NOVEMBER2011 // Global Macro Continued decline in major global economic indicators point to weak economic prospect, including emerging economies. § The Global Manufacturing Purchasing Manager

Index (PMI) fell to 49.9 (a point below 50 is an indication of contraction) in September’11, the 7th consecutive decline, due to slower global demand.

Widespread concern of a slowdown has now reached emerging economies as export was affected by a drop in demand from advanced economies.

Source: OECD, Bloomberg

01 MARKET REVIEW 05 THE GAME PLAN 07 FUND FACTS

Development in the Eurozone sovereign debt resolution shows encouraging progress, but a concrete resolution is still far ahead. § The 17-nation Euro area has concurred to a scaling

up of the European Financial Stability Facility (EFSF) fund from the current 440 billion-euro to 1 trillion-euro in late October, just before the G-20 Leaders Summit on 3 November.

§ Among other agreements made include creditors’ write-down of Greek debt by 50% and bolstering bank’s capital ratio to 9% to provide sufficient buffer on the potential losses.

Malaysia Macro Budget 2012 - People-friendly initiatives § Various measures announced are directed towards

tackling issues of rising living costs, affordable housing, widening income gap and social welfare.

§ Services sector and SMEs are also the main beneficiaries with various measures and incentives announced to further spur Malaysia’s post-industrialisation development strategy.

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§ On economic outlook, the Government forecasts

the economy to grow by 5% to 5.5% this year and between 5% to 6% in 2012, supported by foreign investment, the ETP and 10MP.

§ Deficit forecast: 4.7% of GDP in 2012 from 5.4% in 2011.

The global capital market is more event and news flow driven due to uncertainties in the global economy. Despite continuing worries of the economy, investors’ risk appetite improved in October following encouraging progress from the Eurozone sovereign debt resolution, resulting in positive performance of the equity markets compared to bond markets. The US treasuries which benefited from safe haven flows in September saw a reversing trend in fund flows in October. RISK ON – Equity markets perform relatively better.

Source: Bloomberg

Market rebounds after taking cue from Eurozone determination to end its sovereign debt crisis.

Source: Bloomberg

§ Along with regional markets, the FBM KLCI gains 105 points MoM in October to close at 1492 by end-October.

§ Locally, there has been strong buying interest across the market, particularly in plantation, oil and gas and construction stocks.

§ Equity market performance is reflecting higher optimism despite uncertainties on the effectiveness of the Eurozone debt resolution plan. Likewise, concerns linger over the ability of corporates to meet earnings expectation against the backdrop of slower economic growth.

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Regional Equity Market Performance % Gain/(Loss) Index 31-Oct-11 1 mth 3 mths YTD

South East Asia Indonesia JCI 3,790.8 6.8 (8.2) 2.4

Philippine PSE 4,333.7 8.4 (3.8) 3.2

Singapore STI 2,855.8 6.8 (10.5) (10.5)

Malaysia FBM KLCI 1,491.9 7.6 (3.7) (1.8)

Thailand SET 974.8 6.4 (14.0) (5.6)

North Asia China Shanghai SE 2,468.3 4.6 (8.6) (12.1)

Hong Kong Hang Seng

19,864.9 12.9 (11.5) (13.8)

Taiwan TAIEX 7,587.7 5.0 (12.2) (15.4)

Japan Nikkei 225 8,988.4 3.3 (8.6) (12.1)

South Korea KOSPI 1,909.0 7.9 (10.5) (6.9)

US & Europe

Germany DAX 6,141.3 11.6 (14.2) (11.2)

Euro Stoxx 50 2,385.2 9.4 (10.7) (14.6)

US Dow Jones 11,955.0 9.5 (1.6) 3.3

US S&P 500 1,253.3 10.8 (3.0) (0.3)

US Nasdaq 2,684.4 11.1 (2.6) 1.2

UK FTSE 100 5,544.2 8.1 (4.7) (6.0)

Source: Bloomberg

§ Market remains locally-driven as foreign investors

hold short position on MGS market. Trading was thin, with average daily trade of RM1.7 billion (Sep: RM5.1).

§ Due to strong buying interest in the short tenure, yield spread for 3yr/10yr widened to 84bps from 71bps.

Mild foreign selling in Sept, MGS still well supported in Oct

Source: Bloomberg, Bondstream

RM18.7 billion foreign fund outflows in September, mainly from BNM Bills (RM12.3 billion) and MGS/GII (RM6.4 billion)

Source: Bank Negara Malaysia

Robust trading in Corporate Bond continues as investors seek for yield pickup.

Source: Bloomberg, Bondstream

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§ Trading in Corporate Bond market was reported at RM11.6 billion, mainly on buying interest from local investors. Risk aversion led to shift of interest to Quasi Government (31% of total trade).

§ New issuances in Oct were: Midciti Resources (AAA), KLK (AA1), TRIPlc (AAAfg), Danga Capital (Non-rated) and RHB Bank (AA3).

§ The Bank Negara Malaysia Monetary Policy Committee (MPC) meeting is scheduled on 11 November, the last meeting for the year. Most economists expect no rate action to be announced but instead look forward to assess the central bank direction to be outlined in the MPC press statement.

§ The progress of the European sovereign debt crisis will be the central driver in the capital market. While some progress has been made in October, the successful implementation of the planned measures remains the key determinant.

§ Over the long run, we are upbeat that the emerging market offers attractive returns for investors due to its relative strong fundamental, backed by resilient domestic demand and increasing intra-regional trade.

§ Equity strategy: Will remain cautious and employ range-bound trading tactical moves with a combination of moving cash to accumulate defensive stocks.

§ Bond strategy: To focus on PDS space which offer better yield pickup by capitalising on the corporate issuances in the near term.

Disclaimer: This review prepared by Mayban Investment Management Sdn Bhd (MIMSB) is for the private circulation to clients of MIMSB only. The opinions, statements and information contained in this review are based on available data believed to be reliable and not independently verified by any third party. MIMSB does not warrant the accuracy of anything stated in the review in any manner whatsoever and nor any reliance upon such things by anyone shall give rise to any claim whatsoever against MIMSB in respect thereof. MIMSB DOES NOT ENGAGE IN PROPRIETORY TRADING AND AS SUCH DOES NOT ASSUME ANY POSITION IN SECURITIES OR OPTIONS OF ANY ISSUER HIGHLIGHTED IN THIS REPORT.

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Asset Allocation

· Global stock markets have rebounded strongly since the later part of September 2011, as if the Eurozone crisis was completely resolved and will stop reemerging like it did numerous times. We however expect that potentially there could be more scare to come as increasingly the unity of the European Union falters. The PIIGS countries are taking turns in facing financial panic that saw borrowing cost soaring to uncharted territories. Hence, we believe the recent rally is more of a short-term relief rally and its sustainability is doubtful in our opinion.

· There is also a deep concern on the protracted weakness US economy at the back of our minds. The probability of continued money printing in our view has risen further. Gold price is telling us that. After consolidating for about a month following the sharp plunge from US$1900 to hit US$1,600, gold price regained strength and touched US$1,800. As in the past few years, this signals that the search for an alternative currency as a “store of value” is pretty much intact – further quantitative easing i.e. QE3 is likely to be revisited amid continued weak US economy.

· On the domestic front, the fact that the government recently announced a GDP growth forecast of 5.0-5.5% for 2011 – which is strong and optimistic considering the 1H2011 GDP growth was announced to be 4.4%. Hence, we sense that the government is signaling that the 3Q11 number will turn out to be surprisingly strong.

Equities (Mild Underweight) SELL

· The strong rebound in both the Dow Jones Industrial Index (DJIA) and FBMKLCI by about 11% from the recent low in less than two months has generally caught investors by surprise. In anticipation of a potential fallout in the Eurozone crisis in the next few months, we would trim our equity position by selling positions that we accumulated at lower levels.

· In addition to that, we would also actively switch our portfolios by trimming high-beta stocks and building up on low-beta stocks, so that our portfolios will suffer less in case of another downturn in the stock market.

· Having said that, we are only mildly underweight and are not extremely negative on the stock market. In fact, we plan position ourselves to building up equity position at lower levels and re-switch back our portfolios into high-beta stocks then.

Fixed Income Securities (Neutral) MAINTAIN

· Despite a recent move by several central banks to cut interest rate amid weak global economic outlook, we do not expect Bank Negara to react similarly. This is premised on Bank Negara’s relatively more optimistic view on GDP growth outlook.

· We also believe at the back of Bank Negara’s mind, inflationary pressure may come back to haunt when global demand stabilizes.

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· We remain focused on high-quality PDS and would shy away from government papers which are trading at very low yield. We have a reasonably short duration position to stay invested for our bond portfolios, with plans to buy more whenever yield pick-up opportunities arise.

· We have been actively bidding for new issuances and searching for trading opportunities. As growth concerns are taking over inflationary pressures in determining interest rate policy, we expect overnight policy rate (OPR) to be stable at current level until mid-2012.

Money Market (Neutral) MAINTAIN

· With bond yields especially Malaysian government securities (MGS) trading at very low levels and with the recent rally in the stock market that we are not convinced of, money market is where funds are moving to. Amid the flush liquidity in the banking system, yields of Commercial Papers (CPs) and short term bonds are also depressed.

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DISCLAIMER RINGGIT&SENSENOV2011

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General: This newsletter is for information purposes only and under no circumstances it is to be considered or intended as an offer to sell or a solicitation of an offer to buy any securities referred to herein. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or opined in this newsletter. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. The information contained herein has been obtained from sources believed to be reliable but some sources may not be independently verified and consequently no representation is made as to the accuracy or completeness of this newsletter by Mayban Investment Management Sdn Bhd and it should not be relied upon as such. Mayban Investment Management Sdn Bhd and/or its directors and employees may have interests in the securities referred to/mentioned herein. Any opinions or recommendations contained herein are subject to change at any time. Investors should also understand that statements regarding future prospects may not be realized. This newsletter may include forecasts, which are based on assumptions that are subject to uncertainties and contingencies. The word “anticipates”, “believe”, “intends”, “plans”, “expects”, “forecasts”, “predicts” and similar expressions are intended to identify such forecasts. Mayban Investment Management Sdn Bhd is of the opinion that, barring any unforeseen circumstances, the expectations reflected in such forward-looking statements are reasonable at this point of time. There can be no assurance that such expectations will prove to be correct. Any deviation from the expectations may have adverse effect on the financial and business performance of companies contained in this newsletter. Mayban Investment Management Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this newsletter. Some common terms abbreviated in this newsletter (where they appear): adex = Advertising expenditure NAV = Net asset value BV = Book value NTA = Net tangible asset CY = Calendar year P = Price capex = Capital expenditure PE/PER = Price earnings/PE ratio CAGR = Compounded annual growth rate PEG = PE ratio to growth DPS = Dividend per share p.a = Per annum DCF = Discounted cash flow PBT/PAT = Profit before tax/Profit after tax EV = Enterprise value q-o-q = Quarter-on-quarter EBIT = Earnings before interest, tax ROE = Return on equity EBITDA = EBIT, depreciation and amortisation ROA = Return on asset EPS = Earnings per share ROS = Return on shareholder’s funds FY/FYE = Financial year/Financial year end WACC = Weighted average cost of capital FCF = Free cash flow y-o-y = Year-on-year FV = Fair value ytd = Year to date m-o-m = Month-on-month This review prepared by Mayban Investment Management Sdn Bhd (MIMSB) is for the private circulation to clients of MIMSB only. The opinions, statements and information contained in this review are based on available data believed to be reliable. MIMSB does not warrant the accuracy of anything stated in the review in any manner whatsoever and nor any reliance upon such things by anyone shall give rise to any claim whatsoever against MIMSB in respect thereof.

Chief Executive Officer Nor’ Azamin bin Salleh

General: 03-22977888

Chief Commercial Officer Ahmad Rizlan Azman

Direct: 03-22977800

Acting Head of Investment Research Asrina Baizura Morni

Direct: 03-22977917

Mayban Investment Management Sdn. Bhd. (421779-M) (A member of Maybank Group) Level 13, Tower C, Dataran Maybank, No. 1, Jalan Maarof, 59000 Kuala Lumpur, Malaysia Tel: 603-2297 7888 Fax: 603-2297 7880