Natixis International Funds (Lux) I

Absolute Asia AM Overview Presentation
Citywire Fund Forum, Vienna
April 13th 2010
Bi...
Natixis Global Asset Management Overview



        Each of our affiliates manages their client’s                         ...
Absolute Asia Asset Management Limited
Firm Overview




                                         3
Absolute Asia Asset Management Limited
                              Our Credentials




             Absolute Asia AM (AA...
Absolute Asia Asset Management Overview
                                        Our Investment Strategies




            ...
Absolute Asia Asset Management Overview
                                      Our Expertise – Asia Pacific ex Japan Equiti...
Absolute Asia Asset Management Overview
                                          Our Chief Investment Officer




       ...
Absolute Asia Asset Management Overview
                    Our Investment Philosophy




                          We loo...
Absolute Asia Asset Management Limited
Investment Process
Absolute Asia Asset Management Overview
                 Our Investment Process




                                      ...
Absolute Asia Asset Management Overview
                             Our Investment Process




                       Tre...
Absolute Asia Asset Management Overview
               Our Investment Process




                                        ...
Absolute Asia Asset Management Overview
                           Our Investment Process




Sell Discipline
 We maintain...
Absolute Asia Asset Management Overview
                         Our Investment Process




Risk Management
We employ the ...
Product Range at Absolute Asia AM
    Illustrations of our Existing Capabilities




                                     ...
Flagship Product
    Absolute Asia AM Pacific Rim Equities Fund




                                                 16
Ou...
Product Summary
                       Absolute Asia AM Pacific Rim Equities Fund




Investment Objective
Long term growt...
Absolute Asia AM Pacific Rim Equities Fund I/A (USD)




574.69




                                                      ...
Peer Group Analysis
                                 Annual Performance vs Peers as of end February 2010




Peers: The “U...
Attribution Analysis
                                   Attribution for 3 years as of end February 2010




Policy benchma...
Portfolio Characteristics (1/2)
                                              Absolute Asia AM Pacific Rim Equities Fund

...
Portfolio Characteristics (2/2)
                                                             Absolute Asia AM Pacific Rim ...
Total Return Product
Absolute Asia AM Golden Dragon Renaissance Fund




                                                 ...
Product Summary
                       Absolute Asia AM Golden Dragon Renaissance Fund




Objective
Long term growth of c...
Absolute Asia AM Golden Dragon Renaissance Fund I/A (USD)




73.20




                                                  ...
Portfolio Characteristics (1/2)
                                              Absolute Asia AM Golden Dragon Renaissance F...
Portfolio Characteristics (2/2)
                                              Absolute Asia AM Golden Dragon Renaissance F...
Economic Outlook
    Asian Investment Strategy




                                      28
Our Expertise is Absolutely in...
Economic Outlook
                                                          Global uncertainties persist but Economic Condi...
Economic Outlook
                                       Exports – Restocking and investing to provide momentum



        ...
Economic Outlook
                                              Wide savings and investment gap drives further growth




 ...
Economic Outlook
                                              Rising domestic consumption: huge population makes a differ...
Economic Outlook
                                       Two different spending patterns in Asia




          “Economicall...
Economic Outlook
                                               What happens when Asia grows its economy at twice the spee...
Economic Outlook
                                       This time is no different: A return to the Early 1990s




Note: T...
Absolute Asia AM Pacific Rim Equities Fund
A Region to Invest In (Politically Stable, Global Cities and Natural Resources)...
Absolute Asia AM Pacific Rim Equities Fund
                    Investment Strategies – Demand & Supply




               ...
Economic Outlook
    China – Key Driver for Asia




                                      38
Our Expertise is Absolutely ...
Economic Outlook
             Longer term structural planning is what is being ignored by market obsessed with liquidity w...
Economic Outlook
                                                     China: Rising income leads to rising spending

  Hou...
Economic Outlook
                                       China: What separates the wheat from the chaff?


      Objective ...
Economic Outlook
                                                  China: Focus on growth stimulus programme


Government ...
Economic Outlook
                                           China: Pre-emptive tightening already underway. Boosting longe...
Economic Outlook
                                        China: Can a sharp appreciation of the RMB address the US trade i...
Economic Outlook
                                        China: Can a sharp appreciation of the RMB address the US trade i...
Economic Outlook
                                             China: PE ratio




 MSCI China: Forward PE Chart           ...
Economic Outlook
                   Australia: One of the world’s most resilient economies




Australia’s consistently we...
Economic Outlook
                   Australia: China’s insatiable demand for its exceptional raw materials base




Austra...
Economic Outlook
                                           Australia: PE ratio




 MSCI Australia: Forward PE Chart     ...
Economic Outlook
                      Hong Kong: Internationalization of RMB to Benefit Hong Kong




Background:

Chines...
Economic Outlook
                                            Hong Kong: PE ratio




 MSCI Hong Kong: Forward PE Chart    ...
Economic Outlook
                  Singapore: An all-round service provider. Aiming to be the leading service hub




Tour...
Economic Outlook
                                           Singapore: PE ratio




 MSCI Singapore: Forward PE Chart     ...
Investment Strategy
                                  Taiwan: Continued Improvement of Cross Strait Relations



        C...
Economic Outlook
                                       Taiwan: The significance of Mainland Chinese tourists



   Total ...
Economic Outlook
                                       Taiwan: Vulnerable on external trade front, but look beyond to dom...
Economic Outlook
                                               Taiwan




  MSCI Taiwan: Forward PE Chart                ...
Appendix




                                      58
Our Expertise is Absolutely in Asia
Absolute Asia Asset Management Overview
                                        Our Expertise – Asia Pacific ex Japan Equi...
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
Absolute asia am_citywire final presentation
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Absolute asia am_citywire final presentation

  1. 1. Natixis International Funds (Lux) I Absolute Asia AM Overview Presentation Citywire Fund Forum, Vienna April 13th 2010 Bill Sung, Chief Investment Officer Absolute Asia Asset Management Limited This material is provided for information only to Professional or Qualified Investors. It must not be distributed to Retail Investors.
  2. 2. Natixis Global Asset Management Overview Each of our affiliates manages their client’s Global, affiliate-based organization assets independently Asset management affiliates by domicile USD 728 billion (EUR 505 billion) under management1 Europe and Asia 19th largest asset management company Absolute Asia Natixis Asset Natixis worldwide2 Asset AEW Europe Management Multimanager Management 13th largest asset management company in U.S. Europe3 Active Investment Caspian Capital Harris Reich & Tang Diversified product line and client base Advisors4 Management Associates Funds6 2,729 employees worldwide AEW Capital Capital Growth Loomis, Sayles Snyder Capital Local representation in key markets Management Management & Company Management Gateway Managed Vaughan Nelson AlphaSimplex Investment Portfolio Investment Group Advisers Advisors4 Management Aurora Hansberger Natixis Caspian Westpeak Global Investment Global Private Equity7 Advisors Management5 Investments 1 As of 31 December 2009. 2 Source: Cerulli Associates, Global Markets 2009 – June 2009, based on total assets under management as of 31 December 2008. 3 Source: IPE Survey, Listing of asset managers active in the European marketplace - June 2009, based on total assets under management as of 31 December 2008. 4 Divisions of Natixis Asset Management Advisors. 5 Prior to 9 March 2009, Aurora Investment Management L.L.C. was known as Harris Alternatives L.L.C. 6 Divisions of Reich & Tang Asset Management. 7 Natixis Caspian Private Equity is a joint venture between Natixis Global Asset 2 Management, Natixis Private Equity and Caspian Capital Management.
  3. 3. Absolute Asia Asset Management Limited Firm Overview 3
  4. 4. Absolute Asia Asset Management Limited Our Credentials Absolute Asia AM (AAAM) is wholly owned by NATIXIS Global Asset Management (NGAM). NGAM is one of the largest asset managers globally with US$728 billion (€505 billion)1 Founded in 1998, we specialize in Asia ex Japan equities with an established investment approach and award winning funds. As at end- December 2009, our asset under management was US$1,090m. Bill Sung, our CIO is rated by consultants. Global clienteles and prospects, including public and private pension companies, insurance companies, wholesale wealth management banks, fund of funds managers and family offices. 1 As of end December 2009 4
  5. 5. Absolute Asia Asset Management Overview Our Investment Strategies Absolute Asia Asset Management Limited Investment Core strategy Total Return strategy Absolute Return strategy Strategy Investment Relative Return Absolute Return Absolute Return Objective Concentration* 40 – 70 stocks 30 – 40 stocks 0 – 20 stocks Cash 0% to 5% 0% to 5% 0% to 100% Risk Budget Yes No No Note: Asia refers to Asia ex Japan Source: Absolute Asia AM * Subject to changes and dependent on the AUM size 5 Our Expertise is Absolutely in Asia
  6. 6. Absolute Asia Asset Management Overview Our Expertise – Asia Pacific ex Japan Equities Illustrations of our Existing Capabilities Performance of Composites (gross of fees), as of end- February 2010 (%, USD) 3M 6M 1Y 3Y* 5Y* Developed Asia Equity Composite -4.86 +10.66 92.15 +5.12 +14.38 – Core Strategy (Flagship) MSCI Pacific free ex Japan Index -1.75 +11.43 +92.63 +1.55 +9.16 Asia Pacific ex Japan Equity Composite -8.98 +7.99 +57.10 n.a. n.a. - Absolute Return strategy MSCI Asia Pacific ex Japan Ind ex ^ -1.69 +10.37 +88.91 n.a. n.a. Asia ex Japan + 10% Australia Equity Composite -4.18 +12.00 +92.13 +3.14 +11.64 - Core strategy MSCI all country Asia ex Japan Index + 10% -1.51 +9.88 +85.98 +2.96 +10.17 MSCI Australia Index Greater China Equity Composite -4.32 +13.95 +103.66 +6.24 n.a. –Total Return Strategy (Small & Mid Cap) MSCI Golden Dragon Ind ex -3.95 +8.20 +69.11 +3.47 n.a. Emerging Asia Equity Comp osite -3.79 +11.66 +78.35 +0.52 +8.43 – Core strategy MSCI Emerging Markets Asia -1.65 +9.62 +86.42 +3.39 +10.94 Data source: Lipper – Reuters, Bloomberg, Absolute Asia AM as of end- February 2010. Performance data shown represents past performance and is not a guarantee of future results. More recent performance may be lower or higher. Principal value and returns fluctuate over time (including as a result of currency fluctuations) so that investments, when redeemed, will be worth more or less than their original cost. * annualized ^ MSCI Asia Pacific ex Japan is shown for comparative purposes only and is not intended to parallel the risk or investment style of the Composite. Please refer to the Global Investment Performance Standards (GIPS®) disclosures in the Appendix for important performance information. 6 Our Expertise is Absolutely in Asia
  7. 7. Absolute Asia Asset Management Overview Our Chief Investment Officer Bill Sung has more than 20 years of outstanding success managing institutional assets invested in Asia, especially in China and Hong Kong. Prior to joining Absolute Asia Asset Management Limited, Bill was with Morgan Grenfell for 12 years, where he managed the AA-rated The China Fund and the AAA-rated Batavia Fund. Both funds were rated by Fund Research Limited. At Absolute Asia AM, he managed the Absolute Asia AM Hong Kong Renaissance Fund which was 1st in the category for Hong Kong Equity Bill Sung Chun Piu Chief Investment Officer over 1 year, awarded by Asian Investors Achievement Awards (Hong Kong) in 2003. He also managed the Absolute Asia AM Pacific Rim Equities Fund which was ranked first out of 82 funds by Standards & Poor’s Germany Awards 2001. From 2004 to 2008, he won Sauren Gold medal awards for two of the funds he managed.* Bill Sung was named 5th in Top 100 European Fund Managers by Citywire in 2008 & rated AAA.* *Mention of the awards historically won by Bill Sung is solely presented to provide supplemental information on the his professional biography and not intended to be an indicator or guarantee for future performance results that he or Absolute Asia Asset Management may achieve in managing current or future portfolios. See the awards disclosure at the end of this material for further 7 Our Expertise is Absolutely in Asia information about the awards mentioned and their methodologies.
  8. 8. Absolute Asia Asset Management Overview Our Investment Philosophy We look for businesses that are proxies to our identified themes We invest in businesses that are consistent with our investment criteria and when we agree with the management’s strategy and outlook. Our themes are consistent with the pivotal micro and macro trends, identified as market drivers, which is a unique approach that we have adopted to derive our alpha. We run a concentrated portfolio, with a thematic approach and high conviction on the stocks we like. Our process is qualitative and we focus on research on the fundamentals of the companies. We are not style biased; provides flexibility to seek outstanding opportunities. 8 Our Expertise is Absolutely in Asia
  9. 9. Absolute Asia Asset Management Limited Investment Process
  10. 10. Absolute Asia Asset Management Overview Our Investment Process 2. Top Down Country Allocation Parameters Macro-economics The top-down process is Industry Assessment only applicable for Core Market Valuation Strategy products Politics 1. Research 4. Constraints 5. Portfolio Construction Guidelines Benchmark Risk Management Trend Identification Theme Identification Sector Identification 3. Bottom Up Stock Selection 10 Our Expertise is Absolutely in Asia
  11. 11. Absolute Asia Asset Management Overview Our Investment Process Trend Theme Sector Stock Illustrations: Idea Generation Focus Research Change in Benefits Singapore Hotel Govt Policies Tourism Hotels Properties Rising Affluence Changing Consumer Lifestyle Lifestyle Discretionary See Additional notes for important information 11 Our Expertise is Absolutely in Asia
  12. 12. Absolute Asia Asset Management Overview Our Investment Process Stock Selection Parameters for Fundamental Analysis FUNDAMENTALS VALUATION CORPORATE FINANCE Competitive position Growth/ value Restructuring potential Profitability Profitability/ value Merger & acquisition potential Financial strength Price/ book Business development strategy Impact of deregulation Extent of broker coverage Management quality Anticipated new flow Transparency 12 Our Expertise is Absolutely in Asia
  13. 13. Absolute Asia Asset Management Overview Our Investment Process Sell Discipline We maintain a strong “Sell Discipline” policy. Reasons for Selling a Stock Expected Deterioration in Over-Valuation Better Investment Fundamentals Alternatives Less promising industry Relative to growth potential New stocks identified outlook More intense competition Relative to peers Stable number of holdings Weakening market position Relative to historical levels Loss of management focus Worsening financial position 13 Our Expertise is Absolutely in Asia
  14. 14. Absolute Asia Asset Management Overview Our Investment Process Risk Management We employ the Barra Aegis Portfolio Manager System to monitor different types of risk parameters. Third Party Risk Management System Marginal Ex-ante Other Risk Sources of Risk Contribution tracking error Parameters to Risk In-house Analysis Inappropriate Risk Excesses Undesirable Trend Exposure Risk Indicators Marginal Contribution to Risk: Tracking Error (applicable only for Core Strategy) 14 Our Expertise is Absolutely in Asia
  15. 15. Product Range at Absolute Asia AM Illustrations of our Existing Capabilities 15 Our Expertise is Absolutely in Asia
  16. 16. Flagship Product Absolute Asia AM Pacific Rim Equities Fund 16 Our Expertise is Absolutely in Asia
  17. 17. Product Summary Absolute Asia AM Pacific Rim Equities Fund Investment Objective Long term growth of capital by investing in the Pacific Rim region Fund Highlights Invests primarily in Pacific Rim companies which are in the region referenced by the MSCI Pacific Free ex Japan Index, including Australia, Hong Kong, New Zealand, and Singapore Disciplined, top-down country allocation process coupled with trend identification to drive bottom-up stock selection Market-oriented, opportunistic approach without style and market capitalisation biases Trend identification highlights themes, sectors and individual stocks for investment Reference Index MSCI Pacific Free ex Japan Index Key Guidelines Invests at least two-thirds of its total assets in equity securities of companies with their registered office or principal activities in any of the countries referenced in the Index 17
  18. 18. Absolute Asia AM Pacific Rim Equities Fund I/A (USD) 574.69 18
  19. 19. Peer Group Analysis Annual Performance vs Peers as of end February 2010 Peers: The “Universe” and “Peers” refer to the “Asia Pacific Ex Japan Equity” Morningstar Europe OE category. Period: Performance since inception uses a modified inception date; it reflects returns since the last day of the month concurrent with the Fund’s commencement of operations. Data at end- January. Currency: All figures are expressed in USD. Performance data shown represents past performance and is not a guarantee of future results. More recent performance may be lower or higher. Principal value and returns fluctuate over time (including as a result of currency fluctuations) so that shares, when redeemed, will be worth more or less than their original cost. Performance shown is net of all fund expenses, but does not include the effect of sales charges or correspondent bank charges, and assumes reinvestment of distributions. If such charges were included, returns would have been lower. Performance for other share classes will be more or less depending on differences in fees and sales charges. For periods when certain share classes were unsubscribed or not yet created (the "inactive share classes"), performance is imputed using the actual performance of the fund's active share class which has been determined by the management company as having the closest characteristics to such inactive share class and adjusting it based on the difference in TERs and, where applicable, converting the net asset value of the active share class into the currency of quotation of the inactive share class. The quoted performance for such inactive share class is the result of an indicative calculation. MSCI Pacific Free Ex-Japan Index measures the performance of stocks in the markets of Australia, Hong Kong, Singapore, and New Zealand and is particularly affected by economical and political developments in Australia, which represents approximately 2/3 of the benchmark weight. This Index is shown for comparative purposes 19 only. Index Source: MSCI. Please see Additional Notes for important information. Data Source: Morningstar
  20. 20. Attribution Analysis Attribution for 3 years as of end February 2010 Policy benchmark is MSCI Pacific XJP Comp Net Dividend. Source: Absolute Asia AM Data source: © 2009 Mellon Analytical Solutions, LLC. All Rights Reserved. Attribution analysis is holdings-based. Performance data shown represents past performance and is not a guarantee of future results. More recent performance may be lower or higher. Principal value and returns fluctuate over time (including as a result of currency fluctuations) so that investments, when redeemed, will be worth more or less than their original cost. See Additional Notes and Disclosures for important information. 20
  21. 21. Portfolio Characteristics (1/2) Absolute Asia AM Pacific Rim Equities Fund Portfolio characteristics as of 28 February 2010 Market Capitalization Allocation as of 28 February 2010, % Fund Index Market Capitalization Fund Index # of Holdings 59 148 Giant 44.5 51.9 % Asset in Top 10 Holdings 40.9 Large 39.0 39.4 45.2 Mid 14.9 8.6 Small 0.9 0.0 Value Measures Fund Index Micro 0.8 0.1 Price/Earnings 15.7 15.3 Price/Book 1.5 1.7 Price/Sales 1.8 1.7 Price/Cash Flow 14.3 8.5 Dividend Yield % 3.0 4.9 Top 10 Holdings by absolute weight as of 28 February 2010, % Growth Measures Fund Index Security Fund, % Long-Term Earnings 10.8 10.0 BHP BILLITON LTD /AUD/ 9.7 Historical Earnings -6.4 -1.9 RIO TINTO LIMITED /AUD/ 7.1 SUN HUNG KAI PROPERTIES /HKD/ 4.8 Book Value -18.9 -5.3 WESTPAC BANKING CORP /AUD/ 4.0 Sales 1.0 0.7 WOOLWORTH LTD /AUD/ 3.5 Cash Flow -22.6 -16.4 HONG KONG EXCH & CLEAR /HKD/ 3.5 WEICHAI POWER CO LTD /HKD/ 3.3 AUSTRALIA & NEW ZEALND BKG AUD 3.2 WHARF HOLDINGS LTD /HKD/ 3.1 LIFESTYLE INTL HLDGS TLD/HKD/ 3.0 Reference Index: MSCI Pacific Free ex-Japan Index TR Data source: Morningstar, BBH 21 Please see the Reference Information page for important information.
  22. 22. Portfolio Characteristics (2/2) Absolute Asia AM Pacific Rim Equities Fund Sector Allocation as of 28 February 2010, % Country Allocation as of 28 February 2010, % Sector GICS Classification Fund Index Region / Country Fund Index Energy 8.3 4.6 Australasia 52.5 68.9 Materials 25.6 18.0 Australia 52.4 68.1 Industrials 9.7 8.1 New Zealand 0.1 0.8 Consumer Discretionary 5.0 4.7 Asia Developed 36.5 30.7 Hong Kong 25.2 18.9 Consumer Staples 6.5 7.6 Singapore 11.3 11.9 HealthCare 1.0 2.2 Asia Emerging 10.9 0.4 Financials 42.0 48.1 China 10.9 0.4 Information Technology 0.9 0.7 Other Countries - - Telecom Services 0.8 2.8 Utilities 0.1 3.4 Reference Index: MSCI Pacific Free ex-Japan Index TR Data source: Morningstar 22 Please see the Reference Information page for important information.
  23. 23. Total Return Product Absolute Asia AM Golden Dragon Renaissance Fund 23
  24. 24. Product Summary Absolute Asia AM Golden Dragon Renaissance Fund Objective Long term growth of capital by investing in the Greater China region (China, including Hong Kong and Taiwan) Fund Highlights Invests primarily in companies located in the Greater China region Bottom-up, opportunistic stock selection approach. Investment style is long-only, seeking opportunities in both value and growth stocks. Identifying key trends leads to investable themes and specific sectors which benefit from those themes This leads to idea generation for focused research on stocks identified Concentrated portfolio designed to profit from the investment team’s conviction Reference Index MSCI AC Golden Dragon Index Key Guidelines Invests at least two-thirds of total assets in equity securities of companies with their registered office or principle activities in the Greater China region 24
  25. 25. Absolute Asia AM Golden Dragon Renaissance Fund I/A (USD) 73.20 25
  26. 26. Portfolio Characteristics (1/2) Absolute Asia AM Golden Dragon Renaissance Fund Portfolio characteristics as of 28 February 2010 Market Capitalization Allocation as of 28 February 2010, % Fund Index Market Capitalization Fund Index # of Holdings 47 276 Giant 1.1 54.3 % Asset in Top 10 Holdings 53.2 30.0 Large 26.3 36.0 Mid 51.8 8.0 Small 7.2 0.0 Value Measures Fund Index Micro 13.5 1.7 Price/Earnings 16.1 13.4 Price/Book 1.2 1.9 Price/Sales 0.6 1.6 Price/Cash Flow 5.5 5.6 Dividend Yield % 1.0 6.2 Top 10 Holdings by absolute weight as of 28 February 2010, % Growth Measures Fund Index Security Fund, % Long-Term Earnings 17.8 15.2 WEICHAI POWER CO LTD /HKD/ 7.5 Historical Earnings -2.1 -6.9 DIGITAL CHINA HLDGS LTD /HKD/ 6.8 SHANGHAI FRIENDSHIP /CNY/-B 6.0 Book Value -13.8 -6.1 COMBA TELECOM SYSTEMS HOLDINGS LTD 5.6 Sales -1.9 -19.4 TAIWAN FERTILIZER CO LTD /TWD/ 5.4 Cash Flow 1.4 -32.8 CHINA RESOURCES LAND LTD /HKD/ 5.1 ORIENTAL WATCH HOLDINGS /HKD/ 4.6 LIANHUA SUPERMARKET HLDGS /HKD 4.3 HONTEX INTERNATIONAL HOLDING 4.0 QINGLING MOTOR H SHARES /HKD/ 3.9 Reference Index: MSCI Golden Dragon Index NR Data source: Morningstar, BBH 26 Please see the Reference Information page for important information.
  27. 27. Portfolio Characteristics (2/2) Absolute Asia AM Golden Dragon Renaissance Fund Sector Allocation as of 28 February 2010, % Country Allocation as of 28 February 2010, % Sector GICS Classification Fund Index Region / Country Fund Index Asia Emerging 63.4 49.6 Energy 0.1 9.1 China 63.4 49.6 Materials 6.8 6.8 Asia Developed 36.6 50.4 Industrials 13.3 7.4 Hong Kong 23.9 20.5 Consumer Discretionary 34.7 5.8 Taiwan 12.7 30.0 Consumer Staples 14.6 2.7 Other Countries - - HealthCare 0.4 0.1 Financials 15.4 35.0 Information Technology 14.7 21.2 Telecom Services - 8.0 Utilities - 4.0 Reference Index: MSCI Golden Dragon Index NR Data source: Morningstar, BBH 27 Please see the Reference Information page for important information.
  28. 28. Economic Outlook Asian Investment Strategy 28 Our Expertise is Absolutely in Asia
  29. 29. Economic Outlook Global uncertainties persist but Economic Conditions improving Liquidity stabilised global financial system and economies in 2009. Modest liquidity withdrawals expected for 2010, but unlikely to de-rail a gradual recovery scenario. Asia should lead the way, supported by external demand and boosted by an increasingly important domestic needs. Asia’s massive surplus savings and improved government fiscal positions offer ample room for most Asian governments to stimulate domestic demand. Accumulation of Foreign Reserves Supports Domestic Demand Balance Sheets 4500.0 (US D b n) 4000.0 3500.0 A s ia Ja p a n US UK 3000.0 2500.0 2000.0 1500.0 1000.0 500.0 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: BIS, CEIC, IFS, BNP Paribas Peregrine, as of end- 2008. Source: Moody’s Investor Services, Mirae Asset Research, from “Not just another decoupling story” presentation dated March 2010 Please see additional notes and Disclosures for important information 29 Our Expertise is Absolutely in Asia
  30. 30. Economic Outlook Exports – Restocking and investing to provide momentum Aggressive destocking magnified Asian Corporates are cautious, still under-invested: FCF as exports collapse in 1Q09. % of GDP is at all time high. The capex cycle has yet The OCED restocking cycle is still ahead of to start. us, not behind us. OECD: Production vs Sales US non-fin corporate FCF, % of GDP Source: OECD, Mirae Asset Research, Source: Credit Suisse, as of end- March 2010 from “ Not just another decoupling story” presentation dated March 2010 Please see additional notes and Disclosures for important information 30 Our Expertise is Absolutely in Asia
  31. 31. Economic Outlook Wide savings and investment gap drives further growth The narrowing of the wide savings-investment gap between 1985 and 1995 caused a phenomenal growth of domestic demand. Asia (ex-Japan) has been recording an exceptionally wide savings-investment gap, which should close over the medium term. The current infrastructure spending in Asia has been lagging behind its economic growth. Positive longer term prospects for Asian economies should accelerate inflow of savings and investments to Asia. Asian 8 Savings and investment gap (% of GDP) 40 35 30 25 20 15 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Savings Investment Asian 8: Hong Kong, Korea, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Philippines. Chart source: CEIC, ABN Amro as of end 2008. Please see additional notes and Disclosures for important information 31 Our Expertise is Absolutely in Asia
  32. 32. Economic Outlook Rising domestic consumption: huge population makes a difference Total population of Asia is more than 3 billion people (U.S. ~ 307m*), which is more than half of the world’s total population. When Asia spends, economies move. Asia ex-Japan has been emerging as an increasingly important consumer market. * estimates as of end 2009 Asian 8 private consumption ratio Korea 49 million (% of GDP) 63 China 1,326 million 62 Taiwan 23 million Thailand 67 million 61 India 1,140 million Philippines 90 million 60 59 Malaysia 27 million Indonesia 228 million 58 57 Australia 21 million 56 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 Data as of end 2008 Asian 8: Hong Kong, Korea, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Philippines. Chart source: CEIC, ABN Amro as of end 2008. Please see additional notes and Disclosures for important information 32 Our Expertise is Absolutely in Asia
  33. 33. Economic Outlook Two different spending patterns in Asia “Economically Successful” “Economically Up & Coming” Nations Nations vs Singapore, Hong Kong, Korea & Taiwan China, India, Thailand & Indonesia High dependence on consumer Rising spending power as incomes rise confidence due to economic growth Lots of liquidity in the banks which, Emergence of a middle class will propel when unleashed, will drive economies spending to greater heights. Increasing consumerism Please see additional notes and Disclosures for important information 33 Our Expertise is Absolutely in Asia
  34. 34. Economic Outlook What happens when Asia grows its economy at twice the speed and have 10 times the population size as the U.S.? Annual Consumption as a % of GDP Asia Consumption relative to the US 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 es ina si a d re an a dia ia an NZ g ea an on ali pin ys po r iw p ne Ch In Ko str ail Ja ala  K ga Ta ilip do ng Th Au M Si n In Ph Ho Dec‐99 Dec‐09 Source: Macquerie, asof end Dec 2009 Note: Asia ex-Japan private consumption has risen from 25% of US private Note: Figures for China and Korea is not available for Dec 2009. For China, Dec 2008 consumption in 2001 to an estimated 40% in 2009. figure is used and for Korea, Nov 2009 has been used. Source: CEIC Data, CLSA Asia-Pacific Markets, from “Global & Asia investment strategy” presentation dated March 2010 Asian 8: Hong Kong, Korea, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Philippines. Please see additional notes and Disclosures for important information 34 Our Expertise is Absolutely in Asia
  35. 35. Economic Outlook This time is no different: A return to the Early 1990s Note: The MSCI Asia ex-Japan index and the MSCI USA index are now trading at 12.4x and 13.5x forward earnings. Source: I/B/E/S, Datastream, , from “Global & Asia investment strategy” presentation dated March 2010 Please see additional notes and Disclosures for important information 35 Our Expertise is Absolutely in Asia
  36. 36. Absolute Asia AM Pacific Rim Equities Fund A Region to Invest In (Politically Stable, Global Cities and Natural Resources) Developed Asia can offer growth with many attractive investment opportunities. Countries in developed Asia (Australia, Singapore, Hong Kong & NZ) are politically stable. Australia provides exposure to resources (gold, copper and iron ore), soft commodities (grain such as wheat and agricultural related services), and energy (oil, gas & uranium) sectors. Hong Kong listed stocks provide access to Hong Kong’s robust property market and consumption related stocks, which benefit from Hong Kong’s emerging role as an offshore RMB financial centre. Singapore is an economy transforming into a world class global city, a business center for private banking, a hub for sports, education and medical tourism. 36 Our Expertise is Absolutely in Asia
  37. 37. Absolute Asia AM Pacific Rim Equities Fund Investment Strategies – Demand & Supply Demand Supply China Australia Rich ground for resources/ energy. Sustainable strong growth of domestic consumption. World’s largest exporter of commodities, such as coal, iron China becomes a consumer market. ore, etc. Data source: Absolute Asia AM, as of end- March 2009 37 Our Expertise is Absolutely in Asia
  38. 38. Economic Outlook China – Key Driver for Asia 38 Our Expertise is Absolutely in Asia
  39. 39. Economic Outlook Longer term structural planning is what is being ignored by market obsessed with liquidity withdrawals China’s response to the global financial crisis starting in 2008 can be classified as a two stage plan: Stage 1 To boost economic growth in response to the massive deterioration in the external environment. Stage 2 Longer term in nature, primarily addressing the imbalance of the economy, i.e. diverting from its excess reliance on investment and foreign demand by boosting domestic consumption. China is moving into Stage 2. The U.S. is still stuck in Stage 1. 39 Our Expertise is Absolutely in Asia
  40. 40. Economic Outlook China: Rising income leads to rising spending Household Income 2004 versus 2009 Where is the Incremental Growth? Household Income (Rmb per month) (%) 40,000 300 33,956 35,000 250 30,000 200 25,000 20,000 150 15,095 15,000 100 10,095 9,573 10,000 6,373 4,708 6,498 4,259 50 5,000 2,265 3,217 1,500 2,247 0 0 Bottom 20% 20-40% 40-60% 60-80% 80-90% Top 10% 2004 2009 % change Source: China Consumer Survey & China Market Strategy presentation prepared Source: CEIC Data, CLSA Asia-Pacific Markets, from “Ten in ‘ten – Economic Themes by Credit Suisse, January 2010 for the New year” presentation dated March 2010 Autos: Which is Now the Largest Market? LCD TVs: How Long will it take for China to become #1? Source: CEIC Data, CLSA Asia-Pacific Markets, from “Ten in ‘ten – Economic Themes Source: CEIC Data, CLSA Asia-Pacific Markets, from “Ten in ‘ten – Economic Themes for the New year” presentation dated March 2010 for the New year” presentation dated March 2010 40 Our Expertise is Absolutely in Asia Please see additional notes and Disclosures for important information
  41. 41. Economic Outlook China: What separates the wheat from the chaff? Objective in the 2nd stage is to address the imbalance of the economy with the focus in supporting domestic consumption. This is a sign of confidence the Chinese government is already comfortable about its focus on long-term issues. Allocation of more funding to social spending such as healthcare, education and income support, has started a few years ago. This not only supports public consumption directly, but may also stimulate private consumption. In the long term, this should address the economic imbalance, resulting in higher domestic consumption, a sustainable driver of the Chinese economy. Focus on the Changing Mix of FAI driven by Private Enterprises – increasingly market oriented Note: 1Private enterprises, HK/Macao/Taiwan & other foreign funded enterprises and individual businesses Source: CEIC, CLSA Asia-Pacific Markets, from “Ten in ‘ten – Econmic Themes for the New year” presentation dated March 2010 Please see additional notes and Disclosures for important information. 41 Our Expertise is Absolutely in Asia
  42. 42. Economic Outlook China: Focus on growth stimulus programme Government continues to focus on building up a safety net for the people. Expenditure on Education Expenditure on Social Security 120.0 90.0 80.0 100.0 70.0 80.0 60.0 50.0 US$ bn US$ bn 60.0 40.0 40.0 30.0 20.0 20.0 10.0 0.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008 Expenditure on Medical & Health Care Expenditure on Rural Areas 35.0 90.0 80.0 30.0 70.0 25.0 60.0 50.0 US$ bn 20.0 US$ bn 40.0 15.0 30.0 10.0 20.0 5.0 10.0 0.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: CEIC, Credit Suisse estimates, as of Oct. 2009 42 Our Expertise is Absolutely in Asia Please see additional notes and Disclosures for important information.
  43. 43. Economic Outlook China: Pre-emptive tightening already underway. Boosting longer-term structural competitiveness Monetary Policy not as Loose as Elsewhere – Interest Rates Less Effective in Withdrawing Liquidity Watch the Gap in Deposit and Loan Growth Source: CEIC, CLSA Asia-Pacific Markets, from “Ten in ‘ten – Economic Themes for the New year” New renminbi bank lending totaled Rmb9.6tn in 2009 and Rmb1.39tn in Jan-10. Bank loans rose presentation dated March 2010 by 29.3%YoY in January while corporate deposits rose by 37.7%YoY in December. CLSA’s new renminbi lending forecast for 2010 is Rmb7-8tn, implying annualised loan growth of 17-20%. Source: CEIC Data, PBOC, CLSA Asia-Pacific Markets, from “Ten in ‘ten – Economic Themes for the New year” presentation dated March 2010 Liquidity in absence of real economic needs, finds its way into financial assets. Please see additional notes and Disclosures for important information 43 Our Expertise is Absolutely in Asia
  44. 44. Economic Outlook China: Can a sharp appreciation of the RMB address the US trade imbalance? Currently, there is increasing pressure internationally, especially from the US, to push China to appreciate the Yuan against the USD. So will a sharp appreciation of the RMB address the US trade balance? 1. What is the fair value of the RMB? The question is how to determine the fair value of RMB against the USD. Estimates for the undervaluation of the RMB range from 20% to 100%, depending on the model that is used. 2. Will the appreciation of RMB help to address the US trade imbalance? We believe that an appreciation of the RMB would not have much impact on the US trade imbalance, as it is mainly caused by the US overconsumption and the US’ shrinking manufacturing base especially for the lower value added products. US$b 300.0 30.0% 250.0 25.0% 200.0 20.0% 150.0 15.0% 100.0 10.0% 50.0 5.0% ‐ 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Bloomberg, Absolute Asia AM US Trade Deficit with China (US$b) Cumulative CNY appreciation versus USD (Base = Year 2000) 3. What is the benefit of the relatively stable RMB rate against the USD? We believe that it is not China’s intent to gain some trade advantage by keeping the RMB stable, rather China seems to be trying to gain economic benefit from a stable exchange rate and probably a more stable monetary policy. The ultimate solution would be to make RMB convertible and allow capital and trade flows to adjust through private markets. Please see additional notes and Disclosures for important information 44 Our Expertise is Absolutely in Asia
  45. 45. Economic Outlook China: Can a sharp appreciation of the RMB address the US trade imbalance? 4. How to make the RMB freely convertible? China is starting the test for the internationalization of the RMB represents the start of the whole testing process and it is being undertaken in Hong Kong. Hopefully, Hong Kong’s experience in financial markets will help to accelerate the pace of the whole testing process and the time when the RMB can become freely convertible. 5. What is the chance of RMB appreciation in the near term? A small RMB appreciation of even 2-3% is very unlikely. Even if it were to occur, the US would not be satisfied. Instead, it would attract more hot money inflow, which would worsen the potential asset bubble problem. Also, an appreciation of the RMB now will be seen as bowing to foreign pressure. It would be political suicide for any Chinese leader to agree to appreciate the RMB at this juncture. 6. China does not agree that its huge trade surplus is due to the undervaluation of the RMB. China believes that its huge trade surplus is mainly due to the Chinese citizens saving too much and spending too little. For example, national expenditure on health care lags behind spending in developed countries and also provides a large amount of room to boost domestic consumption. Spending in these areas not only supports public consumption directly, it also stimulates private consumption as well by relieving households of the need to save to finance retirement or self- insure against mishaps. In the future, China’s growth will be driven more by absorbing domestic resources into the provision of social services. This will generate income, support human capital formation and contribute to productivity gains. That means China’s consumer market is entering into a stage of sustainable growth, which can be tapped in the years ahead. Please see additional notes and Disclosures for important information 45 Our Expertise is Absolutely in Asia
  46. 46. Economic Outlook China: PE ratio MSCI China: Forward PE Chart MSCI Asia ex Japan: Forward PE Chart 160 900 PE 20x 140 800 700 PE 17x 120 PE 22x 600 100 PE 14x PE 18x 500 80 PE 14x PE 10x 400 60 PE 10x 300 40 200 20 100 0 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: Credit Suisse, as of end- March 2010 Please see additional notes and Disclosures for important information 46 Our Expertise is Absolutely in Asia
  47. 47. Economic Outlook Australia: One of the world’s most resilient economies Australia’s consistently well managed economy has grown for 18 consecutive years and was the only OECD country to avoid dipping into recession during the recent financial crisis. The banking system remained resilient throughout the crisis, and even strengthened, as many foreign players withdrew to deal with their own domestic problems. The Reserve Bank of Australia was the first central bank to raise interest rates following the crisis and has raised them four times since the tightening began because of the dynamism of the economy which is marked by strong consumer sentiment, falling unemployment, solid retail sales and a more positive outlook from the corporate sector. 47 Our Expertise is Absolutely in Asia
  48. 48. Economic Outlook Australia: China’s insatiable demand for its exceptional raw materials base Australia, as one of the world’s major exporters of raw materials, has benefited greatly from Chinese demand. Demand for bulk commodities, particularly iron ore and coking coal, which are used in steel production have remained exceptionally strong in 2009 and early 2010, in response to explosive Chinese demand for construction, consumer appliances and motor vehicles. Australia is also a key supplier of oil, gas, and LNG to meet Asia’s growing need for power and will remain a major supplier of uranium to supply the rapid increase in nuclear power capacity which will be coming on stream in China, India and the rest of the world. Foreign investors, particularly the Chinese, are very active in Australia, and more M&A activity is likely and another driver of the market. 48 Our Expertise is Absolutely in Asia
  49. 49. Economic Outlook Australia: PE ratio MSCI Australia: Forward PE Chart MSCI Asia ex Japan: Forward PE Chart 1800 900 PE 20x 1600 800 1400 PE 19x 700 PE 17x 1200 PE 16x 600 PE 14x 1000 500 PE 13x 800 400 PE 10x PE 10x 600 300 400 200 200 100 0 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: Credit Suisse, as of end- March 2010 Please see additional notes and Disclosures for important information 49 Our Expertise is Absolutely in Asia
  50. 50. Economic Outlook Hong Kong: Internationalization of RMB to Benefit Hong Kong Background: Chinese government intends to make Shanghai an international financial & shipping center by 2020 which would mean making RMB a fully convertible international trade currency. Steps Taken: a) Currency swap agreements with 6 countries, for importers of Chinese goods to borrow RMB from their central banks; b) Allows settlement of trades in RMB by companies in Hong Kong, Macau and ASEAN countries on a trial basis. Implications: a) Hong Kong is the frontrunner to become an offshore RMB settlement centre, which the local banks will benefit; b) Ability to settle foreign trades in RMB will reduce currency risk for enterprises and encourage trade settlement in HK; c) Issuance of RMB bonds will facilitate debt capital market developments; d) Speculation of setup of a commodities exchange to support China’s burgeoning demand for natural resources; e) Anticipations of more liquidity, now invested aboard, to flow back into Hong Kong 50 Our Expertise is Absolutely in Asia
  51. 51. Economic Outlook Hong Kong: PE ratio MSCI Hong Kong: Forward PE Chart MSCI Asia ex Japan: Forward PE Chart 16000 900 PE 21x PE 20x 14000 800 700 PE 17x 12000 PE 17x 600 10000 PE 14x PE 13x 500 8000 400 PE 10x PE 10x 6000 300 4000 200 2000 100 0 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: Credit Suisse, as of end- March 2010 Please see additional notes and Disclosures for important information 51 Our Expertise is Absolutely in Asia
  52. 52. Economic Outlook Singapore: An all-round service provider. Aiming to be the leading service hub Tourism – new attractions like Formula one race and two new casinos. Singapore as a financial hub – strategic location within Asia and pro-business environment. Medical tourism – foreign patient volumes have grown at a CAGR of 20% since 2000, reaching approximately 450,000 in 2006. Aims to attract 1m foreign patients by 2012. Education hub status targeting to attract 150,000 foreign students by 2015 from 80,000 in 2006, boosting the education sector’s GDP contribution from 1.9% to 5%. Open immigration policy geared towards attracting foreign human capital. 52 Our Expertise is Absolutely in Asia
  53. 53. Economic Outlook Singapore: PE ratio MSCI Singapore: Forward PE Chart MSCI Asia ex Japan: Forward PE Chart 700 900 PE 20x 800 600 PE 22x 700 PE 17x 500 PE 18x 600 PE 14x 400 500 PE 14x 400 PE 10x 300 PE 10x 300 200 200 100 100 0 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: Credit Suisse, as of end- March 2010 Please see additional notes and Disclosures for important information 53 Our Expertise is Absolutely in Asia
  54. 54. Investment Strategy Taiwan: Continued Improvement of Cross Strait Relations Cross straits improvement has become a certainty. Immediate progress already seen, but implementation also likely to be gradual. What has taken place? a. Formalized mainland tourism into Taiwan b. Direct transport links c. Relaxation of investment restrictions cross border, including rules on acquisitions Key re-rating story for Taiwan a. The ECFA, which lowers the trade barriers between China and Taiwan, will remove the uncompetitive position Taiwan faces in trade dealings with China and regional and global trading partners. b. The potential mainland capital inflow into Taiwan See Additional Notes for important information 54 Our Expertise is Absolutely in Asia
  55. 55. Economic Outlook Taiwan: The significance of Mainland Chinese tourists Total Tourist Arrivals & Composition of Overseas Chinese China Visitors to Macau, Hong Kong & Thailand Source: Credit Suisse, as of end-Dec 2009 Source: Credit Suisse, as of end-Dec 2009 Hong Kong & Macau have seen significant increase in mainland Chinese tourists. The potential for Taiwan is undisputed; it’s a question of the magnitude of relaxation to achieve the potential. Please see additional notes and Disclosures for important information 55 Our Expertise is Absolutely in Asia
  56. 56. Economic Outlook Taiwan: Vulnerable on external trade front, but look beyond to domestic recovery Taiwan, in contrast, has become more trade dependent given its position as a leading outsourcing center for MNCs. Domestic demand has been below trend growth, where domestic demand is not over-extended. All we need is confidence to return Composition of GDP Growth, based on Contribution from Domestic Demand & Net Trade 20 GDP growth (% yoy) 10 Domestic demand (% yoy contribution to GDP) 8 15 Net trade (% yoy contribution to GDP) 6 4 10 2 5 0 -2 0 -4 -6 -5 -8 -10 -10 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 Source: Credit Suisse, as of end-Dec 2007 Please see additional notes and Disclosures for important information 56 Our Expertise is Absolutely in Asia
  57. 57. Economic Outlook Taiwan MSCI Taiwan: Forward PE Chart MSCI Asia ex Japan: Forward PE Chart 800 900 PE 20x 700 800 700 PE 17x 600 PE 26x 600 500 PE 14x PE 21x 500 400 PE 16x 400 PE 10x 300 PE 11x 300 200 200 100 100 0 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: Credit Suisse, as of end- March 2010 Please see additional notes and Disclosures for important information 57 Our Expertise is Absolutely in Asia
  58. 58. Appendix 58 Our Expertise is Absolutely in Asia
  59. 59. Absolute Asia Asset Management Overview Our Expertise – Asia Pacific ex Japan Equities Awards & Ratings Morningstar overall rating2: I/A(USD), R/A(USD), for the category of Asia Pacific ex Japan Equity, as of 31 Dec. 2009 FUND MANAGEMENT RATING Absolute Asia AM Pacific Rim Equities Fund’s ratings1 Lipper leader: Consistent Return, Total Return, for the category of Equity (From 14 Jan. 2009 to 13 Jan. 2010) Asia Pacific Ex Japan, as of 31 Dec. 2009 For the peer group of South East Asia equities1 Any reference to a rating, ranking, or an award provides no guarantee for future performance results and may not be constant over time. 1 An S&P Fund Management Rating represents an opinion only and should not be relied on when making an investment decision as the fund rating is for information purposes only and not tailored to a specific investor. Copyright (c) 2010 Standard & Poor's, a division of The McGraw-Hill Companies, Inc. 2 Morningstar Ratings: © 2009 Morningstar, Inc. All Rights Reserved. The information on the Morningstar Ratings contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Please contact Morningstar for the most recent description of their rating methodology. Ratings are subject to change every month. 59 Our Expertise is Absolutely in Asia

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