Citigold. Citigold. FINANCIAL MARKET ANALYSIS 15 August Where To Now? performance. Asset Allocation. China data calls for further easing

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Citigold FINANCIAL MARKET ANALYSIS 15 August 2016 Where To Now? Both bonds and equities in EM have performed well this year with the Citi Global Emerging Market Sovereign bonds index and the MSCI EM index higher almost 15% year-to-date (YTD). Although gold and oil outperformed (Gold: +26% YTD; Brent Crude: +26% YTD; WTI Crude: 20% YTD), performance of EM equity and credit markets was much stronger than commodities in the past few months. Citi analysts believe that EM outperformance has legs to go further as a supportive US dollar, cheap valuations, improving fundamentals and pick-up in growth momentum may continue to provide support. In the US, all 3 major stock market indices - S&P500, Dow Jones Industrials and Nasdaq hit record highs as earnings momentum appears to be improving after 6 consecutive quarters of deceleration. According to Bloomberg, of the 457 companies in the S&P 500 that have reported thus far, nearly 56% have topped sales forecasts, while about 78% have bested profit projections. Nonetheless, we remain neutral on US equity given that the Presidential election may increase volatility. Performance All major equity markets were higher last week, with the MSCI World rising 1.31% supported by EM as well as Japan. In the US, the Dow Jones Industrial Average and the S&P 500 Index ticked up 0.18% and 0.05% respectively while the Nasdaq Composite increased 0.23%. European equities measured by the Stoxx Europe 600 Index rose 1.38% while Japanese stocks jumped higher given some weakness in Yen (Nikkei 225: +4.09% and Topix: +3.38%). Meanwhile, EM equities continued to finish the week higher (MSCI EM: 2.77%), as the MSCI Emerging Europe spiked up 2.18%, the MSCI Latin America gained 3.35% and the MSCI Asia ex-japan rose 2.35%. Within Asia, the HSCEI index was the outperformer, gaining 4.64%, driven by expectations that SZ-HK Connect could be announced soon. Asset Allocation Equities With relative EM fundamentals improving, the Fed on hold and $ rangebound, along with BoE/BoJ/ECB liquidity support, we remain constructive on EM equities. Credit Despite a significant rally this year, we believe the relative value proposition remains compelling in Emerging market debt (EMD), especially in Latin America and certain parts of Asia. Rates The low global interest rate environment should anchor the long-end for US Treasuries as foreign investors continue to bid up safe haven, higher yielding USD assets. Commodities The fundamental story for a broad recovery in commodity prices remains intact and Citi analysts believe price declines as seen in 2H15 look unlikely. China data calls for further easing Citi Economic Surprise Index CESIUSD Index CESIEUR Index CESICNY Index HY bonds and EM debts outperform Accumulated 3-month Bond Index Returns World Govt Bonds Index Global EMD Index HY Index EM equities continue recent rally Accumulated 3-month Equity Index Returns MSCI World MSCI EM MSCI Asia Week Ahead Key Data and Event 60 30 0-30 -60 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% 20% 15% 10% Date Country Data & Event Period Survey Prior Citi Fct 15-Aug JN GDP Annualized SA QoQ 2Q 0.7% 1.9% -0.4% 16-Aug US CPI MoM Jul 0.0% 0.2% 0.0% 16-Aug US Industrial Production MoM Jul 0.3% 0.6% 0.6% 18-Aug JN Exports YoY Jul -13.8% -7.4% -15.9% 18-Aug EC CPI YoY Jul 0.2% 0.2% 0.2% 18-Aug US Leading Index Jul 0.3% 0.3% 0.4% 18-Aug US Releases July FOMC Meeting Minutes -- -- -- 18-Aug CH China Property Prices Jul -- -- -- 18-Aug EC ECB account of the monetary policy meeting -- -- -- 18-Aug US Initial Jobless Claims 13-Aug 265K 266K 260K 19-Aug JN All Industry Activity Index MoM Jun 0.9% -1.0% 1.0% 19-Aug ID Bank Indonesia 7-Day Reverse Repo19-Aug 5.0% 5.3% 5.0% 5% 0% -5% INVESTMENT PRODUCTS: variety of economic, NOT A BANK market DEPOSIT. and other NOT factors. GOVERNMENT Likewise, past INSURED. performance NO BANK is no guarantee GUARANTEE. of future MAY results. LOSE VALUE. Page 1

Drivers and Risks by Market United States Driver: This week, the important data readings will be for industrial production, housing, and CPI inflation. In addition, we will see the minutes from the Fed's July meeting, which occurred before the weak outturn for 2Q16 GDP was released. Risk: Heightened uncertainty in the run up to the presidential election in November and even afterwards has the potential to generate significant drag on growth (e.g., reduced investment and higher saving) that may lower GDP to below its potential. 2200 2100 2000 1900 1800 1700 End-2016 Target: 2150 Implication: We believe the Fed may choose to wait for more data, and for US presidential and congressional election-related uncertainty to subside. Thus we retain our December Fed rate hike call for now. Europe Driver: The second release of 2Q16 euro area GDP data confirmed economic growth slowed down relative to the start of the year, to 0.3% QQ, or 1.1% annualised the slowest quarterly pace since 2Q14. This was half the growth rate of 1Q16 (2.2% annualised), but still left the 1H16 average growth broadly in line with the second half of last year. Risk: Weakness in France may have been partly caused by the refineries strikes amid the labour code saga, which was also reflected in particularly weak industrial production (-0.5% MM in May, -0.8% MM in June). We reckon Italian GDP probably suffered from the negative spillovers of the ongoing bank turmoil, causing negative wealth effects amid falling share prices and hitting confidence. Implication: Looking forward, the major uncertainty on the 2H16 outlook remains the impact of the UK referendum vote on the euro area economy. Early data for Q3 mainly July monthly surveys suggest some resilience and point to the pace of economic growth having remained broadly stable relative to 2Q16. 1600 S&P 500 1500 End-2016 Target: 310 410 390 370 350 330 310 290 DJ Stoxx TMI 270 Japan Driver: While there is uncertainty over the "comprehensive assessment" of monetary policy that the BoJ plans to conduct at its September policy meeting, Citi analysts expect the BoJ may largely justify the effectiveness of the current policy framework (including NIRP) while also starting to carefully communicate its intention to introduce more flexibility to the large-scale JGB purchasing operation. Risk: With almost all listed companies having announced April June results, data collated reveal a significant 15.2% YoY drop in Recurring Profit (RP) and that firms are forecasting RP down 6.2% but Net Profit (NP) up 0.9% for FY3/17 as a whole. 1700 1600 1500 1400 1300 1200 1100 1000 End-2016 Target: 1350 Japan Topix Implication: We believe that the earliest timing for the BoJ s next easing is its meeting on October 31-November 1 when policymakers update their quarterly Economic Outlook Report. However, it is unlikely that the BoJ will change its bullish economic projections in a way that warrants an additional easing action. As a result, Citi s base-case scenario is that the BoJ may only do so in January 2017. Asia Driver: In China, we foresee a manageable slowdown without hard landing, given the positive property chain impact and also Industrial Production resilience amid FAI slowdown. Furthermore, we expect eased bond defaults in 2H16 given less interest payment pressure and stabilizing commodity prices. Risk: Delays to a cut in the Reserve Requirement Ratio (RRR) may keep firms funding costs high, and weigh on investment growth. This in turn leads to a more sluggish growth outlook in Q3. Implication: Citi analysts raise our MSCI China (MXCN) mid-17 target to 68 (prior 62) to factor in less credit risk concern. Correspondingly, HSCEI target was raised to 10,600 (prior 9,500). Our CSI300 target was fine-tuned to 3,200 (prior 3,000). Our MXCN and HSCEI preferences over CSI300 remain unchanged despite the 15% outperformance YTD, given CSI300 s valuation premium. End-2016 Target: 530 600 550 500 450 400 350 MSCI Asia ex JP 300 Page 2

Currency Forecast Last price Forecasts Currency 12-Aug-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 G10-US Dollar Euro EURUSD 1.12 1.12 1.15 1.15 1.16 1.17 1.17 Japanese yen USDJPY 101 105 105 104 103 102 101 British Pound GBPUSD 1.29 1.27 1.28 1.28 1.29 1.30 1.30 Swiss Franc USDCHF 0.97 0.97 0.96 0.95 0.95 0.94 0.94 Australian Dollar AUDUSD 0.77 0.78 0.78 0.78 0.78 0.79 0.79 New Zealand NZDUSD 0.72 0.70 0.70 0.70 0.70 0.69 0.69 Canadian Dollar USDCAD 1.30 1.28 1.26 1.25 1.24 1.23 1.21 EM Asia Chinese Renminbi USDCNY 6.64 6.77 6.79 6.83 6.87 6.91 6.95 Hong Kong USDHKD 7.76 7.77 7.78 7.78 7.78 7.79 7.79 Indonesian Rupiah USDIDR 13,121 13,316 13,464 13,515 13,535 13,555 13,575 Indian Rupee USDINR 66.9 69.1 69.8 70.0 70.0 70.0 70.0 Korean Won USDKRW 1,103 1,168 1,178 1,168 1,152 1,136 1,120 Malaysian Ringgit USDMYR 4.03 4.11 4.10 4.05 3.99 3.93 3.87 Philippine Peso USDPHP 46.6 47.8 48.0 47.9 47.8 47.7 47.6 Singapore Dollar USDSGD 1.35 1.39 1.39 1.39 1.39 1.40 1.40 Thai Baht USDTHB 34.8 35.7 35.9 35.8 35.6 35.4 35.2 Taiwan Dollar USDTWD 31.4 32.4 32.5 32.6 32.7 32.8 32.9 EM Europe Russian Ruble USDRUB 64.8 61.0 60.2 60.1 60.3 60.6 60.8 South African Rand USDZAR 13.48 15.27 15.45 15.55 15.61 15.67 15.73 EM Latam Brazilian Real USDBRL 3.19 3.38 3.48 3.55 3.61 3.67 3.73 Mexican Peso USDMXN 18.3 18.9 19.0 18.9 18.8 18.7 18.6 Source: Citi Research and Bloomberg as of 12 August 2016 \\ Weekly Market Performance (8 12 August 2016) 0.4% 0.1% 0.0% 1.1% 0.8% 0.6% 1.8% 1.6% 1.4% 1.3% 2.8% 2.5% 2.4% 2.2% 3.4% 3.4% 6.4% 4.6% 0% 5% 10% Gold China HSCEI Japan TPX Index MSCI Latin America HK Hang Seng China Shanghai Composite MSCI AsiaXJapan MSCI Emerging Europe UK FTSE 100 Korea KOSPI Europe Stoxx Europe 600 MSCI AC World Citi Global Emerging Mkt Sovereigns Citi High Yield Taiwan TAIEX Citi World Broad Inv Grade US S&P 500 Market Performance (Year-To-Date) (As of 12 August 2016) Oil Short Rates and 10-Year Yield Forecasts Last price 12-Aug-16 3Q16 4Q16 1Q17 2Q17 3Q17 Short Rates (End of Period) US 0.50 0.50 0.75 0.75 1.00 1.00 Japan -0.10-0.10-0.10-0.30-0.30-0.50 Euro Area 0.00-0.10-0.20-0.25-0.25-0.25 10-Year Yield (Period Average) US 1.51 1.60 1.60 1.65 1.65 1.65 Japan -0.11-0.25-0.25-0.25-0.20-0.20 Euro Area -0.11-0.10-0.15-0.20-0.20-0.15 Source: Citi Research and Bloomberg as of 12 August 2016-1.1% -5.4% -13.8% -14.5% 36.8% 25.9% 20.1% 16.8% 14.1% 13.9% 10.8% 9.7% 9.3% 6.9% 6.5% 5.4% 4.5% 3.9% MSCI Latin America Gold Oil MSCI Emerging Europe Citi Global Emerging Mkt Sovereigns Citi High Yield UK FTSE 100 Taiwan TAIEX MSCI AsiaXJapan US S&P 500 Citi World Broad Inv Grade MSCI AC World Korea KOSPI HK Hang Seng China HSCEI Europe Stoxx Europe 600 China Shanghai Composite Japan TPX Index -40% -20% 0% 20% 40% Page 3

World Market At Glance US / Global Last price 52-Week 52-Week 12-Aug-16 High Low 1 week 1 month 1 year Year-to-date Year-to-date (USD) MSCI World 421.02 421.45 351.25 1.31% 3.09% 0.27% 5.42% 5.42% Dow Jones Industrial Average 18576.47 18638.34 15370.33 0.18% 1.25% 6.75% 6.61% 6.61% S&P 500 2184.05 2188.45 1810.10 0.05% 1.48% 4.70% 6.85% 6.85% NASDAQ 5232.90 5238.54 4209.76 0.23% 4.18% 3.74% 4.50% 4.50% Europe MSCI Europe 403.05 450.86 353.59 2.36% 3.59% -9.82% -1.93% -1.93% Stoxx Europe 600 346.09 390.45 302.59 1.38% 2.92% -9.63% -5.39% -2.76% FTSE100 6916.02 6931.04 5499.51 1.80% 3.52% 5.25% 10.79% -2.84% CAC40 4500.19 5025.71 3892.46 2.03% 3.90% -8.63% -2.95% -0.25% DAX 10713.43 11430.87 8699.29 3.34% 7.52% -1.93% -0.28% 2.07% Japan NIKKEI225 16919.92 20668.87 14864.01 4.09% 5.12% -17.03% -11.11% 5.99% Topix 1323.22 1678.10 1192.80 3.38% 2.92% -20.56% -14.48% 1.96% Emerging Markets MSCI Emerging Market 910.08 911.31 686.74 2.77% 6.56% 5.61% 14.60% 14.60% MSCI Latin America 2502.90 2525.67 1550.47 3.35% 7.81% 14.80% 36.78% 36.78% MSCI Emerging Europe 128.88 133.76 91.09 2.18% 2.55% 1.89% 16.79% 16.79% Brazil Bovespa 58298.41 58753.04 37046.07 1.11% 7.45% 20.48% 34.48% 67.63% Russia RTS 954.58 975.21 607.14 2.04% -0.09% 14.79% 26.09% 26.09% Asia MSCI Asia ex-japan 546.26 546.26 434.84 2.35% 6.06% 4.33% 9.27% 9.27% Australia S&P/ASX 200 5530.91 5611.20 4706.70 0.61% 3.32% 2.77% 4.44% 9.70% China HSCEI (H-shares) 9554.85 11169.49 7498.81 4.64% 7.90% -13.47% -1.10% -1.18% China Shanghai Composite 3050.67 4006.34 2638.30 2.49% 0.04% -21.50% -13.80% -15.77% Hong Kong Hang Seng 22766.91 24126.30 18278.80 2.80% 7.27% -4.80% 3.89% 3.80% India Sensex30 28152.40 28289.96 22494.61 0.26% 1.24% 2.33% 7.79% 6.72% Indonesia JCI 5377.20 5476.22 4033.59-0.79% 5.44% 20.04% 17.07% 23.85% Malaysia KLCI 1684.15 1729.13 1503.68 1.21% 1.82% 4.61% -0.49% 6.71% Korea KOSPI 2050.47 2064.72 1800.75 1.61% 2.98% 3.80% 4.55% 11.64% Philippines PSE 7955.86 8118.44 6084.28-0.18% 0.23% 6.14% 14.44% 15.25% Singapore STI 2867.40 3118.52 2528.44 1.39% -1.19% -6.34% -0.53% 4.72% Taiwan TAIEX 9150.39 9200.42 7203.07 0.64% 3.49% 10.47% 9.74% 15.00% Thailand SET 1552.64 1554.31 1220.96 2.24% 5.27% 10.25% 20.54% 25.28% Commodity Historical Returns (%) Oil 44.49 51.67 26.05 6.44% -4.94% 2.75% 20.11% 20.11% Gold spot 1335.85 1375.45 1046.43 0.02% 0.21% 18.80% 25.85% 25.85% Page 4

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All applications for investments and treasury products are subject to Terms and Conditions of the individual investment and Treasury products. Customer understands that it is his/her responsibility to seek legal and/or tax advice regarding the legal and tax consequences of his/her investment transactions. If customer changes residence, citizenship, nationality, or place of work, it is his/her responsibility to understand how his/her investment transactions are affected by such change and comply with all applicable laws and regulations as and when such becomes applicable. Customer understands that Citibank does not provide legal and/or tax advice and are not responsible for advising him/her on the laws pertaining to his/her transaction. Citibank Bahrain does not provide continuous monitoring of existing customer holdings. Hong Kong : This document is distributed in Hong Kong by Citibank (Hong Kong) Limited ("CHKL"). Prices and availability of financial instruments can be subject to change without notice. Certain high-volatility investments can be subject to sudden and large falls in value that could equal the amount invested. India : This document is distributed in India by Citibank N.A. Investment are subject to market risk including that of loss of principal amounts invested. Products so distributed are not obligations of, or guaranteed by, Citibank and are not bank deposits. Past performance does not guarantee future performance. Investment products cannot be offered to US and Canada Persons. Investors are advised to read and understand the Offer Documents carefully before investing. Indonesia : This report is made available in Indonesia through Citibank N.A., Indonesia Branch. Citibank N. A., Indonesia is a bank that is licensed, registered and supervised by the Indonesia Financial Services Authority (OJK). Korea : This document is distributed in South Korea by Citibank Korea Inc. Investors should be aware that investment products are not guaranteed by the Korea Deposit Insurance Corporation and are subject to investment risk including the possible loss of the principal amount invested. Investment products are not available to US persons. Malaysia : This document is distributed in Malaysia by Citibank Berhad. People's Republic of China : This document is distributed by Citibank (China) Co., Ltd in the People's Republic of China (excluding the Special Administrative Regions of Hong Kong and Macau, and Taiwan). Philippines : This document is made available in Philippines by Citicorp Financial Services and Insurance Brokerage Phils. Inc, and Citibank N.A. Philippine Branch. Investors should be aware that Investment products are not insured by the Philippine Deposit Insurance Corporation or Federal Deposit Insurance Corporation or any other government entity. Singapore : This report is distributed in Singapore by Citibank Singapore Limited ( CSL ). Investment products are not insured under the provisions of the Deposit Insurance and Policy Owners Protection Schemes Act of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme. Thailand : This document contains general information and insights distributed in Thailand by Citigroup and is made available in English language only. Citi does not dictate or solicit investment in any specific securities and similar products. Investment contains certain risk, please study prospectus before investing. Not an obligation of, or guaranteed by, Citibank. Not bank deposits. Subject to investment risks, including possible loss of the principal amount invested. Subject to price fluctuation. Past performance does not guarantee future performance. Not offered to US persons. Vietnam : This document is distributed in Vietnam by Citibank, N.A., - Ho Chi Minh City Branch and Citibank, N.A. - Hanoi Branch, licensed foreign bank s branches regulated by the State Bank of Vietnam. Investment contains certain risk, please study product s prospectus, relevant disclosures and disclaimers and the terms and conditions for details before investing. Investment products are not offered to US persons. United Kingdom : This document is distributed in U.K. by Citibank Europe plc, UK Branch. The registered address in the UK is Citibank Centre, Canada Square, Canary Wharf, London E14 5LB. Citibank Europe plc, UK Branch is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Page 5