Jp Morgan Outlook Devepment Countries

Emerging Markets Equity Research3 July 2008

Adrian MowatAC Emerging Markets [email protected] (852) 2800 - 8599 J.P.Morgan Securities (Asia Pacific ) Limited

Deanne Gordon South Africa [email protected] (27-21) 712 0875 J.P.Morgan Equities Ltd.

Ben Laidler Latin America [email protected] (562) 425 5407 Inversiones y Asesorias Chase Manhattan Ltda

Peter Westin Russia [email protected] (7-495) 967-1771 J.P. Morgan Bank International LLC

Rajiv Batra Emerging Markets [email protected] (91-22) 6695-3224 J.P. Morgan India Private Limited

Rohan Ghalla Emerging Markets [email protected] (91-22) 6719-8289 J.P. Morgan India Private Limited

Global Emerging Markets Research, Foreign Exchange, and CommoditiesJoyce Chang Global Emerging Markets [email protected] (1-212) 834-4203 J.P. Morgan Securities Inc.

Key ChangesIndex Page #Market Performance 2

Market Drivers 3

2008 Index Targets 4

Cross-section Earnings Growth 5

Earnings Revisions 6,7

Regional Valuation 8

Sector-Country PE Matrix 9

Valuation Distribution 10

Equities relative to Bonds 11

Economic Momentum 12

Policy Rates Forecast 13

Currency Forecasts 14,15

Credit Risk 16

Emerging Market Balance Sheets 17

Emerging Market in Perspective 18

Emerging Capital Market 19

Index Weightings 20

J.P. Morgan Securities (Asia Pacific) Limited http://mm.jpmorgan.com

Emerging Markets Strategy Dashboards

Emerging Markets Equity Strategy Team Country Recommendation Overweight

China, Mexico, Taiwan,

Thailand, The Philippines

Underweight

JPMorgan's revisions to 2008 Real GDP growth forecasts for the US• Full year : 1.7% [1.6%] • 2Q08 : 2.0% [1.0%] • 3Q08 : 1.0% [1.5%] JPMorgan's revisions to 2009 Real GDP growth forecasts• Negative: Latin America 3.9%[4.0%], Brazil 3.8% [4.0%]

JPMorgan's revisions to official interest rate forecasts• Turkey: Next move 17 Jul 08 +50bp [3Q08 +50bp ] ; Dec 08 level 17.25% [16.75%]• Peru: Next move 10 Jul 08 +25bp [4Q08 +25bp] ; Dec 08 level 6.25% [6.00%]

See page 21 for analyst certification and important disclosures, including non-US analyst disclosures. JPMorgan does and seeks to do business with the companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

India, South Africa

Brazil, Korea, Turkey, Poland,

Market performance to 2 July 2008• Year to date: MSCI Emerging Markets -15.1% underperforming MSCI World by 1.5%• Top market YTD in US$ terms: Argentina, Morocco and Israel• Bottom three markets YTD in US$ terms: Turkey, Philippines and India

Valuations• MSCI China is currently trading at a 12m fwd PE of 12.8x, which is a premium of 6.7% to MSCI EM, as compared to a premium of 42% at the beginning of the year.• MSCI India is currently trading at a 12m fwd PE of 13.6x, which is a premium of 13.3% to MSCI EM, as compared to a premium of 64% at the beginning of the year.

Emerging Markets Equity Strategy ResearchJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599 , [email protected] Equities Limited: Deanne Gordon (27-21) 712 0875, [email protected]

Market Performance: MSCI AC Performance by Regions, Countries and Sectors

2008 Year to Date

Glo

bal

Nor

th

Am

eric

a

Euro

pe

Japa

n

EMF

EMF

Asi

a

EMF

Latin

A

mer

ica

EMEA

EMF

Asi

a

Kor

ea

Taiw

an

Chi

na

Indi

a

Mal

aysi

a

Thai

land

Indo

nesi

a

Phili

ppin

es

Paki

stan

Consumer Discretionary -19.4% -17.4% -25.6% -17.1% -19.6% -22.7% -6.4% -31.0% -22.7% -2.2% -15.4% -39.4% -37.6% -26.2% -18.9% -28.4% -34.6%Consumer Staples -11.9% -8.3% -17.8% -12.0% -9.6% -13.8% 1.1% -24.9% -13.8% -8.9% -8.3% -12.6% -15.0% -5.5% -3.5% -3.1%Energy 3.6% 7.9% -1.2% -7.4% -4.3% -23.0% 14.7% -0.4% -23.0% -32.1% -18.0% -25.4% -26.3% -19.5% -10.0% 37.5% 3.3%Financials -25.6% -28.0% -26.6% -12.8% -24.9% -27.5% -7.6% -27.8% -27.5% -19.5% 1.7% -26.0% -48.8% -25.2% -13.5% -26.9% -40.4% -27.6%Healthcare -9.6% -12.6% -4.7% -9.7% -1.9% -5.3% 1.1% -5.3% 6.3%Industrials -16.6% -16.0% -19.3% -6.1% -32.2% -36.1% -20.0% -25.0% -36.1% -27.3% -10.1% -37.7% -50.6% -30.0% -31.7% -9.4% -34.3%Information Technology -13.9% -13.6% -24.4% -12.7% -12.0% -12.3% 12.2% -6.6% -12.3% 4.6% -19.8% -37.6% -2.6%Materials -0.4% 3.7% 0.1% -17.9% -3.5% -24.0% 7.1% 17.3% -24.0% -8.1% -14.9% -39.0% -40.7% -34.9% -17.2% -32.1% 6.2%Telecoms -18.1% -20.0% -18.5% -14.2% -18.9% -23.7% -8.2% -22.4% -23.7% -16.6% 9.6% -25.6% -46.0% -14.6% -7.9% -24.5% -26.3% -59.3%Utilities -7.2% -4.2% -9.9% -7.0% -12.9% -33.6% 11.5% 6.0% -33.6% -16.9% -34.6% -46.8% -18.9% -18.9% -14.0% -39.5% Region / Country Benchmark

-13.6% -12.4% -16.1% -12.4% -15.1% -24.0% 2.1% -8.9% -24.0% -13.5% -14.4% -28.7% -35.4% -22.1% -12.9% -11.6% -35.5% -12.5%

Change vs dollar 5.0% -10.9% 6.2% 6.1% -9.6% 1.2% -11.9% 1.9% -9.7% -12.3%

2008 Year to Date

EMF

Latin

A

mer

ica

Bra

zil

Mex

ico

Chi

le

Arg

entin

a

Peru

Col

ombi

a

EMEA

Sout

h A

fric

a

Rus

sia

Isra

el

Turk

ey

Pola

nd

Hun

gary

Cze

ch

Rep

ublic

Egyp

t

Mor

occo

Jord

an

Consumer Discretionary -6.4% -12.6% 0.2% -16.8% -31.0% -14.8% -13.1% -34.7% -51.6% -34.6% -37.0% 26.8%Consumer Staples 1.1% -1.2% 9.8% -26.0% -24.9% -17.3% -23.8% -22.5% Energy 14.7% 10.9% 57.3% -0.4% 31.6% 1.3% -24.7% -23.4% -35.9% -17.1% Financials -7.6% -8.3% 3.8% -20.4% -30.0% 8.7% -12.1% -27.8% -26.2% -26.6% -6.0% -52.2% -27.9% -30.6% -22.4% -8.8% 8.0% 4.5%Healthcare 1.1% -26.0% 1.3% 1.3% -45.4% -21.7% 14.9% Industrials -20.0% -23.3% -1.8% -30.7% -25.0% -20.0% -16.9% -37.2% -33.4% 18.2% 14.9%Information Technology 12.2% 12.2% -6.6% -32.9% -4.3% -26.0%Materials 7.1% 9.1% -5.3% 35.0% 19.4% 0.7% -16.2% 17.3% 18.0% 10.7% 54.7% 9.5% -7.8% -27.4% 23.4% Telecoms -8.2% 6.9% -11.4% -17.8% -33.3% -22.4% -6.9% -29.3% 9.4% -42.4% -3.2% -20.1% -10.8% -23.2% 29.7%Utilities 11.5% 15.8% 0.1% 18.7% 6.0% 1.8% 74.3%Region / CountryBenchmark

2.1% 3.9% -4.2% -7.8% 34.0% 2.5% -0.6% -8.9% -2.1% -6.6% 6.1% -41.2% -25.9% -24.5% -7.9% -5.7% 20.5% 13.0%

Change vs dollar 9.5% 4.7% -3.9% 4.0% 1.8% 11.8% -14.3% 5.1% 15.2% -5.9% 14.5% 14.1% 17.4% 3.8% 6.7% 0.2%

Notes Updated as of Jul 2Source: Bloomberg, MSCI.Regional headings first sorted by regional weights in the MSCI EMF and then country headings from left to right by relative weights within the MSCI EMFIndices: Regions in US$ and countries in local currency. Local currency movements against the dollar : appreciation / (depreciation)Country and sector cross sections in italic blue have outperformed their indices by more than 2%. Shaded areas have underperformed their indices by more than 2%.

July 3, 2008

2


Outlook: Market DriversGlobal and developed market driversCountry Positive NegativeGlobal Equities discounting US recession Recession like dynamics, credit crunch, inflation, risk aversion, high oil pricesUS Abating recession fears, fiscal package stimulating consumer spending Sub-prime & housing issues, slower earnings growth, high oil prices and inflationEurope Steepening yield curve, cheap valuations, stabilizing credit markets Weakening growth indicators, negative earnings revisions, currency headwinds, high inflation and potential

rate hikeUK Valuations cheap, currency weakness, wage growth under control Potentially weaker consumer, slowdown in housingJapan Corporate pricing power, rising asset prices, new credit cycle, reasonable valuations, interest rate rise Cyclical earnings, recent weak manufacturing and yen volatilityAustralia Strong terms of trade, consumer tax cuts on the way, corporate pricing power Strong currency headwinds for earnings, weak housing, bank funding costs and asset quality issues,

commodity price risk, slowdown in economic activity post rate hikes, high inflationHong Kong China macro (currency revaluation, possible policy loosening), low real rates, reflation continues, strong

corporate earnings growth, China investment flowsProperty price increases concentrated in luxury end of the market, weak US equity outlook

Singapore Return of 'safe haven' status for Singapore, Banks stocks re-rating from better volume / margins, Property launches leading to real estate run up

Higher food/fuel inflation, tightening policy, significant growth slowdown

Source: JPMorgan.

Emerging Market DriversCountry Positive NegativeChina Headline CPI trending down in 2H08, resumption of RMB appreciation, potential switch in policy focus from

inflation to growth, reform & liberalization on track, lower corporate tax rate, strong domestic demand, strong earnings growth, QDII flows, potential eased loan growth control, liberalization in oil price

Potential further macro tightening, social stability issues, soaring crude oil price, broader and deeper US/global recession, policy mis-step risks, recent weather disruptions

India Long term economic growth, demographics, cash positions with mutual funds and insurance companies, rising wage levels

High inflation, widening current account deficit, depreciating Rupee, politics, expensive valuations, US slowdown impact on Indian IT

Indonesia High soft commodity prices Crowded carry trade, limited policy flexibility, high inflation trending upwards, increase in bond issuance to meet subsidies, interest rate tightening, higher real interest rates

Korea New government potentially pro-growth and possibilities for deregulations in property sector High inflation with slower economic growth, low domestic investment and consumption, fading positive impact from depreciation of KRW on export names

Malaysia Strong domestic demand, strong ringgit, soft commodity play, 9MP pump priming Near term political uncertainty, limited GLC reform, accounting scandals, delays in 9 MP infrastructure projects

Pakistan Fast growing economy, peaking interest rates, cheap valuations, strong ROEs, M&A, privatizations Political risk, infrastructure issues, power deficit, fiscal and current account deficits, high inflation, interest rate tightening

Philippines Fiscal consolidation, OFW remittances and BPO sector to see continued strength, investment cycle upturn Global risks to affect risk appetite on emerging economies, food inflation, low liquidity, political noise, Middle east unrest, interest rate tightening

Taiwan Pro-growth initiatives by new government, closer cross-straits relationships, investment positioning (consensus UW position among FIs)

High emerging market inflation to drag growth, high valuations across non-tech space

Thailand Earnings growth premium, falling real rates, fiscal stimulus, recovering domestic demand, cheap valuations Uncertainty on macro economic policy, politics, inflation

Brazil Strong reserve position, twin surpluses, counter-cyclical monetary policy,structural change in many sectors driving growth and equity market deepening.

Consensus overweight, fiscal relaxation, economy growing above potential, limited reform agenda, equity market heavy commodity concentration, Rate hike, Inflation

Czech Republic Domestic demand-led GDP growth Rich valuations. Political uncertainty, inflationHungary Easing of macro fears, bond spread compression HUF becoming more crowded. Lack of real buy-in on reform by Socialist partyMexico Economy resilient to US slowdown, Domestic demand strong, Fiscal spending supportive, Reform agenda

ongoing, De rated market.Still vulnerable to the US cycle and Inflation

Poland Fixed investment growth, high household income Rising input cost, margin pressure, hawkish central bank, local mutual fund redemptionsRussia Abundant domestic liquidity, consumer boom, commodity prices, fixed investment growth, potential oil tax

reformHeavily skewed to commodity exposure, cost and wage growth, interest rate tightening

South Africa SA not over owned by foreigners, infrastructure investment, valuations Rand exchange rate wildcard, viewed as commodity play, tightening monetary policy, electricity outage, political uncertainity, cash flush SA corporate balance sheets

Turkey Valuations Politics, central bank easing fully priced in to equity markets, declining earnings expectations, rising inflation expectations, large current account deficit

Source: JPMorgan. Updated as of Jul 2008

3


Outlook: December 2008 Index TargetsLocal Market Index MSCI Local Index Valuations (PE)

Dividend US $ Total Target Index2-Jul-08 Target Return 2-Jul-08 Target Return 2-Jul-08 Target Return Yield ## Returns Returns 07E EPS 08E EPS 08E EPS

Emerging Market IndicesChina (H Share)# 11609 18500 59 61 96 58 7.8 7.8 0 1.4 58 59 16.0 14.0 22.0India (Sensex) 13665 18500 35 553 760 38 43.2 45.0 -4 0.7 32 33 17.3 14.7 20.2Indonesia (JCI) 2378 2800 18 3411 4040 18 9215 9200 0 1.5 19 20 16.2 14.0 16.6Korea (KOSPI) 1624 1970 21 447 550 23 1037 1020 2 0.9 25 26 12.4 10.7 13.2Malaysia (KLCI) 1154 1500 30 423 560 33 3.3 3.1 6 1.7 41 43 13.7 12.6 16.7Pakistan (KSE100) 12126 16500 36 392 525 34 69.2 63.6~ 8 3.1 46 49 11.7 10.0 13.4Philippines (PCI) 2394 3400 42 465 670 44 45.2 45.0 0 2.5 45 47 12.6 11.6 16.8Taiwan (TWSE) 7354 11000 50 286 425 49 30.4 29.0 5 2.4 56 58 13.0 12.6 18.8Thailand (SET) 760 970 28 314 410 30 33.4 33.0 1 1.9 32 34 12.8 10.9 14.2South Africa (JSE) 29304 30100 3 698 750 7 7.82 8.00 -2 1.9 5 7 14.2 11.4 12.2Brazil (Bovespa) 61106 78000 28 246162 320000 30 1.60 1.85 -16 1.3 12 14 15.4 13.5 17.5Mexico (Bolsa) 28681 38200 33 26562 36450 37 10.4 10.9 -5 1.6 31 32 15.0 14.1 19.3Chile 2840 3200 13 3688 4200 14 516 500 3 1.4 17 19 19.3 17.0 19.4Poland 40420 65000 61 1735 2800 61 2.11 2.19 -4 2.0 56 58 11.2 11.4 18.3Russia (RTS) 2255 2700 20 1390 1700 22 23.5 23.4 0^ 0.9 22 23 12.9 10.3 12.6Turkey 33566 49000 46 508332 750000 48 1.24 1.23 1 2.1 49 51 7.6 7.5 11.0

Emerging Markets*** 43381 58244 34 -2.7 1.4 31 33 15.1 14.7 19.7

Other Indices Dividend US $ Total Developed Markets 2-Jul-08 Target Return 2-Jul-08 Target Return Yield ## Returns Returns

Australia 5095 5900 16 0.96 0.93 -3 2.4 11 13Singapore 2906 3800 31 1.36 1.33 2 2.0 35 37Hong Kong 21704 31500 45 7.8 7.8 0 1.7 38 39US 1262 1450 15 1.0 1.0 0 1.1 15 16UK 5426 6400 18 1.99 1.86 -7 2.0 10 12Japan** 1301 1301 0 106 110 -4 0.8 -4 -3MSCI Europe 1218 1410 16 1.59* 1.50* -6 2.0 9 12MSCI EMU 183 216 18 1.59* 1.50* -6 2.0 11 13

Updated as of Jul 2Source: MSCI, Datastream, JPMorgan estimatesNote: Local Index used shown in brackets. Index targets for US from JPMorgan's US Equity Strategy team and for UK, MSCI Europe and MSCI EMU from JPMorgan's European Equity Strategy team.# Note that we have not included the forecast 10% move in the Renminbi in the MSCI China forecast.## Dividend yield is time-weighted to arrive at expected 2006 total USD returns. * Euro used for forex in MSCI Europe and MSCI EMU. ~ Consensus forecast is used for Pakistan Rupee** No index target. The number herein refers to current index level.*** Emerging Market index target derived based on weighted calculations of individual countries' target returns^ Forex return for Russia is zero as shares are traded in US$.

Index used

MSCI EMU

FTSE 100TOPIX

STIHSI

MSCI Europe

ASX 200

S&P 500

July 3, 2008

Current Index Level

Index Forex

MSCI US $ IndexForex

4


Profit Outlook: Earnings Forecasts Matrix for Countries and SectorsWeight EPS Growth Weight EPS Growth Weight EPS Growth

EM (%) JPMorgan Consensus China (%) JPMorgan Consensus India (%) JPMorgan ConsensusMedian 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009

Total Market 100.0 - - - 14.2 14.0 15.6 Total Market 100.0 29.4 14.7 19.3 21.2 16.6 18.3 Total Market 100 21.3 18.2 17.6 17.0 16.7 22.0Consumer Discretionary 4.7 - - - 18.3 24.3 19.8 Consumer Discretionary 3.3 28.3 5.6 21.5 22.3 5.0 21.4 Consumer Discretionary 2.8 6.4 0.6 13.5 7.0 9.3 14.8Consumer Staples 4.2 - - - 18.1 1.0 17.1 Consumer Staples 2.5 32.4 31.2 24.8 27.6 29.6 25.1 Consumer Staples 5.3 17.9 12.2 14.1 14.1 9.1 14.6Energy 19.3 - - - 16.9 23.9 12.3 Energy 20.5 40.5 -0.9 18.8 38.0 15.6 14.1 Energy 22.7 22.3 10.9 11.9 19.1 20.8 35.5Financials 20.8 - - - 10.1 9.5 18.6 Financials 31.4 32.4 24.4 21.9 18.5 21.0 24.1 Financials 22.5 35.5 26.3 27.8 30.6 26.9 27.0Health Care 1.5 - - - 12.8 -5.4 16.8 Health Care 0.0 NA NA NA NA NA NA Health Care 4.2 26.9 27.7 -4.0 13.0 14.3 12.5Industrials 7.9 - - - 17.5 12.7 18.9 Industrials 10.8 14.2 7.5 9.9 12.6 2.6 14.2 Industrials 8.4 23.8 21.7 24.2 23.8 11.5 28.3Information Technology 11.1 - - - 4.7 17.5 10.5 Information Technology 2.6 42.2 44.8 40.5 38.5 33.7 23.6 Information Technology 15.8 21.0 25.5 23.9 17.3 18.4 15.9Materials 16.8 - - - 15.8 10.7 14.1 Materials 5.6 35.6 20.2 24.2 26.1 15.2 17.8 Materials 9.5 12.9 18.8 13.7 11.2 13.7 9.5Telecommunication Services 10.8 - - - 11.3 11.9 15.5 Telecommunication Services 21.4 1.1 23.5 17.4 19.2 24.6 15.1 Telecommunication Services 3.7 90.3 32.9 12.4 91.5 25.1 21.7Utilities 3.0 - - - 1.3 1.4 20.2 Utilities 1.9 -8.1 -11.1 19.8 -5.6 -6.9 20.5 Utilities 5.1 10.7 11.2 8.1 3.3 -8.3 10.8

Weight EPS Growth Weight EPS Growth Weight EPS GrowthIndonesia (%) JPMorgan Consensus Korea (%) JPMorgan Consensus Malaysia (%) JPMorgan Consensus

Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009Total Market 100.0 20.3 15.7 38.0 22.0 19.5 24.6 Total Market 100.0 11.9 15.8 17.1 13.2 14.6 15.6 Total Market 100.0 13.5 8.5 12.4 11.4 2.8 10.3Consumer Discretionary 7.9 20.3 20.3 10.2 21.0 21.0 13.0 Consumer Discretionary 9.8 22.0 49.9 6.6 17.3 49.6 11.9 Consumer Discretionary 11.5 -9.8 -15.8 4.8 9.5 -8.2 8.7Consumer Staples 6.5 56.4 55.8 13.5 27.6 36.6 16.1 Consumer Staples 5.9 17.4 17.1 10.6 14.0 13.8 13.5 Consumer Staples 18.8 38.7 31.3 10.3 35.4 26.8 6.7Energy 31.7 93.9 21.9 119.3 62.2 13.2 58.6 Energy 2.7 35.5 129.5 9.5 35.5 61.0 7.2 Energy 3.0 53.6 53.9 31.1 52.5 50.9 32.8Financials 19.0 8.5 14.2 13.7 22.0 20.9 17.2 Financials 18.2 4.3 -5.6 13.7 5.1 -1.0 7.4 Financials 27.9 14.9 9.6 16.8 15.0 2.1 9.7Health Care 0.0 NA NA NA NA NA NA Health Care 0.0 NA NA NA NA NA NA Health Care 0.0 NA NA NA NA NA NAIndustrials 4.3 317.3 126.0 26.2 311.9 112.9 32.7 Industrials 20.8 12.7 5.5 27.3 13.0 7.2 28.1 Industrials 19.9 18.1 21.8 18.3 10.7 16.3 17.8Information Technology 0.0 NA NA NA NA NA NA Information Technology 24.3 47.9 46.4 29.8 33.6 39.7 18.9 Information Technology 0.0 NA NA NA NA NA NAMaterials 6.8 6.7 -12.0 -15.1 12.8 -10.3 -6.2 Materials 12.3 20.0 16.7 7.1 20.0 16.5 4.9 Materials 1.1 583.5 151.8 16.3 583.5 151.8 16.3Telecommunication Services 18.4 -12.8 -9.5 16.5 9.3 8.2 12.4 Telecommunication Services 3.9 11.2 -11.2 17.8 6.8 -13.2 21.1 Telecommunication Services 6.8 -13.8 -7.0 12.1 -29.2 -39.7 8.2Utilities 5.4 69.9 69.9 57.8 105.3 105.3 46.6 Utilities 2.2 -36.5 -58.8 -33.8 -35.6 -58.7 131.5 Utilities 10.9 5.2 -2.2 -2.1 -6.0 -8.7 0.6

Weight EPS Growth Weight EPS Growth Weight EPS GrowthPhilippines (%) JPMorgan Consensus Taiwan (%) JPMorgan Consensus Thailand (%) JPMorgan Consensus

Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009Total Market 100.0 12.1 8.2 15.7 9.9 5.1 12.8 Total Market 100.0 -1.2 2.6 8.1 1.4 2.5 12.3 Total Market 100.0 20.2 17.1 9.8 16.8 114.3 8.7Consumer Discretionary 2.7 12.1 12.1 17.6 2.5 2.5 15.7 Consumer Discretionary 2.2 -3.3 -1.6 18.6 1.3 0.6 15.8 Consumer Discretionary 2.6 21.2 21.3 11.1 23.0 23.3 12.2Consumer Staples 0.0 NA NA NA NA NA NA Consumer Staples 1.5 22.7 22.7 11.5 18.3 18.3 11.3 Consumer Staples 1.6 0.9 0.9 8.2 70.6 70.6 40.3Energy 0.0 NA NA NA NA NA NA Energy 0.9 -24.6 -24.6 3.4 -24.6 -24.6 3.4 Energy 44.8 1.0 13.7 15.7 2.5 11.0 7.9Financials 44.5 9.9 -0.1 26.2 9.9 -2.7 19.9 Financials 18.4 15.7 4.0 12.9 17.1 11.8 24.1 Financials 32.2 14.9 30.0 13.4 15.1 -301.2 14.9Health Care 0.0 NA NA NA NA NA NA Health Care 0.0 NA NA NA NA NA NA Health Care 0.0 NA NA NA NA NA NAIndustrials 9.9 5.1 8.4 22.1 7.8 12.1 10.2 Industrials 3.4 5.4 3.2 11.1 5.4 -10.8 13.3 Industrials 1.4 136.7 136.7 -22.7 136.7 136.7 -22.7Information Technology 0.0 NA NA NA NA NA NA Information Technology 54.2 -6.5 3.6 11.2 -3.3 1.4 14.3 Information Technology 0.0 NA NA NA NA NA NAMaterials 0.0 NA NA NA NA NA NA Materials 14.5 -1.8 -3.0 -6.9 1.6 1.0 -1.3 Materials 7.4 -7.9 -13.5 -12.2 -8.4 -13.7 -3.4Telecommunication Services 33.5 13.3 12.6 14.4 10.4 9.8 12.1 Telecommunication Services 5.0 17.1 22.9 9.3 9.4 17.8 7.8 Telecommunication Services 8.0 55.5 41.2 -7.0 35.7 25.1 6.9Utilities 9.5 37.5 19.1 -21.8 38.6 9.0 -9.0 Utilities 0.0 NA NA NA NA NA NA Utilities 2.0 13.8 13.1 -7.8 6.9 6.1 -6.0

Weight EPS Growth Weight EPS Growth Weight EPS GrowthSouth Africa (%) JPMorgan Consensus Brazil (%) JPMorgan Consensus Mexico (%) JPMorgan Consensus

Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009Total Market 100.0 - - - 16.4 25.0 21.8 Total Market 100.0 - - - 23.2 14.5 17.8 Total Market 100.0 - - - 7.1 6.3 13.2Consumer Discretionary 6.9 - - - 9.9 10.6 20.2 Consumer Discretionary 3.3 - - - 100.7 75.8 49.7 Consumer Discretionary 12.1 - - - 20.6 13.7 18.1Consumer Staples 3.5 - - - 19.2 23.0 15.6 Consumer Staples 4.3 - - - 10.7 21.4 26.8 Consumer Staples 18.5 - - - 5.5 -1.9 14.8Energy 15.5 - - - 37.8 37.8 15.0 Energy 28.3 - - - 44.3 44.3 8.5 Energy 0.0 - - - NA NA NAFinancials 20.3 - - - 4.1 4.8 15.0 Financials 18.6 - - - 28.7 16.3 19.4 Financials 6.4 - - - -5.4 1.8 18.3Health Care 0.9 - - - 11.3 10.6 26.5 Health Care 0.0 - - - NA NA NA Health Care 0.0 - - - NA NA NAIndustrials 5.1 - - - 20.3 21.3 21.3 Industrials 2.9 - - - 37.4 73.0 18.0 Industrials 5.3 - - - -4.1 4.8 -4.0Information Technology 0.5 - - - 53.8 53.8 12.9 Information Technology 0.8 - - - 34.6 34.6 20.4 Information Technology 0.0 - - - NA NA NAMaterials 33.0 - - - 73.6 62.7 34.4 Materials 32.4 - - - -5.5 -4.1 21.2 Materials 18.5 - - - 16.5 10.3 9.0Telecommunication Services 14.3 - - - 11.6 15.3 21.6 Telecommunication Services 4.3 - - - 10.8 4.1 16.0 Telecommunication Services 39.2 - - - 2.4 5.6 16.0Utilities 0.0 - - - NA NA NA Utilities 5.0 - - - 8.4 7.0 7.7 Utilities 0.0 - - - NA NA NA

Weight EPS Growth Weight EPS Growth Weight EPS GrowthRussia (%) JPMorgan Consensus Poland (%) JPMorgan Consensus Turkey (%) JPMorgan Consensus

Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009 Median 2008 2009Total Market 100.0 - - - 23.5 25.3 12.0 Total Market 100.0 - - - 10.7 -1.4 14.8 Total Market 100.0 - - - 17.3 2.1 19.1Consumer Discretionary 0.8 - - - NA NA NA Consumer Discretionary 4.3 - - - 17.7 30.9 16.0 Consumer Discretionary 4.7 - - - 15.2 -27.0 22.7Consumer Staples 0.5 - - - 44.7 44.7 32.7 Consumer Staples 0.0 - - - NA NA NA Consumer Staples 10.9 - - - 20.0 16.7 23.9Energy 62.9 - - - 16.1 28.7 11.4 Energy 14.9 - - - -15.0 -12.5 0.7 Energy 6.4 - - - -17.2 -17.2 5.3Financials 9.7 - - - 34.0 34.0 24.2 Financials 51.6 - - - 10.7 4.4 31.3 Financials 41.6 - - - 15.6 1.4 19.5Health Care 0.5 - - - NA NA NA Health Care 0.9 - - - 68.8 68.8 48.2 Health Care 0.0 - - - NA NA NAIndustrials 0.0 - - - NA NA NA Industrials 5.4 - - - 38.9 61.2 30.4 Industrials 13.2 - - - 2.9 -6.7 15.7Information Technology 0.0 - - - NA NA NA Information Technology 2.3 - - - 4.8 4.8 6.5 Information Technology 0.0 - - - NA NA NAMaterials 14.9 - - - 59.8 6.6 6.8 Materials 9.6 - - - -14.5 -14.5 -11.1 Materials 9.1 - - - 43.0 39.3 40.0Telecommunication Services 10.8 - - - 22.6 28.6 16.9 Telecommunication Services 11.0 - - - 9.0 9.0 5.1 Telecommunication Services 14.1 - - - 39.6 39.6 9.6Utilities 0.0 - - - NA NA NA Utilities 0.0 - - - NA NA NA Utilities 0.0 - - - NA NA NA

Source: I/B/E/S, MSCI, JPMorgan. Updated as Jul 2008Note: Average earnings growth calculated based on earnings aggregate of MSCI contituents. Consensus numbers are used for stocks not covered by JPMorgan under JPMorgan forecasts calculation. Median numbers are for the year 2008.

July 3, 2008

5

Emerging Markets Equity StrategyJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599 , [email protected] Equities Limited: Deanne Gordon (27-21) 712 0875, [email protected]

Profit Outlook: Changes in 2008 and 2009 EPS Forecasts

Source: I/B/E/S Updated as of Jul 2Notes: The dashboard aims to show changes in earnings expectations. All year ends are for December. EPS figures are normalized, starting at 100 on base date Feb 2007 for ease of comparison. These numbers are directly from IBES aggregate and may differ from those in the growth expectations pages where adjustments are made for exceptional items.

July 3, 2008

World EM Asia EM Europe

China

Brazil Russia

Emerging Markets (EM)

KoreaEM Latin America

South Africa Mexico

Taiwan

95

100

105

110

115

120

Feb-07 Jun-07 Oct-07 Feb-08 Jun-08

2008

2009

95

100

105

110

115

120

125

130


2008

2009

99

104

109

114

119

124

129


2008

2009

96

104

112

120

128

136

144


2008

2009

100

110

120

130

140


2008

2009

80

90

100

110

120

130

140


2008

2009

80

90

100

110

120

130


2008

2009

95

105

115

125

135

145

155


2008

2009

90

95

100

105

110

115

120


2008

2009

95

100

105

110

115

120


2008

2009

95

105

115

125

135

145


2008

2009

90

100

110

120

130

140

150


2008

2009

6

Emerging Markets Equity StrategyJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599 , [email protected] Equities Limited: Deanne Gordon (27-21) 712 0875, [email protected]

Profit Outlook: Changes in 2008 and 2009 EPS Forecasts

Updated as of Jul 2Source: I/B/E/SNotes: The dashboard aims to show changes in earnings expectations. All year ends are for December. EPS figures are normalized, starting at 100 on base date Feb 2006 for ease of comparison. These numbers are directly from IBES aggregate and may differ from those in the growth expectations pages where adjustments are made for exceptional items.

July 3, 2008

India Israel Poland

Indonesia

Hungary

Malaysia

TurkeyChile

Philippines

Thailand

Czech. Republic Argentina

100

105

110

115

120

125


2008

2009

95

98

101

104

107

110


2008

2009

95

105

115

125

135

145

155


2008

2009

90

100

110

120

130

140


2008

2009

90

100

110

120

130


2008

2009

90

95

100

105

110

115

120

125


2009

2008

96

98

100

102

104

106

108

110

112


2008

2009

95

100

105

110

115

120


2008

2009

95

105

115

125

135


2008

2009

38

58

78

98

118

138

158


2008

2009

92

98

104

110

116

122

128

134

140


2008

2009

80

90

100

110

120

130


2008

2009

7

Emerging Markets Equity Strategy ResearchJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599,[email protected] Equities Limited: Deanne Gordon (27-21) 712 0875, [email protected]

Value: Regional and Countries Valuations

2-Jul-08 Avg. Current 12m Prospective Avg. Current Prospective Avg. Current ProspectiveMSCI Index 2006 Trailing Fwd 2007 2008E 2009E 2006 Trailing 2007 2008E 2009E 2006 Trailing 2007 2008E 2009E 2006 2007 2008E 2009E

Global* 361 16.0 13.8 12.5 14.2 13.3 11.7 2.4 2.8 2.8 2.8 3.1 2.5 2.1 2.1 2.1 1.9 17.0 15.0 15.7 16.7USA* 1,204 16.5 15.4 13.7 16.0 14.7 12.7 2.2 2.2 2.3 2.2 2.3 2.8 2.5 2.6 2.4 2.2 17.8 16.2 17.0 18.0Europe* 1,218 13.6 11.3 10.5 11.5 11.1 10.0 3.1 3.9 3.8 4.0 4.4 2.1 1.8 1.7 1.8 1.6 16.9 15.3 15.9 17.2Japan* 823 15.7 16.6 15.7 16.8 16.4 15.0 1.1 1.6 1.6 1.7 1.8 2.0 1.6 1.7 1.5 1.4 10.6 9.7 9.9 9.9EMF Asia 565 13.7 14.6 12.9 15.4 13.8 12.0 2.5 2.6 2.4 2.8 2.9 2.0 2.3 2.4 2.2 2.0 15.2 15.1 16.6 17.3EMF LATAM* 7,247,048 12.2 14.5 12.7 15.4 13.6 11.7 2.7 2.6 2.4 2.8 3.5 2.7 2.9 2.8 3.1 2.7 24.3 15.3 17.4 24.4EMF EMEA* 470 13.6 12.0 10.1 13.0 11.0 9.3 3.0 2.7 2.4 3.0 3.5 2.2 2.2 2.4 2.0 1.7 17.7 18.2 19.7 20.1Emerging Markets* 43,381 12.9 13.8 12.0 14.7 12.9 11.1 2.9 2.6 2.3 2.8 3.2 2.1 2.4 2.4 2.3 2.1 17.1 16.0 18.3 19.7Korea 447 11.4 11.6 9.9 12.4 10.7 9.2 1.8 1.7 1.7 1.7 2.0 1.6 1.6 1.7 1.5 1.3 14.1 13.9 14.7 15.3Taiwan 286 16.7 12.8 12.2 13.0 12.6 11.7 3.7 4.7 4.4 4.9 5.0 2.0 1.8 1.9 1.8 1.7 12.5 14.5 14.3 14.6China 61 14.6 15.0 12.8 16.0 14.0 11.7 2.6 2.6 2.4 2.8 3.4 2.3 2.6 2.7 2.4 2.1 17.4 18.7 18.5 19.3Brazil* 246,162 10.8 14.5 12.5 15.4 13.5 11.4 4.8 2.5 2.2 2.7 3.4 2.5 2.9 2.8 3.0 2.6 25.0 20.2 21.6 24.4Russia* 1,390 13.2 11.6 9.8 12.9 10.3 9.2 1.2 1.4 1.1 1.7 2.0 2.0 2.3 2.4 2.1 1.8 17.1 18.2 21.9 21.2South Africa* 698 13.9 12.8 10.4 14.2 11.4 9.3 3.2 3.3 2.9 3.8 4.6 2.6 2.3 2.7 1.9 1.6 22.5 19.7 19.5 18.8Mexico* 26,562 13.8 14.5 13.2 15.0 14.1 12.4 1.4 3.0 2.8 3.3 4.1 4.4 3.3 2.9 3.7 3.4 34.7 22.0 23.2 28.8India 553 19.9 16.0 13.6 17.3 14.7 12.5 1.4 1.3 1.3 1.4 1.4 4.2 3.2 3.6 2.9 2.3 23.0 23.0 21.9 20.7Malaysia 423 14.3 13.2 11.9 13.7 12.6 11.2 3.4 3.4 3.4 3.5 3.8 1.9 2.0 2.1 1.9 1.7 14.3 15.4 15.7 16.3Israel* 480 16.2 13.6 12.1 14.5 12.8 11.5 2.8 3.4 3.5 3.3 4.0 2.1 2.2 2.3 2.1 1.8 14.5 16.7 17.4 17.0Poland* 1,735 14.5 11.3 10.6 11.2 11.4 9.9 4.8 4.4 4.8 4.0 4.3 2.2 1.8 1.9 1.8 1.7 16.5 16.5 16.3 17.7Chile* 3,688 21.2 18.1 15.4 19.3 17.0 13.9 5.1 2.7 2.7 2.8 3.5 1.6 1.9 2.0 1.9 1.8 8.7 10.5 11.4 13.2Turkey* 508,332 14.2 7.5 6.9 7.6 7.5 6.3 2.3 4.4 4.7 4.2 5.2 1.8 1.4 1.4 1.4 1.2 14.3 18.3 18.9 20.3Thailand 314 10.2 11.8 10.4 12.8 10.9 9.9 4.0 3.7 3.6 3.8 4.1 2.0 2.0 2.1 1.9 1.7 16.7 16.2 18.3 18.4Indonesia 3,411 15.0 15.1 12.1 16.2 14.0 10.1 3.2 3.2 3.3 3.1 3.6 2.9 4.4 4.7 4.0 3.2 20.9 27.7 31.1 31.1Hungary* 1,312 10.2 9.2 8.6 9.6 8.8 8.3 2.8 3.9 3.9 3.9 4.3 2.3 1.9 1.9 1.8 1.6 24.9 19.6 21.0 20.0Egypt* 1,966 14.8 15.1 12.8 16.3 13.9 11.8 5.2 2.4 1.9 2.8 4.1 4.3 2.6 2.1 3.0 2.6 30.5 19.3 18.0 23.9Czech Republic* 497 20.5 16.7 14.5 18.0 15.4 13.5 9.1 2.2 0.8 3.6 4.1 2.3 3.0 3.1 2.9 2.6 12.8 17.4 19.3 20.0Argentina* 23,156,220 18.3 10.3 10.1 10.1 10.6 9.7 1.3 2.4 1.2 3.6 4.1 3.1 2.0 2.6 1.5 1.2 28.2 32.9 17.8 13.9Philippines 465 14.2 12.1 10.8 12.6 11.6 10.1 3.2 5.0 4.9 5.0 5.6 2.0 1.9 1.9 1.8 1.7 15.0 14.9 16.1 17.3Pakistan 392 11.7 10.9 9.5 11.7 10.0 8.9 4.9 5.6 5.1 6.2 7.1 4.1 2.7 2.9 2.5 2.2 34.8 27.0 26.7 26.6

Source: I/B/E/S, MSCI, JPMorgan* Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. IBES Estimates are not available for Morocco, Jordan, Peru and Colombia. Updated as of Jul 2For all other markets, forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and I/B/E/S estimates for the rest.

July 3, 2008

P/E (x) Div. Yield (%) P/BV (x) ROE (%)

8


Value: PE Matrix for Countries and Sectors

12-month forward PE

USA

Emer

ging

M

arke

ts

EMF

EMEA

EMF

LATA

M

EMF

Asi

a

Kor

ea

Taiw

an

Chi

na

Indi

a

Mal

aysi

a

Indo

nesi

a

Thai

land

Phili

ppin

es

Paki

stan

Consumer Discretionary 15.3 12.2 10.2 16.4 12.4 8.1 12.2 14.3 12.5 12.4 9.5 16.8 11.3 NAConsumer Staples 15.8 16.9 12.9 17.8 19.2 16.4 19.0 14.6 19.4 16.5 13.9 31.3 NA NAEnergy 11.4 10.6 9.1 12.6 14.6 6.4 13.6 12.9 14.1 13.1 13.6 9.3 NA 8.8Financials 11.7 11.3 8.4 11.6 13.9 8.5 15.8 12.1 13.5 9.5 11.3 11.3 11.2 9.6Health Care 13.3 16.2 14.6 NA 23.3 NA NA NA 19.4 NA NA NA NA NAIndustrials 14.2 13.5 12.5 14.4 15.4 11.4 12.9 11.1 17.5 12.0 11.2 14.6 12.1 NAInformation Technology 16.8 12.4 13.3 20.2 15.4 10.5 11.6 23.1 14.6 NA NA NA NA NAMaterials 14.8 11.2 11.1 11.4 11.6 9.3 10.4 10.7 8.0 13.5 10.8 9.8 NA 8.5Telecommunication Services 14.3 13.8 13.3 12.9 17.6 9.9 13.6 14.4 15.7 14.5 12.5 13.2 10.2 14.6Utilities 15.4 14.4 14.3 12.6 16.2 40.2 NA 15.5 13.1 11.2 18.7 8.9 10.6 NAMarket Aggregate 13.7 12.0 10.1 12.7 14.6 9.9 12.2 12.8 13.6 11.9 12.1 10.4 10.8 9.4Sector Neutral* 13.7 12.0 10.9 13.6 14.7 10.2 13.5 13.8 13.6 12.5 12.2 12.3 11.5 11.1

12-month forward PE

EMF

EMEA

Rus

sia

Sout

h A

fric

a

Isra

el

Pola

nd

Turk

ey

Hun

gary

Egyp

t

Cze

ch R

epub

lic

EMF

LATA

M

Bra

zil

Mex

ico

Chi

le

Arg

entin

a

Consumer Discretionary 10.2 NA 9.0 10.6 14.8 7.2 NA NA 19.9 16.4 19.2 14.5 16.6 NAConsumer Staples 12.9 23.8 10.9 NA NA 14.7 NA NA NA 17.8 17.7 18.4 14.7 NAEnergy 9.1 8.9 10.6 NA 9.3 7.0 9.8 NA NA 12.6 12.9 NA NA 10.9Financials 8.4 12.0 7.5 8.6 11.2 5.0 7.1 10.8 12.7 11.6 11.4 15.4 NA 7.6Health Care 14.6 NA 10.8 NA 22.0 NA 13.6 NA 18.5 NA NA NA NA NAIndustrials 12.5 NA 10.8 12.3 18.0 10.7 NA 16.8 NA 14.4 14.1 15.4 14.2 NAInformation Technology 13.3 NA 8.0 14.7 16.6 NA NA NA NA 20.2 20.2 NA NA NAMaterials 11.1 10.4 12.2 12.9 6.7 9.1 NA 9.5 11.5 11.4 12.0 8.8 12.5 6.3Telecommunication Services 13.3 14.4 13.5 11.9 11.5 8.8 9.6 13.7 14.3 12.9 11.1 13.7 12.8 10.0Utilities 14.3 NA NA NA NA NA NA NA 14.3 12.6 10.9 NA 20.1 NAMarket Aggregate 10.1 9.8 10.3 12.2 10.6 6.8 8.6 12.8 14.4 12.7 12.5 13.2 15.4 10.1Sector Neutral* 10.9 12.2 10.3 11.8 11.9 8.7 10.6 12.0 12.9 13.6 13.6 12.9 12.6 10.2

Source: IBES, MSCI, JPMorgan. Note: PEs are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and IBES estimates for the rest.*Sector neutral PE are calcuated by using sector weights of MSCI EM and sector PE of respective markets (MSCI EM sector PE used where country sector does not exist) Updated as of Jul 2

July 3, 2008

9


Value: Distribution Tables for PE, PBR, DY and RoE

2008E: Price to Earnings Ratio (x) 2008E: Price to Book Value Ratio (x)Weighted Quartiles Weighted QuartilesAverage Min Lower Median Higher Max Average Min Lower Median Higher Max

Global* 13.3 0.0 11.4 14.7 19.1 282.6 Global* 2.1 0.2 1.3 2.0 3.3 137.2USA* 14.7 4.3 12.5 15.5 19.9 257.4 USA* 2.4 0.2 1.5 2.4 3.9 137.2Europe* 11.1 2.2 9.6 12.5 16.2 158.1 Europe* 1.8 0.2 1.2 2.0 3.4 75.0Japan* 16.4 7.0 14.3 17.6 22.2 282.6 Japan* 1.5 0.6 1.1 1.5 2.0 12.0Emerging Markets* 12.9 0.0 10.4 13.5 18.6 124.1 Emerging Markets* 2.3 0.4 1.5 2.2 3.4 57.4Korea 10.7 4.5 8.3 10.9 17.0 44.1 Korea 1.5 0.4 1.1 1.5 2.3 9.9Taiwan 12.6 4.5 10.1 12.9 14.9 41.8 Taiwan 1.8 0.6 1.1 1.7 2.3 7.5China 14.0 5.2 10.5 13.4 20.5 56.5 China 2.4 0.8 1.4 2.1 3.3 13.3Brazil* 13.5 7.1 11.7 15.5 23.5 105.6 Brazil* 3.0 0.4 1.9 2.6 4.2 29.8Russia* 10.3 3.5 8.5 11.1 14.9 67.2 Russia* 2.1 0.5 1.8 2.4 4.9 16.5South Africa* 11.4 4.9 8.0 10.9 12.5 115.0 South Africa* 1.9 1.2 1.6 2.9 4.4 32.8Mexico* 14.1 8.6 13.5 15.7 17.9 34.4 Mexico* 3.7 0.7 2.2 2.6 3.7 9.8India 14.7 5.3 11.0 16.1 23.0 124.1 India 2.9 0.7 2.2 3.0 4.8 31.4Malaysia 12.6 5.7 10.7 12.3 15.9 99.1 Malaysia 1.9 0.6 1.2 1.6 2.6 29.2Israel* 12.8 5.8 10.4 13.1 17.7 41.2 Israel* 2.1 0.8 1.2 2.6 4.2 57.4Poland* 11.4 5.6 12.0 13.6 16.4 26.8 Poland* 1.8 0.6 1.5 1.9 2.8 4.4Chile* 17.0 11.4 14.9 16.9 18.4 45.3 Chile* 1.9 0.9 1.8 2.1 2.5 3.7Turkey* 7.5 3.3 6.7 7.7 14.5 32.6 Turkey* 1.4 0.5 0.9 1.5 2.2 10.8Thailand 10.9 0.0 8.3 11.1 15.3 33.3 Thailand 1.9 0.8 1.3 1.6 3.0 7.0Indonesia 14.0 7.5 10.5 13.0 18.6 77.1 Indonesia 4.0 1.7 2.6 3.3 6.0 15.2Hungary* 8.8 7.5 9.0 9.7 11.1 14.7 Hungary* 1.8 1.5 1.6 1.6 1.8 2.3Egypt* 13.9 8.7 9.3 11.8 12.9 20.0 Egypt* 3.0 0.9 2.0 3.5 3.6 8.4Czech Republic* 15.4 11.5 13.5 15.0 19.1 23.2 Czech Republic* 2.9 1.1 2.2 2.8 3.2 3.6Argentina* 10.6 5.7 8.2 9.0 10.8 11.8 Argentina* 1.5 1.5 1.5 1.5 1.5 1.5Philippines 11.6 5.7 10.0 12.3 14.2 23.6 Philippines 1.8 0.7 1.4 1.8 2.5 3.9Pakistan* 10.0 6.2 7.4 9.1 9.9 19.4 Pakistan* 2.5 1.0 1.6 2.2 3.8 4.8

2008E: Dividend Yield (%) 2008E: Return on Equity (%)Weighted Quartiles Weighted QuartilesAverage Min Lower Median Higher Max Average Min Lower Median Higher Max

Global* 2.8 0.0 1.2 2.2 4.0 17.8 Global* 15.7 0.4 9.5 15.1 22.2 509.8USA* 2.2 0.0 0.3 1.5 3.0 17.8 USA* 17.0 0.6 10.3 16.4 23.3 509.8Europe* 4.0 0.0 2.2 3.5 5.0 16.5 Europe* 15.9 3.0 11.7 16.3 24.0 505.4Japan* 1.7 0.0 1.1 1.5 2.0 5.8 Japan* 9.9 0.4 6.0 8.8 12.2 107.8Emerging Markets* 2.8 0.0 1.3 2.6 4.3 15.5 Emerging Markets* 18.3 0.4 11.6 16.8 24.2 422.9Korea 1.7 0.0 0.9 1.4 2.6 5.8 Korea 14.7 1.6 10.1 14.4 20.8 45.8Taiwan 4.9 0.0 2.5 4.3 5.9 10.3 Taiwan 14.3 2.9 8.3 14.6 19.6 51.5China 2.8 0.0 1.1 2.1 3.5 7.0 China 18.5 1.6 12.7 16.1 21.9 44.6Brazil* 2.7 0.1 1.3 2.8 4.0 8.6 Brazil* 21.6 2.0 12.3 18.4 26.8 134.8Russia* 1.7 0.5 0.9 2.1 3.2 5.3 Russia* 21.9 6.4 15.3 25.0 32.6 91.3South Africa* 3.8 0.3 2.8 5.1 6.6 11.6 South Africa* 19.5 0.4 19.2 25.9 37.3 97.6Mexico* 3.3 0.0 0.3 1.2 3.3 5.6 Mexico* 23.2 4.9 11.7 14.8 23.0 64.3India 1.4 0.0 0.6 1.2 1.9 5.3 India 21.9 1.3 14.0 20.5 26.0 133.4Malaysia 3.5 0.0 1.7 3.4 5.1 9.7 Malaysia 15.7 4.3 11.7 14.1 20.1 191.0Israel* 3.3 0.9 2.1 4.7 7.1 15.5 Israel* 17.4 6.2 12.2 18.7 32.9 422.9Poland* 4.0 0.0 0.1 1.3 2.7 9.8 Poland* 16.3 6.4 9.1 16.3 21.0 31.5Chile* 2.8 0.0 1.7 2.2 3.0 13.3 Chile* 11.4 5.1 10.6 11.3 17.5 21.3Turkey* 4.2 0.0 1.5 3.6 5.4 10.3 Turkey* 18.9 3.5 10.7 17.3 24.7 52.5Thailand 3.8 0.0 2.9 3.9 5.3 10.6 Thailand 18.3 7.3 13.5 16.8 23.2 38.4Indonesia 3.1 0.0 1.7 3.4 4.1 8.8 Indonesia 31.1 4.4 20.0 27.8 46.4 72.8Hungary* 3.9 1.7 3.1 3.7 5.2 9.4 Hungary* 21.0 11.4 14.1 18.3 22.2 24.1Egypt* 2.8 0.1 1.4 2.4 3.9 8.2 Egypt* 18.0 7.0 16.7 26.1 29.0 77.8Czech Republic* 3.6 0.0 1.5 3.6 4.1 9.0 Czech Republic* 19.3 9.8 12.9 14.7 19.8 23.6Argentina* 3.6 3.6 3.6 3.6 3.6 3.6 Argentina* 17.8 18.0 18.0 18.0 18.0 18.0Philippines 5.0 1.0 2.1 2.6 4.8 8.6 Philippines 16.1 9.3 10.7 13.1 18.1 34.5Pakistan* 6.2 3.3 4.6 5.2 8.9 11.0 Pakistan* 26.7 8.7 17.2 23.8 40.9 53.4

Source: Datastream, IBES, MSCI, JPMorgan. Updated as of Jul 2Note: Weighted average numbers based on aggregate of MSCI contituents. Consensus numbers are used for stocks not covered by JPMorgan. * only consensus numbers are used

July 3, 2008

10


Value: Equities relative to Bonds

Country 1-month 3-month 6-month 12-month 36-month 36-month annualised

Brazil -7.3 4.8 3.7 32.1 NA NAChile -5.7 1.9 -2.3 -15.6 45.6 13.3China -14.4 -9.3 -29.5 -4.3 148.4 35.4Colombia -2.5 9.4 0.2 5.9 80.2 21.7Czech -2.6 8.3 -5.8 3.9 89.2 23.7Hungary -9.4 -10.5 -20.8 -31.4 0.5 0.2India -10.1 -8.4 -31.7 -8.4 90.7 24.0Indonesia 0.8 6.5 1.0 36.0 131.1 32.2Malaysia -6.6 -6.3 -19.3 -13.5 39.5 11.7Mexico -7.1 -6.5 -4.9 -14.5 91.3 24.1Peru 0.2 2.4 7.2 18.5 NA NAPoland -10.9 -12.8 -23.9 -32.0 22.4 7.0Russia -10.9 3.6 -9.9 11.7 162.2 37.9South Africa -7.3 1.2 3.5 5.0 96.4 25.2Thailand -3.4 -1.7 -4.7 5.1 32.2 9.7Turkey -14.7 -16.7 -37.3 -38.0 9.5 3.1

Country Generic 10 years Bond Maturity (years)

Bond Yield To Maturity Earnings Yield Dividend Yield DDM Implied

GrowthBrazil 15.6 13.5 13.0 8.0 3.0 16.9Chile 8.0 5.5 3.0 6.5 3.2 9.2China 4.6 5.2 4.2 7.8 3.1 5.8Colombia 10.8 9.4 12.9 3.7 2.5 12.3Czech 5.1 6.3 5.0 6.9 3.9 5.5Hungary 8.5 4.9 9.0 11.7 4.1 8.5India 8.8 11.0 9.2 7.4 1.4 11.4Indonesia 13.3 11.4 13.2 8.3 3.4 14.2Malaysia 4.8 6.3 4.5 8.4 3.6 5.4Mexico 9.2 8.6 9.1 7.6 3.7 9.9Peru 7.3 15.8 7.5 6.3 3.6 7.7Poland 6.7 5.3 6.8 9.4 4.1 6.7Russia 6.2 2.8 6.3 10.2 1.9 8.4South Africa 10.7 7.8 10.8 9.7 4.2 10.9Thailand 5.9 7.5 6.0 9.6 4.0 6.1Turkey 20.6 2.0 21.6 14.6 4.7 20.4

Source: Bloomberg, JPMorgan, DataStream, MSCI, IBES Note: GBI-EM Bond Maturity and Yield to Maturity are used for each country. Updated as of Jul 2

July 3, 2008

Relative outperformance of equities versus bonds by country (%)

Relative value of equities versus bonds by country

For 'DDM Implied Growth', we use a dividend discount model based on expected payout ratios for 2008 (except Colombia and Peru where we use current trailing payout ratio)

Perpetual Implied Growth Rates are calculated based on the Gordon Growth Model:

G= R - D/V

G= Implied Growth RateR= Required Growth Rate (Risk free rate + Equity Risk Premium)D= Index DividendV= Index Value

Note: Equity risk premium of 4%. Risk free rates are 10-year benchmark or nearest equivalent.

JPMorgan's GBI - EM bond indices track local currency government bonds issued by emerging economies.

The indices are easily replicable and represent the local bond portfolio that can be accessed by an international investor.

For more information on these indices please visit www.morganmarkets.com or contact Gloria Kim at [email protected]

The table shows the difference between the MSCI equity benchmark returns in local currency and the GBI - EM benchmark returns for each country.

Positive numbers indicate outperformance by equities.

11


Economic Forecasts: Changes in Real GDP Forecasts

Real GDP Growth (% Y/Y) Change in Forecasts Past 3 months (%) Economic Momentum Inflation JPM

2008E 2009E 2008E 2009E 2008E 2009E 2008E 2009E 2Q 08E 3Q 08E 4Q 08E 1Q 09E 2008E 2009ES Korea 4.4 5.0 4.6 5.0 0.0 0.0 -0.1 0.1 2.5 3.5 4.5 5.5 4.3 3.4Taiwan 4.3 5.0 4.4 5.0 0.8 0.5 0.5 0.4 0.5 5.8 6.5 4.8 3.4 3.0China 10.5 9.8 10.0 9.5 0.0 0.0 -0.1 0.0 10.8 11.7 10.2 9.1 7.0 5.0Brazil 4.4 3.8 4.7 4.0 0.0 -0.2 0.2 0.0 3.0 4.0 4.0 3.8 5.9 6.0Russia 7.8 7.0 7.1 6.5 0.7 0.7 0.3 0.0 10.5 3.0 16.0 0.0 13.9 11.5South Africa 3.3 3.5 3.7 3.9 -0.5 -0.5 -0.7 -0.6 3.8 1.5 1.1 4.5 11.9 9.2Mexico 2.6 4.0 2.5 3.1 0.0 -0.5 -0.4 -0.6 1.0 2.0 3.0 4.9 4.5 3.5India 7.0 8.0 7.7 8.0 0.0 0.0 -0.4 -0.2 6.4 6.0 5.6 5.9 8.3 5.8Malaysia 5.2 5.5 5.8 5.8 0.5 0.2 0.2 0.0 2.4 2.0 2.4 7.4 5.8 4.7Israel na na 4.5 4.5 na na 0.0 0.0 na na na na na naPoland 5.8 5.2 5.3 5.0 0.2 -0.1 -0.2 0.0 5.0 4.5 5.5 5.3 4.3 3.6Chile 3.5 3.5 4.2 4.7 0.0 -1.5 -0.1 -0.2 5.0 1.0 5.0 4.0 7.6 3.8Turkey 3.8 5.2 3.8 4.8 -0.6 -0.8 -1.1 -0.5 0.0 -1.2 6.6 8.2 10.5 8.2Thailand 4.6 5.0 5.0 5.2 0.0 0.0 0.2 0.2 3.0 5.0 6.0 4.5 6.1 5.0Indonesia 5.3 5.2 5.9 6.1 0.3 0.0 -0.2 -0.1 5.0 3.0 4.5 5.0 11.2 9.0Hungary 2.0 2.8 2.0 2.8 0.0 0.0 -0.3 -0.1 3.0 2.8 2.9 2.8 6.7 4.4Egypt na na 5.2 na na na na na na na na na na naCzech Republic 5.0 4.5 4.6 4.9 0.0 -0.3 -0.2 0.0 5.1 5.0 5.0 4.2 6.8 3.4Argentina 6.5 3.0 6.2 3.5 0.0 0.0 0.2 -1.0 8.2 2.8 6.1 2.8 9.0 9.4Peru 8.5 6.0 7.7 6.4 0.8 0.0 0.7 0.0 7.4 5.9 4.8 6.5 5.1 3.0Philippines 4.0 4.5 5.5 6.1 0.0 0.0 -0.4 0.4 2.0 4.0 4.0 4.0 7.7 4.8Morocco na na 4.4 na na na na na na na na na na naColombia 5.0 5.0 5.5 5.1 0.0 0.0 0.0 0.1 5.9 5.5 5.1 4.5 6.1 4.3Pakistan 5.5 5.5 6.3 5.9 -1.5 na 0.0 0.0 na na na na 12.5 8.5Jordan na na 5.0 na na na na na na na na na na na

Source: JPMorgan estimates, Bloomberg Updated as of Jul 2Note: Consensus estimates for Jordan, Egypt, Pakistan and Israel sourced from WES and Morocco from EIU

Consensus JPM

July 3, 2008

(% Y/Y)Consensus GDP SAAR

-2.0

-1.0

0.0

1.0

Peru

Russ

ia

Polan

d

China

Czec

hRe

publi

cAr

genti

na

Mexic

o

Turke

y

Hung

ary

Taiw

an

S Ko

rea

Braz

ilSo

uthAf

rica

Thail

and

Colom

bia

Indon

esia

Malay

sia

India

Chile

Philip

pines

2008E GDP Growth: JPM Minus Consensus Change in Consensus Forecasts for 2008E GDP over last 3 months (%)

-1.0-0.6-0.20.20.61.0

Peru

Taiw

an

Russ

ia

Thail

and

Malay

sia

Braz

il

Arge

ntina

Colom

bia

China

Chile

S Ko

rea

Czec

hRe

publi

c

Indon

esia

Polan

d

Hung

ary

Mexic

o

India

Philip

pines

South

Afric

a

Turke

y

12


July 3, 2008

Economic Forecasts: Policy Rate Trend and ForecastsPolicy Rate

Country Official interest rate 3Q'07 4Q'07 1Q'08 Current 2Q'08F 3Q'08F 4Q'08F 1Q'09F Last Change Next Change

Developed Markets

United States Federal funds rate 4.75 4.25 2.25 2.00 2.00 2.25 2.25 2.50 30 Apr 08 (-25bp) 16 Sep 08 (+25bp)

Euro Area Refi Rate 4.00 4.00 4.00 4.00 4.00 4.25 4.25 4.25 6 Jun 07 (+25bp) 3 Jul 08 (+25bp)

Japan Overnight Call Rate 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 21 Feb 07 (+25bp) Jun 09 (+25bp)

Latin America

Brazil SELIC overnight rate 11.25 11.25 11.25 12.25 12.25 13.25 14.25 14.75 4 Jun 08 (+50bp) 23 Jul 08 (+50bp)

Mexico Repo rate 7.25 7.50 7.50 7.75 7.75 8.00 8.00 8.00 20 Jun 08 (+25bp) 15 Aug 08 (+25bp)

Chile Discount rate 5.75 6.00 6.25 6.75 6.75 7.50 7.50 7.50 10 Jun 08 (+50bp) 10 Jul 08 (+50bp)

Europe, Middle East and Africa

Czech Republic 2-week repo rate 3.25 3.50 3.75 3.75 3.75 4.00 4.00 3.75 7 Feb 08 (+25bp) 25 Sep 08 (+25bp)

Hungary 2-week deposit rate 7.50 7.50 7.75 8.50 8.50 8.75 9.00 9.00 26 May 08 (+25bp) 25 Aug 08 (+25bp)

Poland 7-day intervention rate 4.75 5.00 5.75 6.00 6.00 6.25 6.25 6.25 25 Jun 08 (+25bp) 24 Sep 08 (+25bp)

Russia 1-week deposit rate 3.25 3.25 3.50 4.00 4.00 4.25 4.50 4.75 9 Jun 08 (+25bp) Aug 08 (+25bp)

South Africa Repo rate 10.00 11.00 11.00 12.00 12.00 12.50 12.50 12.50 12 Jun 08 (+50bp) 14 Aug 08 (+50bp)

Turkey O/n borrowing rate 17.25 15.75 15.25 16.25 16.25 17.25 17.25 17.25 16 Jun 08 (+50bp) 17 Jul 08 (+50bp)

EM Asia

China 1-year working capital 7.29 7.47 7.47 7.47 7.47 7.47 7.74 8.01 20 Dec 07 (+18bp) 4Q 08 (+27bp)

Korea Overnight call rate 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 9 Aug 07 (+25bp) 2Q 09 (+25bp)

Indonesia BI rate 8.25 8.00 8.00 8.50 8.50 9.00 9.25 9.50 5 Jun 08 (+25bp) 3 Jul 08 (+25bp)

India Repo rate 7.75 7.75 7.75 8.50 8.50 8.75 9.00 9.00 24 Jun 08 (+50bp) 29 Jul 08 (+25bp)

Malaysia Overnight policy rate 3.50 3.50 3.50 3.50 3.50 4.00 4.00 4.00 26 Apr 06 (+25bp) 25 Jul 08 (+25bp)

Philippines Reverse repo rate 6.00 5.25 5.00 5.25 5.25 5.50 5.75 5.75 5 Jun 08 (+25bp) 17 Jul 08 (+25bp)

Thailand 1-day repo rate 3.25 3.25 3.25 3.25 3.25 3.75 4.25 4.25 18 July 07 (-25bp) 16 Jul 08 (+25bp)

Taiwan Official discount rate 3.25 3.38 3.50 3.63 3.63 3.75 3.88 4.00 26 Jun 08 (+12.5bp) Sep 08 (+12.5bp)

Source: JPMorgan Economics, Bloomberg. Bold figures on next column indicates tightening Updated as of Jul 2

Change in policy rates Emerging Markets policy rate

-400 -300 -200 -100 0 100 200

S AfricaChile

PolandRussia

IndonesiaCzech

MexicoThailand

TaiwanHungary

BrazilMalaysia

IndiaChina

EUJapanKorea

PhilippineTurkey

USA

Change from Aug 07

Forecast change from now to Q4 08

-2

2

6

10

14

18

22

98 99 00 01 02 03 04 05 06 07 08

Nominal Policy Rate

Real Rate

13


Economic Forecasts: Currency Movements and Forecasts

Source: Datastream, JPMorgan estimates, Bloomberg.

July 3, 2008

Euro (EUR) Japansese Yen (JPY)

1.12

1.22

1.32

1.42

1.52

1.62

Dec 04 Nov 05 Oct 06 Sep 07 Jul 08 Jun 09

JPMorgan forecast:end Sep 08: 1.55end Dec 08: 1.50end Mar 09: 1.45

Consensus

JPMorgan

96

100

104

108

112

116

120

124


JPMorgan

Consensus

JPMorgan forecast:end Sep 08: 108end Dec 08: 110end Mar 09: 112

South Korean Won (KRW)

880

920

960

1,000

1,040

1,080


Consensus

JPMorganJPMorgan forecast:end Sep 08:1000end Dec 08: 1020end Mar 09:1040

Taiwan Dollar (TWD)

262728293031323334


Consensus

JPMorgan


1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9


Consensus

JPMorgan


Brazilian Real (BRL) Russian Rouble (RUB)

6.0

6.4

6.8

7.2

7.6

8.0

8.4


JPMorgan

ConsensusJPMorgan forecast:end Sep 08: 6.68end Dec 08: 6.50end Mar 09: 6.30

South African Rand (ZAR)

36

38

40

42

44

46

48


JPMorgan forecast:end Sep 08: 44.0end Dec 08: 45.0end Mar 09: 44.0 Consensus

JPMorgan

Mexican Peso (MXN)

23

24

25

26

27

28

29


ConsensusJPMorgan forecast:end Sep 08: 23.5end Dec 08: 23.7end Mar 09: 24.0 JPMorgan

Indian Rupee (INR)

2.93.03.13.23.33.43.53.63.73.8


JPMorgan

Consensus


Malaysian Ringgit (MYR) Israeli New Shekel (ILS)

Polish Zloty (PLN) Chilean Peso (CLP) Turkish Lira (TRL)

3.2

3.4

3.63.8

4.0

4.2

4.44.6

4.8


Consensus

JPMorganJPMorgan forecast:end Sep 08: 3.60end Dec 08: 3.65end Mar 09: 3.70

Thai Baht (THB)

Chinese Yuan Renminbi (CNY)

10.2

10.5

10.8

11.1

11.4

11.7


JPMorgan

Consensus


5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0


Consensus


283032343638404244


Consensus

JPMorgan


1.92.12.32.52.72.93.13.33.53.7


JPMorgan


Consensus

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8



Consensus

JPMorgan425

450

475

500

525

550

575

600


JPMorgan

Consensus


14


Economic Forecasts: Currency Movements and Forecasts

Source: Datastream, JPMorgan estimates, Bloomberg. Updated as of Jul 2

July 3, 2008

Indonesian Rupiah (IDR) Hungarian Forint (HUF)

150

160

170

180

190

200

210

220

230



JPMorgan

Consensus

14

16

18

20

22

24

26


Consensus

JPMorgan


Czech Koruna (CZK) Argentinian Peso (ARS)

Peruvian Nuevo Sol (PEN) Philippine Peso (PHP)

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5



Consensus

Colombian Peso(COP)

2.5

2.8

3.0

3.3

3.5

3.8


JPMorgan

Consensus


Expected % Gain vs USD till December 2008 (JPM) Expected % Loss vs USD till December 2008 (JPM)

-12

-8

-4

0

KRW

CZK

ZAR

RUB

TRL

CLP

INR

MXN

JPY

EUR

PLN

HUF

ILS ARS

BRL

Source: Datastream, JPMorgan estimates

0

2

3

5

6

8

9

CNY

MYR

TWD

THB

IDR

PHP

COP

Source: Datastream, JPMorgan estimates

1,600

1,800

2,000

2,200

2,400

2,600

2,800

3,000


JPMorgan


Consensus

8,500

9,000

9,500

10,000

10,500

11,000


Consensus

JPMorgan


36

40

44

48

52

56

60


Consensus

JPMorgan


15


Economic Forecasts: Credit Risk External (2008E) Fiscal Position Sovereign Ratings (Long Term Foreign Debt)

Foreign CurrentReserves Account 2008F** 2008F** 2008F** 2009F** 2008F** 2009F** Moody's S & P(US$bil) %GDP (US$bil) %GDP % GDP % GDP % GDP % GDP Rating Action Date Rating Action Date

Korea 262.4 -0.6 293.3 29.4 1.0 0.5 30.0 31.7 A2 Upgrade, stable 25-Jul-07 A Affirmed, stable 12-Oct-07Taiwan 277.8 9.1 62.0 14.6 -1.0 -1.0 37.0 37.5 Aa3 Affirmed, stable 24-Jan-02 AA- Affirmed, O/L (-) 15-Nov-07China 1589.8 7.2 368.2 8.8 -0.8 -1.0 26.4 26.5 A1 Upgrade, stable 26-Jul-07 A Upgrade, stable 27-Jul-06Brazil 192.9 -1.3 217.5 13.8 -2.2 -2.0 67.8 69.0 Ba1 Upgraded, O/L stable 23-Aug-07 BB+ Afirmed, O/L (+) 21-Dec-07Russia 476.7 2.2 433.3 25.9 3.5 2.0 5.5 5.2 Baa2 Upgrade, stable 25-Oct-05 BBB+ Affirmed, O/L stable 21-Aug-07South Africa 30.2 -6.7 65.9 22.5 0.3 0.4 24.8 22.7 Baa1 O/L changed to (+) 05-Jun-07 BBB+ Affirmed, stable 12-Jul-07Mexico 81.4 -1.9 165.0 17.5 0.0 0.0 26.3 26.1 Baa1 Upgrade, stable 06-Jan-05 BBB+ Upgrade, O/L stable 08-Oct-07India 291.3 -1.7 203.8 15.0 -3.0 -3.3 64.9 64.1 Baa3 Upgrade, stable 22-Jan-04 BBB- Upgrade, O/L stable 30-Jan-07Malaysia 116.3 12.0 52.1 23.6 -3.3 -3.1 57.3 55.8 A3 Upgrade, stable 16-Dec-04 A- O/L changed to (+), Affirmed 31-Jul-07Israel* 26.2 2.1 na na na na na na A2 O/L changed to (+) 10-May-06 A Upgrade, O/L (+) 27-Nov-07Poland 72.5 -5.7 206.3 39.7 -3.2 -3.2 47.7 48.1 A2 Affirmed, stable 18-Sep-03 A- Upgrade, O/L stable 29-Mar-07Chile 17.2 0.2 44.8 21.9 5.0 3.0 13.6 11.9 A2 Upgrade, stable 07-Jul-06 A+ Upgrade, O/L stable 18-Dec-07Turkey 117.7 -5.4 237.4 29.7 -1.7 -1.0 39.2 37.2 Ba3 Affirmed, stable 09-May-07 BB- Affirmed, O/L stable 29-Aug-07Thailand 97.8 1.1 52.0 18.1 -1.8 -1.8 29.1 31.2 Baa1 Affirmed, stable 20-Sep-06 BBB+ Affirmed, O/L stable 10-Jul-07Indonesia 57.1 1.2 124.8 26.6 -2.0 -2.0 29.5 30.0 Ba3 Upgrade, stable 18-Oct-07 BB- Affirmed, O/L stable 24-Sep-07Hungary 24.5 -5.3 139.9 85.6 -4.5 -3.8 66.2 65.8 A2 Downgrade, stable 22-Dec-06 BBB+ Affirmed, O/L stable 24-Sep-07Egypt* 17.2 -0.4 na na na na na na Ba1 Affirmed, stable 13-May-99 BB+ Affirmed, O/L stable 10-Dec-07Czech Republic 37.0 -1.9 84.4 36.9 -2.0 -2.5 na na A1 Affirmed, O/L changed to (+) 30-Mar-06 A Upgrade, O/L stable 02-Oct-07Argentina 49.3 4.2 115.9 38.0 1.3 1.1 48.6 45.7 B3 O/L changed to (+) 16-Jan-07 B+ Affirmed, O/L stable 25-Sep-07Peru 32.3 0.2 26.5 19.9 0.6 0.5 22.3 21.4 Ba2 O/L changed to stable 16-Jul-07 BB+ O/L changed to (+), Affirmed 23-Jul-07Philippines 36.0 3.3 52.3 29.3 -0.2 -0.3 57.0 50.4 B1 O/L changed to (+), Affirmed 25-Jan-08 BB- Affirmed, O/L stable 14-Sep-07Morocco* 13.6 -0.9 na na na na na na Ba1 O/L changed to stable 18-Jun-03 BB+ O/L changed to (+), Affirmed 26-Mar-07Colombia 21.8 -3.8 45.6 22.0 -1.6 -2.5 47.6 47.6 Ba2 O/L Changed to (+) 25-Jun-07 BB+ Upgrade, O/L stable 05-Mar-07Pakistan* 10.8 -3.0 na na na na 46.6 44.5 B1 O/L changed to (-), Affirmed 05-Nov-07 B+ O/L changed to (-), Affirmed 06-Nov-07Jordan* 5.3 -14.4 na na na na na na Ba2 O/L changed to stable 08-Jan-07 BB Affirmed, stable 28-Nov-06

Source: Bloomberg, JPMorgan Source: Bloomberg, JPMorgan Source: Bloomberg, JPMorgan Source: Bloomberg, JPMorganSource: CEIC, JP Morgan estimates, Moody's, Standard & Poor's, Bloomberg * Data from World Economic Outlook for April 2006 for Current Account data, ** F denotes forecast. Note: Forex reserves as of 31 March 2008 or latest available data. Updated as of Jul 2

Public Sector DebtFiscal DeficitExternal Debt

July 3, 2008

EMBI Global Spreads and Yields EMBI Asia Spreads and Yields EMBI Latin America Spreads and YieldsEMBI Europe Spreads and Yields

100

150

200

250

300

350

400

Jun-06 Mar-07 Oct-07 Jul-085.0

5.5

6.0

6.5

7.0

7.5

8.0

Spread (L) Yield

100

150

200

250

300

350

Jun-06 Mar-07 Oct-07 Jul-085

6

6

7

7

8

Spread (L) Yield

100120140160180200220240260280300


6.5

7.5

8.5

Spread (L) Yield

100

150

200

250

300

350

400


6.26.4

6.6

6.87.0

7.27.4

7.6

Spread (L) Yield

16


July 3, 2008

Perspective: Emerging Markets Balance Sheets

No. of Companies Debt/Equity Debt/Assets Debt/Mkt. Cap Asset Turnover Current Ratio Interest Coverage Altman Z ScoreKorea 97 0.28 0.15 0.10 0.86 1.19 8.4 4.15Taiwan 108 0.30 0.18 0.08 0.84 1.57 14.2 6.54China 102 0.44 0.20 0.21 0.66 1.01 13.6 5.06Brazil 60 0.48 0.23 0.19 0.58 1.40 7.3 3.06Russia 29 0.13 0.10 0.41 0.61 2.14 13.2 5.49South Africa 42 0.91 0.31 0.22 0.71 1.32 9.0 4.62Mexico 26 0.58 0.26 0.15 0.71 1.27 6.5 4.37India 54 0.43 0.22 0.02 0.84 1.77 15.9 6.88Malaysia 45 0.56 0.29 0.11 0.50 1.93 5.8 5.03Israel 28 0.81 0.25 0.10 0.46 1.84 4.3 4.26Poland 21 0.34 0.18 0.09 1.00 1.67 11.5 4.91Chile 24 0.54 0.30 0.09 0.59 1.43 4.1 3.14Turkey 24 0.75 0.33 0.14 1.08 1.61 11.2 4.83Thailand 25 0.68 0.31 0.09 1.05 1.31 6.8 5.31Indonesia 17 0.54 0.26 0.04 0.86 1.66 11.4 4.89Hungary 3 0.47 0.22 0.11 0.90 1.89 11.1 4.90Egypt 13 0.75 0.33 0.04 0.62 1.03 6.2 3.92Czech Republic 6 0.37 0.19 0.03 0.58 1.31 7.8 4.02Argentina 8 0.79 0.35 0.10 0.65 1.71 12.3 5.23Peru 5 0.18 0.13 0.01 0.78 3.73 18.9 10.99Philippines 14 0.59 0.28 0.08 0.63 1.41 4.1 3.60Morocco 9 0.36 0.18 0.01 1.02 1.24 48.4 5.65Colombia 5 0.33 0.22 0.09 0.41 1.02 1.9 3.58Pakistan 9 0.63 0.26 0.07 1.50 1.54 10.2 5.59Jordan 4 0.50 0.13 0.06 2.06 1.30 2.2 5.47

Source: Datastream, Bloomberg, JPMorgan. Updated as of Jul 2008

2. For the debt to equity distribution chart, each box indicates quartile levels and markets with values exceeding the scale are indicated by the open-ended top box. The diamond indicates weighted average for each market.

Note: 1. All ratios are calculated from latest financial reports available ex Banks, Insurance and Diversified financials sector and calculations are based on weighted average of companies in the MSCI EMF universe. For Altman z-score, its application on company level is such that a score of less than 1.8 indicates bankruptcy likely, between 1.8-2.7 bankruptcy likely within 2 years and more than 3 most likely safe from bankruptcy. For market as a whole, the ratio is a weighted average of companies' z-score, thereby giving a general quality of companies in the market.

3. Quartile Distribution Charts: each quartile is separated by a line, with the exception of the top quartile which is subdivided in order to show the top decile of companies, shaded in blue. Markets with values exceeding the scale are indicated by the open-ended top box. The diamond indicates the weighted mean for each market.

Debt to Equity Ratios Quartile Distribution Chart (x)

0

2

4

6

8

Kore

a

Sout

h Af

rica

Taiw

an

Braz

il

China

Mexic

o

Russ

ia

India

Malay

sia

Israe

l

Thail

and

Chile

Turk

ey

Indo

nesia

Polan

d

Hung

ary

Czec

h Re

publi

c

Arge

ntina Peru

Philip

pines

Egyp

t

Moro

cco

Pakis

tan

Jord

an

Colom

bia

17


Perspective: Demographic and Key Economic Statistics

Age Gross 2008 Growth Dependency Ratio* Enrollment Ratio US$ Per capita Total Per capita Total Per capita

million %YoY Young Old Secondary** billion (US$) (%) (%) (%) (%)

USA 306 1 na na 98 14,365 47,014 5 4 3 2

China 1327 0.5 0.3 0.1 73 4185 3153 16.0 15.3 10.1 9.5Russia# 141 -0.5 0.2 0.2 93 1761 12452 18.5 19.0 6.7 7.2Brazil# 192 1.3 0.4 0.1 102 1629 8492 5.6 4.1 3.0 1.6India 1147 1.5 0.5 0.1 54 1242 1083 11.6 9.9 7.0 5.4Korea 48 0.2 0.3 0.1 91 974 20091 10.9 10.4 5.5 5.0Mexico 106 1.0 0.5 0.1 80 972 9144 8.4 7.2 3.0 1.9Turkey 75 1.4 0.4 0.1 79 790 10584 10.0 8.0 4.0 2.1Poland 38 -0.2 0.2 0.2 97 570 15014 10.0 10.1 4.2 4.4Indonesia 228 1.3 0.4 0.1 64 475 2087 17.7 16.4 4.6 3.5Taiwan 23 0.9 0.3 0.1 na 435 18676 5.0 4.4 4.2 3.5Argentina 40 1.0 0.4 0.2 86 303 7614 -0.7 -1.6 2.7 1.7Venezuela 28 2.0 0.4 0.1 72 302 10758 12.1 10.0 3.4 1.5Thailand 67 1.0 0.3 0.1 77 298 4436 10.1 8.9 4.9 3.8South Africa 48 1.0 0.5 0.1 90 288 5949 8.4 7.2 4.0 2.8Czech Rep. 10 0.0 0.2 0.2 96 240 23380 11.5 11.5 4.0 4.0Malaysia 27 1.7 0.5 0.1 76 221 8111 11.9 9.5 10.2 7.9Colombia 48 1.6 0.5 0.1 75 217 4493 6.3 4.6 3.3 1.6Chile 17 1.2 0.4 0.1 89 193 11498 7.7 6.4 4.0 2.7Philippines 90 2.0 0.6 0.1 86 178 1966 10.6 8.2 4.8 2.6Israel 7 2.2 0.4 0.2 93 177 24769 4.3 2.2 3.7 1.6Hungary 10 -0.2 0.2 0.2 97 161 16028 12.0 12.3 4.0 4.2Pakistan 161 1.8 0.7 0.1 27 160 994 8.0 5.9 5.3 3.2Egypt 75 2.0 0.5 0.1 87 151 2016 5.8 3.7 5.1 3.0Peru 29 1.5 0.5 0.1 92 145 5074 6.7 5.1 4.5 2.9Morocco 31 1.0 0.5 0.1 48 84 2720 7.1 5.9 4.3 3.1MSCI EM 4,021 1.0 16,170 4,021 11.8 11.3

Source: CEIC, Datastream, Bloomberg, US Consensus Bureau, World Bank, IMF, UNESCO, JPMorgan estimates Updated as of Jul 2* Age dependency ratio defined as dependents to working-age population.** Gross Enrollment Ratio is defined as pupils enrolled in a secondary level, regardless of age expressed as a percentage of the population in the relevant official age group *** 10-year CAGR for period 1998-2008, in local currency. # CAGR for period 1998-2008 ## Population data based on IMF estimate as on July 2007Data for Gross enrollment data for 2004 except for Malaysia, Brazil and Argentina which is for 2003

July 3, 2008

Real GDP10 year CAGR***

Population and DemographicsPopulation##

Nominal GDP2008 10 year CAGR***

18


Perspective: Global Emerging Capital Markets

MSCI EMF Index Markets Concentration JPM EMBI Global

Total Market Cap Estimated Free Float Companies Average Daily

Turnover

% of Emerging Market Trading

Volume

Weighting in MSCI EMF

Stocks constituting 75% of Country Market Cap

Stocks constituting 75% ofCountry Market Cap

Market Capitalisation Issues

US$ Bn (%) Number US $ Mn % (%) Number (%) US$ Bn NumberBrazil 929 59 70 3262 15.4 16.9 16 19 49.5 23China 1084 43 101 4855 23.0 14.2 9 19 7.0 8Korea 657 63 93 4336 20.5 12.8 28 19 na naRussia 1039 34 28 518 2.4 10.9 5 25 32.8 4Taiwan 501 68 114 2860 13.5 10.5 31 25 na naSouth Africa 310 70 42 1042 4.9 6.7 17 43 4.3 4India 569 34 61 633 3.0 5.9 22 33 na naMexico 272 58 27 449 2.1 4.9 7 22 49.5 29Israel 136 61 22 432 2.0 2.6 10 45 na naMalaysia 173 43 43 259 1.2 2.3 20 56 9.1 7Indonesia 116 47 20 282 1.3 1.7 10 45 5.7 5Poland 113 48 22 196 0.9 1.7 7 23 3.4 3Thailand 133 33 26 319 1.5 1.4 14 54 na naTurkey 130 32 28 997 4.7 1.3 11 43 22.0 14Chile 96 37 17 112 0.5 1.1 9 65 4.9 8Czech Republic 83 38 6 153 0.7 1.0 3 50 na naHungary 36 70 4 93 0.4 0.8 2 75 1.4 1Egypt 61 40 12 131 0.6 0.8 7 25 1.2 1Peru 49 46 6 6 0.0 0.7 2 67 7.8 8Argentina 52 42 5 11 0.1 0.7 3 80 5.1 2Colombia 73 20 7 52 0.2 0.4 4 57 7.4 7Morocco 57 23 6 24 0.1 0.4 4 83 0.7 1Philippines 35 32 14 41 0.2 0.3 7 57 19.0 14Pakistan 19 26 8 92 0.4 0.2 5 75 1.0 2Jordan 17 15 3 na na 0.1 2 233 na naTotal 6740 48 785 21154 100 100 232 141

Source: MSCI, JPMorgan Updated as of Jul 2

July 3, 2008

Korea13%

Taiwan11%

South Africa7%

Rest of EM17%

Brazil16%

China14%

Mexico5%

India6%

Russia11%

AC World Index Market Capitalisation MSCI Regional Market Capitalisation Top 8 versus Rest of Emerging Markets

EM Asia49%

EM Latin America

25%

EM Europe and Middle East

26%

North America47%

Developed Europe

29%

Emerging Markets

11%Japan

9%

Developed Asia4%

19


Perspective: MSCI Emerging Market Index Composition by Countries and SectorsNumber of Companies: 785 Total Market Capitalization (in billion US$): 6740

MSCI Emerging Markets Free Index

Cons

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Cons

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China 0.5 0.3 3.0 4.4 1.5 0.4 0.8 3.0 0.3 14.2Korea 1.3 0.8 0.3 2.4 2.6 3.1 1.6 0.5 0.3 12.8Taiwan 0.2 0.2 0.1 1.8 0.3 5.8 1.5 0.5 10.5India 0.2 0.3 1.3 1.3 0.3 0.5 1.0 0.6 0.2 0.3 5.9Malaysia 0.3 0.4 0.1 0.6 0.5 0.0 0.2 0.3 2.3Indonesia 0.1 0.1 0.5 0.3 0.1 0.1 0.3 0.1 1.7Thailand 0.0 0.0 0.6 0.4 0.0 0.1 0.1 0.0 1.4Philippines 0.0 0.2 0.0 0.1 0.0 0.3Pakistan 0.0 0.1 0.0 0.0 0.2Asia 2.6 2.1 6.0 11.5 0.3 5.5 10.2 4.7 5.0 1.2 49.2Russia 0.1 0.0 6.9 1.0 0.1 1.7 1.1 10.9South Africa 0.5 0.2 1.1 1.3 0.1 0.3 0.0 2.3 0.9 6.7Israel 0.0 0.0 0.4 1.1 0.1 0.2 0.6 0.2 2.6Poland 0.1 0.2 0.8 0.0 0.1 0.0 0.2 0.2 1.7Turkey 0.1 0.2 0.1 0.5 0.2 0.1 0.2 1.3Hungary 0.3 0.4 0.1 0.1 0.8Egypt 0.2 0.2 0.1 0.3 0.8Czech Republic 0.1 0.1 0.1 0.0 0.1 0.6 1.0Morocco 0.1 0.1 0.0 0.1 0.4Jordan 0.1 0.0 0.1EMEA 0.9 0.4 8.5 4.9 1.4 1.0 0.2 4.9 3.1 0.6 26.0Brazil 0.5 0.7 5.3 3.0 0.5 0.2 5.2 0.7 0.9 16.9Mexico 0.6 0.9 0.3 0.3 0.8 2.0 4.9Chile 0.0 0.1 0.1 0.2 0.3 0.1 0.3 1.1Argentina 0.6 0.0 0.0 0.0 0.7Peru 0.2 0.5 0.7Colombia 0.2 0.2 0.1 0.0 0.4LatAm 1.1 1.8 6.0 3.7 0.9 0.2 7.0 2.8 1.2 24.7Total 4.6 4.3 20.6 20.2 1.7 7.4 10.6 16.6 10.9 3.1 100.0

Source: MSCI, JPMorgan Updated as of Jul 2

July 3, 2008

20


Analyst CertificationThe research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.

Important Disclosures • MSCI: The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated or used to create any financial products, including any indices. This information is provided on an 'as is' basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates.

Price Charts for Compendium Reports: Price charts are available for all companies under coverage for at least one year through the search function on JPMorgan's website https://mm.jpmorgan.com/disclosures/company or by calling this toll free number (1-800-477-0406).

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: JPMorgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] The analyst or analyst’s team’s coverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying analyst(s) coverage universe.

JPMorgan Equity Research Ratings Distribution, as of June 30, 2008 Overweight Neutral Underweight (buy) (hold) (sell) JPM Global Equity Research Coverage 45% 42% 14% IB clients* 51% 52% 41%JPMSI Equity Research Coverage 41% 48% 11% IB clients* 75% 70% 60%*Percentage of investment banking clients in each rating category.For purposes only of NASD/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.

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Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMSI, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMSI, and may not be subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

21

Emerging Markets Equity Strategy ResearchJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599 , [email protected]

J.P.Morgan Equities Limited: Deanne Gordon (27-21) 712 0875, [email protected]

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22


JPMorgan Emerging Markets Strategy TeamChief Equity StrategistsAdrian Mowat Asia and Emerging Market (852) 2800 8599 [email protected] Laidler Latin America (562) 425 5407 [email protected] Gordon South Africa (27-21) 712 0875 [email protected] Westin Russia (7-495) 967-1771 [email protected] J Lee US (1) 212 622 6505 [email protected] Matejka Europe (44-20) 7325 5242 [email protected] Kitano Japan (81-3) 5545 8655 [email protected] StrategistsFrank Gong China (852) 2800 7006 [email protected] Iyer India (91-22) 5639 3005 [email protected] Prasetijo Indonesia (62-21) 5291 8570 [email protected] Lai Taiwan (886-2) 27259864 [email protected] Seo Korea (82-2) 758 5759 [email protected] Oh Malaysia (60-3) 2270 4728 [email protected] Snodgrass Mexico (52 55) 55 40 93 17 [email protected] Shayo Brazil (55-11) 3048 6684 [email protected] Chase Southern Cone & Andean (562) 425 5245 [email protected] Gordon South Africa (27-21) 712 0875 [email protected] Pietersz Thailand (66-2) 684 2670 [email protected] & Policy Research Joyce Chang Global Head, Emerging Markets Research (1-212) 834 4203 [email protected] Fernandez Emerging Asia (65) 6882 2461 [email protected] Lim Korea (82-2) 758 5509 [email protected] Gong Greater China (852) 2800 7006 [email protected] Ng China and Taiwan (852) 2800 7002 [email protected] Beng Ong Thailand, Indonesia and Philippines (65) 6882 7143 [email protected] Thorne LATAM and Mexico (52-55) 5540 9558 [email protected] Werning Argentina, Chile (1-212) 834 4144 [email protected] Akira Brazil (55-11) 3048 3634 [email protected] Marrese Regional Head, Emerging Europe (44-20) 7777 4627 [email protected] Cebeci Turkey (90-212) 326 5890 [email protected] Fassler South Africa (27-11) 507 0376 [email protected] A Chebotareva Russia (7-095) 937 7321 [email protected] Szentivanyi Hungary, Poland & Czech Republic (44-20) 7777 3981 [email protected] authors acknowledge the contribution of Nageswararao Khandavalli, Sanaya Tavaria and Bharat Kheria of J.P. Morgan Services India Private Ltd., Mumbai, to this report. Any analysis or opinions expressed are those of the authors alone.

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