1. Investment strategy for a volatile market … Kevin Scully, 16 July 2010 www.nracapital.com

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3. There are no handouts but copies of the slides can be downloaded from this logo at www.nracapital.com

4. Investment strategy for a volatile market !!

5. Correction in 2010 is modest compared to gains in stock markets in 2009… Jan 1 2009 Dec 31 2009 % change Jan - Dec Jul 16, 2010 % change Jan – Jul Dow Jones9034.6910428.0515.4%10359.31-0.7% Nikkei 2259043.1210546.4416.6%9530.49-9.6% Hang Seng Index15042.8121872.545.4%20207.98-7.6% Shanghai Composite1880.713277.1274.2%2392.46-27.0% STI1829.712897.6258.4%2947.211.7%

6. Markets appeared to be volatile in 2010 but were actually not….when compared to late 2008 and 2009

7. Sovereign debt crisis in Europe among the PIGS (Portugal, Ireland, Greece and Spain)….in April 2010 started this hiccup but the PIGS are small…..in terms of contribution to the Global economy

8. Problems in EU among the PIGs small and still manageable…. GDP US$bn% of world World economy 200957937.5 EU16447.328.4% USA14256.324.6% Japan5068.18.7% China4909.08.5% Germany3352.75.8% France2675.94.6% Spain1464.02.5% Portugal227.90.4% Ireland227.80.4% Greece330.80.6% Hungary129.40.2% Singapore177.10.3%

9. Euro seems to have found support at US$1.10 to US$1.20 level ….weak Euro will fuel recovery in Europe

10. Global economy recovering albeit at a more modest rate

11. Global economy recovering nicely from 2009 led by developing economies World Bank – Global economy contracted by 2.1% in 2009 but forecasted to grow by 3.3% in 2010 and 3.3% in 2011 Developing economies grew by 7.1% in 2009 and forecasted to grow 8.7% in 2010 and 7.8% in 2011 US economy shrank 2.4% in 2009, but is expected to grow 3.3% in 2010 and 2.9% in 2011 China grew 8.7% in 2009 and forecasted to expand 9.5% and 8.5% in 2010 and 2011 respectively

12. US economy both manufacturing & services sectors are expanding ISM Manufacturing ISM Non-Manufacturing

13. US unemployment near 10% but this is a lagging indicator in any economic recovery

14. China’s GDP chugging along nicely: 10.3% for Q2-2010 - a very good number

15. Investment strategy for rest of 2010 into 2011

16. I wanted to ask Paul the World Cup Octopus but he has pulled a mussel after being hired by Goldman Sachs for US$4.5mn

17. More moderate OECD economic recovery (NO DOUBLE DIP) means that global interest rates are likely to stay low until the middle of 2011 instead of Q3/Q4-2010 ……equities which are “cheap” and undervalued remain the best investment class to be in

18. PER of the Dow at 12.7 times 2010 …low end of its historical range

19. PER of Shanghai now at 14.3 times 2010 at historical low since 2000

20. PER of Hang Seng Index now 13.4 times 2010–near historical low levels

21. PER of STI Index now only 13-14 times 2010 earnings (part 1)

22. PER of STI Index now only 13-14 times FY2010 earnings– part 2

23. Summary Uncertainty in stock markets will continue….it took six months for markets to stabilise after the crisis started in the US in Sept/Oct 2008….this would imply market stability sometime in Q3-2010 Look at the VIX for guidance….it rose sharply to 44 when the Euro crisis started but is now comfortably below the 30 level…..a sustained fall below 30 is a good signal to start accumulating again Global economy on the road to recovery although growth rates in the US, EU and China are moderating. Corporate earnings growth has been strong and stock market PERs are at their historic lows for the Dow, Shanghai, Singapore and to a lesser extent Hong Kong

24. My strategy….. Easy money is over - stock selection is more important now ! Until trading liquidity returns, you need to take a six to nine month view for your stock investments Look for undemanding PERs and attractive dividend yields as you may need to wait until Q4-2010 for markets to resume their uptrend. I favor the technology sector (which is experiencing very strong Q1 and Q2 2010 performance and with good visibility until year end Banks offer good exposure to the booming Singapore economy Construction stocks remain undervalued with many companies trading below NTA and some even below cash levels….worth a look for medium term investors Property stocks could underperform in the near term as the Government tries to control and moderate property price inflation

25. Dow is stabilizing and recently cut back up through its 50 and 200 day moving averages

26. STI Index has cut back up through its 50, 100 and 200 day moving averages

27. Shanghai Composite still has downside risks of another 10-20%

28. Stock recommendations Visit www.nracapital.com “Kevin’s Stock Picks” …..we will soon to be releasing Stock Picks (yield) This is only for subscribers of our premium research service but is available to investors who use or have a stock trading account with Lim and Tan Securitieswww.nracapital.com

29. Our Stock Picks have outperformed the STI Index since we started the portfolio in mid 2008

30. Thank You