Wealth Management Research Update

July 6, 2008, 8:00 PM - Data Source: UBS Wealth Management Research

UBS global outlook 2007:

UBS research focus - Asia's ascent

This UBS research focus report entitled, "Asia's ascent," provides an assessment of the long-term economic growth outlook for several Asian countries and the corresponding implications for investment opportunities in the region. The report also shows the expected impact of Asia on global financial markets.

Daily Market News:

Economic News

Germany: Factory orders declined again in May (July 4, 2008, 3:42 PM)
Manufacturing orders fell 0.9% m/m in May against expectations for a rise of 0.8%. This was the 6th consecutive decline in factory orders intake, suggesting that industrial activity is weakening sharply ahead. The annual rate of orders intake dropped from 15.2% to -2%.

Indonesia: Central Bank hikes rates by 25bps (July 4, 2008, 12:12 PM)
Bank Indonesia (BI) hiked rates by 25bps to 8.75% for the third straight month on surging inflation which stood at 11% y/y in June. This was due to rising growth concerns and less-than-expected inflation. We expect the BI to employ further tightening monetary policy in order to tame inflation.

India: Inflation remains at 13-year high (July 4, 2008, 11:37 AM)
Wholesale price inflation surged further to 11.6% (consensus 11.4%) for week ended 21 June. With commodities, fuel and manufacturing product prices to remain high for some more time, we expect the central bank to further tighten its monetary policy by raising the borrowing cost and CRR on 29 July.

Philippines: Inflation at 14-year high in June (July 4, 2008, 9:39 AM)
Consumer price inflation grew by more-than-expected to 11.4% (consensus 10%) from revised 9.5% in May. The double-digit inflation is mainly driven by food prices which account for half of the CPI basket. With core inflation at 6.6% y/y in June, we expect the central bank to hike rates on 17 July.

Malaysia: Strongest export growth since Oct 2004 (July 4, 2008, 9:38 AM)
May export growth surprised at 22% y/y (consensus 12.5%) from 20.9% in April on surging commodities prices. Crude petroleum, palm oil, and refined petroleum exports jumped to 62%, 78.9% and 62.7%, respectively. We expect this robust export pace to slacken in the remainder of 2008 on global slowdown.

USA: ISM Non-manufacturing index falls below 50 (July 4, 2008, 9:03 AM)
The ISM Non-manufacturing composite index fell by more than expected from 51.7 to 48.2 in June. The biggest drag came from the employment sub-index. It fell to 43.8, a low not seen since the 90/91 recession. With consumption growth under pressure, business climate will likely weaken further.

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Equity Markets EU

Daily European Equity Market Comment (July 4, 2008, 4:56 PM)
European stocks declined on Friday on concerns that banks will post more writedowns and record oil prices will curb earnings at airlines. British Airways and Air France-KLM fell on high oil prices. Banks, Travel & Leisure and Insurance were amongst the worst performing sectors. Commodity producers also declined due to a retreat in metal prices. Bradford & Bingley, Britain's biggest lender to landlords, dropped after TPG abandoned its plan to buy a stake in the bank. Retail, Technology and Chemicals were amongst the best performing sectors. Infineon Technologies, Europe's second-biggest semiconductor maker, advanced on speculation the company may be bought. SBM Offshore advanced on reports that Petroleo Brasileiro, Brazil's state-controlled oil company, is considering it to supply one or more floating liquefied natural gas facilities to help develop the Western Hemisphere's oil find.

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Equity Markets USA

Latin America Equity Markets Comment (July 4, 2008, 10:23 AM)
June was a negative month for Latin American equity markets, as the MSCI Latin America closed the month a -7.7%. Brazil, with a poor performance of -8% in June, is to blame, given its significant weight in the index. Overall, Latin American equities had been resilient in the downturn of global equity markets; as in the last 12 months the MSCI World is down -11.1% while the MSCI Latin America is up +26.6%.

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Equity Markets Asia

Daily Asian-Pacific Market Comment (July 4, 2008, 5:36 PM)
Asian stocks traded mixed on Friday. Japan's Nikkei declined marginally on concern of slower consumer demand. Japanese exporters advanced, led by car makers such as Toyota and Nissan. However, the gain was offset by a slump in property developers. High energy costs continued to be a drag on sentiment in some regions. Korea's Kospi slumped, led by Samsung, Hynix and Posco. Hong Kong's Hang Seng climbed marginally on expectations of satisfactory earnings for the first half of the year to be reported by banks. Australian stocks rose, led by BHP Billiton and Rio Tinto on settlement of BHP's record iron ore price settlement with a major Chinese steel maker.

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Forex Markets

Quiet day on FX markets (July 4, 2008, 2:35 PM)
As a result of the big currency swings on Thursday, the release of second tier economic data and US markets closed for holiday on Friday, FX markets were relatively calm. With the return of US participants on Monday, we expect GBP and EUR to weaken further.

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