Daily Morning Watch - 31 July 2012

SINGAPORE

The Government of Singapore Investment Corp, the country's sovereign-wealth fund, reported the annualized real rate of return from investments for the 20 years through end-March was 3.9% in US dollar terms, the same as in a year earlier.

Singapore Exchange Ltd (SGX) is consulting the public on proposed rules to introduce margining for securities cleared by the Central Depository (CDP).

US indices closed lower on Monday pressured by consumer durables & apparel and semiconductors & semiconductor equipment sectors. On the US economic data front, Dallas Fed manufacturing activity index dropped to -13.2 (2.0 expected) in July from 5.8 the previous month. Take a look at US stocks, Loews Corp (L -5.18% to $39.54)'s 2Q net income was $56M or $0.14 per share compared to $250M or $0.61 per share in the same period a year ago. In other news, CNA Financial (CNA -3.59% to $26.03) announced 2Q net operating income of $152M ($114M a year ago) or $0.56 per share and net income of $166M ($124M a year ago) or $0.62 per share. Separately, CB&I (CBI -14.15% to $34.94) to acquire Shaw (SHAW +55.45% to $41.49) for $46 per share in cash and stock.

In Europe, euro zone business climate indicator was -1.27 in July (-1.09 expected) vs -0.95 in July. Consumer confidence was -21.5 in July in final estimation, vs -21.6 expected. Economic confidence was 87.9 in July (88.9 expected) vs 89.9 the month before. Regarding the stocks, Air France-KLM as 2Q loss narrowed. JCDecaux plunged on weak outlook. This morning, the Nikkei225 index opened lower.

CHINA - HK

HSBC (5) posted 1H EPS down 12% YoY to $0.45 and net income down 9% to $8.2B, adding: "Reported profit before tax was $12.7B, 11% higher than in 1H11, (...) Underlying profit before tax down 3% to $10.6B (...) Return on average shareholders' equity 10.5% (2H11: 9.5%, 1H11: 12.3%) (...) The core tier 1 ratio and tier 1 ratio for the Group remained strong at 11.3% (2H11: 10.1%) and 12.7% (2H11: 11.5%) respectively, at 30 June 2012., (...) Dividends declared in respect of 1H12 of $0.18 per ordinary share, in line with 1H11." Meanwhile, the Bank announced provisions of $700M in relation to money laundering issues in the US and $1.3B to cover the misselling of payment protection insurance to customers in the UK . The Bank's CEO said: "We apologise for our past mistakes in relation to anti-money laundering controls, (...) We continue to believe that emerging markets will grow at a reasonable pace. China will play an important role in this phenomenon as the world's second-largest economy and the main trading partner to other faster-growing economies."

Hang Seng Bank (11) reported 1H net income up 14% YoY to HK$9.3B (EPS up 14% to HK$4.87), adding: "Net interest income rose by HK$649M, or 8.5%, when compared with 1H11. (...) The return on average shareholders' funds was 22.9%, compared with 22.8% in 1H2011 and 22.6% in 2H11. (...) At 30 June 2012, the capital adequacy ratio was 13.9%, down 0.4 percentage points compared with 14.3% the end of 2011, (...) core capital ratio was 11.7%, compared with 11.6% at last year-end. (...) The Directors have declared a second interim dividend of HK$1.10 per share, (...) Together with the first interim dividend, the total distribution for 1H12 will amount to HK$2.20 per share, the same as in 1H11."

CNOOC Ltd (883)'s parent group has received approval from the National Development and Reform Commission (NDRC) for its Diefu LNG terminal JV project in Shenzhen announced the NDRC.

Jiangxi Copper (358)'s parent has agreed with two domestic smelters to invest 8B yuan to build facilities in China 's Zhejiang province expanding its annual refined-copper output capacity by 370K tons, according to the China Mining Association.

China Gas (384) said its co-founder Liu Minghui, who has been formally cleared of embezzlement allegations in China , will rejoin the Co as a non-executive director.

Haitong Securities (6837) announced it has obtained approval from the China Securities Regulatory Commission to set up a wholly-owned securities assets management subsidiary called Shanghai Haitong Securities Asset Management Co Ltd.

Shui On Land (272) is said to be selling a $400M bond due 2015 with 9.75% coupon to yield 8.5% reported Dow Jones.

Xinyi Glass (868) unveiled 1H net income down 43.4% YoY to HK$477M on revenue of HK$4.6B, up 18.3%.

Hang Lung Properties (101): FY results expected.

Huaneng Power International (902): 1H results expected.