1. Deutsche Bank
Markets Research
Asia Strategy Date
17 October 2012
The Investigator
Strategy Update
Ajay Kapur, CFA
Policy Uncertainty – The Financial Strategist
(+852) 2203 6196
World's Dominator ajay.kapur@db.com
Ritesh Samadhiya, CFA
Elevated Economic Policy Uncertainty – about to drop?
We might be at an important inflection point in the financial markets. The elevation of Strategist
Economic Policy Uncertainty, since 2008, to twice the level of the previous 23 years has (+852) 2203 6251
increased the equity risk premium, diminished the opportunity set for stock-picking, and ritesh.samadhiya@db.com
favored defensive stocks over cyclicals. Finance professionals and investors may have
wrongly concluded that this state of affairs will be prolonged and enduring. We think this Absolute Return Drivers
status quo view is wrong, and that we could be at a turning point, and that economic
Current Account Balance/GDP
policy uncertainty has probably peaked. Let the profitable boredom begin!
US Political Polarization at 130-year high
Sentiment (Risk-Love)
Political polarization might just recede with this coming US election. Financial
Total Score (current)
Real Exchange Rate
deregulation – a key driver of complexity, the consequent compensation premium in the
Total Score (last)
financial sector, the rise in the ratio of bank fee income to total income, and income
inequality, all likely peaked together in 2008. Any potential reduction in political
Technicals
Valuation
polarization will likely involve compromise, less policy uncertainty, and a lower likelihood
Liquidity
Growth
of policies being overturned with every election.
Policy
Economic Policy Uncertainty highly correlated with poor stock-picking efficacy
Economic Policy Uncertainty is a function of media mentions of the issue, laws dropping China 8 -2
off the books, and economic forecast dispersion. The correlation coefficient between Hong Kong -2 -2
Economic Policy Uncertainty and stock-picking efficacy was only 0.09 between 1985 and Indonesia 1 0
2007. Since then it has jumped to 0.74. As a stock-picker, you want Economic Policy India 4 3
Uncertainty to fall. Adjusted for portfolio volatility, the stock-picking opportunity will Korea 6 -3
become much wider if uncertainty drops. Malaysia 2 3
Economic Policy Uncertainty is highly correlated with equity risk premium and Philippines 5 0
defensives over cyclicals Singapore -2 4
From 1985 to 2007, there was NO relationship between the two, a correlation coefficient Thailand 4 6
of -0.07. Since 2008, however, the correlation coefficient between policy uncertainty and
Taiwan 1 0
equity risk premium has shot up to 0.67! Presumably, stocks are “cheap” compared with
Asia ex-Japan 4 -2
bonds, since policy is uncertain, the impact on cash flows is uncertain and, as the most
Japan 2 -4
junior entity in the capital structure, stocks need to be cheap to compensate for this
policy uncertainty.
Economic Policy Uncertainty probably peaking out globally: huge implications
Our model portfolio is available as a DB
In the US, a 130-year peak in political polarization and an important election on what to
do about this polarization should help resolve things one way or another. Whatever the thematic basket (DBHKASTR).
outcome of the election, another four years of peak political polarization is not what the
electorate is voting for. In Europe, there is still a long way to go on reducing policy
uncertainty on the part of governments, north and southern Europe, and within provinces
in countries, but the ECB’s views are quite clear, agree or disagree with them. In China,
the important political transition that occurs once in a decade will soon be over.
Governance and policy – the work of government – can then get renewed attention. In
India, after a period of lethargy, the government has recently been invigorated and policy
has come unstuck. Of course, this is all speculation and could be wrong, but not having a
view on the direction of Policy Uncertainty is NOT an option for financial professionals,
given its salience.
We are adding Top Glove Corp Bhd, Korea Zinc Co Ltd., Ace Hardware and Shree
Cement Ltd to the model portfolio. The model portfolio is up 23.1% YTD vs. 13.3% for
MSCI AXJ.
________________________________________________________________________________________________________________
Deutsche Bank AG/Hong Kong
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced
from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject
companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus,
investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND
ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 072/04/2012.

2. 17 October 2012
The Investigator
Table Of Contents
Policy Uncertainty – The Financial World’s Dominator ..................................................... 3
Asia Model Portfolio update ............................................................................................... 8
Country selection .............................................................................................................. 15
Country-sector selection .................................................................................................. 16
Asia Model Portfolio ......................................................................................................... 20
Global – valuation ............................................................................................................. 21
Global metrics ................................................................................................................... 22
Global metrics (continued) ............................................................................................... 23
Global – market intelligence ............................................................................................. 24
Global – market intelligence (continued) .......................................................................... 25
Asia – valuation ................................................................................................................ 26
Asia – investor sentiment ................................................................................................. 27
Asia – technicals ............................................................................................................... 28
Asia – growth and earnings.............................................................................................. 29
Asia – liquidity .................................................................................................................. 30
Asia – factor performance ................................................................................................ 31
Asia – market intelligence ................................................................................................ 33
Japan – valuations ............................................................................................................ 34
Japan – investor sentiment .............................................................................................. 35
Japan – technicals ............................................................................................................ 36
Japan – growth and earnings ........................................................................................... 37
Japan – liquidity ................................................................................................................ 38
Japan – factor performance ............................................................................................. 39
Japan – market intelligence.............................................................................................. 40
Companies Mentioned ..................................................................................................... 41
Appendix A ................................................................................... 42
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3. 17 October 2012
The Investigator
Policy Uncertainty – The Financial World’s Dominator
The only thing that matters – policy uncertainty and polarization
We contend that the main driver of the level of equity markets, the relative performance
of risk assets versus “safe” assets, and the potential opportunity for stock-pricing –
pretty much what defines a finance professional’s life – are increasingly determined by
just one primary factor. The rest of it – all those company meetings, the travel,
spreadsheets, conferences and broker research reports – are less salient compared to
this one factor. This is a bold claim. So what is this salient, primary factor? And can we
prove our contention? It is, in our view, Policy Uncertainty.
A few academics have quantified this for the US and Europe, and we will try to prove
our point regarding its link with changes in the equity risk premium, the relative
performance of risky versus “safe assets” and the stock-picking opportunity set. We
will also speculate that Policy Uncertainty in the world is about to downshift remarkably
from current ungainly elevated levels. If we are right, this will have hugely positive
implications for equities, risk assets and the opportunities for stock-picking. So far,
since the financial crisis broke out, Policy Uncertainty has been at twice the level of the
previous 23 years, keeping the equity risk premium high, challenging risky assets versus
“safe assets”, and rendering stock-picking opportunities exceptionally tough. All that
might be about to change.
But first a quick point on political polarization in the USA, where we have the data. As
Figure 1 shows, political polarization in the USA, proxied by how often Republicans vote
similarly to one another, as do Democrats, is at a record high since 1880! It is like two
sullen adults sitting at opposite ends of a see-saw, looking away from each other. With
that degree of entrenched polarization, it is tough to get policies passed, and a
malodorous air of policy inaction and uncertainty hangs heavy in the land. Note in
Figure 1 how policy polarization correlates well with income inequality (or plutonomy).
(Interested readers in the concept of political polarization should go to
http://www.slate.com/articles/life/do_the_math/2001/12/growing_apart.single.html, The
Mathematical Evidence for Congress’ Growing Polarization by Jordan Ellenberg1.) Our
humble contention is that time-series that are at 130-year extremes are most likely to
mean revert, however fanciful that might seem at the time of the extreme. In other
words, political polarization might just recede with this coming US election. Financial
deregulation – a key driver of complexity, the consequent compensation premium in the
financial sector, the rise in the ratio of bank fee income to total income, and income
inequality, all likely peaked together in 2008. Any potential reduction in political
polarization will likely involve compromise, less policy uncertainty, and less of a
likelihood of policies being overturned with every election. As Figure 2 shows, more
policy certainty would diminish one key headache for business.
Economic Policy Uncertainty
Scott Baker, Nick Bloom and Steven Davis at Stanford have constructed Economic
Policy Uncertainty indices for the US, Europe and Canada. For the US, in their words:
To measure policy-related economic uncertainty, we construct an index from three types of underlying
components. One component quantifies newspaper coverage of policy-related economic uncertainty. A second
component reflects the number of federal tax code provisions set to expire in future years. The third component
uses disagreement among economic forecasters as a proxy for uncertainty.
The first component is an index of search results from 10 large newspapers. The newspapers included in our
index are USA Today, the Miami Herald, the Chicago Tribune, the Washington Post, the Los Angeles Times,
1
Also see the original authors’ work at http://voteview.com/Polarized_America.htm#MPRBOOK
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4. 17 October 2012
The Investigator
the Boston Globe, the San Francisco Chronicle, the Dallas Morning News, the New York Times, and the Wall
Street Journal. From these papers, we construct a normalized index of the volume of news articles discussing
economic policy uncertainty of some type. The second component of our index draws on reports by the
Congressional Budget Office (CBO) that compile lists of temporary federal tax code provisions. We create
annual discounted numbers of tax code provisions scheduled to expire for each year, giving a measure of the
level of uncertainty regarding the path that the federal tax code will take in the future. The third component of
our policy-related uncertainty index draws on the Federal Reserve Bank of Philadelphia's Survey of
Professional Forecasters. Here, we utilize the dispersion between individual forecasters' predictions about
future levels of the Consumer Price Index, Federal Expenditures, and State and Local Expenditures to
construct indices of uncertainty about policy-related macroeconomic variables. (From their website,
www.policyuncertainty.com)
Figure 1: US: record political polarization and income inequality – about to reverse?
1.2 20
Higher
1.1 18
Polarization
1.0 16
0.9
14
0.8
12
0.7
10
0.6
8
0.5
0.4 6
House Polarization, LS
0.3 Senate Polarization, LS 4
Income share of the top 1% (excluding capital gains), RS
0.2 2
1879 1899 1919 1939 1959 1979 1999
Source: Deutsche Bank. Polarization is measured as difference in party means - first dimension. http://voteview.com/Polarized_America.htm
Figure 2: US: Economic Uncertainty a huge problem
Source: NFIB
Figure 3 shows the US, European and Canadian Economic Policy uncertainty indices.
We will use the US version for our arguments here. Figure 4 shows the US Economic
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5. 17 October 2012
The Investigator
Policy Uncertainty Index alongside the average US stock performance correlations with
the MSCI USA benchmark (a proxy for the potential efficacy of stock picking. If stocks
all move in the same direction with the benchmark, it reduces the efficacy of stock-
picking, once we adjust for portfolio volatility). A few things stand out. As the inventors
of the index note, US Economic Policy Uncertainty since 2007 has been at twice the
level of the prior 23 years. As Figure 4 also shows, the relationship between Economic
Policy Uncertainty and the stock-picking opportunity set has increased markedly since
2008. The correlation coefficient between Economic Policy Uncertainty and stock-
picking efficacy was only 0.09 between 1985 and 2007. Since then, it has jumped to
0.74. If you are a stock-picker, you want Economic Policy Uncertainty to subside, big
time. Adjusted for portfolio volatility, the stock picking opportunity will become much
wider, and life presumably a bit less stressful. Having a view on Economic Policy
Uncertainty is critical.
Figure 3: Economic Policy Uncertainty has been elevated since 2008, about to drop?
300 300
US Economic Policy Uncertainty Index
250 European Economic Policy Uncertainty Index High policy 250
uncertainty
Canadian Economic Policy Uncertainty Index
200 200
150 150
100 100
50 50
0 0
1/85 1/88 1/91 1/94 1/97 1/00 1/03 1/06 1/09 1/12
Source: Deutsche Bank, Scott Baker, Nick Bloom and Steven Davis (www.policyuncertainty.com)
Figure 4: Economic Policy Uncertainty and stock correlations with the benchmark move
together. Stock-picking to become more potent as Policy Uncertainty drops
0.9 Average US stock performance (60 trading days) EU credit crisis 300
correlations with MSCI USA, LS Lehman Failure
0.8 87 crash US Economic Policy Uncertainty measure, RS
250
0.7 Worldcom Scandal
High High policy
economic uncertainty
0.6 LTCM 200
policy
US recession uncertainty Asian
0.5
Crisis
150
0.4
0.3 100
Macro-driven market,
0.2 correlation 0.74
50
0.1
Stock-pickers market, correlation 0.09
0.0 0
1/86 1/88 1/90 1/92 1/94 1/96 1/98 1/00 1/02 1/04 1/06 1/08 1/10 1/12
Source: Deutsche Bank, Stock correlations with MSCI USA based on rolling 60-day daily returns on a broad universe of stocks covering the top 95% of total
market capitalization (i.e.1,053 to 2,684 stocks from 1985 to 2012). For more on the “Economic Policy Uncertainty Index”, go to the website
http://policyuncertainty.com. According to the authors, “To measure policy-related economic uncertainty, we construct an index from three types of underlying
components. One component quantifies newspaper coverage of policy-related economic uncertainty. A second component reflects the number of federal tax
code provisions set to expire in future years. The third component uses disagreement among economic forecasters as a proxy for uncertainty.”
Figure 5 shows the relationship between the US Economic Policy Uncertainty index and
the equity risk premium (the higher it is, the “cheaper” stocks are versus bonds). From
1985 to 2007, there was NO relationship between the two, a correlation coefficient of -
0.07. Since 2008, however, the correlation coefficient between policy uncertainty and
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6. 17 October 2012
The Investigator
the equity risk premium has shot up to 0.67! Presumably, stocks are “cheap” compared
with bonds, since policy is uncertain, the impact on cash flows is uncertain and, as the
most junior entity in the capital structure, stocks need to be cheap to compensate for
this policy uncertainty. Logically, if the correlation holds and there is a substantial
decline in policy uncertainty, the equity risk premium could decline in tandem – stocks
would beat bonds massively. Having a view on Economic Policy Uncertainty is critical.
How about defensive sectors versus cyclicals? Does US Economic Policy Uncertainty
have any role here? Yes. As Figure 6 shows, changes in US Economic Policy
Uncertainty relate well with changes in the relative performance of defensives versus
cyclicals. The correlation coefficient has doubled from 0.33 between 1985-2007 and
2008 now. As policy uncertainty rises, there is an unsurprising rush to defensives, and
vice versa. Again, this relationship has been a lot more salient since 2008. Having a
view on Economic Policy Uncertainty is critical.
Figure 5: Equity Risk Premium and Economic Policy Uncertainty have moved in lock-
step since 2008. Unlocking equity risk premium if Policy Uncertainty drops
250 8%
High policy
230 US Economic Policy Uncertainty Index, uncertainty
3mma, LS 6%
210
Equity Risk Premium (S&P500 earnings 4%
190
yield less 10yr bond yield), RS
170
2%
150
0%
130
110 -2%
Correlation 0.67
90
Correlation -0.07 -4%
70
50 -6%
1/85 1/87 1/89 1/91 1/93 1/95 1/97 1/99 1/01 1/03 1/05 1/07 1/09 1/11 1/13
Source: Deutsche Bank
Figure 6: Defensives versus Cyclicals ( or risk-off versus risk-on) moves with changes in
Economic Policy Uncertainty
80% Economic Policy Uncertainty, 6m change, LS 80%
60% US defensive sectors / cyclical sectors, 6 month change, RS 60%
40% 40%
20% 20%
0% 0%
1/85 1/87 1/89 1/91 1/93 1/95 1/97 1/99 1/01 1/03 1/05 1/07 1/09 1/11 1/13
-20% -20%
-40% Correlation 0.33 Correlation 0.68 -40%
-60% Defensive sectors are Consumer staples, -60%
healthcare, utilities and telecom.
-80% -80%
Source: Deutsche Bank. Defensive sector price index is from Datastream while MSCI CYC Index is used for cyclicals.
So what is our view on Policy Uncertainty globally? We can only speculate on this, but
it is important to do so. In the US, a 130-year peak in political polarization and an
important election on what to do about this polarization should help resolve things one
way or another. Whatever the outcome of the election, we think it’s safe to say that
another four years of peak political polarization is not what the electorate is hoping for.
The party that loses is unlikely to find recalcitrance and obstructionism a future vote-
gathering strategy, in our view. Of course, we could be wrong and the logjam, the
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7. 17 October 2012
The Investigator
polarization, the policy uncertainty could go on for longer. In Europe, the ECB approved
its aggressive bond-buying plan with just one dissenter. While there is still a long way
to go on reducing policy uncertainty on the part of governments, north and southern
Europe, and within provinces in countries, the ECB’s views are quite clear, agree or
disagree with them. In China, the important political transition that occurs once in a
decade will soon be over. A renewed focus on governance and policy – the work of
government – can then begin. In India, after a period of lethargy, the government has
recently been invigorated and policy has come unstuck.
With the passage of time since the outbreak of the financial crisis, there is early
empirical evidence in the "austerity versus fiscal spending" debate. 2 As more time
elapses and more empirical results reveal themselves, we believe policy uncertainty will
likely diminish. Policymakers and voters will be better informed about the consequences
of opposing policy choices. Thus, the menu of successful policy options will likely shrink
– there should be less uncertainty about the "right" policy course.
Our simple read is that the substantial elevation of policy uncertainty around the world
is probably coming to an end. The confusion of policymakers in facing the rather unique
challenges of a once-in-seventy-years potential debt deflation was understandable. It is
by no means all blue skies from here, but policymakers and politicians are both learning
what is “working”, and what is not. Electorates are making choices about the direction
they want to go in, rather than the logjam of the past five years. Debtors and creditors
always fight about loss allocation in a debt crisis – time is the only healer that can bring
them together, however reluctantly. That time seems to be approaching. Again, this is
simple expectation on our part, and we could be plain wrong. But we stress that not
having a view on the direction of Policy Uncertainty is NOT an option for financial
professionals.
In sum, we might be at an important inflection point in financial markets. The elevation
of Economic Policy Uncertainty since 2008 has elevated the equity risk premium,
diminished the opportunity set for stock-picking, and favored defensive stocks over
cyclicals. The mindset of finance professionals and investors might have wrongly
concluded that this state of affairs is going to be prolonged and enduring – that bonds
are better than stocks, that stock-picking is ruinously counter-productive in this “macro-
driven” market, and that defensives are superior investments to cyclicals. This view
implies a continued elevated level of global Economic Policy Uncertainty. We think this
status quo view is wrong, and that we could be at a turning point, and that economic
policy uncertainty has probably peaked. Let the profitable boredom begin!
2
See the latest IMF World Economic Outlook, Coping with High Debt and Sluggish Growth and Fiscal Policy in a
Depressed Economy by Lawrence H. Summers and J. Bradford DeLong.
(www.brookings.edu/~/.../2012_spring_BPEA_delongsummers.pdf)
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8. 17 October 2012
The Investigator
Asia Model Portfolio update
We are removing Hyundai Motor Co, Hyundai Mobis, Simplo Technology Co Ltd and
Starhub Ltd. Hyundai Motor and Hyundai Mobis have dropped to the fourth and third
quintile respectively in our multifactor stock ranking model. Hyundai Motor looks
weaker (relative to the region) on profitability, growth and earnings momentum.
Hyundai Mobis is now looking expensive and has lower earnings momentum. Simplo
Technology faded on price momentum, earnings momentum and consensus rating
metrics. We are cutting Singapore on poor earnings revisions and dropping Starhub
from the model portfolio.
We are adding Top Glove Corp Bhd, Korea Zinc Co Ltd, Ace Hardware and Shree
Cement Ltd. Top Glove ranks highly on valuation, earnings and price momentum. Korea
Zinc looks better on profitability, earnings, price momentum and earnings quality. Ace
hardware, though looking expensive, scores well on profitability, growth, earnings and
price momentum. Shree Cement looks good on profitability, earnings, price momentum
and consensus analyst rating. For factor description, see appendix A.
Top Glove Corp Bhd (TOPG MK)
Outlook remains positive; reiterating Buy. Disciplined capacity expansion plans,
expectations of leveling raw material prices as a result of higher rubber production in
ASEAN and slower consumption growth globally, as well as resilient demand for rubber
gloves for medical and hygiene purposes should drive multi-year growth for the sector
and allow Top Glove to generate two-year (FY13-15E) net profit CAGR of 14%, in our
view. We reiterate our Buy recommendation with a price target of RM6.05/share,
implying a total return of 21%. (Michelle Foong, 12 October 2012)
Korea Zinc Co Ltd (010130 KS)
Gold/silver price forecast upgrades affect Zijin/Zhaojin/Korea Zinc. Deutsche Bank’s
global commodity team has upgraded its gold/silver price forecasts by 2.4% for 2013
and 11.1% for 2014 in light of further central bank action to expand monetary
conditions. The most relevant stocks in Asia ex-Japan are Zijin, Zhaojin and Korea Zinc
(50% revenue exposure). We raise Zijin/Zhaojin/Korea Zinc’s 2013E earnings by
2.4%/5.1%/1.5%, respectively. Our DCF valuation method differentiates Zijin (Buy) from
Zhaojin (downgrade from Buy to Hold), with target price upgrades at 5.6% and 8.3%,
respectively. We believe the bullishness on the gold price has been factored into
Zhaojin’s share price, after a 36% rally in the past month. We roll over Korea Zinc’s
target price to 2013-based and raise it by 24%. Overall, Zijin and Korea Zinc stand out
after the upgrades, with their target prices now implying 20% and 27% upside potential.
(Chanwook Park, 4 October, 2012)
Ace Hardware (ACES IJ)
Consistently delivering strong growth and aggressive expansion. We believe that Ace
Hardware Indonesia will continue to deliver strong growth as it is one of the best
proxies for the expanding middle class, enjoying a forecast earnings CAGR of 22% over
the next three years. Management has a strong operational and financial track record,
delivering a sales CAGR of 32% on expansion of 21% over the past three years. We
believe the company is on track to have 100 stores in the next three years, which is a
43% increase. Maintaining Buy with new DCF-based target price of Rp8,000 (from
Rp5,000). (Reggy Susanto, 28 September, 2012)
Shree Cement (SRCM IN)
A high FCF yield of over 9% in FY13e, EBITDA CAGR of 27% over FY12-FY14e, driven
by improving realizations and attractive valuations of 6.6x FY13e EV/EBITA, and a ~30%
discount to large cap peers makes us confident of continued outperformance from the
stock despite a 37% rise in the stock price over the past three months. (Harshad Katkar,
16 October, 2012)
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9. 17 October 2012
The Investigator
Summary
Global
High policy uncertainty, and the attendant flight from junior tranches of the capital
structure, along with a dismal prior decade of equity returns keeps them “cheap”.
Reduced policy uncertainty and losses from bond portfolios are likely to be required as
catalysts to unlock value in equities. Despite all the despair about global growth, our
own mother of all leading indicators (MOMLI) is looking up, as are asset-price-based
opinions on global growth. Meanwhile, analysts have lost confidence and are looking
for just 5% EPS growth globally in 2012, and 12% for 2013. Global Risk-Love
(sentiment) has now entered euphoria, a slight concern. The global Tape is very strong,
and the Marshallian K is rising.
Asia
Asian valuations are moderately below historical averages. The problem is margins – in
China they seem to be in a secular decline, while in India they seem to be at a cyclical
low. The region cannot rely on asset turns and leverage – both at global levels – to
boost relative ROEs compared with the world. It is probably going to have to be EBIT
margin expansion that gets the PB up. We don’t see any substantial decline in the cost
of equity to boost PB multiples. Risk-love in Asia is at neutral. Technicals are improving
– new highs are rising, and new lows have almost vanished. Asia’s leading economic
indicators are bottoming, and policy is no longer being tightened. Analysts have taken
the knife to this year’s EPS growth forecasts from around 13% at the start of the year to
5% now. We think that EPS revisions and economic surprises are about bottoming now.
New issuance and secondaries have been paltry – a good positive contrarian indicator.
Foreign fund flows have resumed in earnest as markets have rallied. Value strategies
and high profitability have done well this year, while high projected growth stocks have
been punished.
Japan
Japanese stocks continue to look undervalued versus history. A return to credible
inflation and higher nominal GDP growth globally is required to unlock value. Recent
tensions with China are unhelpful for risk assets in Japan. Sentiment is at neutral levels.
Technicals are mixed. Economic surprises are nasty and mean-reverting. They are
probably going to get less bad. EPS revisions continue to slide. Fund flows are weak
and the market continues to underperform the world as US 10-year bond yields remain
suppressed. Value remains the long-term winner.
China (neutral)
China’s valuations look “cheap” compared with history and are at fair value on our PB
ROE less COE model. However, on prospective ROEs of around 7% in three years’ time
and COE of around 10%, the current PB of 1.4 is substantially overvalued. Monetary
reflation could lift the current multiple, but the long-term deterioration in EBIT margins
is the key challenge to a re-rating. Sentiment is at neutral. Worryingly, turnover/market
cap is plumbing new depths. Once the political transition is done, and policy making,
reflation and market-supportive steps are likely taken, sentiment and pathetic turnover
might perk up. Technicals are weak. Policy is tightening via the currency, and weak
monetary growth. Real interest rates for corporates are rising with the corporate price
deflator contracting yoy. EPS revisions keep dropping as do EPS growth forecasts for
2012 and 2013. We are watching carefully for EPS revisions to hook up. The good news
is that the credit multiplier is rising yoy, and the market is responsive to this indicator.
The bad news is that the gap between M1 and M2 growth is still weak and correlates
with the PB multiple. We need to see a more credible reflation to see the market make
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10. 17 October 2012
The Investigator
strong upward moves. Earnings revisions and momentum, together with analyst
opinions are being rewarded this year, while value investing has been patchy.
Hong Kong (neutral)
Hong Kong equities are at fair value compared with history, and about in the middle of
the pack compared with the other Asian markets. Sentiment has rebounded from the
panic levels earlier this year. Turnover to market capitalization is still anemic, but we are
encouraged by the rise in the gap between M1 and M2 growth. Technicals have
improved since the summer. Policy seems to be tightening (even as real interest rates
are quite negative), and EPS revisions are still quite weak. The EPS growth forecast for
2012 has collapsed – the sign changed from an expected +12% earlier this year to -12%
growth expected now! For next year, EPS growth is expected at 10%. Inflation is
making the real effective exchange rate less competitive, and the yield curve is flat. A
good dose of monetary reflation in China is required to turn liquidity up. Negative real
interest rates are here to stay in HK for longer than anyone recognizes. Value and low
risk styles have been exceptional performers this year.
India (overweight)
Despite the recent run-up, the market is still undervalued on EV/Sales, EV/EBITDA and
PB compared with history. On other metrics, like trailing PE and dividend yield, it is at
long-term averages. On our PB versus ROE less COE model it is at fair value, and needs
for ROEs to rise and/or COEs to fall – likely if the RBI cuts rates as the Rupee
strengthens. Risk-love has perked up from panic in May to neutral now. Meeting with
scores of clients around the world, however, we think there is still considerable
skepticism about the market. With the recent rally, technicals have improved. The
downgrade to GDP growth by the IMF is unfathomable to us simpletons. The leading
indicator from the OECD has been rising for months, and the EPS revisions trajectory
has also been improving for months. Our policy indicator has curled up with the
weakness in the Rupee. Looking ahead, we expect the monetary base to start growing
from its paltry 4% yoy rate, as net foreign asset growth resumes on the back of reforms
and confidence. EPS growth projections for next year, at 12-14%, are reasonable. The
monetary base growth at 4.4% is anemic. The lack of net foreign asset growth is being
compensated by a substantial increase in net RBI lending to government. This is a
vicious cycle that needs to be broken, and probably will be, if reform momentum is
maintained. The yield curve is no longer negative, but is still flat as a chapatti. Value and
EPS momentum have been rewarded well this year. Stick with them.
Indonesia (neutral)
Valuations are at fair levels compared with history. We are a bit concerned about the
decline in Indonesia’s EBIT margins. Maintaining premium valuations to the region
requires maintaining premium ROEs to the region. Having almost doubled capex/GDP in
the past few years, and as it is exposed to any slowdown in nominal GDP growth in
China, keep an eye on declining margins in Indonesia. Indonesia has gone from the
poster child of solid macro policy last year to one that is perceived as having less than
optimal policies – interest rates cut “too soon”, etc. We didn’t understand either
position. Indeed, it seems that other EM central banks are now following BI in cutting
interest rates to combat slower growth. Maybe BI is a lot smarter than the gallery of
critics assumes. We think policy easing makes sense (unlike consensus) – real economy
data is coming in really weak, EPS revisions are negative (but recovering), and EPS
growth expectations have collapsed from 17% a few months ago to just 8% now for
calendar 2012. Inflation, a lagging indicator, is stable at the 4%-ish level. The currency is
more competitive in real effective terms, free liquidity is booming and the yield curve is
flat-ish. Value and EPS mo are king here. The rest are not really adding alpha this year.
Page 10 Deutsche Bank AG/Hong Kong

11. 17 October 2012
The Investigator
Korea (underweight)
The market is at fair value compared with its history, but cheap compared with other
markets on a snapshot basis. This is a low ROE, low EBIT margin market, and is likely to
remain a low PB market unless ROEs rise sharply. Interestingly, unlike China, Taiwan
and Singapore, where margins have been in secular decline, and ROEs have been
goosed by rising asset turns and leverage (this has also been happening in Malaysia and
Indonesia recently), in Korea this is not happening. EBIT margins and ROEs move
together – albeit at low levels. We think this deserves a higher multiple than currently
obtained. We think investors in the other markets might be suffering from “ROE
illusion”, implying very strong nominal GDP growth and more leverage – both unlikely.
Sentiment is just shy of neutral. Technicals are a lot stronger than overall market
performance suggests. Close to a record percentage of stocks are making 52-week
highs. The leading economic indicator has been rising persistently for many months
now, but EPS revisions are still in the doldrums. Implication: margins are under
continued pressure. The terms of trade are improving and we expect this to feed
through to improving margins and EPS revisions soon. The yield curve is flat, and
flattening. Value has made a massive comeback in the past six months. Price and EPS
mo have been disasters this year. Stock-picking in Korea based on style is very tricky
because the factors go in and out of style with a head-spinning intensity.
Malaysia (neutral)
Malaysian equities are undervalued versus history but quite expensive versus the other
markets on a relative basis. As in Indonesia, we are concerned about the sharp drop in
EBIT margins, even as ROEs remain stable. Risk-Love is quite high, just shy of euphoria.
Technicals are neutral. The EPS revisions index has collapsed and EPS growth numbers
are being taken down for 2012. Price and EPS mo, along with ROE have been rewarded
this year. But value has been tepid.
Philippines (neutral)
The market is expensive compared with its history and versus other markets in the
region. We like that the EBITs and ROEs move together, so there is no leverage or asset
turnover-driven “ROE illusion”. Also, years of under-investment imply many years of
strong EBIT margins (unlike say in China, or maybe even Indonesia). Sentiment has
come off from the euphoria of the summer to neutral now. The leading economic
indicator is rising, and we expect EPS revisions to do the same. This is a requirement in
order to maintain its premium valuations. Value, a perennial king in Philippine alpha
generation, continues to do well, as do EPS revision strategies.
Singapore (neutral)
The market is cheap compared with history, but fairly valued compared with other
regional markets. EBIT margins are in secular decline, and maintaining ROEs will rely on
continued improvements in asset turnover and leverage. Sentiment is in mild euphoria.
Technicals are super-strong, with close to a record percentage of stocks making 52-
week highs. EPS growth projections for both 2012 and 2013 remain lackluster. Earnings
revisions also look weak. The good news is that the terms of trade are now picking up
nicely, so margins are likely to get a boost. Only stability and low risk factors are
generating alpha. Value strategies are mixed, but momentum strategies have destroyed
alpha this year.
Taiwan (underweight)
The market is a serial underperformer versus the region. EBIT margins are in secular
decline, and the high asset turnover is running into gravity now. Risk-love is in the tank.
EPS revisions are worsening, but there is hope. The terms of trade have gone vertical
and project rising EPS momentum. Given poor sentiment, and an impending
improvement in EPS growth projections, we need to keep an eye on the underweighted
Deutsche Bank AG/Hong Kong Page 11

12. 17 October 2012
The Investigator
market. This tech-heavy market is respecting price momentum and stocks supported by
analysts.
Thailand (overweight)
The market is fairly valued versus history and the region. The exception is PB – where
the market is at record premiums to the region. Could that be a reward for the solid
ROEs (driven not by EBIT margins but asset turns)? Sentiment is neutral. Technicals are
super-strong. About a quarter are making 52-week highs. Growth-leading indicators are
still strong, even as incoming data have been weak. Analysts have dropped projected
2012 EPS growth forecasts from 23% earlier his year to about 15% now. Also, we are
comforted with the rise in the terms of trade that should be supportive of margins and
EPS growth going forward. Value has been a disaster this year, while price and EPS
momentum strategies have been huge winners.
Page 12 Deutsche Bank AG/Hong Kong

13. 17 October 2012
The Investigator
Figure 7: Model portfolio performance since inception (13 September 2010)
22 Model portfolio absolute returns (After T/C): 19.0% 1-week relative returns 0.1% 22
20 MSCI Asia ex Japan absolute returns: 4.8% 1-month relative returns 2.5% 20
18 Model portfolio relative returns (After T/C): 14.2% YTD relative returns 9.8% 18
16 12-month relative returns 12.1% 16
14 After Transaction Cost 14
12 12
10 10
8 8
6 6
4 4
2 2
0 0
-2 -2
9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12
Source: Deutsche Bank, MSCI, FactSet
Note: Performance is measured in local currency. Stock changes are effective as of close one day after they are officially published (i.e. Changes published on 4th May 2011 will be effective as of close 5th May 2011).
*New additions. Assume 50bps on both buying and selling as proxy for transaction cost. Note: Past performance does not guarantee future results
Figure 8: Model portfolio country and sector overweights/underweights
-12% -9% -6% -3% 0% 3% 6% 9% 12% Sector (MSCI Wgt) -12% -9% -6% -3% 0% 3% 6% 9% 12%
Country (MSCI Wgt)
Retailing (1.5%)
THAILAND (3.0%)
Materials (7.0%)
Energy (7.2%)
INDIA (9.5%) Telecom (6.7%)
Cons Svc (1.7%)
Div Financials (2.4%)
INDONESIA (3.7%)
Cap Gds (7.6%)
Health Care Equip (0.3%)
PHILIPPINES (1.2%) Media (0.3%)
Real Estate (7.0%)
CHINA (23.9%) Comm Svc (0.0%)
Pharma/Biotech (0.7%)
Underweight Neutral Overweight Overweight
Software (3.2%) Underweight
SINGAPORE (7.3%)
Cons Dur/App (0.8%)
Food/Staples Retail (0.8%)
MALAYSIA (4.9%) Food Beverages (3.6%)
Hhold Products (1.2%)
Utilities (3.9%)
HONG KONG (11.9%)
Insurance (4.3%)
Transport (1.9%)
TAIWAN (14.4%) Current O/U wgt Tech Hardware (4.5%) Current O/U wgt
(17 October 2012) (17 October 2012)
Autos (5.0%)
Previous O/U wgt Previous O/U wgt
Semis (10.1%)
SOUTH KOREA (20.1%) (07 August 2012) (07 August 2012)
Banks (18.1%)
-12% -9% -6% -3% 0% 3% 6% 9% 12% -12% -9% -6% -3% 0% 3% 6% 9% 12%
Source: Deutsche Bank, MSCI.
Note: Numbers in parenthesis are sector and country weights in MSCI AC Asia ex Japan index. The model portfolio is equal weighted; each stock has weighting of 2.5%.
Deutsche Bank AG/Hong Kong Page 13

14. 17 October 2012
The Investigator
Figure 9: Asia Model Portfolio
Profitability
FY 13
Cons Rec
Valuation
Price Mo
Earnings
Earnings
Stability
Growth
Quality
DB Date Close YTD Rtn Hldg Per Mcap 20D ADT PE (DB
Risk
Mo
BB Ticker Mkt Rec Added 16Oct12 (%) Rtn (%) Beta (U$bn) (U$ m) est)
Energy - MSCI wgt: 7.2%, portfolio wgt: 12.5%
CNOOC Ltd. 883 HK CN H 11Dec10 15.94 20.5 -6.7 1.40 91.8 111.5 8.9 o + ++ o o ++ o o o
Oil & Natural Gas Corp. Ltd. ONGC IN IN B 14Sep10 278.95 12.4 -14.7 0.65 45.2 20.3 8.7 ++ ++ + o o ++ o o o
Oil India Ltd. OINL IN IN B 30Sep11 485.85 5.9 -6.2 0.29 5.5 1.7 9.1 ++ + + o + ++ o o o
PTT PCL PTT TB TH NR 14Sep10 311.00 1.6 1.27 29.0 38.7
SK Innovation Co. Ltd. 096770 KS KR B 7Aug12 154000 8.5 -6.9 1.47 13.5 55.8 6.6 ++ ++ + o - - ++ - - o o
Materials - MSCI wgt: 7.0%, portfolio wgt: 12.5%
Grasim Industries Ltd. GRASIM IN IN B 27Jun12 3464.85 39.0 36.1 0.75 6.0 6.0 11.0 + + ++ ++ ++ o o + o
Shree Cement Ltd. SRCM IN IN B 17Oct12 4048.80 87.7 NA 0.70 2.7 6.3 17.7 - ++ ++ ++ o - -- o ++
Indocement Tunggal Prakarsa INTP IJ ID B 14Sep10 21450 27.5 19.6 1.34 8.2 5.5 15.9 - ++ ++ ++ ++ ++ o o o
Korea Zinc Co. Ltd. 010130 KS KR B 17Oct12 461000 51.6 NA 1.13 7.9 31.9 8.2 o ++ ++ ++ - + o + o
LG Chem Ltd. 051910 KS KR B 14Sep10 316500 -0.3 -5.3 1.53 19.3 73.6 11.9 o ++ + o o ++ o o --
Capital Goods - MSCI wgt: 7.6%, portfolio wgt: 10.0%
China Communications Construction Co. Ltd. 1800 HK CN B 5May11 6.94 18.0 5.5 1.41 12.1 19.3 7.0 + + o ++ o o o o ++
Sino-Thai Engineering & Construction PCL STEC TB TH B 7Aug12 20.70 72.8 36.2 0.82 0.8 3.9 19.3 o + ++ ++ o ++ o o ++
SembCorp Industries Ltd. SCI SP SG B 14Sep10 5.47 39.3 30.0 1.36 8.0 9.3 11.4 o ++ o ++ o + o o +
SembCorp Marine Ltd. SMM SP SG B 11Dec10 4.92 35.3 8.0 1.66 8.4 14.5 13.2 o ++ o + o ++ - - o +
Commercial Services & Supplies - MSCI wgt: 0.0%, portfolio wgt: 0.0%
Transportation - MSCI wgt: 1.9%, portfolio wgt: 0.0%
Automobiles & Components - MSCI wgt: 5.0%, portfolio wgt: 0.0%
Consumer Durables & Apparel - MSCI wgt: 0.8%, portfolio wgt: 0.0%
Consumer Services - MSCI wgt: 1.7%, portfolio wgt: 5.0%
SJM Holdings Ltd. 880 HK HK B 9Mar12 16.30 34.5 10.1 1.34 11.7 9.7 12.7 + ++ ++ ++ o ++ ++ o
Minor International PCL MINT TB TH B 27Jun12 17.80 76.2 26.2 1.06 2.1 6.5 20.4 o ++ ++ ++ o - - ++ o
Media - MSCI wgt: 0.3%, portfolio wgt: 2.5%
BEC World PCL BEC TB TH H 11Nov11 57.25 31.7 59.1 0.73 3.7 3.4 20.8 - ++ ++ o o ++ o o --
Retailing - MSCI wgt: 1.5%, portfolio wgt: 7.5%
Belle International Holdings Ltd. 1880 HK CN B 5May11 13.62 2.0 -6.9 0.93 14.8 25.5 15.7 - ++ ++ ++ o ++ ++ o
Giordano International Ltd. 709 HK HK H 14Sep10 6.40 20.4 61.0 0.88 1.3 2.5 12.3 + ++ + + o ++ ++ ++
Ace Hardware Indonesia ACES IJ ID B 17Oct12 6650.00 62.8 NA 0.41 1.2 0.6 23.7 - - + ++ ++ o + ++ o
Food & Staples Retailing - MSCI wgt: 0.8%, portfolio wgt: 0.0%
Food Beverage & Tobacco - MSCI wgt: 3.6%, portfolio wgt: 2.5%
Uni-President Enterprises Corp. 1216 TT TW B 7Aug12 52.00 28.0 4.7 0.63 8.7 14.3 19.9 - + ++ ++ - + o o
Household & Personal Products - MSCI wgt: 1.2%, portfolio wgt: 0.0%
Health Care Equipment & Services - MSCI wgt: 0.3%, portfolio wgt: 2.5%
Top Glove Corp. Bhd TOPG MK MY B 17Oct12 5.31 8.8 NA 0.99 1.1 2.2 14.1 ++ o + ++ o ++ - - o o
Pharmaceuticals & Biotechnology - MSCI wgt: 0.7%, portfolio wgt: 0.0%
Banks - MSCI wgt: 18.1%, portfolio wgt: 7.5%
ICICI Bank Ltd. ICICIBC IN IN B 7Aug12 1042.05 54.6 7.0 1.44 22.7 78.4 12.7 - - o o o o -- o o ++
BOC Hong Kong (Holdings) Ltd. 2388 HK HK B 5May11 24.10 37.0 9.3 1.02 32.9 32.2 11.7 ++ o o + o o o o +
Industrial & Commercial Bank of China Ltd. 1398 HK CN B 5May11 4.88 11.2 -16.7 1.41 214.7 165.4 6.2 ++ ++ o -- o o o o ++
Diversified Financials - MSCI wgt: 2.4%, portfolio wgt: 5.0%
IDFC Ltd. IDFC IN IN B 15May12 149.90 65.9 30.7 1.58 4.3 24.5 10.2 - ++ o o ++ o o
Haitong Securities Co. Ltd-H share 6837 HK CN B 27Jun12 10.70 NA -0.2 NA 14.5 7.0 15.0 + + + + o o ++
Insurance - MSCI wgt: 4.3%, portfolio wgt: 2.5%
Dongbu Insurance Co. Ltd. 005830 KS KR NR 9Mar12 49550 -5.0 5.7 0.53 3.2 5.5 NA + ++ o o - o
Real Estate - MSCI wgt: 7.0%, portfolio wgt: 7.5%
Sun Hung Kai Properties Ltd. 16 HK HK B 11Dec10 109.00 12.9 -12.7 1.08 36.8 82.2 13.1 + o ++ o o o o o --
Keppel Land Ltd. KPLD SP SG B 15May12 3.47 65.3 18.0 1.69 4.4 5.3 13.3 + ++ ++ - - - ++ -- o
Megaworld Corp. MEG PM PH B 7Aug12 2.40 43.1 7.1 1.28 1.5 4.4 9.1 ++ o ++ o + o o o o
Software & Services - MSCI wgt: 3.2%, portfolio wgt: 2.5%
SouFun Holdings Ltd. ADS SFUN US CN B 30Aug11 17.71 28.0 10.5 1.64 1.4 3.8 8.0 ++ ++ ++ ++ -- -- + o o
Technology Hardware & Equipment - MSCI wgt: 4.5%, portfolio wgt: 0.0%
Semiconductors & Semiconductor Equipment - MSCI wgt: 10.1%, portfolio wgt: 5.0%
Samsung Electronics Co. Ltd. 005930 KS KR B 7Aug12 1330000 25.8 2.8 1.14 178.8 337.8 8.6 + ++ o o + + o o ++
Novatek Microelectronics Corp. 3034 TT TW B 28Jan11 104.50 43.7 18.9 1.23 2.2 18.6 12.6 o ++ o o ++ + o o ++
Telecommunication Services - MSCI wgt: 6.7%, portfolio wgt: 10.0%
China Mobile Ltd. 941 HK CN H 14Sep10 83.70 14.7 15.9 0.46 217.0 196.8 10.8 ++ ++ + -- + ++ o o o
China Communications Services Corp. Ltd. 552 HK CN B 30Sep11 4.39 32.6 28.9 0.63 3.9 2.7 9.2 ++ o ++ ++ ++ ++ o -- ++
Far EasTone Telecommunications Co. Ltd. 4904 TT TW B 30Sep11 72.40 32.5 65.7 0.12 8.1 13.9 17.4 - + ++ ++ - - ++ o o ++
Telekom Malaysia Bhd T MK MY H 15May12 6.23 35.6 23.6 0.76 7.3 16.6 26.3 o o ++ ++ ++ - -- o o
Utilities - MSCI wgt: 3.9%, portfolio wgt: 2.5%
Guangdong Investment Ltd. 270 HK CN B 30Sep11 6.20 35.5 32.4 0.38 5.0 4.5 12.6 o o o o o o o
Db X-Trackers Csi300 Trn Index Et 3049 HK CN 15May12 5.62 -7.2 -11.1 1.00 0.3 3.7
Asia Model Portfolio (eq-wgt)** 23.1 19.0 1.03 26.6 36.7 13.1
MSCI Asia ex-Japan, LC 13.3 4.8
Source: Deutsche Bank, FactSet, Bloomberg Finance LP. Note: Stocks are sorted by names in alphabetical order within each sector. Factor scores are given on a country and sector relative basis. Very Favorable (++),
Favorable (+), Neutral (0), Unfavorable (-), Very Unfavorable (--), Not Applicable (Blank). For a detailed explanation please see appendix A. Performance is measured in local currency. Stock changes are effective as of close
one day after they are officially published (i.e. Changes published on 4th May 2011 will be effective as of close 5th May 2011). *New additions. **Assume 50bps on both buying and selling as proxy for transaction cost.
Page 14 Deutsche Bank AG/Hong Kong

15. 17 October 2012
The Investigator
Country selection
Figure 10: Equity markets and their key drivers
Current Account Balance/GDP
Sentiment (Risk-Love)
Real Exchange Rate
Total Score
Technicals
Valuation
Liquidity
Growth
Policy
China (Latest) 8
China (Last) -2
Hong Kong (Latest) -2
Hong Kong (Last) -2
Indonesia (Latest) 1
Indonesia (Last) 0
India (Latest) 4
India (Last) 3
Korea (Latest) 6
Korea (Last) -3
Malaysia (Latest) 2
Malaysia (Last) 3
Philippines (Latest) 5
Philippines (Last) 0
Singapore (Latest) -2
Singapore (Last) 4
Thailand (Latest) 4
Thailand (Last) 6
Taiwan (Latest) 1
Taiwan (Last) 0
Asia ex-Japan (Latest 4
Asia ex-Japan (Last) -2
Japan (Latest) 2
Japan (Last) -4
Source: Deutsche Bank.
Blank cell represents factor not used in the model for that country.
Most Favorable, Favorable, O Neutral, Less Favorable and Least Favorable.
Liquidity is based on yoy change in M2/Market Cap ratio, valuation is based on composite valuation index (based on trailing P/E, 12m fwd P/E, P/cash earnings,
P/book, dividend yield, EV/EBIDTA and EV/Sales), sentiment is based on Risk-Love indicator, technicals are based on several price based indicators like percentage
of stocks above 200-d moving average, number of 52-Weeks new lows and new highs, indices above/below their 200-d moving average etc., growth is based on
leading economic indicators and earnings revision index, current account balance/GDP is based on deviation from 3-year moving average trend, real exchange rate
is based on deviation from 2-year moving average trend and policy is based on policy indicator.
Deutsche Bank AG/Hong Kong Page 15

16. 17 October 2012
The Investigator
Country-sector selection
Figure 11: We prefer sectors with value, high earnings and price momentum, and better profitability
0.90
JP Banks
HK Real Estate
JP Telecom 0.80
KO Autos
ID Hhold Products 0.70
TH Banks
ID Banks Most preferred sectors
CH Banks
TH Food Bev 0.60 TH Telecom
JP Energy
IN Software
0.50
High earnings revisions & IN Hhold Products
JP HCare Equip/Svc
price momentum, better MY Utilities MY Telecom CH Real Estate
0.40 KO Insurance
profitability KO Tech Hard/Equip
IN Div Fin SG Banks
CH Utilities
0.30 JP Autos TA Banks PH Real Estate
TH Energy SG Real Estate SG Retailing
JP Transport ID Utilities JP Div Fin
ID Autos HK Telecom JP Food Bev KO Utilities JP Fd/Staples Retail
0.20 ID Pharma/ Biotech JP Comm Svc
IN Energy HK Utilities
PH Div Fin PH Cap Gds
MY Energy JP Pharma/ Biotech HK Banks Software
JP
HK Cons Svc IN Banks
ID Food Bev 0.10 TH Media
IN Pharma/ Biotech JP Materials MY Banks
MY Food Bev ID Telecom HK Cap Gds
CH Telecom Materials
ID
CH Software TA Real Estate
CH Transport SG Media Materials IN Autos JP Real Estate
TH Materials
KO
TA Div Fin 0.00 TA Telecom JP Cap Gds
CH Cap GdsJP Insurance TA Cons Durables SG Div Fin
KO Retailing KO Cap Gds Transport JP Tech Hard/Equip
HK
KO Cons Svc
KO Telecom KO Energy JP Hhold Products KO Food Bev JP Retailing JP Media
KO Hhold Products IN Materials
SG Food Bev -0.10 MY Autos
CH Tech Hard/Equip
CH HCare Equip/Svc HK Semis
KO Transport CH Energy
TA Materials -0.20 TA Semis PH Fd/Staples Retail
HK Tech Hard/Equip JP Semis SG Cap Gds
TA Retailing TA Cap Gds TA Insurance
HK Retailing CH Autos
KO Fd/Staples Retail -0.30 IN Food Bev MY Materials
HK Cons Durables
SG Cons Svc SG Fd/Staples Retail
CH Materials KO Cons Durables Cheaper
JP Cons Svc TA Tech Hard/Equip
MY Cons Svc ID Energy MY Transport MY Cap Gds PH Telecom
CH Retailing -0.40
CH Insurance MY Div Fin SG Telecom
TA Fd/Staples Retail CH Food Bev IN Cap Gds IN Utilities
IN Telecom IN Real Estate TA Transport
Least preferred sectors IN Media HK Div Fin KO Pharma/ Biotech KO Div Fin Cap Gds
ID
-0.50
TA Autos KO Semis SG Transport
CH Fd/Staples Retail KO Software
-0.60 JP Utilities
-0.70
-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70
Source: Deutsche Bank, FactSet
Page 16 Deutsche Bank AG/Hong Kong