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F:\Ct&T Capital

  1. 1. CT&T Capital Investors Meeting Updates and Response to Atlantic Ocean Windstorm 20 March 2010 CHOO KOON PO | TOR WEI JIAN | TEO GUI XIONG CONFIDENTIAL
  2. 2. AGENDA 1 Introduction 2 Background 3 Event Analysis 4 Actions Taken 5 Conclusion CT&T Capital 6 Appendix CONFIDENTIAL CT&T Capital 1
  3. 3. INTRODUCTION: Recap of Our Investment Strategy CT&T Capital seeks to obtain an attractive rate of return through investing in long term macro trends and focusing on key geographies and asset classes 3 Key Investment Themes Target Investors Investors with high risk appetite seeking Alternative Energy for high returns for an investment time 1 - Ongoing Climate issue horizon of 10 years - Government Stimulus - Technological Advancement Theme Funds Selection S$ Frontier Market 1 HSBC GIF Climate Change $1m 2 - Superior Growth Prospect - Lower valuations in Frontier Market ING (L) Invest Middle East & 2 2 North Africa $3m Commodities FORTIS L FUND Bond Best 3 2 2 Selection World Emerging $1m - Agriculture: Increasing population and decreasing arable land DWS Global Agribusiness A2 - Metals: Increase urbanization and 3 3 SGD $1m construction activities Schroder AS Gold and Metals A 3 3 $3m Acc SGD CONFIDENTIAL CT&T Capital 2
  4. 4. BACKGROUND: US and New York State United States New York State World GDP by PPP, 2008 Description  Gross GDP of USD 1.14tr in 2008 20.4%  16th largest economy in the world, 8th highest per capita income 11.3% 53.0%  NYC – largest and most populous city in US 6.2%  A global, iconic hub for 4.9% financial, cultural, transportation and 4.2% manufacturing activities US China Japan India Germany Rest of world World imports & exports, USD trillion 2008 Top 5 industries of New York State Exports Imports 16% Japan 78 Japan 76 42% 15% US 129 China 113 SE Asia 141 Germany 120 9% China 143 SE Asia 143 10% 7% Germany 146 US 217 Finance and insurance Real estate and rental and leasing - 50 100 150 200 0 100 200 300 Professional and technical services Health care and social assistance Government All others CONFIDENTIAL CT&T Capital 3
  5. 5. BACKGROUND: Historical Disasters Analysis Impact on financial markets is driven mainly by investor’s expectation, severity of disaster and size/significance of the affected region’s economy 1 Investor Expectations 2 Severity of Disaster 3 Region’s Economy • Unexpected events and • Increase severity would lead • Key economic regions will mismatch expectations would to greater disruption and increase impact to financial increase impact on financial recovery/rebuilding efforts markets markets •Sept 11 Attacks •Hurricane Katrina •Hurricane Katrina Unexpected event which cause USD 82 Billion in property Gulf of Mexico contributes to huge market fluctuations damage and destruction of over 50% of US gasoline state‟s infrastructure production Led to rise in oil prices CONFIDENTIAL CT&T Capital 4
  6. 6. EVENT ANALYSIS: General We expect NY Windstorm to surpass Katrina’s total economic impact Property Damages and Economic Costs Impacts on Global Markets USD bn 350 ? 1 Impact on Global Economy 300 - Key US industries affected 250 200 - Contagion effect to rest of world 150 150 109 100 81.2 78 2 Impact on Global Financial 35 41 Markets 50 26.8 0 - Capital Markets Hurricane Hurrican Hurricane Hurrican Ike Sept 11 2010 NY - Equities, Bonds Katrina Ike Attacks Windstorm - Currencies and Commodities Property damages Total economic impact CONFIDENTIAL CT&T Capital 5
  7. 7. EVENT ANALYSIS: Industry Analysis Construction sector first to benefit from reconstruction efforts Negative - Positive + • Insurance: Increase liability claims • Construction: Reconstruction efforts and increase in demand of construction equipments • Financials: Disruption of operations of major • Consumer Durables: Restocking by consumers finance companies and decreasing investor‟s risk appetites • Resources Mining: Demand for raw materials such as base metals for reconstruction • Tourism/Entertainment: Drop in tourist arrivals and hotel occupancy •Transportation: Reconstruction efforts would involve moving of supplies e.g. trucking companies • Aviation/Shipping: Disruption of airport and seaport services CONFIDENTIAL CT&T Capital 6
  8. 8. EVENT ANALYSIS: Government Reaction We expect central banks and governments to react swiftly and decisively Sept 11 attacks Subprime crisis 2010 NY Windstorm Monetary Monetary Monetary  Fed funds rate lowered by  Fed funds rate lowered from  Fed funds to be maintained at 175bp over 3 months 5.25% to range of 0 – 0.25% 0 – 0.25%  Quantitative easing and  More special lending facilities extraordinary lending facilities may be created / restarted  Quantitative easing Fiscal Fiscal Fiscal  USD 40bn to fund relief efforts  A total of USD 955 bn stimulus  More fiscal stimulus in the form package in 2008/9 of tax cuts, government  Further tax cuts and stimulus expenditures etc. bill were made in Q1, 2002  TARP fund. USD 700 bn used specifically for financial  Specific programs for property institutions and business owners CONFIDENTIAL CT&T Capital 7
  9. 9. EVENT ANALYSIS: Immediate Impact Analysis of past disasters – Sept 11 Attacks and Hurricane Katrina Sept 11 Attacks Hurricane Katrina 110 120 Gold rose 4.2% from 10- Gold remains 17 Sept 105 stable 115 Oil suffers a Oil went up 100 3% from 23-28 large drop in the aftermath 110 Aug of event 95 Metals went up 10% in 4 Equities went 105 weeks after 23 down an 90 Aug average 5% globally when 100 Equities US Markets 85 remains first open on stable 17 Sept 80 95 Year Year 2001 2005 23 Aug 2005: Hurricane struck Bahamas Market closes from 11-16 Sep 2001 28 Aug 2005: Hurricane struck Louisiana S&P 500 MSCI World MSCI Emerging Metals Gold Oil CONFIDENTIAL CT&T Capital 8
  10. 10. EVENT ANALYSIS: Immediate Impact Market volatility increases, gold has upside potential whereas broad equities indices and oil fall Commodities Impact Reasons/ Market Speculations Gold Flight to safety Oil Slow down of US economy Base Metals Reconstruction efforts Equities Impact Reasons US Equities Global Equities US economic impact spreads globally Emerging/Frontier Equities Currency Impact Reasons US Dollar Index Selling of US assets, economic growth stalls Fixed Income Impact Reasons US Treasuries NA Historically not closely correlated Global Treasuries NA Market Volatlity Impact Reasons VIX Index Market volatility increases due to uncertainty CONFIDENTIAL CT&T Capital 9
  11. 11. ADDITION #1: Fullerton Global Bond Fund (FGLOB) The Fund has the flexibility to invest in sovereign bonds, corporate bonds, REITs and other fixed income instruments. The Fund Manager may invest in futures and derivatives for hedging purposes and efficient portfolio management. Reasons for Inclusion Fund description Lowest Annual Expense Ratio Asset Allocation – Credit Ratings 1  The fund has the lowest annual expense ratio (0.36%) among its 12 peers (average of 5.8%) Low Risk 2 48% of portfolio in AAA rating bonds Currency exposure 3 Relatively low exposure to USD •Only 24.4% in USD (Rare for low risk bond denominated funds) Offers a great hedge to our current portfolio amid volatile period Source: Fund Factsheet (Dec 2009) CONFIDENTIAL CT&T Capital 10
  12. 12. ADDITION #2: Global Construction Portfolio 4 stocks to invest to capitalize on the reconstruction efforts 1 3 • Relevant experience as the only • Good long-term relationships with construction company working at governments and contractors both the Pentagon and WTC disaster • Ability to take on contract risks and sites during 9/11 stress test projects • Debt free • Debt-free 2 4 • World's largest manufacturer of • World„s 8th largest construction construction equipment company • Strong business model, consistent • Key markets in US positive free cash flow • Low debt/equity level (c.15%) and High ROE (c.18.4%) CONFIDENTIAL CT&T Capital 11
  13. 13. SUMMARY OF IMMEDIATE ACTIONS TAKEN We seek to take advantage of event-driven opportunities Portfolio Allocation Immediate Theme Funds Selection Current Action Alternative HSBC GIF Climate Change $2m $0.5m Energy Frontier Markets ING MENA $3m $1.5m (Equities) Frontier Markets FORTIS Emerging Bond $1m $0.5m (Bonds) Commodities DWS Global Agribusiness $1m $1m (Agriculture) Commodities Schroder Gold and Metals $3m $4.5m (Gold & Metals) Safe Assets Fullerton Global Bond - $1m (NEW) Construction 4 Global Construction - $1m Equities (NEW) Companies CONFIDENTIAL CT&T Capital 12
  14. 14. EVENT ANALYSIS: Med to Long Term Impact We are positive on the economic recovery story as markets stabilize V-shape Recovery 1 Emerging Markets to recover faster than US US Government increase fiscal spending 2 US Government to issue more debt to fund reconstruction, stimulate economy Downside pressure on US dollars Commodities – Gold to correct, demand for base metals strong 3 Gold prices to correct as market conditions stabilize Base metal fundamentals to be strong due to emerging market growth CONFIDENTIAL CT&T Capital 13
  15. 15. EVENT ANALYSIS: Med to Long Term Impact on Funds Our portfolio would revert largely to our original 3 key investment themes  We expect lesser climate change 1 HSBC GIF Climate Change commitments from Gov‟t 2 ING MENA  Emerging markets to recover faster 3 FORTIS Emerging Bond 4 DWS Agribusiness  Agriculture fundamentals remain intact  Industrialization & Urbanization gather 5 SCHRODER Gold & Metals momentum CONFIDENTIAL CT&T Capital 14
  16. 16. SUMMARY OF POST EVENT ACTIONS TAKEN We seek to maximise returns on long term macro trends Portfolio Allocation Immediate Theme Funds Selection Current Post Event Action Alternative HSBC GIF Climate Change $2m $0.5m $1m Energy Frontier Markets ING MENA $3m $1.5m $3m (Equities) Frontier Markets FORTIS Emerging Bond $1m $0.5m $2m (Bonds) Commodities DWS Global Agribusiness $1m $1m $1m (Agriculture) Commodities Schroder Gold and Metals $3m $4.5m $3m (Gold & Metals) Safe Assets Fullerton Global Bond - $1m - (NEW) Construction 4 Global Construction - $1m - Equities (NEW) Companies CONFIDENTIAL CT&T Capital 15
  17. 17. CONCLUSION We adopt an opportunistic approach in the immediate aftermath of the windstorm S$‟m Portfolio Allocation* 6 Agriculture 5 Metals & Gold 4 Frontier 3 Climate Treasuries 2 Construction 1 0 Pre-Event Pre-Event Reaction Reaction Market Stabilise Market Stabilize  Capitalize on  Ride on Economic  Economic recovery reconstruction recovery especially story continues in efforts on Emerging Emerging Market Investment Theme economies  Underweight on Global Equities  Overweight on Metals & Gold *Our present portfolio allocation is based on our base case scenario analysis CONFIDENTIAL CT&T Capital 16
  18. 18. CONCLUSION 3 investment themes for the next decade Climate Change Frontier Markets Agriculture and Metals  High potential returns from  High potential returns from low  High potential returns from increasing investments and base, low PE rising urbanization and government support in population alternative energies MPT + Optimize Sharpe ratio Fund with strong capability and potential of generating the alpha performance in the next decade CONFIDENTIAL CT&T Capital 17
  19. 19. CT&T Capital The alpha to your investment needs Q&A CT&T Capital CONFIDENTIAL CT&T Capital 18
  20. 20. Appendix Event CT&T Capital CONFIDENTIAL CT&T Capital 19
  21. 21. SCENARIO ANALYSIS: Immediate Actions We seek to maximise returns on long term macro trends Portfolio Allocation Theme Funds Selection Pessimistic Base Optimistic Alternative HSBC GIF Climate Change - $0.5m $1m Energy Frontier Markets ING MENA - $1.5m $3m (Equities) Frontier Markets FORTIS Emerging Bond - $0.5m $1m (Bonds) Commodities DWS Global Agribusiness $1m $1m $1m (Agriculture) Commodities Schroder Gold and Metals $4m $4.5m $3m (Gold & Metals) Safe Assets Fullerton Global Bond $5m $1m - (NEW) Construction 4 Global Construction - $1m S1m Equities (NEW) Companies CONFIDENTIAL CT&T Capital 20
  22. 22. SCENARIO ANALYSIS: Med to Long Term We seek to maximise returns on long term macro trends Portfolio Allocation Theme Funds Selection Pessimistic Base Optimistic Alternative HSBC GIF Climate Change - $1m $2m Energy Frontier Markets ING MENA $1m $3m $3m (Equities) Frontier Markets FORTIS Emerging Bond $1m $2m $1m (Bonds) Commodities DWS Global Agribusiness $1m $1m $1m (Agriculture) Commodities Schroder Gold and Metals $4m $3m $3m (Gold & Metals) Safe Assets Fullerton Global Bond $3m - - (NEW) Construction 4 Global Construction - - - Equities (NEW) Companies CONFIDENTIAL CT&T Capital 21
  23. 23. New York State Profile Demographics and Social Economic  3rd most populous state in the US, estimated  Gross GDP of USD 1.14tr in 2008 pop. of 19.5m as of July 2009  16th largest economy in the world, 8th highest per capita income  Highly urbanised. 92% of residents living in urban areas  Projected state deficit of USD 8.2bn in 2010/2011 New York City Top five industries as percent of GDP, 2008  Geographically largest city in the state and 16% most populous in the US 43% 15%  A global hub for financial, cultural, transportation and 10% 7% 9% manufacturing activities Finance and insurance Real estate and rental and leasing Professional and technical services Health care and social assistance  Location of the NYSE, largest stock Government All others exchange in the world Source: Bureau of Economic Analysis, US Department of Commerce _____ CONFIDENTIAL 22
  24. 24. United States Profile GDP in PPP and nominal $ Economic Current USD PPP  Largest national GDP in the world – 23% 20% USD14.4 trillion 51% 7% 54% 11% 6% 5% 8% 4% 5% 6%  Largest importer of goods and 3rd largest exporter in the world US China Japan France Germany Rest US China Japan India Germany Rest  Services contribute 67.8% of GDP in 2009  3rd largest producer of oil in the world and Global exports largest importer  []  World‟s top producer of corn and soybeans 9.2% 10.2% 5.6%  NYSE – world‟s largest by dollar volume 60.5% 4.3%  Budget deficit of 9.8% of GDP 10.3%  Gross national debt in 2009: 83.4% of GDP US China Japan France Germany Rest _____ CONFIDENTIAL 23
  25. 25. Hurricane Katrina Hurricane Katrina (Aug 2005) - 4th most severe hurricane and greatest economic damage What Happened? • Worst affected states in US: Louisiana (Ranked 24th in Gross State Product in US), Mississippi (Ranked 35th), Alabama (Ranked 25th) •Total Fatalities: 1,836 confirmed, 705 missing • Total Damage to Property: USD 81.2 Billion •Total Economic Impact: Up to USD 150 Billion • Industries Affected (Immediate): •Oil Production in the Gulf Coast (over 50% of US gasoline production) • Shipping (Bulk of US agriculture shipped from the Gulf) •Forestry (about USD 2 Billion loss) CONFIDENTIAL CT&T Capital 24
  26. 26. 9/11 – September 11th Attacks September 11th 2001 - Most deadly attack on US soil since Pearl Harbor What Happened? • Main Cities Affected: New York City (GDP: Over USD 1trillion) •Total Fatalities: 2,973 victims •Total economic Impact: • GDP Declined in NYC: USD 27.3 Billion • Insurance lost: up to USD 40 Billion • Industries Affected (Immediate): • Finance • NYSE, NASDAQ, NYMEX, bond market cease trading • Tourism • Airlines/Aviation CONFIDENTIAL CT&T Capital 25
  27. 27. NY State Disaster 2010 Worst Wind Storm to hit New York State What Happened? • Main Areas Affected: New York State •Total Fatalities: Minimal •Total economic Impact (Estimated): • Damage to property: Over 100 USD Billion • GDP decline: ?? • Industries Affected (Immediate): • Finance • NYSE, NASDAQ, NYMEX, bond market cease trading • Transport •Airlines •Shipping •Tourism • CONFIDENTIAL CT&T Capital 26
  28. 28. NY State Disaster 2010 – Damage to Infrastructure Heavy damage to property, major sea ports and airports • Main Areas Affected: New York State • Property: • NYC: $796.6 billion (2010) • Major Airports Affected: 1. John F. Kennedy International Airport 2. LaGuardia Airport 3. Newark Liberty International Airport 4. Stewart International Airport, 5. Teterboro Airport • Major Port Affected: 1. Auto Marine Terminal 2. Brooklyn Port Authority Marine Terminal 3. Howland Hook Marine Terminal 4. Port Newark-Elizabeth Marine Terminal CONFIDENTIAL CT&T Capital 27
  29. 29. Natural Disasters and Economic Growth Natural Disasters: Short term economic pain but long term growth? Sichuan Earthquake (May 2008) Case Study • 80,000 dead, almost apocalyptic devastation in China • Massive rebuilding effort and billions of dollars it would pump into the Chinese economy would far outweigh the economic losses from the quake • Bump up national economic growth by 0.3 percent Other Studies •Studies have found that earthquakes in California and Alaska helped spur economic activity there, and that countries with more hurricanes and storms tend to see higher rates of growth. Some of the most recent studies have found a link between disasters and subsequent innovation. • Possible long term economic growth after initial destruction CONFIDENTIAL CT&T Capital 28
  30. 30. New Fund – Fullerton Global Bond Fund (FGLOB) The Fund has the flexibility to invest in sovereign bonds, corporate bonds, REITs and other fixed income instruments. The Fund Manager may invest in futures and derivatives for hedging purposes and efficient portfolio management. Fund description Peer comparison Asset Allocation – Credit Ratings  The fund has the lowest annual expense ratio (0.36%) among its 12 peers (average of 5.8%)  The fund has the 3rd highest 1-year return (12.3%) among its peers (average of 5.38%)1 1 As of 19 March 2010 Geographical exposure Currency Exposure  Relative lower exposure to USD currency compared to other low risk bond denominated funds Source: Fund Factsheet (Dec 2009) CONFIDENTIAL CT&T Capital 29
  31. 31. New Fund – Fullerton Global Bond Fund (FGLOB) The Fund has the flexibility to invest in sovereign bonds, corporate bonds, REITs and other fixed income instruments. The Fund Manager may invest in futures and derivatives for hedging purposes and efficient portfolio management. Fund Description Description Details Top 5 Positions % portfolio Currency SGD France Government 4.25% 2.2% Oct 2023 Manager Fullerton Fund Management Bank Nederlandse Launch 16 November 2009 Gemeenten 4.125% 2.0% Jun 2016 Management Fee 0.75% (Annual) Korea Treasury Bond 5.75% Fundsupermart 1.9% 2- Low Risk Sep 2018 Risk Rating US Government 2.75% 1.9% Feb 2019 Bundes Republick Deutschland 5.625% 1.9% Jan 2028 Source: Fund Factsheet (Feb 2010) CONFIDENTIAL CT&T Capital 30
  32. 32. DJ Home Construction Index vs S&P500, post 9/11 Construction sector outperformed S&P500 strongly post 9/11 attacks _____ CONFIDENTIAL 31
  33. 33. Caterpillar Inc. Caterpillar Inc.. The Group's principal activities are designing, manufacturing and marketing construction machinery and engines. The Group operates through three business segments: Machinery, Engines and Financial Products. Machinery segment designs, manufactures and markets construction, mining and forestry machinery and related parts. Engines segment designs, manufactures and markets electric power generation systems, on-highway vehicles and locomotives, marine, petroleum, industrial, agricultural and related parts. Financial Products segment provides financing to customers and dealers for the purchase and lease of equipment, offers operating and finance leases, installment sale contracts, wholesale financing plans and insurance services. The Group's products are sold under the brand names Caterpillar, Cat, Solar Turbines, MaK, Perkins, FG Wilson and Olympian. It operates in the United States, Europe, Africa, Middle East, Asia Pacific, Latin America and North America. Source: Worldscope. CONFIDENTIAL CT&T Capital 32
  34. 34. AMEC AMEC p.l.c.. The Group's principal activity is providing consultancy, engineering and project management services to the energy, power and process industries. It designs, delivers and maintains strategic and complex assets for its customers. The Group operates through four businesses. Natural Resources designs, manages, maintains and upgrades production assets for a range of oil and gas companies globally. Power and Process designs, enhances and maintain electricity and gas infrastructure in the United Kingdom, and power and industrial plant in selected markets in North America. Earth and Environmental provides environmental, geotechnical, materials and water fields services. Investments and others focuses on identifying sites, undertaking environmental studies and developing planning applications, site engineering and design, economic modelling. In Nov 2008, the Group acquired OEST Associates, Inc. Source: Worldscope. CONFIDENTIAL CT&T Capital 33
  35. 35. KBR Kbr, Inc.. The Group's principal activity is to provide engineering, construction services, supporting the energy, petrochemicals, government services and civil infrastructure sectors. The Group provides wide range of services through six business segments, Upstream, Services, Downstream, Technology Ventures and Government and Infrastructure. The Upstream Downstream and Technology segment designs and constructs energy and petrochemical projects, including large, technically complex projects in remote locations around the world. The Government and Infrastructure segment delivers on-demand support services across the full military mission cycle from contingency logistics and field support to operations and maintenance on military bases. Source: Worldscope. CONFIDENTIAL CT&T Capital 34
  36. 36. SKANSKA Skanska AB. The Group's principal activity is to provide construction services related to building and civil projects and in-house project development. The Group's operations are carried out in four segments, Construction, Residential Development, Commercial Development and Infrastructure Development. The Construction segment refers to building construction (both non-residential and residential) and civil construction. The Residential Development segment develops residential projects for immediate sale. Commercial Development segment initiates, develops, leases and divests commercial property projects. Infrastructure Development segment develops and invests in privately financed infrastructure projects such as roads, hospitals and power generation plants. The Group operates in Sweden, Other Nordic countries, Other Europe, the United States and Other markets. The Group acquired Tekri Oy in 2008. Source: Worldscope CONFIDENTIAL CT&T Capital 35
  37. 37. Appendix Fund Selections CT&T Capital CONFIDENTIAL CT&T Capital 36
  38. 38. Global economic recovery is off to a strong start Global GDP growth Global production and trade %, qoq, annualized Annualized %, Annualized %, change of 3- Industrial change of 3- Merchandise Emerging and month moving production month moving exports developing economies average average 10 25 Emerging and 80 developing economies Emerging and World World 60 developing economies 15 5 40 5 20 0 -5 2005 0 2006 2007 2008 2009 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 -20 2005 2006 2007 2008 2009 Advanced economies -15 -5 World -40 -25 Advanced -60 economies Advanced -10 Source: IMF, World Economic Outlook update, Jan 2010 -35 -80 economies • Following the deepest global downturn recent history, global economic growth has returned to nearly pre-crisis levels, largely led by key emerging economies in Asia • Global production and trade have bounced back, largely driven by the turn in inventory cycle in advanced economies and normalization of global trade. Leading indicators such as PMI and ISM have all registered accelerating growth recently • Financial markets have also recovered faster than expected. Money markets have stabilized and the tightening of bank lending standards has moderated. Equity markets and corporate bond issuance have surged since the 2009Q1 • IMF expects GDP of most emerging and developing economies to rise about 6 percent in 2010 and a further acceleration in 2011. Growth will be largely driven by strong economic frameworks and buoyant internal demand • Fiscal and monetary policies in advanced economies are expected to remain accommodative due to the still-low levels of capacity utilization and low inflation expectations • The strong revival of commodity prices is further evidence of the global economic recovery. Global demand, particularly from emerging economies, will help support growth in commodity producers, for example GCC countries, Australia, Canada, Russia and Brazil • The high-upside potential underscores our recommendation in a high-risk, high-return fund CONFIDENTIAL CT&T Capital 37
  39. 39. Introduction CT&T Capital seeks to obtain an attractive rate of return through investing in long term macro trends and focusing on key geographies and asset classes Asset and Geographical Allocation Target Investors Investors with high risk appetite seeking for high returns for an investment time horizon of 10 years Funds Selection Amount * 1 DWS Global Agribusiness A2 SGD $1m 2 Schroder AS Gold and Metals A $3m Acc SGD 3 ING (L) Invest Middle East & North $3m Africa 4 FORTIS L FUND Bond Best $1m Selection World Emerging * Excludes Holdings on Schroder AS Gold and Metals 5 HSBC GIF Climate Change $2m CONFIDENTIAL CT&T Capital 38
  40. 40. Investment Strategy 3 Major macro trends which shaped our investment strategy Alternative Energy - Inevitable Climate Change The ongoing climate issue and eventual regulation on emission levels would lead to 1 substantial growth in industries involved with Climate Change. Government stimulus and technological advancement will continue to make this investment attractive. Frontier Market – The Next Emerging Market 2 Emerging Market will enjoy a superior growth rate compared to develop market in the next decade. With BRIC equities looking increasingly expensive, we believe that the lower base and lower valuations in the frontier market will be the best bet for high returns. Commodities – The Rising Asset Class 3 We are positive with the outlook of agriculture and metal commodities due to the increase in population coupled, decrease in arable land and increasing urbanization trend. CONFIDENTIAL CT&T Capital 39
  41. 41. Alternative Energy - Inevitable Climate Change Climate Change debate is gaining momentum leading to strong growth for clean energy •Climate Change Heating Up. Climate Change debate is gaining momentum. Inroads were made in Copenhagen Summit and more commitments expected to be achieve in upcoming summits. •Strong Government Stimulus. Governments allocated more than US$ 430 billion in fiscal stimulus globally to “climate change themes” and US$ 177 billion of stimulus to clean energy in 2009. Source: New Energy Finance •Advancement in Clean Energy Technology. In the past 18 months, price of clean energy has dropped significantly. Government stimulus and increased R&D efforts would make clean energy more viable. Source: New Energy Finance CONFIDENTIAL CT&T Capital 40
  42. 42. Alternative Energy - Nuclear Energy Strong Growth Expected for Nuclear Energy World Nuclear Generating Capacity by Region, 2006, 2015, 2030 OECD Europe  President Obama‟s efforts to promote nuclear 140 energy would be a strong boost to the industry. 120 OECD North America The recent US$8bn in loan guarantees for the first Gigawatts 100 OECD Asia nuclear power plant to be built in three decades in 80 60 Non-OECD the United States was “only the beginning” as up 40 Europe/Eurasia 20 China to US$54 in loan guarantees is included in 2011 0 India budget request 2006 2015 2030 Rest of World Source: Energy Information Administration  In addition, countries such as France, Japan and China’s Nuclear Electricity Power Generation in especially China have increased their investments kilowatt-hours in nuclear energy 70 60 50  9.4% of fund invested in nuclear energy related 40 companies and 3rd highest holding of fund is in 30 Exelon 20 10 0 Source: EIU 2000 2001 2002 2003 2004 2005 2006 2007 2008 CONFIDENTIAL CT&T Capital 41
  43. 43. Alternative Energy - Government Stimulus Clean Energy Stimulus might decrease significantly after 2011 Expected Clean Energy Stimulus Spending by Year,  Almost every major government worldwide US$ billions (% of total)Year, US$ billions (% of announced a fiscal stimulus package with total) significant portion earmarked for „green‟ initiative  The flow of stimulus spending will strengthen to around US$ 60 billion during 2010 and drive overall investment in clean energy into record territory as much as US$ 200 billion  Clean energy stimulus projected to decrease sharply after 2011  However, with increasing political will on climate change and more legislative action, continual government support is very likely CONFIDENTIAL CT&T Capital 42
  44. 44. Fund 1 – HSBC GIF Climate Change The fund seeks long term capital growth by investing in a diversified portfolio of equities of companies’ developing activities related to climate change Fund description Fund analysis Geographical Allocation • Focus on Alternative Energy. Over 50% of fund invested in clean energy and nuclear energy production • Exposure in key geographical areas. Main investments in countries with strong growth in Source: Fund Factsheet (Dec 2009) climate change industries Industry Allocation Risk analysis • Reduction in government stimulus. Governments face questions on how to stop stimulus without causing the industry to suffer • Increasing Interest Rates. For clean energy industries, bulk of the cost to be borne up-front, Source: Fund Factsheet (Dec 2009) more sensitive to higher net interest than fossil fuels CONFIDENTIAL CT&T Capital 43
  45. 45. Fund 1 – HSBC GIF Climate Change The fund seeks long term capital growth by investing in a diversified portfolio of equities of companies’ developing activities related to climate change Fund Description Peer comparison Description Details % YTD Returns 0.00% Currency SGD Schroder ISF Gb HGIF Climate DWS Glb Climate -2.00% Climate Change Change HSBC Global Asset Manager -4.00% Management -6.00% -4.73% -5.02% Launch 9 November 2007 -6.61% -8.00% Management Fee 1.50% (Annual) 1 As of 5 March 2010 Fundsupermart * Excludes performance fee of 10% of absolute return subject to a high 9-Higher Risk water mark Risk Rating % Annual Expense Ratio 2.05% 2.00% 1.99% 2.00% 1.95% 1.90% 1.85% 1.85% 1.80% 1.75% Schroder ISF Gb HGIF Climate DWS Glb Climate Climate Change Change CONFIDENTIAL CT&T Capital 44
  46. 46. Frontier Market- The Next Emerging Market Exposure to Frontier Market is recommended for investors seeking high returns List of Frontier Market Countries Frontier market is a subset of the larger emerging market (EM)  Smaller, less liquid and less developed markets in the EM sphere  Categorized by higher returns, higher risk and lower correlation with the developed markets Middle East & Africa Americas Asia Eastern Europe Bahrain Kuwait Pakistan Argentina Kazakhstan Bulgaria Romania Botswana Lebanon Qatar Jamaica Sri Lanka Croatia Serbia Ghana Mauritius Saudi Arabia Vietnam Estonia Slovenia Jordan Nigeria Tunisia Lithuania Ukraine Kenya Oman UAE Source: MSCI Barra (Sept 2009) CONFIDENTIAL CT&T Capital 45
  47. 47. Frontier Market- The Next Emerging Market Frontier market provides attractive returns with cheaper valuation Best-Performing World Equity Indices (2000-09) •Historical Outperformance in Equity Market Economic, security and social developments across these underdeveloped markets pose a great catalyst to its equities returns •Lower Correlation with the Developed Market Correlation S&P Extended Other Developing and with Frontier 150 Developed Market Indices S&P 500 56% 75-95% Source: Bloomberg Strong long-term diversification potential and ability Average PE (2007-2009) to hold on its own despite an uncertain recovery of the developed world •Lower Valuations than Emerging Markets Median Frontier Emerging Developed Stock Market Market Market Market Economies Economies Economies Cap. over GDP 24% 50% 88% Source: ArabFinance, Bloomberg CONFIDENTIAL CT&T Capital 46
  48. 48. Frontier Market- The Next Emerging Market Frontier market provides attractive returns with cheaper valuation Worst-Performing World Equity Indices (2000-09) •Historical Outperformance in Equity Market Economic, security and social developments across these underdeveloped markets pose a great catalyst to its equities returns •Lower Correlation with the Developed Market Correlation S&P Extended Other Developing and with Frontier 150 Developed Market Indices S&P 500 56% 75-95% Source: Bloomberg Strong long-term diversification potential and ability Average PE (2007-2009) to hold on its own despite an uncertain recovery of the developed world •Lower Valuations than Emerging Markets Median Frontier Emerging Developed Stock Market Market Market Market Economies Economies Economies Cap. over GDP 24% 50% 88% Source: ArabFinance, Bloomberg CONFIDENTIAL CT&T Capital 47
  49. 49. Frontier Markets - S&P Extended Frontier 150 Index consists of the 150 largest and most liquid companies from over 30 countries List of Countries ME&A Americas Europe Bahrain Colombia Bulgaria Botswana Ecuador Croatia Cote d'Ivoire Jamaica Estonia Ghana Panama Georgia Kenya Trinidad & Tobago Latvia Kuwait Lithuania Lebanon Slovak Republic Jordan Asia Slovenia The index uses a modified market capitalization Oman Romania Bangladesh scheme to ensure that no country has a weight Qatar Cambodia Ukraine Pakistan greater than 15% in the index and no security is Kazakhstan Namibia Mauritius over 10% of the index Nigeria Sri Lanka Tunisia Vietnam U.A.E Zimbabwe CONFIDENTIAL CT&T Capital 48
  50. 50. Frontier Markets - MENA MENA region has the 2nd highest regional GDP growth forecast for the next 5 years Egypt, with its diverse economy and large World Nominal GDP Growth* population, coupled with minimal penetration rates across sectors and low levels of leverage, sets the scene for strong internal growth driving opportunities Qatar is the fastest growing economy in the region with the third largest gas reserves in the world Saudi Arabia is one of the strongest domestic * Measured in USD Terms markets with one of the least geared GCC economies Oman, with its massive upcoming government infrastructure projects, is pose to enjoy stimulated growth in various industries CONFIDENTIAL CT&T Capital 49
  51. 51. Fund 2 – ING (L) Invest Middle East & North Africa The fund invests in a diversified portfolio of equities in or with exposure to the Middle East and North Africa market Fund description Fund analysis Geographical Allocation • Well diversified • Strong catalyst for Internal Growth categorize by large population (Egypt), low leverage (Egypt and Saudi) and large government spending in infrastructure Industry Allocation Risk analysis • Significant drop in oil price affected GCC exports. Mitigated by strong Gov‟t reserves and Gov‟t directives to diversify economy • Dubai Crisis escalating. Mitigated by strong balance sheet of GCC Gov‟t and its willingness to intervene in stimulating the economy Source: Fund Factsheet (Jan 2010) CONFIDENTIAL CT&T Capital 50
  52. 52. Fund 2 – ING (L) Invest Middle East & North Africa The fund invests in emerging markets fixed-income securities with an emphasis on long-term strategically driven exposures at the country level Fund Description Peer comparison Description Details Currency USD ING Investment Manager Management (Dubai) Ltd Launch 13 January 2008 Management Fee 1.50% (Annual) Fundsupermart 9-Higher Risk Risk Rating Top 3 Holdings Equities Sector Holdings National Shipping Co Energy 5.88% Ras Al Khaimah Industrials 4.26% N/A Ceramics Oman Telecom Co Telecoms 4.10% Source: Fundsupermart CONFIDENTIAL CT&T Capital 51
  53. 53. Fund 3 – FORTIS L World Emerging Bond The fund invests in emerging markets fixed-income securities with an emphasis on long-term strategically driven exposures at the country level Fund description Fund analysis Geographical Allocation • Exposure into attractive emerging economies • EM bonds are less co-related • Narrowing spreads due to increased investors‟ confidence • EM currencies upsides due to lower fiscal deficits and public debt ratios Fiscal Emerging Market Developed Market Source: Fund Factsheet (Dec 2009) Deficits 3% 7-8% GDP* Growth (2008-2014) Public Debt 40% 90% Ratio * Nominal GDP # Countries include Kazakhstan, Argentina, Venezuela, Brazil, Russia, Indonesia, Peru Risk analysis • Double dip recession. Might cause a flight to safety assets. Mitigated by recent favorable economic indicators and the willingness of governments to intervene Source: IMF (Jan 2010) CONFIDENTIAL CT&T Capital 52
  54. 54. Fund 3 – FORTIS L World Emerging Bond The fund invests in a diversified portfolio of equities in or with exposure to the Middle East and North Africa market Fund Description Peer comparison Description Details Currency USD Manager Fortis Investments Launch 27 May 1998 Management Fee 1.50% (Annual) Fundsupermart 5-Moderate Risk Risk Rating Top 3 Holdings Bond Maturity Holdings Elec De Caracas Fin B 04/2018 7.83 % 8.5 (Venezuela) Argentina 8.28 12/2033 6.90 % N/A Turanalem Finance Bv 01/2037 5.00 % 8.25 (Netherlands) Source: Fundsupermart CONFIDENTIAL CT&T Capital 53
  55. 55. Commodities – The Rising Asset Class The secular uptrend in commodities is underway Cumulative returns since Dec 2003 • Outstanding historical returns. % cumulative change Commodities have provided outstanding returns as 200% compared to equities in the last decade 150% • Secular trend to continue. 100% Growing demand for commodities, particularly 50% emerging countries will support this secular trend 0% • Exposure recommended for target investors. Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 -50% Investors with greater risk tolerance and long-term horizon should have exposure to this asset class -100% Thomson Reuters/Jefferies CRB Index • Agriculture and Metals may outperform. S&P500 Index We believe Agriculture and Metals will outperform Source: Thomson Reuters/ Jefferies/ Bloomberg other commodity classes. CONFIDENTIAL CT&T Capital 54
  56. 56. Commodities – Global Agriculture Fundamentals provide strong impetus for global demand boom in agricultural products Demand and supply trends Area (million Ha) • World’s population is expected to increase to 1414 World arable land area 8.01 billion by 2025 from the current 6.91 billion 1412 1410 • Global arable land is shrinking since 2005 due 1408 to rising urbanization 1406 1404 • Global stocks-to-use ratio have held steady, 1402 providing a fundamental support for prices 1400 2003 2004 2005 2006 2007 • Global demand for agri. products will rise. Source: Food and Agriculture Organization of the United Nations Demand for this human necessity and key % alternative to energy resource will continue to rise Global Stocks-to-Use* ratio in key agricultural markets *Measures the carryover stock over the amount used in the past year. Gauges the relative supply/demand balance Source: World Bank, 2009 CONFIDENTIAL CT&T Capital 55
  57. 57. Fund 4 – DWS Global Agribusiness A2 SGD The fund invests in opportunities at various points along the “food chain” ranging from agricultural commodities to consumer products. Areas include land and plantation, seed and fertiliser, protecting and irrigation, food processing and manufacturing companies. Fund description Peer comparison Sector Allocation % 1–year return1 % Annual expense ratio 80 70.9 70.4 4 3.47 70 3.5 60 3 50 2.5 1.98 2.01 40 33.51 2 1.58* 30 1.5 20 1 10 0.02 0.5 0 0 DWS Global Schroder DWS Global BNP Paribas DWS Global Schroder Golden DWS Global BNP Paribas Agribiz A2 Golden Agribiz A2 Agriculture Agribiz A2 SGD Blossom Fund Agribiz A2 USD Agriculture (SGD) SGD Blossom USD (SGD) Fund Fund Fund 1 As of 5 March 2010 * Excludes management fee of 4.1% charged upfront Geographical exposure Risk analysis • Due to the focus on the agricultural sector, fund volatility is expected to be higher than traditional global equity funds • The globally-diversified nature of the underlying assets means that currency risk is mitigated Source: Fund Factsheet (Jan 2010) CONFIDENTIAL CT&T Capital 56
  58. 58. Fund 4 – DWS Global Agribusiness A2 SGD The fund invests in opportunities at various points along the “food chain” ranging from agricultural commodities to consumer products. Areas include land and plantation, seed and fertiliser, protecting and irrigation, food processing and manufacturing companies Fund Description Description Details Principal Holdings % Portfolio Currency SGD Monsanto Co. 6.20% Manager DWS Investment S.A. Viterra Inc. 4.30% Launch 15 April 2007 Management Fee 1.50% (Annual) Archer Daniels Midland Co. 3.20% Fundsupermart Agrium Inc. 2.60% 9-Higher Risk Risk Rating CONFIDENTIAL CT&T Capital 57
  59. 59. Commodities – Global Metals Base and precious metals display signs of strong demand and weak supply Demand and supply trends of base metals • Robust demand for base metals, the building Global metal consumption 90% blocks of development, is supported by strong fiscal stimulus spending on infrastructure as well as 60% increasing urbanization 30% 0% • Precious metals seen as a safeguard against 1996 1999 2002 2005 2008 geopolitical risk and are less volatile than most Aluminium Copper Lead Nickel commodities and equity indices, bringing Tin Zinc Steel diversification benefits to our portfolio Global metal stock 300% • Downward movement of global stocks of base metals towards 1996 levels or below it are further 200% evidence of continued strong demand for base 100% metals 0% 1996 1999 2002 2005 2008 -100% Aluminium Copper Lead Nickel Tin Zinc Source: EIU CONFIDENTIAL CT&T Capital 58
  60. 60. Commodities - Global metals: Gold Unique properties of gold provide diversification benefits to our portfolio Demand and supply trends of gold • Spot gold price has went up by 20.7% over the past year, surpassing US$1200/oz at one time, fears of overvaluation of gold is intensifying • Gold‟s role as a store of wealth and hedge against financial turmoil has been tested and proven • For the past 38 years, the world has been engaged in a monetary system based on a single currency – the US dollar • Given the US‟s high budget deficit and debt levels, more economists and central banks are calling for the re-look into a new global reserve currency, gold is the most viable alternative now • Jewelry currently accounts for up over 60% of total gold demand. As the economy improves, jewelry demand will follow suit as well Source: World Gold Council CONFIDENTIAL CT&T Capital 59
  61. 61. Fund 5 – Schroder AS Gold and Metals A Acc SGD The Fund invests predominantly in a range of metal-related derivative instruments, principally comprising futures and other commodity-linked derivative instruments (e.g. swaps on physical commodities) and, to a lesser extent equities in metal-related industries. Fund description Peer comparison % 1–year return1 % Asset Allocation 60 Annual expense ratio 52.78 48.78 2.5 50 2.05 1.91 36.36 2 40 1.5 30 20 1 0.4* 10 0.5 0 0 Schroder AS United Gold & General DWS Noor Prec Metals Schroder AS United Gold & General DWS Noor Prec Metals Gold&Metals A Acc Fund CL J SGD Gold&Metals A Acc Fund CL J SGD 8% SGD SGD 1 As of 5 March 2010 * Excludes performance fee of 10% of absolute return subject to a high water mark Portfolio exposure Risk analysis • The volatility of this fund is expected to be higher than more diversified regional/sector equity funds due to the asset class- focus • Nonetheless, the mandate for the fund not to employ leverage or engage in short selling caps the risks for investors • As most metals are priced in USD, hence the currency exposure is mainly to the USD. The fund does currency hedging as well, mitigating foreign exchange risks. Source: Fund Factsheet (Dec 2009) CONFIDENTIAL CT&T Capital 60

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