Nomura Strategy 03 11

STRATEGY
NOMURA INTERNATIONAL (HK) LIMITED
The long run, the short run and the in-between

Deflation, inflation and the return of the productive economy
Sean Darby
Tel: +852 2252 2182 email: sean.darby@nomura.com
Amy Lee, CFA, CAIA

Tel: + 852 2252 2181 email: amy.lee@nomura.com
Mixo Das
Tel: + 852 2252 1424 email: mixo.das@nomura.com
March 2011 (Europe)
Any authors named on this report are strategists unless otherwise indicated. See the important disclosures and analyst certifications on pages 100 to 104.
ASIA PACIFIC
Summary - Asia: too hot to handle? (I)

We expect global equities to deliver positive returns as funds move away from bonds as growth fears subside. Asian equities should benefit from rising domestic consumption, real negative interest rates, buoyant wealth effects and growing bi-lateral trade among emerging markets. Asian authorities continue to prioritise growth over inflation. We still side with an inflation outcome rather than deflation. We have held this view since January 2009. Watch bond yields. In the short term, we expect equities to retreat due to very bullish sentiment, some inventory overhang and policy tightening measures. Asia has a growing inflation problem. Loose monetary policy, supply-side agriculture shocks, a weak US dollar and ultra-low G3 interest rates are raising both headline and asset inflation in China and the rest of Asia. In some ways this resembles the macro conditions which were responsible for the asset bubble between 1994-97. However, policy makers in China are likely to address inflation pressures through a combination of price controls and monetary tightening. This is not to be under-estimated. All Asian authorities appear to be quenching property asset bubbles. This means that a repeat of 1994-97 is unlikely. It suggests that Asia will steadily lose competitiveness through a combination of appreciating exchange rates and higher factor inputs (labour/materials). Investors have not placed enough emphasis on productivity and competitiveness in stock selection. The question investors should ask is whether Asia and China is falling into the middle income" trap. We believe margins have peaked for this cycle. So has operational gearing. Financial leverage and pricing are the two levers left for stronger profits. We believe that as bond yields rise and with margins already having peaked, quality investment styles become more important. We prefer high-ROE companies rather than value or momentum style strategies.
Nomura International (Hong Kong) Limited 2
ASIA PACIFIC
Summary - Asia: too hot to handle? (II)

Three big macro themes appear to have been missed amidst the hype of bubbles in Asia. First, 2011 will mark the start of the slide of the world's population from favourable demographics to an aging society. This is also passing through Asia from Japan, Korea to Taiwan. Second, the aging of the world also comes at a time when China has reached the 'Lewis' point. China has run out of cheap labour. Wage costs in Asia are rising quickly. Third, urbanisation within the developing world has reached 50% but demand for public investment is growing exponentially. We recently launched a productivity basket of companies benefiting from business models that we think have the potential to benefit from the above trends. Over 30% of the MSCI Asia ex-Japan by market capitalisation failed to produce positive returns in 2010. Market performance and valuations have polarised around Asean banks, regional property and consumption and the rest of the market. Ironically, the market has derated the real economy at a time when economic growth failed to double dip in 2010 as consensus feared and future expectations remain indifferent. We expect a switch into blue chips as investors re-rate high-ROE stocks that are experiencing positive growth. Price controls and administrative measures will effectively mean that certain sectors will become uninvestable due to policy risks. This is unlikely to affect Asian blue chips or companies benefiting from the change in the global competitive landscape, in our view. We prefer corporate spending over consumption. We still like softs, oil, LNG and nuclear. We have a strong bias for infrastructure. We prefer regional financials over property. Major risks: Asset class correlation remains high. External commodity shocks such as higher food or energy prices. EM investment story well known.
Nomura International (Hong Kong) Limited
ASIA PACIFIC
Japan: earthquake; tsunami; nuclear crisis

Nikkei volatility Tokyo Geiger counter (on 15 March)
Source: Bloomberg, Nomura International (HK) Investment Strategy
Source: wakwak.com
Closed-end fund premium/(discount) to NAV

(%) 5 0 (5) (10) (15) (20) (25) May-10 Nov-09 May-09 Sep-09 Nov-10 Mar-09 Mar-10 Sep-10 Mar-11 Jan-10 Jan-09 Jan-11 Jul-09 Jul-10
Note: JEQ US used Source: Bloomberg, Nomura International (HK) Investment Strategy
ASIA PACIFIC
MSCI Far East ex JP / MSCI World (US$)

(Index) 450 400 350 300 250 200 150 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11
ASIA PACIFIC
China and US M2
(USD bn) 12,000 10,000 8,000 6,000 4,000 2,000 0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 China M2 (US$bn) US M2 (US$bn)
Source; CEIC, Nomura International (Hong Kong) limited Investment Strategy
ASIA PACIFIC
Other asset classes

New York Taxi Medallion
US$ 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 J ul-04 J ul-05 J ul-06 J ul-07 J ul-08 J ul-09 J an-04 J an-05 J an-06 J an-07 J an-08 J an-09 J an-10 J ul-10 J an-11 Individual Prices Corporation Prices
Hong Kong Taxi License
Fine Wine
(Index) 400 350 300 250 200 150 100 50 0 Feb-88 Feb-89 Feb-90 Feb-91 Feb-92 Feb-93 Feb-94 Feb-95 Feb-96 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11
Art (Old Masters)

(Index) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Feb-85 Feb-87 Feb-89 Feb-91 Feb-93 Feb-95 Feb-97 Feb-99 Feb-01 Feb-03 Feb-05 Feb-07 Feb-09
Source: New York Taxi and Limousine Commission, Taxixchange, Bloomberg

ASIA PACIFIC
US core CPI % y-y vs CRB index

(Jan2001=100) 250 200 150 100 50 0 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jul-10 US core CPI %y-y (RHS) CRB Spot index (LHS)
Source: Bloomberg, Nomura International (HK) Limited Investment Strategy
ASIA PACIFIC
Deflation vs Inflation
Number of times the word "deflation" appears in the press Number of times the word "inflation" appears in the press
Source: Factiva, Nomura International (Hong Kong) Limited Investment Strategy
Source: Factiva, Nomura International (Hong Kong) Limited Investment Strategy
ASIA PACIFIC
Number of times protest appears in the press vs food prices
10
ASIA PACIFIC
US asset weights percentage of outstanding publicly traded financial assets and cash
55% 50% 45% 40% 35% 30% 25% 20% 15% Dec-51 Dec-55 Dec-59 Dec-63 Dec-67 Dec-71 Dec-75 Dec-79 Dec-83 Dec-87 Dec-91 Dec-95 Dec-99 Dec-03 Dec-07 Bonds Equities Cash
Source: Nomura Strategy research

ASIA PACIFIC
Global fund flows

Global net purchases of equity and bond mutual funds Global institutional investor net purchases of (percentage of market capitalisation 3MMA, equities (% global market capitalisation ) annualised)
4 3 2 1 0 -1 -2 -3 -4
1.0 0.8
Equities
0.6 0.4 0.2
Bonds
0.0 -0.2 -0.4 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 21 00 -0.6
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Note: Net flow of equities expressed as a percentage of market capitalisation and bonds as a percentage of the global bond market value. Source: Europerformance - Six Telekurs, ICI, IMA, BVI, Assogestioni, HKIFA, Fondbolagens Forening, BOPP,EPFR, Datastream and Nomura Equity Strategy
Notes: 1) Life & non-life insurance, private pension funds, State & Local retirement funds. 2) Q3 2010 figure does not include Euro-Area Source: FRB, TSE, ONS, ECB, Nomura strategy research
12
ASIA PACIFIC
EM and DM equity fund flows

EM net inflows DM net inflows
EM excess flows and relative returns
13
ASIA PACIFIC
Global investor sentiment

Global Put/Call ratio Composite sentiment Indicator
Z-score
Increasing put call ratio
Source: Nomura Strategy research Source: Nomura Strategy research
14
ASIA PACIFIC
Risk index
(Z score) 6 4 2 0 -2 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11
Note: A composite index of EMBI Global Spread, VIX, MOVE, Corporate spread, Ted spread Source: Bloomberg, Nomura International (Hong Kong) Limited Investment Strategy
15
ASIA PACIFIC
US dollar net non-commercial positions (US$bn)

ASIA PACIFIC
Divergence in sector performance

Asian utilities vs. MSCI far east excl. Japan US$ Asian utilities vs. MSCI far east excl. Japan US$
Source: Thomson Reuters Datastream, Nomura Investment Strategy
Asia ex-JP telecom services vs. MSCI far east excl. Japan US$

ASIA PACIFIC
Switch performances
Switch: Telecom relative to Airlines Switch: Telecom relative to listed stocks exchanges
Switch: regional utilities relative to Singapore real estate
18
ASIA PACIFIC
Asias output gap has closed
Productivity basket
Price Name KPS HTC ZTE Mesoblast Cochlear Perusahaan Mphasis Baidu Nomura International (Hong Kong) Limited Ticker 051600 KS 2498 TT 763 HK MSB AU COH AU PGAS IJ MPHL IN BIDU US (local) 34,500.0 1,010.0 36.3 6.8 78.7 3,600.0 403.4 120.6 19
ASIA PACIFIC
Wage growth
Wage growth in Asia
Country China Thailand Singapore India Malaysia Korea Taiwan Hong Kong Average Data release %y-y Sep-10 14.0 Dec-10 9.3 Dec-10 7.5 Dec-10 5.7 Dec-10 5.1 Dec-10 4.3 Dec-10 3.7 Sep-10 0.6 6.3
Korea: wage growth (% y-y)

40 30 20 10 0 -10 -20 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10
Note: monthly earnings growth until 2007, total wage growth afterwards Source; CEIC, Nomura International (Hong Kong) limited Investment Strategy
Taiwan: average monthly regular earnings (% y-y)

(%y-y) 6 4 2 0 -2 -4 -6 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
Note: India data is from Cotton Textile Mills in Mumbai Source; CEIC, Nomura International (Hong Kong) limited Investment Strategy
20
ASIA PACIFIC
Tight labour market in India and China

India: employment exchange: vacancies notified ('000)
70 60 50 40 30 20 10 0 Aug-87 Aug-89 Aug-91 Aug-93 Aug-95 Aug-97 Aug-99 Aug-01 Aug-03 Aug-05 Aug-07 Aug-09
Degree of labour shortage faced by Hong Kong companies operating in China's Pearl Delta region
4150% 5.3% 3140% 6.7% 5160% 0.7% No shortage 9.3%
2130% 22.0% 110% 36.7%
Source: CEIC, Nomura International (Hong Kong) Limited - Investment Strategy

1120% 19.3%
Note: Source:
Data show the percentage of labour unfilled against the existing labour force. A total of 222 companies with an average employment size of about 991 responded to the survey The Chinese Manufacturers' Association of Hong Kong, Nomura Global Economics
21
ASIA PACIFIC
China crop production: wheat and corn
Source: FAO, Nomura
22
ASIA PACIFIC
Soft commodities: Global inventory coverage (days)

Soybean Wheat
Corn
Cotton
23
ASIA PACIFIC
Crude oil prices 1861-2009
24
ASIA PACIFIC
Impact of oil on Asia

Net oil imports for Asia Impact of an oil price rise of US$10 on select Asian economies
25
ASIA PACIFIC
China: monthly coal imports (US$mn)

2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
26
Source: CEIC, Bloomberg, USDA, Nomura International (HK) Investment Strategy
ASIA PACIFIC
Margin pressure
US Philly Fed index: prices paid minus prices received The frequency of price adjustments
Note: This table is based on answers to the question: how often do the prices of your most important products change in a typical year Source: Table 4.1, Alan S.Blinder, "ON Sticky Prices: Academic Theories Meet the Real World,: in N.G. Mankiw, ed., Monetary Policy (Chicago: University of Chicago Press, 1994): 117-154
27
ASIA PACIFIC
EM vs DM earnings and revenue revision

Earnings revisions for EM less DM and relative performance Revenue revisions for EM less DM and relative performance
28
ASIA PACIFIC
Maersk container vessels: the Triple-E
Source: Maersk, The Global and Mail

ASIA PACIFIC
US ISM
US ISM: new orders minus inventory index US ISM on supplier deliveries
US ISM: import intention
US ISM: backlog of orders
30
ASIA PACIFIC
US Truck and Rail traffic

US ATA truck tonnage index (2000=100) US intermodal rail traffic %y-y (4-week moving average)
Transpacific freight rates and %y-y Asia Europe freight rates
31
ASIA PACIFIC
Air cargo volume growth

Air cargo vol growth vs global industrial European chemical industry vol. production growth, %y-y growth vs air cargo volume growth, % y-y
32
ASIA PACIFIC
OECD Belgium leading indicator
33
ASIA PACIFIC
Global equity outlook

Global earnings revisions balance
20 10 0 (10) (20) (30) (40) (50) Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
Global actual, trend and consensus 12-month forward earnings indices

Index Jan 1988 = 100
500 450 400 350 300 250 200 150 100 50

Trailing 4 Quarter Earnings Trend 12m Forward Consensus Earnings
Note: Net Earnings Revisions %, (Up -Down) / Total. Source: IBES, Factset, Nomura Strategy
0 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
Source: MSCI, IBES, Nomura Strategy
Global P/B
4.0 3.5 3.0 2.5 2.0 1.5 1.0 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
Global ROE
19 17 15 13 11 9 7 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
Source: Worldscope, Nomura Strategy research


34
ASIA PACIFIC
Technology spending is gathering pace

(% of GDP) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Dec-50 Dec-54 Dec-58 Dec-62 Dec-66 Dec-70 Dec-74 Dec-78 Dec-82 Dec-86 Dec-90 Dec-94 Dec-98 Dec-02 Dec-06 Dec-10 (Jan88=100) 600 500 400 300 200 100 0 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
35
Global Tech 12mth Fw d Earnings US Tech 12mth Fw d Earnings
Source: Nomura Strategy Insight
Source: Nomura Strategy Insight
Corporate IT spending basket

Price Name ASE ASM Pacific LG Display Samsung Electronics SEMCO Venture Corp Canon Inc O-Net Nomura International (Hong Kong) Limited Ticker 2311 TT 522 HK 034220 KS 005930 KS 009150 KS VMS SP 7751 JP 877 HK (local) 30.3 87.3 34,950.0 889,000.0 112,000.0 9.0 3,485.0 5.4
ASIA PACIFIC
Improving business sentiment

US CEO confidence index
9 8 7 6 5 4 3 2 1 0 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Feb-11
US CEO survey: percentage of respondents expecting higher capital spending over the next six months 70
60 50 40 30 20 10 0 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 May-03 May-04 May-05 May-06 May-07 May-08 May-09 May-10 Nov-10
Source: CEIC, Nomura International (Hong Kong) Limited Investment Strategy
US: NFIB small business capital expenditures plans (SA)

(%) 45 40 35 30 25 20 15 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
Note: Business Roundtable survey Source: Thomson Reuters Datastream, Nomura Investment Strategy
German IFO survey: business climate

(2000=100) 115 110 105 100 95 90 85 80 Feb-93 Feb-94 Feb-95 Feb-96 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11
36

Source: Bloomberg, Nomura International (Hong Kong) Limited Investment Strategy
ASIA PACIFIC
Improving business sentiment

Australia terms of trade vs business spending
170 150 130 110 90 70 50 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Terms of Trade - LHS Private Capex (AUD bn) - RHS 30 25 20 15 10 5 -
Australia: private new capital expenditure expected

(A$mn) 100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08
Korea: business expectation survey Investment

120 110 100 90
China: business survey Fixed Assets Investment

65 60 55 50
80 70 60 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11
45 40 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10

Note: diffusion index Source: CEIC; Nomura International (Hong Kong) Limited Investment Strategy
37
Dec-10
ASIA PACIFIC
US corporates: cash holdings and real interest rates

US: checkable deposits and currency held by non-financial corporate business US: 3M real deposit rates
(%) 5.0 4.0 3.0 2.0 1.0 0.0 (1.0) (2.0) (3.0) (4.0) Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
38
Source: St. Louis Fed, Nomura International (Hong Kong) Limited Investment Strategy
US: corporate cashflow to fixed investment
Note: CPI adjusted real rates Source: Bloomberg, Nomura International (HK) Limited Investment Strategy
Source: Thomson Reuters Datastream, Nomura International (HK) Limited - Investment Strategy
ASIA PACIFIC
Global non-financial companies capex/depreciation ratio
39
ASIA PACIFIC
Titanium
Japan: titanium sponge export volume Chinas imports of aircraft, spacecraft, & parts thereof (6mma)
USD mn 1,400 1,200 1,000 800 600 400 200 0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10
Source: Nomura, based on MOF trade statistics
40
ASIA PACIFIC
R&D expenditure
China: estimated total R&D expenditure over the next five years Gross expenditure on R&D as a percentage of GDP
Note: most recent years Source: CEIC, National Bureau of Statistics of China, Nomura research Source: OECD, Main Science and Technology Indicators (2009/1).
41
ASIA PACIFIC
China: imports of high-tech goods

China: net imports of scientific and optical instruments from Japan
(JPY bn) 40 35 30 25 20 15 10 5 0 -5 -10 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
China: total hi-tech imports (US$mn)
45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jun-06 Dec-07 Jun-09 Dec-10 Dec-01 Dec-04 Jun-03 Jun-04 Jun-07 Dec-02 Dec-03 Dec-05 Dec-06 Dec-08 Dec-09 Jun-10 Jun-02 Jun-05 Jun-08
42
ASIA PACIFIC
Machine tools
Ratio of CNC-enabled machine tools: Chinas ratio on par with that of Japan in the mid-1980s Machinery basket
Price Name Amada Daifuku Mori Seiki Komatsu Ltd Misumi Group Smc Corp Lonking holdings HCM Samsung Techwin Fanuc Sany Heavy equipment Ticker 6113 JP 6383 JP 6141 JP 6301 JP 9962 JP 6273 JP 3339 HK 6305 JP 012450 KS 6954 JP 631 HK (local) 607 521 891 2,504 1,784 13,220 4.8 1,921 70,600 11,580 11.5
Source: Nomura research
43
ASIA PACIFIC
Memo to HR department: sell humans, buy robots

US part-time employment (% y-y)
(% y-y) 12 10 8 6 4 2 0 (2) (4) (6) Jan-97 Jan-00 Jan-02 Jan-04 Jan-07 Jan-09 Jan-99 Jan-01 Jan-06 Jan-08 Jan-11 Jan-98 Jan-03 Jan-05 Jan-10
Energy consumption required to generate US$1mn of real GDP
NFIB: small business hiring plans

(%) 25 20 15 10 5 0 -5 -10 -15 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

ASIA PACIFIC
US wholesalers: I-S ratio machinery, equipment & supplies

3.10 2.90 2.70 2.50 2.30 2.10 1.90 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
45
ASIA PACIFIC
Shipbuilding euphoria in 2007

Daewoo Shipbuilding and Marine Engineering P/B vs BDIY Korea: vessel exports vs orders received
46
ASIA PACIFIC
Aggregate earnings momentum

By country
Earnings Best Country Thailand Hong Kong Malaysia Taiwan China Korea Singapore Australia Worst India Total momentum index 3.75 3.33 2.80 1.40 1.34 1.11 0.82 0.62 0.40 1.16 % of cos with +ve ERI i,t 68.2 75.0 70.0 53.6 56.0 48.0 45.2 36.1 28.4 51.1 % of cos with -ve ERI i,t 18.2 22.5 25.0 38.4 41.8 43.1 54.8 58.3 71.6 43.9 Worst Best Energy Industrials Financials Materials Health Care Information Technology Consumer Staples Consumer Discretionary Telecommunication Services Utilities
By sector
Regional sector Earnings momentum index 3.29 1.30 1.28 1.25 1.14 1.03 1.00 0.85 0.75 0.69 Previous month rank 1 2 5 4 3 9 8 6 10 7
Source: Worldscope, I/B/E/S, Nomura International (Hong Kong) Limited Quantitative Strategies
Source: Worldscope, I/B/E/S, Nomura International (Hong Kong) Limited Quantitative Strategies
47
ASIA PACIFIC
AP ex JP: earnings revision and valuations

AP ex JP: Earnings revision (3MA) AP ex Japan: valuations
48
ASIA PACIFIC
AP region: valuation and returns/volatility

Regional valuation comparison: ROE vs P/BV AP ex JP stock markets: annualised returns vs volatility
49
ASIA PACIFIC
AP ex JP: quality screen (high ROE, cheap)

Ticker GFF AU RIO AU TLS AU QAN AU 601288 CH 601988 CH 601668 CH 2238 HK 3328 HK 939 HK 1988 HK 1398 HK 1186 HK 390 HK 1618 HK 1101 HK 3818 HK 682 HK 1387 HK 2777 HK 688 HK 941 HK ONGC IN UNTP IN 012630 KS 037620 KS 033780 KS 030200 KS 017670 KS 3622 TT 2324 TT 3231 TT 2382 TT Company Name GOODMAN FIELDER LTD RIO TINTO LTD TELSTRA CORP LTD QANTAS AIRWAYS LTD AGRICULTURAL BANK OF CHINA-A BANK OF CHINA LTD-A CHINA STATE CONSTRUCTION -A GUANGZHOU AUTOMOBILE GROUP-H BANK OF COMMUNICATIONS CO-H CHINA CONSTRUCTION BANK-H CHINA MINSHENG BANKING-H IND & COMM BK OF CHINA-H CHINA RAILWAY CONSTRUCTION-H CHINA RAILWAY GROUP LTD-H METALLURGICAL CORP OF CHIN-H CHINA RONGSHENG HEAVY INDUST CHINA DONGXIANG GROUP CO CHAODA MODERN AGRICULTURE RENHE COMMERCIAL HOLDINGS GUANGZHOU R&F PROPERTIES - H CHINA OVERSEAS LAND & INVEST CHINA MOBILE LTD OIL & NATURAL GAS CORP LTD UNITED PHOSPHORUS LTD HYUNDAI DEVELOPMENT COMPANY MIRAE ASSET SECURITIES CO LT KT&G CORP KT CORP SK TELECOM YOUNG FAST OPTOELECTRONICS COMPAL ELECTRONICS WISTRON CORP QUANTA COMPUTER INC Industry Group Food Beverage & Tobacco Materials Telecommunication Services Transportation Banks Banks Capital Goods Automobiles & Components Banks Banks Banks Banks Capital Goods Capital Goods Capital Goods Capital Goods Consumer Durables & Apparel Food Beverage & Tobacco Real Estate Real Estate Real Estate Telecommunication Services Energy Materials Capital Goods Diversified Financials Food Beverage & Tobacco Telecommunication Services Telecommunication Services Technology Hardware & Equipmen Technology Hardware & Equipmen Technology Hardware & Equipmen Technology Hardware & Equipmen TC AUD AUD AUD AUD CNY CNY CNY HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD INR INR KRW KRW KRW KRW KRW TWD TWD TWD TWD Price TC 1.10 77.41 2.61 2.12 2.63 3.26 3.53 9.26 7.80 6.97 6.74 6.01 8.29 5.02 3.07 6.61 2.91 4.10 1.16 9.88 12.96 72.25 271.50 126.80 30,300.00 44,350.00 56,200.00 37,850.00 157,000.00 207.00 30.60 47.60 51.90 MC US$mn 1,502 33,530 32,282 4,773 117,674 96,987 16,114 2,629 26,540 214,964 3,568 66,916 2,208 2,709 1,131 5,936 2,115 1,757 3,274 1,287 13,587 185,977 51,358 1,293 2,013 1,637 6,799 8,709 11,171 993 4,579 3,165 6,732 12MFL PE x 8.4 7.6 9.9 7.2 7.2 6.9 9.0 8.8 7.6 8.7 7.8 8.8 8.8 8.8 7.9 8.7 8.3 2.3 4.0 6.2 9.7 9.8 8.0 7.7 7.0 8.9 9.5 6.6 7.4 7.9 6.4 6.4 8.4 12MFL PE 5Y SD s.d. (1.28) (1.09) (1.09) (1.58) (1.47) (1.29) (1.20) (1.40) (1.21) (1.02) (1.45) (1.00) (1.67) (1.20) (1.65) (1.87) (1.24) (1.77) (1.96) (1.03) (1.62) (1.07) (1.04) (1.57) (1.23) (1.49) (1.67) (1.94) (1.94) (1.49) (1.49) (1.28) (1.04) 12MFL PB x 0.9 1.9 2.6 0.7 1.3 1.2 1.2 1.9 1.4 1.8 1.2 1.8 1.3 1.2 1.1 2.0 1.6 0.4 1.2 1.2 1.8 1.9 1.8 1.3 0.8 0.9 1.6 0.8 1.0 2.2 1.1 1.4 1.5 12MFL PB 5Y SD s.d. (1.31) (1.05) (1.52) (1.17) (1.47) (1.30) (1.05) (1.83) (1.27) (1.02) (1.60) (1.09) (2.17) (1.18) (1.70) (1.84) (1.38) (1.60) (1.70) (1.06) (1.47) (1.14) (1.17) (1.47) (1.08) (1.46) (1.88) (2.02) (1.69) (1.79) (1.52) (1.02) (1.06) 12MFL ROE % 10.9 28.3 26.4 10.0 19.2 18.7 13.0 22.8 19.8 22.2 16.8 22.3 15.6 13.9 16.4 24.9 19.5 20.1 30.2 21.4 19.5 20.2 21.3 18.5 12.0 10.4 17.0 12.6 13.6 31.3 17.7 22.9 18.6 12MFL DY % 10.0 1.7 10.7 3.4 5.1 5.3 N/A 2.8 4.4 5.0 2.0 5.1 3.2 2.7 2.4 1.3 8.2 2.9 10.6 6.0 2.1 4.6 4.2 2.1 2.4 2.1 5.4 7.3 6.2 6.4 8.7 7.4 7.1
Note: Prices as of 15 March 2011. Criteria consensus ROE > 10%, P/BV lower than 3x, P/BV 1 STDEV below 5yr average, P/E lower than 10x, P/E 1 STDEV below 5yr average
Source: IBES, Bloomberg; Nomura International (Hong Kong) limited Quantitative Strategy
ASIA PACIFIC
AP ex JP: oversold companies with net cash
Note: Prices as of 15 March 2011.
Source: IBES, Bloomberg; Nomura International (Hong Kong) limited Quantitative Strategy
51
ASIA PACIFIC
Top-10 companies by composite scores
Criteria: MSCI AC Asia ex Japan universe covered by Nomura, market cap (over US$2bn) and turnover (above US$5mn ADV) Note: Priced as of 11 March 2011 (per Quants Weekly) Source: Bloomberg; Nomura International (Hong Kong) Limited Quantitative Strategies
ASIA PACIFIC
Gold
Gold-to-oil ratio Gold-to-S&P 500 ratio
Gold-to-corn ratio
53
ASIA PACIFIC
China: loan growth vs money supply growth (% y-y)

(RMB bn) 12,000 10,000 8,000 6,000 4,000 2,000 0 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 20 15 10 Loan grow th (last 12m, RMB bn) - LHS Money supply grow th (%y-y, M2) - RHS (%y-y) 35 30 25
54
ASIA PACIFIC
Press statistics; China banks

Number of times quantitative easing appears in the press Number of times Ben Bernanke vs Zhou Xiaochuan appears in the press
Number of times price controls appears in the press
Chinese banks: Loan/Deposit

LDR (3Q10)
55
ASIA PACIFIC
China interbank rate and deposits

China interbank spread charts (%) China deposit growth % y-y
China: deposit growth vs real deposit rates
56
ASIA PACIFIC
China: required reserve ratio and yield curve

China: required reserve ratio vs reserve money China yield curve (SHIBOR)
China property basket

Price Name COLI Agile KWG Ticker 688 HK 3383 HK 1813 HK (local) 13.30 10.16 5.10
57
ASIA PACIFIC
China: M1 growth and equity market performance

China: M1 growth vs CSI300
%q-q 80 60 40 20 0 -20 -40 -60 Oct-06 Oct-07 Oct-08 Oct-09 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Oct-10 Feb-11 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 CSI300 %q-q (LHS) M1 %q-q (RHS) %q-q 12 10 8 6 4 2 0 -2 -4
MSCI China A-shares vs MSCI Far East ex-Japan

(Index) 2400 2300 2200 2100 2000 1900 1800 1700 1600 1500 1400 1300 May-09 May-10 Mar-09 Jan-09 Jul-09 Nov-09 Mar-10 Jan-10 Jul-10 Nov-10 Sep-09 Sep-10 Mar-11
58
Source; CEIC, Nomura International (HK) limited Investment Strategy
Source; Datastream; Nomura International (HK) limited Investment Strategy
Jan-11
ASIA PACIFIC
China A-shares: yields and earnings

China A-share earnings yield vs domestic bond yield
(% ) 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1. 0 -2. 0 Jan-06 Jan-07 Jan-08 Jan-04 Jul-08 Jul-09 Jan-05 Jan-09 Jan-10 Jul-10 Jan-11 Jul-04 Jul-05 Jul-06 Jul-07
China A-share earning yields minus real deposit rate (CPI adjusted)
(%) 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
59
Source: Bloomberg, Nomura International (HK) Limited investment Strategy
China: Shanghai composite earnings integer (RMB)

180 160 140 120 100 80 60 40 20 0 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11
Source: Bloomberg, Nomura International (HK) Limited investment Strategy
ASIA PACIFIC
Hong Kong (I): Air Pollution Average (1mma)
60
ASIA PACIFIC
Hong Kong (II)

Hong Kong loans outstanding to stockbrokers (quarterly)
(HKD mn) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Dec-96 Dec-03 Dec-99 Dec-06 Dec-02 Dec-09 Dec-95 Dec-98 Dec-01 Dec-04 Dec-05 Dec-07 Dec-08 Dec-97 Dec-00 Dec-10
Hong Kong warrants turnover as % of total turnover

(%) 35 30 25 20 15 10 5 0 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Hong Kong Liquidity Index

40 30 20 10 (10) (20) (30) (40) (50) Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
HK$ and the HSI

10% 8% 6% 4% w -w change in HKD (%) -0.5% -0.4% -0.3% -0.2% -0.1% 2% 0% 0.0% -2% -4% -6% -8% 0.1% 0.2% 0.3% w -w change in HSI (%)
Note: real loan growth real interest rate REER appreciation (%y-y) Source: CEIC, Nomura International (Hong Kong) Limited Investment Strategy
61
ASIA PACIFIC
Hong Kong (III)

HK: Loans wholesale and retail (% y-y)
60% 50% 40% 30% 20% 10% 0% -10% -20% -30% Jun-90 Jun-92 Jun-94 Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10
HK: Loans trade finance

60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Dec-81 Dec-83 Dec-85 Dec-87 Dec-89 Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09
Hong Kong import prices (% y-y)

(%y-y) 10.0 8.0 6.0 4.0 2.0 0.0 (2.0) (4.0) (6.0) J u l-0 0 J u l-0 1 J u l-0 2 J u l-0 3 J u l-0 4 J u l-0 5 J u l-0 6 J u l-0 7 J u l-0 8 J u l-0 9 J u l-1 0
HK: RMB deposits as % of total

(% of total deposit) 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 D ec -0 4 D ec -0 5 D ec -0 6 D ec -0 7 D ec -0 8 D ec -0 9 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 D ec -1 0
62
A p r-0 5
A p r-0 6
A p r-0 7
A p r-0 8
A p r-0 9
Source: CEIC, Nomura International (Hong Kong) Limited Investment Strategy Nomura International (Hong Kong) Limited
A p r-1 0
ASIA PACIFIC
Hong Kong (IV)

New mortgage loans approved (by interest rate type) Hong Kong inflation basket
Basket performance
63
ASIA PACIFIC
Australia (I)
Australia vs World dividend yield
(%) 8 7 6 5 4 3 2 1 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Australia World
Australia 1-yr fwd earnings yield 1-yr govt bond yield

(%) 10 8 6 4 2 0 -2 -4 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Jan-10
Australia vs World return on assets

(%) 18
Australia earnings revision index

40 30 20 10 0 -10 -20 -30 -40 -50 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
16 14 12 10 8 6 4 2 0 Jan-88 Jan-90 Jan-92 Jan-94
Australia
World
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Source: Bloomberg, Nomura Strategy Insight, Nomura (Hong Kong) Investment Strategy Nomura International (Hong Kong) Limited 64
Jan-10
Jan-11
2010
ASIA PACIFIC
Australia (II)
RBA rate forecast (%)
8 7 Estimate 6 5 4 3 2 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 (10) (20) (30) Jun-84 Jun-86 Jun-88 Jun-90 Jun-92 Jun-94 Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Feb-11 Jun-10
(index)
Australia: terms of trade

40 30 20 10
Australia monetary conditions

(Index)
Australia: inflation expectations

(%) 3.1
50 40 30 20 10 0 -10 -20 -30 Nov-90 Nov-92 Nov-94 Nov-96 Nov-98 Nov-00 Nov-02 Nov-04 Nov-06 Nov-08 Nov-10 Tight Loose
AU 10yr BE (LHS)
AOI (RHS)
5200 5000 4800 4600 4400 4200 4000
3.0 2.9 2.8 2.7 2.6 2.5 2.4 2.3 2.2 May-10 Feb-10 Mar-10 Oct-10 Jan-10 Jun-10 Nov-10 Dec-10 Aug-10 Sep-10 Apr-10 Jan-11 Jul-10
Source: CEIC, Bloomberg, Nomura International (Hong Kong) Limited Investment Strategy Nomura International (Hong Kong) Limited
65
ASIA PACIFIC
New Zealand
Terms of trade (% y-y)
(%y-y) 20 15 10 5 0 -5 -10 -15 -20 Dec-80 Dec-82 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 5000 0 Oct-91 Oct-92 Oct-93 Oct-94 Oct-95 Oct-96 Oct-97 Oct-98 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Dec-10 Oct-10 Mar-11 10000
FX reserves (US$mn)
25000 20000 15000
Source: Statistics New Zealand, Nomura International (HK) Investment Strategy
Source: RBNZ, Nomura International (HK) Investment Strategy
New Zealand dairy products export price index (%y-y)

80 60 40 20 0 (20) (40) (60) Dec-80 Dec-82 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10
MSCI NZ vs MSCI Asia ex-Japan

130 120 110 100 90 80 70 60 Jun-07 Jun-08 Jun-09 Mar-07 Mar-08 Mar-09 Dec-07 Dec-08 Dec-09 Sep-07 Sep-08 Sep-09 Mar-10 Jun-10 Sep-10


66
ASIA PACIFIC
Taiwan (I)
Taiwan: exports to mainland China (including re export)
NTD mn 250,000 200,000 150,000 100,000 50,000 0 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Taiwan: export price index (% y-y)

20% 15% 10% 5% 0% -5% -10% -15% -20% Jan-83 Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
Taiwan: CPI vs CPI ex Food

(%y-y) 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 (1.0) (2.0) (3.0) Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 CPI %y-y CPI ex Food %y-y
Taiwan : Labour cost index (industry)

(%y-y) 40 30 20 10 0 -10 -20 -30 -40 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Note: Jan and Feb growth are average of two months %y-y growth Source: CEIC, Nomura International (Hong Kong) Limited Investment Strategy
Jan-10
ASIA PACIFIC
Taiwan (II)
Taiwan: government surplus or deficit (1 year rolling sum)
(NTDmn) 200,000 100,000 0 -100,000 -200,000 -300,000 -400,000 -500,000 -600,000 -700,000 -800,000 Dec-67 Dec-70 Dec-73 Dec-76 Dec-79 Dec-82 Dec-85 Dec-88 Dec-91 Dec-94 Dec-97 Dec-00 Dec-03 Dec-06 Dec-09
Taiwan: commercial paper outstanding (NTDmn)

(NTDmn) 1,400,000 1,300,000 1,200,000 1,100,000 1,000,000 900,000 800,000 700,000 600,000 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Taiwan: 10-year government bond yields

(%) 8 7 6 5 4 3 2 1 0 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Taiwan: M1 growth vs FX reserve growth

(%y-y) 50 40 30 20 10 0 (10) (20) Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
68
M1b %y-y FX reserve %y-y
Note: M1B = currency in circulation + checking accounts and demand deposits + passbook savings deposits
Source: Bloomberg; CEIC, Nomura International (Hong Kong) Limited Investment Strategy
ASIA PACIFIC
Taiwan (III)
Taiwan: M1 growth % y-y vs real deposit rates %
(%y-y) 35 30 25 20 15 10 5 0 -5 -10 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 M1B grow th %y-y (LHS) Real deposit rates (RHS) (%pa) 6 5 4 3 2 1 0 -1 -2 -3 -4
Taiwan: loans to SME (% y-y)

20% 15% 10% 5% 0% -5% May-06 May-07 May-08 May-09 May-10 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Jan-11
Taiwan stock margin transactions: margin Taiwan fund flows: bond market ratio (%) Bond market: Monthly inflow (outflow)
(%)
(NTDbn)
75 65 55 45 35 25 15 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
250 200 150 100 50 0 -50 -100 May-04 May-05 May-06 May-07 May-08 May-09 May-10 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Source: Central Bank of Republic of China (Taiwan; CEIC, Nomura International (Hong Kong) Limited Investment Strategy
ASIA PACIFIC
Taiwan (IV)
Taiwan: export orders on hand MSCI Taiwan IT 12-month fwd P/E
70
ASIA PACIFIC
Korea (I)
Korea: current account balance (monthly) DRAM-to-oil ratio vs MSCI Korea rel to MSCI AP ex JP
Korea vs Japan vs US: 10-year government bond yields (nominal)
Korea vs Japan vs US: 10-year government bond yields (real)
71
ASIA PACIFIC
Korea (II)
Korea: KOSPI foreign shareholdings vs KOSPI index
MSCI Korea financials P/BV (x)
KOSPI dividend yield %
72
ASIA PACIFIC
India (I)
India: bank credit growth (% y-y) Indian industrial production (% y-y)
Source: CEIC, Nomura International (HK) Investment Strategy
India: domestic credit growth (% y-y)
India: loan-to-deposit ratio (%)
73
ASIA PACIFIC
India (II)
India reverse repo amt outstanding (net) India FX reserve growth vs MSCI India US$ relative to MSCI Far East US$
India: real deposit rates vs deposit growth
India current account balance vs MSCI India US$ relative to MSCI Far East US$
74
ASIA PACIFIC
India (III)
India: COGS of manufacturing companies India: sharply higher interest rates vs commodity prices
SENSEX: FY11F and FY12F consensus earnings downgrades
Asia Pacific ex-Japan: CPI and PPI/WPI
75
ASIA PACIFIC
Singapore (I)
Singapore: non oil exports in US$ % q-q Singapore trade balance SG$m
Singapore: credit (% y-y)
Singapore: budget balance

ASIA PACIFIC
Singapore (II): REER and PMI

Singapore: REER Singapore PMI vs US ISM PMI
ASEAN banks basket

Price Name Negara Indonesia Maybank Alliance Finance Group OCBC DBS Group Bank Central Asia Ticker BBNI IJ MAY MK AFG MK OCBC SP DBS SP BBCA IJ (local) 3,575.0 8.7 3.1 9.1 14.0 6,550.0
77
ASIA PACIFIC
Indonesia (I)
Indonesia car sales units Indonesia consumer confidence
Farm output (2007=100)
Farmers terms of trade index

ASIA PACIFIC
Indonesia (II)
Bank lending to the private sector (% y-y) Indonesia: CPI food (% y-y)
Retail sales (% y-y)
Business expectations (%)

ASIA PACIFIC
Thailand (I)
Thailand industrial output (% q-q) Export growth (% y-y) (baht)
Capacity utilisation (%)
BoT investment indicator (% y-y)

ASIA PACIFIC
Thailand (II)
Retail sales (% y-y) Thailand car sales
Household borrowing (% y-y)
Bank lending (% y-y)

ASIA PACIFIC
Thailand (III)
Thailand government spending (rolling 12 Basic balance (US$ '000) months Bt m)
Current account (US$ annual
FDI inflows (US$ m)

ASIA PACIFIC
The Philippines (I)

The Philippines: exports The Philippines: trade balance (three-month rolling sum)
The Philippines BoP: cash remittances

(USD mn) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
The Philippines: three-month PHIBOR

(%) 35 30 25 20 15 10 5 0 Feb-96 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11
83

ASIA PACIFIC
The Philippines (II)

The Philippines: BOP current account The Philippines: BoP capital and financial account
The Philippines: foreign exchange reserves
The Philippines: loan-to-deposit ratio
84
ASIA PACIFIC
Mauritius
Mauritius GDP breakdown (2009) Mauritius official international reserves
(US$mn) 3,000 2,500 2,000 1,500 1,000 500 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Nov-10 Jan-11 Feb-11
85
Mauritius BoP: net direct investment

(MURmn) 5000 4000 3000 2000 1000 0 -1000 -2000 -3000 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10
SEMDEX index valuation: P/B

(x) 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 May-07 May-08 May-09 May-10 Feb-07 Feb-08 Feb-09 Nov-07 Nov-08 Aug-07 Aug-08 Aug-09 Nov-09 Feb-10 Aug-10
Source: CIA Factbook, CEIC, Bloomberg, Nomura International (Hong Kong) Limited Investment Strategy Nomura International (Hong Kong) Limited
ASIA PACIFIC
Mongolia (I)
Total market capitalisation of Mongolia exchanges (US$mn)
2000 1800 1600 1400 1200 1000 800 600 400 200 0 Oct-07 Oct-08 Oct-09 Oct-10 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Apr-07 Apr-08 Apr-09 Apr-10
Mongolia foreign reserves (SDR mn)

1400 1200 1000 800 600 400 200 0 May-01 May-06 May-09 May-04 May-07 N ov-08 Nov-03 Nov-00 Nov-02 Nov-04 Nov-05 Nov-07 Nov-09 May-02 May-05 May-10 May-03 May-08 Nov-10 Nov-01 Nov-06
Mongolia current account balance (% GDP)
Mongolia primary exports
Source: IMF, CEIC, Bloomberg, Nomura International (Hong Kong) Limited Investment Strategy
ASIA PACIFIC
Mongolia (II) Rail and road infrastructure

Trans-Mongolian railway Asian Highway in Mongolia
Source: UNESCAP, Nomura International (Hong Kong) Limited Investment Strategy Source: trans-siberian.su, Nomura International (Hong Kong) Limited Investment Strategy
87
ASIA PACIFIC
Suggested asset allocation

Long-run growth themes Allocated (%) 5 5 5 5 5 5 5 5 5 45 Theme Viruses and healthcare Water investment Nuclear power Railway infrastructure Emerging market productivity gains/ Machinery Experience economy Asian and Japanese Internet The rebirth of the silk road: Central Asia infrastructure The return of the spice route: Muslim consumption* Proxies/examples of baskets Sysmex Guangdong investment Toshiba Plant & Engineering China Railway Construction Komatsu Bangkok Dusit NHN Corp Petrochina Hyundai Motor Recommended Mar-03 Dec-04 Dec-04 Jul-05 Nov-07 May-08 May-08 Jun-08 Jul-09
The in-between (Asian interest rate, bank credit and currency)
5 Greater China Inc (RMB liberalisation theme) 5 ASEAN Banks 5 REITs 15 5 5 5 5 5 5 5 5 40 100 Soft commodities Corporate spending beneficiaries M&A basket Asian oil companies/ Energy Basket China property Blue chip basket Productivity basket Container shipping and port
BOC HK Kasikornbank CapitaCommercial Trust
Jun-09 Dec-09 Oct-10
The short-run/style tilts
China agri Canon Inc M1 CNOOC China overseas Land & Inv Samsung Electronics KPS NOL
Nov-09 May-10 Sep-10 Oct-10 Oct-10 Nov-10 Dec-10 Mar-11
* Note: Emerging market bilateral trade launched Aug 2005 and Rural consumption launched Jul 2006 merged into the return of the spice route; China/India consumption closed on 7 Dec 2010; Vice fund closed on 7 Dec 2010; Rare Earth metals closed on 10 Nov 2010; Asian high dividend yield closed on 18 Oct 2010; RMB appreciation beneficiaries basket closed on 7 Oct 2010.; Shipping and port basket closed on 30 Sep 2010; China Steel companies closed 27 Sep 2010; Petrodollar recycling closed on 23 February 2011 Source: Nomura
ASIA PACIFIC
Where are we now?

Market calls
Market Australia China A shares China B shares China H shares Hong Kong India Indonesia Korea Kosdaq Malaysia Mauritius Mongolia New Zealand Pakistan Philippines Singapore Sri Lanka Taiwan Thailand Vietnam
Downgrading; upgrading Source: Nomura International (Hong Kong) Limited Investment Strategy
3-Mar-11 Bullish Bullish Bullish Bearish Bullish Bearish Bearish Bearish Bullish Bullish Bullish Bullish Bullish Bearish Bearish Bullish Bearish Bullish Bearish Bearish
15-Feb-11 Bullish Bullish Bullish Bearish Bearish Bearish Bearish Bullish Bullish Bullish Bullish Bullish Bullish Bearish Bearish Bearish Bearish Bullish Bearish Bearish
6-Dec-10 Bullish Bearish Bullish Bearish Bearish Bearish Bearish Bullish Bullish Bullish Bullish Bullish Bullish Bearish Bearish Bearish Bearish Bullish Bearish Bearish
22-Nov-10 Bullish Bearish Bullish Bearish Bearish Bearish Bearish Bullish Bullish Bullish Bullish Bullish Bullish Bearish Bearish Bearish Bearish Bearish Bearish Bearish
17-Nov-10 Bullish Bearish Bullish Bearish Bullish Bearish Bearish Bullish Bullish Bullish Bullish Bullish Bullish Bearish Bearish Bearish Bearish Bearish Bearish Bearish
10-Nov-10 Bullish Bullish Bullish Bearish Bullish Bearish Bearish Bullish Bullish Bullish Bullish Bullish Bullish Bearish Bearish Bearish Bearish Bearish Bearish Bearish
9-Nov-10 Bullish Bullish Bullish Bearish Bullish Bearish Bearish Bullish Bullish Bullish Bullish Not rated Bullish Bearish Bearish Bearish Bearish Bearish Bearish Bearish
18-Oct-10 Bullish Bullish Bullish Bearish Bullish Bearish Bearish Bullish Bullish Bullish Not rated Not rated Bullish Bearish Bearish Bearish Bearish Bearish Bearish Bearish
ASIA PACIFIC
Valuation indicators and revision indices for major Asia-Pacific market indices (I)
Published on 7 Mar 2011
90
ASIA PACIFIC
Valuation indicators and revision indices for major Asia-Pacific market indices (II)
Published on 7 Mar 2011
91
ASIA PACIFIC
Many thanks for attending the presentation
92
ASIA PACIFIC
Appendix
93
ASIA PACIFIC
Economic forecasts (I)
Note: * CPI refers to wholesale prices. published in Asia economic weekly on 4 March 2011 Source: CEIC, Bloomberg, Nomura Global Economics
94
ASIA PACIFIC
Economic forecasts (II)
Note: Fiscal balances are for fiscal years which differ from calendar years for Australia (Jul-Jun), Hong Kong (Apr-Mar), India (Apr-Mar), New Zealand (Apr-Mar), Singapore (Apr-Mar) and Thailand (Oct-Sep). Fiscal data are for the central government and do not include off-budget. published in Asia economic weekly on 4 March 2011 Source: CEIC, Bloomberg, Nomura Global Economics.
95
ASIA PACIFIC
Economic forecasts (III)
Note: All figures relate to the modal forecast, ie, the "most likely" outcome; published in Asia economic weekly on 4 March 2011 Source: CEIC, Bloomberg, Nomura Global Economics.
96
ASIA PACIFIC
Global Equity Strategy

Chief Global and European Strategist LONDON Strategist, Europe LONDON SCOTT, IAN Tel: +44-20-7102-2959 E-mail: ian.scott@nomura.com DEV, RISHAV Tel: +44-20-7102-9122 E-mail: rishav.dev@nomura.com
Senior Strategist, Europe LONDON
Chief Strategist, Asia ex-Japan HONG KONG
NAIR, SHANTHI Tel: +44-20-7102-4518 E-mail: shanthi.nair@nomura.com
DARBY, SEAN Tel: +852-2252-2182 E-mail: sean.darby@hk.nomura.com
Strategist, Europe LONDON
Strategist, China HONG KONG
DIVER, MARK Tel: +44-20-7102-2987 E-mail: mark.diver@nomura.com
WU, HENRY Tel: +852-2252-2122 E-mail: henry.wu@nomura.com
Strategist, Europe LONDON
Strategist, India INDIA
AFREH, MICHAEL Tel: +44-20-7102-7248 E-mail: michael.afreh@nomura.com
AWASTHI, PRABHAT Tel: +91-22-4037-4180 E-mail: prabhat.awasthi@nomura.com
97
ASIA PACIFIC

Strategist, Malaysia MALAYSIA Chief Strategist, Japan TOKYO CHOONG, WAI KEE Tel: +60-3-2027-6893 E-mail: waikee.choong@nomura.com IWASAWA, SEIICHIRO Tel: +81-3-5255-1676 E-mail: s-iwasawa@frc.nomura.co.jp
Strategist, Singapore SINGAPORE
Corporate Eamings Analysis, Japan TOKYO
LIM, JIT SOON Tel: +65-6433-6969 E-mail: jitsoon.lim@nomura.com
ITO, TAKASHI Tel: +81-3-6703-1252 E-mail: takashi.ito.1@nomura.com
Strategist, Indonesia INDONESIA
Technical Analysis, Japan TOKYO
IE, WILIANTO Tel: +62-21-2991-3341 E-mail: wilianto.ie@nomura.com
YAMAUCHI, SHOICHIRO Tel: +81-3-6703-1253 E-mail: shoichiro.yamauchi@nomura.com
Strategist, Taiwan TAIWAN
WANG, JESSE Tel: +886-2-2176-9977 E-mail: jesse.wang@nomura.com 98
ASIA PACIFIC

Strategist, Japan TOKYO SAKAGAMI, RYOTA Tel: +81-3-6703-1255 E-mail: ryota.sakagami@nomura.com
EQUITY RESEARCH - JAPAN
Strategy (Small-cap Stocks) TOKYO
Thematic Research TOKYO
MOTOMURA, MASAKI Tel: +81-3-6703-1119 E-mail: masaki.motomura@nomura.com
MIYACHI, KUNIHARU Tel: +81-3-6703-1114 E-mail: kuniharu.miyachi@nomura.com
IWATA, YOSHIYA Tel: +81-3-6703-1120 E-mail: yoshiya.iwata@nomura.com
YOKOYAMA, KYOICHIRO Tel: +81-3-6703-1113 E-mail: kyoichiro.yokoyama@nomura.com
99
ASIA PACIFIC
ANALYST CERTIFICATION
We, Sean Darby, Amy Lee and Mixo Das, hereby certify (1) that the views expressed in this Research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this Research report, (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of our compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or any other Nomura Group company.
Important Disclosures
Conflict-of-interest disclosures Important disclosures may be accessed through the following website: http://www.nomura.com/research/pages/disclosures/disclosures.aspx . If you have difficulty with this site or you do not have a password, please contact your Nomura Securities International, Inc. salesperson (1-877-865-5752) or email grpsupport-eu@nomura.com for assistance. Online availability of research and additional conflict-of-interest disclosures Nomura Japanese Equity Research is available electronically for clients in the US on NOMURA.COM, REUTERS, BLOOMBERG and THOMSON ONE ANALYTICS. For clients in Europe, Japan and elsewhere in Asia it is available on NOMURA.COM, REUTERS and BLOOMBERG. Important disclosures may be accessed through the left hand side of the Nomura Disclosure web page http://www.nomura.com/research or requested from Nomura Securities International, Inc., on 1877-865-5752. If you have any difficulties with the website, please email grpsupport-eu@nomura.com for technical assistance. The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by Investment Banking activities. Industry Specialists identified in some Nomura International plc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they have coverage. Industry Specialists do not contribute in any manner to the content of research reports in which their names appear. Marketing Analysts identified in some Nomura research reports are research analysts employed by Nomura International plc who are primarily responsible for marketing Nomuras Equity Research product in the sector for which they have coverage. Marketing Analysts may also contribute to research reports in which their names appear and publish research on their sector. Distribution of ratings (Global) Nomura Global Equity Research has 2027 companies under coverage. 48% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 38% of companies with this rating are investment banking clients of the Nomura Group*. 38% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 48% of companies with this rating are investment banking clients of the Nomura Group*. 12% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 13% of companies with this rating are investment banking clients of the Nomura Group*. As at 31 December 2010. *The Nomura Group as defined in the Disclaimer section at the end of this report.
100
ASIA PACIFIC
Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America for ratings published from 27 October 2008
The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock. Analysts may also indicate absolute upside to target price defined as (fair value - current price)/current price, subject to limited management discretion. In most cases, the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis, etc. STOCKS A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company. Benchmarks are as follows: United States/Europe: Please see valuation methodologies for explanations of relevant benchmarks for stocks (accessible through the left hand side of the Nomura Disclosure web page: http://www.nomura.com/research);Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology. SECTORS A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.
Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published from 30 October 2008 and in Japan from 6 January 2009
STOCKS Stock recommendations are based on absolute valuation upside (downside), which is defined as (Target Price - Current Price) / Current Price, subject to limited management discretion. In most cases, the Target Price will equal the analyst's 12-month intrinsic valuation of the stock, based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A 'Buy' recommendation indicates that potential upside is 15% or more. A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%. A 'Reduce' recommendation indicates that potential downside is 5% or more. A rating of 'Suspended' indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.
101
ASIA PACIFIC
Explanation of Nomura's equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe, Middle East and Africa, US and Latin America published prior to 27 October 2008)
STOCKS A rating of '1' or 'Strong buy', indicates that the analyst expects the stock to outperform the Benchmark by 15% or more over the next six months. A rating of '2' or 'Buy', indicates that the analyst expects the stock to outperform the Benchmark by 5% or more but less than 15% over the next six months. A rating of '3' or 'Neutral', indicates that the analyst expects the stock to either outperform or underperform the Benchmark by less than 5% over the next six months. A rating of '4' or 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark by 5% or more but less than 15% over the next six months. A rating of '5' or 'Sell', indicates that the analyst expects the stock to underperform the Benchmark by 15% or more over the next six months. Stocks labeled 'Not rated' or shown as 'No rating' are not in Nomura's regular research coverage. Nomura might not publish additional research reports concerning this company, and it undertakes no obligation to update the analysis, estimates, projections, conclusions or other information contained herein. SECTORS A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next six months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next six months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next six months. Benchmarks are as follows: Japan: TOPIX; United States: S&P 500, MSCI World Technology Hardware & Equipment; Europe, by sector - Hardware/Semiconductors: FTSE W Europe IT Hardware; Telecoms: FTSE W Europe Business Services; Business Services: FTSE W Europe; Auto & Components: FTSE W Europe Auto & Parts; Communications equipment: FTSE W Europe IT Hardware; Ecology Focus: Bloomberg World Energy Alternate Sources; Global Emerging Markets: MSCI Emerging Markets ex-Asia.
Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published prior to 30 October 2008
STOCKS Stock recommendations are based on absolute valuation upside (downside), which is defined as (Fair Value - Current Price)/Current Price, subject to limited management discretion. In most cases, the Fair Value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc. However, if the analyst doesn't think the market will revalue the stock over the specified time horizon due to a lack of events or catalysts, then the fair value may differ from the intrinsic fair value. In most cases, therefore, our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value. Recommendations are set with a 6-12 month horizon unless specified otherwise. Accordingly, within this horizon, price volatility may cause the actual upside or downside based on the prevailing market price to differ from the upside or downside implied by the recommendation. A 'Strong buy' recommendation indicates that upside is more than 20%. A 'Buy' recommendation indicates that upside is between 10% and 20%. A 'Neutral' recommendation indicates that upside or downside is less than 10%. A 'Reduce' recommendation indicates that downside is between 10% and 20%. A 'Sell' recommendation indicates that downside is more than 20%. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.
Target Price
A Target Price, if discussed, reflect in part the analyst's estimates for the company's earnings. The achievement of any target price may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.
102
ASIA PACIFIC
DISCLAIMERS:
This publication contains material that has been prepared by the Nomura entity identified on the banner at the top or the bottom of page 1 herein and, if applicable, with the contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or elsewhere identified in the publication. Affiliates and subsidiaries of Nomura Holdings, Inc. (collectively, the 'Nomura Group'), include: Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura International plc, United Kingdom; Nomura Securities International, Inc. ('NSI'), New York, NY; Nomura International (Hong Kong) Ltd., Hong Kong; Nomura Financial Investment (Korea) Co., Ltd., Korea (Information on Nomura analysts registered with the Korea Financial Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis.kofia.or.kr ); Nomura Singapore Ltd., Singapore (Registration number 197201440E, regulated by the Monetary Authority of Singapore); Capital Nomura Securities Public Company Limited; Nomura Australia Ltd., Australia (ABN 48 003 032 513), regulated by the Australian Securities and Investment Commission and holder of an Australian financial services licence number 246412; P.T. Nomura Indonesia, Indonesia; Nomura Securities Malaysia Sdn. Bhd., Malaysia; Nomura International (Hong Kong) Ltd., Taipei Branch, Taiwan; Nomura Financial Advisory and Securities (India) Private Limited, Mumbai, India (Registered Address: Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India; SEBI Registration No: BSE INB011299030, NSE INB231299034, INF231299034, INE 231299034). THIS MATERIAL IS: (I) FOR YOUR PRIVATE INFORMATION, AND WE ARE NOT SOLICITING ANY ACTION BASED UPON IT; (II) NOT TO BE CONSTRUED AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE ILLEGAL; AND (III) BASED UPON INFORMATION THAT WE CONSIDER RELIABLE. NOMURA GROUP DOES NOT WARRANT OR REPRESENT THAT THE PUBLICATION IS ACCURATE, COMPLETE, RELIABLE, FIT FOR ANY PARTICULAR PURPOSE OR MERCHANTABLE AND DOES NOT ACCEPT LIABILITY FOR ANY ACT (OR DECISION NOT TO ACT) RESULTING FROM USE OF THIS PUBLICATION AND RELATED DATA. TO THE MAXIMUM EXTENT PERMISSIBLE ALL WARRANTIES AND OTHER ASSURANCES BY NOMURA GROUP ARE HEREBY EXCLUDED AND NOMURA GROUP SHALL HAVE NO LIABILITY FOR THE USE, MISUSE, OR DISTRIBUTION OF THIS INFORMATION. Opinions expressed are current opinions as of the original publication date appearing on this material only and the information, including the opinions contained herein, are subject to change without notice. Nomura is under no duty to update this publication. If and as applicable, NSI's investment banking relationships, investment banking and non-investment banking compensation and securities ownership (identified in this report as 'Disclosures Required in the United States'), if any, are specified in disclaimers and related disclosures in this report. In addition, other members of the Nomura Group may from time to time perform investment banking or other services (including acting as advisor, manager or lender) for, or solicit investment banking or other business from, companies mentioned herein. Furthermore, the Nomura Group, and/or its officers, directors and employees, including persons, without limitation, involved in the preparation or issuance of this material may, to the extent permitted by applicable law and/or regulation, have long or short positions in, and buy or sell, the securities (including ownership by NSI, referenced above), or derivatives (including options) thereof, of companies mentioned herein, or related securities or derivatives. For financial instruments admitted to trading on an EU regulated market, Nomura Holdings Inc's affiliate or its subsidiary companies may act as market maker or liquidity provider (in accordance with the interpretation of these definitions under FSA rules in the UK) in the financial instruments of the issuer. Where the activity of liquidity provider is carried out in accordance with the definition given to it by specific laws and regulations of other EU jurisdictions, this will be separately disclosed within this report. Furthermore, the Nomura Group may buy and sell certain of the securities of companies mentioned herein, as agent for its clients. Investors should consider this report as only a single factor in making their investment decision and, as such, the report should not be viewed as identifying or suggesting all risks, direct or indirect, that may be associated with any investment decision. Please see the further disclaimers in the disclosure information on companies covered by Nomura analysts available at www.nomura.com/research under the 'Disclosure' tab. Nomura Group produces a number of different types of research product including, among others, fundamental analysis, quantitative analysis and short term trading ideas; recommendations contained in one type of research product may differ from recommendations contained in other types of research product, whether as a result of differing time horizons, methodologies or otherwise; it is possible that individual employees of Nomura may have different perspectives to this publication. NSC and other non-US members of the Nomura Group (i.e. excluding NSI), their officers, directors and employees may, to the extent it relates to non-US issuers and is permitted by applicable law, have acted upon or used this material prior to, or immediately following, its publication. Foreign-currency-denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derived from, the investment. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies, effectively assume currency risk. The securities described herein may not have been registered under the US Securities Act of 1933, and, in such case, may not be offered or sold in the United States or to US persons unless they have been registered under such Act, or except in compliance with an exemption from the registration requirements of such Act. Unless governing law permits otherwise, you must contact a Nomura entity in your home jurisdiction if you want to use our services in effecting a transaction in the securities mentioned in this material. This publication has been approved for distribution in the United Kingdom and European Union as investment research by Nomura International plc ('NIPlc'), which is authorized and regulated by the UK Financial Services Authority ('FSA') and is a member of the London Stock Exchange. It does not constitute a personal recommendation, as defined by the FSA, or take into account the particular investment objectives, financial situations, or needs of individual investors. It is intended only for investors who are 'eligible counterparties' or 'professional clients' as defined by the FSA, and may not, therefore, be redistributed to retail clients as defined by the FSA. This publication may be distributed in Germany via Nomura Bank (Deutschland) GmbH, which is authorized and regulated in Germany by the Federal Financial Supervisory Authority ('BaFin'). This publication has been approved by Nomura International (Hong Kong) Ltd. ('NIHK'), which is regulated by the Hong Kong Securities and Futures Commission, for distribution in Hong Kong by NIHK. This publication has been approved for distribution in Australia by Nomura Australia Ltd, which is authorized and regulated in Australia by the Australian Securities and Investment Commission ('ASIC'). This publication has also been approved for distribution in Malaysia by Nomura Securities Malaysia Sdn Bhd. In Singapore, this publication has been distributed by Nomura Singapore Limited ('NSL'). NSL accepts legal responsibility for the content of this publication, where it concerns securities, futures and foreign exchange, issued by their foreign affiliates in respect of recipients who are not accredited, expert or institutional investors as defined by the Securities and Futures Act (Chapter 289). Recipients of this publication should contact NSL in respect of matters arising from, or in connection with, this publication. Unless prohibited by the provisions of Regulation S of the U.S. Securities Act of 1933, this material is distributed in the United States, by Nomura Securities International, Inc., a US-registered broker-dealer, which accepts responsibility for its contents in accordance with the provisions of Rule 15a-6, under the US Securities Exchange Act of 1934. Nomura International (Hong Kong) Limited 103
ASIA PACIFIC
This publication has not been approved for distribution in the Kingdom of Saudi Arabia or to clients other than 'professional clients' in the United Arab Emirates by Nomura Saudi Arabia, Nomura International plc or any other member of the Nomura Group, as the case may be. Neither this publication nor any copy thereof may be taken or transmitted or distributed, directly or indirectly, by any person other than those authorised to do so into the Kingdom of Saudi Arabia or in the United Arab Emirates or to any person located in the Kingdom of Saudi Arabia or to clients other than 'professional clients' in the United Arab Emirates. By accepting to receive this publication, you represent that you are not located in the Kingdom of Saudi Arabia or that you are a 'professional client' in the United Arab Emirates and agree to comply with these restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the Kingdom of Saudi Arabia or the United Arab Emirates. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means; or (ii) redistributed without the prior written consent of the Nomura Group member identified in the banner on page 1 of this report. Further information on any of the securities mentioned herein may be obtained upon request. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this publication, which may arise as a result of electronic transmission. If verification is required, please request a hard-copy version.
Additional information available upon request

NIPlc and other Nomura Group entities manage conflicts identified through the following: their Chinese Wall, confidentiality and independence policies, maintenance of a Restricted List and a Watch List, personal account dealing rules, policies and procedures for managing conflicts of interest arising from the allocation and pricing of securities and impartial investment research and disclosure to clients via client documentation.
Disclosure information is available at the Nomura Disclosure web page:

http://www.nomura.com/research/pages/disclosures/disclosures.aspx
104
ASIA PACIFIC
Asian Equity Research Group

HONG KONG Nomura International (Hong Kong) Limited 30/F Two International Finance Centre 8 Finance Street, Central, Hong Kong Tel: +852 2536 1111 Fax: +852 2536 1820 SINGAPORE Nomura Singapore Limited 5 Temasek Boulevard #11-01, Suntec Tower Five, Singapore 038985, Singapore Tel: +65 6433 6288 Fax: +65 6433 6169 TAIPEI Nomura International (Hong Kong) Limited, Taipei Branch 17th Floor, Walsin Lihwa Xinyi Building No.1, Songzhi Road, Taipei 11047, Taiwan, R.O.C. Tel: +886 2 2176 9999 Fax: +886 2 2176 9900 SEOUL Nomura Financial Investment (Korea) Co., Ltd. 17th floor, Seoul Finance Center 84 Taepyeongno 1-ga, Jung-gu Seoul 100-768, Korea Tel: +82 2 3783 2000 Fax: +82 2 3783 2500 KUALA LUMPUR Nomura Securities Malaysia Sdn. Bhd. Suite No 16.5, Level 16, Menara IMC 8 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: +60 3 2027 6811 Fax: +60 3 2027 6888 SYDNEY Nomura Australia Ltd. Level 25, Governor Phillip Tower 1 Farrer Place, Sydney NSW 2000 Tel: +61 2 8062 8000 Fax: +61 2 8062 8362 INDIA Nomura Financial Advisory and Securities (India) Private Limited Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India Tel: +91 22 4037 4037 Fax: +91 22 4037 4111 INDONESIA PT. Nomura Indonesia Suite 209A, 9th Floor, Sentral Senayan II Building, Jl. Asia Afrika No. 8, Gelora Bung Karno, Jakarta 10270, Indonesia Tel: +62 21 2991 3300 Fax: +62 21 2991 3333 TOKYO Financial & Economic Research Center Nomura Securities Co., Ltd. 17/F Urbannet Building, 2-2, Otemachi 2-chome Chiyoda-ku, Tokyo 100-8130, Japan Equity Research Department// Tel: +81 3 5255 1658 Fax: +81 3 5255 1718 Investment Strategy Department Tel: +81 3 5255 1735 Fax: +81 3 5255 1655 Economic Research Department Tel: +81 3 5203 0445 Fax: +81 3 5203 0498
www.nomura.com

Nomura Strategy 03 11

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Nomura Strategy 03 11

Încărcat de

Drepturi de autor:

Formate disponibile

STRATEGY

NOMURA INTERNATIONAL (HK) LIMITED

The long run, the short run and the in-between

Amy Lee, CFA, CAIA

March 2011 (Europe)

Summary - Asia: too hot to handle? (I)

Summary - Asia: too hot to handle? (II)

Nomura International (Hong Kong) Limited

Japan: earthquake; tsunami; nuclear crisis

Source: Bloomberg, Nomura International (HK) Investment Strategy

Closed-end fund premium/(discount) to NAV

Nomura International (Hong Kong) Limited

MSCI Far East ex JP / MSCI World (US$)

Source: Bloomberg, Nomura International (HK) Investment Strategy

Nomura International (Hong Kong) Limited

Source; CEIC, Nomura International (Hong Kong) limited Investment Strategy

Nomura International (Hong Kong) Limited

Other asset classes

Hong Kong Taxi License

Art (Old Masters)

Source: New York Taxi and Limousine Commission, Taxixchange, Bloomberg

US core CPI % y-y vs CRB index

Source: Bloomberg, Nomura International (HK) Limited Investment Strategy

Nomura International (Hong Kong) Limited

Source: Factiva, Nomura International (Hong Kong) Limited Investment Strategy

Source: Factiva, Nomura International (Hong Kong) Limited Investment Strategy

Nomura International (Hong Kong) Limited

Number of times protest appears in the press vs food prices

Nomura International (Hong Kong) Limited

Source: Nomura Strategy research

Global fund flows

0.6 0.4 0.2

0.0 -0.2 -0.4 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 21 00 -0.6

Nomura International (Hong Kong) Limited

EM and DM equity fund flows

EM excess flows and relative returns

Nomura International (Hong Kong) Limited

Global investor sentiment

Increasing put call ratio

Source: Nomura Strategy research Source: Nomura Strategy research

Nomura International (Hong Kong) Limited

Nomura International (Hong Kong) Limited

US dollar net non-commercial positions (US$bn)

Source: Bloomberg, Nomura International (HK) Investment Strategy

Divergence in sector performance

Source: Thomson Reuters Datastream, Nomura Investment Strategy

Source: Thomson Reuters Datastream, Nomura Investment Strategy

Source: Thomson Reuters Datastream, Nomura Investment Strategy

Switch: regional utilities relative to Singapore real estate

Nomura International (Hong Kong) Limited

Asias output gap has closed

Korea: wage growth (% y-y)

Taiwan: average monthly regular earnings (% y-y)

Source; CEIC, Nomura International (Hong Kong) limited Investment Strategy

Nomura International (Hong Kong) Limited

Tight labour market in India and China

2130% 22.0% 110% 36.7%

Source: CEIC, Nomura International (Hong Kong) Limited - Investment Strategy

China crop production: wheat and corn

Source: FAO, Nomura

Nomura International (Hong Kong) Limited

Soft commodities: Global inventory coverage (days)