The MSCI Emerging Markets rose 0.68% led by MSCI AsiaXJapan (1.58%) and MSCI Emerging Europe (0.17%), while MSCI Latin America fell 2.66%.

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1 2 APRIL 2019 EM Equities: Heading for a Catch Up? IN THIS ISSUE Despite the 13% rebound in Emerging Markets (EM) equities from 4Q18 lows, the asset class has lagged behind Developed Markets (DM) which have rebounded +17%, led by the US. Citi analysts believe from current levels there remains more upside in EM equities compared to DM. EM Equities: Heading for a Catch Up? Page 1 2 Extending Duration in Fixed Income Read more on page 2 > Market Performance Page 3 Oil Prices Likely to Remain Supported Page 4 In the US the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite advanced by 0.05%, 1.79% and 2.61% respectively in March. The European Stoxx 600 gained 1.69% while the Nikkei 225 and Topix lost 0.84% and 1.00% respectively. The MSCI Emerging Markets rose 0.68% led by MSCI AsiaXJapan (1.58%) and MSCI Emerging Europe (0.17%), while MSCI Latin America fell 2.66%. Within Asia, India s Sensex Index was the biggest outperformer, surging 7.82% in March. Has the USD Bear Market Resumed? Page 5 Model Portfolios Page 6 MARKET OUTLOOK PAGE 1 INVESTMENT PRODUCTS: NOT A BANK DEPOSIT. NOT GOVERNMENT INSURED. NO BANK GUARANTEE. MAY LOSE VALUE.

2 EM Equities: Heading for a Catch Up? (continued) The EM rebound has been broad-based, with 54% of EM markets currently trading above their 200 day moving averages. Historically once 10%+ of EM countries cross above their 200 day moving averages, forward returns have exceeded 20%, 30% and 40% over the next 6, 12 and 18 months. Having reached 75% in late February, this measure of EM market breadth has moderated somewhat. However, a positive outcome on US-China trade and a softening US dollar is likely to lead to an improved environment. Despite the EM equity valuations rebound, EM equity valuations are only back around neutral levels. Source: Citi Private Bank. As of 18 March Despite the rebound, EM equities continue to look cheap and on most forward and trailing valuation measures. On a forward PE basis the asset class trades in line with its 20-year average around 11.5x. On a trailing PE basis EM equities currently trade on a 12.8x PE, below their long-run average of 15.1x while on a trailing price-to-book basis the current 1.6x is also below a long-run average of 1.8x. EPS revisions have become deeply negative to the extent that an improvement is likely from current levels. Indeed, after 19 consecutive weeks where 2019 EPS growth expectations were cut (from 11.7% in October to 5.8% in February), so far in March expectations have rebounded to 6.8%. MARKET OUTLOOK PAGE 2

3 Extending Duration in Fixed Income With US rates falling at the long and short end of the curve, Citi analysts see growing relative value in intermediate duration US investment grade corporate debt. While a slowing economic outlook typically coincides with a longer duration view, Citi analysts believe an already flat Treasury curve lessens that opportunity. For fixed income investors where yield (or income) is their main objective, the minimal pick-up to extend along the curve is not enough to offset the additional rate volatility. In fact, Citi s benign view on 10-year Treasury yields, supports our preference to diversify across the entire US curve. That said, Citi analysts believe the opportunities to add duration are better found in US investment grade (IG) corporates. To be fair, IG corporate yield curves have also flattened. However, the average difference between 2-year and 10-year corporate yields are nearly 85bp steeper than the US Treasury market (see figure). Along with Citi s constructive view on corporate fundamentals, benchmark yields near 4.0% remain attractive, especially when compared to yields in non-us IG corporate bond markets. Citi sees value in intermediate duration US investment grade corporate debt. US IG corporates offer value in the belly of the curve Source: Citi Private Bank. As of 18 March Not only are IG corporate yield curves relatively steeper, but valuations also improve as you extend along the curve. For example, slightly moving from a 2-year bond to a 4-year bond, average IG spreads improve by 60%. This is primarily a result of large inflows over the last 15 months funneling into shorter-dated corporate bond strategies, steepening spread curves. Citi analysts feel this presents an opportunity, and decided to shift our short-term US corporate bond overweight into intermediate-term IG maturities. MARKET OUTLOOK PAGE 3

4 Oil Prices Likely to Remain Supported Supply risks are tightening the oil market in 2019 with Citi analysts forecasting Brent oil prices in the $70s much of the time through 2Q-4Q. Oil supply look tighter after the OPEC+ meeting in Baku on March 17-18, with Saudi Arabia indicating that it would cut even deeper than its quotas require, even as Venezuelan supply remains at greater risk with a high probability of blackouts, and the US could tighten sanctions waivers with regard to Iran s oil exports come May 5. Looking ahead, there are major moving parts that can shift the balances meaningfully. First, the Saudi/Russia/OPEC+ decision on whether to extend or end current production cuts in June (having just deferred the decision over March in Baku) is crucial. Second, US sanctions waivers for Iran expire in May, and the US will need to decide whether and by how much to extend new waivers to buyers of Iranian oil. Third, geopolitical supply losses in Venezuela, Nigeria, and Algeria could yet add to market tightness. Although this could be partially offset by upcoming gains in Libya, as the Sharara field returns. With these moving parts in mind, Citi analysts see Brent oil prices in the $70s much of the time through 2Q-4Q, however the return of OPEC+ supply along with a pick-up in US exports could see prices begin to ease back down to the $60s in Oil production in m b/d, E Supply risks are tightening the oil market in Source: Citi Research. As of 22 March MARKET OUTLOOK PAGE 4

5 Has the USD Bear Market Resumed? Citi analysts forecast the USD to be around 1% weaker vs. G10 over 0-3 months and roughly 3-4% weaker over 6-12 months. USD: With a statistical tendency for USD to follow a broad 15yr cycle with 5yrs of gains followed by 10yrs to the downside and with the up cycle seen in , this means the USD may now be in an extended bear market. And with relative growth a key factor in driving exchange rates, a Euro growth recovery relative to the US could make it more difficult to attract the foreign capital needed to fund US s twin deficits. EUR: A boost to activity in Euro Area may come from China reflation and fiscal stimulus. A possible bottoming of EA business cycle is rising, especially outside Germany. An additional positive for EUR is the reduction in debt outflows associated with the European Central Bank (ECB) taper. As the ECB buys fewer bonds, local private sector investors can buy more. This necessitates fewer overseas purchases, meaning that the broad balance of payments improves which is positive for EUR. Citi analysts believe we may now be in an extended USD bear market. Dollar Spot Index Source: Citi Research. As of 21 March AUD: Recent data has shown some green shoots that could signal better quarterly GDP average growth outcomes in Chinese reflation/ credit creation should also benefit momentum with improved domestic conditions helping stabilize falling rate expectations. Moreover, a further escalation in US-China trade tensions looks increasingly unlikely and risk assets and high beta currencies like AUD could continue to trade more robustly. Asia: Asian currencies could strengthen in 6-12m, largely driven by a significantly stronger CNY, INR and SGD while THB is expected to be the underperformer in the region. A stronger KRW medium term is also likely given positive headlines on US-China trade tensions and rising appetite towards EM assets though US-North Korea geopolitical tension could keep the unit range bound near term. MARKET OUTLOOK PAGE 5

6 2Q19 Model Portfolios Defensive Seeking primarily capital preservation over time and only willing to accept very minor portfolio value fluctuations from month to month. Cash 20% Developed Govt Bonds 47% Global IG Corp Bonds 22% Global Equities 11% Income Oriented Seeking growth of wealth over time but unwilling to accept significant fluctuations in the value of portfolio from month to month. Developed Govt Bonds 37% Global IG Corp Bonds 27% HY Bonds 5% US Equities 9% European Equities 5% Global Equities 12% Global REITs 5% Growth And Income Seeking long-term capital growth foremost but unwilling to accept significant losses on value of portfolio over the medium term. Developed Govt Bonds 22% Global IG Corp Bonds 19% HY Bonds 4% Emerging Market Debt 4% US Equities 19% European Equities 12% Pacific Equities 7% EM Equities 5% Global REITs 8% Growth Oriented Seeking long-term capital appreciation and willing to tolerate measured medium-term volatility in order to enhance longer-term performance. Aggressive Growth Seeking long-term capital appreciation and can accept potentially large losses on portfolio over the near-to-medium term in order to maximise long-term performance. Developed Govt Bonds 9% Global IG Corp Bonds 14% HY Bonds 5% Emerging Market Debt 6% US Equities 24% European Equities 15% Pacific Equities 9% EM Equities 8% Global REITs 10% Developed Govt Bonds 3% Global IG Corp Bonds 5% HY Bonds 5% Emerging Market Debt 6% US Equities 29% European Equities 21% Pacific Equities 11% EM Equities 10% Global REITs 10% MARKET OUTLOOK PAGE 6

7 World Market at a Glance Last price 52-Week 52-Week Historical Returns (%) 28-Feb-19 High Low 1 week 1 month 1 year Year-to-date US / Global Dow Jones Industrial Average % 5.66% 3.54% 11.10% S&P % 5.32% 2.60% 11.08% NASDAQ % 6.31% 3.57% 13.52% Europe MSCI Europe % 4.66% -8.43% 9.75% Stoxx Europe % 5.20% -1.80% 10.41% FTSE % 4.86% -2.17% 5.15% CAC % 7.20% -1.50% 10.78% DAX % 2.72% -7.40% 9.06% Japan NIKKEI % 3.57% -3.10% 6.85% Topix % 3.35% -9.08% 7.60% Emerging Markets MSCI Emerging Market % 2.23% % 8.82% MSCI Latin America % -0.45% -8.03% 9.95% MSCI Emerging Europe % 0.03% -8.22% 8.20% MSCI EM Middle East & Africa % -0.64% % 6.76% Brazil Bovespa % 0.15% 11.99% 8.76% Russia RTS % 0.79% -7.56% 11.19% Asia MSCI Asia ex-japan % 3.57% % 9.48% Australia S&P/ASX % 4.46% 2.54% 9.26% China HSCEI (H-shares) % 4.46% -8.19% 12.27% China Shanghai Composite % 13.25% -9.77% 17.93% Hong Kong Hang Seng % 3.83% -7.17% 10.79% India Sensex % 0.59% 4.92% -0.56% Indonesia JCI % -0.24% -2.33% 4.02% Malaysia KLCI % 0.60% -8.00% 1.01% Korea KOSPI % 0.83% -9.55% 7.56% Philippines PSE % -4.33% -9.08% 3.21% Singapore STI % 0.41% -8.68% 4.69% Taiwan TAIEX % 3.75% -3.94% 6.80% Thailand SET % 1.75% -9.65% 5.73% Commodity Oil % 10.06% -7.17% 26.01% Gold spot % 0.76% -0.38% 2.41% Source: Citi Research as of 28 February MARKET OUTLOOK PAGE 7

8 Currency Forecasts Last price Forecasts Currency 28-Feb-19 Mar-19 Jun-19 Sep-19 Dec-19 G10-US Dollar Euro EURUSD Japanese yen USDJPY British Pound GBPUSD Swiss Franc USDCHF Australian Dollar AUDUSD New Zealand NZDUSD Canadian Dollar USDCAD EM Asia Chinese Renminbi USDCNY Hong Kong USDHKD Indonesian Rupiah USDIDR 14, Indian Rupee USDINR Korean Won USDKRW 1, Malaysian Ringgit USDMYR Philippine Peso USDPHP Singapore Dollar USDSGD Thai Baht USDTHB Taiwan Dollar USDTWD EM Europe Czech Koruna USDCZK Hungarian Forint USDHUF Polish Zloty USDPLN Israeli Shekel USDILS Russian Ruble USDRUB Turkish Lira USDTRY South African Rand USDZAR EM Latam Brazilian Real USDBRL Chilean Peso USDCLP Mexican Peso USDMXN Colombian Peso USDCOP Source: Citi Research as of 28 February MARKET OUTLOOK PAGE 8

9 EMEA Model Portfolio This section shows the revisions to asset allocations decided by Citibank EMEA Model Portfolio Committee on 22 March Citibank s EMEA Model Portfolios provide a guide to possible diversification of investment portfolios and serve as an asset allocation reference tool both for periodic evaluation and prospective investments. Citibank Model Portfolios are developed by Citibank s inhouse Global and Regional investment specialists to cater to investors with various risk profiles (based on Citibank s risk assessment) and provide them with: Diversified asset allocations, made uniquely relevant for EMEA investors Up-to-date asset allocations which are reviewed and revised periodically by Citibank s Research teams to reflect changing market conditions in respect of relevant asset classes Access to our best-in-class research from the Global Investment Committee It is important to note that while Citibank Model Portfolios represent Citibank s best thinking in terms of asset allocation and diversification, they serve only as a guideline for investors based on certain risk profiles. Market movements, changing market views, time horizons and liquidity constraints (among others) may result in a portfolio s asset allocation deviating from the model allocation. Citibank does not monitor and/or manage individual customer portfolios. For a long term investor, it is advantageous to diversify his/her investment portfolio and consider using Citibank Model Portfolios as a reference in diversification reviews. The suggested allocations are intended to be general in nature and are not to be construed as specific investment advice. Investors are encouraged to consult with their Relationship Managers to determine their allocation needs based on their risk tolerance, suitability and goals. Model Portfolio Disclaimers Investment products are (a) not insured by any government agency; (b) not a deposit or other obligation of, or guaranteed by, the depository institution; and (c) subject to investment risks, including possible loss of the principal amount invested. Past performance is not indicative of future results: prices can go up or down. This is neither an offer nor solicitation to purchase or sell any security, other investment or service or to attract any funds or deposits. This document does not constitute the distribution of any information or the making of any offer or solicitation by any one in any jurisdiction in which such distribution or offer is not authorized or to any person to whom it is unlawful to distribute such document or make any offer or solicitation. Investors investing in investment products denominated in non-local currency should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Investment products are not available to US Persons and may not be available in all jurisdictions. Portfolio diversification is an important element for an investor to consider when making investment decisions. Concentrated positions may entail greater risks than a diversified portfolio. Certain factors that affect the assessment of whether your overall investment portfolio is sufficiently diversified may not be evident from a review of only your account with Citibank. It therefore is important that you carefully review your entire investment portfolio to ensure that it meets your investment goals and is within your risk tolerance, including your objectives for asset and issuer diversification. To discuss your asset allocations and potential strategies to reduce the risk and/or volatility of a concentrated position, please contact your personal banker/relationship manager. Citibank s Model Portfolio is not a program or offering, but is a diversification tool that is meant for reference purposes only. Model Portfolios are: (i) not binding on the part of the customers; (ii) not monitored by Citibank with respect to customers individual investment holdings; and (iii) not personalized to the specific needs of any individual customer. Citibank s Model Portfolios are not available to US Persons and may not be available in all jurisdictions. MARKET OUTLOOK PAGE 9

10 Disclaimer Citi analysts refers to investment professionals within Citi Research ( CR ), Citi Global Markets Inc. ( CGMI ) and voting members of the Citi Global Investment Committee. Citibank N.A. and its affiliates / subsidiaries provide no independent research or analysis in the substance or preparation of this document. The information in this document has been obtained from reports issued by CGMI. Such information is based on sources CGMI believes to be reliable. CGMI, however, does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute CGMI's judgment as of the date of the report and are subject to change without notice. This document is for general information purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or currency. No part of this document may be reproduced in any manner without the written consent of Citibank N.A. 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