Macro Briefing A monthly review of the economy and markets February 2013

Macro Briefing A monthly review of the economy and markets February 2013 15000 US Dow Jones Industrial Average 1300 EUROPE FTSE Eurofirst 300 Index 12500 JAPAN Topix Index 700 ASIA ex- JAPAN MSCI AC Asia ex-japan 12000 1.40 1000 9000 700 6500 300 Data as of Feb 2013 Country Country GDP (4Q12) Inflation Benchmark Interest Currency Country Rating ^ (% changes YoY) (% change YoY)# Rate (%)# (% change vs US$) Moody's S&P * US 1.60 1.60 1/13 0.25 12/08 - Aaa AA+u Eurozone -0.90 2.00 1/13 1.50 7/12-3.3 - - Japan 0.30-0.30 1/13 0.10 12/08-1.2 Aa3 AA-u Positive economic data including strong housing market data and signs of improvement in the manufacturing sector, continued to lift sentiment Fears grew that the $85 billion programmed spending cuts to begin in March would hit the US economic growth unless Congress could find a more moderate compromise Stock valuations continue to be attractive with 12-mth forward P/E ratio below historical range 0.60 European equity markets sold off amid fears that Italy s recent reform progress may be undermined with the country facing the prospect of a prolonged period of political instability News that the eurozone contracted in the 4Q12 and growing indications of France s deepening downturn did little to lift the mood Measures of business and consumer confidence have rebounded from recent lows. But hopes that the improvement in financial market conditions will feed through to the real economy have not been realised 9500 3.78 The Japanese equity market rallied against the backdrop of generally much better economic data including strong consumer surveys, improving industrial production numbers and banker production surveys In addition, the yen weakened and sentiment improved as investors continued to bet that the government will adopt aggressive monetary policy Japan posted its worst-ever trade deficit in January, despite a surge in exports as a weaker yen led to higher fuel import costs 500-0.21 Asian equities finished February lower as optimism over China s rebound waned and profit-taking ensued on the back of market s strong run-up in recent months The Philippines, Thailand and Indonesia continued their impressive runs, as their economies continue to benefit from sustained domestic consumer demand and infrastructure investment Meanwhile, India was the worst performing market as the Union Budget for 2013-2014 was the main overhang Source : Eastspring Investments(Singapore) Limited and Bloomberg as of February 2012. Data shown in the graphs extracted from Bloomberg in local currency terms. Note: MoM refers to month-on-month, YoY refers to year-on-year. # based on latest available data. US Federal Funds Target Rate, Europe ECB Marginal, Japan BOJ Target Rate of Unsecured Overnight Call Rate. ^Refers to Foreign Currency Long Term Debt. * u denotes that the rating is unsolicited (refers to S&P s website for more details).

6300 4700 3100 AUSTRALIA ASX - FTSE All-Share Index 4.62 3200 2400 1600 CHINA Shanghai Composite Index -0.83 24600 20300 16000 HONG KONG Hang Seng Index -2.99 25000 17500 10000 INDIA BSE India Sensex 30 Index -5.19 Data as of Feb 2013 Country Country GDP (4Q12) Inflation Benchmark Interest Currency Country Rating ^ (% changes YoY) (% change YoY)# Rate (%)# (% change vs US$) Moody's S&P * Australia 3.10 2.20 12/12 3.00 12/12-1.48 Aaa AAAu China 7.90 2.00 1/13 6.00 7/12 0.04 Aa3 AA- Hong Kong 2.50 3.00 1/13 0.38 1/13 0.01 Aa1 AAA India 4.50 6.62 1/13 7.75 1/13-2.23 Baa3 BBB-u Investors cheered the largely positive December half earnings reporting season driven by lower costs, interest and tax The central bank said there is already a good deal of interest rate stimulus in the economy but the bank could ease interest rates further if needed given a benign inflation outlook Retail sales advanced faster than economists forecast in January, led by gains in household goods Despite the market s weakness in February, economic data continued to support the recovery story in China The State Council urged local government to tackle surging property prices, which suggested specific property tightening measures may be imminent China s consumer price index in January rose 2% from a year earlier in line with consensus estimates Global economic concerns, talk of further tightening by China and policy risks in the domestic property sector weighed on the market On the earnings front, results were broadly in line with expectations. Insurance and the property sector, however, reported the strongest earnings growth Hong Kong s economy expanded 1.4% in 2012 with domestic demand spearheading the growth India declined on the back of a volatile global environment, worsened by weak domestic growth indicators despite moderating inflation The budget, which was announced on Feb. 28, did not contain new major reform proposals and failed to surprise the market positively India has lowered its growth forecast, underlining the challenges it faces in reviving its sluggish economy Source : Eastspring Investments (Singapore) Limited and Bloomberg as of February 2013. Data shown in the graphs extracted from Bloomberg in local currency terms. Note: MoM refers to month-on-month, YoY refers to year-on-year. # # based on latest available data. Australia - RBA Daily Cash Rate Target, China 1 Year Best Lending Rate, Hong Kong - 3 months HIBOR, India RBI REPO Cutoff Yield, ^ Refers to Foreign Currency Long Term Debt. * u denotes that the rating is unsolicited (refers to S&P s website for more details).

INDONESIA Jakarta Composite Index KOREA Kospi Index 5000 2300 3500 1600 7.68 3.29 2000 900 1700 1450 1200 MALAYSIA FTSE Bursa Malaysia KLCI 0.62 7000 5000 3000 PHILIPPINES Philippines Composite Index 7.67 Data as of Feb 2013 Country Country GDP (4Q12) Inflation Benchmark Interest Currency Country Rating ^ (% changes YoY) (% change YoY)# Rate (%)# (% change vs US$) Moody's S&P * Indonesia 6.11 5.31 2/13 5.75 2/12 0.62 Baa3 BB+ Korea 1.50 1.40 2/13 2.75 10/12 0.35 Aa3 A+ Malaysia 6.40 1.30 1/13 3.00 4/11 0.53 A3 A- Philippines 6.80 3.40 2/13 3.50 10/12-0.12 Ba1 BB+ The Indonesian market was one the best performers, supported by strong returns from the financial sector where banks reported robust credit growth Indonesia continues to face rising price pressures and inflation in February accelerated to a 20-month high on the back of higher food prices and power tariffs Indonesia's current account deficit in 2012 was wider than the initial target, raising concerns among investors and pressuring the rupiah Korean shares rose as currency volatility eased and expectations of policy stimulus by the new government of President Park Geun Hye surfaced Park Geun-hye pledged to improve ties with North Korea and implement widespread reform to support the economy The central bank expressed its intolerance of currency volatility, underscoring the new President s message that her government may tighten trading rules if needed to stabilize the currency market Investors were cheered by robust fourth-quarter economic growth and positive initiatives on transport infrastructure between Malaysia and neighboring Singapore 4Q12 economic growth accelerated the fastest since 2010 on resilient domestic demand and increased investment The central bank kept its benchmark reference rate steady as widely expected, saying its policy stance remains supportive of growth while inflation is contained Philippine shares rallied in February supported by strong corporate earnings, favorable macro data and positive newsflow about the government s Public Private Partnership (PPP) program Rate-sensitive sectors such as banks and property led the rally on the back of positive earnings announcements Inflation climbed to 3.4% in February from a year earlier, the fastest pace in five months on higher food prices Source : Eastspring Investments (Singapore) Limited and Bloomberg as of February 2013. Data shown in the graphs extracted from Bloomberg in local currency terms. Note: MoM refers to month-on-month, YoY refers to year-on-year. # based on latest available data. Indonesia BI Reference Interest Rate, Korea - Target Overnight Call Rate Daily, Malaysia Overnight Policy Rate, Philippines Overnight Reverse Repurchase Agreement RRP Rate. ^ Refers to Foreign Currency Long Term Debt. * u denotes that the rating is unsolicited (refers to S&P s website for more details).

3300 2750 2200 SINGAPORE FTSE Strait Times Index -0.39 10000 7500 5000 TAIWAN Taiwan Taiex Index 0.61 2100 1200 300 THAILAND Stock Exchange of Thai Index 4.57 Data as of Feb 2013 Country Country GDP (4Q12) Inflation Benchmark Interest Currency Country Rating ^ (% changes YoY) (% change YoY)# Rate (%)# (% change vs US$) Moody's S&P * Singapore 1.50 3.60 1/13 0.38 1/13 0.17 Aaa AAAu Taiwan 3.72 2.97 2/13 1.88 6/11-0.32 Aa3 AA-u Thailand 18.90 3.23 2/13 2.75 10/12 0.13 Baa1 BBB+ Consumer discretionary stocks led the gains while consumer staples declined the most on the back of poor earnings announcements by plantation companies The government announced a slew of measures in its 2013 budget designed to address concerns of disgruntled citizens The finance minister said that some correction in Singapore property prices will not be out of order, suggesting that there could be intervention if prices do not moderate Taiwan shares rose in the short trading month of February, buoyed by positive macro news, measures mulled by the Cabinet to support the equities market and earnings of IT companies Taiwan raised its growth forecast for 2013 after the economy expanded more than initially estimated in the fourth quarter of 2012 Inflation forecast for this year was raised to 1.37% from 1.31% by the statistics bureau, with pressure seen from higher minimum wages and a proposed electricity tariff increase The economy expanded 6.4% in 2012 from 0.1% in 2011, when floods inundated most of the country Thailand s central bank kept its policy interest rate unchanged for a third straight meeting as economic growth quickened, resisting the government s calls for monetary easing Imports surged in January from a year earlier as factories stepped up output after recovering from the floods of 2011 Source : Eastspring Investments (Singapore) Limited and Bloomberg as of February 2013. Data shown in the graphs extracted from Bloomberg in local currency terms. Note: MoM refers to month-on-month, YoY refers to year-on-year. # based on latest available data. Singapore 3 months SIBOR, Taiwan Central Bank of China Taiwan Discount Rate Daily, Thailand - BOT Repurchase Market Rates 1 Day Official Rates. ^ Refers to Foreign Currency Long Term Debt. * u denotes that the rating is unsolicited (refers to S&P s website for more details).

Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 *Jan-13 *Feb-13 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 *Jan-13 *Feb-13 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 *Jan-13 *Feb-13 % 0.50 0.40 0.30 0.20 0.10 0.00 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 US Japan Hong Kong Singapore GDP % 4.0 3.0 2.0 1.0 0.0-1.0 % 5.00 4.00 3.00 2.00 1.00 5.0 3.0 1.0 Interest Rates Trend 1 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 Europe Taiwan Australia Korea Malaysia Consensus 2013 GDP Forecasts 2 GDP % 7.0 % 9.00 7.00 5.00 3.00 1.00 7.5 5.5 3.5 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-1 % GDP 9.5 Philippines Thailand Indonesia China India Eurozone US Hong Kong Taiwan Japan Singapore South Korea Australia Malaysia Philippines 12-month forward profit forecasts (1 month change) 3 Thailand Indonesia India Asia ex Japan China Australia Hong Kong Philippines Japan Korea Singapore Taiwan Indonesia Europe India Malaysia Thailand Asia ex Japan US China 0.00 0.50 1.00 % -2.00-1.50-1.00-0.50 0.00 % Source : Eastspring Investments(Singapore) Limited and Bloomberg as of February 2013. 1 US Federal Funds Target Rate, Japan BOJ Target Rate of Unsecured Overnight Call Rate, Singapore 3 months SIBOR, Hong Kong - 3 month HIBOR, Europe ECB Marginal, Taiwan Central Bank of China Taiwan Discount Rate Daily, Australia - RBA Daily Cash Rate Target, Korea - Target Overnight Call Rate Daily, Malaysia Overnight Policy Rate, Philippines Overnight Reverse Repurchase Agreement RRP Rate, Thailand - BOT Repurchase Market Rates 1 Day Official Rates, Indonesia BI Reference Interest Rate, China 1 Year Best Lending Rate, India RBI REPO Cutoff Yield. 2 Consensus Forecasts, February 2013. * Refer to 2013 GDP forecasts while Mar 12 to Dec 12 period refers to 2012 forecast. 3 IBES MSCI from Datastream as at February 2013. The forecasts may change at any time and may not the final outcome.

Valuation - 12-months Forward P/E (x) 4 Source: 4 IBES MSCI from DataStream as of February 2013. Note: The forward price earnings multiple shown above is calculated on an 12-month rolling basis. The horizontal lines represent the average (the middle line) and one standard deviation either side of this average for the period shown.

Valuation - 12-months Forward P/E (x) 4 Source: 4 IBES MSCI from DataStream as of February 2013. Note: The forward price earnings multiple shown above is calculated on an 12-month rolling basis. The horizontal lines represent the average (the middle line) and one standard deviation either side of this average for the period shown.

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