Daily Morning Watch - 1 Aug 2012

SINGAPORE

Capitaland (CAPL) posted 2Q net income down 3.3% YoY to S$386M on revenue of S$863M, up 16.5%. 1H net income grew 3.7% YoY to S$519M on revenue of S$1.5B, up 11.2%. The Co attributed the 1H results to "higher contribution from development projects in Singapore and Australia , increased shopping mall revenue and fee-based income". The Co's president & CEO said: " Singapore and China will remain as the Group's key markets for new investments. The underlying fundamentals of the housing sector in the two markets remain sound, driven by new home formation, rising urbanisation and growing wealth creation."

Fraser & Neave (FNN) said Thai Beverage Ltd has just raised its holding in the Co to 24.1% from 23.9%. And ThaiBeV said it has obtained from the Singapore Exchange a waiver from holding an extraordinary general meeting concerning the acquisition of a stake in the Co.

US indices closed lower on Tuesday pressured by consumer durables & apparel and retailing sectors. On the US economic data front, personal income rose 0.5% MoM (+0.4% expected) in June while personal spending was flat (+0.1% MoM expected). Chicago Purchasing Manager index increased to 53.7 (52.5 expected) in July from 52.9 the previous month while Conference Board consumer confidence index rose to 65.9 (61.5 expected) from 62.7 in June. Looking at some US marjor company news, Apple (AAPL +2.64% to $610.76) may release a new version of its iPhone early September reported Bloomberg citing unarmed sources. Pfizer (PFE +1.39% to $24.04) announced 2Q net income up 25% to $3.25B, or $0.43 a share, on sales down 9% to $15.1B. Separately, Goodyear Tire & Rubber (GT +10.41% to $11.45): 2Q net income was $85M or $0.33 per share vs $40M or $0.16 per share in the 2Q of 2011. In other news, US Steel (X +9.14% to $20.65) unveiled 2Q adjusted EPS of $0.69 ($0.49 expected) vs $1.12 a year earlier.

In Europe, euro zone unemployment rate was 11.2% in June, flat MoM (May figure was revised to 11.2% from 11.1%). German retail sales dropped 0.1% in June vs a 0.3% decrease the previous month. Economists expected them to be up 0.5%. Still in Germany , unemployment grew by 7,000K in July, as expected and at the same pace than in June. Unemployment rate was flat at 6.8%. French consumer spending was up 0.2% in June vs +0.5% in May (revised from +0.6%) and +0.4% expected. Regarding the stocks, BP and UBS lost ground on disappointing 2Q. Bayer advanced after raising its sales forecast. This morning, the Nikkei225 index opened lower, and remains below its 20D & 50D MAs.

CHINA - HK

China posted a current account surplus of $59.7B in 2Q vs $24.7B surplus in 1Q according to the State Administration of Foreign Exchange. The capital & financial account swung to a $71.4B deficit from a $49.9B surplus in 1Q. The SAFE added it saw no obvious signs of capital flowing out of the country.

The People's Bank of China is said to be considering investing in bonds issued by regional governments in Australia reported Dow Jones.

Hong Kong 's Exchange Fund recorded total assets of HK$2,554.4B at end-June, HK$49.5B higher MoM, according to the Hong Kong Monetary Authority.

Hong Kong 's M1 money supply climbed 7.2% YoY in June vs +3.8% in May, while M2 money supply grew 6.2% vs +4.6% in May according to the HKMA. Yuan deposits in Hong Kong increased 0.7% MoM to 557.7B yuan at end-June.

Hong Kong 's government posted a budget deficit of HK$0.77B in June vs a HK$9.37B deficit in May.

Sinopec (386)'s parent group announced it has agreed with global chemical giant BASF to build a world-scale plant in China 's Guangdong province for the production of iso-nonanol, which is used in plastics manufacturing.

PetroChina (857) has bought coal-seam-gas assets in Australia 's Queensland state for A$41M from Molopo Energy Ltd, announced the latter.

The move will likely help China reduce its reliance on imports of iso-nonanol, a chemical used primarily used in plastics manufacturing.

CLP Holdings (2) announced the re-appointment of Mrs. Fanny Law Fan Chiu Fun, currently a member of Hong Kong government's Executive Council, as an independent non-executive director.

Huaneng Power International (902) said 1H net income surged 87.6% YoY to 2.1B yuan on revenue of 67.2B yuan, up 4.9%, citing "the carry-over effect of the tariff adjustment last year and the Co's effective cost controls."

New World Development (17) announced the agreement with Sogo Hong Kong Co Ltd on terminating their lease contract regarding the Sogo Department Store in Tsim Sha Tsui in February 2014.

Everbright Securities (601788) reported 1H net income down 26.6% YoY to 829M yuan on turnover of 2.1B yuan, down 20.3%.

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