of 62
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Global and AsianInvestment strategy
Christopher Wood
5-7 Nov 2012
Equity strategist
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Page 2
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US total debt as % of GDP
Note: Include public debt and private financial & non-financial sector debt.Source: CLSA Asia-Pacific Markets, Federal Reserve - Flow of Funds Accounts (1945-2012 data),Census Bureau Historical Statistics of the United States, Colonial Times to 1970 (1916-1944 data).
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400
1916 1925 1934 1943 1952 1961 1970 1979 1988 1997 2006
US total debt as % of GDP(%)
1933=299%
2Q09=386%
2Q12=354%
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Page 3
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Western central banks total assets as % of GDP
The Feds and the BoEs total assets have risen from 6% of GDP in 2007 to 18% and 27% at present, while theECBs and the Swiss National Banks assets have risen from 13% and 21% of GDP in 2007 to 32% and 85%.The BoJs balance sheet has also risen from 19% in 2007 to 32.5% at present.Source: Bloomberg, CEIC Data, CLSA Asia-Pacific Markets
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5
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15
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2007 2008 2009 2010 2011 2012
Bank of England
ECB
Federal Reserve
Swiss National Bank (RHS)
(%) (%)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Federal Reserve balance sheet expansion
At the proposed US$40bn/month buying of mortgage-backed securites (MBS), it will take about three years for the Fed to achieve asimilar scale of balance-sheet expansion as was added in QE1 between November 2008 and March 2010 when the Fed bought aboutUS$1.6tn of securities (Treasuries, MBS and agency debt). Note: Projections based on the open-ended QE3 (MBS buying ofUS$40bn/month) announced on 13 September 2012. Source: Federal Reserve
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2007 2008 2009 2010 2011 2012 2013 2014 2015
(US$bn) Agency debt
MBS
Treasuries
Fed assets
projection
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Page 5
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US and Japan household interest incomes
Japanese households interest income received has fallen by 80% from a peak of Y37.5tn in FY91 to Y7.4tn in FY10 ended March 2011.US annualised personal interest income has declined by 31% from a peak of US$1.422tn reached in Aug-08 to US$976bn in Sep-12.Note: Fiscal years beginning 1 April for Japan, calendar year data for US with annualised data for Jan-Sep 2012.Source: US Bureau of Economic Analysis, Japan Cabinet Office
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1,100
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1,400
1,500
0
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1986
1987
1988
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2008
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2012
(Yen tn) Japan household interest income
US personal interest income (RHS)
(US$bn)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US and Japanese banks asset yields
Japanese banks asset yield has fallen from 6.9% in 1990 to 1.2% in 2011, while US banks asset yield has declined from 6.5% in 2007to 4% in 1H12. Source: Japanese Bankers Association, FDIC, CLSA Asia-Pacific Markets
0
1
2
3
4
5
6
7
8
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Japan asset yield (1988-2011)US asset yield (2005-1H12)
(%)
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Page 7
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US M2 velocity (Nominal GDP/M2)
Note: US M2 velocity, measured as the nominal GDP to M2 ratio, has fallen from 1.96 in May 2006 to 1.56 inSeptember 2012. Source: Federal Reserve, CLSA Asia-Pacific Markets
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009
US M2 Velocity (Nominal GDP/M2)(x)
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Page 8
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US household debt growth
US household debt increased by an annualised 1.2% in 2Q12, the strongest growth since 1Q08. The increase is due to an annualised6.2% rise in consumer credit, of which federal guaranteed student loans accounted for 85% of the increase over the past 12 months.While home mortgages declined for the 13th consecutive quarter, falling by an annualised 2.1% in 2Q12. Domestic financial-servicessector has also reduced its debt for 14 straight quarters, declining by an annualised 5.1% in 2Q12 and down 19% since 4Q08.Source: Federal Reserve Flow of Funds Accounts
(10)
(5)
0
5
10
15
20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(QoQ saar) US household debt growth
Home mortgages
Consumer credit
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Page 9
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
S&P500 companies net income
S&P500 companies total quarterly net income declined by 6.9%YoY in 2Q12. On an annualised basis, the netincome of S&P500 companies rose by a mere 1.9%YoY in the four quarters ended June. Excluding Apple, annualisednet income for the S&P500 declined by 0.1%YoY, the first such decline since 3Q09. Source: Bloomberg
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2005 2006 2007 2008 2009 2010 2011 2012
(US$bn,annualised)
S&P500 excl. Apple Apple Inc.
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Page 10
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US average hourly earnings growth
US average hourly earnings for private production/non-supervisory workers rose by 1.1%YoY in October, thelowest annual growth rates since the data series began in 1964.Source: US Bureau of Labour Statistics
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10
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
US average hourly earnings growth of privateproduction/non-supervisory workers
(%YoY)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Number of Americans on food stamps
A total of 46.7m Americans or 22.5m American households were on food stamps as of July 2012.Note: Fiscal year ending 30 September. Data up to July 2012.Source: US Department of Agriculture (USDA) Food and Nutrition Service
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5
10
1520
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35
40
45
50
1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
Number of Americans on food stamps(m)
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Page 12
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US housing starts and new home sales
US housing starts in multifamily units (buildings with 5 units or more) are now 391% above the trough levelreached in Oct-09, while single-family housing starts are only 71% above their March 2009 low. Multifamily homesaccounted for 30% of total housing starts in September, up from 10% in Oct-09. New home sales are now 42%above their Feb-11 low but still 72% below the peak reached in July 2005. Source: US Census Bureau
0
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1,500
2,000
2,500
2004 2005 2006 2007 2008 2009 2010 2011 2012
(thousand, saar)
Other starts (buildings with 2-4 units)
Starts in buildings with 5 units or more
Single-family housing starts
US new home sales
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US mortgage application index
The US mortgage refinancing application index has risen by 151% since February 2011. But the new purchasemortgage application index has remained broadly flat since 2Q10, and is still 65% below its June 2005 peak.Source: Mortgage Bankers Association of America
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US new purchase mortgage application index
US mortgage refinancing application index (RHS)
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Page 14
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Residential investment and exports as % of US GDP
Residential investments share of US nominal GDP has fallen from a high of 6.3% in 4Q05 to 2.5% in 3Q12, whileexports share of GDP has risen from 10.5% to 13.8% over the same period.Source: US Bureau of Economic Analysis
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4
6
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14
16
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012
(%GDP)
Residential investment Exports
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Page 15
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
US Dollar Index
Source: Bloomberg
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74
76
78
80
82
84
86
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90
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
US Dollar Index
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Eurozone bank assets to nominal GDP ratio
Eurozone bank assets totaled 33tn at the end of 2Q12, or 3.5x Eurozone nominal GDP.Source: ECB, Eurostat
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
1998 2000 2002 2004 2006 2008 2010 2012
(x)Eurozone credit institutions' total assetsto Eurozone nominal GDP ratio
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Page 17
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Eurozone nominal GDP growth
Eurozone nominal GDP rose by 0.4%YoY in 2Q12, down from 1.5%YoY in 1Q12. Germany nominal GDP rose by1.7%YoY in 2Q12 vs 2.8%YoY in 1Q12. While nominal GDP in Eurozone excl. Germany declined by 0.1%YoY in 2Q12compared with a 1.0%YoY increase in 1Q12. Note: Based on unadjusted nominal GDP data. Source: Eurostat
(8)
(6)
(4)
(2)
0
2
4
6
8
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(%YoY) Eurozone Germany Eurozone excl. Germany
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Page 18
2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Eurozone private sector loan growth
German banks loans to the private sector rose by 1.4%YoY in September while private-sector loans in the rest ofthe Eurozone declined by 1.6%YoY. Note: Based on ECB data for monetary financial institutions loans to theprivate sector (excl. monetary financial institutions and general government). Source: ECB
-4
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18
2005 2006 2007 2008 2009 2010 2011 2012
(%YoY) Germany Eurozone excl. Germany
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
10-year and 2-year Spanish government bond yield
The 10-year and 2-year Spanish government bond yields have fallen by 203bp and 368bp from their recent highof 7.62% and 6.64% reached on 24 July to 5.59% and 2.96%. Source: Bloomberg
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2
3
4
5
6
7
8
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
(%) Spanish 10-year government bond yield
Spanish 2-year government bond yield
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Spanish banks borrowings from the ECB
ECB gross lending to Spanish banks has risen by 265bn or 197% in the first nine months of this year to 400bn inSeptember, accounting for 33% of the ECBs gross lending to Eurozone banks.Note: Average of daily data. Source: Bank of Spain
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15%
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25%
30%
35%
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(Euro bn) (%)
ECB gross lending to Spanish banks
as % of ECB gross lending to Eurozone banks (RHS)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Spain monthly net capital flows
Spain has recorded 14 consecutive months of capital outflows as of August, totalling 343bn or 32% of GDP.Note: Balance of payments: financial account balance excluding Bank of Spain operations. Source: Bank of Spain
(80)
(60)
(40)
(20)
0
20
40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(Euro bn) Spain monthly net capital inflows/outflows
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Spain current account balance
Spain recorded a current account surplus of 500m in July and 1.24bn in August, its first monthly current accountsurplus since August 1998. Source: Bank of Spain
(14)
(12)
(10)
(8)
(6)
(4)
(2)
0
2
1998 2000 2002 2004 2006 2008 2010 2012
(Euro bn) Spain monthly current account balance
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Bundesbank Target2 balance
Bundesbanks Target2 claims against other European national central banks rose by 288bn in the first 8 monthsof 2012 to a record 751.4bn at the end of August, but fell 56bn in September to 695.5bn. While the Bank ofSpains Target2 liabilities rose by 259bn in Jan-Aug 2012 to 434bn but down 34bn in September to 400bn.Source: Bundesbank, Bank of Spain
0
100
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2007 2008 2009 2010 2011 2012
( bn)Bundesbank Target2 balance
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Brent crude oil price
Source: Bloomberg
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2006 2007 2008 2009 2010 2011 2012
Brent crude oil priceUS$/bbl
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Asia ex-Japan CPI inflation and CRB Index
Note: WPI for India. Headline inflation rates weighted by five-year average (2007-11) nominal personal consumption.Source: CEIC Data, Bloomberg, CLSA Asia-Pacific Markets
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-2
-1
0
12
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6
7
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9
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Asia ex-Japan CPI inflation
CRB Index (RHS)
(%YoY)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
MSCI China and Emerging Markets relative to S&P500
The MSCI Emerging Markets Index has underperformed the S&P500 by 27% since October 2010, while the MSCI China Index,which accounts for 17% of the MSCI Emerging Markets Index, has underperformed the S&P500 by 31% over the sameperiod. The MSCI China has outperformed the S&P500 by 16% since early September while the MSCI Emerging Markets hasoutperformed by 6%. Source: Datastream
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(1/1/00=100) MSCI China relative to S&P500
MSCI Emerging Markets relative to S&P500
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
MSCI AC Asia Pacific ex-Japan trailing price-to-book
MSCI AC Asia Pacific ex-Japan Index now trades on 1.61x trailing price-to-book, compared with a long-termaverage since 1995 of 1.82x and a late 2008 low of 1.16x. Source: Bloomberg
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
1995 1997 1999 2001 2003 2005 2007 2009 2011
(x)
mean
-1sd
+1sd
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
CLSA Asia Pacific ex-Japan asset allocation
Source: MSCI, CLSA Asia-Pacific Markets
MSCI AC Asia
Pacific ex-Japan
weightings
28-Sep-12
CLSA
recommended
weightings
28-Sep-12
Mismatch
from current
benchmark
Australia 25.2% 8.0% -17.2%
China 17.3% 18.0% 0.7%
Hong Kong 8.9% 8.0% -0.9%
India 7.0% 8.0% 1.0%
Indonesia 2.7% 6.0% 3.3%
Korea 15.5% 14.0% -1.5%
Malaysia 3.6% 6.0% 2.4%
New Zealand 0.4% 0.0% -0.4%
Philippines 0.9% 8.0% 7.1%
Singapore 5.4% 6.0% 0.6%
Taiwan 11.1% 8.0% -3.1%
Thailand 2.2% 8.0% 5.8%
Vietnam -- 2.0% 2.0%Total 100.0% 100.0% --
A i J th ti it tf li
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Asia ex-Japan thematic equity portfoliofor long-only absolute-return investors
Source: CLSA Asia-Pacific Markets
Regional consumer 4% Samsonite
Australia gold mining 10% Newcrest Mining
China internet search engine 6% Baidu
China internet company 4% Tencent
India consumer 8% Titan Industries (3%), Godrej Consumer (5%)
India banks 4% HDFC Bank
India housing finance 4% HDFC
India infrastructure finance 4% IDFC
India infrastructure 3% Bharat Heavy Electricals (BHEL)
India internet play 4% Info Edge
Indonesia autos 4% Astra International
Indonesia cement 4% Indocement
Indonesia fuel distribution 3% AKR Corporindo
Korea electronics 5% Samsung Electronics
Korea internet search portal 3% NHN Corp
Philippines banks 5% Security Bank
Philippines consumer 5% Universal Robina
Singapore dividend plays 10% StarHub (5%), SATS (5%)
Thailand banks 4% Krung Thai Bank
Thailand consumer 6% CP All
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IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
CLSA thematic portfolio relative to MSCI Asia ex-Japan
Note: Data up to 1 November 2012. This portfolio has risen by 691% in US$ terms since its inception on 30 Sep 2002,compared with a 200% gain in the MSCI AC Asia ex-Japan Index. The portfolio rose by an annualised 22.7% since inception,compared with an annualised 11.5% increase in the MSCI AC Asia ex-Japan Index. Based on the thematic portfolio for long-only absolute-return investors. Excluding dividends paid. Source: Datastream, CLSA Asia-Pacific Markets
0
100
200
300
400
500
600
700
800
900
Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12
Asia ex-Japan thematic portfolio
MSCI AC Asia ex-Japan Index
(30 Sep 02=100)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: WPI and CPI inflation
Headline WPI inflation rose from 7.55%YoY in August to 7.8% in September, while core WPI inflation (non-foodmanufactured products) was unchanged at 5.6%. Food WPI inflation eased from 9.1% in August to 8.5% inSeptember. CPI inflation slowed from 10%YoY in August to 9.7%YoY in September.Source: Ministry of Commerce & Industry, CEIC Data
-2
0
2
4
6
8
10
12
2006 2007 2008 2009 2010 2011 2012
India WPI inflation
Core WPI inflationNew CPI inflation
(%YoY)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: RBI policy rates
The RBI cut the repo rate by 50bps to 8% on 17 April, and has cut the cash reserve ratio (CRR) by 175bps sinceJanuary to 4.25%. Source: Reserve Bank of India, Bloomberg
3
4
5
6
7
8
9
10
11
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RBI repo rate
Reverse repo rate
Cash reserve ratio (CRR)
(%)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Real GDP growth
India real GDP growth slowed to 5.5%YoY in Apr-Jun 12. CLSAs economics team forecast real GDP to grow by5.5% this fiscal year (FY13 ending 31 March 2013) and 6.0% in FY14.Source: CEIC Data, CLSA Asia-Pacific Markets
0
2
4
6
8
10
12
1997 1999 2001 2003 2005 2007 2009 2011
India real GDP growth
(%YoY)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Investment as % of GDP
Annualised gross fixed capital formation to nominal GDP ratio has fallen from a peak of 33.3% in 3Q08 to 29.2%in 2Q12. Source: CEIC Data, Reserve Bank of India
22
24
26
28
30
32
34
1997199819992000200120022003200420052006200720082009201020112012
India gross fixed capital formation as % of GDP(%, 4Qma)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Growth in value of investment projects
The growth in value of investment projects under implementation slowed from 39%YoY in Sep-10 to 8.3%YoY inSep-12. Source: Centre for Monitoring Indian Economy (CMIE)
0
10
20
30
40
50
60
2004 2005 2006 2007 2008 2009 2010 2011 2012
(%YoY)Growth in value of investment projects under implementation
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: New investment projects announced
New investment project announcements during the July-September quarter fell by 77%YoY to Rs585bn, the lowestlevel since April-June 2004. Source: Centre for Monitoring Indian Economy (CMIE)
0
1
2
3
4
5
6
7
8
9
2004 2005 2006 2007 2008 2009 2010 2011 2012
(Rs tn)New investment projects annoucements
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Bank credit growth
India bank credit growth slowed from 24.5%YoY at the end of 2010 to 16.0%YoY on 19 October 2012.Source: Reserve Bank of India
8
10
12
1416
18
20
22
24
26
28
30
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
India total bank credit growth
%YoY
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Current account balance
Note: July 2011-June 2012 = 4.2% of GDP.Source: CEIC Data, RBI
-5
-4
-3
-2
-1
0
1
2
3
4
1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
India current account as % of GDP(%, annualised)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Rupee/US$ (inverted scale)
Indian rupee has appreciated by 6% against the US dollar since June, after depreciating by 15% from earlyFebruary high. The rupee has still fallen by 18% against the US dollar since 1 August 2011. Source: Bloomberg
1518
21242730333639
42454851545760
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Indian rupee/US$ (inverted scale)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Cumulative FII net equity investment
Note: FII data up to 31 October 2012. FIIs have bought a net US$18bn worth of Indian equities so far this year.Source: Bloomberg, SEBI
2,000
4,000
6,000
8,00010,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
0
10
20
3040
50
60
70
80
90
100
110
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Cumulative FII net equity investment
BSE Sensex (RHS)
US$bn
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IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Cumulative net buying by mutual funds
Indian domestic mutual funds have sold a net Rs151bn worth of Indian equities so far this year.Note: Data up to 1 November 2012. Source: Bloomberg, SEBI
-50
0
50
100
150
200
250
300
350
400450
500
550
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Cumulative net buying of Indian stocksby domestic mutual funds
(Rs bn)
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
India: Sensex one-year forward PE
Note: Sensex now trades on 14.4x one-year forward earnings, compare with a 10-year average of 15x and a long-termaverage of 17.7x since 1990. Source: CLSA Asia-Pacific Markets
5
10
15
20
25
30
35
40
45
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
(x)
average
d d l
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2012 CLSA Asia-Pacific Markets (CLSA).
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India: MSCI India relative to Asia ex-Japan
Source: Datastream, CLSA Asia-Pacific Markets
40
60
80
100
120
140
160
180
200
220
240
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
MSCI India relative to MSCI AC Asia Pacific ex-Japan Index
Ch C fl
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
China: CPI inflation
China headline CPI inflation slowed from 6.5%YoY in July 2011 to 1.9%YoY in September 2012, while food CPIinflation slowed from 14.8%YoY to 2.5%YoY over the same period. Non-food CPI rose by 1.7%YoY in Septemberwhile core CPI (excl. food & energy) rose by 1.6%YoY. Source: CEIC Data, National Bureau of Statistics
-5
0
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012
Food CPI
China CPI inflation
Non-food CPI
(%YoY)
Chi N i l GDP h
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
China: Nominal GDP growth
China nominal GDP growth has slowed from 18.4%YoY in 3Q11 to 8.5%YoY in 3Q12.Source: CEIC Data, CLSA Asia-Pacific Markets
0
5
10
15
20
25
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(%YoY)
China nominal GDP growth
Chi A h i i th
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
China: A-share companies earnings growth
China A share companies aggregate net profits fell 3.6%YoY in 3Q12, compared with a 2.4%YoY decline in 2Q12.Total bank profits were up 15.8%YoY in 3Q12 vs 16.8%YoY increase in 2Q12. Non-bank A share companies profitsfell 20.6%YoY in 3Q12 vs 17.4%YoY decline in 2Q12. Source: FortuneCLSA, Wind
(30)
(20)
(10)
0
10
20
30
40
50
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
(%YoY) Total A shares A shares excluding banks
Chi C t ib ti t l GDP th
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2012 CLSA Asia-Pacific Markets (CLSA).
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China: Contribution to real GDP growth
Gross capital formation contributed less to real GDP growth than final consumption in 2011 and 1-3Q12 for the first timesince 2005. Final consumption (household & government) contributed 4.2ppts to the real GDP growth of 7.7%YoY in 1-3Q12while gross capital formation contributed 3.9ppts. In 2011, consumption contributed 5.2ppts to the real GDP growth of9.3%YoY while investment contributed 4.5ppts. Source: CEIC Data, National Bureau of Statistics (NBS)
(6)
(4)
(2)
02
4
6
8
1012
14
16
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1-3Q
2012
(ppt)Final consumption Gross capital formation Net exports
Chi B h k i t t t d RRR
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2012 CLSA Asia-Pacific Markets (CLSA).
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China: Benchmark interest rates and RRR
The PBOC cut the benchmark one-year lending and deposit rates by 25bp in June to 6.31% and 3.25%, and by afurther 31bp and 25bp in July to 6.0% and 3.0%. RRR has been cut by 150bp since December 2011 to 20%.Source: CEIC Data, PBOC
0
2
4
68
10
12
14
16
18
20
22
1
2
3
4
5
6
7
8
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
One-year lending rate
One-year deposit rate
Reserve requirment ratio (RHS)
(%) (%)
Ch b b k l d d b d f
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2012 CLSA Asia-Pacific Markets (CLSA).
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China: New renminbi bank lending and corporate bond financing
New renminbi bank lending totaled Rmb623bn in September, up 33%YoY from Rmb469bn in September 2011.New loans in the first 9 months of 2012 rose by 18%YoY to Rmb6.72tn, accounting for 79-84% of the anticipated loanquota of Rmb8-8.5tn for 2012. Loan outstanding rose by 16.3%YoY in September, up from 15%YoY in January. Short-termloans and bill financing accounted for 62% of new bank lending in Jan-Sep 2012. Net corporate bond financing rose by85%YoY to Rmb1.56tn in Jan-Sep 2012, equivalent to 66% of medium/long-term bank lending.Source: CEIC Data, PBOC, CLSA Asia-Pacific Markets
0
2
4
6
8
10
12
2007 2008 2009 2010 2011 Jan-Sep11 Jan-Sep12
Short-term bank lending & bill financing
Medium/long-term bank lending
Net corporate bond financing
(%YoY)
Chi A d il id ti l t l
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2012 CLSA Asia-Pacific Markets (CLSA).
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China: Average daily residential property sales
Average daily residential sales in 13 big mainland cities rose by 38%YoY in October.Note: Based on official sales data in 13 Tier 1-2 cities in floor space terms.Source: City-level Government Real Estate Information Centres, China Reality Research
0
10
20
30
40
50
60
70
80
90
100110
120
130
Nov-07 May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12
Average daily residential sales index (13 big cities)Nov-07=100
Chi N h i i Ti 1 iti
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China: New home prices in Tier-1 cities
New home prices in Beijing, Shanghai, Shenzhen and Guangzhou rose by 0.1%, 0.0%, 0.1% and 0.4% MoM inSeptember, but are still down 0.7%, 1.9%Y, 2.2% and 0.7% YoY.Note: Based on monthly NBS home price survey of 70 major cities. Source: National Bureau of Statistics (NBS)
(4)
(2)
0
2
4
6
8
10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
(%YoY) Beijing Shanghai
Shenzhen Guangzhou
Chi I t t i i f t t d l t t
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China: Investment in infrastructure and real estate
Fixed asset investment in infrastructure rose by 23.2%YoY in September, up from 2.2%YoY in December, and is up 13.8%YoYin the first 9 months of this year compared with an average growth of 22%YoY during 2005-2011. Residential real estateinvestment growth slowed to 4.8%YoY in July and 10%YoY in August and September.Source: National Bureau of Statistics, CEIC Data, CLSA Asia-Pacific Markets
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012
(%YoY) China residential real estate investment
Fixed asset investment in infrastructure
China: Capital flows
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2012 CLSA Asia-Pacific Markets (CLSA).
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China: Capital flows
Chinas capital outflows, measured as foreign exchange reserve accumulation less trade balance, totalled US$172bnin the past five quarters, equivalent to 1.8% of GDP. Note: Quarterly data up to 3Q12.Source: Peoples Bank of China, CEIC Data, CLSA Asia-Pacific Markets
(4)
(2)
0
2
4
6
8
10
(150)
(100)
(50)
0
50
100
150
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(US$bn) (%GDP, annualised)
China quarterly change in foreign reserves - trade balance
as % of GDP (annualised, RHS)
China Renminbi 12m non deli e able fo a d p emi m
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2012 CLSA Asia-Pacific Markets (CLSA).
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China: Renminbi 12m non-deliverable forward premium
The renminbi non-deliverable forward (NDF) market now assumes a 1.7% depreciation against the US dollar 12months forward. The renminbi has appreciated by 1.0% against the US dollar so far this year. Source: Bloomberg
-8
-6
-4
-2
0
2
4
6
8
10
12
14
2007 2008 2009 2010 2011 2012
(%)
China: Shanghai Composite Index
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China: Shanghai Composite Index
Source: Bloomberg
1,600
1,800
2,000
2,2002,400
2,600
2,800
3,000
3,200
3,400
3,600
Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12
Shanghai Composite Index
200-day moving average
China: MSCI China relative to Asia Pac ex Japan
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China: MSCI China relative to Asia Pac ex-Japan
Source: Datastream
80
90
100
110
120
130
140
150
160
170
180
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(1/1/02=100)MSCI China relative to Asia Pacific ex-Japan Index
Recommended long-only asset allocation for
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g yUS-dollar-denominated pension funds
Source: CLSA Asia-Pacific Markets
Weight Investment Type
45% Physical gold bullion
30% Asia ex-Japan equities, weighted according to the long-only
thematic portfolio
20% Unhedged gold mining stocks
5% Japanese equities, weighted according to the Japan long-
only portfolio
Gold bullion price in US dollar terms
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Gold bullion price in US dollar terms
Source: Bloomberg
200
400
600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Gold bullion spot price
200-day moving average
(US$/oz)
Gold mining stocks relative to gold price
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Gold mining stocks relative to gold price
Note: NYSE Arca Gold BUGS Index is a modified equal-dollar weighted index of 17 unhedged gold mining stocks.Source: Bloomberg
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
NYSE Arca Gold BUGS Index / Gold bullion price ratio(x)
Official sector gold demand
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2012 CLSA Asia-Pacific Markets (CLSA).
IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
Official sector gold demand
Note: Central banks gold reserves increased by 157.5tn tonnes in 2Q12, the largest quarterly net buying sincethe official sector became a net buyer in 2Q09. Source: World Gold Council
(200)
(160)
(120)
(80)
(40)
0
40
80
120
160
1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12
(tonne) Official sector gold demand
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IMPORTANT: The content of this report is subject to and should be read in conjunction with the disclaimer and CLSA's Legal and Regulatory Notices as set outat www.clsa.com/disclaimer.html, a hard copy of which may be obtained on request from CLSA Publications or CLSA Compliance Group, 18/F, One Pacific Place,88 Queensway, Hong Kong, telephone (852) 2600 8888.
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Important notices
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Important notices2012 CLSA Asia-Pacific Markets ("CLSA").
Key to CLSA/Credit Agricole Securities investment rankings: BUY: Total return expected to exceed market return AND provide 20% or greater absolute return; O-PF: Total return expected to be greater than marketreturn but less than 20% absolute return; U-PF: Total return expected to be less than market return but expected to provide a positive absolute return; SELL: Total return expected to be less than market return AND toprovide a negative absolute return. For relative performance, we benchmark the 12-month total return (including dividends) for the stock against the 12-month forecast return (including dividends) for the local market wherethe stock is traded.
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