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GSNO.10
- 1. The Growth Map: Economic
Opportunity in the BRICs and Beyond
Jim O’Neill
Chairman, Goldman Sachs Asset Management
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or
March 2012
investment advice.. Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011,
Goldman Sachs. All rights reserved
1
- 2. Issues for UK
1. Does this changing world “suit” the UK? Yes.
2. Exports must increase as share of GDP.
3. But the Services vs. Manufacturing split is less
important.
4. EU and EMU less relevant but more
complicated.
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
2
- 3. Country Classification by
2010 GDP Share
N11
Bangladesh
World Egypt Growth Markets
Iran
Nigeria
Pakistan
Philippines Mexico
Emerging Vietnam 2% Korea
Markets Mexico 2%
12% Korea
Turkey Turkey
Indonesia 1%
Growth Indonesia
China
Markets 9%
1%
Developed 23%
Markets
Brazil
65% 3%
Russia
India
3%
2%
Source: GSAM
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
3
- 4. GDP Forecasts
2012 2013
2010 2011*
GSAM Consensus GSAM Consensus
US 3.0 1.7 2.5 2.2 2.5 2.5
UK 1.4 0.9 1.0 0.5 1.8 1.8
Canada 3.2 2.4 2.2 2.0 2.5 2.3
Euroland 1.8 1.6 -0.4 -0.4 1.0 0.9
Japan 4.0 -0.8 1.9 1.8 1.3 1.4
Brazil 7.5 3.0 3.6 3.3 5.0 4.3
China 10.3 9.2 8.2 8.4 8.0 8.6
India 10.1 6.9 7.2 7.0 8.0 7.3
Russia 4.0 4.2 3.0 3.5 4.8 3.9
Mexico 5.4 3.9 3.6 3.3 3.8 3.4
Korea 6.2 3.7 3.4 3.3 4.8 4.0
Indonesia 6.1 6.4 6.0 6.0 6.1 6.4
Turkey 8.9 8.5 1.0 1.3 4.0 4.9
Advanced 2.9 1.3 1.4 1.2 1.8 1.8
BRICs 8.9 7.5 6.9 7.0 7.3 7.3
Growth Markets 8.3 7.0 6.2 6.3 6.8 6.7
World 5.1 3.8 3.5 3.4 4.0 4.0
* Consensus Economics. Data as of Feb 2012.
Source: GSAM and Consensus Economics
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
4
- 5. Inflation Forecasts
2009 2010 2011* 2012* 2013*
US 1.9 1.7 3.2 2.0 2.0
UK 2.1 3.4 5.3 3.0 2.6
Canada 0.8 2.2 2.9 1.9 2.0
Euroland 0.9 2.2 2.6 2.0 0.9
Japan -1.7 -0.4 -0.3 -0.3 0.0
Brazil 4.3 5.9 6.5 5.3 5.1
China 0.7 4.7 5.4 3.3 3.7
India 15.0 9.5 8.3 8.4 7.3
Russia 8.8 8.8 6.8 6.3 6.0
Mexico 3.6 4.4 3.2 3.7 3.6
Korea 2.8 3.5 4.4 3.1 3.1
Indonesia 2.8 7.0 5.4 4.9 5.4
Turkey 6.5 6.4 6.3 9.4 6.2
Advanced 1.1 1.7 2.7 1.8 1.4
BRICS 5.2 6.4 6.3 5.0 4.9
Growth Markets 4.9 6.1 6.0 5.0 4.8
World 2.6 3.5 4.1 3.2 2.9
* Consensus Economics Feb 2012
Source: IMF and Consensus Economics
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
5
- 6. Change in US$ Size of GDP
from 2011 to 2020
16
2010 US$ trn
14
12
10
2011 - 2020 GDP Increase
8
6
4
2
0
Source: GS Global ECS Research. GSAM Calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
6
- 7. China vs European Periphery
2011-2012 Change in
BRIC GDP
2011-2012 Change in
China GDP
Italy GDP, 2011
Greek GDP, 2011
GDP, $bn
China GDP, 2011
0 2,000 4,000 6,000 8,000
Source: GS Global ECS Research and GSAM Calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
7
- 8. Share of Global GDP in 2020
45
Share, %
40
35
30
25
20
2020 Share of global GDP
15
10
5
0
Source: GS Global ECS Research. GSAM Calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
8
- 9. Growth Market / Emerging Market
Split
25
Global GDP Share,
% 2050 Share of Global GDP
20
Share of Global GDP Cut-off
Point (1%)
15
10 Growth Markets Emerging Markets
5
0
Source: GS Global ECS Research. GSAM Calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
9
- 10. BRICs & N11. 2010 Growth
Environment Score (GES)
8
GES 1997-2010 GES Change
7 1997 GES
1997 Developing Average
6 2010 Developing Average
5
4
3
2
1
0
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
10
- 11. GES For Growth Markets (and US)
India Indonesia Russia Turkey Mexico China Brazil Korea United States
Total 4.0 4.7 4.8 5.1 5.2 5.4 5.5 7.5 6.9
Rule of Law 5.1 3.9 3.5 5.2 3.9 4.3 4.6 7.0 8.1
Corruption 4.3 3.6 2.8 5.2 4.5 3.9 4.9 6.0 7.4
Political Stability 2.6 3.7 3.6 3.2 3.6 4.1 5.6 5.4 5.8
Govt. Deficit 0.7 4.2 2.1 1.7 3.8 3.9 3.3 6.1 0.0
Ext Debt 8.3 7.5 8.0 6.9 8.4 9.3 8.6 .. ..
Inflation 7.3 8.8 7.1 8.4 8.7 10.0 8.8 9.3 10.0
Life Exp 5.7 7.2 6.6 7.4 8.0 7.6 7.5 9.0 8.7
Computers 0.4 0.3 1.8 0.8 1.9 0.8 2.1 7.7 10.0
Mobiles 3.0 6.2 10.0 8.9 7.1 4.8 7.8 9.4 8.9
Internet 0.6 1.1 4.3 4.6 3.0 3.0 5.0 10.0 10.0
Investment 7.0 5.5 4.4 4.0 4.4 8.4 3.8 5.9 3.6
Schooling 4.4 6.5 6.9 7.1 6.9 6.1 7.9 9.5 8.7
Openness 2.7 2.7 2.1 2.5 3.4 3.3 1.7 4.5 1.8
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
11
- 12. Who is Fit for EMU?
(Growth Markets)
Cyclically adjusted Gross General Growth
budget deficit Govt. Debt (% Environment Score
(%GDP) GDP)
India -8.9 65.3 4.0
Brazil -2.8 64.2 5.5
Mexico -2.8 43.2 5.2
Turkey -2.1 38.1 5.1
Korea 2.1 30.0 7.5
Indonesia -1.7 24.0 4.7
China -0.7 23.3 5.4
Russia 1.0 11.2 4.8
Note, data are 2012 estimates
Source: IMF and GS Global ECS
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
12
- 13. Who is Fit for EMU?
(Developed Markets)
Cyclically adjusted budget Gross General Govt. Growth
deficit (%GDP) Debt (% GDP) Environment Score
Germany -0.4 81.6 7.5
France -3.3 90.7 7.2
Italy -0.8 125.3 6.2
Spain -4.7 78.1 6.5
Netherlands -2.3 66.5 7.9
Belgium -2.7 94.3 7.6
Austria -3.0 73.9 7.7
Greece -4.7 189.1 5.5
Finland 1.2 50.3 7.9
Ireland -5.5 115.4 7.4
Portugal -1.3 111.8 6.4
Slovakia -3.4 46.9 7.2
EMU Average -2.4 90.0 7.1
UK -5.1 86.6 7.3
US -5.6 107.6 6.9
Canada -3.2 86.7 7.6
Japan -8.6 241.0 6.8
Australia -1.8 23.8 7.5
Sweden 1.2 32.6 8.0
Note, data are 2012 estimates. Source: IMF and Eurostat
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
13
- 14. Euro Area Competitiveness
155
Index, Jan Unit Labour Costs
'00=100
145
France Germany
Greece Ireland
135 Italy Portugal
Spain Austria
125 Belgium Finland
115
105
95
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: Haver Analytics
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
14
- 15. China Lead Indicators
18
% yoy Index 106
16 1996=100
105
14 104
12 103
10 102
101
8
100
6
99
4
98
2 GSCA (lhs) CEMAC-GS Leading Indicator (rhs)
97
0 96
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
15
- 16. China FCI
112
index
111
110 China FCI
109
108
107
106
105 Easier Conditions
104
103
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
16
- 17. Retail Sales US and BRICs
36
%yoy
32
28
24
20
16
12
8
4
0
-4 USA Russia Brazil
-8 China India* BRICs
-12
04 05 06 07 08 09 10 11 12
* Private final consumption
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
17
- 18. Change in Real Retail Sales in
Developed vs Growth Plus (Jan ‘07 to
Present)
120
Bil$ Change
100 since Jan 07
80
60
40
20
0
-20 World
-40 Advanced
Growth and
-60 Emerging Markets
-80
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Source: National Sources, GS Global ECS Research.
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
18
- 19. Germany’s Exports to Asia Rising –
Stabilisation Elsewhere
230
Index
210 Jan07=100 China
India
190
Russia
170
France
150 Italy
Japan
130
US
110
Spain
90 BRIC
70 N-11
50
Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13
Source: Haver Analytics and GSAM calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
19
- 20. US Exports to Key Destinations
215
Index World
Jan07=100
195 BRIC
N-11
175
Canada
155 Mexico
China
135
Japan
115 Germany
UK
95
Brazil
75
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Source: Haver Analytics and GSAM Calculations.
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
20
- 21. UK Exports to Key Destinations
Index
160 Jan 07 = 100
China
Netherlands
140
BRICs
India
120
N-11
Germany
100
Ireland
France
80
U.S.
60
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Source: Haver Analytics and GSAM Calculations.
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
21
- 22. UK Composite PMI
65
Index
60
55
50
45
UK Composite PMI
40 Expansion > 50
35
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: Haver Analytics
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
22
- 23. ‘Crisis’ Indicator
6
Index
5
4 GS FSI (Financial Stress Index)
3
2
1
0
-1
-2
90 92 94 96 98 00 02 04 06 08 10 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
23
- 24. Credit Spreads
300 1800
bp bp
1600
250
CDX IG (lhs)
1400
CDX IH (rhs)
200
1200
150 1000
800
100
600
50
400
0 200
06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
24
- 25. OECD Financial Conditions
103
Index, Jan
2000 = 100
102
101
100
99
98 OECD FCI
Oil Augmented FCI
97
96
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
25
- 26. Momentum of the GLI
1.5
% mom
1.0
0.5
0.0
-0.5
-1.0
Global Industrial Production*, 3mma
-1.5 GLI Momentum
-2.0
-2.5 *Includes OECD countries plus BRICs,
Indonesia and South Africa
-3.0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
26
- 27. ISM Manufacturing Index
65 35
Index Index
60 30
25
55
20
50
15
45 10
40 5
0
35
-5
PMI Composite Index (50+ =
30
Econ Expand) [lhs] -10
New orders - Inventories Index
25 -15
(rhs)
20 -20
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
27
- 28. US Weekly Job Claims
700
Claims (000s)
600
4-Week Moving
500
Average
400
300
200
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
28
- 29. US House Prices vs Income
Ratio Percent
4.5 3.0
House Price/Income Ratio* (left)
4.0
Mortgage Rate (right, inverted)
4.0
5.0
3.5 6.0
7.0
3.0
8.0
2.5 9.0
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
* S.a. median home price divided by median family income.
Source: Department of Commerce. FRB. NAR.
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
29
- 30. Inflation Expectations in US
3.6
%yoy
University of
Michigan 5-10 yr
3.4 Inflation
Expectations
3.2
3.0
2.8
2.6
2.4
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
30
- 31. US BBoP vs Current Account
2
% GDP 4-qtr
1 ma
0
-1
-2
-3
-4
-5
-6 Current Account
-7 BBoP
-8
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
31
- 32. Five Year Forward Oil Price
160
$/barrel
140
120
5-yr Forward Oil Price
100
80
60
40
20
0
00 01 02 03 04 05 06 07 08 09 10 11 12
Source: GS Global ECS Research
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
32
- 33. Current Estimates for the Equity
Risk Premium*
Real Real Expected Real Expected
Dividend Implied Expected
GDP Earnings + = Real - Bond = Nominal
Yield ERP Inflation
Growth Growth Return Yield Return
US 2.5 2.5 2.1 4.6 -0.3 4.8 2.0 6.6
UK 2.3 2.3 3.4 5.6 -1.0 6.6 2.0 7.6
Europe ex UK 2.0 2.0 3.7 5.7 0.8 4.9 2.0 7.7
Japan 1.5 1.5 2.3 3.8 1.0 2.7 1.0 4.8
Brazil 5.0 5.0 3.9 8.9 5.0 3.8 4.5 13.4
China 8.0 8.0 3.3 11.3 0.6 10.7 3.0 14.3
India 8.0 8.0 1.5 9.5 4.2 5.2 4.0 13.5
Russia 5.0 5.0 2.4 7.4 1.9 5.5 6.0 13.4
GDP-weighted
Advanced 2.1 2.1 2.8 4.9 0.3 4.6 1.8 6.7
BRICs 7.0 7.0 3.0 10.0 2.1 7.9 3.8 13.9
World 3.5 3.5 2.8 6.3 0.8 5.5 2.4 8.7
PPP-weighted
Advanced 2.2 2.2 2.7 4.9 0.2 4.7 1.9 6.8
BRICs 7.3 7.3 2.8 10.2 2.0 8.2 3.7 13.9
World 4.2 4.2 2.8 7.0 0.9 6.1 2.6 9.6
* As of 07 March 2012
Source: GSAM Calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
33
- 34. ERP for Growth Market
Economies
Real Real Expected Real Expected
Dividend Implied Expected
GDP Earnings + = Real - Bond = Nominal
Yield ERP Inflation
Growth Growth Return Yield Return
Brazil 5.0 5.0 3.9 8.9 5.0 3.8 4.5 13.4
China 8.0 8.0 3.3 11.3 0.6 10.7 3.0 14.3
India 8.0 8.0 1.5 9.5 4.2 5.2 4.0 13.5
Russia 5.0 5.0 2.4 7.4 1.9 5.5 6.0 13.4
Mexico 3.0 3.0 2.0 5.0 3.3 1.7 3.0 8.0
Korea 4.8 4.8 1.4 6.2 0.9 5.3 3.0 9.2
Indonesia 5.8 5.8 2.1 7.9 0.6 7.2 5.0 12.9
Turkey 5.0 5.0 2.4 7.4 4.2 3.2 5.5 12.9
* As of 07 March 2012
Source: GSAM Calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
34
- 35. Trend in Forward P/Es
35
12mth forward
United States
PE
30 Japan
Brazil
China
25 India
Russia
20 Europe
15
10
5
0
Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12
Source: Datastream
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
35
- 36. Cyclically Adjusted PE (CAPE)
Ratios
Latest Average Deviation CAPE vs CAPE
Forward PE
CAPE CAPE from avg. FY1 PE History
USA 21.9 12.7 18.7 17% 73% 1973
Indonesia 21.4 13.0 21.8 -2% 65% 2001
Mexico 19.6 14.8 19.3 2% 33% 2001
Japan 19.1 13.3 46.8 -59% 44% 1975
India 18.3 14.3 22.4 -19% 28% 2001
Canada 17.4 12.7 19.3 -10% 37% 1975
Australia 16.0 11.2 15.8 1% 42% 1975
China 15.1 9.5 17.6 -14% 59% 2001
Korea 14.4 9.5 16.7 -14% 52% 2001
Brazil 13.4 9.8 15.5 -13% 37% 2001
Germany 12.4 10.4 19.1 -35% 19% 1976
UK 11.1 10.2 13.8 -19% 9% 1975
France 10.4 10.1 19.9 -48% 3% 1975
Turkey 9.3 9.6 15.5 -40% -3% 2001
Russia 8.4 5.3 14.5 -42% 58% 2001
Italy 7.2 9.0 22.4 -68% -20% 1989
Spain 7.1 9.5 18.2 -61% -25% 1985
Source: Datastream and GSAM Calculations. As of 01 March 2012
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
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- 37. GSAM Benchmark Allocation in
Growth Market World
Group GDP
Market Cap GSAM
Share
China 10.3% 2.4% 5.4%
Brazil 3.7% 2.2% 2.5%
India 2.7% 1.1% 1.7%
Korea 1.8% 1.9% 2.1%
Russia 2.6% 0.9% 1.9%
Turkey 1.3% 0.2% 0.8%
Mexico 1.8% 0.6% 1.2%
Indonesia 1.2% 0.3% 0.6%
Developed Markets 69.4% 86.2% 80.4%
Growth Markets 25.3% 9.7% 16.1%
Emerging Markets 5.3% 4.1% 3.5%
Source: GSAM Calculations
This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.. Any reference to a specific company
or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. Copyright © 2011, Goldman Sachs. All rights reserved
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