1. 1 July 2009 July 2009 Adrian Cowell www.rexiter.com Rexiter Capital Management Limited Asia ex-Japan – A Perspective

2. 2 “I have only told the half of what I saw” Epitaph of Marco Polo Epitaph of Marco Polo The Mongol Empire The First Asia ex-Japan Marco Polo 1254-1324 Kublai Khan 1215-1294 “For ye shall find therein all kinds of wonderful things, and the divers histories of the Great Hermenia, and of Persia, and of the land of the Tartars, and of India….” Marco Polo

3. 3 Ibn Battuta, 1304-1368(9) Moroccan scholar and traveler “Rihla” or Voyage 1325-1354, 75k miles, 44 countries, the Muslim world

4. 4 Christopher Columbus, 1451-1506 Which is why Christopher Columbus tried to short cut the other way round … … with this result … …but…

5. 5 Admiral Zheng He 1371-1433 Seven huge expeditions 1405-1433 Kangido Map 1402 Wu Bei Zhi chart West India, Ceylon and East Africa Fra Mauro Map 1420 Giraffe, 1414 Zheng He’s Treasure Ships China’s first blue water capability

6. 6 The Silk Road Cloves and Nutmeg The Spice Trade

7. 7 In 2008, nominal World GDP was US$60.689trIn 2008, nominal World GDP was US$60.689tr In 2008 nominal Asia Pacific GDP was US$16.774trIn 2008 nominal Asia Pacific GDP was US$16.774tr World ranking; China 3 rd US$4.4tr, India 12 th US$1.2tr, Korea 15 th US$947bn, Indonesia 19 th US$511bn World ranking; China 3 rd US$4.4tr, India 12 th US$1.2tr, Korea 15 th US$947bn, Indonesia 19 th US$511bn 2009 estimates are World US$54.863tr and Asia Pacific US$16.437tr 2009 estimates are World US$54.863tr and Asia Pacific US$16.437tr source IMF source IMF In the first millennium, India accounted for 30% of global GDPIn the first millennium, India accounted for 30% of global GDP By 1500 China had surpassed IndiaBy 1500 China had surpassed India Until 1850, China and India alternated as No1 and No2 by GDP Until 1850, China and India alternated as No1 and No2 by GDP source Wikipedia source Wikipedia

8. 8 Asia Today

9. 9 “Demography is Destiny” Auguste Comte, 1798-1857 French philosopher, mathematician and sociologist

10. 10 From the Great Wall … to Shanghai … and Beijing 2008 The Han River, Korean War … the 2002 Seoul World Cup Stadium … and Pyongyang, DPRK

11. 11 Asia Market Capitalisation by Index (Price, USD)30-Jun-0931-Dec-0831-Dec-03 MSCI AC World Index244.905227.683251.131 Performance+7.6%-9.3% Free Float Adj. Market Cap. (USD bn)20,09418,47918,243 -Asia ex Japan8.4%6.6%3.4% -5 Biggest Asian Markets7.1%5.5%2.6% (China/Korea/Taiwan/HK/India) MSCI Emerging Markets Index761.295567.042442.778 Performance+34.3%+28.1% Free Float Adj. Market Cap. (USD bn)2,4081,747826 -Asia ex Japan57.4%55.7%54.0% -4 Biggest Asian Markets51.0%49.2%44.0% (China/Korea/Taiwan/India) MSCI AC Asia ex Japan Index386.043288.109255.318 Performance+34.0%+12.8% Free Float Adj. Market Cap. (USD bn)1,6951,213625 -5 Biggest Asian Markets84.3%83.7%77.1% China27.6%26.2%10.4% Korea17.5%19.6%24.1% Taiwan16.7%15.7%16.1% HK11.9%12.9%19.0% India10.7%9.4%7.5%

12. 12 Asia– In Context Asia A land mass of 44.579 million kmsq (17.212million sq miles), the world’s largest, and most populous continent A population of 4.162bn or 60% of the world with 7 of the world’s 10 most populous countries; China, India, Indonesia, Russia, Pakistan, Bangledesh and Japan UNDP estimates the population increased by a factor of 2.5 from 1950-2000, an absolute 2.2 bn or 1.8% annually 47 countries in distinct regional groupings; East Asia, Central Asia, South East Asia, South Asia, and West Asia In 2000;   East Asia had a population of 1.4bn, a growth rate of 0.67% annually and life expectancy of 72.1 years   South East Asia had 520m, 1.4% annual growth rate and expectancy of 66.7 years   South Central Asia had 1.4bn, growth of 1.66% and expectancy of 63.2 years Dramatic improvements in life expectancy drove the population explosion, and are being followed by a dramatic drop in the fertility rate led by China which will both age and suffer a shortage of brides UNPD forecasts 1975-2025; China 930m to 1.4bn (median age 39), India 620m to 1.3bn, Vietnam 48m to 105m, Korea 35m to 50m (median 44) or a unified 75m, Pakistan 70m to 250m which compare to the United States at 385m and Japan at 123m (median 50) Slum dwelling urban population (World Bank/UN 2005); East Asia 33%, South Asia 59%, West and South East Asia 27% Population, per capita GDP and potential Consumption, Low level of Public and Private Debt, growing Foreign Reserves

13. 13 Asia– In Context Asia Infrastructure The ADB estimates that less than 1% of US$1tr Euro-Asia trade is land transported through Central Asia (12 land locked countries) China and seven Central Asian countries have agreed to invest US$19.2bn in the 21 st century equivalent of the Silk Road (supported by ADB, EBRD, Islamic DB, IMF, UNDP, World Bank).   Additional to UN and EU projects to build 140k km roads and 14k km of railways   Central Asian GDP estimated to double by connection to the Trans Siberian Railway and to deep water ports The Asian Highway – AH1 from Tokyo to Bulgaria; US$25bn in commitments. China is building 12 highways to link Xingjiang with Central Asia The Iron Silk Road – four corridors; Northern (Trans Siberian to Korea), ASEAN (Kunming-Singapore etc), Southern (CPIT - Yunan to Turkey), Europe to the Persian Gulf. Trans Asian Railway Network – 17 Asian nations to serve 13 of the top 20 container ports with 81k km network Container Ports; Asia has 18 of the world’s top 20 container ports by ‘000 TEU (Singapore, Shanghai, Hong Kong, Shenzen, Pusan) Oil and Gas Pipelines; China sources most of its crude from the Middle east but is diversifying into central Asia – Kazakh- China pipeline. Transneft is building the East Siberian pipeline to China, and phase 2 will deliver to the Pacific coast. Turkmenistan (via Uzbekistan and kazakhstan) to China gas pipeline under construction Japan became rich before it became old, Chinese may become old before they become rich

14. 14 India – In Context Indian Infrastructure India - The Infrastructure Opportunity   Government is targeting US$1.5tr of investment by 2017 versus actual spend of US$200bn in last five years 11 th Five Year Plan   Power generation; Capex in 10 th Plan (‘03-’07) of US$48bn (vs target US$70.5bn) could rise in 11 th Plan (’08-’12) to US$108bn (vs target US$150.4bn) and in 12 th Plan (’13-’17) to US$171bn   Roads in 11 th US$57bn (up 60% PoP vs target US$76.1bn) – six lane, four lane, expressways, highways and rural roads   Railways in 11 th US$50bn (70% PoP vs target of US$62.2bn) – dedicated freight corridor, 10,300km new track etc   Four large airports (320% PoP for target US$8.5bn), 35 small airports   Port growth of 13 times; add 493million mt in major ports, and 345million in minor ports for target of US$18bn Build it and Growth will Come

15. 15 India – In Context India A land mass of 3.3 million kmsq, the 7 th largest country in the world, and the 2 nd largest in Asia, after China Land boundary of 14,103km with a coastline of 7,517km; 48% of land is arable, 20.6% under forest As of 2001, population of 1.03bn, 17% of the world population and 2 nd largest in the world after China, but growing at 1.45%pa. 1991-2001 population grew by an absolute 21.5% (1.9% CAGR), or 181million over the period.   166million in state of Uttar Pradesh - (6 th largest in the world after Brazil)   97million in state of Maharashtra   83million in state of Bihar – (bigger than Germany) Current assumptions suggest a population of 1.3billion by 2026 (ie adding another “United States”), and by 2050 India could be the most populous country in the world Life expectancy is 65.4 years, up from 54.4 in 1981, and literacy rate is 64%, up from 43.6% in 1981 59% of the population is younger than 30 years, 50% is under 25 years, and the labour force will grow at an estimated 1.7-1.8% to 2015. Working population estimated to peak at 60% by 2020 (China peak to be reached around 2010) 36 cities greater than 1m (China has 150 such cities), top 3 cities have a population of 42 million, and the largest, Mumbai, has a population of 16 million; urban population increased from 23% in 1981 to 28% in 2001 (China 39%) In 2005 an estimated 300million or 27% of the population still lives below the poverty line (55% in 1974) Population 17% of World ; LOW DEPENDENCY, Expanding Workforce

16. 16 India – In Context India The world’s largest democracy, independent since 15 th August 1947, founded on socialist, democratic and secular principles   Lok Sabha - Lower House of 543 elected members plus 2 appointed by the President   Rajya Sabha - Upper House of no more than 250 members chosen by elected members of the State Assemblies   The President is the head of State, and the Prime Minister heads the government Since 1990 the country has been governed by coalition, previously governed by Indian National Congress Party   6 national political parties (criterion is recognition in four or more states), and 47 state parties   In 2004 election, Congress, United Progressive Alliance coalition leader, won 150 seats in its own right and leads a coalition of 292 seats, and Bharatiya Janata (BJP), leader of the National Democratic Alliance, won 131 seats in its own right, and led an opposition coalition of 179 seats, with a further 72 seats made up of other parties   Contentious Nuclear Treaty with the United States (civilian nuclear co-operation)/Terrorism   Congress led coalition won the ’09 election winning 206 of 543 seats and its coalition has 262 with others for an effective majority Predominantly Hindu   81% Hindu   13% Muslim (second largest Muslim population after Indonesia), 2% Christian, 2% Sikh, 1% Buddhist 22 official languages and 500 tribes; Hindi, the official language is spoken by 40%, English is the predominant business language – a bank note has its denomination printed in 16 languages Largest Democracy in the World

17. 17 India – In Context India Strong GDP for the past five years; in 2006-7 GDP grew 9.2%. India has joined the US$1trillion GDP club of nations, as of end 2007 similar in size to Russia and Brazil GDP breakdown is; Agriculture 18.5%, Industry 26.4% and Services 55.1% Government target for 11 th Five Year Plan is an average growth rate of 9%   Infrastructure spending is 4% of GDP vs 10% in China; target is 9%   Education spending is 1% of GDP vs 10% in China; target is 6%   Agriculture is 18.5% of GDP (55% in 1951); self sufficient since 1970, 60% of population dependent, less than 30% of land irrigated so the monsoon is critical (this year officially started 31 st May 2008) The world’s 2 nd largest apparel producer after China, 3 rd largest cotton grower after US and China; textiles 14% of exports at $14bn World’s 5 th steel producer at 45mtpa with per capita consumption of 44kg vs world average of 150k; huge iron ore reserves, targets 100mt steel production by 2012 World’s 2 nd largest cement producer after China at 160mt (top 2 companies; 40%); adding 90-100mt of capacity over 3 years In Pharmaceuticals India produces 8% of world bulk, should export US$7bn in ‘08 Huge Resources but Inadequate & Overloaded Infrastructure

18. 18 India – In Context India End ’07 recoverable hydrocarbon reserves estimated at 5.5bnbbl and 1,055bcm of gas; import dependence of 75%, net oil imports are a key drag on economy. New discoveries being made off east coast. Refining capacity of 150mtpa, is in surplus, and will rise to 215mtpa by 2012 World’s 3 rd largest coal producer at 433mtpa after China and US. Estimated reserves of 235bnt July ’07 installed generating capacity was 135,000MW. Target is to add 160,000MW in ten years. Sources are 66% thermal, 26% hydro, 3% nuclear, 3% renewable   Country has a power deficit of 9-14%.   Losses in transmissions accounted for up to 30% Self sufficient in aluminium at 1.2mt, copper at 0.7mt and zinc at 0.4mtpa. World 6 th in bauxite production, 3 rd in chromite, 4 th in iron ore Sensitive to Oil, Food Prices ; GOVERNMENT REFORM, Dynamic Private Sector

19. 19 Sachin Tendulkar Cricket Superstar Shahrukh Khan Bollywood A List Film Star + = + = Jeter Woods SmithClooney

20. 20 China – In Context China A land mass of 9.5 million kmsq, the largest in Asia Land boundary of 22,117km with 14 countries (Afganistan, Bhutan, Burma, India, Kazakhstan, DPRK, Kyrgyzstan, Laos, Mongolia, Nepal, Pakistan, Russia, Tajikistan, Vietnam) with a coastline of 14,500km; 15% of land is arable (but threatened by erosion and economic development) As of 2007, estimated population of 1.33bn, the world’s most populous country, but growing at 0.6%pa; labour force is 798mk;43% in agriculture, 25% industry and 32% services   91.9% Han Chinese   Minorities; Zhung, Uygur, Hui, Yi, Tibet, Miao, Manchu, Mongol, Buyi, Korean   Atheist, but historically Taoist and Buddhist; Christian 3-4%, Muslim 1-2%   Mandarin (Putonghwa), Cantonese, Shanghainese, Fuzhou, Hokkien, Xiang, Gan, Hakka, and minority languages Life expectancy is 73.47 years (m 71.61, f 75.52), and literacy rate is 90.9%, median age 34.1 years 19.8% younger than 15 years, 72.1% between 15-64 years, and 8.1% 65 years and above 150 cities greater than 1m, top 3 cities have a population of 33m; Shanghai 12.7 m, Beijing 10.8m and Tianjin 9.3m; urban population 43% Urbanisation, rural poverty (8% below poverty line), aging population and sex imbalances (at birth 1.1 male to female) are issues Rapidly Aging Population with Limited Social Welfare Safety Net

21. 21 China – In Context China The world’s largest country, communist, established People’s Republic of China 1 st October 1947   23 provinces (Taiwan is classified as the 23 rd ), 5 Autonomous Regions, 4 Municipalities and 2 Special Administrative Regions   President Hu Jintao (since March 2003) and Vice President Xi Jinping (March 2008) elected by National People’s Congress, Prime Minister Wen Jiabao and 4 Vice Prime Ministers and State Council appointed by National People’s Congress   National People’s Congress elected ’07/’08, next election ’12/’13; only Communist Party members and allies may stand Since 1978 transformation from a centrally planned economy to a more market oriented economy, diversified banking system, private sector and stock market Currency pegged to the US dollar until July 2005 when revalued by 2.1%; appreciated by 20% to late 2008 Economy has grown ten fold since 1978   By Purchasing Power Parity 2nd largest in the world US$7.8tr (2007 US$7.1tr, 2006 US$6.5tr)   At official exchange rates, real GDP was US$4.2tr in 2008 with GDP growth of 9.8% (2007 13%, 2006 11.6%), estimated 2008 per capita GDP US$6,000   2008e GDP is 10.6% agriculture, 49.2% industry, 40.2% services; military expenditure is 4.3% of GDP   Public sector debt is estimated 2008 at 15.7% of GDP, CPI at 5%, market capitalisation US$6.226tr (no 3) 800m Work Force ; ENORMOUS ADDRESSABLE MARKET/Subsidy Programmes

22. 22 China – In Context China Exports/Imports   Exports US$1.465tr fob world no 3; Imports US$1.156tr fob; trade balance US$296bn, current account surplus US$271bn   Exports (2007); US 19.1%, HK 15.1%, Japan 8.4%, Korea 4.6%, Germany 4%   Imports (2007); Japan 14%, Korea 10.9%, Taiwan 10.5%, US 7.3%, Germany 4.7%   Trade balance US$296bn, current account surplus US$271bn or 8.4% of P Foreign exchange reserves; US2.033tr end 2008 (a positive and a negative), external debt US$420.8bn Power generation and consumption best economic indicators Per capita income (2007) US$5,420 Challenges   Coastal economic development has prompted 200m relocation   Job creation; new members of work force, and former employees of state enterprises   High savings rate and low levels of consumption (rural/national subsidy)   Minorities   Liberalising command economy   Infrastructure Correlation? ; Who Dances to Whose Tune … Economically?

23. 23 Yao Ming Superstar Gong Li Film Star + = = Michael Jordan Gong Li

24. 24 Political Challenges in Asia

25. 25 Kim Jong-Il’s “Rodong 1” Missiles … outgoing …. vs ….. President Obama’s incoming “Rodham 1”! The Democratic Peoples’ Republic of Korea (DPRK) Dear Leader health and succession concerns, desperately seeking attention! Propensity to test bombs and missiles DPRK Missile Arsenal “as reported”; 600 Scud Missiles with a range of 320-500kms 200 Rodong 1 Missiles with a range of 1,300kms Taepodong 2 under development with a range of 6,700kms North Korea – Missile & Fissile Encounters Euna Lee//Laura Ling incarceration for 12 years hard labour … and now virtual cyber attacks? Version 2007 vs 2009

26. 26 Asian Politics Generally Positively Inclined China and Hong Kong   Taiwan, but…   Sustainability of a capitalist economy and the current political system/Tibet and other minorities, and   Frontiers with inter alia; India, Bhutan, Spratly Islands, Paracel Islands, India   Successful democratic election in 2009 won by a Congress led coalition Malaysia   Repeal of Malay protection law Indonesia   Likely first round winner re-elected as President Singapore   Stable Thailand   Dependent upon the health of the King, but influence of Thaksin could be declining Philippines   Incumbent President trying to change the constitution

27. 27 Politics Of More Concern Pakistan   Security Sri Lanka   Reconciliation/reconstruction Iran   Aftermath of Presidential election/proliferation Burma   Human rights Central Asia – the Stans   Russia Middle East   Security

28. 28 Comments on Recent Performance of the Rexiter Asia ex-Japan Strategy

29. 29 Asia ex Japan Performance (USD) – Q2 2009 Relative performance has improved with the recovery in markets. The portfolio was positioned for recovery from the end of 2008. April – Composite +17.1% (Benchmark +16.8%).   Positive Contributors: Stocks in India, HK and Singapore   Negative contributors: Stocks in Korea, O/W China and The Philippines May – Composite +17.0% (Benchmark +16.1%).   Positive contributors: Stocks in HK, India and Taiwan. U/W Korea, Malaysia, O/W India   Negative contributors: Stocks in Korea, China, Singapore. U/W Singapore June (Prelim) – Portfolio +0.3% (Benchmark -0.5%)   Positive contributors: Stocks in India and Korea. O/W Thailand, China, U/W Taiwan   Negative contributors: Stocks in China, Hong Kong

30. 30 Markets turned decisively higher in March and rose by 54% in March to May   Our decision to position the portfolio for recovery (starting in November 2008) has proved to be correct. Markets are up nearly 50% since then.   We further reduced defensive exposure at the end of Q1, after January /February ’ s weakness.   We managed to recapture our underperformance of March (Resorts World, Public Bank, PLDT) in April-May India – a strong positive driver of relative performance in the quarter   Positive election surprise – the new government is better placed to drive economic reform forward   Relatively low exposure to international economy; positively leveraged to an improvement in the availability of funds   We started the quarter 1% overweight, with a portfolio positioned for recovery (O/W financials, consumer durables, infrastructure/capital goods)   We remain positive in the medium to long run, but are now cutting back relative exposure towards neutral. Property – another positive driver   Beneficiary of low interest rates and improving sentiment   Our preference is for HK/China over Singapore, as the supply/demand balance is more supportive   Taiwan fertiliser is an indirect property play on hopes for improving liquidity flows/cross-straits relations   As with India, we have reduced our O/W to the sector a little (Wharf) after recent outperformance At quarter end, we are starting to take some profits in areas that have done particularly well (India, financials, real estate). Asia ex Japan Performance (USD) – Q2 2009

31. 31 Comments on Recent Activity and Positioning

32. 32 Country and sector bets have fallen, reflecting profit-taking in areas where we have been overweight and which have done particularly well. Portfolio Activity – Summary (Q2 2009) We have selectively added a little more to industrial cyclical exposure, continuing a policy that started in Q4 2008   Purchases of Techtronic (April), POSCO (May), Sesa Goa (June). Aggregate U/W to industrials has dropped from 4.5% to 2% IT has moved back to being slightly underweight following profit taking in Hon Hai (June)   Contact with sector management suggests the short term trend is positive. Longer term visibility is low. We have taken some profits in financials and real estate, capitalising on recent strength   Reductions in IDFC (India), Bank Rakyat (Indonesia, though partly rolled into Mandiri on valuation grounds), China Merchants Bank, Singapore Exchange and Public Bank. We are now slightly underweight financials for the first time in a while.   Profit-taking in Wharf (80% above the purchase price in March). We remain 2.5% O/W real estate – with a focus on HK and China. Our overweighting to telecoms has increased slightly, reflecting strong underperformance YTD   Purchase of SingTel out of Singapore Exchange. Outperformance in India has resulted in an increase in our O/W to 3.5% at quarter end, which we are now reducing Our O/W to China has reduced by 3% to 1%. This has been one of the best performing markets in the last year   Profit taking in China Merchants Bank, New World Department Store, China South Locomotive

33. 33 Rexiter Asia ex Japan – Country Exposures (Relative) – June 2009 Changes in weighting determined principally by bottom up considerations We have started reducing exposure to India in July. - - Exposure to China has fallen by 3% this quarter. The O/W has fallen from 4.5% to 1%   Profit-taking. China has been one of the best performing markets in the last year and is a consensus O/W.   Sale of China South Locomotive. Reductions in China Merchants Bank, New World Department Store. - - Exposure to India has risen by 4% (O/W +2%), principally as a result of market action and positive stock selection.   Purchase of Sesa Goa (iron ore) - - Exposure to Malaysia has fallen by 1%; exposure to Korea has risen by 1%   Reduction to Public Bank. Purchase of POSCO (steel) - - In other countries, absolute exposure is little changed. Changes to relative exposure reflect relative performance.

34. 34 Rexiter Asia ex Japan – Sector Exposures (Relative) – June 2009 Changes in weighting determined principally by bottom up considerations Overall sector aggression has eased slightly in the quarter. - - c. 3% has been added to non-oil commodities. In aggregate neutral, but still U/W internationally traded commodities - - Purchases of POSCO (steel) and Sesa Goa (iron ore) - - We have limited exposure to chemicals and none to agri-commodities or metals other than steel. Our three Taiwanese holdings are held mostly for local/regional considerations (Chinese cement demand, Taiwanese real estate exposure). - - We have taken profits in financials/real estate. The combined O/W has fallen by 6%, from 7% to 1% - - This has been driven less by macro considerations than a desire to book profits in stocks that had done well and are looking less compelling value - - Sale of Singapore Exchange. Profit taking in China Merchants Bank, IDFC, Wharf. Reduction in Public Bank. - - Telecom valuations looking most attractive amongst the traditionally defensive sectors - - In July, we have added further to SingTel, raising the sector O/W to 2.5%

35. 35 Rexiter Asia ex Japan Portfolio – Country/Sector Matrix

36. 36 New Additions to the Portfolio – Q2 2009 Techtronic (HK)   A leading supplier of power tools, outdoor equipment and home care appliances (brands include Ryobi, Milwaukee, Hoover, Dirt Devil and Vax). Techtronic is also a contract manufacturer for Bosch, Philips and Colgate. Strong relationship with Home Depot of the USA. Now returning to a free cash flow positive position, following its Hoover acquisition (2007). Net debt to equity is 60%, but falling, and financing risks are abating.   Acquired at an expected cycle bottom on an estimated 7.5x 2009 PER (6.5x 2010), 0.9x P/BV (RoE 12%), 15% free cash flow yield, 2% dividend yield. Hengan international (China)   One of China ’ s top 3 producers of tissues, sanitary napkins and children ’ s nappies. The company has successfully competed with MNCs such as P&G and Kimberley Clark for 20 years and continues to gain share in a still fragmented market. Strong position in second and third tier cities. Improving product quality has the scope to raise average selling prices and margins. A recent visit with management suggests scope for upside surprise on consensus earnings in the short term.   Acquired on an estimated 21x 2010 PER, 5.4x P/BV (RoE 23%). Net cash. Free cash flow yield of 3%. Earnings growth 30%-40% for 2009/10. The purchase was funded with part of the position in New World Department Store (China) which had recently outperformed other China consumer peers. Bank Mandiri (Indonesia)   One of the leading banks in Indonesia and a beneficiary of continued buoyant credit market. Formed from a merger of four state-owned banks in 1998, Mandiri has seen steady improvements in the structure of its assets/funding and profitability – a trend that has scope to continue further. We expect RoE to converge with its more expensively rated peers over time. In the shorter term, we believe assets quality concerns are probably overdone and we think there is more upside potential to consensus than for the other leading banks.   The acquisition was funded by profit taking in Bank Rakyat, with a view in part to improving portfolio liquidity. The shares were acquired on an estimated PER for 2009 of 11.5x (9.5x 2010), 2.1x 2009 P/BV (RoE 20%) and a dividend yield of 4.4%. Tier one capital 12.5%, total CAR 15%, 120% loan loss reserves/NPLs (7% gross loans). Singapore Telecom (Singapore)   SingTel offers diversified exposure to regional telecoms, through its investments in Bharti (India), Telkomsel (Indonesia), Optus (Australia) and AIS (Thailand). This, and an improving performance in Singapore, is expected to drive (10%+) earnings growth for the next two years, which is solid by sector standards. Recent strength in the Australian Dollar/Indonesian Rupiah will also assist in the short term. Earnings expectations are currently low, but have started to improve more than for the sector at large.   Acquired at the lower end of its 12m trading range against the market, the shares are priced on an estimated PER of 11x for March 2010, 2.1x P/BV (RoE 18%) a dividend yield of 5% and a free cash flow yield of 6.5%. Stripping out the value of its listed associates, the implied value of the Singapore and Australian operations is about 1SD below the long term average.

37. 37 Comments on the Investment Outlook

38. 38 Investment Outlook We have taken a little risk off the table in recent weeks. Consensus earnings estimates have been rising for the first time in a while   At the end of March, the expectation was for a cumulative decline in Asia X Japan earnings of 39% in 2008/09, with a 31% rise in 2010.   At the end of June, the consensus was for a cumulative decline of 31.5% in 2008/09 earnings, with a rise of 30% in 2010.   Based on consensus, the region trades on 17.6x 2009 PER, 1.7x P/BV with RoE expected to be c.10%. 13.5x 2010 PER, 1.6x P/BV, RoE 11.8% Investment Positives   Earnings upgrades have been continuing in June (2009E +2.3% after a 1.9% rise in May). The upgrades seem to be broad-based.   The leading indicators are generally sending a positive signal. China ’ s PMI survey in June rose slightly from May ’ s level to 53.2.   In the trade-exposed economies, the sequential growth in production in Q2 may well surprise positively. Inventories are still down YoY, but are up QoQ.   Asia is importing the West ’ s very low level of interest rates, but is not in the same economic mess. This should be positive for asset prices.   Positive political developments in India, Thailand, Malaysia and Indonesia.   Valuations have recovered to “ average ” territory. The markets are not yet “ obviously expensive ” – monetary policy settings could send them higher. Reasons for Caution   The West is still in the mire. Deflation remains a real threat and exports are likely to remain difficult.   Continuing risk of financial default/contagion – leverage and the stock of derivative exposure remains very high.   The speed of the markets ’ recovery has been unusually fast.   The cyclical rally is looking somewhat extended vs defensives. The markets have anticipated the inventory cycle – the degree of follow through is important.   The markets are certainly no longer “ cheap ”

39. 39 Asia ex Japan Equities – Earnings in Previous Global Downturns   In the 82 (Volcker) recession, USD GDP fell by 2.7%. In 90/91, it contracted by 1%. In the 00/01 recession, USD GDP growth remained positive.   The current consensus for Asia ex Japan is forecasting earnings to decline by 39% over 2008/09. This is enough to take RoE down to c.9% from end 2007 ’ s 14.5%. On current consensus, earnings in 2010 will be 13% below 2007 ’ s level. EPS is eepected to rise by 17% in 2011   In 1990/91, RoE troughed at c.9.3%. In 2000/01 (the tech wreck) trailing RoE troughed at 7.5% (May 02) – to get there, earnings would have to decline by about 50% from end January 07 reported levels on the same assumption for the payout. (RoE in 1983 troughed at 8.2% - although the composition of the index then was very different).   The duration of earnings recessions may be under-estimated. It is true that, in 1990/91, it took only a little over 1 year for earnings to trough and about 2 years for them to recover to their previous levels. However, in the tech wreck, earnings took almost 2 years to bottom and 4 years to regain their prior level and, from 1982, they took about 3 ½ years to trough and 5 ½ years to regain their previous peak.   IBES has become much more realistic; however a prediction that earnings would recover their previous peak (August 2008) in c.28 months (ie by end 2011) would make this one of the shorter earnings cycles in a global downturn. Source for Charts: MSCI/Citi (Earnings derived from the reciprocal of the trailing PER)

40. 40 Investment Outlook We have taken a little risk off the table in recent weeks. Consensus earnings estimates have been rising for the first time in a while   At the end of March, the expectation was for a cumulative decline in Asia X Japan earnings of 39% in 2008/09, with a 31% rise in 2010.   At the end of June, the consensus was for a cumulative decline of 31.5% in 2008/09 earnings, with a rise of 30% in 2010.   Based on consensus, the region trades on 17.6x 2009 PER, 1.7x P/BV with RoE expected to be c.10%. 13.5x 2010 PER, 1.6x P/BV, RoE 11.8% Investment Positives   Earnings upgrades have been continuing in June (2009E +2.3% after a 1.9% rise in May). The upgrades seem to be broad-based.   The leading indicators are generally sending a positive signal. China ’ s PMI survey in June rose slightly from May ’ s level to 53.2.   In the trade exposed economies, the sequential growth in production in Q2 may well surprise positively. Inventories are still down YoY, but are up QoQ.   Asia is importing the West ’ s very low level of interest rates, but is not in the same economic mess. This should be positive for asset prices.   Positive political developments in India, Thailand and (probably) Indonesia.   Valuations have recovered to “ average ” territory. The markets are not yet “ obviously expensive ” – monetary policy settings could send them higher. Reasons for Caution   The West is still in the mire. Deflation remains a real threat and exports are likely to remain difficult.   Continuing risk of financial default/contagion – leverage and the stock of derivative exposure remains very high.   The speed of the markets ’ recovery has been unusually fast.   The cyclical rally is looking somewhat extended vs defensives. The markets have anticipated the inventory cycle – the degree of follow through is important.   The markets are certainly now longer “ cheap ”

41. 41 Themes to Watch For The shape of the de-leveraging curve in the West.   The leading indicators have troughed, but the recovery will be long and drawn out.   US Quantitative Easing has arguably not yet started Whither the US Dollar ?   Capital flows to repay liabilities vs the money press. What happens to US treasuries eventually ?   Historically, Asian equities have done better in periods of USD weakness. Repatriation of assets could delay this. How will Asian governments respond to external weakness ?   Risks to the Asian export model when the West is as leveraged as it is   We assume currencies will not appreciate, but also that competitive devaluation is not likely. This is potentially very positive for asset prices.   Protectionism pressures to build the longer recovery is delayed Preference for countries with the resources to combat external weakness   China. India less exposed to external demand, but fiscally constrained. Indonesia.   Korea challenged by high levels of household debt Cash Flow, Working Capital, Leverage   Evidence of being better managed so far, but risks remain   Quality of management will probably still get the benefit of the doubt. The US is not able to rescue the world economy this time around. Asia needs to stimulate domestic demand. How effective will its policies be ?

42. 42 The US is Still in the Mire (and so is Europe) The money multiplier is still not functioning. The banks are unwilling to lend. No improvement in yield spreads in Q2. Inflation expectations falling. Source for Charts: Nomura Int’l.

43. 43 A Couple of Positives - Inventories and Liquidity   There was a huge inventory shock in H2 2008 and Q1 2009   Sequentially, production has been rising in Q2 as inventories had been so depleted. Annualised sequential growth rates could easily surprise positively when company results/economic data for Q2 is published   BUT inventories are still falling YoY, which is positive looking forward   Liquidity in markets such as HK has exploded. The US Fed is expected to keep interest rates low for a long period. It does not regard it as its problem if its policy settings cause an asset bubble in Asia. Asia could (but probably won’t) allow its currencies to appreciate. China is worried about social stability and will seek to avoid the consequences of an asset bubble bust, but we doubt it will turn hawkish in the short term. Source for Charts: UBS

44. 44 Asia ex Japan – Positive Comparisons with the West The balance sheets of the commercial banks are much stronger …………. ………….. the banking system is working…..... …. Chinese retail sales have decoupled (even if exports have not) ………… ………government finances are in much better shape (i) ……….. ………government finances are in much better shape (ii) ……. ………and exchange rates are attractive (though FX appreciation is likely to be capped) Source for Charts: Credit Suisse/Datastream

45. 45 Asia ex Japan - Some Possible Negative Risks Asia is a consumer of commodities, not an exporter ………………… ………… inflation (and spending power) is sensitive to rising food prices ………. … exports, Asia’s traditional driver, remain weak...... … and, whilst the PMI is positive, Chinese electricity output is still down YoY. Asian equities tend to do better with the USD is weak. Funds flow into Asian (and GEM) equities has been strongly positive. Source for Charts: Credit Suisse/Datastream

46. 46 A number of leading indicators are now signalling expansion   ISM New Orders, China PMI, Singapore PMI, Taiwan Business Climate Index But, historically, cyclicals relative performance has been less pronounced after ISM New Orders reach this stage   There has, however, been no pronounced trend of outperformance or underperformance in the months after this point has been reached. History also suggests that the largest share of cyclicals ’ outperformance is in the first 6 to 7 months after the bottom Relative valuation: Cyclicals now trading on c.80% of Defensives P/BV – above the average of the last 15 years (c.65%) Cyclicals tend to do less well when bond yields are declining. Source for Charts: UBS/Credit Suisse/MSCI. Cyclicals comprise IT, Industrials, Materials and Cons. Discretionary. Defensives comprise Cons. Staples, Telecoms, Health Care and Utilities Whereas in the last 2 quarters we have been actively searching for cyclical laggards, now we are more open in our approach to sectors. The Outperformance of Cyclicals in Context

47. 47 Asia ex Japan – Regional Valuations (June 2009) Valuations back to “average” territory. Earnings progression increasingly important. Monetary policy settings currently supportive. Source for Charts: MSCI/Credit Suisse. Div Yield-US Corp Bond Yield: UBS

48. 48 Asia ex Japan – Relative Valuations (June 2009) Asian fundamentals are clearly better, but relative valuations are looking more stretched. Source for Charts: MSCI/Credit Suisse.

49. 49 Appendices Rexiter Capital Management www.Rexiter.com

50. 50 Rexiter Capital Management - Overview “The Best of Both Worlds” An investment boutique backed with world- class resources * Economic interest SSgA / ABP Joint Venture 75% Rexiter Staff 25%   A stable structure. No-one has left the Asian team since Rexiter was formed in 1997.   SSgA provides IT, dealing, back office, compliance and risk management as well as marketing support   Managers concentrate on investment Strong sense of company ownership. Strong support in resources and systems

51. 51 A wealth of experience, focused on an attractive balance of risk and reward Our Company An investment boutique exclusively focused on Asia and emerging markets A stable, experienced team owning 25% of the company USD 4.4bn of AUM at end May (of which c. USD 3.0bn is in Asia ex Japan markets) Our Process A disciplined approach – but one that encourages original thinking Quality and growth, at reasonable valuations. Engagement with management Control on risk through diversification and an approach of “considered contrarianism” Rexiter - Summary of Key Points

52. 52 Rexiter - Organisation Chart Kenneth King* Chairman Murray Davey* Managing Director and CIO GEM Latin American Team Nicholas Payne* Fund Manager Guido Giammattei Fund Manager Arzu Akkemik* Fund Manager EMEA Team Lewis Jones Research Analyst Fixed Income Team John Morton* Managing Director and CIO Fixed Income BOSTON Daniel Wood Fund Manager Mark Capstick Fund Manager Sharon Power Client Relationship Manager Guy Jackson Risk and Compliance Officer Gavin MacLachlan* Chief Operating Officer Finance and Tax Anna Cho Administrator SEOUL Gayathri Rameshkumar Management Accountant Sharon Lim Finance Manager SINGAPORE David Lehman Business Manager Portfolio Administrators (SSgA) Olivier Mampouya Emma Cook Operations and Business Christopher James*/** Managing Director SINGAPORE Asian Team Adrian Cowell*/** Fund Manager SINGAPORE Solim Kim Research Analyst SEOUL Jamshed Desai** Fund Manager SINGAPORE Saiyi He Research Analyst Zhixin Shu Senior Research Analyst Non-Investment Investment Karin Checksfield Administrator / Receptionist Client Relationship and Marketing Rebecca Mitchell Marketing Executive Deborah Stephenson Marketing Assistant Ana Goh Administrator SINGAPORE Administration Sylvana Billings Chief Financial Officer Kyung-Rae Min Senior Research Analyst SEOUL Helena Coles* Fund Manager SINGAPORE Christopher Vale*/** Managing Director and CIO Asia Denotes functional reporting line * Directors of Rexiter Capital Management Limited as at May 2008 ** Directors of Rexiter Capital Management Singapore PTE Limited as at May 2008 Denotes line management Stuart Butler Elwyn McDonnell

53. 53 Kenneth King Managing Director and CIO BSc Econ. University College London MSc Econ. University College London Kenneth is Managing Director and Chief Investment Officer of Rexiter. Having worked for the Central Reserve Bank of Peru as an economic adviser (1967 to 1969), he returned to England to study at Pembroke College Oxford, where he obtained a Ford Foundation research fellowship on Brazilian Monetary Policy. In 1971, Kenneth became a lecturer at a post graduate research foundation in Rio de Janeiro (the Getulio Vargas Foundation). Between 1973 and 1980, he worked in the Foreign and Commonwealth Office as economic adviser on Latin America and then joined HM Treasury, as economic adviser on monetary policy. He joined NM Rothschild and Sons in 1980,becoming head of international fixed income in 1983. He moved to international equities in 1986, becoming head of international equities in 1987. He joined Kleinwort Benson Investment Management (KBIM) in 1989 as head of international equities and established its emerging markets group as CIO in 1992. Kenneth was founding Managing Director and Chief Investment Officer at Rexiter. Christopher Vale Asian CIO. Fund Manager. Research for Greater China BA in Economics and Agricultural Economics, University of Exeter Chris is Rexiter’s Asian Chief Investment Officer and a Director of Rexiter, based in London. Chris joined KBIM in London in 1985 as a private client portfolio manager, with additional responsibility for UK banking research. In 1989, Chris transferred to the Hong Kong office of KBIM where he spent eight years managing Asian funds. He was made head of KBIM’s Asian team and a Director of KBIM in 1994. He was a founding Director of Rexiter in mid-1997. Chris set up the Rexiter Korean office in Seoul in late 1998 and managed the Arirang Corporate Restructuring fund on behalf of the Korean Government for 3 years. He was also responsible for initially setting up and managing Rexiter’s Korean mid-cap portfolios. Chris returned to London in March 2001. Christopher James Fund Manager. Research for SE Asia and Pakistan MA in Classics and Philosophy, Magdalen College, Oxford Chris is a Director of Rexiter, based in Singapore. Having worked as a fund manager in European and global equities at KBIM from 1989 to 1993, Christopher transferred to KBIM Pacific in Hong Kong in 1994 to manage portfolios in Asia ex Japan, specialising in research on the Indian Subcontinent and Korea, as well as Taiwan. Christopher returned to London as one of Rexiter's founding directors in 1997. In October 2001, he moved from London to Seoul to manage the Mukoonghwa Corporate Restructuring Fund on behalf of the Korean government, assuming responsibility for Rexiter's investments in Korea overall and for Rexiter's Korean mid-cap portfolios from early 2001. In September 2004, Christopher established Rexiter’s new fund management subsidiary in Singapore, from where he co-ordinates Rexiter’s local investment research effort. Helena Coles, CFA Fund Manager. Research for Greater China BA Hons in Politics and Economics, Durham University Helena is a director of Rexiter based in London. Following three years experience as a private client manager in Asia, she worked for five years as an equities analyst, latterly at Kleinwort Benson Securities in Hong Kong, covering the consumer and media sectors in the region. In 1996, she transferred to KBIM as an Asian fund manager specializing in China, Hong Kong and Taiwan. Helena joined the Rexiter team upon its inception in mid-1997. Rexiter - Team Biographies

54. 54 Adrian Cowell Fund Manager. Research on Korea. BA, Russian and French, University of Exeter Adrian is a director of Rexiter based in Singapore. Having worked for Sumitomo Bank in London & Tokyo from 1981 to 1984, Adrian moved to Grindlay Brandts/ANZ Merchant Bank where he was assistant manager in capital markets. In 1986, he joined Kleinwort Benson in London where he became an Assistant Director in International Corporate Finance. In 1990, he transferred to Tokyo becoming General Manager in Corporate Finance. In 1992, Adrian moved to Seoul where he was the Kleinwort Benson representative. He opened the Dresdner Kleinwort Benson Branch in Seoul in 1997, where he was Branch Manager and Head of Corporate Finance. In March 2000, Adrian joined Rexiter’s team in Seoul, managing the Arirang Corporate Restructuring Fund from March 2001 to September 2004. After 13 years in Korea, Adrian joined Rexiter’s Singapore subsidiary in September 2005. Jamshed Desai Fund Manager. Research on India BSc, Chemistry, St Xavier’s College, Mumbai Jamshed was an investment analyst at Tata Investment Corporation from 1993 to 1995, prior to joining Tata Asset Management as senior manager, equities. In this period, to mid-1997, he was the local adviser to the Kleinwort Benson India Fund, managed by Christopher James (above). After periods in equity research at Insight Asset Management and SMIFS Securities, Jamshed was appointed head of institutional research at TAIB Securities (India) at the end of 1999. In 2004, he moved to IL&FS Investsmart, where he was appointed head of institutional research and latterly head of portfolio management. Jamshed joined Rexiter Singapore in May 2006 and is responsible for Rexiter’s investments in India. Kyung-Rae Min Analyst, Korean Mid-Caps Master, Economics, Seoul National University Following periods in the treasury team at POSCO Engineering and Construction and as a credit analyst at National Information and Credit Evaluation Inc., Kyung-Rae worked for State Street Bank & Trust in Boston (1998-9). He returned to Korea with State Street in 1999, before joining Hansset Global Advisors as an analyst in 2000. In that capacity, Kyung-Rae worked as a full-time secondee with Rexiter in Seoul for four years, working on both the Arirang and Mukoonghwa Corporate Restructuring Funds as well as Rexiter's Korean mid-cap portfolios. In November 2004, Kyung-Rae formally joined Rexiter as an analyst based in Seoul, where – inter-alia - he has a focus on researching and actively engaging with mid-sized companies. Solim Kim, CFA Analyst, Korean Mid-Caps. BA, International Economics and Political Science, Seoul National University MSc, Economics, London School of Economics Solim joined Rexiter’s Korean Representative Office in September 2005. She has worked as an economic consultant at KPMG Sebit (San Tong) Corp and as an associate at Samil Price WaterhouseCoopers in Korea and as a Research Assistant at Credit Suisse First Boston in Seoul, specialising in steel, utilities, construction and tobacco. Rexiter - Team Biographies

55. 55 Zhixin Shu, CFA Senior Analyst, Greater China BSc, PhD, Chemistry, Imperial College of Science and Technology MBA, University of Ottawa Zhixin started work as a NSERC Visiting Fellow at Coal Research Laboratory, Energy, Mines, Resources in Canada (1986-1987), was a research associate at the Ottawa Heart Institute (1989-91) and then a research officer on advanced materials at the National Research Council of Canada (1991-95). Zhixin was an analyst and director of investment management at Newton Investment Management (1996-2005), focussing on global energy and chemicals and then on global pharmaceuticals and biotech. She worked at Morgan Stanley Investment Management in the UK as a director of the European equity team (2005-2006). Saiyi He Analyst, Greater China M Eng, Electrical and Electronic Engineering with Management, Imperial College of Science and Technology CFA level II candidate. Whilst at Imperial College, Saiyi worked for a period as a credit analyst at HSBC’s commercial banking division as well as a member of the credit research team at Merrill Lynch Investment Managers (UK Fixed Income). From June 2005 to June 2006, she was a global fixed income credit portfolio manager at BlackRock/Merrill Lynch Investment Managers in the UK. Rexiter - Team Biographies