1. Eastern Promise: Can Asian growth be sustained? Speakers Tristan Hanson Anatole Kaletsky Jonathan Schiessl Investment Presentation October 2009

2. Ashburton Investment Models Jonathan Schiessl Ashburton view from China/India Climbing the wall of worry October 2009

3. Eastern Promise | Ashburton Investment presentation | October2009 The impact of Chinese liquidity… Chateau Petrus 1982 A six litre bottle of Chateau Petrus went to a mainland Chinese buyer for a record US$94,000 over the weekend. Apparently the buyer was attracted to the sellers description of the vintage as smelling of prunes and spices…

4. Eastern Promise | Ashburton Investment presentation | October2009 Source: Nationmaster.com (1978) World Bank (2009), JI Rank according to 1978 GDP/Capita Stunning growth GDP per Capita growth, 1978 and 2009 19782009CAGR% United States10,22946,7165.0 Germany9,23435,6134.5 Japan8,42134,0994.6 UK5,72835,4456.1 Nigeria5462,0824.4 India2042,9729.0 China1545,96212.5

5. Eastern Promise | Ashburton Investment presentation | October2009 So lets look at the markets Various markets from Oct 08 to beginning Oct 09 Source: Bloomberg % move from Oct 08 S&P H shares A shares India (Nifty) -60 -40 -20 0 20 40 60 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09

6. Eastern Promise | Ashburton Investment presentation | October2009 So lets look at valuations MSCI China from Jan 96 to end Sept 09 Source: Bloomberg, BNP MSCI China P/E ratio (trailing) mean 0 10 20 30 40 50 60 Jan-96Jan-97 Jan-98Jan-99 Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06Jan-07 Jan-08Jan-09

7. Eastern Promise | Ashburton Investment presentation | October2009 So lets look at valuations MSCI India from Jan 96 to end Sept 09 Source: Bloomberg, BNP MSCI India P/E ratio (trailing) mean 0 5 10 15 20 25 30 35 Jan-96Jan-97 Jan-98Jan-99 Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06 Jan-07 Jan-08Jan-09

8. Eastern Promise | Ashburton Investment presentation | October2009 So lets look at current positioning As at beginning October 09 Source: MSCI, Ashburton Ashburton Chindia Fund weightings Financials Energy Cyclical Capital Goods Technology Staples MSCI China/India sector weightings Financials Energy Cyclical Communications Capital Goods Technology Basic Materials Staples

9. Eastern Promise | Ashburton Investment presentation | October2009 So lets look at current positioning The joy of China Mobile (941 HK) Source: Bloomberg Earnings growth estimates (consensus) 200717% 200818% 200916% 201013% 2011 11% 2012 6% Other data (consensus) P/E12x Divi yield3.7%

10. Eastern Promise | Ashburton Investment presentation | October2009 So lets look at current positioning As at beginning Oct 09 Source: Ashburton Ashburton Chindia Fund thematic weightings Commodities Banks Real asset plays Consumer related Cash Others Infrastructure Clean & Green Energy

11. Eastern Promise | Ashburton Investment presentation | October2009  China and India were both global innovators in the past. Before 1600 there were 24 key inventions that spread to the West - compass, printing, cast iron, gunpowder etc etc  R&D intensity (R&D spend as a % of GDP) increasing rapidly in China (1.42% in 2006 vs EU 1.76%, US 2.62%, Japan 3.39% and India 1%) China targeting 2% by 2010 and 2.5 to 3% by 2020  Some Chinese statistics:  China now registering more patents than the UK  412,000 patents certified in 2008 (up 17%)  No 4 in scientific articles in international journals  1,160 research institutes - massive inter-provincial competition  75% of enterprise R&D done by domestic companies  Comparative advantage in sectors with large domestic market and export potential And now for something different R&D – an emerging investment focus

12. Eastern Promise | Ashburton Investment presentation | October2009  Scale and low cost - the law of large numbers Low cost innovation starting to replace low cost manufacturing as key advantage  Risks - more focus needed on innovative research, too much on technology transfer, process improvement IP - lack of enforcement, but is slowly changing as China has more skin in the game (as happened in Taiwan when it finally reached scale) Education - lack of focus on creativity  Opportunities – some great developments in IT, consumer goods, telecoms, chemicals and autos And now for something different R&D – an emerging investment focus

13. Eastern Promise | Ashburton Investment presentation | October2009 China  China continues to stand in good stead amid global financial problems - strong GDP growth (back to double digit rates), low inflation  Policy remains “appropriately loose” as long as “uncertainties” persist (exports, private sector investment)  The message from Beijing is clear - no change in monetary policy  Global factors aside, we are cautiously optimistic on Chinese equities India  One of best performing markets in the face of scepticism about earnings, capital raisings, a poor monsoon and an insipid budget  Worries over fiscal deficit well known, but other macro indicators positive  Domestic demand robust, property prices reflating  BUT earnings estimates are still running below long-term trends, so still scope for upgrades  To conclude – global risks aside, if you want growth in a growth starved world… So lets look at China/India... Still the best horse in the glue factory

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