Three-speed recovery. GDP growth. Percent Emerging and developing economies. World

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1 Three-speed recovery GDP growth Percent Source: IMF WEO; Milken Institute. Emerging and developing economies Advanced economies World

2 Output is still below the pre-crisis level in some major countries Real GDP (Q1 28=1) U.S. 1 Germany Japan U.K. Italy Sources: Bloomberg and Milken Institute.

3 Is the global banking system too big? Index (1977 = 1) 5, 4, Global bank assets 3, 2, 1, Global GDP Note: Global bank assets are international claims of banks in 43 reporting countries to the Bank of International Settlements (BIS); Global GDP is in nominal terms. Sources: BIS, IMF, and Milken Institute.

4 Central bank assets vs. GDPs of world s largest economies US$ trillions United States China Japan Germany European Central Bank US Federal Reserve Bank France United Kingdom Sources: Federal Reserve, IMF 212.

5 Central bank target interest rates remain low Policy interest rates, percent 6 United Kingdom United States Bank of Japan Eurozone Source: Bloomberg.

6 Government debt-to-gdp ratio in advanced countries 213 estimated General government gross debt (% of GDP) Source: OECD Economic Outlook.

7 Government debt in advanced countries is expected to continue rising Gross debt, percent of GDP Euro area Total OECD Source: OECD Economic Outlook.

8 Expansion of balance sheets of major central banks Central bank total assets (% of GDP) BoJ ECB BoE Fed 1 5 Q1 26 Q1 27 Q1 28 Q1 29 Q1 21 Q1 211 Q1 212 Source: Bloomberg.

9 Equities rally in 213 Equity indices in major countries Index (January 1, 21 = 1) 15 U.S. 14 Eurozone U.K. 9 Japan 8 7 Note: U.S. (S&P 5), Eurozone (German DAX), UK (FTSE 1), Japan (Topix). Source: Bloomberg.

10 Performance of emerging market equities Compared to developed market equities Percent 2 MSCI equity indices, returns in U.S. dollars Developed markets Emerging markets EMEA Emerging Asia Latin America Source: Bloomberg.

11 Eurozone recession deepens Annual GDP growth (%) Germany France -2 Spain -4 Italy -6-8 Q1 23 Q1 24 Q1 25 Q1 26 Q1 27 Q1 28 Q1 29 Q1 21 Q1 211 Q1 212 Source: Datastream.

12 Flight to safety Decline in the government bond yields in major advanced countries 1-year government bond yield (%) 6 5 Germany U.K. U.S Japan Source: Bloomberg.

13 Euro area: Divergent trends in unemployment rates 212 Unemployment rate, percent Spain Greece Portugal Ireland Euro area average Italy France U.S. U.K. Germany Source: EuroStat.

14 Bank deposits rise in some troubled Eurozone states Bank deposits (annual % change) 3 Greece 2 1 Bank deposits (annual % change) 3 Spain Ireland -1 Portugal Source: DataStream.

15 Cyprus: Large bank assets relative to GDP Bank assets (% country GDP) Note: Data as of 2/1/213 Source: Datastream and Milken Institute. Cyprus Ireland France Spain Portugal Germany Italy Greece

16 Performance of emerging market equities By region MSCI Index (January 1, 213 = 1) EMEA Emerging Asia Latin America EMEA = Europe, the Middle East and Africa. Source: Bloomberg and Milken Institute.

17 FDI rising amid global economic uncertainty FDI inflows, global and by group of economies US$ billions 2,5 2, 1,5 1, Developed economies Developing economies Transition economies World total 5 Source: UNCTAD

18 Record low ten-year treasury yields Ten-year Treasury yield, percent Average since 1964: 6.7 percent Source: Bloomberg and Milken Institute

19 Global real short-term interest rates are negative Global real interest rate (%) Note: 3-month interest rates; China, Canada, France, Germany, Italy, Japan, United Kingdom, United States; Weighted by 212 GDP. Source: Datastream, International Monetary Fund, Milken Institute.

20 Relationship between Treasury yield and Fed s buying government bonds US$ trillions Percent 2. 1-year Treasury yield (%, RHS) QE1 QE2 QE Fed holdings of Treasury securities ($trillion, LHS) Sources: Federal Reserve and Milken Institute.

21 Has the U.S. policy rate been kept too low for too long? Percent 6 Taylor Rule estimate 4 2 Federal funds target rate Sources: Federal Reserve, Bloomberg and Milken Institute.

22 Global M&A activity Deal volume, thousands Deal volume Deal value Deal value, US$ trillions Source: Zephyr.

23 Emerging market PE deal values still in post-crisis slump Emerging market PE investment volume by quarter US$ billions Number 16 3 Deal value Number of deals Q1 28 Q4 28 Q3 29 Q2 21 Q1 211 Q4 211 Q3 212 Source: Emerging Market Private Equity Association.

24 Japan s elderly population Age dependency ratio, old (% of working-age population) Percent Japan Euro Area UK OECD US China Brazil Mexico Source: World Bank.

25 Mexican Bolsa Index outperforms Dow Jones since 1995 Index (1995=1) Mexico Bolsa Index DJIA Source: Bloomberg and Milken Institute.

26 Will China dominate the world s economy? Composition of global GDP in 25 PPPs Percent of global GDP in 211 Percent of global GDP in 23 Rest of the World 25% United States 23% Rest of the World 27% China 28% Other OECD 18% Euro area 17% China 17% Other OECD 15% Euro area 12% United States 18% Source: OECD Economic Outlook 91 long-term database.

27 Apr-7 Sep-7 Feb-8 Jul-8 Dec-8 May-9 Oct-9 Mar-1 Aug-1 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 China s rapid credit growth Total social financing growth RMB billions 3, 2,5 2, 1,5 1, 5 Source: UBS.

28 China s economy not yet rebalancing Growth, (%YOY) Percent 4 35 Fixed asset investment Retail sales 5 Feb-7 Oct-7 Jun-8 Feb-9 Oct-9 Jun-1 Feb-11 Oct-11 Jun-12 Feb-13 Source: UBS.

29 Chinese local governments: large spending responsibilities, inadequate revenues Share of local governments to total governments Percent 9 8 Expenditure Revenue Source: Ministry of Finance, China.

30 China: rate of return for non-state firms exceeds that of SOEs Return on equity Percent 3 25 Non-SOEs SOEs Source: National Bureau of Statistics, China. Note: SOEs stands for State Owned Enterprises.