Asia Daily Update

North Asia:
** China moving towards market-based IPO system; foreign listings may be approved
** South Korea: Finance Minister Choi says domestic demand improving

CHINA: The China Securities Journal reported on Tuesday that China is moving towards a market-based IPO system and may approve foreign listings. NPC is currently reviewing the first draft of changes for the Securities Law. Two further rounds of reviews are expected to be completed by October.

Separately, power-transformer maker Baoding Tianwei has become the first state-owned company to default on its interest payment.

SOUTH KOREA: Finance Minister Choi told parliament on Tuesday that domestic demand is showing signs of improvement. He added that weak exports and low capital investment have been a drag on the economy. He also said that Korea will join in the second rounds of TPP trade talks.

South/Southeast Asia:
** India: USD-INR firmer but still within consolidation range
** Singapore: SGD NEER still holding around the mid-point

INDIA: USD-INR eased back slightly yesterday to close around 62.85 after Monday’s 0.9% rise. Some reasons behind the move included the wider than expected March trade deficit of USD11.8bn from USD6.9bn previously on weak exports and the jump in net foreign equity outflows of USD227bn, the largest in three months. Year-to-date however, net foreign equity inflow is still around USD6.9bn which is around the same around this time last year. For all of 2014, net foreign equity inflows amounted to USD26.4bn.

- The March trade numbers were disappointing, with exports down 21% y/y and imports down over 13% y/y. If anything, it once again reflects the sluggish global recovery. Nevertheless, we’d look for a better performance in coming months. For USD-INR, it is still largely within the 61-63 consolidation range of the past three months or so. It has been relatively stable since the start of the year eg it is up a marginal 0.3% vs USD year-to-date.

SINGAPORE: We get the COE auction prices today which should ease back after the announcement to increase COE supply by 40% from May this year. This should in turn further depress headline inflation. MAS is forecasting -0.5% to 0.5% for this year and core inflation (excluding private road transport and accommodation) at 0.5% to 1.5%.

- USD-SGD closed just slightly higher yesterday at 1.3510 from the 1.3480 level on Monday.
- For the SGD NEER, we estimate it is just below the mid-point at -0.2% vs the mid-point for USD-SGD at 1.3510, USD-MYR at 3.6370, and USD-CNY at 6.2020. The +/-2% band around themed-point is estimated at 1.3220-1.3760, ceteris paribus.