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1 APRIL 2018 Geopolitical Premium Pushes Oil Higher IN THIS ISSUE Geopolitical risks are rising following the (likely) appointments of Mike Pompeo and John Bolton to US President Donald Trump s foreign policy team and this increases the potential for disruptions to oil trade and supply. The recent launch of the Shanghai Futures Exchange (SHFE) Chinese crude futures contract is also adding further uncertainty with market participants unsure as to how it will trade relative to current oil futures benchmarks. Geopolitical Premium Pushes Oil Higher Page 1 2 US Technology Stocks under Pressure? Page 3 Read more on page 2 > Market Performance How Will A Trade War Affect EM? Page 4 In the US the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all declined by -1.77%, -1.87% and -2.68% respectively. The MSCI Emerging Markets lost - 0.95%, the decline of which was led by MSCI EM Middle East & Africa (-3.55%). Meanwhile, the MSCI Emerging EUR May Appreciate in the Medium Term Page 5 However, the European Stoxx 600 Europe and MSCI AsiaXJapan climbed 1.04% while the Nikkei 225 and the Topix were up by lost -2.00% and -0.63% respectively. 1.29% and 0.47% respectively. MARKET OUTLOOK PAGE 1 INVESTMENT PRODUCTS: NOT A BANK DEPOSIT. NOT GOVERNMENT INSURED. NO BANK GUARANTEE. MAY LOSE VALUE.

Geopolitical Premium Pushes Oil Higher (continued) The recent movement of crude price has seemed akin to the classic geopolitical premium trading environment as futures have spiked, percentage of volume has risen despite higher prices and yet few barrels have been lost (yet) and physical crude markets are still soft. The geopolitical premium, potentially sizeable crude builds in March or April and a flurry of potential geopolitical flashpoints occurring in May look likely to keep oil markets choppy in the second quarter of this year according to Citi analysts. Despite no Iranian barrels being disrupted yet, the potential for disrupted supplies from Iran and Latin America has increased with John Bolton s appointment as US National Security Advisor. Bolton is a notable foreign policy hawk and a vocal critic of the Joint Comprehensive Plan of Action (JCPOA) deal, making it more likely that Trump won t sign the sanctions waiver that is due no later than 12 May. The issue for oil markets is how to price this risk, as the decision doesn t have a binary outcome and the timing is highly uncertain. Financial flows continue to play a crucial role in price formation and Citi analysts believe the market may be positioned for a move to the upside in the near term although Citi s structural view on the oil market remains bearish into 2019. Citi s forecast for ICE Brent prices are $59 per barrel in 2018 and $49 per barrel for 2019. Global oil demand (million barrels per day) Citi analysts believe the market may be positioned for a move to the upside in the near term. Source: EIA, FGE, IEA, JODI, NBS, PPAC, Citi Research. As of 27 March 2018. MARKET OUTLOOK PAGE 2

US Technology Stocks under Pressure? Several top US technology stocks fell in March over growth, safety and privacy concerns are they still attractive? Rising concerns over the safety of self-driving cars, privacy on social media and whether the tech bubble is about to burst has sent US technology stocks tumbling. In addition, reports that US President Donald Trump will crack down on Chinese companies investing in certain types of US tech companies has added fuel to the fire. But EU threats regarding new digital revenue taxes, social media investigations and alleged monopolistic behavior all were seen as passing risks but not that substantive according to Citi analysts. Technology stocks comprise roughly 25% of the S&P 500 market cap and Citi has been overweight on the sector. According to Citi analysts, the good news is that IT demand is still strong and not excessively valued as was in place in 1999/2000. According to Citi Technology as the best-performing sector in 2017: Price Performance (US$) analysts, IT demand is still strong and not excessively valued. Source: Citi Research, MSCI, Factset. As of 4 January 2018. The IT sector has indeed seen its profits climb sharply, more than already-high US profits generally. But unlike 1999, the IT sector has only seen its valuation climb slightly above its earnings contribution a far more mild valuation risk than was the case in 1999. Also quite unlike 1999 Citi analysts see no massive, obvious excesses in IT fundamentals to unwind. As such, Citi maintains a cautious but overweight view on the technology sector. MARKET OUTLOOK PAGE 3

How Will A Trade War Affect EM? Many Emerging Markets are dependent on trade what will happen to EM equities in the event of a trade war? Emerging market (EM) economies get their liquidity via both the trade channel and capital flows, which boosts the asset side of the central banks balance sheets thereby boosting domestic liquidity and asset prices. As such, anything that slows or reverses trade or capital flows is negative for EM equities. Some regions more than others but in aggregate, all are head lower. Asia is the most open of the three EM regions to trade and has the most connections along the global value chain, so trade issues matter most to Asia. According to Citi, yearto-date earnings growth forecasts for EM have increased but that may reverse depending on the severity of the trade issues. EM as an asset class is very export dependent. Asia the largest region is the most export-dependent part of EM and some of the larger markets such as Korea and Taiwan are especially vulnerable to a slowdown in trade. EM exports size relative to GDP Increased trade tensions is not Citi s view. Source: Citi Research. As of 16 March 2018. The effect of less trade on EM liquidity is negative. It is also negative for corporate profitability. EM isn t expensive by and large but under a trade war scenario, Citi believes it can certainly become cheaper. Nevertheless, Citi analysts do not expect a trade war and continue to remain overweight on EM equities. In terms of sectors, EM consumer and telecoms are the least risky with the highest quality attributes. MARKET OUTLOOK PAGE 4

EUR May Appreciate in the Medium Term The USD may be on the decline, but the medium-term outlook is bright for the EUR. Citi analysts remain bearish on the US dollar for the medium term, as the US has already seen a sharp deterioration in the trend of the net international asset position and will now run the largest twin deficits in recent history (outside of the global financial crisis period). Meanwhile, the EUR has established a solid base over the 2015-2017 period. As Citi anticipates progressively less accommodative European Central Bank (ECB) policy, further appreciation is likely although slightly lower soft (relative) data momentum in the eurozone and dovish ECB soundings have taken some steam out of the uptrend. As Citi anticipates DM & EM Forecasts Path progressively less accommodative European Central Bank (ECB) policy, further EUR appreciation is likely. Source: Citi Research. As of March 2018. With only a year to go until Britain leaves the European Union, very little has been agreed in terms of trade. Citi analysts see the Irish border issue as a major potential stumbling block to the negotiations and represents the biggest downside risk to the GBP. While Asian currencies may be most directly in the firing line of the Trump administration when it comes to tariffs, this threat can also work to strengthen them as it reduces the extent of intervention by local authorities. Citi analysts see most upside in MYR, but also think that IDR and PHP can do well. Despite heightened risk surrounding potential trade wars from the US administration, the continued robustness of Asian currencies versus the USD is likely a boon for the AUD as the two have traded virtually in lockstep this year. MARKET OUTLOOK PAGE 5

World Market at a Glance Last price 52-Week 52-Week Historical Returns (%) 30-Mar-18 High Low 1 week 1 month 1 year Year-to-date US / Global Dow Jones Industrial Average 24103.11 26616.71 20379.55 2.42% -1.77% 16.28% -2.49% S&P 500 2640.87 2872.87 2328.95 2.03% -1.87% 11.52% -1.22% NASDAQ 7063.45 7637.27 5805.15 1.01% -2.68% 19.43% 2.32% Europe MSCI Europe 476.05 523.74 418.81 0.84% 0.77% 11.38% -2.41% Stoxx Europe 600 370.87 403.72 362.04 1.38% 1.04% -2.52% -4.70% FTSE100 7056.61 7792.56 6866.94 1.95% -0.19% -4.25% -8.21% CAC40 5167.30 5567.03 4980.41 1.41% 0.60% 1.53% -2.73% DAX 12096.73 13596.89 11726.62 1.77% 1.54% -1.30% -6.35% Japan NIKKEI225 21454.30 24129.34 18224.68 4.06% 1.29% 12.54% -5.76% Topix 1716.30 1911.31 1452.15 3.08% 0.47% 12.35% -5.57% Emerging Markets MSCI Emerging Market 1170.88 1278.53 950.99-0.10% -0.95% 20.78% 1.07% MSCI Latin America 3032.91 3243.07 2423.52 1.05% -1.07% 14.08% 7.24% MSCI Emerging Europe 172.29 187.38 136.46-1.53% -2.00% 15.04% 4.05% MSCI EM Middle East & Africa 291.33 324.53 246.60-2.74% -3.55% 12.65% -1.60% Brazil Bovespa 85365.56 88317.83 60314.70 1.17% -0.46% 30.80% 11.73% Russia RTS 1249.41 1339.41 958.83-0.95% -0.97% 9.86% 8.23% Asia MSCI Asia ex-japan 716.55 780.56 575.37 0.16% -0.63% 22.46% 0.43% Australia S&P/ASX 200 5759.37 6150.00 5629.80-1.05% -2.86% -2.32% -5.04% China HSCEI (H-shares) 11998.34 13962.53 9882.17-1.07% -1.68% 15.86% 2.47% China Shanghai Composite 3168.90 3587.03 3016.53 0.51% -2.63% -1.29% -4.18% Hong Kong Hang Seng 30093.38 33484.08 23723.87-0.71% -1.60% 23.84% 0.58% India Sensex30 32968.68 36443.98 29241.48 1.14% -3.17% 11.20% -3.20% Indonesia JCI 6188.99 6693.47 5555.37-0.35% -5.98% 10.66% -2.62% Malaysia KLCI 1863.46 1880.56 1708.48-0.09% 0.40% 6.53% 3.71% Korea KOSPI 2445.85 2607.10 2117.82 1.20% 1.82% 12.99% -0.88% Philippines PSE 7979.83 9078.37 7301.69 0.11% -5.66% 8.83% -6.76% Singapore STI 3427.97 3611.69 3113.90 0.19% -1.47% 8.03% 0.74% Taiwan TAIEX 10906.22 11270.18 9622.25 0.77% 1.94% 10.74% 2.47% Thailand SET 1776.26 1852.51 1531.68-1.00% -1.97% 12.43% 1.29% Commodity Oil 64.94 66.66 42.05-1.43% 6.02% 28.98% 7.48% Gold spot 1325.00 1366.18 1204.68-1.65% 0.17% 6.63% 1.68% Source: Citi Research as of 30 March 2018. MARKET OUTLOOK PAGE 6

Currency Forecasts Last price Forecasts Currency 30-Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 G10-US Dollar Euro EURUSD 1.23 1.26 1.27 1.28 1.31 Japanese yen USDJPY 106 106 105 103 101 British Pound GBPUSD 1.40 1.43 1.44 1.46 1.49 Swiss Franc USDCHF 0.95 0.94 0.93 0.92 0.91 Australian Dollar AUDUSD 0.77 0.78 0.80 0.81 0.81 New Zealand NZDUSD 0.72 0.74 0.74 0.75 0.75 Canadian Dollar USDCAD 1.29 1.26 1.25 1.23 1.22 EM Asia Chinese Renminbi USDCNY 6.28 6.35 6.40 6.44 6.37 Hong Kong USDHKD 7.85 7.84 7.85 7.85 7.84 Indonesian Rupiah USDIDR 13,768 13,677 13,526 13,420 13,538 Indian Rupee USDINR 65.2 65.7 65.8 66.0 66.0 Korean Won USDKRW 1,064 1,058 1,057 1,055 1,052 Malaysian Ringgit USDMYR 3.86 3.77 3.73 3.70 3.68 Philippine Peso USDPHP 52.2 52.0 52.1 52.2 52.2 Singapore Dollar USDSGD 1.31 1.30 1.29 1.29 1.28 Thai Baht USDTHB 31.2 30.8 30.5 30.3 30.1 Taiwan Dollar USDTWD 29.1 29.1 29.1 29.0 28.9 EM Europe Czech Koruna USDCZK 20.56 20.02 19.67 19.31 18.93 Hungarian Forint USDHUF 254 249 246 243 239 Polish Zloty USDPLN 3.42 3.28 3.24 3.19 3.13 Israeli Shekel USDILS 3.49 3.42 3.42 3.41 3.40 Russian Ruble USDRUB 57.1 57.6 58.3 58.8 58.8 Turkish Lira USDTRY 3.96 3.95 4.00 4.05 4.08 South African Rand USDZAR 11.84 11.34 11.26 11.22 11.34 EM Latam Brazilian Real USDBRL 3.31 3.18 3.17 3.15 3.16 Chilean Peso USDCLP 604 599 598 597 600 Mexican Peso USDMXN 18.2 18.7 18.6 18.3 18.0 Colombian Peso USDCOP 2795 2915 2934 2952 2962 Source: Citi Research as of 30 March 2018. MARKET OUTLOOK PAGE 7

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. For important disclosures concerning companies covered by Citi's Equity Research analysts, please refer to the link: https://www.citivelocity.com/cvr/eppublic/citi_research_disclosures. This document is based on information provided by Citigroup Investment Research, Citigroup Global Markets, Citigroup Global Wealth Management and Citigroup Alternative Investments. It is provided for your information only. It is not intended as an offer or solicitation for the purchase or sale of any security. Information in this document has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the information, consider its appropriateness, having regard to their objectives, financial situation and needs. Any decision to purchase securities mentioned herein should be made based on a review of your particular circumstances with your financial adviser. Investments referred to in this document are not recommendations of Citibank or its affiliates. Although information has been obtained from and is based upon sources that Citibank believes to be reliable, we do not guarantee its accuracy and it may be incomplete and condensed. All opinions, projections and estimates constitute the judgment of the author as of the date of publication and are subject to change without notice. Prices and availability of financial instruments also are subject to change without notice. Past performance is no guarantee of future results. Investment products are (i) not insured by any government agency; (ii) not a deposit or other obligation of, or guaranteed by, the depository institution; and (iii) subject to investment risks, including possible loss of the principal amount invested. All forecasts are expressions of opinion, are not a guarantee of future results, are subject to change without notice and may not meet our expectations due to a variety of economic, market and other factors. The document is not to be construed as a solicitation or recommendation of investment advice. Subject to the nature and contents of the document, the investments described herein are subject to fluctuations in price and/or value and investors may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal the amount invested. Certain investments contained in the document may have tax implications for private customers whereby levels and basis of taxation may be subject to change. Citibank does not provide tax advice and investors should seek advice from a tax adviser. Citibank N.A., London Branch is authorised and regulated by the Office of the Comptroller of the Currency (USA) and authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of regulation by the Prudential Regulation Authority are available from us on request. Our firm reference number with our UK regulators is 124704. Citibank Europe plc is authorised by the Central Bank of Ireland and by the Prudential Regulation Authority. It is subject to supervision by the Central Bank of Ireland, and subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority are available from us on request. Citibank Europe plc, UK Branch is registered as a branch in the register of companies for England and Wales with registered number BR017844. Its registered address is Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB. VAT No.: GB 429 6256 29. Citibank N.A., London Branch is registered as a branch in the UK at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB. Registered number BR001018. Citibank Europe plc is registered in Ireland with number 132781, with its registered office at 1 North Wall Quay, Dublin 1. Citibank Europe plc is regulated by the Central Bank of Ireland. Ultimately owned by Citigroup Inc., New York, USA. In Jersey, this document is communicated by Citibank N.A., Jersey Branch which has its registered address at PO BOX 104, 38 Esplanade, St Helier, Jersey, JE4 8QB. Citibank, N.A., Jersey Branch is regulated by the Jersey Financial Services Commission. Citibank N.A. is incorporated with limited liability in the USA. Head office: 399 Park Avenue, New York, NY 10043, USA. Citibank N.A. 2018. CITI, CITI and Arc Design are registered service marks of Citigroup Inc. Calls may be monitored or recorded for training and service quality purposes. MARKET OUTLOOK PAGE 8