.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.03 0.01 -2.07 -0.35 0.12 0.26 0.28 0.06 0.07 0.00

2013 YTD (%chg) 0.1 0.0 -2.2 -1.0 0.3 0.2 0.4 -0.5 -0.1 0.0

Page 6 of 9


STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7 3,191.8 1,391.9 413.7

9-Jan

10-Jan

2,275.3 23,218.5 4,362.9 10,578.6 1,991.8 1,689.9 6,091.2 3,220.4 1,423.5 448.8

OVERNIGHT LENDING RATE (%) 9-Jan 10-Jan bps change 2.090 1.980 -11.00 0.097 0.097 0.00 4.186 4.183 -0.32 0.100 0.098 -0.25 2.750 2.750 0.00 3.000 3.000 0.00 2.426 2.588 16.20 0.020 0.020 0.00 2.750 2.750 0.00 3.825 3.329 -49.60

% change

2,283.7 23,354.3 4,317.4 10,652.6 2,006.8 1,684.6 6,018.6 3,226.8 1,412.7 460.1

0.37 0.59 -1.04 0.70 0.75 -0.32 -1.19 0.20 -0.75 2.53

2013 YTD (%chg) 0.6 0.2 -0.7 2.5 -1.2 0.6 2.7 0.8 0.4 10.0

3-MONTH INTERBANK LENDING RATE (%) 9-Jan 10-Jan bps change 3.903 3.902 -0.07 0.398 0.398 0.00 4.960 4.958 -0.20 0.309 0.309 0.00 2.830 2.830 0.00 3.210 3.210 0.00 -0.058 -0.230 -17.20 0.377 0.377 0.00 2.867 2.868 0.08 7.000 7.125 12.50

CREDIT DEFAULT SWAP (IN BPS) 9-Jan 10-Jan bps change China 61.39 61.56 0.17 Hong Kong 42.33 42.22 -0.11 Indonesia 130.12 134.99 4.87 Japan 73.88 73.38 -0.49 Korea 62.50 65.02 2.52 Malaysia 73.94 77.50 3.56 Philippines 97.15 96.95 -0.21 Thailand 86.50 90.92 4.42 Vietnam 204.22 205.75 1.53 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk.

9-Jan Gold Spot (in US$ per ounce)

1,657.6

10-Jan

% change

1,660.7

0.18

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

Page 7 of 9


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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

EXTERNAL LIQUIDITY RATIOS

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

Reserves latest

3 months imports of goods & services

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 20.0

504.3 144.7 50.5 70.9 150.9 58.0 19.3 118.2 67.2 29.9

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 6.9

DATA RELEASES FOR THE DAY

Country

CHINA CHINA CHINA CHINA CHINA INDONESIA JAPAN PHILIPPINES SOUTH KOREA THAILAND

Indicators

New Yuan Loans (RMB bn) Imports YoY% Exports YoY% Trade Balance (USD bn) Foreign Exchange Reserves (USD bn) Bank Indonesia Reference Rate% Official Reserve Assets (USD bn) Total Exports (YoY)% Bank Lending to HH (KRW Tln) Consumer Confidence Economic

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

Period

Dec Dec Dec Dec Dec Jan 10 Dec Nov Dec Dec

Last

454.3 6.0 14.1 31.62 3310 5.75 1268.1 5.5 466.5 70.6

SELECTED ECONOMIC RELEASES CALENDAR (7 January 2013 – 11 January 2013)

Expected Release Date

1/7/2013

1/9/2013

1/10/2013

Country

INDONESIA INDONESIA SINGAPORE PHILIPPINES HONG KONG THAILAND MALAYSIA MALAYSIA SOUTH KOREA JAPAN

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

Indicators

Consumer Confidence Index Foreign Reserves (USD bn) Foreign Reserves (USD mn) Foreign Reserves (USD mn) Foreign Currency Reserves (USD bn) Benchmark Interest Rate Imports YoY% Exports YoY% Unemployment Rate (SA)% Official Reserve Assets (USD bn)

31-Dec 3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 Previous

522.9 0.0 2.9 19.63 3290 5.75 1270.9 6.1 461.6 69.4

Period

Dec Dec Dec Dec Dec Jan 9 Nov Nov Dec Dec

Page 8 of 9


1/11/2013

THAILAND CHINA CHINA CHINA CHINA PHILIPPINES INDONESIA SOUTH KOREA CHINA CHINA CHINA JAPAN JAPAN SOUTH KOREA

Consumer Confidence Economic New Yuan Loans (RMB bn) Imports YoY% Exports YoY% Trade Balance (USD bn) Total Exports (YoY)% Bank Indonesia Reference Rate% Bank Lending to HH (KRW Tln) Foreign Exchange Reserves (USD bn) Consumer Price Index (YoY)% Producer Price Index (YoY)% Current Account Balance YOY% Current Account Total (JPY bn) South Korea 7-Day Repo Rate %

Dec Dec Dec Dec Dec Nov Jan 10 Dec Dec Dec Dec Nov Nov Jan 11

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.

Page 9 of 9


MARKET UPDATE FOR ASEAN+3 11 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS 

Asian Stocks Swing Between Gains and Losses on China CPI. Asian stocks swung between gains and losses amid overheating signs as China’s inflation accelerated and Japan approved 10.3 trillion yen ($116 billion) of stimulus measures. The MSCI Asia Pacific Index (MXAP) dropped 0.1 percent to 131.92 at 3:47 p.m. in Tokyo after falling as much as 0.4 percent earlier. The gauge is little changed for the week after capping a sevenweek rally last week, the longest streak since March 2012, as U.S. Congress approved a budget deal. China’s Shanghai Composite Index (SHCOMP) dropped 2.1 percent as the nation’s inflation accelerated faster than estimated, limiting room for easing. Hong Kong’s Hang Seng Index (HSI) fell 0.6 percent, while Australia’s S&P/ASX 200 Index lost 0.3 percent. South Korea’s Kospi Index dropped 0.5 percent after the nation’s central bank left its key rate unchanged as expected.

Oil Heads for Fifth Weekly Gain on Saudi Production Cut. Oil traded near the highest level in almost four months, extending the longest weekly rising streak since August, as Saudi Arabia cut production and investors speculated a global economic recovery will boost fuel demand. Futures were little changed in New York after rising for the first time in three days yesterday. Saudi Arabia, the world’s largest crude exporter, reduced output in December to the lowest in 19 months, according to a Persian Gulf official with knowledge of the kingdom’s energy policy. Oil is poised for a fifth weekly gain after Chinese exports accelerated, European Central Bank President Mario Draghi said the euro-area economy will gradually recover, and Japan announced a 10.3 trillion yen ($116 billion) stimulus package. West Texas Intermediate crude for February delivery was at $93.85 a barrel, up 3 cents, in electronic trading on the New York Mercantile Exchange at 4:03 p.m. Singapore time. The contract increased 72 cents to $93.82 yesterday, the highest close since Sept. 18. Prices are up 0.8 percent this week.

BREAKING NEWS GLOBAL 

Draghi Shifts Crisis Gear as ECB Focuses on Economy Inbox. European policy makers are shifting focus from a financial crisis to an economic-growth crisis. “We are now back in a normal situation from a financial viewpoint, but we are not at all seeing an early and strong recovery,” European Central Bank President Mario Draghi said yesterday. Luxembourg Prime Minister Jean-Claude Juncker, who leads euro-area finance ministers, echoed that by saying, “the worst is over, but what we still have to do is difficult.” As the Euro Stoxx 50 (SX5P) posts its best start to a year since 2003 and bond yields from Greece to Spain recede from euro-era highs, markets are endorsing last year’s ECB-led rescue efforts and rebutting warnings of an imminent euro breakup. The next test for authorities will come if the economic slump reignites investor doubts about cash-strapped governments. For now, Draghi predicts recovery to begin later this year


and pushed governments to drive it by restoring health to their economies and budgets. The central bank yesterday held off doling out more recession-fighting medicine, keeping its benchmark interest rate at 0.75 percent in a unanimous decision a month after calls for a cut from some of its Governing Council. It maintained its so- far untapped offer to buy the bonds of sovereigns acquiescing to reform demands and will hand banks further cheap long-term funding. 

U.K. Keeps Its Key Rate Unchanged Amid Concerns About High Inflation. The Bank of England left its monetary levers untouched on Thursday as concerns about persistently high inflation trump signs of a renewed economic downturn. The U.K.'s central bank said its Monetary Policy Committee left the BOE's benchmark interest rate at 0.5% and the limit for its bond-buying stimulus program at £375 billion ($600 billion) following its two-day policy meeting, minutes of which will be published Jan. 23. The MPC enters 2013 facing a similar mix of stubbornly high inflation and weak growth that dogged its decisions in 2012. Business surveys and economic data published in recent weeks suggest the U.K. economy contracted in 2012's final quarter and will probably struggle to grow in the first few months of 2013, raising the specter of three recessions in relatively quick succession. Economists on average expect the U.K. economy to have shrunk 0.1% in 2012 and estimate it will grow 1.1% in 2013, according to a range of independent economic forecasts compiled by the U.K. Treasury.

Trade Gap in U.S. Probably Narrowed as Fuel Costs Declined. The trade deficit in the U.S. probably shrank in November as lower fuel costs curbed imports and exports rebounded, economists said before a report today. The gap narrowed to $41.3 billion from October’s $42.2 billion, according to the median forecast of 68 economists surveyed by Bloomberg. Another report today may show import prices were little changed in December. A decline in the cost of petroleum that is helping to trim the import bill, combined with sustained job gains, is also boosting the buying power of U.S. households. In addition, stabilization in global growth, led by a pickup in China, will probably spur sales overseas for American companies such as Alcoa Inc.

REGIONAL 

Japan Posts Deep Current Account Deficit. Japan recorded a much bigger-thanexpected deficit in its current account in November, as its export-led economy grappled with overseas headwinds and territorial tensions with China to post red ink that will likely intensify pressure on the Bank of Japan to take fresh measures to support the economy. While Japan's finance minister insisted that it is too early to detect a trend toward a deficit, many economists now believe Japan's once massive current account is on the brink of turning into the red on a regular basis. The deficit in the current account, the broadest measure of Japan's trade with the rest of the world, stood at 222.4 billion yen ($2.52 billion) in November before seasonal adjustment. That was much worse than the ¥33.5 billion gap expected by economists surveyed by Dow Jones Newswires, and was the second-largest on record, following a ¥455.6 Page 2 of 7


billion deficit in January 2012. Analysts said the figures show a clear deterioration in Japan's trading position as exports to China, the country's largest export market, have declined since the autumn in part because of a continuing territorial dispute over a group of islands in the East China Sea. The continuing sovereign debt crisis in Europe is also cited as a factor hurting Japanese exports. 

Japan Approves Stimulus, With Eye on Central Bank. Japan's new government approved a ¥10.3 trillion ($115.7 billion) economic stimulus package Friday and vowed to beef up ties with the Bank of Japan in the latest efforts to defeat long-running deflation and prop up the weakening economy. The administration of Prime Minister Shinzo Abe said the package should push up gross domestic product by 2 percentage points, a strong boost from the current annual growth forecast of 1.7%. The package, however, will also mean the already indebted government will need to borrow another ¥5 trillion, adding to its debt burden now well over 200% of its annual GDP The government touted the hefty emergency package as the second largest in Japanese history, following only measures unveiled after the Lehman shock in 2008. The new budget contains ¥5.5 trillion in public-works projects. Including localgovernment and private-sector spending, the stimulus package could be worth more than ¥20 trillion.

China Inflation Accelerates. Inflation accelerated in China in December as unusually cold winter weather pushed up food prices around the country, potentially posing a risk to the recovery. China's consumer-price index rose 2.5% from a year earlier in December, up from a 2.0% rise in November. Economists polled earlier had expected a reading of 2.4%. China's economy has been picking up steam in the past few months after a prolonged slowdown, but accelerating inflation could constrain the government's ability to take further measures to support growth. The inflation rate is still well below where it was a year ago, and economists say it is far from worrying levels. Economists expect prices to keep rising in the coming months due to the cold weather, which is disrupting crop production, as well as high seasonal food demand during the Lunar New Year holiday in February, but they are divided on the outlook for the rest of the year. The index was driven by a sharp rise in food prices, which climbed 4.2% from a year earlier, up from November's 3.0% increase. For the full year, China's consumer-price index rose by 2.6%, compared with 5.4% in 2011 and 3.3% in 2010, highlighting that the overall inflation level is still moderate by historical standards.

Bank of Korea Holds Rate as Park Vows Effort to Boost Growth. The Bank of Korea held borrowing costs unchanged for a third month amid promises from incoming President Park Geun Hye to increase efforts to support economic growth and create jobs. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 2.75 percent after a 25 basis-point cut in October, the central bank said in a statement in Seoul today. Thirteen of 14 economists surveyed by Bloomberg News predicted the move, which Kim said was not unanimous, and one forecast a cut. Page 3 of 7


The central bank decision follows plans from Park’s government to spend 72 percent of the budget in the first half of the year to aid a recovery. At the same time, the BOK today reduced its forecast for 2013 growth to 2.8 percent from 3.2 percent, highlighting obstacles to a rebound that include the won’s 27 percent rise against the Japanese yen in the last year. Vietnam May Have Cut Policy Rates Too Quickly in 2012, IMF Says. Vietnam still faces inflationary pressures, according to the International Monetary Fund, which said it would have preferred a slower pace of interest-rate cuts last year by the country’s central bank. The State Bank of Vietnam reduced borrowing costs for a sixth time last year on Dec. 24, two weeks after the IMF said the central bank should maintain its policy rate. The refinancing rate was cut to 9 percent from 15 percent at the beginning of the year, while the discount rate and the cap on dong deposits were also lowered. The monetary policy must focus on ensuring that economic stability gained in 2012 can be maintained this year, said Sanjay Kalra, IMF’s resident representative for Vietnam. “Going forward, there is still a case for being a little bit more careful,” Kalra said at a conference in Ho Chi Minh City today. “In terms of the balance of risks, it is perhaps advisable to be a little bit late in terms of reducing policy rates than being a little bit too early,” he said, adding that easing would only flood the banking system with liquidity.

IFIs NEWS (compiled from their websites) OECD – Publication: “Strengthening Euro Area banks” 

The OECD has issued the captioned analysis. “The European banking system remains at the heart of the euro crisis, and major changes are still needed to strengthen the capital positions of many banks, according to analysis of the financial sector from the OECD’s latest Economic Outlook.” http://www.oecd.org/economy/economicoutlookanalysisandforecasts/strengtheninge uroareabanks.htm (Press Release)

UNCTAD – Press Release: 2012-2013 Intersessional Panel Meeting of the Commission on Science and Technology for Development 

UNCTAD has announced that the 2012-2013 Intersessional Panel Meeting of the Commission on Science and Technology for Development (CSTD) is under way in Lima, Peru.

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=386&Sitemap_x0020_Tax onomy=UNCTAD World Bank – Press Release: New Funding for Climate and Forests Protection 

World Bank has issued a press release that, in a boost for global efforts to combat climate change and tropical deforestation, Finland, Germany, and Norway have each announced new financial contributions totaling approximately US$180 million to the Forest Carbon Partnership Facility (FCPF), the World Bank administered facility that was set up to compensate developing countries for reductions in carbon dioxide emissions achieved by preserving their forests. http://www.worldbank.org/en/news/2013/01/10/new-funding-for-climate-forestsprotection Page 4 of 7


FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 10-Jan 11-Jan close China 6.2306 6.2306 6.2245 6.2158 Hong Kong 7.7503 7.7513 7.7512 7.7526 Indonesia 9,793.0 9,788.0 9,867.0 9,866.0 Japan 86.75 88.15 88.78 88.99 Korea 1,064.4 1,063.7 1,060.3 1,054.7 Malaysia 3.058 3.0468 3.0299 3.021 Philippines 41.005 40.925 40.675 40.6 Singapore 1.2218 1.2272 1.2224 1.2258 Thailand 30.6 30.5 30.3 30.3 Vietnam 20,840.0 20,843.0 20,840.0 20,840.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.14 -0.02 0.01 -0.24 0.53 0.29 0.18 -0.28 -0.03 0.00

2013 YTD (%chg) 0.3 0.0 -2.2 -1.9 0.8 0.5 0.6 -0.4 0.2 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,233.3 22,666.6 4,316.7 10,395.2 1,997.1 1,681.3 5,812.7 3,191.8 1,391.9 413.7

10-Jan 2,283.7 23,354.3 4,317.4 10,652.6 2,006.8 1,684.6 6,018.6 3,226.3 1,406.0 460.1

OVERNIGHT LENDING RATE (%) 10-Jan 11-Jan bps change 1.980 2.030 5.00 0.097 0.094 -0.36 4.183 4.182 -0.08 0.095 0.098 0.25 2.750 2.750 0.00 3.000 3.000 0.00 2.588 -0.215 -280.30 0.025 0.025 0.00 2.750 2.750 0.00 3.329 3.933 60.40

11-Jan

% change

2,243.0 23,264.1 4,305.9 10,801.6 1,996.7 1,683.8 6,051.8 3,211.5 1,408.5 462.7

-1.78 -0.39 -0.27 1.40 -0.50 -0.04 0.55 -0.46 0.17 0.56

2013 YTD (%chg) -1.2 -0.2 -0.9 3.9 -1.7 0.5 3.3 0.3 0.1 10.6

3-MONTH INTERBANK LENDING RATE (%) 10-Jan 11-Jan bps change 3.902 3.904 0.19 0.398 0.388 -1.00 4.958 4.952 -0.60 0.309 0.309 0.00 2.830 2.830 0.00 3.210 3.210 0.00 -0.230 -0.312 -8.20 0.377 0.377 0.00 2.868 2.868 0.00 7.125 7.184 5.90

CREDIT DEFAULT SWAP (IN BPS) 10-Jan 11-Jan bps change China 62.58 63.87 1.28 Hong Kong 42.22 42.02 -0.20 Indonesia 130.67 147.66 16.99 Japan 74.37 74.82 0.44 Korea 64.50 66.84 2.33 Malaysia 76.92 77.66 0.75 Philippines 94.84 102.97 8.13 Thailand 89.47 90.65 1.18 Vietnam 204.06 210.00 5.94 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk.

10-Jan Gold Spot (in US$ per ounce)

1,675.4

11-Jan 1,670.8

% change -0.27

Source: Bloomberg

Page 5 of 7


CREDIT RATINGS S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

EXTERNAL LIQUIDITY RATIOS

Reserves latest

3 months imports of goods & services

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 20.0

504.3 144.7 50.5 71.0 150.9 58.0 19.3 118.2 67.2 29.9

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY Country

Indicators

CHINA JAPAN SOUTH KOREA THAILAND VIETNAM

Consumer Price Index (YoY)% Producer Price Index (YoY)% Current Account Balance YOY% Current Account Total (JPY bn) South Korea 7-Day Repo Rate % Foreign Reserves (USD bn) Vietnam Consumer Confidence

Period

Last

Previous

Dec Dec Nov Nov Jan 11 Jan 4 4Q

2.5 -1.9 -276.4 -222.4 2.75 180.88 146.5

2.0 -2.2 -29.4 376.9 2.75 181.6 146.71

SELECTED ECONOMIC RELEASES CALENDAR (7 January 2013 – 11 January 2013) Expected Release Date

1/7/2013

Country

INDONESIA INDONESIA SINGAPORE

Indicators

Consumer Confidence Index Foreign Reserves (USD bn) Foreign Reserves (USD mn)

Period

Dec Dec Dec

Page 6 of 7


1/9/2013

1/10/2013

1/11/2013

PHILIPPINES HONG KONG THAILAND MALAYSIA MALAYSIA SOUTH KOREA JAPAN THAILAND CHINA CHINA CHINA CHINA CHINA PHILIPPINES INDONESIA SOUTH KOREA CHINA CHINA JAPAN JAPAN SOUTH KOREA THAILAND VIETNAM

Foreign Reserves (USD mn) Foreign Currency Reserves (USD bn) Benchmark Interest Rate Imports YoY% Exports YoY% Unemployment Rate (SA)% Official Reserve Assets (USD bn) Consumer Confidence Economic New Yuan Loans (RMB bn) Imports YoY% Exports YoY% Trade Balance (USD bn) Foreign Exchange Reserves (USD bn) Total Exports (YoY)% Bank Indonesia Reference Rate% Bank Lending to HH (KRW Tln) Consumer Price Index (YoY)% Producer Price Index (YoY)% Current Account Balance YOY% Current Account Total (JPY bn) South Korea 7-Day Repo Rate % Foreign Reserves (USD bn) Vietnam Consumer Confidence

Dec Dec Jan 9 Nov Nov Dec Dec Dec Dec Dec Dec Dec Dec Nov Jan 10 Dec Dec Dec Nov Nov Jan 11 Jan 4 4Q

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.

Page 7 of 7


MARKET UPDATE FOR ASEAN+3 14 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Asian stocks rise as China regulator outlines investment reform. Asian stocks outside Japan rose with a regional gauge heading for almost two-week high, as Chinese shares rallied after a regulator said China can boost by 10 times quotas for foreign investment in its financial markets. The MSCI Asia Pacific (ex-Japan) increased by 0.4 percent to 477.79 as of 4.35 p.m. in Hong Kong. A gauge of financial stocks ion the MSCI Emerging Markets Index also advanced by 0.8 percent, the most amongst 10 industry groups. China’s Shanghai Composite Index climbed 3.1 percent – the most since 14 December, while the Hang Seng and Jakarta Composite gained 0.6 percent and 1.3 percent, respectively. The FTSE Bursa Malaysia KLCI and Thailand’s SET also gained 0.7 percent and 0.85 percent, respectively.

Yen touches the lowest since 2010 amid bets that Bank of Japan will signal easing. The yen fell to the lowest in more than two years on prospects that Prime Minister Abe will select a central bank chief that can push through bold monetary policy as the next governor of Japan, which meets next week. The yen dropped to as low as 89.67 per dollar, a level unseen since 25 June 2010, before trading at 89.59 as of 6.57 a.m. in London. Meanwhile, the peso retreated from the highest level since March 2008 after the central bank warned that it will intervene to curb swings. The peso fell by 0.15 percent to 46.667 per dollar.

WTI oil gains, while Brent premium narrows as seaway pipeline starts. Oil gained in New York, heading for the highest close since September, while Brent crude’s premium to West Texas Intermediate (WTI) fell to a four-month low after the start of a new pipeline that may reduce a glut in the U.S. Midwest. Crude for February delivery rose as much as 73 cents to US$94.29 a barrel and was at US$94.18 a barrel on the NYMEX at 3.50 p.m. Singapore time.

BREAKING NEWS GLOBAL •

Euro leaders declaring that the single currency is “over the worst of the crisis”. European leaders declaring they have gained the upper hand in the three-year-old debt crisis and are sharpening efforts to channel a rebound in financial markets to an economic recovery. Even as euro-area chiefs call for more time to lock in a bailout package for Cyprus and elections loom next month in Italy, German Finance Minister Wolfgang Schaeuble said that the single currency is “over the worst of the crisis.” Financial markets are starting to appear normal again. The ECB President Mario Draghi cited “positive contagion” in European markets after the ECB’s Governing Council left the central bank’s benchmark interest rate at 0.75 percent, holding its fire amid signs that the debt crisis is waning.

U.K.’s business confidence and output index fall as recovery falters. An index of U.K. business confidence and a gauge of output both fell in December, suggesting the economy may contract in the coming months, according to BDO LLP. The sentiment gauge fell to 90.3 in December from 91.4 the previous month. A measure of output decreased to 93.1 from a reading of 93.4, below the 95 mark that points to positive growth one quarter ahead. The decline suggests that “the U.K. may experience further contraction in the first quarter of 2013, potentially resulting in a triple-dip recession,” BDO said. Britain’s recovery is struggling to take hold after the economy emerged from a recession in the third quarter. The turmoil in the euro area is adding to pressures at home, as the government’s fiscal squeeze curtails domestic spending. The Bank of England last week kept its emergency bond-buying plan on hold as it assesses the effect of a credit-boosting plan introduced in the summer.


Obama to push for comprehensive immigration plan. President Barack Obama plans to push for a comprehensive immigration plan that includes a legislative solution to issues such as undocumented immigrants, according to administration officials. While no final decision has been made about when the Democratic White House’s proposal will be formally introduced, administration officials, who spoke on condition of anonymity to discuss internal deliberations, said they will oppose efforts by Republicans to break immigration legislation into smaller bills. In his first news conference after winning re-election, Obama promised to begin working on a major immigration bill soon after the formal start of his second term.

REGIONAL •

China’s palm oil imports to drop, adding to global stockpiles. Palm oil imports by China, the world’s biggest cooking oil consumer, are set to plunge this month after the government imposed more stringent inspections on shipments, increasing global inventories. Imports may be about 300,000 metric tons in January, less than half of those in December, according to the median of estimates from six traders and researchers compiled by Bloomberg. China’s quality watchdog, the General Administration of Quality Supervision, Inspection and Quarantine, told regional officials to toughen inspections on shipments of cooking oils from 1 January to improve food safety. Stockpiles in Malaysia, the second- largest producer, advanced to a record in December, while exports extended their decline in the first 10 days of January. The government has told companies and other countries that it will strictly enforce quality standards, and that is causing shipments to plunge to half the usual level.

Bank of Japan (BOJ) to get behind 2% inflation target. Prime Minister Shinzo Abe said that his government will set a medium-term 2 percent inflation target with the BOJ in a joint statement expected later this month to help shore up the recession-hit economy. In his latest move to pressure the central bank to be more aggressive in combatting the country's chronic deflation ahead of its next monetary policy meeting on 21 and 22 January, Mr Abe said that what will be important is properly including the price goal of 2 percent. Abe said the BOJ's current goal of 1 percent inflation lacks "strong determination" and that the government and central bank will come up with "a definite goal and write that it will be 2 percent." Abe claimed the new target needs to be achieved under a medium-term scenario rather than a long-term one or financial markets "will not react."

Foreigners bought RM700.8m of Malaysian equities. Foreigners remained firm net buyers of Malaysian equities, purchasing more than net RM700.80mil in the open market in week ended 11 January. MIDF Equities Research said that the purchase of Malaysian equities was the highest in 24 weeks as foreigners bought every trading day last week. The buying streak has now extended to 13 consecutive days. There was heavy buying on Monday, with the amount exceeding RM200mil at RM227mil. For the year until last Friday, foreign investors have bought RM1.1bil of Malaysian equities. In 2012, they bought RM13.7bil, said the research house. It added that the rate of participation (average daily gross purchase and sale) rose to RM847mil, which was still moderate in its assessment. However, local investors continued to withdraw from the market and the rate of withdrawal increased again last week.

Myanmar effect hits tourism in Cambodia. Myanmar’s rising popularity in the tourism sector affected several travel services in Cambodia that claim to have lost customers, especially from Europe. According to one country manager of Cambodian tour operator Other Ways, there appears to be fewer tourists from Europe last year. One reason for that is the economic crisis while a more notable development in the Myanmar effect. Some customers might have preferred Myanmar over Cambodia. Nick Ray, adviser at tour operator Hanuman, says travel businesses have been affected for two main reasons: trips to Thailand were combined with Page 2 of 6


Cambodia, but would now often be twinned with Myanmar. Myanmar also has about five to 10 destinations, which is more than Cambodia. •

Vietnamese government aims to rescue ailing property market. The Vietnamese government has issued a resolution dealing with problems in the property market and bad debt. To solve the inventories and support the market, the Government has asked relevant ministries to implement effective measures to rapidly spur disbursement for construction project. The government has also asked the ministries to allocate investment capital for cities and provinces and focus on building social housing and hostel. Under the resolution, cities and provinces with large inventories are required to limit the use of State budget to invest in developing new residential housing for displaced people. They are asked to use the State coffer to repurchase commercial housing projects from investors to use as social housing for low-income earners, State employees and workers and people who made great contribution to the State. The Government also decided to reduce 50 per cent of land rent this year and in 2014. At the same time, the Government has assigned the Minister of Finance to report to the National Assembly, recommending the legislature to consider and decide to apply corporate income tax at 20 per cent as of July 1, 2013 six months earlier than the schedule. The Government plans to slash 50 per cent of value added tax for investment and trading performance from social housing as of July 1, 2013 to the end of June 2014

IFIs NEWS (compiled from their websites) FSB – Press Release: Formation of the LEI Regulatory Oversight Committee of the Global LEI System •

The Financial Stability Board has formed the legal entity identifier (LEI) Regulatory Oversight Committee. The Member and Observers to the ROC are published as below. http://www.financialstabilityboard.org/publications/r_130111.pdf

FSB – Press Release: Fifth progress note on the implementation of the legal entity identifier (LEI) initiative •

The Financial Stability Board has issued the fifth of a series of notes on the implementation of the legal entity identifier (LEI) initiative. http://www.financialstabilityboard.org/publications/r_130111a.pdf

IMF – Working Paper •

The IMF has publicised the following working papers: •

The Behavior of Currencies during Risk-off Episodes – “Episodes of increased global risk aversion, also known as risk-off episodes, have become more frequent and severe since 2007. During these episodes, currency markets exhibit recurrent patterns, as the Japanese yen, Swiss franc, and U.S. dollar appreciate against other G-10 and emerging market currencies. The pattern of these moves can be explained by a combination of fundamental factors, such as the nominal interest rate, the international investment position and measures of exchange rate misalignment, and market-liquidity factors, such as bid-offer spreads and restrictions on international capital flows. We also find that currency performance in a risk-off episode has become more related to a currency’s yield and relationship to broader risks in recent years.” http://www.imf.org/external/pubs/ft/wp/2013/wp1308.pdf

Page 3 of 6


New Zealand Banks’ Vulnerabilities and Capital Adequacy – “ “The paper finds that, given New Zealand’s conservative approach in implementing the Basel II framework, New Zealand banks’ headline capital ratios underestimate their capital strength. A comparison with Canadian, UK and Australian banks highlights the impact of New Zealand’s more conservative approach.” http://www.imf.org/external/pubs/ft/wp/2013/wp1307.pdf

Why are the G-20 Data Gaps Initiative and the SDDS Plus Relevant for Financial Stability Analysis? – “In the wake of the recent global crisis the international community is giving an increased focus on stability of the financial system, so-called financial stability analysis. With the increasing need for data sets to undertake this analysis, the question naturally arises as to what types of data are needed? While various data initiatives are underway, two initiatives at the forefront are: (1) the IMF/FSB G-20 Data Gaps Initiative (DGI) created by the international statistical community and endorsed by the G-20 Finance Ministers and Central Bank Governors as well as the IMF’s International Monetary and Financial Committee, and (2) the new Special Data Dissemination Standard Plus (SDDS Plus), aimed particularly at economies with systemically important financial sectors. This paper explains the relevance of the DGI for financial stability analysis and the close link with the SDDS Plus. The importance of the SDDS Plus in promoting the dissemination to the public of a core set of data for financial stability analysis is emphasized. http://www.imf.org/external/pubs/ft/wp/2013/wp1306.pdf

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 11-Jan 14-Jan close China 6.2306 6.2158 6.2158 6.2203 Hong Kong 7.7503 7.7518 7.7518 7.7527 Indonesia 9,793.0 9,866.0 9,866.0 9,635.0 Japan 86.75 89.18 89.18 89.43 Korea 1,064.4 1,054.7 1,054.7 1,056.1 Malaysia 3.058 3.0210 3.0210 3.0175 Philippines 41.005 40.6 40.6 40.68 Singapore 1.2218 1.225 1.225 1.2262 Thailand 30.6 30.3 30.3 30.3 Vietnam 20,840.0 20,850.0 20,850.0 20,842.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.07 -0.01 2.40 -0.28 -0.14 0.12 -0.20 -0.10 0.03 0.04

2013 YTD (%chg)

0.2 0.0 0.2 -2.3 0.7 0.6 0.4 -0.5 0.2 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,243.0 23,264.1 4,305.9 10,801.6 1,996.7 1,682.7 6,051.8 3,216.5 1,412.1 462.7

11-Jan 2,243.0 23,264.1 4,305.9 10,801.6 1,996.7 1,682.7 6,051.8 3,216.5 1,412.1 462.7

14-Jan 2,311.7 23,413.3 4,363.7 10,801.6 2,007.0 1,683.0 6,093.9 3,201.2 1,424.1 459.0

% change 3.06 0.64 1.34 0.00 0.52 0.02 0.70 -0.48 0.85 -0.80

2013 YTD (%chg) 1.9 0.4 0.4 3.9 -1.2 0.5 4.0 0.0 1.2 9.7

Page 4 of 6


China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

OVERNIGHT LENDING RATE (%) 11-Jan 14-Jan bps change 2.030 2.040 1.00 0.094 0.096 0.29 4.182 4.178 -0.44 0.098 0.098 0.00 2.750 2.750 0.00 3.000 3.000 0.00 -0.215 -1.946 -173.10 0.022 0.022 0.00 2.750 2.750 0.00 3.933 3.710 -22.30

3-MONTH INTERBANK LENDING RATE (%) 11-Jan 14-Jan bps change 3.904 3.906 0.15 0.388 0.388 0.00 4.952 4.942 -0.96 0.309 0.309 0.00 2.820 2.820 0.00 3.210 3.210 0.00 -0.312 -0.094 21.80 0.377 0.377 0.00 2.868 2.868 0.00 7.184 6.975 -20.90

CREDIT DEFAULT SWAP (IN BPS) 11-Jan 14-Jan bps change China 63.87 63.08 -0.79 Hong Kong 42.22 42.02 -0.20 Indonesia 147.66 135.59 -12.07 Japan 74.01 73.38 -0.63 Korea 66.84 65.54 -1.30 Malaysia 78.09 77.68 -0.41 Philippines 102.97 99.00 -3.97 Thailand 90.46 91.20 0.73 Vietnam 208.50 209.01 0.51 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. 11-Jan Gold Spot (in US$ per ounce)

14-Jan

1,663.0

% change

1,669.3

0.38

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

Page 5 of 6


EXTERNAL LIQUIDITY RATIOS

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

Reserves - latest

3 months imports of goods/serv

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 20.0

504.3 144.7 50.5 71.0 150.9 58.0 19.3 118.2 67.2 25.4

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY Country -

Indicators -

Period -

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/15/2013 SINGAPORE Retail Sales (YoY)% SINGAPORE Retail Sales ex-auto (YoY)% JAPAN Machine Tool Orders (YoY)% JAPAN Money Stock (M2), (YoY)% JAPAN Money Stock (M3), (YoY)% PHILIPPINES OFW Remittances (YoY)% 1/16/2013 JAPAN Machinery Orders (YoY)% JAPAN Machinery Orders (MoM)% JAPAN Consumer Confidence 1/17/2013 SINGAPORE Electronic Exports (YoY)% SINGAPORE Non-oil Domestic Exports (YoY)% HONG KONG Unemployment rate, SA (%) PHILIPPINES Money Stock (M3), (YoY)% 1/18/2013 THAILAND Foreign Reserves (USD bn) CHINA Real GDP (YoY)% CHINA Real GDP (QoQ)% CHINA Industrial Production (YoY)% CHINA Retail Sales (YoY)% JAPAN Industrial Production (YoY)% JAPAN Industrial Production (MoM)% JAPAN Capacity Utilisation (MoM)% PHILIPPINES Balance of Payments (USD bn)

Last -

Previous -

Period Nov Nov Dec P Dec Dec Nov Nov Nov Dec Dec Dec Dec Nov 11 Jan 4Q 4Q Dec Dec Nov F Nov F Nov F Dec

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.

Page 6 of 6


MARKET UPDATE FOR ASEAN+3 15 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Most Asian stocks climb as Japanese shares advance. Most Asian stocks rose, with the regional benchmark index heading for the highest close since August 2011. Japanese shares gained after Bank of Japan Governor said the central bank will pursue powerful monetary easing. The MSCI Asia Pacific Index rose 0.3 percent to 132.51 as of 5:20 p.m. in Tokyo. The gauge is extending a rally for a third consecutive month after reports showed China’s economy is recovering and Japanese shares gained on speculation of more aggressive policies to stimulate the world’s third-largest economy. The Nikkei 225 Stock Average (NKY) gained 0.7 percent to its highest close since April 2010. The Shanghai Composite Index advanced by 0.6 percent, while Hong Kong’s Hang Seng and Korea’s KOSPI both lost 0.1 percent and 1.2 percent, respectively.

Yen rallies as Japan official Amari comments on currency. The yen rose against all of its 16 major peers after comments by Japan’s economy minister stoked speculation the nation would not try to spur further weakness in its currency. The yen ended four days of declines against the dollar after Amari said an excessively weak currency could impact import costs and households. The yen rallied 0.6 percent to 88.96 per dollar as of 6:25 a.m. in London after reaching 89.67 yesterday – the weakest since June 2010. The ringgit advanced to a 10-month high as optimism bolstered demand for riskier assets. The ringgit strengthened by 0.4 percent to 3.0041 per dollar.

Oil falls from four-month high as U.S. stockpiles seen gaining. Oil fell in New York as investors speculated that a rally to the highest level in almost four months was excessive amid rising stockpiles and concern the U.S. economic recovery may be derailed by a budget dispute. Crude for February delivery dropped as much as 43 cents to US$93.71 a barrel in electronic trading on the NYMEX and was at US$93.86 at 4:09 p.m. Singapore time. The contract increased to US$94.14 yesterday, the highest settlement since 18 September.

BREAKING NEWS GLOBAL •

Obama refuses to negotiate debt ceiling. President Barack Obama on Monday rejected any negotiations with Republicans over raising the U.S. borrowing limit, accusing his opponents of trying to extract a ransom for not ruining the economy in the latest fiscal fight. At a White House news conference called to promote his position on the budget, Obama vowed not to trade cuts in government spending sought by Republicans in exchange for raising the borrowing limit. Obama said that "What I will not do is to have that negotiation with a gun at the head of the American people”. With an agreement to prevent the economy falling over a "fiscal cliff" barely two weeks old, Washington has already begun skirmishing over a new fiscal issue – the debt ceiling, which fixes a limit on how much the government can borrow. The United States could default on its debt if Congress does not increase the borrowing limit, a prospect Federal Reserve Chairman Ben Bernanke warned against in separate comments.

U.S. debt limit steps may run out by mid-February. U.S. Treasury Secretary Timothy F. Geithner said so-called extraordinary measures he is taking to avoid breaching the debt ceiling would work only until mid- February to early March and warned that failure by Congress to raise the limit could “impose severe economic hardship” on the country. “Congress should act as early as possible to extend normal borrowing authority in order to avoid the risk of default and any interruption in payments,” Geithner said in a letter today to House Speaker John Boehner. In the letter, released by the Treasury, Geithner said the department will “provide a more narrow range” of dates with a “more targeted estimate at a later date.” Geithner’s estimate is similar to


one made by the Washington-based Bipartisan Policy Center last week. The center projected that sometime between 15 February and 1 March, the Treasury will no longer have sufficient funds to pay all its bills. •

Bernanke to weigh QE costs as Fed assets approach record. Fed Chairman Ben S. Bernanke indicated that the central bank is weighing the potential costs from its US$85 billion in monthly purchases of bonds while saying the unorthodox easing bolsters the economy. According to Bernanke, “So far, we think we are getting some effect, it is kind of early. We are going to continue to assess how effective the program is because it is possible that as you move through time and the situation changes, the impact of these tools could vary.” The Federal Open Market Committee (FOMC) last month decided to add US$45 billion in monthly purchases of U.S. Treasury notes to its program buying US$40 billion of mortgage-backed securities each month. The committee set no limit on the size or duration of the bond purchases. Minutes from the 1112 December meeting showed that even as they were preparing to launch new Treasury purchases, “several” FOMC members said it would “probably be appropriate to slow or stop buying well before the end of 2013. A “few” others were willing to let the program run to the end of the year, while “a few others” didn’t give a time frame.

Germany economy likely contracted in the fourth quarter of 2012. Germany’s economy, Europe’s largest, probably shrank in the final quarter of 2012 as the sovereign debt crisis and weaker global growth damped exports and company investment. Gross domestic product may have dropped as much as 0.5 percent from the third quarter, the Federal Statistics Office in Wiesbaden said today in a preliminary estimate. In 2012, growth slowed to 0.7 percent from 3 percent in 2011, it said. While today’s fourth-quarter estimate leaves Germany on the brink of recession, the Bundesbank predicts the economy will stabilize and avoid two consecutive periods of contraction even as the debt crisis curbs growth across euroland.

U.K. home price index rises to 30-month high as outlook improves. An index of U.K. house prices rose to the highest in two and a half years last month as measures to boost credit lifted optimism at real-estate agents about the outlook, the Royal Institution of Chartered Surveyors (RICS) said today. The price gauge advanced to zero from -9 in November, citing a monthly poll of property surveyors. It is the first time since June 2010 that the measure has not been below zero. A gauge of sales expectations for the next three months also rose. The Bank of England started its Funding for Lending Scheme in August and reported earlier this month that credit conditions have eased. The RICS added that there has been a “notable increase” in new buyer inquiries in recent months and the housing market in some areas “may have started to bottom out”.

REGIONAL •

Amari signals limits to Abe’s campaign to weaken the yen. Japanese Economy Minister Akira Amari said that the nation faces risks from any excessive decline in the yen, highlighting limits on Prime Minister Shinzo Abe’s campaign to drive down the currency. Amari told reporters in Tokyo today that if the yen excessively weakens, this would cause a spike in import prices. He added that it would be beneficial for exports, but at the same time, there are harmful effects on people’s livelihoods. However, he said that the currency is “correcting” to a level in line with economic fundamentals, while declining to comment on an appropriate value. Fiscal stimulus and the prospect of more central-bank easing drove a decline of about 10 percent in the yen against the dollar in two months, aiding Japanese exporters as the nation struggles to climb out of recession. Junko Nishioka, chief economist at RBS Securities Japan Ltd. and a former BOJ official; said that further depreciation of the yen is necessary to boost manufacturers’ profits and improve price competitiveness.

Page 2 of 7


Korea approves restrictions on giant retailers. Korea's government today approved a national law restricting the operating hours of large retailers in a bid to protect small stores who say they are being pushed out of business. The law, which will start to come into effect after three months, requires warehouse-style chains to shut stores on two Sundays a month and to limit their operating hours to 10:00 am to midnight. The Sunday closure rule has already been adopted by many city councils, including the capital Seoul, although several top retailers have fought it in the courts, claiming discrimination. Last October, Seoul city officials cracked down on outlets of US retail giant Costco, writing up a host of minor parking and safety breaches in apparent reprisal for the company's non-adherence to Sunday closing. Protecting small merchants and mom-and-pop stores was one of the top campaign promises of president-elect Park Geun-Hye, who will take office next month after winning December's election. Widening income gaps and a lack of controls on major conglomerates were both major issues during the election campaign.

Housing is Hong Kong’s top issue as Chief sets policy goals. Executive Leung Chun-ying may address the city’s housing crunch when he gives his first policy address tomorrow, as he seeks to boost record- low popularity and move on from an opposition impeachment bid. With housing prices double what they were four years ago, the government must tackle the city’s crisis “without delay,” Leung wrote in a blog post ahead of his first policy speech since he became chief executive in July. Leung, who came to office on campaign promises to improve the lives of poor and middle-class citizens, may announce more measures to boost Hong Kong’s land supply. The city faces challenges that include property prices and pollution that have made it the most expensive and one of the smoggiest financial centres in the world.

Myanmar to award 2 nationwide telco service licenses in 1H 2013. The Myanmar government has invited companies to submit bids for two nationwide telecommunications service licenses, which will be issued by the first half of 2013. The government said today that the issuance of the licenses was part of its policy framework to develop its telecommunications and ICT industry by facilitating competition of local and international operators in the sector. According to the government, the main goals are to increase the overall tele-density of the country to 75 percent to 80 percent in 2015-2016, to make the telecommunications services available to the public at affordable prices, and to give the public the capability of choice for the telecommunications services.

Cambodia official tips 7 percent growth in 2013. A Government official predicts Cambodia’s gross domestic product will grow by seven per cent this year despite the uncertainty of the global economy, especially in the U.S. and in light of the sovereign-debt crisis in Europe. The projection is only slightly higher than estimates by the International Monetary Fund (IMF), the World Bank and the Asian Development Bank, which average 6.7 per cent. Ou Proum Virak, deputy director of the Trade Promotion Department of the Commerce Ministry, said that the global economy was on the way to recovery. He added that Cambodia’s economy had done well last year and would keep growing this year. He said garment exports, tourism, agriculture and construction were still on the rise, but added that the global economic situation at the end of 2012 and into 2013 still pose high risks caused by persistent sovereign-debt problems in Europe and the sluggish recovery of the US economy.

Singapore’s record home sales in 2012 drive government measures. Singapore’s home sales rose to a record last year, fueling prices to an all-time high and prompting the government to introduce cooling measures last week. Home sales climbed to 1,410 units in December from 1,087 units in November, according to data released by the Urban Redevelopment Authority today. Home sales reached 22,699 units in 2012, according to calculation by Bloomberg News based on the government data, which dates back to 1996. Singapore home prices reached a record high in the fourth quarter amid low interest rates, raising concerns of a housing bubble and prompting the government to introduce its seventh round of cooling measures on 11 January 2013. According to the director of valuation and head of consultancy and research at Page 3 of 7


Knight Frank Pte in Singapore, sales volumes are likely to dampen in the coming months. Whilst pent-up home buying demand is strong, the higher stamp duties, tighter loan-to-value limits and higher cash down payment would deter home buyers, who do not have the cash resources for their planned purchases. Knight Frank cut its estimates for new home sales for 2013 by 20 percent and expects sales to range between 12,000 and 14,000 units this year. •

Philippines’ overseas foreign worker (OFW) remittances grew by 7.6 percent annually in November 2012. Remittances sustained its strong growth last November as Filipinos saw steady demand for labor abroad, data from the Bangko Sentral ng Pilipinas (BSP) showed today. Filipinos working and living abroad sent home US$1.918 billion for the month, 7.6 percent more than the previous year. For the first 11 months, remittances totaled US$19.416 billion, 6 percent up from the same period in 2011. This performance far surpasses the 5 percent growth target of the BSP for 2012.

IFIs NEWS (compiled from their websites) IFC – Publication: “Assessing Private Sector Contributions to Job Creation” •

A new study by IFC finds that much-needed jobs in developing countries can be created at a faster rate if policymakers and development institutions make it a priority to remove the key obstacles to growth that private-sector companies face. The captioned study concludes that four obstacles pose a particular challenge to job creation in the private sector: a weak investment climate, inadequate infrastructure, limited access to finance for micro, small, and medium enterprises; and insufficient training and skills. Removing these obstacles can significantly increase job creation. http://www.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/AC486DA92DE3A94C85257AF30051 079F http://www1.ifc.org/wps/wcm/connect/46e7af804e2decd89943b97a9dd66321/IFC+Jobs+Stud y+4-page+FactSheet+Janaury+2013.pdf?MOD=AJPERES (Factsheet) http://www1.ifc.org/wps/wcm/connect/5c201d004e2c09d28d32ad7a9dd66321/IFC_Job+Study +Condensed+Report..pdf?MOD=AJPERES (Report)

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 14-Jan 15-Jan close China 6.2306 6.2158 6.2203 6.2157 Hong Kong 7.7503 7.7518 7.7523 7.7531 Indonesia 9,793.0 9,866.0 9,635.0 9,868.0 Japan 86.75 89.18 89.48 88.73 Korea 1,064.4 1,054.7 1,056.1 1,056.6 Malaysia 3.058 3.0210 3.0170 3.01 Philippines 41.005 40.6 40.68 40.585 Singapore 1.2218 1.225 1.2258 1.2249 Thailand 30.6 30.3 30.2 30.1 Vietnam 20,840.0 20,850.0 20,842.0 20,842.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.07 -0.01 -2.36 0.85 -0.04 0.23 0.23 0.07 0.60 0.00

2013 YTD (%chg) 0.3 0.0 -2.2 -1.6 0.7 0.8 0.7 -0.4 0.9 0.0

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STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,243.0 23,264.1 4,305.9 10,801.6 1,996.7 1,682.7 6,051.8 3,216.5 1,412.1 462.7

14-Jan 2,311.7 23,413.3 4,382.5 10,801.6 2,007.0 1,684.6 6,093.9 3,206.6 1,425.1 459.0

OVERNIGHT LENDING RATE (%) 14-Jan 15-Jan bps change 2.040 2.070 3.00 0.096 0.096 -0.07 4.178 4.179 0.16 0.095 0.088 -0.75 2.750 2.750 0.00 3.000 3.000 0.00 -1.946 0.713 265.90 0.024 0.024 0.00 2.750 2.750 0.00 3.710 3.630 -8.00

15-Jan

% change

2,325.7 23,381.5 4,400.8 10,879.1 1,983.7 1,685.9 6,087.7 3,190.6 1,422.8 461.4

0.60 -0.14 0.42 0.72 -1.16 0.07 -0.10 -0.50 -0.16 0.53

2013 YTD (%chg) 2.5 0.3 1.3 4.7 -2.3 0.7 3.9 -0.3 1.1 10.3

3-MONTH INTERBANK LENDING RATE (%) 14-Jan 15-Jan bps change 3.906 3.905 -0.11 0.388 0.388 0.00 4.942 4.941 -0.08 0.309 0.308 -0.08 2.820 2.820 0.00 3.210 3.210 0.00 -0.094 -0.426 -33.20 0.377 0.377 0.00 2.868 2.867 -0.08 6.975 6.680 -29.50

CREDIT DEFAULT SWAP (IN BPS) 14-Jan 15-Jan bps change China 63.08 65.33 2.25 Hong Kong 42.50 n.a. n.a. Indonesia 135.59 139.52 3.93 Japan 73.38 76.71 3.33 Korea 65.54 68.26 2.72 Malaysia 77.92 80.42 2.50 Philippines 99.00 102.71 3.72 Thailand 91.20 92.28 1.08 Vietnam 210.67 213.15 2.48 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. 14-Jan Gold Spot (in US$ per ounce)

1,667.8

15-Jan

% change

1,681.0

0.79

Source: Bloomberg

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

Page 5 of 7


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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

EXTERNAL LIQUIDITY RATIOS

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

Reserves - latest

3 months imports of goods/serv

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 20.0

504.3 144.7 50.5 71.0 150.9 58.0 19.3 118.2 67.2 25.4

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY Country SINGAPORE SINGAPORE JAPAN JAPAN JAPAN PHILIPPINES

Indicators Retail Sales (YoY)% Retail Sales ex-auto (YoY)% Machine Tool Orders (YoY)% Money Stock (M2), (YoY)% Money Stock (M3), (YoY)% OFW Remittances (YoY)%

Period Nov Nov Dec P Dec Dec Nov

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/15/2013 SINGAPORE Retail Sales (YoY)% SINGAPORE Retail Sales ex-auto (YoY)% JAPAN Machine Tool Orders (YoY)% JAPAN Money Stock (M2), (YoY)% JAPAN Money Stock (M3), (YoY)% PHILIPPINES OFW Remittances (YoY)% 1/16/2013 JAPAN Machinery Orders (YoY)% JAPAN Machinery Orders (MoM)% JAPAN Consumer Confidence 1/17/2013 SINGAPORE Electronic Exports (YoY)% SINGAPORE Non-oil Domestic Exports (YoY)% HONG KONG Unemployment rate, SA (%) PHILIPPINES Money Stock (M3), (YoY)%

Last -1.1 2.0 -27.5 2.6 2.2 7.6

Previous -1.0 1.3 -21.3 2.1 1.9 8.5

Period Nov Nov Dec P Dec Dec Nov Nov Nov Dec Dec Dec Dec Nov

Page 6 of 7


Expected released date 1/18/2013

Country THAILAND CHINA CHINA CHINA CHINA JAPAN JAPAN JAPAN PHILIPPINES

Indicators Foreign Reserves (USD bn) Real GDP (YoY)% Real GDP (QoQ)% Industrial Production (YoY)% Retail Sales (YoY)% Industrial Production (YoY)% Industrial Production (MoM)% Capacity Utilisation (MoM)% Balance of Payments (USD bn)

Period 11 Jan 4Q 4Q Dec Dec Nov F Nov F Nov F Dec

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.

Page 7 of 7


MARKET UPDATE FOR ASEAN+3 16 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Asian stocks drop on overheating concerns. Asian stocks dropped, with the regional benchmark index heading for its biggest loss since November, amid signs markets are overbought. The Nikkei 225 Stock Average slid by the most in eight months, while Chinese shares fell for the first time in three days. The 14-day relative strength index, an indicator of market momentum, on the MSCI Asia Pacific Index reached 75 yesterday. A level above 70 is considered by some investors as a sign the market is overbought. Shares on the Asian gauge traded at 14.2 times estimated earnings, compared with 13.3 for the Standard & Poor’s 500 Index and 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. Japan’s Nikkei 225 dropped 2.6 percent, posting its biggest decline since 18 May.

Yen heads for biggest two-day advance since May before Bank of Japan meets. The yen headed for its biggest two- day gain in eight months amid speculation the Bank of Japan will fail to impress investors with extra policy measures at its 21-22 January meeting. The yen stood at 87.92 at 5.00 p.m. Singapore time. Other regional currencies such as the Thai baht and Indonesia rupiah gained 0.4 percent and 2.1 percent, respectively.

Oil trades near one-week low as U.S. crude inventories increase. Oil traded near the lowest level in almost a week in New York after U.S. crude stockpiles increased and the World Bank cut its economic growth forecasts. An Energy Department report today may show stockpiles climbed by 2.2 million barrels, according to a Bloomberg News survey. Crude for February delivery was at US$93.47 a barrel, up 19 cents, in electronic trading on the NYMEX at 3:40 p.m. Singapore time. The contract declined 0.9 percent to US$93.28 yesterday, the biggest drop since 21 December and the lowest close since 9 January.

BREAKING NEWS GLOBAL •

World Bank cuts its global growth forecast as developed nations lose steam. The World Bank cut its global growth forecast for this year as austerity measures, high unemployment and low business confidence weigh on economies in developed nations. The Washington-based bank yesterday projected that the world economy will expand by 2.4 percent, down from a June forecast of 3 percent, after growing by 2.3 percent in 2012. It halved its forecast for Japan, cut the U.S. projection by 0.5 percentage point and predicted a second year of contraction in the euro region. It also lowered projections for emerging markets led by Brazil, India and Mexico. “Overall, the global economic environment remains fragile and prone to further disappointment, although the balance of risks is now less skewed to the downside than it has been in recent years,” the World Bank said in its twice-yearly report. Developed economies failed to gain steam in 2012 even after measures to stem the European debt crisis helped boost financial markets around the world. Uncertainties surrounding a U.S. political agreement on spending cuts and Japan’s diplomatic tensions with China may weigh further on the global economy just as emerging markets recover from one of their slowest growth rates of the past decade.

European December car sales fall 16 percent on U.S. producers. European car sales in December fell the most in more than two years as recessions in the southern part of the region cut demand at Ford Motor, General Motors Co. and Renault. Registrations plunged by 16 percent to 838,428 vehicles last month from 997,842 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said in a statement today. Car manufacturers have announced 30,000 job cuts in Europe since July, with Renault and Paris-


based Peugeot Citroen planning workforce cutbacks of 17 percent in their home market of France, amid a contraction in the economy of the 17 countries using the euro. Manufacturers of mid-range cars, such as Peugeot and Turin, Italy-based Fiat have exacerbated losses with price cuts that failed to win buyers. The decline in December was the biggest since a 17 percent drop in October 2010. •

Euro on 10-month high poses economic threat. The euro’s 8 percent gain against the U.S. dollar in the past six months is posing a fresh threat to the European economy just as it shows signs of escaping the debt crisis, said Jean-Claude Juncker, who leads the group of euro-area finance ministers. Echoing policy makers from Switzerland to Japan in bemoaning strong exchange rates, Juncker late yesterday called the euro’s value “dangerously high” after the 17-nation currency this week traded above $1.34 against the dollar for the first time since February last year. The euro has rallied amid growing signs in financial markets that the three-year debt turmoil is fading and after European Central Bank President Mario Draghi last week signaled no immediate plan to ease monetary policy further.

India banking system face worsening asset quality. India’s financial system has been made vulnerable by the deterioration in bank assets and a lack of capital as the economy slowed, according to the International Monetary Fund. The main near-term risks to the financial system are a worsening of bank asset quality and renewed pressures on systemic liquidity. According to the IMF, stress tests have shown that the risks are “manageable” for now, which concluded its assessment of India’s financial stability in February 2012. The IMF added that increasing involvement of the state in the financial industry leaves the government exposed to losses at banks and is acting as a brake on economic growth.

REGIONAL •

Japan machine orders rise more than estimated in November. Machinery orders rose more than expected in November, suggesting that companies were optimistic about the economic outlook as the yen weakened. Orders, an indicator of capital spending, climbed 3.9 percent from the previous month for the second straight rise, according to the Cabinet Office today in Tokyo.

Hong Kong Chief unveils plans to ease city housing shortage. Hong Kong will build a land reserve and speed up public-housing construction, Chief Executive Leung Chun-ying said today, as the city seeks to tame record high property prices that have led to concerns of a housing bubble. In his first policy address since taking office last July, Hong Kong will maintain property curbs for overseas buyers. The supply of housing in the next five years will exceed the previous period by at least 18 percent, according to figures compiled from Leung’s speech. The measures announced today, which also included free kindergarten education and pollution-control efforts, must be made as leaders “grasp the nettle” and address the city’s “deep-rooted” problems. Battling record-low approval ratings, he is looking to refocus attention on his policy initiatives after defeating two opposition bids to oust him in recent weeks.

China defends December export data in response to scepticism. China’s customs administration said that every dollar of trade is documented, defending the quality of export data that analysts at UBS AG and Australia & New Zealand Banking Group Ltd. (ANZ) said may fail to capture the true picture. “Customs import and export statistics are based upon actual customs declarations,” the General Administration of Customs said in an e-mailed statement yesterday, responding to questions submitted by Bloomberg News on 11 January. China’s unexpected 14.1 percent export gain in December from a year earlier spurred scepticism from economists which cited discrepancies with other nations’ trade data. The Ministry of Commerce said today that exporters hurried shipments before a waiver of inspection fees expired at the end of the month and it was wrong to speculate that the data was false.

Page 2 of 7


Lao PDR to become full World Trade Organisation (WTO) member next month. Laos will become a full member of the WTO early next month after the General Council meeting of WTO members agreed to allow Laos to join the organisation in October last year. On the 3rd of this month the country informed the WTO secretariat that the National Assembly had ratified the membership, meaning that Laos will become a full WTO member, its 158th, on the 2nd of February, over 15 years since Laos applied to join on 16 July 1997. The success of the application will have a major impact on the future of the country and will help Laos to fully integrate with the international community. The National Coordination Committee representing all government organisations gathered on Monday in Vientiane to discuss work plans and seek opportunities and challenges from its members concerning national development.

Myanmar and China to promote trade. Vice-President of the Republic of the Union of Myanmar U Nyan Tun received a delegation led by Vice Minister of Commerce Mr Chen Jian of the People’s Republic of China, at Credentials Hall of Presidential Palace yesterday. They held a cordial discussion on further promoting trade between the two countries, successful functioning of businesses based on amity, and more investments in the sectors of transport, electricity and infrastructures.

Indonesia surpasses target in bond issuance. Indonesia's government bonds sold like hotcakes, surpassing the initial target of Rp 7 trillion by garnering Rp 9 trillion (US$926 million) from the debt papers in an auction yesterday. The weighted average yields for the three-month and oneyear debt papers were 3.99 percent and 4.33 percent, according to the Finance Ministry's debt management office. The yields for the five-year, 10-year and 20-year notes were 4.66 percent, 5.2 percent, and 6.1 percent, respectively. It shows that the auction has high demand and the perception of Indonesia's economy is still widely positive as the government absorbed well above its initial target of Rp 7 trillion.

Thailand’s exports expected to grow at 9.38 percent in the first half year. Thailand’s Ministry of Commerce’s Trade Policy and Strategy Office has projected that exports over the first six months of the year (Jan-June) will grow by 9.38 percent. Deputy permanent secretary for commerce Nanthawan Sakuntanak said today that exports to China are expected to expand by 9.98 percent, to India 10.30 percent, and to the other nine member countries of ASEAN 6.79 percent. Exports to Japan are also projected to grow by 3.31 percent, to the U.S. 5.45 percent and to European Union 5.71 percent. According to Nanthawan, these projections were based on simulated economic model using economic indicators of the Organization for Economic Cooperation and Development (OECD).

IFIs NEWS (compiled from their websites) ADB – Press Release: More 'Green' Buses to Ply Urban Roads in People's Republic of China •

More public buses with lower greenhouse gas (GHG) emissions will soon be deployed on the roads of major cities in China as ADB helps bus operators shift their fleets to cleaner fuel. ADB has earmarked $275 million for up to five top-tier financial leasing companies in China to finance leased buses that run on cleaner fuel – such as compressed natural gas (CNG) and liquefied natural gas (LNG) – as well as electric and hybrid buses. http://www.adb.org/news/more-green-buses-ply-urban-roads-peoples-republic-china

G20 – Press Release: The first Framework Working Group meeting within Russia’s Presidency took place in New Delhi •

The first Framework Working Group meeting within Russia's Presidency took place in New Delhi (India) on January 14-15, 2013. The representatives of the G20 Finance Ministries and Central Banks and experts from IMF, World bank, OECD, ILO, BIS and UNCTAD attended the meeting. During the meeting delegates affirmed to continue monitoring developments in the global economy and assess progress in meeting commitments made in Los Cabos (June 19, 2012) to Page 3 of 7


restore global economy and enhancement of the accountability assessment process in realizing Framework for strong, sustainable and balance growth by G20's member economies. http://www.g20.org/news/20130115/781144087.html IMF – Press Release: IMF-Singapore Regional Training Institute Hosts Triennial Asia-Pacific Training Meeting •

The IMF-Singapore Regional Training Institute (STI) organized the Third STI Meeting on Training in the Asia-Pacific region on January 14-15, 2013. The two-day seminar was held in Singapore and attended by 36 senior officials in charge of training at central banks, finance ministries, and other government agencies from countries across the Asia-Pacific. Representing STI’s main donors were senior officials from Singapore’s Ministry of Foreign Affairs, the Monetary Authority of Singapore, the Japanese Embassy and the Australian High Commission, as well as senior staff from IMF headquarters. http://www.imf.org/external/np/sec/pr/2013/pr1312.htm

IMF – Publication: “India: Financial System Stability Assessment Update” •

The IMF has publicised the captioned staff paper. http://www.imf.org/external/pubs/ft/scr/2013/cr1308.pdf

IMF – Working Paper •

The IMF has publicised the following working papers: •

Recent Improvements to the Government Finance Statistics Yearbook Database in Response to Analytical Needs - The purpose of this paper is to provide a non-technical overview of the methodology and advantages of the GFSY database and discussion of how the database is improving to better meet the needs of the user community. http://www.imf.org/external/pubs/ft/wp/2013/wp1315.pdf

Connected to Whom? International Interbank Borrowing During the Global Crisis - This paper focuses on the drivers of the retrenchment from 32 advanced and emerging banking systems. http://www.imf.org/external/pubs/ft/wp/2013/wp1314.pdf

Explaining ASEAN-3’s Investment Puzzle A Tale of Two Sectors - This paper shows that the post-crisis investment recession has been mainly concentrated in the nontradable sector, and hypothesizes that the slowdown is because firms operating in that sector are financially constrained. http://www.imf.org/external/pubs/ft/wp/2013/wp1313.pdf

Modeling Sterilized Interventions and Balance Sheet Effects of Monetary Policy in a NewKeynesian Framework - We study a wide range of hybrid inflation-targeting (IT) and managed exchange rate regimes, analyzing their implications for inflation, output and the exchange rate in the presence of various domestic and external shocks. http://www.imf.org/external/pubs/ft/wp/2013/wp1311.pdf

Okun's Law: Fit at 50? - This paper asks how well Okun’s Law fits short-run unemployment movements in the United States since 1948 and in twenty advanced economies since 1980. http://www.imf.org/external/pubs/ft/wp/2013/wp1310.pdf

Page 4 of 7


FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 15-Jan 16-Jan close China 6.2306 6.2158 6.2157 6.2184 Hong Kong 7.7503 7.7518 7.7518 7.7527 Indonesia 9,793.0 9,866.0 9,868.0 9,668.0 Japan 86.75 89.18 88.79 87.92 Korea 1,064.4 1,054.7 1,056.6 1,058.7 Malaysia 3.058 3.0210 3.0100 3.0173 Philippines 41.005 40.6 40.585 40.69 Singapore 1.2218 1.225 1.2262 1.2251 Thailand 30.6 30.3 29.9 29.8 Vietnam 20,840.0 20,850.0 20,842.0 20,843.0 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.04 -0.01 2.07 0.99 -0.21 -0.24 -0.26 0.09 0.37 0.00

2013 YTD (%chg) 0.2 0.0 -0.2 -0.7 0.5 0.6 0.4 -0.4 1.7 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,243.0 23,264.1 4,305.9 10,801.6 1,996.7 1,682.7 6,051.8 3,216.5 1,412.1 462.7

15-Jan 2,325.7 23,381.5 4,400.8 10,879.1 1,983.7 1,685.9 6,087.7 3,196.1 1,422.9 461.4

OVERNIGHT LENDING RATE (%) 15-Jan 16-Jan bps change 2.070 2.040 -3.00 0.096 0.096 0.00 4.179 4.178 -0.16 0.100 0.098 -0.25 2.750 2.750 0.00 3.000 3.000 0.00 0.713 3.024 231.10 0.027 0.027 0.00 2.750 2.750 0.00 3.630 3.500 -13.00

16-Jan

% change

2,309.5 23,357.0 4,403.1 10,600.4 1,977.5 1,680.8 6,047.5 3,206.0 1,422.9 465.3

-0.70 -0.10 0.05 -2.56 -0.32 -0.30 -0.66 0.31 0.00 0.83

2013 YTD (%chg) 1.8 0.2 1.3 2.0 -2.6 0.4 3.2 0.1 1.1 11.2

3-MONTH INTERBANK LENDING RATE (%) 15-Jan 16-Jan bps change 3.905 3.903 -0.18 0.388 0.387 -0.07 4.941 4.945 0.40 0.308 0.308 -0.08 2.820 2.820 0.00 3.210 3.210 0.00 -0.426 -0.289 13.70 0.377 0.377 0.00 2.867 2.867 0.00 6.680 6.980 30.00

CREDIT DEFAULT SWAP (IN BPS) 14-Jan 15-Jan bps change China 61.88 64.87 2.99 Hong Kong 42.37 42.37 0.00 Indonesia 136.36 136.85 0.49 Japan 75.96 81.01 5.05 Korea 64.55 66.59 2.04 Malaysia 77.58 82.52 4.94 Philippines 96.15 99.13 2.98 Thailand 86.82 89.30 2.48 Vietnam 210.67 213.15 2.48 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag.

Page 5 of 7


14-Jan Gold Spot (in US$ per ounce)

15-Jan

1,667.8

% change

1,681.0

0.79

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

EXTERNAL LIQUIDITY RATIOS

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

Reserves - latest

3 months imports of goods/serv

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 20.0

504.3 144.7 50.5 71.0 150.9 58.0 19.3 118.2 67.2 25.4

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY Country JAPAN JAPAN JAPAN

Indicators Machinery Orders (YoY)% Machinery Orders (MoM)% Consumer Confidence (points)

Period Nov Nov Dec

Last 3.9 0.3 39.2

Previous 2.6 1.2 39.4

Page 6 of 7


SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/15/2013 SINGAPORE Retail Sales (YoY)% SINGAPORE Retail Sales ex-auto (YoY)% JAPAN Machine Tool Orders (YoY)% JAPAN Money Stock (M2), (YoY)% JAPAN Money Stock (M3), (YoY)% PHILIPPINES OFW Remittances (YoY)% 1/16/2013 JAPAN Machinery Orders (YoY)% JAPAN Machinery Orders (MoM)% JAPAN Consumer Confidence (points) 1/17/2013 SINGAPORE Electronic Exports (YoY)% SINGAPORE Non-oil Domestic Exports (YoY)% HONG KONG Unemployment rate, SA (%) PHILIPPINES Money Stock (M3), (YoY)% Expected released date Country Indicators 1/18/2013 THAILAND Foreign Reserves (USD bn) CHINA Real GDP (YoY)% CHINA Real GDP (QoQ)% CHINA Industrial Production (YoY)% CHINA Retail Sales (YoY)% JAPAN Industrial Production (YoY)% JAPAN Industrial Production (MoM)% JAPAN Capacity Utilisation (MoM)% PHILIPPINES Balance of Payments (USD bn)

Period Nov Nov Dec P Dec Dec Nov Nov Nov Dec Dec Dec Dec Nov Period 11 Jan 4Q 4Q Dec Dec Nov F Nov F Nov F Dec

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.

Page 7 of 7


MARKET UPDATE FOR ASEAN+3 17 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Most Asian shares declined, led by Chinese shares before China releases 4Q 2012 GDP tomorrow. Most Asian shares declined after the regional benchmark touched a 17-month high this week. Japan’s Nikkei 225 Stock Average closed less than 0.1 percent higher after swinging amid currency fluctuations. China’s Shanghai Composite Index declined 1.1 percent , while Hong Kong’s Hang Seng Index lost 0.1 percent. Likewise, Korea’s KOSPI Index slid 0.2 percent.

Regional currencies gained modestly, with the exception of the yen. The yen snapped a 2-day gain as investors’ expectations grew for new monetary easing measures by Bank of Japan next week. The yen slid by 0.6 percent to 88.92 per dollar at 5.15 p.m. Singapore time. Other regional currencies gained by about 0.1 percent. The peso traded at 40.62 per dollar, little changed from yesterday. Nonetheless, a gauge of expected fluctuations in the peso held at the lowest in a decade after central bank officials warned to take steps to counter appreciation.

Oil trades four-month high after crude stockpiles decline. Oil traded near the highest level in four months in New York as a surprise drop in U.S. crude stockpiles countered concern the global economic recovery may falter and curb fuel demand. According to analysts, the oil market has been trying to reach new highs but is being met by profit taking. Crude for February delivery was at US$93.99 a barrel, down 25 cents, in electronic trading on the NYMEX at 3:39 p.m. Singapore time. The contract climbed 96 cents to US$94.24 yesterday, the most since 2 January. It was the highest close since 18 September 2012.

BREAKING NEWS GLOBAL •

Fed concerned about overheated markets amid record bond buying. Federal Reserve officials are voicing increased concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases. Investors have been snapping up riskier assets since the Fed boosted its bond buying to reduce long-term borrowing costs after cutting its overnight rate target close to zero in December 2008. Enthusiasm for speculative-grade bonds is at unprecedented levels, driving a Credit Suisse index that tracks the yield on more than 1,500 issues to a record-low 5.9 percent last week. As central bankers boost their stimulus with additional bond purchases, policy makers from Chairman Ben S. Bernanke to Kansas City Fed President Esther George are on the lookout for financial distortions that may reverse abruptly when the Fed stops adding to its portfolio and eventually shrinks it. In a speech, George said that prices of assets such as bonds, agricultural land, and high-yield and leveraged loans are at historically high levels, and the possibility that the low-interest rate policy may be creating incentives that lead to future financial imbalances cannot be ignored.

Cameron’s EU speech puts U.K. economy at risk. Business Secretary Vince Cable said Prime Minister David Cameron would put the U.K. economy at risk if he raises the prospect of a British exit from the European Union. Cable, a Liberal Democrat member of Cameron’s Conservativeled coalition, will say in a speech today that while there is a case for a referendum on the EU, announcing it years in advance will create uncertainty and discourage businesses from investing. At the same time, Douglas Alexander, foreign affairs spokesman for the Labour opposition, will say Cameron’s hand has been forced by his own lawmakers. Cameron is expected to give a speech in the Netherlands tomorrow in which he would call for the U.K. to get powers back from


the EU. He has signalled that he wants to put any renegotiation of Britain’s membership to a popular vote after the 2015 general election, a process critics warn could lead to Britain leaving the 27-nation bloc altogether. •

IMF releases aid to Greece after long delay. After lengthy delays, the International Monetary Fund unblocked part of its aid to Greece on Wednesday, offering a brief respite to the recessionmired country grappling with austerity measures. The amount released – 3.2 billion euros (US$4.3 billion) – might seem a mere footnote to the 172 billion euro international bailout for Greece last March, the second rescue effort after a 2010 aid programme foundered. But the instalment carries symbolic weight: it closes a chapter on the Greek debt crisis which had put the IMF and its European partners at odds and fuelled doubts within the Washington-based institution about the merits of austerity in Europe. Following a political crisis that delayed implementation of the economic programme, understandings were reached with the government on a fully recalibrated economic programme to be supported under the EFF arrangement.

Australian employers cut job, raising unemployment to 5.4 percent. Australian employers unexpectedly cut payrolls in December and the unemployment rate rose, signaling weakness outside the mining industry is discouraging hiring. The local dollar declined against most major currencies. The number of people employed fell by 5,500 after a revised 17,100 gain in November, according to the data released by the statistics bureau in Sydney today. The jobless rate rose to 5.4 percent compared with a revised 5.3 percent the previous month. The data validate the Reserve Bank of Australia’s decision to lower the benchmark interest rate last month, the fourth reduction in 2012.

India slaps 2.5 percent import duty on crude edible oils. India has slapped a 2.5 percent import duty on crude edible oils, Information Minister Manish Tiwari said today – a move taken to stem overseas purchases by the world's top vegetable oil buyer and protect its domestic oilseed growers. India's farmers had been calling for action against cheap palm oil imports after Malaysia, the world's No. 2 palm oil producer removed export duty on its crude variant from 1 January. The duty on the refined varieties of palm oil will remain unchanged, Tiwari told reporters after a meeting of the federal cabinet on economic affairs.

REGIONAL •

Japan’s Amari says that yen is still correcting from excessive gains. Japanese Economy Minister Akira Amari said the yen is still in the process of correcting from excessive gains and that his remarks earlier this week on yen weakness were misinterpreted. Amari told reporters today that the media did not report his full remarks and that caused a reaction in the markets. The yen rose the most since May versus the dollar after Amari said that excessive weakening in the yen could have harmful effects on people’s livelihoods, indicating possible limits on Prime Minister Shinzo Abe’s campaign to drive down the currency. The currency snapped a two-day advance today, falling 0.3 percent to 88.60 as of 4:28 p.m. in Tokyo.

Singapore exports drop most in 14 months as recovery delayed. Singapore’s exports declined the most in 14 months in December as manufacturers shipped fewer electronics and pharmaceuticals, hurting economic recovery. Non-oil domestic exports slid 16.3 percent from a year earlier, after a revised 2.6 percent drop in November. The drop was the most since October 2011. Non-electronics shipments, which include petrochemicals and pharmaceuticals, slid 14.8 percent last month from the previous year. Petrochemical exports slowed to 4.7 percent, while pharmaceutical shipments decreased 11.5 percent after rising by 29.6 percent in November. On a seasonally-adjusted basis, Singapore’s non-oil exports rose by 1.8 percent last month from November, when they dropped a revised 0.4 percent. The government forecasts that exports will rise by 2 percent to 4 percent in 2013, restrained by a faltering recovery in global demand. Page 2 of 8


China’s FDI sees first decrease in nine years amid global slowdown. China’s FDI fell by almost 4 percent in 2012, the first annual decrease in nine years, although central provinces attracted increasing investment. While FDI in the world's second-largest economy is expected to recover in 2013, the outlook for inbound foreign investment is not promising, according to experts. The Ministry of Commerce said that FDI fell in 2012 by 3.7 percent from a year earlier to US$111.7 billion on the back of the global slowdown and Europe's debt crisis. Investment inflow from the European Union declined by 3.8 percent while FDI from the U.S. rose by 4.5 percent, and from Japan by 16.3 percent. Manufacturing has been a major driver of China's FDI. As labour costs increasingly rose during the last year, some foreign companies in labour-intensive industries turned their focus toward cheaper emerging economies.

Thailand talks bath lower as Russia warns of ‘currency war’. Thailand joined a growing chorus of developing nations expressing alarm at the rapid appreciation of their currencies as increased monetary easing in the U.S. and Japan spurs demand for higher-yielding assets. The baht climbed to a 17-month high today, before retreating after Finance Minister Kittiratt Na-Ranong said the exchange rate is “not at a good level” and exporters will face difficulties should it strengthen further. The Bloomberg-JPMorgan Asia Dollar Index is headed for a record eighth monthly gain and currencies in Colombia, Poland and Romania reached their strongest levels this month since at least February 2012. With risk appetite among investors growing this year and plenty of liquidity supplied by developed nations, appreciation pressure on the emergingmarket currencies is unavoidable,” said Koji Fukaya, a former chief foreign-exchange strategist at Credit Suisse Group AG in Tokyo.

Aircraft landing gear maker to invest RM500 million in Malaysia. France-based MessierBugatti-Dowty, the world's largest manufacturer of aircraft landing gear, is set to invest RM500mil in Malaysia. The investment is to set up an aeronautical carbon brake manufacturing plant. Its Director of Industrial Strategy, Herve Blanc said the plant in Senawang, Negeri Sembilan, is expected to be operational in 2018. The initial production capacity is 300 tonnes of new carbon discs annually. The factory's refurbishment capacity is expected to be 10,000 brakes in the first year of operation, with the maximum capacity at 20,000 brakes per annum. From 2012 to 2018, it will be the construction and ramp-up phase, with Malaysian companies being involved and benefiting from this high-technological project.

Task force formed to prevent massive layoffs in Indonesia. Indonesia’s Manpower and Transmigration Minister Muhaimin Iskandar has formed a task force to prevent massive layoffs by companies to cope with rising minimum wages. According to the minister, the task force will find a solution by offering some facilities, including the postponement of the minimum wage hikes. The task force would also coordinate with labor agencies throughout the country to collect data related to work terminations and provide counseling to workers who were laid off. Besides establishing the task force, Muhaimin also plans to provide tax and other fiscal incentives for small- and medium-scale companies to help resolve disputes between workers and their employers over the provincial minimum wage.

Hong Kong Chief maintains housing plans in line with election vows. Chief Executive Leung Chun-ying emphasised today that his maiden policy address did not deviate from his election platform and earlier promises, saying that he expected the amount of public housing being built in the next five years to exceed the 75,000-unit vow in the speech. But as he spoke on a radio phone-in programme in the morning, Leung still faced a barrage of criticism from listeners who complained that he did too little to help those with pressing housing needs, and to tackle problems such as inflation. Leung said the government had secured land for the development of about 75,000 new public housing flats over the next five years.

Page 3 of 8


IFIs NEWS (compiled from their websites) ADBI&OECD – Publication: “Managing Migration to Support Inclusive and Sustainable Growth” •

A new ADBI and OECD report, Managing Migration to Support Inclusive and Sustainable Growth, identifies innovative models for managing new and emerging forms of labor migration in Asia. It also provides, for the first time in a single publication, a statistical overview of international migration in selected Asian countries. The report was derived from the ADBI and OECD Second Roundtable on Labor Migration in January 2011 and has been published in advance of the third roundtable, which will take place in Bangkok, Thailand on 23–25 January 2013. http://www.adbi.org/book/2013/01/11/5428.managing.migration.sustainable.growth/ (Introduction) http://www.adbi.org/files/2013.01.11.book.managing.migration.sustainable.growth.pdf (Book)

G20 – Press Release: Roundtable discussion devoted to Russia’s Presidency of the G20 took place within the framework of the Gaidar Forum 2013 •

On January 16, within the framework of the annual Gaidar Forum "Russia and the World: Challenges of Integration", a roundtable discussion entitled "G20's Answers to the Global Challenges", devoted to the Russia's G20 Presidency, took place. Ksenia Yudaeva, Chief of the Presidential Experts' Directorate and the Russian G20 Sherpa, acted in the role of the moderator of the discussion. http://www.g20.org/news/20130116/781147362.html

IMF – Press Release: Completes Sixth Review Under an EFF Arrangement with Portugal •

The IMF has completed the sixth review of Portugal’s performance under an economic program supported by a 3-year, SDR 23.742 billion (about €27.51 billion) Extended Fund Facility (EFF) arrangement. The completion of the review enables the immediate disbursement of an amount equivalent to SDR 724 million (about € 838.8 million), bringing total disbursements under the EFF arrangement to SDR 19.126 billion (about €22.16 billion). http://www.imf.org/external/np/sec/pr/2013/pr1314.htm

IMF – Press Release: Completes First and Second Reviews Under Extended Fund Facility Arrangement for Greece •

The IMF has completed the first and second reviews of Greece’s economic performance under a program supported by a four-year Extended Fund Facility (EFF) arrangement for Greece. The completion of the review enables the disbursement of an amount equivalent to SDR 2.798 billion (about €3.24 billion or US$4.3 billion), bringing total Fund disbursements under the EFF arrangement to an amount equivalent to SDR 4.197 billion (about €4.86 billion or US$6.46 billion). In completing the review, the Executive Board also approved waivers of applicability of end-December 2012 performance criteria, modified performance criteria, and rephased disbursements under the arrangement. http://www.imf.org/external/np/sec/pr/2013/pr1313.htm

IMF – Publication: “Government Cash Management: Relationship between the Treasury and the Central Bank” •

The IMF has publicised the captioned technical note and manual (TNM), which addresses the following main issues: •Interaction between treasury cash management and monetary policy operations within the wider context of the respective economic responsibilities of the ministry of finance and the central bank. •Institutional arrangements for an effective relationship between the treasury and the central bank. •Contractual arrangements between the treasury and the central bank for the provision of banking and other services. This document will be particularly relevant to developing countries that are reforming cash management operations or contemplating more active cash management; or where there are operational policy differences between the treasury and the central bank. Page 4 of 8


http://www.imf.org/external/pubs/ft/tnm/2012/tnm1202.pdf OECD & WTO – Statistics: Trade in Value Added indicators •

The OECD and the WTO have made the first release of the Trade in Value-Added Initiative (TiVA) indicators on 16 January 2013. The joint OECD – WTO TiVA breaks with conventional measurements of trade, which record gross flows of goods and services each time they cross borders. It seeks instead to analyse the value added by a country in the production of any good or service that is then exported, and offers a fuller picture of commercial relations between nations. A new approach to measuring trade shows that services make up a larger share of exports than previously thought. Business competitiveness and export performance are increasingly tied to countries’ integration into global production chains and a willingness to open markets to wider imports, according to preliminary international trade data released today by the OECD and the WTO. http://www.oecd.org/newsroom/newoecdwtoanalysishighlightschangingfaceofglobaltrade.htm

World Bank – Publication: “Global Economic Prospects - January 2013: Assuring Growth Over the Medium Term” •

The World Bank has published the captioned report. “Four years after the onset of the global financial crisis, the world economy remains fragile and growth in high-income countries is weak. Developing countries need to focus on raising the growth potential of their economies, while strengthening buffers to deal with risks from the Euro Area and fiscal policy in the United States”, says the World Bank in the newly-released Global Economic Prospects (GEP) report. For the East Asia, it says, “Regional GDP growth is projected to pick up to 7.9 percent in 2013 before stabilizing at around 7.5 percent by 2015, with China’s economy expanding at 8.4 percent in 2013, before easing to 7.9 percent by 2015. Ex-China, regional growth is forecast to average 5.9 percent over 2013-2015 on strong domestic demand and intensified global trade flows.” http://www.worldbank.org/en/news/2013/01/15/wb-urges-developing-countries-safeguardeconomic-growth-road-ahead-remains-bumpy (Press Release) http://www.worldbank.org/globaloutlook (Index site)

WTO – Press Release: US files dispute against Indonesia on import licensing and quotas •

The United States notified the WTO Secretariat on 10 January 2013 of a request for consultations with Indonesia concerning measures applied by Indonesia to its imports of horticultural products, animals and animal products. http://www.wto.org/english/news_e/news13_e/ds455rfc_10jan13_e.htm

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 16-Jan 17-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.75 7.75 Indonesia 9,793.00 9,866.00 9,668.00 9,650.00 Japan 86.75 89.18 88.38 88.92 Korea 1,064.40 1,054.69 1,058.73 1,058.11 Malaysia 3.06 3.02 3.02 3.02 Philippines 41.01 40.60 40.70 40.62 Singapore 1.22 1.23 1.22 1.22 Thailand 30.59 30.27 29.81 29.79 Vietnam 20,840.00 20,850.00 20,845.00 20,845.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.05 -0.01 0.19 -0.61 0.06 0.12 0.19 0.05 0.07 0.00

2013 YTD (%chg) 0.3 0.0 0.0 -1.8 0.5 0.7 0.6 -0.2 1.8 0.0

Page 5 of 8


STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,243.0 23,264.1 4,305.9 10,801.6 1,996.7 1,682.7 6,051.8 3,216.5 1,412.1 462.7

16-Jan 2,309.5 23,357.0 4,411.0 10,600.4 1,977.5 1,683.0 6,047.5 3,208.5 1,416.1 465.3

OVERNIGHT LENDING RATE (%) 16-Jan 17-Jan bps change 2.040 2.000 -4.00 0.096 0.096 0.00 4.178 4.179 0.12 0.100 0.098 -0.25 2.750 2.750 0.00 3.000 3.000 0.00 3.024 2.371 -65.30 0.027 0.027 0.00 2.750 2.750 0.00 3.500 3.250 -25.00

17-Jan

% change

2,284.9 23,339.8 4,398.4 10,609.6 1,974.3 1,681.1 6,072.2 3,196.7 1,420.6 456.8

-1.06 -0.07 -0.29 0.09 -0.16 -0.11 0.41 -0.37 0.32 -1.82

2013 YTD (%chg) 0.7 0.1 1.2 2.1 -2.8 0.4 3.6 -0.2 0.9 9.2

3-MONTH INTERBANK LENDING RATE (%) 16-Jan 17-Jan bps change 3.903 3.903 -0.03 0.387 0.387 0.00 4.945 4.946 0.08 0.308 0.307 -0.08 2.820 2.820 0.00 3.210 3.210 0.00 -0.289 -0.276 1.30 0.377 0.377 0.00 2.867 2.867 0.00 6.980 6.880 -10.00

CREDIT DEFAULT SWAP (IN BPS) 15-Jan 16-Jan bps change China 64.87 66.86 1.99 Hong Kong 42.37 42.39 0.02 Indonesia 136.85 138.32 1.47 Japan 81.01 87.60 6.59 Korea 66.59 69.11 2.52 Malaysia 82.52 84.51 1.99 Philippines 99.13 101.13 2.00 Thailand 89.30 92.77 3.47 Vietnam 213.15 211.98 -1.16 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 16-Jan Gold Spot (in US$ per ounce)

1,679.9

17-Jan

% change

1,682.2

0.13

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

Page 6 of 8


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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

30-Apr 3,298.9 295.6 116.4 1,289.5 316.8 135.9 76.5 246.1 178.5 19.5

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct n.a 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov n.a 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

EXTERNAL LIQUIDITY RATIOS

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

Reserves - latest

3 months imports of goods/serv

Short-term external debt

(US$bn)

(US$bn)

(US$bn)

3,310.0 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 20.0

504.3 144.7 50.5 71.0 150.9 58.0 19.3 118.2 67.2 25.4

572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 17.9 2.2 2.4 4.4 2.2 2.7 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY Country SINGAPORE SINGAPORE HONG KONG PHILIPPINES

Indicators Electronic Exports (YoY)% Non-oil Domestic Exports (YoY)% Unemployment rate, SA (%) Money Stock (M3), (YoY)%

Period Dec Dec Dec Nov

Last -19.1 -16.3 Pending 9.8

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/15/2013 SINGAPORE Retail Sales (YoY)% SINGAPORE Retail Sales ex-auto (YoY)% JAPAN Machine Tool Orders (YoY)% JAPAN Money Stock (M2), (YoY)% JAPAN Money Stock (M3), (YoY)% PHILIPPINES OFW Remittances (YoY)% 1/16/2013 JAPAN Machinery Orders (YoY)% JAPAN Machinery Orders (MoM)% JAPAN Consumer Confidence (points) 1/17/2013 SINGAPORE Electronic Exports (YoY)% SINGAPORE Non-oil Domestic Exports (YoY)% HONG KONG Unemployment rate, SA (%) PHILIPPINES Money Stock (M3), (YoY)%

Previous -16.5 -2.6 Pending 8.6

Period Nov Nov Dec P Dec Dec Nov Nov Nov Dec Dec Dec Dec Nov

Page 7 of 8


Expected released date 1/18/2013

Country THAILAND CHINA CHINA CHINA CHINA JAPAN JAPAN JAPAN PHILIPPINES

Indicators Foreign Reserves (USD bn) Real GDP (YoY)% Real GDP (QoQ)% Industrial Production (YoY)% Retail Sales (YoY)% Industrial Production (YoY)% Industrial Production (MoM)% Capacity Utilisation (MoM)% Balance of Payments (USD bn)

Period 11 Jan 4Q 4Q Dec Dec Nov F Nov F Nov F Dec

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.

Page 8 of 8


MARKET UPDATE FOR ASEAN+3 18 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Emerging market stocks advance on China’s growth. Emerging-market stocks rose and a gauge of Chinese companies hit a 17-month high as the nation’s economic growth accelerated. The MSCI Asia-Pacific Index is rallying for a third month amid signs the U.S. and Chinese economies are recovering and Japanese shares rallied for a 10th week on speculation Prime Minister Shinzo Abe will pursue more aggressive stimulus policies. The Asian benchmark trades at 14.3 times estimated earnings on average, compared with 13.4 times for the S&P 500 and 12 times for the Stoxx 600. China’s Shanghai Composite Index gained 1.1 percent, while Hong Kong’s Hang Seng Index rose by 0.9 percent. The Nikkei 225 Stock Average jumped by 2.9 percent to its highest close since April 2010.

Regional currencies set for fourth weekly gain on global outlook. Regional currencies headed for a fourth weekly gain on optimism the global economy is recovering. The BloombergJPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, advanced by 0.2 percent this week as of 12:18 p.m. in Singapore. Yesterday, the gauge reached a 16-month high. Malaysia’s ringgit led gains, climbing by 0.2 percent to 3.0110, while the Philippines’ peso rose by 0.1 percent to 40.58 per dollar.

Oil trades continue to trade near four month high. Oil traded near the highest price in four months in New York and headed for the longest weekly winning streak in 14 months. Crude for February delivery was at US$95.47 a barrel, down 2 cents, in electronic trading on the NYMEX at 4:34 p.m. Singapore time. The contract advanced by 1.3 percent to US$95.49 yesterday. Prices are up by 2 percent this week for a sixth straight advance, the longest winning streak since November 2011.

BREAKING NEWS GLOBAL •

Obama promises to raise middle class living standards. President Barack Obama, who said his “one mandate” in a second term was to help middle class families, takes the oath of office with many barriers to raising most Americans’ living standards. Most Americans started this year with a cut in take-home pay as Congress let a temporary 2-percentage-point reduction in payroll taxes expire. Workers’ own leverage to gain wage increases will be limited for years by competition from the swollen ranks of jobless Americans as forecasters expect the unemployment rate to remain at or above 7 percent through 2014. Even with bright spots such as signs of strength in housing and an energy boom that’s lowering fuel costs for manufacturers, forecasters predict a slower expansion as federal tax increases and spending cuts crimp growth and demand for exports drops with a weakening global economy.

European Central Bank (ECB) mulls tougher bank loan rules. ECB officials are considering new rules that would require banks to give more information about loans used as collateral for borrowing from the institution, a person with knowledge of the situation said today. The ECB wanted to stop lenders taking advantage of the lower burden of information it demanded on loans compared with asset-backed securities. Officials were still working on the proposals for improving their ability to value the so-called non-marketable assets. Loans, credit claims and deposits used as collateral for borrowing from the ECB soared by 60 per cent to an average of €668.4 billion in the third quarter of last year, according to the central bank, and accounting for 27 per cent of the €2.52 trillion of collateral posted. That is more than any other guarantee type and compares with €371.7 billion of asset-backed debt.


Cameron postponed speech raises spectre of EU exit. British Prime Minister David Cameron prepared a speech that put 40 years of integration with the continent on the line by raising the specter of a U.K. exit from the European Union. While Cameron postponed the speech in Amsterdam due to the hostage crisis in Algeria, his office earlier released excerpts for publication before the scheduled address today. He was due to say that “More of the same won’t be enough to guarantee the EU’s future due to Britons’ dismay at a lack of consent in their relationship with the 27-nation bloc. There is a gap between the EU and its citizens which has grown dramatically in recent years and which represents a lack of democratic accountability and consent that is, yes, felt particularly acutely in Britain. The danger is that Europe will fail and the British people will drift towards the exit”.

REGIONAL •

China exits slowdown as quarterly growth tops forecast. China’s economic growth accelerated for the first time in two years as government efforts to revive demand drove a rebound in industrial output, retail sales and the housing market. GDP rose by 7.9 percent in the fourth quarter from a year earlier, as compared to the 7.8 percent median estimate in a Bloomberg News survey and 7.4 percent recorded in the previous quarter. Industrial output in December also rose a more-than-expected by 10.3 percent, while fixed-asset investment for the year gained 20.6 percent. The recovery adds to evidence that the global economy is improving, after U.S. data yesterday showed housing starts at a four-year high. China business conditions also improved in January, with new orders rising. The Flash MNI China Business Sentiment Indicator from MNI, a unit of Deutsche Boerse Group, found that expansion was gaining traction in January, rising to 54.94, from a final figure of 52.22 in December.

Japan learned to love deflation in wage malaise facing Bank of Japan (BOJ). A decade and a half after Japan slumped into deflation, the central bank is set to signal its strongest effort yet to reverse the trend. The biggest challenge may be that the nation has come to rely on falling prices. According to a BOJ survey, more than 80 percent of respondents said that rising prices last year was bad. More than a third of those who said prices fell were happy about it. Ending consumer price declines would give companies and households more incentive to borrow, and boost revenue for businesses and the government in a nation that saw its third recession in five years in 2012. The danger is that prolonged deflation has altered behavior across the economy, from entrenching declines in pay to driving more than half of savings into cash.

Hot money in Philippines exceeded 2012 forecast. Foreign investors placed US$18.456 billion in Philippines’ stock and bond markets last year, the highest on record in the last 10 years, according to the central bank (BSP). It was a 12 percent jump from the US$16.5 billion posted the year before, as foreign investors flocked to the Philippine Stock Exchange (PSE), which hit a string of record highs in 2012. The United Kingdom, the United States, Singapore, Hong Kong and Luxembourg accounted for most of the investments. The inflows were offset by US$14.571 billion in outflows, nearly a fifth higher than the US$12.397 billion recorded in 2011. The resulting net inflow of $3.885 billion was down 4.72 percent year-on-year but it still surpassed the BSP’s full-year forecast of US$3.2 billion. BSP Governor Amando M. Tetangco, Jr. has tagged capital flows as one of the country’s main challenges this year.

Cambodia’s exports defy global slump. Cambodia's total exports increased by more than 10 per cent year-on-year in 2012, despite a slowdown in the global economy and the Kingdom’s main traditional export markets, the US and the European Union. The growth rate, however, is far below the level in 2011. Total exports rose by 10.2 per cent to US$5.48 billion last year, compared with US$4.97 billion in 2011.

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AirAsia to open more routes from Semarang and Makassar. Low cost carrier Indonesia AirAsia (IAA) will open more domestic and international routes from Semarang, Central Java and Makassar, South Sulawesi in the first quarter of this year to further strengthen its foothold in the country’s growing air transportation market. IAA president director Dharmadi said that the airline would connect Semarang with Singapore, and Makassar with Surabaya, East Java; Denpasar, Bali; and Manado, North Sulawesi, as well as Kota Kinabalu and Kuala Lumpur in Malaysia. The company expects to launch an Initial Public Offering in the third quarter of this year.

Asian Development Bank (ADB) to lend US$176 to Vietnam. Vietnam yesterday signed four loan agreements with the ADB for US$176 million to strengthen capacity in various areas like public-private partnerships and food safety. The agreements were signed by Nguyen Van Binh, governor of the State Bank of Viet Nam, and Tomoyuki Kimura, the ADB's country director for Viet Nam. The largest loan of $130 million will help transform the border towns of Dong Ha, Lao Bao (in the central Quang Tri Province) and Moc Bai (the south-eastern Tay Ninh Province) into economic hubs by improving urban and environmental infrastructure and strengthening local institutional capacities. A US$20 million loan will come from the bank's Asian Development Fund to fund the Public Private Partnership Support Project to increase private investment in infrastructure. A US$11 million loan will fund a project to develop food-safety capacities. The final loan of US$15 million, also from the ADF, is for capacity building in HIV/AIDS Prevention, which will help the Government develop its national and regional capacity to mitigate HIV risks and vulnerability, primarily in the country's 15 border provinces.

Facelift for three Hong Kong harbour front areas. Kai Tak, Tsim Sha Tsui and the waterfront along the northern shore of Hong Kong Island will be the first areas to be revamped by the harbour authority that will be formed by June next year. The details emerged after Chief Executive Leung Chun-ying said in his policy address last Wednesday that he would back the establishment of an authority with financial support. Turning the existing Harbourfront Commission, which only has an advisory role, into a much more powerful authority is likely to transform Victoria Harbour. The harbour is seen by some as boring and inaccessible. A new authority is likely to make it more vibrant and pedestrian-friendly, with a mix of more land and water-based activities. The need for a harbour authority had been discussed for almost 10 years. The new body will plan, design and manage the waterfront instead of leaving the task to various departments, which have often failed to deliver improvements. In March, the government will begin a public consultation on establishing the authority, which will replace the Harbourfront Commission, a proposal that the previous administration set aside.

IFIs NEWS (compiled from their websites) IMF – Event: “Frontier Asia: Economic Transformation and Inclusive Growth” •

The IMF will, together with Japan International Cooperation Agency (JICA), will organize the captioned conference in Bangkok on 27-28 January. This conference will focus on what type of economic transformation is necessary to move up the economic value chain; and how to ensure that growth and job creation benefits all segments of society. The event will conclude with a high-level Roundtable Discussion. Among the participants are Naoyuki Shinohara, Deputy Managing Director, International Monetary Fund (IMF) and Kiyoshi Kodera, Vice President, Japan International Cooperation Agency (JICA). http://www.imf.org/external/np/seminars/eng/2013/bangkok/index.htm

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IMF – Publication: Myanmar: Staff-Monitored Program •

The IMF has publicised the staff paper, Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding for the Staff-Monitored Program for Myanmar. http://www.imf.org/external/pubs/ft/scr/2013/cr1313.pdf (Staff Paper) http://www.imf.org/External/NP/LOI/2012/MMR/122812.pdf (LOI, MEFP, Technical MOU)

IMF – Script: Transcript of Managing Director's New Year Press Briefing •

The IMF has publicised the transcript of MD’s new year press briefing. She emphasized that “We stopped the collapse. We should avoid the relapse. It is not time to relax.” http://www.imf.org/external/np/tr/2013/tr011713.htm

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 17-Jan 18-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.75 7.75 Indonesia 9,793.00 9,866.00 9,650.00 9,828.00 Japan 86.75 89.18 89.88 89.79 Korea 1,064.40 1,054.69 1,058.11 1,057.08 Malaysia 3.06 3.02 3.02 3.01 Philippines 41.01 40.60 40.62 40.58 Singapore 1.22 1.23 1.22 1.23 Thailand 30.59 30.27 29.77 29.76 Vietnam 20,840.00 20,850.00 20,845.00 20,845.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.05 0.00 -1.81 0.10 0.10 0.15 0.10 -0.24 0.03 0.00

2013 YTD (%chg) 0.2 0.0 -1.8 -2.7 0.6 0.8 0.7 -0.5 1.9 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,243.0 23,264.1 4,305.9 10,801.6 1,996.7 1,682.7 6,051.8 3,216.5 1,412.1 462.7

17-Jan 2,284.9 23,339.8 4,398.4 10,609.6 1,974.3 1,681.1 6,072.2 3,195.1 1,421.0 456.8

OVERNIGHT LENDING RATE (%) 17-Jan 18-Jan bps change 2.000 2.050 5.00 0.096 0.095 -0.07 4.179 4.184 0.52 0.100 0.098 -0.25 2.750 2.750 0.00 3.000 3.000 0.00 2.371 2.126 -24.50 0.026 0.026 0.00 2.750 2.750 0.00 3.250 2.000 -125.00

18-Jan 2,317.1 23,601.8 4,465.5 10,913.3 1,987.9 1,676.4 6,139.2 3,212.0 1,433.7 454.2

% change 1.41 1.12 1.53 2.86 0.69 -0.28 1.10 0.53 0.90 -0.57

2013 YTD (%chg) 2.1 1.2 2.7 5.0 -2.1 0.1 4.7 0.3 1.9 8.6

3-MONTH INTERBANK LENDING RATE (%) 17-Jan 18-Jan bps change 3.903 3.894 -0.84 0.387 0.387 0.00 4.946 4.956 1.00 0.307 0.307 0.00 2.820 2.820 0.00 3.210 3.210 0.00 -0.276 -0.168 10.80 0.377 0.377 0.00 2.867 2.867 0.00 6.880 6.893 1.30

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CREDIT DEFAULT SWAP (IN BPS) 16-Jan 17-Jan bps change China 66.86 67.36 0.50 Hong Kong 42.39 42.38 -0.01 Indonesia 138.32 140.79 2.47 Japan 87.60 88.58 0.98 Korea 69.11 69.13 0.02 Malaysia 84.51 85.51 1.00 Philippines 101.13 103.14 2.01 Thailand 92.77 93.29 0.52 Vietnam 211.98 215.75 3.76 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 17-Jan Gold Spot (in US$ per ounce)

18-Jan

1,687.6

% change

1,690.7

0.18

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 30-Sep 3,272.9 3,285.1 298.2 301.2 109.0 110.2 1,273.2 1,277.0 316.9 322.0 134.9 137.5 80.7 82.0 246.2 252.1 179.2 183.6 n.a n.a

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

EXTERNAL LIQUIDITY RATIOS

Reserves - latest China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

Short-term external Import cover (Qtrs of debt imports covered (US$bn) by reserves) 572.8 6.6 711.2 2.2 38.3 2.2 2,255.1 18.0 132.6 2.2 32.4 2.4 8.0 4.4 924.3 2.2 57.2 2.7 10.0 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

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Country THAILAND CHINA CHINA CHINA CHINA JAPAN JAPAN JAPAN PHILIPPINES

DATA RELEASES FOR THE DAY Indicators Period Foreign Reserves (USD bn) 11 Jan Real GDP (YoY)% 4Q Real GDP (QoQ)% 4Q Industrial Production (YoY)% Dec Retail Sales (YoY)% Dec Industrial Production (YoY)% Nov F Industrial Production (MoM)% Nov F Capacity Utilisation (MoM)% Nov F Balance of Payments (USD bn) Dec

Last 182.3 7.9 2.0 10.3 15.2 -5.5 -1.4 -0.2 Pending

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/15/2013 SINGAPORE Retail Sales (YoY)% SINGAPORE Retail Sales ex-auto (YoY)% JAPAN Machine Tool Orders (YoY)% JAPAN Money Stock (M2), (YoY)% JAPAN Money Stock (M3), (YoY)% PHILIPPINES OFW Remittances (YoY)% 1/16/2013 JAPAN Machinery Orders (YoY)% JAPAN Machinery Orders (MoM)% JAPAN Consumer Confidence (points) 1/17/2013 SINGAPORE Electronic Exports (YoY)% SINGAPORE Non-oil Domestic Exports (YoY)% HONG KONG Unemployment rate, SA (%) PHILIPPINES Money Stock (M3), (YoY)% 1/18/2013 THAILAND Foreign Reserves (USD bn) CHINA Real GDP (YoY)% CHINA Real GDP (QoQ)% CHINA Industrial Production (YoY)% CHINA Retail Sales (YoY)% JAPAN Industrial Production (YoY)% JAPAN Industrial Production (MoM)% JAPAN Capacity Utilisation (MoM)% PHILIPPINES Balance of Payments (USD bn)

Previous 180.9 7.4 2.1 10.1 14.9 -5.8 -1.7 1.6 Pending

Period Nov Nov Dec P Dec Dec Nov Nov Nov Dec Dec Dec Dec Nov 11 Jan 4Q 4Q Dec Dec Nov F Nov F Nov F Dec

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.

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MARKET UPDATE FOR ASEAN+3 21 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Developing-nation stocks fell, led by Malaysian equities, dragging the MSCI Emerging Markets Index from a two-week high. The MSCI Emerging Markets Index fell 0.3 percent to 1,077.95 as of 2:49 p.m. in Hong Kong as 289 stocks declined while 235 advanced. The gauge added 0.7 percent last week and trades at 10.8 times estimated profit, within 1 percent of the highest level since May 2011. European finance ministers meet in Brussels to discuss the debt crisis, while U.S. markets are closed for a public holiday.

BREAKING NEWS •

European finance ministers gathering for the first time this year begin the long march to enacting policies they promised to subdue the debt crisis, beginning with how to channel firewall funds directly to banks. At a meeting in Brussels today, where an assessment of Spain, Cyprus and Greece will feature, euro-area ministers are likely to clash over how and when the 500 billion-euro ($666 billion) European Stability Mechanism can bypass governments and provide direct help to banks. With officials declaring the worst of the region’s three- year market emergency over, finance ministers are debating whether the ESM should take over earlier bank bailouts that were routed through governments and what to do with so-called legacy assets.

Spanish trade figures due today will be followed by house- price data tomorrow showing if the property market endured a fourth year of declines. The Bank of Spain may also release its estimate for fourth-quarter gross domestic product, and the data will culminate in jobs figures on Jan. 24, forecast by economists to show a record 26 percent of Spaniards unemployed. Officials predict the euro-area’s fourth-biggest economy faces a further slump this year at a time when the government will struggle to meet its budget goals.

The U.K.’s financial industry will lose 43,000 jobs in six months, according to a forecast from the Confederation of British Industry, as companies shrink and reduce costs. Banks, insurers, asset managers and other finance firms probably cut 25,000 positions in the last three months of 2012 and may eliminate 18,000 jobs in the first quarter of this year, according to a study by Britain’s biggest business lobby group and PricewaterhouseCoopers LLP, published today. Global cuts at financial firms have exceeded 115,000 since 2012 as they seek to control compensation expenses and retreat from capital-intensive businesses, according to data compiled by Bloomberg. Morgan Stanley, with securities operations in London, plans to eliminate about 1,600 jobs from its investment bank and support staff in the coming weeks, a person with direct knowledge of the matter said on Jan 9. New York-based Citigroup Inc. said in December that it will cut more than 11,000 jobs and pull back from some emerging markets to curb costs.

REGIONAL •

The Bank of Japan will need to slow monetary easing if the effects on prices and the yen go too far, said Koichi Hamada, who’s advising Prime Minister Shinzo Abe on choosing a new central bank chief. Policy makers are “working hard to raise prices and influence the yen,” Hamada told reporters yesterday. “If it goes too far, it should be stopped,” he said after appearing with Economy Minister Akira Amari on an NHK television show in Tokyo. Investors are gauging how far the government may let the Japanese currency slide after Abe’s pledges of aggressive fiscal and monetary action triggered a 10 percent decline against the dollar from mid-November. They got mixed signals last week, when Amari highlighted harmful effects of an excessive decline and then said he had been misinterpreted, while Hamada said 110 yen per dollar would be “too weak.”


The yen strengthened from its weakest level against the dollar since June 2010 as Bank of Japan officials started a two-day policy meeting. Japan’s currency has declined 6 percent versus the greenback in the past month on speculation the BOJ, under pressure from the government of new Prime Minister Shinzo Abe, will boost stimulus to lift the economy out of recession. Technical indicators signaled the yen’s decline may have been overdone, while traders became the least bearish on the currency in eight weeks. The Dollar Index was near a one-week high before reports this week forecast show U.S. home sales increased.

China’s growth rebound will be capped by a labor-force squeeze and shrinking resources that leave the government satisfied with rates of expansion as low as half the peak during the past decade. A pace of 7 percent to 8 percent reflects economic forces, Ma Jiantang, head of the National Bureau of Statistics, said on Jan. 18 after reporting 7.9 percent expansion in the fourth quarter from a year earlier. He said a decline last year in the working-age population was of “great importance.” Ma’s comments bolster the contention that China’s economy is permanently downshifting a gear as its one-child policy drives down the labor force.

Standard Chartered Plc estimates offshore trading of yuan has doubled to at least $6 billion a day, giving investors more confidence to invest in the currency using options, forwards and Dim Sum bonds. Average daily transactions in Hong Kong surged from $3 billion in the past year, said Charles Feng, Standard Chartered’s regional head for fixed-income trading in the city. Trading in offshore options in the currency swelled to between $300 million and $500 million per day, according to J.P. Morgan Private Bank, which is buying the contracts for its clients. HSBC Holdings Plc says combined yuan deposits and certificates of deposits in the city will rise 43 percent this year to 1 trillion yuan ($161 billion). Dim Sum bonds have been rallying for a record six consecutive weeks as the central bank announced plans to accelerate the opening up of capital markets to foreigners and allow cross-border yuan loans. The average yield on the securities fell five basis points last week to 3.5 percent, the lowest since October 2011, a Deutsche Bank AG index showed. That compares with an average 2.62 percent for global corporate debt, according to Bank of America Merrill Lynch data.

Hong Kong's composite consumer price index rose 3.7% in December from a year earlier, unchanged from the previous month, but the possibility of an uptick in inflation later in the year is growing, the Census and Statistics Department said Monday. December's inflation rate was below the median 3.8% rise forecast by four economists surveyed earlier by Dow Jones Newswires. Inflationary pressures are still likely to be largely contained in the near term, given the recent moderate increase in import prices and the subpar performance of the economy," a government spokesman said in a statement. "Nevertheless, further down the road, the volatility of international food and commodity prices amid the global liquidity glut, coupled with the pickup in local housing rentals since the early part of 2012, may pose some upside risks to inflation," the spokesman said. For last year as a whole, the headline CPI rose 4.1%, faster than the 3.9% increase the government was expecting, but below the 5.3% rise in 2011.

Garment Manufacturers Association of Cambodia (GMAC) on Monday agreed to increase salaries for the workers in the kingdom's garment and footwear industries, according to a press release after a closed door meeting. The meeting was attended by Minister of Social Affairs Ith Samheng, Minister of Labor Vong Sauth, GMAC's president Van Sou Ieng, and representatives of trade unions in Cambodia. "The meeting agreed in principle to discuss wage increase for the workers," the press release said. "All trade unions should meet among them to set a unanimous proposal on minimum pay rise for workers in order to negotiate with employers." According to the press release, all relevant parties will meet again on Feb. 26 in order to decide the minimum pay rise. The wage hike negotiation was made after trade unions repeatedly appealed to the government to urge manufacturers to increase salaries for the workers from the year 2013.

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Singapore will increase spending on population-growth measures by 25 percent, rolling out incentives ranging from government-paid time off for adoption and paternity leave to funding for fertility treatments. An annual budget of S$2 billion ($1.6 billion) will be set aside for measures including state-funded childcare leave, healthcare costs and financial support for housing to married couples, the government said in a statement today. That’s an increase from S$1.6 billion in the last package in 2008, it said. “The enhanced package aims to provide more comprehensive support for Singaporeans in getting married and starting their families,” the government said in the statement. “Addressing our falling birth rate requires a concerted effort beyond government initiatives.”

Malaysia’s ringgit fell the most in three months before a report that economists predict will show consumer prices rose for the first time in 15 months. Inflation accelerated to 1.4 percent in December from 1.3 percent in November, according to the median forecast in a Bloomberg survey before official data due on Jan. 23. The Southeast Asian nation’s central bank will keep policy rate on hold at 3 percent this quarter, a separate poll shows.

Thailand’s baht traded near a 17- month high as speculation mounts that the central bank will intervene to halt appreciation that hurts exports. Finance Minister Kittiratt Na-Ranong said Jan. 17 the exchange rate is “not at a good level” and exporters will face difficulties should it strengthen further. Bank of Thailand Governor Prasarn Trairatvorakul said the same day that capital inflows to short-term securities were driving the currency higher and the central bank is “closely watching” the situation. The dollar’s 14-day relative-strength index against the baht dropped to 16 today, below the 30 threshold that signals to some traders the Thai currency’s gains will reverse. The baht traded at 29.73 per dollar as of 3:03 p.m. in Bangkok, unchanged from Jan. 18, according to data compiled by Bloomberg. The currency touched 29.66 earlier, the strongest level since August 2011.

Prices in Ho Chi Minh City climbed 0.44 percent in Jan. from previous month, according to posting on Vietnam government website. One sub-category of overall food prices registered 1.43 percent increase, reflecting jump in egg prices. The overall pace of increase is ‘modest’ for the beginning of the year, given upcoming Tet lunar New Year holiday, government says.

IFIs NEWS (compiled from their websites) BIS – Publication: Comments received on the consultative report "Recovery and resolution of financial market infrastructures " •

The BIS has publicised the public comments submitted to the Committee on Payment and Settlement Systems (CPSS) and IOSCO on their consultative document "Recovery and resolution of financial market infrastructures". http://www.bis.org/publ/cpss103/comments.htm G20 – Press Release: The role of the G20 in responding to the global challenges to be discussed in Davos •

G20 has issued a press release that, at the World Economic Forum Annual Meeting to be held in Davos Klosters, Switzerland, on January 23-27, 2013, the major issues and priorities of the G20 agenda will be covered in two sessions. http://www.g20.org/news/20130118/781160461.html IMF – Press Release: Approves New Two-Year US$33.8 Billion Flexible Credit Line Arrangement for Poland •

On 18 Jan, the IMF approved a successor two-year arrangement for Poland under the Flexible Credit Line (FCL) in an amount equivalent to SDR 22 billion (about US$33.8 billion, or 1,303 percent of quota). Poland’s first FCL arrangement was approved on May 6, 2009 (see Press Release No. 09/153). Successor arrangements were approved on July 2, 2010 (see Press Release No. 10/276), and January 21, 2011 (see Press Release No. 11/15). The Polish authorities have Page 3 of 7


stated that they intend to treat the arrangement as precautionary and do not intend to draw on the FCL. http://www.imf.org/external/np/sec/pr/2013/pr1317.htm IMF – Press Release: Concludes 2012 Article IV Consultation with Portugal •

The IMF has concluded the Article IV consultation with Portugal. Executive Directors welcomed the authorities’ impressive policy effort to gradually reverse the accumulated imbalances and prevent future crises. They noted the considerable progress already made in advancing fiscal and external adjustment, and implementing the structural reform agenda. They also welcomed the significant narrowing in sovereign spreads, which also reflect ongoing efforts to strengthen crisis management at the euro area level, and bodes well for the authorities’ strategy of regaining market access. Nonetheless, Directors highlighted that the near-term outlook was uncertain and sizable medium-term economic challenges remained. In light of this, they stressed the need to sustain efforts to make the tradable sector more competitive, boost longterm growth, and further advance fiscal consolidation. http://www.imf.org/external/np/sec/pn/2013/pn1307.htm (Press Release) http://www.imf.org/external/pubs/ft/scr/2013/cr1318.pdf (Staff Paper) http://www.imf.org/external/pubs/ft/scr/2013/cr1319.pdf (Selected Issues) http://www.imf.org/External/NP/LOI/2012/PRT/121912.pdf (LOI etc) IMF – Publication: Greece: First and Second Reviews Under the Extended Arrangement Under the Extended Fund Facility •

The IMF has publicised the series of papers regarding the captioned review. http://www.imf.org/external/pubs/ft/scr/2013/cr1320.pdf (Staff Paper) http://www.imf.org/External/NP/LOI/2012/GRC/122112.pdf (LOI etc) Vienna 2 Initiative – Press Release: The Steering Committee of Vienna 2 delivers observations on cross-border bank resolution to European authorities •

The Steering Committee of the Vienna Initiative 2 submitted observations on cross-border resolution to a number of European authorities. These observations focused on critical aspects of home-host cooperation, which are of particular importance for countries in Central, Eastern, and South-Eastern Europe (CESEE), where locally systemic affiliates of foreign banks operate. The aim is to provide input for the ongoing discussions on the design of the European financial stability framework and to communicate general concerns of host as well as of home countries. Some specific features of the CESEE countries make the cross-border resolution process particularly challenging in this region. These include the systemic importance of subsidiaries (or branches) of euro zone based banks in their local markets, and the fact that subsidiaries in many cases rely on the parent bank not only for funding support but also for all major strategic and financial decisions. http://www.imf.org/external/np/sec/pr/2013/pr1316.htm

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 18-Jan 21-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.75 7.75 Indonesia 9,793.00 9,828.00 9,828.00 9,618.00 Japan 86.75 90.10 90.10 89.43 Korea 1,064.40 1,057.08 1,057.08 1,062.88 Malaysia 3.06 3.01 3.01 3.04 Philippines 41.01 40.58 40.58 40.75 Singapore 1.22 1.23 1.23 1.23 Thailand 30.59 29.76 29.76 29.73 Vietnam 20,840.00 20,845.00 20,845.00 20,850.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.06 -0.01 2.18 0.75 -0.55 -0.82 -0.41 -0.19 0.10 -0.02

2013 YTD (%chg)

0.2 0.0 0.4 -2.3 0.1 0.0 0.3 -0.8 2.0 0.0

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STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,317.1 23,601.8 4,465.5 10,913.3 1,987.9 1,676.4 6,139.2 3,211.2 1,434.4 454.2

18-Jan 2,317.1 23,601.8 4,465.5 10,913.3 1,987.9 1,676.4 6,139.2 3,211.2 1,434.4 454.2

OVERNIGHT LENDING RATE (%) 18-Jan 21-Jan bps change 2.050 1.940 -11.00 0.095 0.094 -0.07 4.184 4.184 -0.04 0.098 0.098 0.00 2.750 2.750 0.00 3.000 3.000 0.00 2.126 1.868 -25.80 0.052 0.052 0.00 2.750 2.750 0.00 2.000 1.800 -20.00

21-Jan

% change

2,328.2 23,590.9 4,440.0 10,747.7 1,986.9 1,635.6 6,171.7 3,222.4 1,442.2 447.8

0.48 -0.05 -0.57 -1.52 -0.05 -2.43 0.53 0.35 0.54 -1.40

2013 YTD (%chg) 2.6 1.2 2.2 3.4 -2.2 -2.3 5.3 0.6 2.5 7.0

3-MONTH INTERBANK LENDING RATE (%) 18-Jan 21-Jan bps change 3.894 3.886 -0.81 0.387 0.387 0.00 4.956 4.948 -0.76 0.307 0.307 0.00 2.820 2.820 0.00 3.210 3.210 0.00 -0.168 -0.091 7.70 0.377 0.377 0.00 2.867 2.867 0.00 6.893 6.700 -19.30

CREDIT DEFAULT SWAP (IN BPS) 17-Jan 18-Jan bps change China 67.36 63.96 -3.40 Hong Kong 42.38 42.37 -0.01 Indonesia 140.79 136.45 -4.34 Japan 88.58 88.10 -0.48 Korea 69.13 65.69 -3.44 Malaysia 85.51 83.09 -2.42 Philippines 103.14 99.32 -3.82 Thailand 93.29 91.36 -1.93 Vietnam 215.75 209.60 -6.15 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 18-Jan Gold Spot (in US$ per ounce)

1,684.3

21-Jan

% change

1,689.9

0.33

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

Page 5 of 7


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

2012 China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

EXTERNAL LIQUIDITY RATIOS

Reserves - latest

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

Short-term external Import cover (Qtrs of debt imports covered (US$bn) by reserves) 572.8 6.6 711.2 2.2 38.3 2.2 2,255.1 18.0 132.6 2.2 32.4 2.4 8.0 4.4 924.3 2.2 57.2 2.7 10.0 -

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

Page 6 of 7


Country HONG KONG

DATA RELEASES FOR THE DAY Indicators Period CPI - Composite Index (YoY)% Dec

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/21/2013 HONG KONG CPI - Composite Index (YoY)% 1/22/2013 JAPAN All Industry Activity Index (MoM) % MALAYSIA Foreign Reserves (USD bn) 1/23/2013 MALAYSIA CPI YoY % SINGAPORE CPI (YoY)% 1/24/2013 JAPAN Merchnds Trade Exports YoY % JAPAN Merchnds Trade Balance Total (JPY bn) CHINA HSBC Flash China Manufacturing PMI THAILAND Customs Imports (YoY)% THAILAND Customs Exports (YoY)% VIETNAM CPI (YoY) % HONG KONG Imports YoY% HONG KONG Exports YoY% HONG KONG Trade Balance (HKD bn) SOUTH KOREA GDP (YoY)% SOUTH KOREA GDP (QoQ)% 1/25/2013 THAILAND Foreign Reserves (USD bn) VIETNAM Imports YTD (YoY)% VIETNAM Exports YTD (YoY)% VIETNAM Industrial Production Index YoY % VIETNAM Retail Sales YTD (YoY)% SINGAPORE Industrial Production YoY% PHILIPPINES Total Imports (YoY)% PHILIPPINES Trade Balance (USD mn) JAPAN National CPI YoY % JAPAN National CPI Ex Food, Energy YoY %

Last 3.7

Previous 3.7

Period Dec Nov Jan 15 Dec Dec Dec Dec Jan Dec Dec Jan Dec Dec Dec 4Q P 4Q P Jan 18 Jan Jan Jan Jan Dec Nov Nov Dec Dec

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.

Page 7 of 7


MARKET UPDATE FOR ASEAN+3 22 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

European stocks declined the most this year as Deutsche Bank AG tumbled, while investors awaited a report on U.S. house sales and earnings from Google Inc. U.S. futures retreated, while Asian stocks advanced. The Stoxx Europe 600 Index retreated 0.5 percent to 286.22 at 9:17 a.m. in London, for its biggest drop since Dec. 28. Japanese stocks fell as the yen strengthened after the Bank of Japan doubled its inflation target while waiting until next year to start openended asset purchases like the ones already adopted by the Federal Reserve. The MSCI Asia Pacific excluding Japan Index rose 0.3 percent to 480.33 as of 5:58 p.m. in Tokyo, with about the same number of shares rising and falling. The yen reversed early losses against the U.S. dollar to gain 0.8 percent. The regional equity gauge is priced in U.S. dollars, so gains by the yen inflate the value of Japanese companies in the index.

BREAKING NEWS GLOBAL •

Euro-area finance ministers staked out their turf in a brewing battle over bank rescues amid German and Austrian warnings that direct bailouts won’t be widely available. Ministers seek an agreement in the first half of this year on how and when the 500 billion-euro ($668 billion) European Stability Mechanism can bypass governments and provide direct help to banks. Ireland and France led calls at a meeting of euro finance chiefs in Brussels yesterday for work to proceed quickly so the new tool can be ready as quickly as possible. Some creditor nations countered that direct bank aid shouldn’t start until the European Central Bank takes up its new role as single supervisor within the currency zone, which isn’t expected until 2014. In the meantime, the ESM needs to leave its resources free to be a lender of last resort, German Finance Minister Wolfgang Schaeuble said.

International investors are the most bullish on stocks in at least 3 1/2 years, with close to two- thirds planning to raise their holdings of equities during the next six months, according to a Bloomberg survey. As the global financial and business elite gather in Davos for their annual forum, 53 percent of respondents to the Bloomberg Global Poll also say equities will offer the highest return in the next year. That’s a 17 percentage point jump from the last poll in November and the most since the quarterly survey of investors, analysts and traders who subscribe to Bloomberg began in July 2009. Behind the enthusiasm for shares: growing confidence in the U.S. economy and ebbing concerns about Europe.

Klaus Schwab, founder of the World Economic Forum, sees political “black swan” events threatening global security even as economic risks subside, with confidence returning to the euro area. “The world is still full of risks and we do not have only to address the economic risks, I think it is very important that we become more resilient in terms of the political risks,” Schwab, 78, said in a Bloomberg Television interview in Davos yesterday. “There are many black swans round,” he said, referring to the Japan-China dispute in the East China Sea, the Syrian civil war and the nuclear inspections in Iran. A World Economic Forum survey presented earlier this month found that income disparities and government budget deficits present the most likely risks to the global economy in the next decade. Schwab, who founded the annual meeting of political and business leaders in 1971, said that he expects Northern Africa, Syria and the war in Mali to be “hot issues” at the Forum, which starts tomorrow, while the euro-region crisis “will not play such a big role as it did the last year.”

The Australian dollar’s deflationary impact probably faded last quarter as consumer-price gains accelerated, indicating the central bank may pause benchmark interest-rate cuts. The Consumer Price Index rose 2.4 percent last year, faster than the 2 percent pace in the 12


months to Sept. 30, the median estimate in a Bloomberg survey showed before government data tomorrow. The gap between yields on 10-year bonds and same-maturity inflation-linked securities, a gauge of trader expectations for cost increases over the life of the debt, reached 2.8 percentage points on Jan. 18, the most since April. •

India’s government has taken corrective measures to curb its budget deficit and sees no case for a rating downgrade to junk, Finance Minister Palaniappan Chidambaram told investors in Hong Kong today. Chidambaram, 67, who is on a tour of Asia and Europe to woo investment after helping overhaul Indian policies to counter the weakest economic expansion in a decade, vowed that the shortfall won’t breach his target of 5.3 percent of gross domestic product “under any circumstance” for the 12 months ending March 31. He pledged to cut the gap by 0.6 percentage point annually to 3 percent as he prepares to present the budget for the next financial year at the end of February. Standard & Poor’s lowered India’s sovereign credit outlook to negative in April, taking the nation a step closer to non-investment grade, while Fitch Ratings followed in June with a similar move, citing slowing growth and limited progress in combating the deficit.

REGIONAL •

The Bank of Japan made its strongest commitment yet to end two decades of stagnation, shifting to Federal Reserve-style open-ended asset purchases while disappointing investors by delaying the program until next year. Governor Masaaki Shirakawa and six of his nine fellow board members voted for a 2 percent inflation target, to be achieved “at the earliest possible time” -- a pace not sustained in Japan since the early 1990s. While judging that the “economy remains relatively weak,” and that consumer prices will be flat for the time being, the BOJ refrained from adding any immediate stimulus. With a planned 13 trillion yen a month ($145 billion) in extra securities buying on hold until January 2014, the yen rose and stocks fell. The currency has slid and shares climbed the past 10 straight weeks in anticipation of the BOJ joining Prime Minister Shinzo Abe’s administration in strengthening measures to lift the economy out of its third recession in five years.

Swaps traders are stepping up bets that Chinese lenders’ borrowing costs will fall after the central bank announced plans to increase the frequency of money-market operations, which are currently conducted twice a week. The cost to lock in the three-month Shanghai interbank offered rate for one year declined 21 basis points last week, the most since May, according to data compiled by Bloomberg. The contract slipped a further five basis points yesterday to 3.85 percent, dropping below the underlying money rate for the first time since October. More frequent auctions will help Chinese policy makers achieve their goal of bringing down funding costs for companies, supporting a rebound in an economy that expanded in 2012 at the slowest pace in 13 years.

Indonesia’s foreign and domestic investment rose last quarter as the metals, machinery, electronics, mining, transport, and communication industries boosted spending. Investment climbed 18.7 percent to 83.3 trillion rupiah ($8.6 billion) in the three months ended Dec. 31 from a year earlier, M. Chatib Basri, chairman of nation’s the Investment Coordinating Board, said at a briefing in Jakarta today. Full-year investment in 2012 rose 24.6 percent to 313.2 trillion rupiah from a year earlier.

Indonesia’s Financial Services Authority plans to publish scorecards rating companies on the quality of their corporate governance as it begins supervising capital markets in Southeast Asia’s biggest economy. The agency plans to rate the nation’s 50 biggest listed companies this year, said Muliaman Hadad, chairman of the newly minted regulator known by its Indonesian acronym of OJK. How companies treat minority shareholders and the roles played by board directors are among the criteria, he said in an interview in Jakarta on Jan. 15. OJK will consolidate supervision of capital markets, banks and non-bank financial institutions. Hadad, a

Page 2 of 6


former central bank deputy governor, wants companies to improve practices to lure investors and broaden the pool of capital to fund growth. •

Bank of Thailand Governor Prasarn Trairatvorakul said volatile capital flows are the main threat to economic growth this year, after overseas purchases of stocks and bonds pushed the baht to a 17-month high yesterday. “We have to take care of capital flows, which will be more volatile, and assess the baht’s impact on the real economy,” Prasarn said today in an annual policy address in Bangkok. “We have prepared tools and will use them if needed,” he added, without saying what measures the central bank may employ. Finance Minister Kittiratt Na-Ranong said last week that Thailand’s exchange rate is “not at a good level” and that exporters will face difficulties should the baht strengthen further. Policy makers in the Philippines and South Korea have taken measures to contain their currencies as monetary stimulus in the world’s biggest developed economies spurs capital flows to the region. “If there is unusual movement, we are ready to take action,” Prasarn said today. “This is our normal practice. Moving against the market will create risk on cost, but that doesn’t mean we accept that the market mechanism is perfect.”

Myanmar’s central bank signs initial agreement with Bank of Tokyo-Mitsubishi UFJ, which will provide technical assistance and training, says Managing Director Pe Myint. Banks expect to sign a “business alliance” by end-March. Pe Myint says Myanmar central bank hasn’t yet been been instructed to tell private banks to lower interest rates in financial year starting April.

Vietnam must accept “low” economic growth while it restructures its economy and should aim for annual expansion of at least 5 percent, according to President Truong Tan Sang. Growth less than 5 percent would be “dangerous,” and spur high unemployment, Sang said in a Jan. 21 interview with Vietnam News Agency, the official state media. The country should try to gradually boost growth to 7 percent to 8 percent and stabilize the macro-economy, he said, without specifying a time frame. Vietnam’s economy expanded at the slowest pace in 13 years in 2012 as a slump in bank lending damped domestic demand, adding pressure on the government to revamp the financial system and attract more foreign investment.

Monetary policy loosening has taken the form of cutting of central bank policy rates and money supply growth, says Deepak Mishra, World Bank lead economist for Vietnam. Vietnam faces risk of double-digit inflation in 2013, Mishra says at business meeting in Ho Chi Minh City. November and December 2012 saw a “sharp increase in liquidity growth in the economy”. The World Bank is “more concerned now” about loosening of monetary policy than at time of Consultative Group meeting in Hanoi on Dec. 10. The World Bank has yet to see “agreement in the policy circle about how do you really resolve the bad debt problem” at Vietnamese banks. The government is reluctant to use “taxpayer money to bail out the banks or to address the NPL issue”. Vietnam’s foreign reserves are not yet “an adequate defense against a future currency attack” and need to be increased to cover at least three months of imports.

IFIs NEWS (compiled from their websites) BIS – Statistics: Preliminary international banking statistics at end-September 2012 •

The BIS has released the captioned statistics. For the first time, the BIS is releasing consolidated banking statistics for Korean banks. The addition of Korea brings the number of countries contributing to the consolidated banking statistics on an immediate borrower basis to 31. The foreign claims of banks headquartered in Korea stood at $121 billion at end-September 2012, comparable in size to the foreign claims of Brazilian banks ($98 billion) and Portuguese banks ($123 billion). Roughly half of Korean banks' foreign claims were on counterparties in the AsiaPacific region, led by borrowers in China, Hong Kong SAR and Japan. Among BIS reporting banks at end-September 2012, Korean banks were the largest creditors to Cambodia and Uzbekistan and the second largest to Vietnam. http://www.bis.org/statistics/rppb1301.htm (Press Release)

Page 3 of 6


http://www.bis.org/statistics/rppb1301.pdf (Statistics Report) Basel Committee – Publication: Basel Committee on Banking Supervision (BCBS) Charter •

The Basel Committee on Banking Supervision has publicised the captioned charter. http://www.bis.org/bcbs/charter.pdf World Bank – Publication: “High-Speed Rail, Regional Economics, and Urban Development in China” •

The World Bank has publicised the captioned report. It suggests that wider economic development benefits of high speed rail projects are significant and are worth considering in the evaluation of such programs, in addition to traditionally measured direct transport benefits. http://www.worldbank.org/en/news/2013/01/21/evaluation-of-high-speed-rail-programshould-consider-wider-economic-benefits (Press Release) http://wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/01/16/000356161_20 130116164534/Rendered/PDF/NonAsciiFileName0.pdf (Report)

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 21-Jan 22-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.75 7.75 Indonesia 9,793.00 9,828.00 9,618.00 9,620.00 Japan 86.75 90.10 89.60 88.71 Korea 1,064.40 1,057.08 1,062.88 1,062.30 Malaysia 3.06 3.01 3.04 3.04 Philippines 41.01 40.58 40.75 40.61 Singapore 1.22 1.23 1.23 1.23 Thailand 30.59 29.76 29.74 29.76 Vietnam 20,840.00 20,845.00 20,845.00 20,850.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.02 0.00 -0.02 1.00 0.05 -0.15 0.36 0.04 -0.07 -0.02

2013 YTD (%chg) 0.2 0.0 0.3 -1.5 0.1 -0.2 0.6 -0.6 1.9 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,317.1 23,601.8 4,465.5 10,913.3 1,987.9 1,676.4 6,139.2 3,211.2 1,434.4 454.2

21-Jan 2,328.2 23,590.9 4,440.0 10,747.7 1,986.9 1,635.6 6,171.7 3,221.3 1,440.5 447.8

OVERNIGHT LENDING RATE (%) 21-Jan 22-Jan bps change 1.940 1.930 -1.00 0.094 0.095 0.07 4.184 4.180 -0.32 0.095 0.088 -0.75 2.750 2.750 0.00 3.000 3.000 0.00 1.868 0.512 -135.60 0.057 0.057 0.00 2.750 2.750 0.00 1.800 2.025 22.50

22-Jan 2,315.1 23,659.0 4,416.5 10,709.9 1,996.5 1,628.7 6,104.9 3,223.6 1,444.7 442.9

% change -0.56 0.29 -0.53 -0.35 0.49 -0.43 -1.08 0.07 0.29 -1.10

2013 YTD (%chg) 2.0 1.5 1.6 3.0 -1.7 -2.8 4.2 0.7 2.6 5.9

3-MONTH INTERBANK LENDING RATE (%) 21-Jan 22-Jan bps change 3.886 3.884 -0.22 0.387 0.386 -0.07 4.948 4.952 0.36 0.307 0.307 0.00 2.820 2.820 0.00 3.210 3.210 0.00 -0.091 -0.139 -4.80 0.377 0.377 0.00 2.867 2.867 0.00 6.700 6.570 -13.00

Page 4 of 6


CREDIT DEFAULT SWAP (IN BPS) 18-Jan 21-Jan bps change China 63.96 64.02 0.07 Hong Kong 42.37 42.37 0.00 Indonesia 136.45 135.60 -0.85 Japan 88.10 87.20 -0.90 Korea 65.69 65.86 0.17 Malaysia 83.09 85.20 2.11 Philippines 99.32 99.32 0.00 Thailand 91.36 92.61 1.25 Vietnam 209.60 209.03 -0.57 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 21-Jan Gold Spot (in US$ per ounce)

22-Jan

1,690.1

% change

1,691.1

0.06

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 30-Sep 3,272.9 3,285.1 298.2 301.2 109.0 110.2 1,273.2 1,277.0 316.9 322.0 134.9 137.5 80.7 82.0 246.2 252.1 179.2 183.6 n.a n.a

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

EXTERNAL LIQUIDITY RATIOS

Reserves - latest China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

Short-term external Import cover (Qtrs of debt imports covered (US$bn) by reserves) 572.8 6.6 711.2 2.2 38.3 2.2 2,255.1 18.0 132.6 2.2 32.4 2.4 8.0 4.4 924.3 2.2 57.2 2.7 10.0 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

Page 5 of 6


Country

JAPAN MALAYSIA

DATA RELEASES FOR THE DAY Indicators Period

All Industry Activity Index (MoM) % Foreign Reserves (USD bn)

Nov Jan 15

Last -0.3 140.0 bn

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/21/2013 HONG KONG CPI - Composite Index (YoY)% 1/22/2013 JAPAN All Industry Activity Index (MoM) % MALAYSIA Foreign Reserves (USD bn) 1/23/2013 MALAYSIA CPI YoY % SINGAPORE CPI (YoY)% 1/24/2013 JAPAN Merchnds Trade Exports YoY % JAPAN Merchnds Trade Balance Total (JPY bn) CHINA HSBC Flash China Manufacturing PMI THAILAND Customs Imports (YoY)% THAILAND Customs Exports (YoY)% VIETNAM CPI (YoY) % HONG KONG Imports YoY% HONG KONG Exports YoY% HONG KONG Trade Balance (HKD bn) SOUTH KOREA GDP (YoY)% SOUTH KOREA GDP (QoQ)% 1/25/2013 THAILAND Foreign Reserves (USD bn) VIETNAM Imports YTD (YoY)% VIETNAM Exports YTD (YoY)% VIETNAM Industrial Production Index YoY % VIETNAM Retail Sales YTD (YoY)% SINGAPORE Industrial Production YoY% PHILIPPINES Total Imports (YoY)% PHILIPPINES Trade Balance (USD mn) JAPAN National CPI YoY % JAPAN National CPI Ex Food, Energy YoY %

Previous 0.2 139.7 bn

Period Dec Nov Jan 15 Dec Dec Dec Dec Jan Dec Dec Jan Dec Dec Dec 4Q P 4Q P Jan 18 Jan Jan Jan Jan Dec Nov Nov Dec Dec

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.

Page 6 of 6


MARKET UPDATE FOR ASEAN+3 23 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

The yen gained, set for its longest rally in two months, while Japanese shares led Asian equities lower after the Bank of Japan deferred new monetary stimulus. U.S. stock-index futures declined before lawmakers vote on the debt limit and Apple Inc. reports earnings. South Korea’s won fell against all of its 16 major peers as the government said it’s ready to curb the currency’s gain. The MSCI Asia Pacific Index retreated 0.7 percent and Japan’s Nikkei 225 Stock Average capped its first three-day drop since elections were called. Treasuries advanced.

BREAKING NEWS GLOBAL •

European Central Bank President Mario Draghi suggested the worst of the sovereign debt crisis may be over, saying the “darkest clouds’ over the euro area have lifted due to decisive policy steps last year. “We can begin 2013 on a more confident note, precisely because significant progress was made during 2012,” Draghi said in a speech in Frankfurt late yesterday. “The darkest clouds over the euro area subsided. Europe’s leaders recognized that monetary union needs to be complemented by a financial union, a fiscal union, a genuine economic union and eventually a deeper political union.” Draghi’s comments are the latest to indicate the ECB chief is increasingly confident that the three-year debt crisis has been contained and that the 17-nation currency bloc can emerge from recession later this year. He defended the ECB’s so-far untapped bond-purchase plan, which has calmed fears of a euro break-up on financial markets, saying it is fully in line with the central bank’s price-stability mandate and doesn’t threaten its independence.

Spain’s recession deepened in the last quarter of 2012 after Prime Minister Mariano Rajoy’s government approved its fifth austerity package in a year to reduce the second-largest budget deficit in the euro area. Gross domestic product shrank for a sixth quarter, contracting 0.6 percent from the previous three months, when it slipped 0.3 percent, the Bank of Spain said in an estimate in its monthly bulletin released in Madrid today.

Global investors say the state of the U.S. government’s finances is the greatest risk to the world economy and almost half are curbing their investments in response to continuing budget battles, a Bloomberg poll shows. With the government within weeks of reaching its borrowing limit, 36 percent of respondents cite the nation’s fiscal woes as the biggest threat compared with 29 percent who choose Europe’s sovereign debt crisis and 15 percent who name a slowing Chinese economy, according to the quarterly poll on Jan. 17 of investors, analysts and traders who subscribe to Bloomberg.

Bank of England Governor Mervyn King said it may be appropriate to review the U.K.’s inflation-targeting regime, and that government measures to strengthen the economy are needed to underpin a “gentle recovery.” “It would be sensible to review the arrangements for setting monetary policy,” King said in Belfast yesterday in his final speech outside London before he retires in June. “There are certainly aspects of the inflation-targeting regime to consider.” In a wide-ranging address, King said the BOE is ready to add more stimulus if needed, though monetary policy is not a “panacea” and more must be done to strengthen banks and implement structural reforms.

Australian consumer prices gained less than economists forecast last quarter on cheaper food and health care, pushing down the local dollar and giving the central bank scope to reduce interest rates. The trimmed mean gauge of core prices rose 0.6 percent from the prior quarter, the Bureau of Statistics said in Sydney today, compared with the median forecast of 26


economists for a 0.7 percent gain. The broader consumer price index advanced 0.2 percent from three months earlier, half the forecast increase REGIONAL •

The Bank of Japan’s decision to hold off on fresh monetary stimulus for a year puts pressure on the Abe administration to revive growth through fiscal measures and risks capping losses in the yen that aid export competitiveness. Governor Masaaki Shirakawa, whose term ends in less than 11 weeks, yesterday agreed to set the 2 percent inflation target urged by Prime Minister Shinzo Abe, while stopping short of immediate action to achieve it. The BOJ plans to start open-ended asset purchases in January next year. Abe, elected last month on a platform calling for an end to two decades of deflation, hailed the BOJ commitment to consumer-price increases that would raise prospects for higher corporate revenues and tax receipts. His optimism in face of yesterday’s slump in stocks may reflect recognition that stronger measures must wait for a new BOJ chief.

Japan’s government raised its assessment of the economy for the first time in eight months as it sees stimulus spending and improved conditions for exporters driving a recovery from recession. “The recovery is expected to resume while supported by the improvement of export conditions,” the Cabinet Office said in a monthly report released in Tokyo today, after it downgraded its assessment in four of the last seven months. The government announced 10.3 trillion yen ($117 billion) in stimulus earlier this month to boost growth and end deflation.

South Korea’s won fell after Finance Minister Bahk Jae Wan vowed to curb the currency’s volatility, saying recent gains were too steep. Government bonds declined. The government is “all ready” for new measures, Bahk told reporters in Seoul today, declining to comment on when they will be announced. The won’s rapid appreciation is giving authorities little time to respond, he said. The currency touched 1,054.49 on Jan. 15, a level not seen since August 2011, after rallying 8.3 percent in 2012.

Malaysia’s inflation eased in December to the slowest pace in almost three years, providing scope for the central bank to support growth. Consumer prices rose 1.2 percent from a year earlier, after climbing a previously reported 1.3 percent in November, according to data released by the Putrajaya-based Statistics Department today. The median of 15 estimates in a Bloomberg News survey was for a 1.4 percent gain. Inflation was 1.6 percent in 2012, the report showed.

Myanmar’s hotel and tourism industry attracted $300m of foreign investment in April-Nov. period, according to data from Myanmar’s Central Statistical Organization. They noted that the country recorded $4.64b of FDI in fiscal year ended March 2012.

Singapore’s inflation rate rose to the highest in three months in December, reducing the central bank’s scope to ease monetary policy to boost growth. The consumer price index rose 4.3 percent from a year earlier, after climbing 3.6 percent in November, the Department of Statistics said in a statement today. The median estimate of 18 economists in a Bloomberg News survey was for a 3.8 percent increase. Price gains averaged 4.6 percent in 2012, the government said. Inflation has remained elevated even after the Monetary Authority of Singapore tightened monetary policy last year by allowing its currency to appreciate, as private property prices reached a record and the cost of owning a vehicle surged. The central bank forecasts price gains will be in a 3.5 percent-to-4.5 percent range in 2013.

Thailand’s baht weakened for a third day, retreating from near a 17-month high, as speculation grew the central bank will intervene to halt gains that will hurt exports. Government bonds were steady. Finance Minister Kittiratt Na-Ranong said today that the baht’s recent strength was caused by short-term inflows and speculation, and said it may Page 2 of 6


weaken as companies boost imports as part of government infrastructure investments. Central bank Governor Prasarn Trairatvorakul said yesterday volatile capital flows are the main threat to growth, and the monetary authority is ready to act should there be “unusual movement.” The currency advanced 2.7 percent in the past month, the best performance among 25 emerging currencies in the world. •

The World Bank said it is open to a new loan that may provide support for a potential recapitalization of Vietnamese banks, which are struggling with rising levels of bad debt that have slowed credit growth. “We would certainly be ready to find the resources to bring to the table, additional to what we’re doing, to support them in this area,” Victoria Kwakwa, the agency’s Vietnam country director, in an interview yesterday. “Our sense is they might need some support,” she said, adding that the government has not made such a request. Vietnam’s government has said it plans to restructure its banking system, and Fitch Ratings has estimated the cost of recapitalization may range from about 7 percent of gross domestic product to as much as 20 percent. Rising levels of bad debt have damped corporate growth and domestic demand, and slowed economic expansion to the slowest pace since 1999. Vietnam faces the risk of the negative economic consequences of a banking system that cannot support credit growth unless it takes measures to address high levels of non- performing loans, Moody’s Investors Service said this week. A so-called Financial Sector Assessment Program being undertaken jointly by the World Bank and the International Monetary Fund and scheduled to be completed in the first half of the year, should provide a “better sense” of the level of nonperforming loans. Fitch said its “scenario analysis” of the potential recapitalization bill is based on its assumptions of targeted capital adequacy ratios and recovery rates on bad debt, with the range dependent on the actual level of non-performing loans. Vietnam is considering establishing an asset management company to resolve bad debt, which Kwakwa said may be set up by the end of March.

IFIs NEWS (compiled from their websites) IMF – Working Papers •

The IMF has publicised the following working papers: • Regionalization vs. Globalization – “We find that, since the mid-1980s, the importance of regional factors has increased markedly in explaining business cycles especially in regions that experienced a sharp growth in intra-regional trade and financial flows. By contrast, the relative importance of the global factor has declined over the same period. In short, the recent era of globalization has witnessed the emergence of regional business cycles.” http://www.imf.org/external/pubs/ft/wp/2013/wp1319.pdf • Macroprudential Policies for a Resource Rich Economy The Case of Mongolia – “This paper explores the extent to which macroprudential tools can be used to manage banking sector risks in Mongolia, a commodity producing country exposed to both procyclical and crosssectional financial sector risks. Loose fiscal policy, rising credit activity, and heightened risk appetite—attributable to the commodity boom—are fuelling price volatility in asset markets, posing significant risks to financial stability if left unchecked.” http://www.imf.org/external/pubs/ft/wp/2013/wp1318.pdf UNCTAD – Press Release: World commercial services exports swung into decline in the third quarter of 2012 •

According to preliminary estimates by the WTO and UNCTAD, in the third quarter of 2012, world exports of commercial services shrank by 2 %, as compared with the same quarter last year. Preliminary figures (balance-of-payments basis, current prices) indicate the sharp drop in services exports in Europe (-7%), while the services trade growth also slowed, but remained positive in North America (2%) and Asia and Oceania (4%).

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http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=387&Sitemap_x0020_Taxono my=Statistics;#20;#UNCTAD Home World Bank – Press Release: China: Promoting a more resilient forest ecosystem in Hunan •

The World Bank has approved a loan of US$80 million to the People’s Republic of China to reforest and rehabilitate ice storm affected ecological forest plantations in Hunan Province to develop a stable forest ecosystem that can be tolerant of future disturbances and change – including those caused by climate change. http://www.worldbank.org/en/news/2013/01/22/china-promoting-more-resilient-forestecosystem-hunan World Bank – Publication: “Planning, Connecting, and Financing Cities – Now: Priorities for City” •

The IMF has. Rapid urbanization can hold long-term economic, social and environmental promise for developing countries if investments made now in infrastructure, housing and public services are efficient and sustainable http://www.worldbank.org/en/news/2013/01/22/new-world-bank-report-offers-policymakersroadmap-building-resilient-sustainable-cities (Press Release) http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSDNET/0,,contentMDK:23342828~pa gePK:64885161~piPK:64884432~theSitePK:5929282,00.html (Report)

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 22-Jan 23-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.75 7.75 Indonesia 9,793.00 9,828.00 9,620.00 9,625.00 Japan 86.75 90.10 88.71 88.27 Korea 1,064.40 1,057.08 1,062.30 1,066.18 Malaysia 3.06 3.01 3.04 3.04 Philippines 41.01 40.58 40.61 40.63 Singapore 1.22 1.23 1.23 1.23 Thailand 30.59 29.76 29.73 29.82 Vietnam 20,840.00 20,845.00 20,845.00 20,845.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.03 0.01 -0.05 0.50 -0.36 -0.08 -0.06 0.02 -0.30 0.00

2013 YTD (%chg) 0.2 0.0 0.3 -1.1 -0.2 -0.2 0.5 -0.5 1.7 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,317.1 23,601.8 4,465.5 10,913.3 1,987.9 1,676.4 6,139.2 3,211.2 1,434.4 454.2

22-Jan 2,315.1 23,659.0 4,416.5 10,709.9 1,996.5 1,628.7 6,104.9 3,219.9 1,434.1 442.9

23-Jan 2,320.9 23,635.1 4,418.7 10,487.0 1,980.4 1,635.3 6,092.5 3,230.2 1,428.3 443.4

% change 0.25 -0.10 0.05 -2.08 -0.81 0.40 -0.20 0.32 -0.40 0.12

2013 YTD (%chg) 2.3 1.4 1.7 0.9 -2.5 -2.4 4.0 0.9 1.5 6.0

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OVERNIGHT LENDING RATE (%) 3-MONTH INTERBANK LENDING RATE (%) 22-Jan 23-Jan bps change 22-Jan 23-Jan bps change China 1.930 2.300 37.00 3.884 3.880 -0.39 Hong Kong 0.095 0.095 0.00 0.386 0.386 0.00 Indonesia 4.180 4.184 0.36 4.952 4.952 0.00 Japan 0.090 0.095 0.50 0.307 0.301 -0.58 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 0.512 0.979 46.70 -0.139 0.094 23.30 Singapore 0.061 0.061 0.00 0.377 0.377 0.00 Thailand 2.750 2.750 0.00 2.867 2.868 0.15 Vietnam 2.025 2.000 -2.50 6.570 6.580 1.00 CREDIT DEFAULT SWAP (IN BPS) 21-Jan 22-Jan bps change China 64.02 63.52 -0.51 Hong Kong 42.37 45.35 2.98 Indonesia 135.60 133.22 -2.38 Japan 87.20 82.23 -4.97 Korea 65.86 64.79 -1.07 Malaysia 85.20 82.67 -2.53 Philippines 99.32 97.62 -1.70 Thailand 92.61 91.47 -1.14 Vietnam 209.03 208.34 -0.69 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 22-Jan

Gold Spot (in US$ per ounce)

23-Jan

1,692.8

% change

1,691.6

-0.07

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

2012 China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

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EXTERNAL LIQUIDITY RATIOS

Reserves - latest China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

Short-term external Import cover (Qtrs of debt imports covered (US$bn) by reserves) 572.8 6.6 711.2 2.2 38.3 2.2 2,255.1 18.0 132.6 2.2 32.4 2.4 8.0 4.4 924.3 2.2 57.2 2.7 10.0 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY Country MALAYSIA SINGAPORE THAILAND THAILAND THAILAND

Indicators CPI YoY % CPI (YoY)% Customs Exports (yoy)% Customs Exports (yoy)% Customs Trade Balance (USD mn)

Period Dec Dec Dec Dec Dec

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/21/2013 HONG KONG CPI - Composite Index (YoY)% 1/22/2013 JAPAN All Industry Activity Index (MoM) % MALAYSIA Foreign Reserves (USD bn) 1/23/2013 MALAYSIA CPI YoY % SINGAPORE CPI (YoY)% 1/24/2013 JAPAN Merchnds Trade Exports YoY % JAPAN Merchnds Trade Balance Total (JPY bn) CHINA HSBC Flash China Manufacturing PMI THAILAND Customs Imports (YoY)% THAILAND Customs Exports (YoY)% VIETNAM CPI (YoY) % HONG KONG Imports YoY% HONG KONG Exports YoY% HONG KONG Trade Balance (HKD bn) SOUTH KOREA GDP (YoY)% SOUTH KOREA GDP (QoQ)% 1/25/2013 THAILAND Foreign Reserves (USD bn) VIETNAM Imports YTD (YoY)% VIETNAM Exports YTD (YoY)% VIETNAM Industrial Production Index YoY % VIETNAM Retail Sales YTD (YoY)% SINGAPORE Industrial Production YoY% PHILIPPINES Total Imports (YoY)% PHILIPPINES Trade Balance (USD mn) JAPAN National CPI YoY % JAPAN National CPI Ex Food, Energy YoY %

Last 1.2 4.3 13.45 4.67 2,365

Previous 1.3 3.6 26.86 24.53 1,454

Period Dec Nov Jan 15 Dec Dec Dec Dec Jan Dec Dec Jan Dec Dec Dec 4Q P 4Q P Jan 18 Jan Jan Jan Jan Dec Nov Nov Dec Dec

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.

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MARKET UPDATE FOR ASEAN+3 25 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Asian currencies fell this week by the most since July as a slide in the yen fanned concern regional central banks will intervene to prevent gains that may hurt exports. Officials from Russia to Thailand have voiced concern that Japan’s intention to weaken the yen will stoke competitive devaluations. The Bloomberg-JPMorgan Asia Dollar Index retreated from a 16month high as the yen headed for an 11th weekly loss. Samsung Electronics Co. said today that gains in the won, which strengthened 8.3 percent in 2012, may cut operating profit by 3 trillion won ($2.8 billion) this year.Emerging-market stocks fell, with the benchmark index heading for its biggest weekly decline in two months, after Samsung Electronics Co. said the won’s strength is hurting profits and Kia Motors Corp.’s earnings disappointed investors. The MSCI Emerging Markets Index fell 0.3 percent to 1,068.77 as of 5 p.m. in Hong Kong, poised for the lowest level since Jan. 1.

BREAKING NEWS GLOBAL •

Federal Reserve Chairman Ben S. Bernanke’s unprecedented bond buying pushed the Fed’s balance sheet to a record $3 trillion as he shows no sign of softening his effort to bring down 7.8 percent unemployment. The Fed is purchasing $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The central bank began $40 billion in monthly purchases of mortgage-backed securities in September and added $45 billion in Treasury securities to that pace this month. The Fed’s total assets climbed by $48 billion in the past week to $3.01 trillion as of Jan. 23, according to a release from the central bank yesterday in Washington. The announcement came as the Standard & Poor’s 500 Index closed at the highest level since December 2007.

The European Central Bank will give a first indication today of how much of its 1 trillion euros ($1.33 trillion) in three-year loans banks plan to repay early. In a statement at around noon in Frankfurt, the ECB will say how much of the first three-year loan banks have pledged to hand back at the first early-repayment opportunity on Jan. 30. They will initially repay 84 billion euros, according to the median of 10 estimates in a Bloomberg News survey of economists. Some 150 billion euros of the first loan, which totaled 489 billion euros, will be given back early as banks continue to repay the funds over coming weeks, the survey shows. The ECB flooded financial markets with two tranches of three-year loans a year ago to avert a credit crunch after banks stopped lending to each other because of Europe’s sovereign debt crisis. Banks have the option of repaying the loans, which were lent at the average of the ECB’s benchmark rate over their duration, after a year. While today’s data may give an insight into the health of banks amid signs the debt crisis is abating, economists cautioned not to read too much into them.

The U.K. economy shrank more than forecast in the fourth quarter as the boost from the 2012 Olympic Games unwound and mining output plunged, leaving the country on the brink of an unprecedented triple-dip recession. Gross domestic product dropped 0.3 percent from the three months through September, the Office for National Statistics said in London. That compares with the median of 38 estimates in a Bloomberg News survey for a decline of 0.1 percent. Growth is struggling to gain traction more than three years after the economy emerged from its deepest recession since World War II, with heavy snow across the country this month raising the possibility of a further contraction in the current quarter. Bank of England Governor Mervyn King has said policy makers will provide more stimulus if needed.

German business confidence rose more than economists forecast in January, adding to signs that Europe’s largest economy is recovering from a slump at the end of last year. The Ifo


institute’s business climate index, based on a survey of 7,000 executives, climbed to 104.2 from 102.4 in December. That’s the highest since June and the third straight gain. Sentiment dropped to a 2 1/2 year low in October. Economists predicted an increase to 103, according to the median of 41 forecasts in a Bloomberg News survey. The Bundesbank said this week there are indications that the economy is already rebounding from a contraction in the final quarter of 2012, even as the sovereign debt crisis curbs demand in Germany’s euro-area trading partners. Investor confidence jumped to the highest since May 2010 this month and a gauge of activity in service industries rose to a 19-month high. REGIONAL •

Japan’s consumer prices fell for the seventh time in eight months, underscoring the risk that the central bank may struggle to reach a 2 percent inflation target unless it implements new easing measures earlier than planned. Consumer prices excluding fresh food fell 0.2 percent in December from a year earlier, the government said in Tokyo today, matching the median estimate of 23 economists surveyed by Bloomberg News. Bank of Japan Governor Masaaki Shirakawa said today that meeting the target would not be easy and that central banks need to be alert to financial bubbles. Deputy Economy Minister Yasutoshi Nishimura said in an interview yesterday that reaching the inflation target announced this week will be difficult without more easing, as he endorsed further yen weakness. Minutes of a December BOJ meeting released today show that some members were in favor of making asset purchases in the first half of 2013 to support an economy that contracted in the second and third quarters of last year.

The Japanese government will raise its economic growth predictions for next fiscal year as it sees stimulus measures driving a recovery from recession, according to Japanese media reports. The government will raise its real gross domestic product forecast for the year that starts in April to 2.5 percent, according to separate reports today from Kyodo News and the Nikkei newspaper. They didn’t say where they got the information. Nominal GDP will grow 2.7 percent in the year, according to the reports.

China’s foreign-exchange regulator renewed concerns that the nation will see fresh speculative inflows of money after the U.S. and Japanese central banks said they would pump more funds into their financial systems. “The policies in major economies of monetary easing and low interest rates will boost global liquidity, increase risk preferences in the market and drive speculative funds into China,” the State Administration of Foreign Exchange said in a statement on its website today. A large amount of so-called “hot money” inflows is possible, “but there are many uncertain factors,” SAFE said. The SAFE statement didn’t name the U.S. or Japan, which over the past two months expanded asset-purchase programs and maintained near-zero interest rates designed to stoke growth. Capital inflows and an economic rebound in China could fuel inflation and asset bubbles after former central bank adviser Fan Gang said this week that overheating risks may resurface this year.

The Philippines is poised to get its first investment-grade credit rating this year and the central bank is prepared to unveil additional measures to deal with a possible surge in capital inflows, Governor Amando Tetangco said. “We think we’ll achieve it this year and most probably in the first half,” Tetangco said about the rating in an interview on Bloomberg Television today. “We have allowed greater flexibility in the exchange rate, but we also reserve the right to participate in the foreign-exchange market to smoothen sharper movements. We stand ready to implement additional measures as may be appropriate.” The Southeast Asian economy has the highest junk rating at Moody’s Investors Service, Fitch Ratings and Standard & Poor’s, and President Benigno Aquino said in his speech in Davos this week that the nation is “on the cusp” of becoming investment grade. S&P, which raised the outlook on the country’s debt to positive last month, said an upgrade is possible this year, citing improved governance and public finances. Page 2 of 6


Singapore’s industrial production fell for the fourth time in five months in December as manufacturers produced fewer electronics items. Manufacturing declined 0.6 percent from a year earlier after a revised 2.9 percent increase in November, the Economic Development Board said in a report today. The median of 18 economists surveyed by Bloomberg News was for a 4.8 percent drop. For the whole year, output gained 0.1 percent. The export-dependent nation is struggling to cope with faltering demand for its goods even as the global economy shows signs of improvement. While data indicates recoveries in the U.S., China and Europe are gaining traction, Singapore’s overseas shipments declined the most in 14 months in December.

Singapore’s latest round of measures to curb record property prices has become a stumbling block in the city-state’s two-biggest corporate takeover deals. Overseas Union Enterprise Ltd. this week gave up its two-month S$13.8 billion ($11.2 billion) tussle against Thai billionaire Charoen Sirivadhanabhakdi for property and drinks company Fraser & Neave Ltd., citing the measures. Wheelock Properties Ltd., which tried to thwart a plan by SC Global Developments Ltd.’s chief executive officer to buy out the company, dropped the fight less than a week after the new rules, citing “market developments.” Singapore’s latest curbs -- from higher taxes to tougher mortgage requirements -- have been described by broker Knight Frank LLP as the “most severe” since the government started cooling the market more than three years ago.

Thailand’s Finance Minister Kittiratt Na-Ranong said the central bank should avoid fighting market forces to stem currency gains, heeding a lesson from the 1997 Asian financial crisis. “The shadow of 1997 is there,” Kittiratt said in an interview in Bangkok. “I will never encourage Bank of Thailand to go and trade against the market-determined rate unless it’s only part of the daily stability, the weekly stability.” The baht fell from a 17-month high this week, snapping a seven-week rally, amid speculation the central bank will intervene to halt gains. December export growth missed analysts’ estimates, prompting concern that the currency’s appreciation will pare shipments that account for about two-thirds of the economy.

IFIs NEWS (compiled from their websites) ADBI – Press Release: Climbs Global Think Tank Rankings •

The ADBI has announced that it has jumped from 10th to 6th among government-affiliated think tanks in the 2012 Global Go To Think Tanks Report which ranked more than 6,500 think tanks. The report is based on an international survey of 1,950 scholars, public and private donors, policymakers, and journalists who ranked more than 6,500 think tanks. http://www.adbi.org/news/2013/01/24/5458.adbi.global.think.tank.rankings.2012/ (Press Release) http://www.gotothinktank.com/2012-global-goto-tank-index-report/ (Go To Think Tanks Report) BIS – Speech: “From ideas to implementation”

The BIS has publicised the speech by Mr Stefan Ingves, Chairman of the Basel Committee and Governor of the Sveriges Riksbank. http://www.bis.org/review/r130124a.pdf FSB – Publication: Summary of workshop on compensation practices

As recommended by the 2012 implementation progress report on compensation practices, the FSB organised in November 2012 a workshop on this topic. Senior executives from global systemically important banks and from consulting firms took part in the workshop, which focused on the alignment of compensation with ex ante risk taking, the alignment of compensation with performance, and the identification of material risk takers. The FSB has published a summary of the workshop and welcomes any further feedback on its main takeaways; feedback should be sent to fsb@bis.org. http://www.financialstabilityboard.org/publications/r_130124.pdf

Page 3 of 6


UNCTAD – Press Release: UNCTAD to lead post-2015 e-discussion on development-led globalization •

The United Nations is organizing a series of consultations on various themes to support governments to agree on a post-2015 development agenda for when the Millennium Development Goals expire. Growth and employment is one of these thematic areas. The thematic e-discussion on development-led globalization will be led by UNCTAD from 25 January to 22 February 2013, and will be moderated by Ralf Peters and Amelia Santos-Paulino (from UNCTAD) and Jayati Ghosh (from Jawaharlal Nehru University, New Delhi). http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=389&Sitemap_x0020_Taxono my=Globalization and Development;#1644;#Economic Cooperation and Integration among Developing Countries;#20;#UNCTAD Home Vienna 2 Initiative – Press Release: Discusses Deleveraging, Asset Quality and Implications of Banking Union Plans •

The Steering Committee of the Vienna 2 Initiative met in Vienna on 14 January, 2013, to discuss deleveraging trends, asset quality, and next steps towards a banking union in light of the EU Council’s decisions in December 2012, and issued the captioned press release. http://www.imf.org/external/np/sec/pr/2013/pr1322.htm

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 24-Jan 25-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.75 7.75 Indonesia 9,793.00 9,828.00 9,760.00 9,653.00 Japan 86.75 90.10 90.33 90.67 Korea 1,064.40 1,057.08 1,068.85 1,074.05 Malaysia 3.06 3.01 3.05 3.04 Philippines 41.01 40.58 40.64 40.66 Singapore 1.22 1.23 1.23 1.23 Thailand 30.59 29.76 29.82 29.89 Vietnam 20,840.00 20,845.00 20,845.00 20,840.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.03 -0.01 1.11 -0.37 -0.48 0.12 -0.04 0.02 -0.23 0.02

2013 YTD (%chg) 0.2 0.0 0.0 -3.7 -1.0 -0.3 0.5 -0.7 1.5 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,317.1 23,601.8 4,465.5 10,913.3 1,987.9 1,676.4 6,139.2 3,211.2 1,434.4 454.2

24-Jan 2,302.6 23,598.9 4,418.7 10,620.9 1,964.5 1,635.3 6,117.3 3,248.4 1,449.1 452.4

25-Jan 2,291.3 23,580.4 4,437.6 10,926.7 1,946.7 1,635.2 6,167.6 3,266.4 1,459.2 468.1

% change -0.49 -0.08 0.43 2.88 -0.91 0.00 0.82 0.56 0.69 3.47

2013 YTD (%chg) 1.0 1.2 2.1 5.1 -4.2 -2.4 5.2 2.0 3.7 11.9

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OVERNIGHT LENDING RATE (%) 24-Jan 25-Jan bps change 2.100 2.100 0.00 0.095 0.095 0.00 4.184 4.185 0.08 0.100 0.095 -0.50 2.750 2.750 0.00 3.000 3.000 0.00 1.789 1.839 5.00 0.063 0.063 0.00 2.750 2.750 0.00 2.043 2.125 8.20

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

3-MONTH INTERBANK LENDING RATE (%) 24-Jan 25-Jan bps change 3.880 3.883 0.27 0.386 0.386 -0.07 4.952 4.952 0.00 0.297 0.295 -0.17 2.820 2.820 0.00 3.210 3.210 0.00 0.105 0.150 4.50 0.377 0.377 0.00 2.869 2.869 0.00 6.480 6.120 -36.00

CREDIT DEFAULT SWAP (IN BPS) 23-Jan 24-Jan bps change China 63.54 63.07 -0.47 Hong Kong 45.34 44.35 -0.99 Indonesia 133.27 134.76 1.49 Japan 79.20 74.36 -4.84 Korea 65.29 65.80 0.51 Malaysia 83.18 83.63 0.45 Philippines 97.68 97.74 0.06 Thailand 91.98 92.50 0.52 Vietnam 207.24 209.97 2.73 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 24-Jan

Gold Spot (in US$ per ounce)

25-Jan

1,668.0

% change

1,670.0

0.12

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 30-Sep 3,272.9 3,285.1 298.2 301.2 109.0 110.2 1,273.2 1,277.0 316.9 322.0 134.9 137.5 80.7 82.0 246.2 252.1 179.2 183.6 n.a n.a

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

Page 5 of 6


EXTERNAL LIQUIDITY RATIOS

Reserves - latest

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

Short-term external Import cover (Qtrs of debt imports covered (US$bn) by reserves) 572.8 6.6 711.2 2.2 38.3 2.2 2,255.1 18.0 132.6 2.2 32.4 2.4 8.0 4.4 924.3 2.2 57.2 2.7 10.0 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY Country THAILAND SINGAPORE PHILIPPINES PHILIPPINES JAPAN JAPAN

Indicators Foreign Reserves (USD bn) Industrial Production YoY% Total Imports (YoY)% Trade Balance (USD mn) National CPI YoY % National CPI Ex Food, Energy YoY %

Period Jan 18 Dec Nov Nov Dec Dec

SELECTED ECONOMIC RELEASES CALENDAR (14 – 18 January 2013) Expected released date Country Indicators 1/21/2013 HONG KONG CPI - Composite Index (YoY)% 1/22/2013 JAPAN All Industry Activity Index (MoM) % MALAYSIA Foreign Reserves (USD bn) 1/23/2013 MALAYSIA CPI YoY % SINGAPORE CPI (YoY)% 1/24/2013 JAPAN Merchnds Trade Exports YoY % JAPAN Merchnds Trade Balance Total (JPY bn) CHINA HSBC Flash China Manufacturing PMI THAILAND Customs Imports (YoY)% THAILAND Customs Exports (YoY)% VIETNAM CPI (YoY) % HONG KONG Imports YoY% HONG KONG Exports YoY% HONG KONG Trade Balance (HKD bn) SOUTH KOREA GDP (YoY)% SOUTH KOREA GDP (QoQ)% 1/25/2013 THAILAND Foreign Reserves (USD bn) VIETNAM Imports YTD (YoY)% VIETNAM Exports YTD (YoY)% VIETNAM Industrial Production Index YoY % VIETNAM Retail Sales YTD (YoY)% SINGAPORE Industrial Production YoY% PHILIPPINES Total Imports (YoY)% PHILIPPINES Trade Balance (USD mn) JAPAN National CPI YoY % JAPAN National CPI Ex Food, Energy YoY %

Last 182.0 -0.6 2.2 -1586 -0.1 -0.2

Previous 182.3 3.1 4.3 -832 -0.2 -0.1

Period Dec Nov Jan 15 Dec Dec Dec Dec Jan Dec Dec Jan Dec Dec Dec 4Q P 4Q P Jan 18 Jan Jan Jan Jan Dec Nov Nov Dec Dec

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.

Page 6 of 6


MARKET UPDATE FOR ASEAN+3 28 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS 

Yen Rises From 2 1/2-Year Low on Bets Losses Overdone. The yen rallied from its weakest level in 2 1/2 years as traders decreased bearish bets and technical indicators signaled recent declines in the currency may have been overdone. The yen fell 3.7 percent from 90.91 to 90.66 per dollar from 25th to 28th Jan 2013. South Korea’s won followed the yen trend by falling 2.7 percent to 1,092.63 per dollar, while China’s yuan appreciated slightly against the dollar by 0.1 percent. Indonesia’s rupiah, Singapore’s dollar and Malaysi’s ringgit also depreciated against the dollar by 1.8 percent, 1.5 percent and 1.6 percent, respectively. The exchange rate between Vietnam’s dong and the dollar remained unchanged at the level of 20,840 per dollar, while Thailand’s baht appreciated by 1.1 percent.

Most Asian Stocks Rise; Japan Shares Drop as Streak Ends. Most Asian shares outside Japan rose after Chinese industrial profits increased for a fourth month. From Friday 25th to Monday 28th Jan 2013, Japan’s Nikkei 225 (NKY) increased by 4.1 percent. Conversely, South Korea’s Kospi and Malaysia’s stock index declined respectively by 4.5 percent and 2.2 percent. Samsung Electronics Co., the world’s largest maker of smartphones, dropped 3.2 percent to 1.372 million won. Singapore’s Straits Times Index gained 2.3 percent, Hong Kong’s Hang Seng Index (HSI) rose 1.5 percent and China’s Shanghai Composite Index jumped 3.4 percent to its highest close since June 2012. Indonesia’s stock index, the Philippines’ stock index and Thailand’s stock index showed a gain of 1.6 percent, 5.7 percent and 4.4 percent, respectively. Meanwhile, Vietnam’s stock index indicated the highest gain of 14.6 percent over the same period of time.

BREAKING NEWS GLOBAL 

Assault Weapons Ban Lacks Democratic Votes to Pass Senate. A proposed ban on sales of assault weapons would be defeated in the U.S. Senate unless some lawmakers changed their current views. At least six of the 55 senators in the Democratic caucus have expressed skepticism or outright opposition to a ban, the review found. That means Democrats wouldn’t have a 51-vote majority to pass the measure, let alone the 60 needed to break a Republican filibuster to bring it to a floor vote. A ban on the military-style weapons is among the legislative goals President Barack Obama outlined in his recommendations to Congress on curbing gun violence after the Dec. 14 Sandy Hook Elementary School slaughter of 20 children and six educators in Newtown, Connecticut. Vice President Joe Biden said yesterday it will take “persuasion and information” to gain the necessary support to enact the White House package.

Yi Warns on Currency Wars as Yuan Close to ‘Equilibrium’. China’s foreign-exchange regulator urged Group of 20 nations to improve collaboration to avoid any so-called currency wars while signaling he’s comfortable with the value of the yuan. On a global level, there needs to be “better communication and coordination” on foreign exchange among the G-20, Yi Gang, who is also a deputy governor of China’s central bank, said in


an interview at the World Economic Forum’s annual meeting in Davos, Switzerland, on Jan. 26. Japanese Economy Minister Akira Amari said in Davos that his nation is trying to defeat deflation rather than weaken the yen, after Prime Minister Shinzo Abe’s push for laxer monetary policy sparked a slide in the currency. His comments on Jan. 26 followed a week in which German and Canadian policy makers joined a worldwide chorus highlighting a recent plunge in the yen as a worry. 

Foreign Flows Into India Stocks Poised for January Record. Indian stocks are luring the biggest inflows ever for January as foreign investors grow confident the government will curb the budget deficit and boost the economy. Overseas funds bought a net $3.01 billion of local shares this year through Jan. 23, data from the market regulator show, surpassing the previous January record of $2.18 billion set last year. Inflows surged to $24.5 billion in 2012, the highest among 10 Asian markets, helping the benchmark BSE India Sensitive Index (SENSEX), or Sensex, to post its biggest annual jump in three years. Stocks gained even as economic growth waned, inflation accelerated to the fastest pace among the so-called BRIC nations and the current-account deficit widened to a record. The government has taken steps to attract more inflows since September by relaxing rules on foreign investment, lowering taxes on overseas borrowing, cutting fuel subsidies and raising import taxes on gold. Finance Minister Palaniappan Chidambaram pledged on Jan. 22 to deepen the overhaul of economic policy by introducing a goodsand-services tax.

Tripling in Debt to $1.7 Trillion Drags on Economy. Chinese companies are spending more than ever to service debt after their borrowing almost tripled over five years, prompting strategists to warn of rising default risk and a threat to economic growth. Total short- and long-term borrowing by 3,895 publicly traded non-financial companies rose to almost $1.7 trillion in their latest filings, from $604 billion at the end of 2007, data compiled by Bloomberg show. Financing costs, including interest, on all forms of debt climbed to the highest level as a percentage of gross domestic product last year, according to Sanford C. Bernstein & Co. Bernstein says that means less cash for investment to fuel the world’s second-largest economy, while Royal Bank of Scotland Group Plc says the threat of defaults will hold back interest-rate liberalization. The average 10-year yield for top-rated company bonds is near a 13-month high at 5.27 percent, compared with the 2.6 percent yield in a Bank of America Merrill Lynch global corporate index.

REGIONAL 

Singapore By-Election Loss Shows Lee Challenges: Southeast Asia. Singapore’s ruling People’s Action Party (PAP) lost a by-election with the widest margin in almost three decades, signaling Prime Minister Lee Hsien Loong may struggle to claw back support as the cost of living climbs. The Workers’ Party’s Lee Li Lian, a 34-year-old sales trainer, won 54.5 percent of votes in the four-way race in the northeastern Punggol East district over the weekend, a 10.8 percentage point lead over the ruling party’s candidate. That’s the most for a district held by the PAP since the 1984 general elections, according to data from the Elections Department. Record-high housing and transport costs, public discontent over an influx of foreigners and infrastructure strains are weakening approval for the only party that has ruled Singapore since independence in 1965. Its policies, which have helped forge Southeast Asia’s only advanced economy, are now being questioned by voters, many of whom are looking for a government that is less authoritative and more consultative. Page 2 of 8


Yudhoyono Buffeted by Fuel as Indonesia Election Nears: Economy. Indonesian President Susilo Bambang Yudhoyono is under growing pressure to raise fuel prices and curb oil imports as currency risks persist and the window to act narrows ahead of elections in 2014. The government will probably need to increase subsidized-fuel prices this year, according to economists at Bank of America Corp., Australia & New Zealand Banking Group Ltd., Standard Chartered Plc, PT Bank Danamon Indonesia and Moody’s Analytics. The country limited the use of partially government-funded diesel last week and the trade minister said Yudhoyono will evaluate energy charges in the next few weeks. The president has avoided raising fuel prices since protests derailed an increase early last year, highlighting the political minefields in a country where riots spurred by soaring living costs helped oust the dictator Suharto in 1998. Subsidies that keep charges below international market rates have bolstered demand for energy imports in the world’s fourth most-populous nation, contributing to a widening current-account gap and a 5.9 percent drop in the rupiah last year.

Myanmar Clears ADB, World Bank Overdue Debt With Japan Help. Myanmar cleared about $1 billion in overdue debt with the ADB and World Bank using a bridge loan from Japan, opening the door for increased lending as the country seeks to overhaul its infrastructure. The ADB announced a $512 million loan, its first to Myanmar in more than 30 years, while the World Bank separately said it would lend $440 million to the Southeast Asian nation. The funds will be used to pay back the JBIC, which this month provided financing to Myanmar to clear arrears with the government-backed lenders. President Thein Sein’s moves to modernize the country’s financial and physical infrastructure after years of neglect have lured private equity funds and companies such as General Electric Co. and Norway’s Telenor ASA. (TEL). Japan, Myanmar’s largest creditor, agreed last year to settle $6.6 billion in arrears. Myanmar’s finance ministry said today that Norway canceled $534 million in debt after a meeting with the 19member Paris Club group of creditor nations, which includes the U.S., Australia, Canada, Japan, Russia and 14 European nations.

IFIs NEWS (compiled from their websites) ADB – Press Release: ADB Returns to Myanmar with First Re-engagement Assistance 

The ADB is resuming operations in Myanmar, with an assistance package for social and economic development that is designed to build a solid foundation for further reforms to alleviate poverty and foster growth. ADB’s first major assistance will help Myanmar develop a competitive economy by focusing on improved public finance, trade, investment, small and medium-sized enterprises, and financial sector development, building on significant measures the government has already taken, including major reforms to its central bank and trade and investment liberalization. http://www.adb.org/news/adb-returns-myanmar-first-re-engagement-assistance

IFC – Press Release: IFC Catalyst Fund Mobilizes $280 Million to Spur Climate Investment by Private Equity Funds 

The IFC, the governments of Canada and the United Kingdom, and the sovereign wealth fund of Azerbaijan have invested about $280 million in the IFC Catalyst Fund, which will invest in funds that provide growth capital to companies developing innovative ways to address climate change, and invest directly in those companies. IFC is contributing $75 million to the fund. The fund will provide investors with exposure to a diversified portfolio of private equity funds managed by established and emerging fund managers. Page 3 of 8


It will also offer investors the ability to invest at scale in fast-growing resourceefficiency sectors across emerging markets. http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/409E34B34EBC432C85257AF E0054B91E IMF – Working Papers 

Assessing the Determinants of Interest Rate Transmission through Conditional Impulse Response Functions – “We employ a structural panel VAR model with interaction terms to identify determinants of effective transmission from central bank policy rates to retail lending rates in a large country sample. The findings suggest that industrial economies tend to enjoy a higher pass-through largely on account of their more flexible exchange rate regimes and their more developed financial systems.” http://www.imf.org/external/pubs/ft/wp/2013/wp1323.pdf Assessing the Macroeconomic Impact of Structural Reforms The Case of Italy - Wideranging structural reforms are underway in Italy, aimed at addressing key bottlenecks in the product and labor markets. Our analysis, based on the IMF‘s Global Integrated Monetary and Fiscal model (GIMF), attempts to quantify the potential gains to the economy from a comprehensive package of structural reforms. http://www.imf.org/external/pubs/ft/wp/2013/wp1322.pdf

UNCTAD – Press Release: Experts meet to discuss regional integration and foreign direct investment 

On 28-30 January 2013, national, regional and international experts and policymakers will come together to exchange views on this topic, and on how the relationship between FDI and regional integration can be managed in order to foster growth and sustainable development. The trade and investment nexus, and its relationship between regional integration and TNC strategies, is the subject of the forthcoming UNCTAD expert meeting being held in Geneva on investment for productive capacitybuilding and sustainable development http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=388&Sitemap_x0020_ Taxonomy=UNCTAD

UNCTAD – Publication: “Global Investment Trend Monitor, No. 11 – 23 Jan 2013” 

UNCTAD has publicised the captioned report. It noted , “Global foreign direct investment (FDI) inflows declined by 18 per cent in 2012, down from $1.6 trillion in 2011 to an estimated $1.3 trillion. The strong decline of FDI flows is in stark contrast to other macroeconomic variables, including gross domestic product (GDP), trade and employment growth, which all remain in positive territory.” http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=390&Sitemap_x0020_ Taxonomy=Investment (Press Release) http://unctad.org/en/PublicationsLibrary/webdiaeia2013d1_en.pdf (Report)

World Bank – Press Release: Myanmar and World Bank Group now fully engaged to spur growth and create opportunities for all 

Myanmar and the World Bank Group on 27 January marked the beginning of a new phase in their partnership to accelerate reforms with the clearance of arrears to the Bank and the Asian Development Bank. The Bank Group is now fully engaged in supporting development programs to benefit all of the people of Myanmar, with

Page 4 of 8


financial and technical assistance. The Bank Group is currently in discussions with the government to identify priority needs. On January 22, 2013, the World Bank Board of Directors approved a US$440 million Reengagement and Reform Support Credit to Myanmar. The Credit supports critical reforms being implemented by the Government to strengthen macroeconomic stability, improve public financial management and improve the investment climate. Its proceeds will also help the Government meet its foreign exchange needs, including repaying a bridge loan provided to it by the Japan Bank for International Cooperation (JBIC) to clear arrears. http://www.worldbank.org/en/news/2013/01/27/myanmar-world-bank-group-nowfully-engaged-spur-growth-and-create-opportunities-for-all FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 25-Jan 28-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.75 7.76 Indonesia 9,793.00 9,653.00 9,653.00 9,832.00 Japan 86.75 90.91 90.91 90.66 Korea 1,064.40 1,074.05 1,074.05 1,092.63 Malaysia 3.06 3.04 3.04 3.08 Philippines 41.01 40.66 40.66 40.97 Singapore 1.22 1.23 1.23 1.24 Thailand 30.59 29.94 29.94 29.99 Vietnam 20,840.00 20,840.00 20,840.00 20,840.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.04 -0.04 -1.82 0.28 -1.70 -1.25 -0.76 -0.32 -0.17 0.00

2013 YTD (%chg) 0.1 -0.1 -1.8 -3.7 -2.7 -1.6 -0.3 -1.5 1.1 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,291.3 23,580.4 4,437.6 10,926.7 1,946.7 1,637.1 6,167.6 3,266.4 1,459.2 468.1

25-Jan 2,291.3 23,580.4 4,437.6 10,926.7 1,946.7 1,637.1 6,167.6 3,269.3 1,461.4 468.1

OVERNIGHT LENDING RATE (%) 25-Jan 28-Jan bps change 2.100 2.090 -1.00 0.095 0.095 0.00 4.185 4.187 0.20 0.095 0.098 0.25 2.750 2.750 0.00 3.000 3.000 0.00 1.839 2.207 36.80 0.037 0.037 0.00 2.750 2.750 0.00 2.125 2.500 37.50

28-Jan 2,346.5 23,671.9 4,416.9 10,824.3 1,939.7 1,637.1 6,192.4 3,273.9 1,469.6 479.6

% change 2.41 0.39 -0.47 -0.94 -0.36 0.00 0.40 0.14 0.56 2.46

2013 YTD (%chg) 3.4 1.5 1.6 4.1 -4.5 -2.2 5.7 2.3 4.4 14.6

3-MONTH INTERBANK LENDING RATE (%) 25-Jan 28-Jan bps change 3.883 3.886 0.32 0.386 0.386 0.00 4.952 4.952 0.00 0.295 0.294 -0.08 2.820 2.820 0.00 3.210 3.210 0.00 0.150 0.350 20.00 0.377 0.377 0.00 2.869 2.869 0.00 6.120 6.862 74.20

Page 5 of 8


CREDIT DEFAULT SWAP (IN BPS) 24-Jan 25-Jan bps change China 63.07 63.59 0.52 Hong Kong 44.35 44.36 0.01 Indonesia 134.76 133.32 -1.44 Japan 74.36 73.41 -0.95 Korea 65.80 65.83 0.03 Malaysia 83.63 84.15 0.52 Philippines 97.74 96.83 -0.91 Thailand 92.50 92.03 -0.47 Vietnam 209.97 210.09 0.12 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 25-Jan Gold Spot (in US$ per ounce)

28-Jan

1,658.7

% change

1,656.7

-0.12

Sources: Bloomberg & Datastream

CREDIT RATINGS S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam INTERNATIONAL BILLION)

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

RESERVES

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

(END-MONTH,

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+ IN

US$

2012 31-Aug 30-Sep 3,272.9 3,285.1 298.2 301.2 109.0 110.2 1,273.2 1,277.0 316.9 322.0 134.9 137.5 80.7 82.0 246.2 252.1 179.2 183.6 n.a n.a

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

EXTERNAL LIQUIDITY RATIOS

Reserves - latest

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

Short-term external debt (US$bn) 572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 18.0 2.2 2.4 4.4 2.2 2.7 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

Page 6 of 8


DATA RELEASES FOR THE DAY

Country SOUTH KOREA

Indicators Business Survey- Non-Manufacturing Business Survey- Manufacturing

Period Feb Feb

Last -

Previous 70 68

SELECTED ECONOMIC RELEASES CALENDAR (28 Jan to 01 Feb 2013)

Expected released date 28/1/2013 29/1/2013

30/1/2013

31/1/2013

Country SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN JAPAN JAPAN PHILIPPINES PHILIPPINES PHILIPPINES SINGAPORE SINGAPORE SINGAPORE HONG KONG HONG KONG HONG KONG HONG KONG HONG KONG HONG KONG THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND MALAYSIA JAPAN JAPAN JAPAN CHINA CHINA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA

Indicators Business Survey- Non-Manufacturing Business Survey- Manufacturing Current Account in (USD mn) Good Balance in (USD mn) Industrial Production (YoY)% Industrial Production (MoM)% Retail Trade MoM SA Retail Trade YoY Industrial Production YOY% Industrial Production MoM % Markit/JMMA Manufacturing PMI GDP sa (QoQ)% GDP (YoY)% Annual GDP (YoY)% Unemployment Rate (sa)% M1 Money Supply (YoY)% M2 Money Supply (YoY)% Money Supply M1 in HK$ (YoY)% Money Supply M2 in HK$ (YoY)% Money Supply M3 in HK$ (YoY)% Retail Sales - Volume (YoY)% Retail Sales - Value (YoY)% Govt Mthly Budget Surp/Def (HKD bn) Total Trade Balance (USD mn) Overall Balance (USD mn) Total Imports YOY% Total Exports YOY% Current Account Balance (USD mn) Business Sentiment Index Consumer Price Index (YoY)% Consumer Price Index NSA (MoM) Core CPI (YoY)% Overnight Rate % Jobless Rate % Job-To-Applicant Ratio Overall hhold spending (YoY)% PMI Manufacturing HSBC Manufacturing PMI Ext Trade - Imports (YoY)% Ext Trade - Export (YoY)% HSBC Manufacturing PMI Core Consumer Price Index(YoY)%

Period Feb Feb Dec Dec Dec Dec Dec Dec Dec P Dec P Jan 4Q 4Q 2012 4Q P Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Jan Jan Jan Jan 31 Dec Dec Dec Jan Jan Jan Jan Jan Jan

Page 7 of 8


1/2/2013

SOUTH KOREA SOUTH KOREA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA JAPAN JAPAN INDONESIA INDONESIA THAILAND THAILAND

Consumer Price Index (YoY)% Consumer Price Index (MoM)% Total Imports (YoY)% Core Inflation (YoY)% Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) Official Reserve Assets (USD bn) Vehicle sales Consumer Confidence Index Money Supply - M2 (YoY)% Foreign Reserves (USD bn) Forward Contracts

Jan Jan Dec Jan Dec Jan Jan Dec Jan Jan Jan Jan Jan 25 Jan 25

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.

Page 8 of 8


MARKET UPDATE FOR ASEAN+3 29 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS •

Dollar Drops Versus Peers Before Confidence Data, Fed. The dollar weakened against most of its major counterparts as investors pared expectations the Federal Reserve will signal a change to its asset-buying program at the end of a two-day meeting tomorrow. The U.S. currency was 0.2 percent from its lowest in 11 months versus the euro before a report today forecast to show confidence among U.S. consumers declined this month. The dollar traded at $1.3446 per euro as of 7:19 a.m. in London from $1.3456 in New York. It reached $1.3479 per euro on Jan. 25, the weakest level since Feb. 29, 2012. Japan’s currency gained 0.13 percent to 90.57 per dollar. South Korea’s won rose by 0.93 percent to 1,082.60 per dollar, while China’s yuan and Hong Kong’s dollar depreciated slightly against the dollar with the same pace of 0.03 percent to 6.23 and 7.76 per dollar respectively. Indonesia’s rupiah, Singapore’s dollar, Malaysia’s ringgit and Thailand’s baht strengthened against the dollar 1.53 percent, 0.22 percent, 0.18 percent and 0.50 percent, respectively. Meanwhile, Vietnam’s dong weakened against the dollar 0.55 percent, from 20,840 to 20,955 per dollar.

Emerging Stocks Snap Four-Day Slide as Korean Shares Rebound. Emerging-market stocks rose for the first time in five days, led by the biggest rally in South Korea’s benchmark index in four weeks, as a gauge of manufacturers’ confidence in the country increased. Kia Motors Corp., South Korea’s second-largest carmaker, surged 5.1 percent from its lowest level since November 2010. Samsung C&T Corp. jumped the most in four years after operating profit beat analyst estimates. South Korea’s Kospi index gained 0.84 percent, the most since Jan. 2. The Philippine Stock Exchange Index advanced 0.68 percent, poised for a record close. The FTSE Bursa Malaysia KLCI Index fell slightly by 0.02 percent, and Singapore’s Straits Times Index as well as Hong Kong’s Hang Seng Index (HSI) slid moderately by 0.25 percent and 0.07 percent respectively. Meanwhile, China’s Shanghai Composite Index jumped 0.53 percent and Indonesia’s index, Japan’s Nikkei 225 (NKY), Thailand’s index as well as Vietnam’s index increased by 0.37 percent, 0.39 percent, 0.18 percent and 0.92 percent, respectively.

BREAKING NEWS GLOBAL •

RBI Signals India Rate-Cut Limits as Policy Revamped: Economy. The Reserve Bank of India signaled elevated inflation is limiting room to cut interest rates even as its focus may shift to spurring growth as the government implements an overhaul of economic policies. “The scope for supportive monetary policy action is constrained,” the Reserve Bank of India said in a report yesterday ahead of its interest-rate decision in Mumbai today. “However, as reform actions get executed, monetary policy could increasingly focus on growth revival.” The central bank report suggests there are “clear risks” to Goldman Sachs Group Inc.’s expectations for a front-loading of rate cuts this month, economist Tushar Poddar said in a note yesterday. While the government has vowed to curb the budget gap to damp price pressures, costlier diesel and risks from a trade


deficit will limit the central bank to a 25 basis-point rate cut, according to 30 of 35 analysts in a Bloomberg News survey. •

Bernanke Seen Buying $1.14 Trillion in Assets in 2014. Federal Reserve Chairman Ben S. Bernanke’s latest round of bond buying will reach $1.14 trillion before he ends the program in the first quarter of 2014. Bernanke will push on with purchases of $40 billion a month of mortgage bonds and $45 billion a month of Treasuries, according to the survey of 44 economists, even as some Fed officials warn his unprecedented balance-sheet expansion will impair efforts to tighten policy when necessary. The Federal Open Market Committee will renew its commitment to asset buying during a two-day meeting starting today after determining the benefits from the program exceed any risk of inflation or financial instability. Bernanke has said the policy will continue until there are “substantial” gains in employment. Fed officials have a brighter outlook for the economy than many private economists.

Buffett NYSE Bid Reinforcing Confidence as S&P 500 Nears Record. Warren Buffett’s proposal to take over NYSE Euronext, while rejected in favor of a higher offer last year, is boosting optimism that the world-famous stock picker sees a rebound in trading from a four-year low. The bid for the New York Stock Exchange owner, made in November and disclosed yesterday in a government filing, came amid signs investors are returning to stocks after volume fell 18 percent in 2012. U.S. equity funds took in a record $3.1 billion at the beginning of this year after investors pulled about $250 billion since 2009, based on data from EPFR Global. The value of American equities has risen by $1 trillion this year as the biggest January rally since 1987 pulled the Standard & Poor’s 500 Index within 4.4 percent of its record. Even though Intercontinental Exchange Inc. (ICE) won NYSE Euronext with its $8.2 billion bid announced in December, Berkshire Hathaway Inc. (BRK/A)’s interest may signal exchange earnings are poised to rebound, according to PNC Wealth Management and Tabb Group LLC.

Oil Trades Near Four-Month High as OPEC Sees No Price Collapse. Oil traded near the highest level in four months in New York on signs of economic growth in the U.S. and after OPEC Secretary General Abdalla El-Badri said prices are unlikely to drop this year. Futures were little changed after climbing 0.6 percent yesterday. Federal Reserve policy makers start a two-day meeting today to discuss continuing asset purchases to boost the economy. The oil market is well-balanced and the OPEC doesn’t “envision a price collapse” in 2013, El-Badri said in London. “The OPEC statement seems to imply that they are not contemplating any particular action.” Crude for March delivery was at $96.72 a barrel, up 28 cents, in electronic trading on the New York Mercantile Exchange at 1:22 p.m. Singapore time. The average volume of all contracts traded was 50 percent below the 100-day average. Futures rose to $96.44 yesterday, the highest since Sept. 17. Brent for March settlement rose 10 cents to $113.58 a barrel on the London-based ICE Futures Europe exchange. The average volume of all contracts traded was 40 percent below the 100-day average. The European benchmark grade was at a premium of $16.86 to West Texas Intermediate futures, from $17.04 yesterday.

REGIONAL •

China Communists to Control Size of Party Amid Corruption Fight. China’s ruling Communist Party will control the size of the organization as it seeks to weed out “unqualified members,” the official Xinhua News Agency said, citing a meeting overseen Page 2 of 8


by party leader Xi Jinping. Some party members are “corrupt and degenerate,” members of the ruling Politburo said, affecting the party’s “vigor and vitality,” according to the Xinhua report. The party had 82 million members as of last year. The statement comes as part of a crackdown on corruption following Xi’s elevation to party general secretary in November that has netted officials including Li Chuncheng, a deputy party secretary in Sichuan province removed on suspicion of discipline violations. Chinese leaders have said corruption and official malfeasance risk weakening the party’s grip on power. In a bid to burnish the party’s image, Xi has called for an end to lavish receptions and displays of ostentation. In September, the party sent the case of ousted Politburo member Bo Xilai, who is accused of abuse of power and bribery, to the judiciary after his wife was convicted in the murder of a British businessman. •

Malaysia’s High Real Yields Mean Flows Top Peers. Global funds pumped more cash into Malaysia’s sovereign debt than Indonesian or Thai bonds for a fourth year in 2012, lured by the highest real yields and the safest credit rating of the region’s three-biggest economies. Foreign ownership of the local-currency notes rose by $8.4 billion in the first 11 months, compared with a full-year increase of $4.9 billion in Indonesia and $6.6 billion in Thailand, according to official figures. Malaysia is rated A3 by Moody’s Investors Service, three levels above Indonesia and one step more than Thailand, while its 10-year bonds pay 2.3 percent after accounting for inflation, versus 0.9 percent and 0.1 percent for its respective peers. Bond-trading volumes in Malaysia that are 21 percent higher than in Indonesia and more than twice those in Thailand make the market more liquid, meaning it’s easier to match buyers and sellers, according to Natixis Asia Ltd. and CIMB Group Holdings Bhd. Malaysia has the lowest inflation in Southeast Asia even as the central bank kept borrowing costs on hold since May 2011.

New Billionaire’s Wealth Pumped by China Power Generator. Cao Kejian, chairman of Zhejiang Kaishan Compressor Co., became a billionaire since the start of this year after shares of China’s largest air compressor maker climbed more than 50 percent in four months on a new product. The company has manufactured a new screw expander, power-generating machinery that helps convert water and exhaust gas to electricity, the company said in a Jan. 7 statement. It will start selling it globally. “Kaishan’s technology is market leading globally and it has cost and distribution network advantages,” said Xu Minle, a Shanghai-based analyst at Bank of China International. He has a “buy” rating on the shares and attributes the stock’s gain to investors’ anticipation of the new product. The screw expander will be sold to mines, chemical plants, steel mills and other industrial companies. It makes electricity using water above 80 degrees Celsius (176 degrees Fahrenheit), which is produced in the cooling process at a factory and is usually wasted. While a typical compressor pressurizes air to create heat, the screw expander uses heat from the water to produce kinetic energy. Kaishan’s predecessor was founded in 1956 as the Communist Party consolidated companies that were previously privately held. It reverted back to a private company in 1998 as China’s policy makers allowed market economics to take hold.

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IFIs NEWS (compiled from their websites) IFC – Press Release: IFC Supports Rail Infrastructure in Kazakhstan, Boosting Trade and Industry •

The IFC, a member of the World Bank Group, is providing $50 million in financing to Eastcomtrans, the largest railcar leasing company in Kazakhstan, to help expand its railcar fleet, broadening commercial logistics services and helping develop the country's infrastructure for trade and industry. This investment, comprising $20 million of equity and $30 million of debt finance, will help Eastcomtrans expand its operations and meet the growing demand for new and reliable railcars in the country. Most of Kazakhstan’s domestic railcar fleet is approaching retirement age. http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/FD338C84AAFFB27A85257B 0100370A16

IFC – Press Release: IFC/CGAP Study Finds Lack of Access to Finance in Myanmar •

In a report released by the IFC and the CGAP (a policy ans research centre), it is found that demand for microfinance in Myanmar exceeds supply four times as the country’s economy expands following decades of isolation, highlighting the need to build up sustainable microfinance institutions. The report’s authors estimate that the total of outstanding loans in Myanmar currently stands at around $283 million whereas demand for microcredit is estimated at $1 billion. Demand is particularly high among farmers in Myanmar’s rural areas where more than two-thirds of the population lives. The report, entitled “Microfinance in Myanmar – Sector Assessment,” refers to microfinance as financial services for low-income people, including credit, savings, transfers, and insurance. http://www.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/C9D532F01AAE80D085257B 020021EAC8

IMF – Publication •

Policy Paper: The Fund’s Income Position for FY 2013 – Midyear Update http://www.imf.org/external/np/pp/eng/2012/122112.pdf

Staff Report: Dominica: 2012 Article IV Consultation http://www.imf.org/external/pubs/ft/scr/2013/cr1331.pdf

Working Paper: The Changing Collateral Space http://www.imf.org/external/pubs/ft/wp/2013/wp1325.pdf

Working Paper: Income Mobility and Welfare http://www.imf.org/external/pubs/ft/wp/2013/wp1324.pdf

Country Report: Latvia: Selected Issues http://www.imf.org/external/pubs/ft/scr/2013/cr1329.pdf

IMF – Press Release: IMF Executive Board Approves US$18.4 Million Disbursement Under the Rapid Credit Facility for Mali •

The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of an amount equivalent to SDR 12 million (about US$18.4 million) for Mali under the Rapid Credit Facility (RCF) to support the authorities with policy advice and financial support to maintain macroeconomic stability and growth during the next twelve months, as part of a broad-based support by Mali's development partners. Page 4 of 8


http://www.imf.org/external/np/sec/pr/2013/pr1324.htm IMF – Press Release: IMF-JICA High-Level Conference Discusses Economic Transformation and Inclusive Growth in Frontier Asia •

The International Monetary Fund (IMF) and the Japan International Cooperation Agency (JICA) today held a conference in Bangkok, Thailand entitled “Frontier Asia: Economic Transformation and Inclusive Growth.” The conference brought together ministers, central bank governors, other senior policymakers and academics from the region, along with staff from the IMF, JICA and other international financial institutions. Discussion focused on what is needed for Frontier Asia to continue moving up the development ladder, and to ensure that growth and job creation benefit all segments of society. http://www.imf.org/external/np/sec/pr/2013/pr1319.htm

IMF – Press Release: Staff Report: 2013 Hungary Article IV Consultation http://www.imf.org/external/pubs/ft/scr/2013/cr1328.pdf IMF – Press Release: IMF Executive Board Concludes 2012 Article IV Consultation and Second Post-Program Monitoring Discussions, and Ex-Post Evaluation of Exceptional Access Under the 2008 Stand-By Arrangement with the Republic of Latvia http://www.imf.org/external/np/sec/pn/2013/pn1311.htm OECD – Press Release: OECD calls for better alignment of energy policy, public finances and environmental goals •

Two new OECD reports provide wide-ranging evidence of how reforming subsidies and tax breaks for fossil fuels and rationalising fuel taxes can help countries boost finances and meet green objectives. http://www.oecd.org/newsroom/oecdcallsforbetteralignmentofenergypolicypublicfina ncesandenvironmentalgoals.htm

World Bank – Press Release: Cameroon’s Economy Grew Five Percent in 2012 http://www.worldbank.org/en/news/2013/01/28/cameroons-economy-grew-fivepercent-2012 FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 28-Jan 29-Jan close China 6.23 6.22 6.22 6.23 Hong Kong 7.75 7.75 7.76 7.76 Indonesia 9,793.00 9,653.00 9,832.00 9,684.00 Japan 86.75 90.91 90.69 90.57 Korea 1,064.40 1,074.05 1,092.63 1,082.60 Malaysia 3.06 3.04 3.08 3.08 Philippines 41.01 40.66 40.97 40.72 Singapore 1.22 1.23 1.24 1.24 Thailand 30.59 29.94 29.98 29.83 Vietnam 20,840.00 20,840.00 20,840.00 20,955.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change -0.03 -0.03 1.53 0.13 0.93 0.18 0.60 0.22 0.50 -0.55

2013 YTD (%chg) 0.1 -0.1 -0.3 -3.6 -1.8 -1.4 0.3 -1.3 1.7 -0.5

Page 5 of 8


STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,291.3 23,580.4 4,437.6 10,926.7 1,946.7 1,637.1 6,167.6 3,266.4 1,459.2 468.1

28-Jan 2,346.5 23,671.9 4,416.9 10,824.3 1,939.7 1,637.1 6,192.4 3,273.9 1,472.1 479.6

OVERNIGHT LENDING RATE (%) 28-Jan 29-Jan bps change 2.090 2.200 11.00 0.095 0.095 0.00 4.187 4.188 0.08 0.098 0.095 -0.25 2.750 2.750 0.00 3.000 3.000 0.00 2.207 2.308 10.10 0.044 0.044 0.00 2.750 2.750 0.00 2.500 2.467 -3.30

29-Jan

% change

2,359.0 23,655.2 4,433.3 10,866.7 1,956.0 1,636.8 6,234.7 3,265.6 1,474.7 484.0

0.53 -0.07 0.37 0.39 0.84 -0.02 0.68 -0.25 0.18 0.92

2013 YTD (%chg) 4.0 1.5 2.0 4.5 -3.7 -2.3 6.4 2.0 4.8 15.7

3-MONTH INTERBANK LENDING RATE (%) 28-Jan 29-Jan bps change 3.886 3.887 0.09 0.386 0.386 0.00 4.952 4.952 0.00 0.294 0.294 0.00 2.820 2.820 0.00 3.210 3.210 0.00 0.350 0.499 14.90 0.377 0.377 0.00 2.869 2.869 0.00 6.862 6.200 -66.20

CREDIT DEFAULT SWAP (IN BPS) 25-Jan 28-Jan bps change China 63.59 62.69 -0.90 Hong Kong 44.36 44.44 0.08 Indonesia 133.32 137.83 4.51 Japan 73.41 71.42 -1.99 Korea 65.83 64.44 -1.39 Malaysia 84.15 84.22 0.07 Philippines 96.83 96.05 -0.78 Thailand 92.03 92.61 0.58 Vietnam 210.09 208.66 -1.43 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 28-Jan Gold Spot (in US$ per ounce)

1,653.7

29-Jan

% change

1,663.5

0.60

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

2012 China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

31-Aug 3,272.9 298.2 109.0 1,273.2 316.9 134.9 80.7 246.2 179.2 n.a

30-Sep 3,285.1 301.2 110.2 1,277.0 322.0 137.5 82.0 252.1 183.6 n.a

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

EXTERNAL LIQUIDITY RATIOS

Reserves - latest China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

Short-term external Import cover (Qtrs of debt imports covered (US$bn) by reserves) 572.8 6.6 711.2 2.2 38.3 2.2 2,255.1 18.0 132.6 2.2 32.4 2.4 8.0 4.4 924.3 2.2 57.2 2.7 10.0 -

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

DATA RELEASES FOR THE DAY

Country SOUTH KOREA

JAPAN

Indicators Current Account in (USD mn) Good Balance in (USD mn) Industrial Production (YoY)% Industrial Production (MoM)% Retail Trade MoM SA Retail Trade YoY Small Business Confidence

Period Dec Dec Dec Dec Dec Dec Jan

Last 44.3

Previous 6,877.7 6,753 2.9 2.3 -0.1 1.2 43.8

SELECTED ECONOMIC RELEASES CALENDAR (28 Jan to 01 Feb 2013)

Expected released date 28/1/2013 29/1/2013

30/1/2013

Country SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN JAPAN JAPAN JAPAN PHILIPPINES

Indicators Business Survey- Non-Manufacturing Business Survey- Manufacturing Current Account in (USD mn) Good Balance in (USD mn) Industrial Production (YoY)% Industrial Production (MoM)% Retail Trade MoM SA Retail Trade YoY Small Business Confidence Industrial Production YOY% Industrial Production MoM % Markit/JMMA Manufacturing PMI GDP sa (QoQ)%

Period Feb Feb Dec Dec Dec Dec Dec Dec Jan Dec P Dec P Jan 4Q

Page 7 of 8


31/1/2013

1/2/2013

PHILIPPINES PHILIPPINES SINGAPORE SINGAPORE SINGAPORE HONG KONG HONG KONG HONG KONG HONG KONG HONG KONG HONG KONG THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND MALAYSIA JAPAN JAPAN JAPAN CHINA CHINA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA JAPAN JAPAN INDONESIA INDONESIA THAILAND THAILAND

GDP (YoY)% Annual GDP (YoY)% Unemployment Rate (sa)% M1 Money Supply (YoY)% M2 Money Supply (YoY)% Money Supply M1 in HK$ (YoY)% Money Supply M2 in HK$ (YoY)% Money Supply M3 in HK$ (YoY)% Retail Sales - Volume (YoY)% Retail Sales - Value (YoY)% Govt Mthly Budget Surp/Def (HKD bn) Total Trade Balance (USD mn) Overall Balance (USD mn) Total Imports YOY% Total Exports YOY% Current Account Balance (USD mn) Business Sentiment Index Consumer Price Index (YoY)% Consumer Price Index NSA (MoM) Core CPI (YoY)% Overnight Rate % Jobless Rate % Job-To-Applicant Ratio Overall hhold spending (YoY)% PMI Manufacturing HSBC Manufacturing PMI Ext Trade - Imports (YoY)% Ext Trade - Export (YoY)% HSBC Manufacturing PMI Core Consumer Price Index(YoY)% Consumer Price Index (YoY)% Consumer Price Index (MoM)% Total Imports (YoY)% Core Inflation (YoY)% Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) Official Reserve Assets (USD bn) Vehicle sales Consumer Confidence Index Money Supply - M2 (YoY)% Foreign Reserves (USD bn) Forward Contracts

4Q 2012 4Q P Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Jan Jan Jan Jan 31 Dec Dec Dec Jan Jan Jan Jan Jan Jan Jan Jan Dec Jan Dec Jan Jan Dec Jan Jan Jan Jan Jan 25 Jan 25

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.

Page 8 of 8


MARKET UPDATE FOR ASEAN+3 30 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS 

Yen Drops as Stocks Advance; Dollar Trades Near 14-Month. The yen declined versus most of its major counterparts as Asian stocks rose for a second day, spurring investors to buy higher-yielding assets amid expectations Japan will expand monetary stimulus. The dollar approached its weakest in more than a year versus the euro before data forecast to show U.S. growth and job gains slowed. The yen slid 0.80 percent to 91.19 per dollar as of 5:00 p.m. in Singapore. South Korea’s won and Indonesia’s rupiah fell by 0.26 percent and 0.04 percent, respectively, while China’s yuan slightly appreciated against the dollar by 0.10 percent. The exchange rate between Hong Kong’s dollar the US dollar remained unchanged at the level of 7.76 per US dollar. Singapore’s dollar, Thailand’s baht, Philippines’ peso and Vietnam’s dong strengthened against the dollar 0.03 percent, 0.20 percent, 0.24 percent and 0.53 percent, respectively. Meanwhile, Malaysia’s ringgit dropped moderately by 0.15 percent to 3.08 per dollar.

Asia Stocks Rise to 17-Month High as Japanese Shares Jump. Asian stocks rose, with the benchmark index headed for its highest close since August 2011, as Japanese shares surged on earnings and amid speculation the Federal Reserve will renew its commitment to asset purchases. Japan’s Nikkei 225 Stock Average (NKY) rose 2.28 percent, closing above 11,000 for the first time since April 2010. South Korea’s Kospi Index (KOSPI) advanced 0.43 percent after the nation’s industrial output unexpectedly climbed. The Kospi is one of only two Asian benchmark stock measures to have declined this month. The other is the FTSE Bursa Malaysia KLCI Index, which dropped 0.63 percent to 1,627 today. Hong Kong’s Hang Seng Index (HSI) rose 0.71 percent with trading volume 30 percent above its 30-day average at the time of day. The Shanghai Composite Index gained 1.00 percent, after yesterday entering a so-called bull market. The Philippine Stock Exchange Index advanced 0.59 percent, while Singapore’s Straits Times Index rose by 0.60 percent. Meanwhile, Indonesia’s JCI index, Thailand’s index as well as Vietnam’s index increased by 0.31 percent, 0.50 percent and 0.74 percent, respectively.

BREAKING NEWS GLOBAL 

Draghi’s Bank of Italy Knew of Monte Paschi Missteps in 2010. The Bank of Italy under former Governor Mario Draghi spotted accounting irregularities that allowed Banca Monte dei Paschi di Siena SpA to mask losses more than two years before the lender was forced to say it will have to restate profit. In 2010, “a problem came to light” on Monte Paschi’s booking of a structured deal called Santorini, Italy’s Rome-based central bank said in a report dated Jan. 28. The Bank of Italy alerted “other authorities” a year later and talks with those regulators, which it didn’t identify, haven’t concluded. It didn’t explain the delay in forcing the bank to disclose the information. The Bank of Italy’s account of Monte Paschi’s use of derivatives, released yesterday, calls into question its oversight of the world’s oldest bank, which is seeking the second taxpayer bailout in four years.


Dell Founder Said to Seek Majority Control Using Personal Funds. Michael Dell is seeking majority control of Dell Inc. (DELL) in a buyout that would combine his 15.7 percent stake in the company with as much as $1 billion of his personal funds, said people familiar with the matter. Michael Dell may contribute equity financing of $500 million to $1 billion. Dell, the PC maker he founded in 1984, is nearing a buyout led by Silver Lake Management LLC, and Microsoft Corp. (MSFT) may provide part of the funding. Going private and pushing his ownership stake past 50 percent will enable CEO Dell to reposition the company amid shrinking PC sales and an industrywide shift to mobile and cloud computing without the scrutiny and stock fluctuations that come with being publicly traded. By contributing his stake, worth about $3.6 billion at yesterday’s close, and another $500 million to $1 billion, Michael Dell would be putting up more than half of the total $8 billion to $9 billion equity check, with the remainder of the takeover financed by debt and possibly some of the $11 billion of cash Dell reported it had as of Sept. 30. Silver Lake and Microsoft would invest $1 billion to $2 billion each.

Oil Trades Near Four-Month High Before Federal Reserve Statement. Oil traded near the highest level in four months before a Federal Reserve policy statement that may signal the central bank will keep adding economic stimulus in the U.S., the world’s biggest crude user. Futures were little changed in New York after climbing 1.2 percent yesterday. The Federal Open Market Committee will renew its commitment to asset purchases during a two-day meeting that began yesterday. U.S. crude stockpiles increased by 4.2 million barrels last week, data from the American Petroleum Institute showed yesterday. West Texas Intermediate prices are poised for a third monthly gain, the longest run since April 2011. “A lot of people are optimistic on the global economic recovery,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo. “Demand is gradually recovering. The DOE data won’t change the general direction of the market.”

REGIONAL 

Japan Defense Budget to Increase for First Time in 11 Years. Japan is set to increase its defense budget for the first time in 11 years and boost Coast Guard spending as it copes with mounting incursions by Chinese ships in waters near islands claimed by both countries. The defense budget will rise 0.8 percent to 4.68 trillion yen ($51.7 billion), the Defense Ministry said. The Coast Guard budget will go up 1.9 percent to 176.5 billion yen, its first expansion in six years. Prime Minister Shinzo Abe’s Cabinet yesterday approved a 92.6 trillion yen budget for the fiscal year starting April that must be approved by parliament. Abe is beefing up Japan’s ability to monitor and protect the uninhabited East China Sea islands called Diaoyu in China and Senkaku in Japan. His plans are limited by a shortage of funds as Japan struggles to service record debt, as well as a decades-old informal military spending limit of 1 percent of GDP. The new budget calls for setting up a 400-strong specialized team with 14 patrol vessels to defend remote islands.

Residents Told to Stay Inside Again, Smog Covers Beijing. Beijing warned the city’s 20 million people to prepare for at least another day of smog, and officials closed some factories and ordered government cars off the road as pollution remained at hazardous levels. Visibility was reduced to a few hundred yards in downtown Beijing and an online merchant reported “overwhelming” interest in face masks yesterday. A U.S. Embassy pollution monitor showed that air quality reached hazardous levels for the 19th in 25

Page 2 of 7


days. Premier Wen Jiabao said China should promote energy-saving measures, reduce emissions and advance ecological progress in light of the pollution, the official Xinhua News Agency reported. The smog has remained dense after hitting record levels on Jan. 12 and Beijing officials have proposed new rules aimed at improving air quality. 

China Rural-Income Gains Aid Shift Toward Consumption. Chinese incomes rose faster in the countryside than in cities for a third straight year in 2012 as migrant workers boosted their pay and the government strengthened the social safety net. Rural percapita net income advanced 10.7 percent, compared with 9.6 percent for urban dwellers, partly on the rise in migrant laborers and their wages, the National Bureau of Statistics said on Jan. 18. Rural residents’ income from benefits payments rose 21.9 percent, almost double the urban pace, as the government boosted its budget for health-care handouts. Rural spending power has been lifted by wages earned by peasants working in cities, underscoring the broader benefits of the urbanization drive championed by incoming Premier Li Keqiang. Spreading gains in consumption would help sustain a growth rebound and reduce the economy’s reliance on exports, which rose last year at less than half 2011’s pace.

IFIs NEWS (compiled from their websites) FSB – Publication: Public responses to the Consultative Documents on strengthening oversight and regulation of shadow banking 

The FSB has publicised the public comments received on its Consultative Documents on Strengthening Oversight and Regulation of Shadow Banking. http://www.financialstabilityboard.org/publications/c_130129.htm

G20 – Press Release: Russia will focus on reforming the international monetary system during its G20 presidency 

At a press conference in Moscow, Russian Foreign Minister Sergei Lavrov stated that Russia in cooperation with its like-minded partners will seek to implement decisions on reforming the international monetary and financial system. He also noted that "the Russian Presidency will pay due attention to the issues of enhancing and broadening investment conditions, introducing measures aimed at new jobs creation and managing sovereign debt without provoking global economic shocks. http://www.g20.org/news/20130129/781169478.html

IMF – Publication: “The Fund's Income Position for FY 2013 - Midyear Update” 

The IMF has publicised the captioned paper, which presents updated projections on the Fund’s FY 2013 income position. The projected net income is now SDR 2.1 billion, slightly lower than the earlier projection of SDR 2.3 billion at the beginning of the year. The changes reflect lower projected disbursements under approved arrangements owing to delays in scheduled drawings and arrangements expected to expire with substantial undrawn balances, the expectation that funding of the gold endowment will not begin until FY 2014, and lower implicit returns on the Fund’s interest-free resources due to the prevailing interest rate environment. http://www.imf.org/external/pp/longres.aspx?id=4729

OECD – Publication: OECD calls for better alignment of energy policy, public finances and environmental goals

Page 3 of 7


The OECD has published the following 2 new reports, which provide wide-ranging evidence of how reforming subsidies and tax breaks for fossil fuels and rationalising fuel taxes can help countries boost finances and meet green objectives:  Taxing Energy Use – This report provides the first systematic, comparative analysis of the structure and level of energy taxes in the 34 OECD member countries. It sets out how tax rates vary between different types of fuel and different uses of fuel for each country. The information is also summarised in graphical form.  The Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels 2013 – This report collects details on more than 550 fossil fuel support measures in the 34 OECD member countries, including many provided by state and provincial governments. The report also highlights progress made and the benefits identified by a number of OECD countries in reforming support to fossil fuels in recent years. http://www.oecd.org/newsroom/oecdcallsforbetteralignmentofenergypolicypublicfina ncesandenvironmentalgoals.htm

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 29-Jan 30-Jan close China 6.23 6.22 6.23 6.22 Hong Kong 7.75 7.75 7.76 7.76 Indonesia 9,793.00 9,653.00 9,684.00 9,688.00 Japan 86.75 90.91 90.46 91.19 Korea 1,064.40 1,074.05 1,082.60 1,085.46 Malaysia 3.06 3.04 3.08 3.08 Philippines 41.01 40.66 40.72 40.63 Singapore 1.22 1.23 1.24 1.24 Thailand 30.59 29.94 29.85 29.79 Vietnam 20,840.00 20,840.00 20,955.00 20,845.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.10 0.00 -0.04 -0.80 -0.26 -0.15 0.24 0.03 0.20 0.53

2013 YTD (%chg) 0.2 -0.1 -0.4 -4.2 -2.0 -1.5 0.6 -1.3 1.8 0.0

STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,291.3 23,580.4 4,437.6 10,926.7 1,946.7 1,637.1 6,167.6 3,266.4 1,459.2 468.1

29-Jan 2,359.0 23,655.2 4,439.0 10,866.7 1,956.0 1,637.3 6,234.7 3,259.8 1,478.8 484.0

OVERNIGHT LENDING RATE (%) 29-Jan 30-Jan bps change 2.200 2.110 -9.00 0.095 0.095 0.00 4.188 4.188 0.00 0.095 0.098 0.25 2.750 2.750 0.00 3.000 3.000 0.00 2.308 1.581 -72.70 0.051 0.051 0.00 2.750 2.750 0.00 2.467 2.429 -3.80

30-Jan 2,382.5 23,822.1 4,453.0 11,114.0 1,964.4 1,627.0 6,271.2 3,279.2 1,486.2 487.6

% change 1.00 0.71 0.31 2.28 0.43 -0.63 0.59 0.60 0.50 0.74

2013 YTD (%chg) 5.0 2.2 2.5 6.9 -3.3 -2.9 7.0 2.4 5.6 16.6

3-MONTH INTERBANK LENDING RATE (%) 29-Jan 30-Jan bps change 3.887 3.888 0.04 0.386 0.385 -0.07 4.952 4.952 0.00 0.294 0.294 0.00 2.820 2.820 0.00 3.210 3.210 0.00 0.499 0.500 0.10 0.377 0.377 0.00 2.869 2.869 0.00 6.200 7.000 80.00

Page 4 of 7


CREDIT DEFAULT SWAP (IN BPS) 28-Jan 29-Jan bps change China 62.69 64.17 1.48 Hong Kong 44.44 44.35 -0.09 Indonesia 132.44 135.42 2.98 Japan 72.99 72.98 -0.01 Korea 64.44 64.92 0.48 Malaysia 84.22 85.74 1.52 Philippines 96.05 97.09 1.03 Thailand 92.61 92.63 0.02 Vietnam 208.66 209.40 0.74 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 29-Jan Gold Spot (in US$ per ounce)

30-Jan

1,660.7

% change

1,666.7

0.37

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

EXTERNAL LIQUIDITY RATIOS Reserves - latest

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 30-Sep 3,272.9 3,285.1 298.2 301.2 109.0 110.2 1,273.2 1,277.0 316.9 322.0 134.9 137.5 80.7 82.0 246.2 252.1 179.2 183.6 n.a n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

Short-term external debt (US$bn) 572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 18.0 2.2 2.4 4.4 2.2 2.7 -

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

Page 5 of 7


DATA RELEASES FOR THE DAY

Country JAPAN

PHILIPPINES

SINGAPORE

HONG KONG

Indicators Industrial Production YOY% Industrial Production MoM % Markit/JMMA Manufacturing PMI GDP sa (QoQ)% GDP (YoY)% Annual GDP (YoY)% Unemployment Rate (sa)% M1 Money Supply (YoY)% M2 Money Supply (YoY)% Money Supply M1 in HK$ (YoY)% Money Supply M2 in HK$ (YoY)% Money Supply M3 in HK$ (YoY)%

Period Dec P Dec P Jan 4Q 4Q 2012 4Q P Dec Dec Dec Dec Dec

Last -

Previous 0.44 -1.4 45.0 1.3 7.2 3.9 1.9 5.3 6.2 15.3 11.0 10.9

SELECTED ECONOMIC RELEASES CALENDAR (28 Jan to 01 Feb 2013)

Expected released date 28/1/2013 29/1/2013

30/1/2013

31/1/2013

Country SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA JAPAN JAPAN JAPAN JAPAN JAPAN JAPAN PHILIPPINES PHILIPPINES PHILIPPINES SINGAPORE SINGAPORE SINGAPORE HONG KONG HONG KONG HONG KONG HONG KONG HONG KONG HONG KONG THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND THAILAND

Indicators Business Survey- Non-Manufacturing Business Survey- Manufacturing Current Account in (USD mn) Good Balance in (USD mn) Industrial Production (YoY)% Industrial Production (MoM)% Retail Trade MoM SA Retail Trade YoY Small Business Confidence Industrial Production YOY% Industrial Production MoM % Markit/JMMA Manufacturing PMI GDP sa (QoQ)% GDP (YoY)% Annual GDP (YoY)% Unemployment Rate (sa)% M1 Money Supply (YoY)% M2 Money Supply (YoY)% Money Supply M1 in HK$ (YoY)% Money Supply M2 in HK$ (YoY)% Money Supply M3 in HK$ (YoY)% Retail Sales - Volume (YoY)% Retail Sales - Value (YoY)% Govt Mthly Budget Surp/Def (HKD bn) Total Trade Balance (USD mn) Overall Balance (USD mn) Total Imports YOY% Total Exports YOY% Current Account Balance (USD mn) Business Sentiment Index Consumer Price Index (YoY)% Consumer Price Index NSA (MoM)

Period Feb Feb Dec Dec Dec Dec Dec Dec Jan Dec P Dec P Jan 4Q 4Q 2012 4Q P Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Jan Jan

Page 6 of 7


1/2/2013

THAILAND MALAYSIA JAPAN JAPAN JAPAN CHINA CHINA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA SOUTH KOREA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA JAPAN JAPAN INDONESIA INDONESIA THAILAND THAILAND

Core CPI (YoY)% Overnight Rate % Jobless Rate % Job-To-Applicant Ratio Overall hhold spending (YoY)% PMI Manufacturing HSBC Manufacturing PMI Ext Trade - Imports (YoY)% Ext Trade - Export (YoY)% HSBC Manufacturing PMI Core Consumer Price Index(YoY)% Consumer Price Index (YoY)% Consumer Price Index (MoM)% Total Imports (YoY)% Core Inflation (YoY)% Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) Official Reserve Assets (USD bn) Vehicle sales Consumer Confidence Index Money Supply - M2 (YoY)% Foreign Reserves (USD bn) Forward Contracts

Jan Jan 31 Dec Dec Dec Jan Jan Jan Jan Jan Jan Jan Jan Dec Jan Dec Jan Jan Dec Jan Jan Jan Jan Jan 25 Jan 25

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.

Page 7 of 7


MARKET UPDATE FOR ASEAN+3 31 January 2013, 17:00 local time SGT (UTC+8) MARKET DEVELOPMENTS 

Korean Won Drops as Government Considers Trading Tax. South Korea’s won fell for a second day after Deputy Finance Minister Choi Jong Ku proposed taxing trading in currency and bonds to limit “speculative” capital inflows. The currency is set for its first monthly drop since August following pledges by officials to curb its appreciation. It rose 8.3 percent in 2012 as global funds pumped $15.1 billion into local stocks. Exporters are looking to sell dollars to convert their proceeds, which will limit declines. South Korea’s won fell 0.29 percent to 1,089.59 per dollar. Japan’s yen rose by 0.48 percent to 90.87 per dollar, while China’s yuan and Hong Kong’s dollar slightly appreciated against the dollar by the same pace of 0.02 percent. Indonesia’s rupiah, Singapore’s dollar, Thailand’s baht, Philippines’ peso and Vietnam’s dong weakened against the dollar 0.57 percent, 0.15 percent, 0.23 percent and 0.01 percent, respectively. Meanwhile, Malaysia’s ringgit dropped the most against the dollar by 0.77 percent to 3.11 per dollar.

Asian Stocks Swing as Earnings and U.S. Data Temper Rally. Asian stocks swung between gains and losses on the busiest day of Japan’s earnings season after the country’s industrial production missed estimates and U.S. growth unexpectedly stalled. Japan’s Nikkei 225 Stock Average (NKY) and Indonesia’s JCI index climbed 0.22 percent and 0.02 percent, respectively. South Korea’s Kospi Index (KOSPI) and Hong Kong’s Hang Seng Index retreated 0.13 percent and 0.39 percent, respectively. The Shanghai Composite Index rose 0.12 percent, with trading volume 11 percent above its 30-day average at the time of day. The FTSE Bursa Malaysia KLCI Index and Singapore’s Straits Times Index dropped very slightly by 0.01 percent and 0.04 percent, respectively. Meanwhile, the Philippine Stock Exchange Index, Thailand’s index and Vietnam’s index fell the most by 0.45 percent, 0.75 percent and 1.60 percent, respectively.

BREAKING NEWS GLOBAL 

Bernanke Dissatisfied With Growth Will Press on With Pace of QE. Federal Reserve Chairman Ben S. Bernanke signaled he isn’t close to easing up on $85 billion in monthly bond purchases to spur a stalled economy and bring down 7.8 percent unemployment. The FOMC said in a statement yesterday that growth, while slowed by “transitory factors,” faces “downside risks” even after strains in global financial markets have eased. The expansion will pick up and unemployment will fall in response to “appropriate policy accommodation,” Fed officials said in a statement after a two-day meeting. Bernanke and his FOMC colleagues are deploying record stimulus through an open-ended expansion of the Fed balance sheet after determining that the benefits from stoking a flagging economy outweigh any risk of financial instability or higher inflation. The Standard & Poor’s 500 Index fell yesterday 0.4 percent to 1,501.96, retreating from the highest level since December 2007. The 10-year Treasury note yield declined 0.01 percentage point to 1.99 percent after reaching the highest level since April.


Boeing Moves Ahead on New 787 Versions as Grounding Drags. As a regulatory probe of battery faults that grounded Boeing Co. (BA)’s marquee 787 Dreamliner drags into a third week, the plane maker is moving forward with plans to boost output and develop two more versions of the jet. Production is set to rise to seven a month in midyear, from five now, and to double to 10 by year-end, CEO Jim McNerney said on an earnings call. In addition to the 787-8, the version comprising all 50 planes grounded by a battery fire on one and an emergency landing by another, the company is working on two more variants, the -9 and -10. Boeing said nothing in the probe has called into question its use of a lithium-ion battery at the center of the review. The company, which detailed its plans in a fourth-quarter earnings report, forecast at least 60 Dreamliner deliveries this year, while still lacking a timetable to resume shipments. Boeing cautioned that yesterday’s deliveries and earnings forecasts rested on the presumption of “no significant financial impact” from the 787’s woes. The jets have been parked since Jan. 16.

Deutsche Bank Has 2.17 Billion Euros Loss on Costs. Deutsche Bank AG (DBK), Europe’s biggest bank by assets, posted a fourth-quarter loss that was worse than estimated after costs from building capital and eliminating jobs surged. Deutsche Bank had a loss of 2.17 billion euros ($3 billion), compared with a 147 million-euro profit a year earlier, the Frankfurt-based company said today in a statement. Co-Chief Executive Officers Juergen Fitschen and Anshu Jain are cutting staff and bolstering capital levels, the lowest among Europe’s biggest investment banks, in their first year in charge to help meet stricter capital rules. The costs countered a surge in trading revenue, spurred by the European Central Bank’s measures to stem the sovereign debt crisis. “Various exceptional items arising from restructuring costs and impairment charges” hurt fourthquarter profit, Amit Goel, an analyst at Credit Suisse Group AG (CSGN) who has an underperform rating on the stock, wrote in an e-mailed report from London before the earnings were published. Deutsche Bank’s shares have lagged behind rivals, climbing 15 percent over the past year compared with an increase of 23 percent for the benchmark Stoxx 600 Banks Index.

REGIONAL 

BOJ Could Add Further Easing If Needed, Yamaguchi Says. The BOJ could add further stimulus if warranted by economic and price conditions, Deputy Governor Hirohide Yamaguchi said, while rejecting criticism of the impact of the bank’s policies on the yen. “It could be the case that further accommodation will be pursued,” as the BOJ monitors the economy and prices, Yamaguchi, whose term ends in March, said in a speech in Nagasaki today. He later told reporters that the central bank’s policies aren’t aimed at directly weakening the yen. The BOJ last week adopted a 2 percent inflation target without a deadline and said it would wait until 2014 to start open-ended asset purchases. Prime Minister Shinzo Abe today urged the bank to reach the target quickly, adding to his calls for more action that have helped weaken the yen more than 12 percent against the dollar in three months. European Central Bank governing council member Jens Weidmann warned this month against “politicizing” the yen exchange rate, and German Chancellor Angela Merkel said “I can’t say I’m completely free of worry when I look at Japan right now,” last week while speaking at the World Economic Forum in Davos.

Page 2 of 8


Philippines Joins Korea in Weighing Steps to Curb Inflows. Philippine central bank Governor Amando Tetangco said he’s studying more measures to counter excessive capital inflows lured by growth, joining South Korea and Singapore in warning that policy makers need to consider more steps to reduce the impact of such funds. “Capital flows and the impact of these on the local economy and local financial markets” would be among the biggest challenges this year, Tetangco said in an interview in his office yesterday. “We continue to study what other measures can be implemented just in case there’s a need to adopt more measures in the future.” Monetary easing in developed nations from Japan to the U.S. and Europe has spurred flows to faster growing emerging markets as investors seek higher returns, boosting Asian stocks to the highest in 17 months this week. Bangko Sentral ng Pilipinas can’t rule out further reductions on the rate it pays on funds placed in its special deposit accounts after a cut last week, Tetangco said. The Philippine economy grew 6.8 percent last quarter from a year earlier, while the GDP for 2012 increased 6.6 percent.

Asia Leads Global Recovery After Unexpected U.S. Slip: Economy. The Philippine and Taiwan economies grew more than forecast last quarter, and Singapore’s jobless rate fell to a five-year low, signaling an upswing at the end of 2012 that underscores Asia’s role leading a global recovery. In the Philippines, GDP grew 6.8 percent from a year earlier, while Taiwan reported a preliminary 3.42 percent gain and upgraded its fullyear growth forecast. Singapore’s unemployment was 1.8 percent. Asia’s resurgence as China rebounds contrasts with the U.S. yesterday reporting an unexpected decline in GDP after defense spending plunged. Meantime, Japan’s economic outlook depends on Prime Minister Shinzo Abe reviving wages and spending, with less-than-forecast industrial output for December highlighting the challenge ahead. China has started to gather momentum as the various domestic stimulus policies kick in and that lifts the region. Southeast Asia is doing very well autonomously. Taiwan raised its forecast for this year’s growth to 3.53 percent from 3.15 percent as China’s economic rebound boosted its imports, underscoring President Ma Ying-jeou’s case for closer trade and investment ties. The island plans to allow more visitors and securities investment from the mainland, and let domestic lenders conduct business in yuan by early February.

IFIs NEWS (compiled from their websites) IFC – Press Release: IFC Finances China Flooring to Buy Plantations, Promote Sustainable Forestry Management 

The IFC has agreed to provide $40 million in financing to China Flooring Holding Co. to help the company purchase plantations and promote sustainable forestry management in China. IFC’s financing to China Flooring consists of a $30 million long-term loan and a $10 million convertible loan, which will be used to fund its working capital and acquire forest plantations in southern China. IFC holds a 7.29 percent stake in the company. http://www.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/73CD795D0255CBAB85257B030011 1323

IMF – Working Papers 

Revisiting the Link Between Finance and Macroeconomic Volatility – “This paper examines the impact of financial depth on macroeconomic volatility using a dynamic panel analysis for 110 advanced and developing countries. We find that financial depth Page 3 of 8


plays a significant role in dampening the volatility of output, consumption, and investment growth, but only up to a certain point.” http://www.imf.org/external/pubs/ft/wp/2013/wp1329.pdf

Financial Crises Explanations, Types, and Implications – “This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Second, what are the major types of financial crises? Third, what are the real and financial sector implications of crises?” http://www.imf.org/external/pubs/ft/wp/2013/wp1328.pdf

External Conditions and Debt Sustainability in Latin America – “Highly favorable external conditions have helped Latin America strengthen its economic fundamentals over the last decade. But, has the region built enough buffers to guard itself from a weakening of the external environment? This paper addresses this question by developing a simple framework that integrates econometric estimates of the effect of global factors on key domestic variables that determine public and external debt dynamics, with the IMF‘s standard debt sustainability framework.” http://www.imf.org/external/pubs/ft/wp/2013/wp1327.pdf

Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point? – “China is on the eve of a demographic shift that will have profound consequences on its economic and social landscape. This paper empirically assesses when the transition to a labor shortage economy is likely to occur. Our central result is that on current trends, the Lewis Turning Point will emerge between 2020 and 2025.” http://www.imf.org/external/pubs/ft/wp/2013/wp1326.pdf

World Bank – Press Release: Inequality Matters to People Worldwide, World Bank Photo Contest Shows 

Eleven photographers have been selected as winners of the World Bank’s “Picture Inequality” photo contest for their powerful images and statements on inequality. The contest attracted more than 750 photos from participants who sought to show what inequality and lack of opportunity means to them. https://pictureinequality.worldbank.org/contests/browseallentries/all/all?showwinners=true

FOREIGN CURRENCY EXCHANGE RATES Previous wk's 2012 close 30-Jan 31-Jan close China 6.23 6.22 6.22 6.22 Hong Kong 7.75 7.75 7.76 7.76 Indonesia 9,793.00 9,653.00 9,688.00 9,744.00 Japan 86.75 90.91 91.31 90.87 Korea 1,064.40 1,074.05 1,085.46 1,088.59 Malaysia 3.06 3.04 3.08 3.11 Philippines 41.01 40.66 40.63 40.67 Singapore 1.22 1.23 1.24 1.24 Thailand 30.59 29.94 29.75 29.82 Vietnam 20,840.00 20,840.00 20,843.00 20,845.00 Note: Negative values indicate depreciation and positive values indicate appreciation.

% change 0.02 0.02 -0.57 0.48 -0.29 -0.77 -0.10 -0.15 -0.23 -0.01

2013 YTD (%chg) 0.2 -0.1 -0.9 -3.9 -2.3 -2.3 0.5 -1.4 1.7 0.0

Page 4 of 8


STOCK MARKET INDEX 2012 close China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

2,269.1 22,656.9 4,316.7 10,395.2 1,997.1 1,689.0 5,812.7 3,167.1 1,391.9 413.7

Previous wk's close 2,291.3 23,580.4 4,437.6 10,926.7 1,946.7 1,637.1 6,167.6 3,266.4 1,459.2 468.1

30-Jan 2,382.5 23,822.1 4,453.0 11,114.0 1,964.4 1,627.7 6,271.2 3,285.9 1,490.8 487.6

OVERNIGHT LENDING RATE (%) 30-Jan 31-Jan bps change 2.110 2.310 20.00 0.095 0.095 0.00 4.188 4.190 0.20 0.098 0.088 -1.00 2.750 2.750 0.00 3.000 3.000 0.00 1.581 2.183 60.20 0.050 0.050 0.00 2.750 2.750 0.00 2.429 2.333 -9.60

31-Jan

% change

2,385.4 23,729.5 4,453.7 11,138.7 1,961.9 1,627.6 6,242.7 3,284.5 1,479.6 479.8

0.12 -0.39 0.02 0.22 -0.13 -0.01 -0.45 -0.04 -0.75 -1.60

2013 YTD (%chg) 5.1 1.8 2.5 7.2 -3.4 -2.8 6.5 2.6 5.1 14.7

3-MONTH INTERBANK LENDING RATE (%) 30-Jan 31-Jan bps change 3.888 3.888 0.02 0.385 0.386 0.07 4.952 4.952 0.00 0.294 0.294 0.00 2.820 2.820 0.00 3.210 3.210 0.00 0.500 0.366 -13.40 0.377 0.377 0.00 2.869 2.869 0.00 7.000 6.200 -80.00

CREDIT DEFAULT SWAP (IN BPS) 29-Jan 30-Jan bps change China 64.17 64.67 0.50 Hong Kong 44.35 44.35 0.01 Indonesia 135.42 138.88 3.46 Japan 72.98 75.94 2.96 Korea 64.92 66.91 2.00 Malaysia 85.74 91.17 5.42 Philippines 97.09 99.09 2.00 Thailand 92.63 95.11 2.48 Vietnam 209.40 212.05 2.65 Note: Negative values indicate lower pricing of risk and positive values indicate higher pricing of risk. Latest data are available on a one-day lag. 30-Jan Gold Spot (in US$ per ounce)

1,666.2

31-Jan

% change

1,675.7

0.57

Sources: Bloomberg & Datastream

CREDIT RATINGS China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

S&P AAAAA BB+ AAA ABB+ AAA BBB+ BB-

Moody's Aa3 Aa1 Baa3 -Aa3 A3 Ba1 -Baa1 B1

Fitch A+ AA+ BBBAA A+ ABB+ AAA BBB B+

Page 5 of 8


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

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

31-May 3,206.1 291.9 111.5 1,277.7 310.9 136.0 76.1 237.7 172.6 19.9

30-Jun 3,240.0 295.0 106.5 1,270.5 312.4 134.2 76.1 243.4 174.7 19.7

EXTERNAL LIQUIDITY RATIOS Reserves - latest

China Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Thailand Vietnam

Country HONG KONG

THAILAND

JAPAN

SOUTH KOREA

MALAYSIA CHINA INDONESIA

(US$bn) 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 182.3 n.a

31-Jul 3,240.0 296.3 106.6 1,272.8 314.4 134.5 79.8 244.1 175.3 20.0

2012 31-Aug 30-Sep 3,272.9 3,285.1 298.2 301.2 109.0 110.2 1,273.2 1,277.0 316.9 322.0 134.9 137.5 80.7 82.0 246.2 252.1 179.2 183.6 n.a n.a

3 months imports of goods/serv (US$bn) 504.3 144.7 50.5 70.3 150.9 59.2 19.3 116.7 68.0 25.4

31-Oct 3,287.4 301.7 110.3 1,274.2 323.5 138.3 81.7 254.2 181.5 n.a

Short-term external debt (US$bn) 572.8 711.2 38.3 2,255.1 132.6 32.4 8.0 924.3 57.2 10.0

30-Nov 3,297.7 305.2 111.3 1,270.9 326.1 139.1 83.9 255.8 181.6 n.a

Import cover (Qtrs of imports covered by reserves) 6.6 2.2 2.2 18.0 2.2 2.4 4.4 2.2 2.7 -

DATA RELEASES FOR THE DAY Indicators Period Retail Sales - Volume (YoY)% Dec Retail Sales - Value (YoY)% Dec Govt Mthly Budget Surp/Def (HKD bn) Dec Total Trade Balance (USD mn) Dec Overall Balance (USD mn) Dec Total Imports YOY% Dec Total Exports YOY% Dec Current Account Balance (USD mn) Dec Business Sentiment Index Dec Consumer Price Index (YoY)% Jan Consumer Price Index NSA (MoM) Jan Core CPI (YoY)% Jan Jobless Rate % Dec Job-To-Applicant Ratio Dec Overall hhold spending (YoY)% Dec Construction orders (YoY)% Dec Ext Trade - Imports (YoY)% Jan Ext Trade - Export (YoY)% Jan HSBC Manufacturing PMI Jan Core Consumer Price Index(YoY)% Jan Consumer Price Index (YoY)% Jan Consumer Price Index (MoM)% Jan Overnight Rate % Jan 31 PMI Manufacturing Jan HSBC Manufacturing PMI Jan Total Imports (YoY)% Dec Core Inflation (YoY)% Jan

Last 8.1 8.8 51.7 283 799 1.3 13.6 730 50.6 4.8 -

31-Dec 3,311.6 317.3 112.8 1,268.1 327.0 139.7 84.2 259.3 181.6 n.a

2013 31-Jan n.a n.a n.a n.a n.a n.a n.a n.a 182.3 n.a

Reserves over short-term debt 5.8 0.4 2.9 0.6 2.5 4.3 10.5 0.3 3.2 -

Previous 8.1 9.5 24.8 627 1203 24.1 27.1 392 52.0 3.63 0.39 1.78 4.1 0.8 0.2 -2.1 -5.2 -5.7 50.1 1.2 1.4 0.2 3.0 50.6 51.5 9.9 4.4

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Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn)

Dec Jan Jan Dec

SELECTED ECONOMIC RELEASES CALENDAR (28 Jan to 01 Feb 2013) Expected released date Country Indicators SOUTH KOREA Business Survey- Non-Manufacturing 28/1/2013 SOUTH KOREA Business Survey- Manufacturing SOUTH KOREA Current Account in (USD mn) SOUTH KOREA Good Balance in (USD mn) 29/1/2013 SOUTH KOREA Industrial Production (YoY)% SOUTH KOREA Industrial Production (MoM)% JAPAN Retail Trade MoM SA JAPAN Retail Trade YoY JAPAN Small Business Confidence JAPAN Industrial Production YOY% JAPAN Industrial Production MoM % JAPAN Markit/JMMA Manufacturing PMI PHILIPPINES GDP sa (QoQ)% PHILIPPINES GDP (YoY)% PHILIPPINES Annual GDP (YoY)% 30/1/2013 SINGAPORE Unemployment Rate (sa)% SINGAPORE M1 Money Supply (YoY)% SINGAPORE M2 Money Supply (YoY)% HONG KONG Money Supply M1 in HK$ (YoY)% HONG KONG Money Supply M2 in HK$ (YoY)% HONG KONG Money Supply M3 in HK$ (YoY)% HONG KONG Retail Sales - Volume (YoY)% HONG KONG Retail Sales - Value (YoY)% HONG KONG Govt Mthly Budget Surp/Def (HKD bn) THAILAND Total Trade Balance (USD mn) THAILAND Overall Balance (USD mn) THAILAND Total Imports YOY% THAILAND Total Exports YOY% THAILAND Current Account Balance (USD mn) THAILAND Business Sentiment Index THAILAND Consumer Price Index (YoY)% 31/1/2013 THAILAND Consumer Price Index NSA (MoM) THAILAND Core CPI (YoY)% MALAYSIA Overnight Rate % JAPAN Jobless Rate % JAPAN Job-To-Applicant Ratio JAPAN Overall hhold spending (YoY)% JAPAN Construction Orders (YoY)% CHINA PMI Manufacturing CHINA HSBC Manufacturing PMI SOUTH KOREA Ext Trade - Imports (YoY)% SOUTH KOREA Ext Trade - Export (YoY)% SOUTH KOREA HSBC Manufacturing PMI SOUTH KOREA Core Consumer Price Index(YoY)% SOUTH KOREA Consumer Price Index (YoY)% SOUTH KOREA Consumer Price Index (MoM)% INDONESIA Total Imports (YoY)% INDONESIA Core Inflation (YoY)%

-

-4.6 4.3 0.54 -478

Period Feb Feb Dec Dec Dec Dec Dec Dec Jan Dec P Dec P Jan 4Q 4Q 2012 4Q P Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Jan Jan Jan Jan 31 Dec Dec Dec Dec Jan Jan Jan Jan Jan Jan Jan Jan Dec Jan

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1/2/2013

INDONESIA INDONESIA INDONESIA INDONESIA JAPAN JAPAN INDONESIA INDONESIA THAILAND THAILAND

Exports (YoY)% Inflation (YoY)% Inflation NSA (MoM)% Total Trade Balance (USD mn) Official Reserve Assets (USD bn) Vehicle sales Consumer Confidence Index Money Supply - M2 (YoY)% Foreign Reserves (USD bn) Forward Contracts

Dec Jan Jan Dec Jan Jan Jan Jan Jan 25 Jan 25

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.

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Market Update for ASEAN+3 Jan2013  
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