China By The Numbers - WikiLeaks · Asian Economic Monitor 3 June 2009 UBS 5 Inflation Q What the numbers say: Headline CPI inflation fell 1.5% y/y in April, led mainly by a drop

UBS Investment Research

Asian Economic Monitor

China By The Numbers (May 2009)

Global Economics Research

Asia

Hong Kong

3 June 2009

www.ubssecurities.com

Tao WangEconomist

[email protected]+8610-5832 8922

Harrison HuAssociate Economist

[email protected]+8610-5832 8847

Our guide to Chinese monthly data – what the numbers are, what they mean, and our outlook going forward:

Overview and summary . . . . . . . . . . . . . . . . 2

UBS activity indicators . . . . . . . . . . . . . . . . 3

Business indicators . . . . . . . . . . . . . . . . 4

Inflation . . . . . . . . . . . . . . . . 5

Money and credit . . . . . . . . . . . . . . . . 6

Base money and sterilization . . . . . . . . . . . . . . . . 7

Fixed asset investment . . . . . . . . . . . . . . . . 8

Industrial production . . . . . . . . . . . . . . . . 9

Industrial inventories . . . . . . . . . . . . . . . . 10

Industrial profits . . . . . . . . . . . . . . . . 11

Consumption and retail . . . . . . . . . . . . . . . . 13

Property and construction . . . . . . . . . . . . . . . . 14

Trade . . . . . . . . . . . . . . . . 15

FDI . . . . . . . . . . . . . . . . 17

FX reserves and capital flows . . . . . . . . . . . . . . . . 18

Exchange rate . . . . . . . . . . . . . . . . 19

Financial markets . . . . . . . . . . . . . . . . 20

Data tables . . . . . . . . . . . . . . . . 21

This report has been prepared by UBS Securities Co. Limited ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 26.

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mailto:[email protected]

Asian Economic Monitor 3 June 2009

UBS 2

Overview and summary Data from the past couple of months show that:

• Q1 GDP growth rebounded q/q, helped by the re-stocking in some sectors and stimulus-related investment demand. Exports continued to decline sharply in April, but orders increased slightly. New bank lending decelerated but we think overall bank lending is sufficient to support our estimated 7.5% GDP growth in 2009.

• With the strong push in fiscal stimulus and bank credit, fixed asset investment (FAI) in infrastructure and other government-related sectors picked up strongly, however private and housing investment remained weak.

• A rebound in property sales is consistent with our outlook for a recovery in housing investment later in 2009. Retail sales appear to be resilient, as consumption may be supported by falling food and commodity prices.

Signs of domestic demand-led recovery have become more apparent. Exports continued to fall in April, suggesting persistent weak external demand. While we do expect exports to stabilize in line with global credit conditions and demand in the coming months, we think export-related manufacturing investment will decline this year. Meanwhile, the government stimulus package, accompanied by strong credit growth, has led to increased fixed investment, production (some of it ahead of final orders) and a consistent rebound in PMI. A pick-up in housing and auto sales and construction activity has buoyed the market.

Rapid push on fiscal stimulus and bank lending. The funds related to the fiscal stimulus package have been disbursed quickly, but more importantly, credit expansion has far exceeded expectation. The highly expansionary monetary policy, coupled with a strong desire for growth and investment by local governments, helped to push new bank lending to RMB5.2 trillion in the first four months of the year. While market-based economic activity remains weak and investment demand likely dormant, we expect the significant increase in bank lending to translate to rapid fixed investment growth, albeit in government-related sectors and projects. We expect strong FAI growth to push Q2 growth above 14% q/q. The focus on infrastructure investment and other construction has led to an early recovery of metal production, even as final demand may start to recover only in the coming months. While the government has increased social spending on healthcare and transfer payment to the poor, we do not expect consumption growth to become the lead growth engine this year.

The upside and the risks of the recovery story. With continued strong bank lending growth and the expected recovery in domestic housing investment, GDP growth may have some upside from our forecast if global demand starts to rebound later this year. Nevertheless, at the micro level, we expect corporate earnings to fall in light of excess capacity and downward pressure on prices. While strong bank lending is necessary for domestic demand growth, we think the lower level of new bank lending in April is sufficient and more sustainable, although it may disappoint the market. CPI inflation is likely to be contained by weakness in commodity and food prices and by a decline in core manufacturing prices, but the excess liquidity in the system increases the risk of resource misallocation and an asset market bubble. A lack of market-based real demand could also lead to a “double dipping” in growth later on.

Outlook in the coming year. We expect the economic recovery in China to continue, supported not by a strong turnaround in the external situation, but by continued government stimulus and bank lending. The recent optimism about the economy may have also been accentuated by the flood of liquidity into the system, which we think is unsustainable. In the coming months, investors should look out for the following: (1) a tapering off in new bank lending, but sufficient liquidity to support an economic recovery and FAI in government-mandated sectors; (2) a rebound in housing construction activity in H209, which would provide comfort for sustained underlying loan growth outside of infrastructure; (3) both exports and imports starting to stabilize in the coming months, with trade surplus likely rising again; (4) China not actively diversifying its FX reserve holding and the RMB kept stable against the USD, but seeing increased trade friction with major trading partners.


UBS 3

UBS activity indicators

What the numbers say: The UBS Expenditure Index picked up in April as the fall in net exports and softening of retail sales growth were more than offset by a rise in fixed investment growth. The Physical Activity Index continued to rebound, led by the pick-up in industrial production and improvement in construction activity.

What they mean: China’s trade surplus declined in April 2009 as exports dropped more than imports. The rapid push of the substantial economic stimulus, as reflected by surging bank lending, has significantly boosted FAI spending, leading to a rebound in orders and production, and electricity production seems to have bottomed.

12-month outlook: We expect the Physical Activity Index to recover along with sequential economic growth. We think export growth will likely remain negative for a few months, bringing down with it export-related investments. Stimulus policies have already helped to halt the slide in economic activity, and we expect a more visible rebound in the summer when the substantial loan growth of the past few months translates to actual investment, resulting in rising orders and activity.

Chart 1: UBS Expenditure Index by source

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20%

2002 2003 2004 2005 2006 2007 2008 2009

Net exportsFixed investmentConsumption

Grow th rate (% y/y 3mma)

Source: CEIC, UBS estimates

Chart 2: UBS Physical Activity Index

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15%

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2002 2003 2004 2005 2006 2007 2008 2009

Physical activity index

Grow th rate (% y/y, 3mma)


Chart 3: Transport and energy

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10%

15%

20%

2002 2003 2004 2005 2006 2007 2008 2009

ElectricityTransportation



Chart 4: Industry and construction

-14%

-4%

6%

16%

26%

36%

46%

2002 2003 2004 2005 2006 2007 2008 2009

ConstructionIndustry



Our overall expenditure index rose as domestic expenditure rebounded on surging fixed investment The Physical Activity Index also rebounded …

... due to the rebound in production and construction, while transportation and power production seem to have also bottomed


UBS 4

Business indicators

What the numbers say: Chinese business surveys are often contradictory, but the latest data show signs of an early economic recovery. PMI indicators rose strongly from the lows in December 2008, largely on improving orders and raw material inventory, and the NBS leading index also picked up. The OECD leading index and entrepreneur expectations seem to have bottomed, and consumer confidence has stabilized.

What they mean: We generally do not follow business indicators closely, given the wide dispersion of results. The latest rebounds in PMI, OECD and NBS leading index, together with other positive signs including the surge in bank lending and FAI spending, as well as the pick-up in industrial production, can be seen as signs of a rebound in sequential growth momentum led by the stimulus policy.

12-month outlook: We expect the leading economic indicators to maintain their recent strength in the near term, and to rise further once it is clearer that the stimulus policy is bearing fruit.

Chart 1: PMI and Tankan indices

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2005 2006 2007 2008 2009

NBS PMI

CLSA PMI

Diffusion index level

Source: CEIC, Bloomberg, UBS estimates

Chart 2: Other business climate indices

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2003 2004 2005 2006 2007 2008 20095

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30

35

40

45Entrepreneur expectationBusiness climate5000 Enterprise index (RHS)

Index level Index level


Chart 3: Leading indicators

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108

2003 2004 2005 2006 2007 2008 200987

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NBS leading indexConsumer confidence indexOECD leading indicator (RHS)

Diffusion index level Diffusion index level

Source: CEIC, OECD, UBS estimates

Monthly leading indicators have rebounded or stabilized


UBS 5

Inflation

What the numbers say: Headline CPI inflation fell 1.5% y/y in April, led mainly by a drop in pork and fuel prices. Meanwhile, PPI inflation extended its decline to 6.6% in April.

What they mean: Food and fuel prices have been responsible for CPI fluctuations in the past few years, with core goods and services prices remaining relatively muted. The rise in headline CPI inflation between mid-2007 and mid-2008 was mainly driven by a surge in pork, poultry products, and vegetable prices. The fall in these prices is now the main reason for the decline in the CPI index, while the sell-off in energy and other commodities is driving down the PPI. Core manufacture prices have also softened.

12-month outlook: We expect headline inflation to average 0.5% y/y in 2009. We do not expect CPI inflation to flare up soon as the weakness in food and commodities prices is likely to dominate CPI movement in the coming months. Core manufacturing prices also face downward pressure from declining export demand and expected weaker growth in domestic consumption.

Chart 1: CPI by component

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15%

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25%

2002 2003 2004 2005 2006 2007 2008 2009

Overall CPI indexFood and fuel"Core" inf lation

Inflation rate (% y/y)


Chart 2: Upstream price indices

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2002 2003 2004 2005 2006 2007 2008 2009

Producer priceRaw materialsCorporate goodsImport price

Inflation rate (% y/y)


Chart 3: Export prices

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-4%

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2%

4%

6%

8%

10%

2002 2003 2004 2005 2006 2007 2008 2009

Overall ChinaChinese consumer goods

Hong Kong import price index (% y/y)


Both food price inflation and “core” dropped Upstream prices and export price indicators collapsed


UBS 6

Money and credit

What the numbers say: April new lending decelerated to RMB592 billion from RMB1.9 trillion in March. The growth in overall bank lending remained high at 30% y/y, while M2 growth increased slightly, to 26% y/y in April.

What they mean: New bank lending reached record highs in the past few months on a seasonally adjusted basis. Almost 30% of the new bank credit was short-term discount bills, which largely reflect the abundance of bank liquidity rather than true lending. The surge in underlying bank lending was mainly because of three factors: the abolishing of the credit quota, the rapid push of fiscal stimulus and matching bank loans, and easier approval of local governments’ investment projects. The natural tapering off in bank lending does not mean that growth will slow, and we continue to think that there will be enough liquidity to support an economic recovery in 2009.

12-month outlook: Increasing bank lending is important in sustaining domestic demand in 2009. However, we think the rapid pace of bank lending in Q109 was neither sustainable nor necessary. As we expected, the pace of loan growth has started to taper off, as normal bank lending and stimulus-related lending are front-loaded, and bill financing is shrinking as banks find more opportunities to extend higher-yielding loans. We think runaway loan growth would significantly increase the risk of resource misallocation and an asset price bubble; we estimate new bank lending in 2009 to be RMB7-8 trillion.

Chart 1: Money and credit growth

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30%

35%

2002 2003 2004 2005 2006 2007 2008 2009

Broad money M2Bank lending

Grow th rate (% y/y)


Chart 2: Sequential growth

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40%

2002 2003 2004 2005 2006 2007 2008 2009

Broad money M2Bank lending

Grow th rate (% q/q)


Chart 3: Monthly new lending

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2002 2003 2004 2005 2006 2007 2008 20090

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100

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200

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300

350

400

450

500Nominal new loans (sa, 3mma)New loans/GDP (RHS)

New monthly f low lending (RMB bn) Index


Both credit and broad money growth surged After surging since November 08, new bank lending remains at a very high level in April


UBS 7

Base money and sterilization

What the numbers say: Base money growth stabilized in March following the earlier rapid growth. FX inflows slowed while the PBC resumed its sterilization operations.

What they mean: The PBC has been flooding the market with money supply to ensure adequate liquidity for banks to increase lending. Banks’ average excess reserve ratio dropped in March after a period of explosive lending growth.

12-month outlook: With liquidity-generating FX inflows persisting (albeit at a slower pace) and monetary policy remaining expansionary, we see base money growth to remain at current pace. However, as liquidity is in no longer in short supply and bank lending is rising sharply, the PBC may want to stabilize the pace of base money growth.

Chart 1: Base money growth (y/y)

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45%

2002 2003 2004 2005 2006 2007 2008 2009

PBC base money (RR adjusted)Excluding cash



Chart 3: Bank excess reserve position

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6%

8%

10%

12%

2002 2003 2004 2005 2006 2007 2008 2009

PBC reserves less required reserves (% of deposits)


Chart 2: Base money growth (q/q)

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5%

15%

25%

35%

45%

55%

65%

2002 2003 2004 2005 2006 2007 2008 2009

PBC base money (RR adjusted)Excluding cash

Grow th rate (% q/q 3mma, sa, annualized)


Chart 4: Sterilization operations

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0%

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80%

2002 2003 2004 2005 2006 2007 2008 2009

Domestic contributionFX reserve contributionTotal reserve money grow th (RR adjusted)


Sterilization


Chart 5: Sterilization by component

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2002 2003 2004 2005 2006 2007 2008 2009

OtherBondsReserve requirements

12-month cumulative sterilization (RMB bn)


Base money growth increased in recent months… And commercial bank excess liquidity ratio dropped in March as banks quickly convert excess reserve into loans

The PBC has reduced sterilization with reserves requirements


UBS 8

Fixed asset investment

What the numbers say: The growth in urban fixed asset investment accelerated to 34% y/y in April from 30% y/y in March. On a real GDP-consistent basis (i.e., excluding secondary asset transactions), FAI growth also rose significantly.

What they mean: FAI strength in recent months has mainly came from government investments and SOEs investing in infrastructure projects, while investment by foreign-funded companies and investments related to exports continued to drop sharply, consistent with falling external demand. Keep in mind there is a large and varying gap between the actual pace of investment activity and the headline monthly growth figures due to the volatile non-capital “asset trading” transactions such as land purchases, and mergers and acquisitions; the fluctuations in our adjusted investment series better reflect the turns in the broader economy. However, this adjustment has become even more difficult in recent months given the large movements in both input and asset prices.

12-month outlook: The rapid push of fiscal stimulus and substantial loan growth are being reflected in faster growth in fixed asset investment. While we expect investment in the market-based manufacturing sectors that face weak demand (especially those related to exports) to decline, government-influenced investment will continue to rise sharply, pushing growth in overall real fixed capital formation to above 11% y/y in 2009E.

Chart 1: Fixed asset investment growth

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35%

2002 2003 2004 2005 2006 2007 2008 2009

Nominal f ixed investment (3mma)Real adjusted investment (3mma)



Chart 2: Real investment vs. physical index

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30%

2002 2003 2004 2005 2006 2007 2008 2009-5%

0%

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10%

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20%Physical activity index (RHS)Real adjusted investment (3mma)

Grow th rate (% /y/y) Grow th rate (% y/y)


Chart 3: Real investment vs. financial flows

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2002 2003 2004 2005 2006 2007 2008 2009-20%

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80%Financing proxy (RHS)Real adjusted investment (3mma)

Grow th rate (% /y/y) Grow th rate (% y/y)


Both nominal and adjusted real investment picked up The adjusted real series also correspond more closely to the movements in our Physical Activity index and in financial flows


UBS 9

Industrial value-added and sales

What the numbers say: Growth of both real industrial sales and industrial value-added slowed somewhat in April in y/y terms, but sequential q/q growth momentum continued to rebound.

What they mean: The most volatile determinants of industrial production trends are construction spending and exports. In the past couple of months, the decline in electricity consumption has called into question the reliability of industrial value added statistics, but we believe the divergence in the two statistics could, in part, be explained by: (i) a decline or continued weakness in the production of some energy-intensive industries; and (ii) bigger production cuts or more shutdowns of less energy-efficient plants within those industries. In the mean time, the VAI of some light manufacturing such as food processing, medical products, electric machinery, and plastic products grew strongly.

12-month outlook: We expect industrial production to rebound in the course of 2009, reflecting, in part, the government’s policy stimulus, the stabilization of exports, and the rebound in housing-related construction spending.

Chart 1: Industrial sales growth

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2002 2003 2004 2005 2006 2007 2008 2009

Nominal industrial salesReal industrial sales



Chart 2: Industrial value-added growth

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2002 2003 2004 2005 2006 2007 2008 2009

Industrial value added

Real grow th rate (% y/y 3mma)


Chart 3: Light vs. heavy industry

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2002 2003 2004 2005 2006 2007 2008 2009

Overall value-addedLight industryHeavy industry

Real grow th rate (% y/y 3mma)


Industrial indicators show signs of recovery


UBS 10

Industrial inventories

What the numbers say: Real industrial inventory stocks, as a share of industrial sales, stopped rising between December 2008 and February 2009, and the pace of new inventory flows fell sharply. However, steel inventory at large and medium mills and iron ore inventory at ports have risen rapidly in recent months.

What they mean: In late 2008, as construction spending and materials demand fell, production and import cuts led to aggressive de-stocking in some sectors, and a slowdown in inventory build-up at the macro level even in the face of falling demand. At the macro level, aggregate stocks are still relatively well-behaved. Following the announcement of the stimulus package, production of steel and some other construction material recovered strongly, prior to final demand picking up, which has led to rising finished goods inventory in some sectors.

12-month outlook: We see a possible upturn in light manufacturing industrial stocks in H109 as the economy slows, but production cuts and rebounding demand in the heavy industry sector should help limit the overall stock build-up.

Chart 1: Inventory/sales ratio

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2002 2003 2004 2005 2006 2007 2008 2009

Inventory/sales ratio index


Chart 2: Flow inventory/sales ratio

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2002 2003 2004 2005 2006 2007 2008 2009

6-month inventory grow th as a share of monthly sales (%)


Chart 3: Contribution to flow ratio

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6%

2002 2003 2004 2005 2006 2007 2008 2009

Machinery/EquipmentChemical/MetalsLight industryMining

Contribution to f low inventory/sales ratio (pp)


The aggregate industrial inventory/sales ratio has stopped rising On a flow basis, the pace of inventory build-up has dropped sharply in recent months


UBS 11

Industrial profits

What the numbers say: Industrial earnings fell 37% y/y in the first two months of 2009. Leading the fall were profits in the mining and metals sectors, dropping more than 65% y/y, while light industry profits also declined. In March, data from 22 (of 31) regions suggests that industrial earnings have stabilized, as we had expected.

What they mean: The sharp decline in commodity prices resulted in the fall in profits in resource-related sectors, but falling oil and food prices have been positive for petrochemical and food processing sector margins. Weak export and domestic demand led to the drop in margins of light manufacturing.

12-month outlook: We expect a further squeeze in light industry margins on declining export demand and weak overall sales. Earnings in heavy industrial sectors may have bottomed as demand starts to pick up from stimulus-related infrastructure construction and later in the year a recovery in housing construction, and as commodity prices stabilize at a lower level than in the previous year. However, overcapacity in some industries, such as steel, will continue to weigh on earnings prospects, in our view, forestalling a meaningful recovery.

Chart 2: Industrial profit margins

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2002 2003 2004 2005 2006 2007 2008 2009

Overall industry ex Mining(seasonally adjusted)

Profit margin (%)


Chart 1: Industrial earnings growth

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120%

2002 2003 2004 2005 2006 2007 2008 2009

Overall ex MiningHeavy Light

Earnings grow th (% y/y 3mma)


Chart 3: Heavy industry

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8%

2002 2003 2004 2005 2006 2007 2008 2009

Heavy industry(seasonally adjusted)

Profit margin (%)


Chart 4: Light industry

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7%

2002 2003 2004 2005 2006 2007 2008 2009

Light industry(seasonally adjusted)

Profit margin (%)


Industrial earnings fell sharply, but margins stabilized in Jan-Feb 09

Heavy industry margins rebounded, led by chemical sector


UBS 12

Industrial profits, continued

Chart 7: Textile

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2002 2003 2004 2005 2006 2007 2008 2009

Textile(seasonally adjusted)

Profit margin (%)


Chart 5: Mining

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2002 2003 2004 2005 2006 2007 2008 2009

Mining(seasonally adjusted)

Profit margin (%)


Chart 8: Other light manufacturing

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2002 2003 2004 2005 2006 2007 2008 2009

Other light manufacturing(seasonally adjusted)

Profit margin (%)


Chart 11: Machinery and equipment

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2002 2003 2004 2005 2006 2007 2008 2009

Machinery and equipment(seasonally adjusted)

Profit margin (%)


Chart 12: Electronics

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2002 2003 2004 2005 2006 2007 2008 2009

Electronics(seasonally adjusted)

Profit margin (%)


Chart 9: Chemical

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2002 2003 2004 2005 2006 2007 2008 2009

Chemical(seasonally adjusted)

Profit margin (%)


Chart 10: Metals and Materials

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2002 2003 2004 2005 2006 2007 2008 2009

Metals and Materials(seasonally adjusted)

Profit margin (%)


Chart 6: Food processing

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2002 2003 2004 2005 2006 2007 2008 2009

Food processing(seasonally adjusted)

Profit margin (%)



UBS 13

Consumption and retail sales

What the numbers say: The growth in retail sales fell in April, while real sales growth stayed flat due to falling prices.

What they mean: Growth in real urban income and expenditure has rebounded since H208 on rapid disinflation, especially as food prices has fallen. Growth in rural income, on the other hand, has flattened, and rural expenditure growth has started to slow. China’s retail sales data does not cover consumption of services, but does include some sales to firms and government agencies. The expenditure survey data is difficult to interpret.

12-month outlook: We expect urban expenditure growth to slow modestly this year but remain resilient as disinflation, the reversal of negative wealth effect, and government stimulus will largely offset the rise in unemployment and slower wage growth. We expect rural income and expenditure growth to be affected more by significant jobs losses among migrant workers. Higher grain procurement prices, increased fiscal spending in rural areas, and recent rural reform should help to cushion the negative impact.

Chart 1: Real retail sales y/y

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2002 2003 2004 2005 2006 2007 2008 2009

Nominal

Real

Retail sales grow th (% y/y, 3mma)


Chart 2: Urban income and expenditure

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2002 2003 2004 2005 2006 2007 2008 2009

Urban incomeUrban expenditure

Real grow th rate (% y/y, sa, 12mma)


Chart 3: Rural income and expenditure

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2002 2003 2004 2005 2006 2007 2008 2009

Rural incomeRural expenditure

Real grow th rate (% y/y, sa, 12mma)


Retail sales growth has slowed Urban income growth rebounded while rural income growth stagnated


UBS 14

Property and construction

What the numbers say: Our construction activity index continued to rebound in April. Of its components, completion, sales, and floor space under construction, all rose strongly, while new construction and land development continued to drop sharply.

What they mean: The rebound in the construction index is a positive sign. While the strong pick-up in sales volume supports our view that fundamental property demand remains strong outside the high-end sector, the surge in property completion may largely reflect the strong housing starts 1.5-2 years ago. The weaknesses in new construction and land purchase, which can partially explain the lacklustre demand for construction-related materials, reflect (i) continued weak sentiment and outlook among developers, and (ii) the construction of mass market property and low-end public housing has not yet come in full force.

12-month outlook: We expect mass-market and low-end housing construction to pick up strongly in the coming months, which in Q309 should more than offset the continued decline in high-end property new construction. We think the recent government decision to lower the own-capital requirement for commodity residential construction will help stimulate property investment.

Chart 1: Real construction index

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2002 2003 2004 2005 2006 2007 2008 2009

Real construction activity grow th (% y/y)


Chart 3: Property and land prices

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2002 2003 2004 2005 2006 2007 2008 2009

Property pricesLand prices



Chart 2: Construction by component

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2002 2003 2004 2005 2006 2007 2008 2009

New /currentCompleted/soldLand sales/development

Construction and f loorspace indicators (grow th rate, % y/y)


Chart 4: Construction vs. steel demand

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2002 2003 2004 2005 2006 2007 2008 2009

Domestic steel consumptionOverall construction indexFloorspace started / under construction

Grow th rate(% y/y)


Chart 5: Property lending

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2005 2006 2007 2008 20098%

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33%ST Loans to ConstructionLoans to Real Estate Developers (RHS)

Grow th rate (% y/y) Grow th rate (% y/y)


Construction activity rebounded, as sales, construction and completion rose Property prices have stabilized

The construction index matches domestic steel and materials consumption swings well Loans to developers and construction rose strongly


UBS 15

Trade

What the numbers say: Imports dropped 23% y/y in April while the fall in exports steepened to 22.6% y/y from 17% y/y in March. Real imports grew in April from the low levels of early 2009, but exports continued its sequential decline.

What they mean: The sharp drop in underlying real exports is consistent with continued economic contraction in China’s major markets. The stabilization in real imports reflects the strong pick-up in some commodity imports related to domestic infrastructure investment demand, as well as the rise in processing inputs imports due to the tentative recovery in processing exports orders. However, the surge in some imports, such as iron ore, also reflected the price competitiveness of the imports relative to domestically produced products, not just overall demand.

12-month outlook: We expect both exports and imports to stabilize in the coming months as the extreme uncertainties that froze orders earlier on fade. Towards the end of 2009, we expect exports to recover on rebounding consumer demand, even though from a lower level. On imports, we expect volume growth to continue. Nevertheless, we expect the trade surplus to increase this year due to a sizable terms of trade gain.

Chart 1: Export growth

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2002 2003 2004 2005 2006 2007 2008 2009

NominalReal

Export grow th (% y/y, 3mma)


Chart 2: Import growth

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2002 2003 2004 2005 2006 2007 2008 2009

NominalReal

Import grow th (% y/y, 3mma)


Chart 3: Sequential trends

-55%

-35%

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2002 2003 2004 2005 2006 2007 2008 2009

Exports (real)Imports (real)

Sequential q/q grow th rate (% annualized, 3mma)


Chart 4: Trade balance

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2002 2003 2004 2005 2006 2007 2008 2009

HeadlineSeasonally adjusted

Monthly trade balance (US$ bn)


Chart 5: Change in balance by category

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2002 2003 2004 2005 2006 2007 2008 2009

Primary ChemicalMetals MachineryElectronics Light

Contribution to change in trade balance (US$ bn, sa, 3mma)


Trade surplus narrowed in April due to the steeper fall in exports Most of the action is heavy industry and primary materials

Both exports and imports continued to fall in April


UBS 16

Trade, continued

Chart 1: Trade balance by sector

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2002 2003 2004 2005 2006 2007 2008 2009

Primary ChemicalMetals MachineryElectronics Light

Monthly trade balance (US$ bn, sa, 3mma)


Chart 2: Trade balance by region

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2002 2003 2004 2005 2006 2007 2008 2009

EuropeNorth AmericaJapanOther AsiaOther

Monthly trade balance (US$ bn, sa, 3mma)


Chart 5: Real export growth by sector (i)

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2002 2003 2004 2005 2006 2007 2008 2009

Primary resourcesChemicalsMetals/materials

Real export grow th rate (% y/y 3mma)


Chart 6: Real export growth by sector (ii)

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2002 2003 2004 2005 2006 2007 2008 2009

ElectronicsMachinery/equipmentLight manufactures

Real export grow th rate (% y/y 3mma)


Chart 3: Real import growth by sector (i)

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2002 2003 2004 2005 2006 2007 2008 2009

AgricultureMineralsFuelsChemicals

Real import grow th rate (% y/y 3mma)


Chart 4: Real import growth by sector (ii)

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2002 2003 2004 2005 2006 2007 2008 2009

Metals/materialsElectronicsMachinery/equipmentLight manufactures

Real import grow th rate (% y/y 3mma)


Commodity imports have risen significantly


UBS 17

FDI

What the numbers say: FDI inflows stabilized in H108 after surging in 2007, but have fallen since H208. At the same time, direct investment abroad more than doubled in 2008, albeit still smaller than inward FDI.

What they mean: FDI inflows have fallen in recent months as the expectation of RMB appreciation have faded and the financial crisis abroad has deepened. FDI flows have not been a significant contributor to the Chinese macroeconomic cycle. The significant growth in outward investment, mainly minerals mining and finance, reflects China’s growing interest in overseas raw material resources, as well as Chinese enterprises’ increasing participation in global competition.

12-month outlook: We expect smaller, but still sizable FDI inflows in 2009, with a continued rise in Chinese investment abroad.

Chart 1: FDI flows

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1%

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2002 2003 2004 2005 2006 2007 2008

Net inw ard FDI

Net outw ard FDI

Share of GDP (%)


FDI has stabilized


UBS 18

FX reserves and capital flows

What the numbers say: FX reserve growth slowed significantly in Q408 and rebounded somewhat in Q109. The slower accumulation of FX reserves contrasted with the continued large trade surplus in recent months (except in February).

What they mean: The smaller change in Q408 and Q109 FX reserves against the large trade surplus and persistent FDI inflows suggests a net other capital outflow in these months. However, the reversal in trade financing movements, the new FX regulation, and the possible losses in reserves could have clouded the true picture. We think the strictly defined “hot” money inflows into China had been relatively small, and the cushion from continued trade surplus and large FX reserves is big enough even if net capital flows turn negative.

12-month outlook: Our baseline forecast is for continued accumulation of underlying FX reserves, by as much as US$300 billion in 2009.

Chart 1: FX reserve accumulation

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2002 2003 2004 2005 2006 2007 2008 2009

HeadlineValuation and Seasonally Adjusted, 3mma

Monthly FX reserve grow th (US$ bn)


Chart 2: Reserve growth by source

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2002 2003 2004 2005 2006 2007 2008 2009

FX reserve accumulation (Adjusted)"Basic" balance of paymentsOther capital f low s (Adjusted)

Share of GDP (%, sa 3mma)


Chart 3: “Hot” capital flows

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0%

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2002 2003 2004 2005 2006 2007 2008 2009

From Financial system FX dataFrom PBC FX reserve data (Adjusted)

Implied "other" capital flow s (% of GDP)


After adjusting for valuation effects, FX reserve accumulation slowed since Q4 2008

Other capital flows turned negative, but could be clouded by other factors


UBS 19

Exchange rate

What the numbers say: Except for falling against the USD for a few days in early December, the RMB has remained stable since July, after appreciating at an annual rate of more than 15% in Q108. Meanwhile, the USD has fluctuated wildly against the majors.

What they mean: In recent months, the concerns about slowing export demand and talk of an “expanded role of the RMB” have dominated the discussions about the exchange rate, with contradictory implications. The RMB has appreciated by more than 10% against the trade basket between July and end-November 2008, but has since seen volatile movements as the USD fluctuated wildly against other major currencies.

12-month outlook: We expect the RMB/USD to remain roughly unchanged in the coming year against a wide range of USD/EUR movements. While the policy priorities of supporting export growth leave no room for further RMB appreciation, China might face strong international criticism and protectionist reaction if it depreciated the currency while still having a large trade surplus in a global recession. Moreover, the RMB does not face any depreciation pressure from economic fundamentals from either the trade account or capital account.

Chart 1: RMB against the “basket”

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Jul-05 Mar-06 Nov-06 Jul-07 Mar-08 Nov-08

Implied trade-w eighted basketActual

RMB exchange rate against US dollar


Chart 3: NDF RMB expectations

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3-month forw ard 12-month forw ard

NDF forw ard premium against the dollar


Chart 2: Recent RMB movements

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One-monthOne-year

Bilateral change (annualized, % y/y)


Volatile against the basket Remains stagnant against the USD The implied depreciation in the NDF market has moderated


UBS 20

Financial markets

What the numbers say: After falling sharply in Q408, short-term interest rates have remained stable, while long-term bond yields have picked up somewhat. Meanwhile, the domestic A-share market has rebounded strongly, rising by more than 60% from its trough and 45% ytd, outperforming most other markets in the world.

What they mean: Investors’ risk tolerance on equity investment has eased. We believe investors are prepared for poor economic data and earnings results, while any positive news (eg, rising QoQ earnings, higher-than-expected bank loans, a rebound in the PMI, and a property market recovery) are likely to be exaggerated in H109. The rise of long-term bond yields in recent months probably reflects improving growth prospects and market concerns about inflation over the medium to long term.

12-month outlook: We expect much of the recent A-share market gains to be sustained, although a deepening global recession, continued weak headline growth and production numbers, fall in earnings, and the upcoming resumption of IPO activities, might weigh on the equity market for the next few months. Investors are now focusing on both QoQ earnings growth as well as liquidity flows from the banking system. We expect short-term and long-term interest rates to remain low given the extremely expansionary monetary policy.

Chart 1: Money market interest rates

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2003 2004 2005 2006 2007 2008 2009

Average 7-day interbank rateAverage long bond yieldPBC 1-year rate

Percent per annum


Chart 2: Shanghai composite index

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6900

2003 2004 2005 2006 2007 2008 2009

Shanghai composite Index


Short rates have come down sharply Will the rebound continue?


UBS 21

Macroeconomic data tables Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09

Physical Activity Index (SARS-adjusted) % y/y 7.7 6.7 5.4 4.7 2.9 0.8 -1.0 -1.4 -0.6 1.4 3.1 Industrial production % y/y 10.0 9.0 7.5 5.6 3.4 1.5 0.4 1.7 3.7 8.9 11.8 Energy usage % y/y 11.4 10.1 7.0 5.9 1.9 -2.1 -5.6 -6.1 -5.2 -4.1 -4.0 Transportation volume % y/y 7.0 5.6 5.7 7.2 8.0 5.3 5.0 2.3 2.2 -1.4 0.8 Construction % y/y 2.7 2.0 1.0 -1.0 -5.6 -10.7 -13.7 -11.5 -7.6 -1.6 1.3 Agriculture % y/y 3.6 3.8 4.1 4.4 4.7 5.0 5.3 4.8 4.2 3.7 3.7

CPI (1994=100) Index s.a. 154.5 154.7 154.2 154.2 154.2 153.2 152.3 151.8 152.3 151.9 152.1 Food Index s.a. 183.8 184.3 182.6 182.6 182.9 181.6 180.2 180.0 181.3 180.7 181.5 Goods Index s.a. 104.7 104.8 104.9 104.8 104.8 104.6 104.3 103.9 103.9 103.9 103.9 Services Index s.a. 183.0 183.2 183.1 183.2 182.4 180.8 179.2 178.9 179.0 178.6 178.1

CPI % y/y 7.1 6.3 4.9 4.6 4.0 2.4 1.2 1.0 -1.6 -1.2 -1.5 Food % y/y 17.3 14.4 10.3 9.7 8.5 5.9 4.2 4.2 -1.9 -0.7 -1.3 Goods % y/y 0.7 1.0 1.0 0.9 0.9 0.4 0.0 -0.5 -0.7 -0.8 -0.8 Services % y/y 3.4 3.4 3.2 3.1 2.2 0.4 -1.0 -1.0 -2.0 -2.1 -2.5

Producer price index (1996=100) Index s.a. 119.6 120.6 120.8 120.4 118.8 116.1 114.2 112.6 112.8 111.9 111.6Raw materials price index (1996=100) Index s.a. 148.9 151.0 151.3 150.2 148.3 143.8 139.3 135.5 135.9 134.3 134.2Corporate goods price index (1994=100) Index s.a. 145.2 145.8 145.3 144.3 142.0 138.7 136.6 135.5 135.8 135.2 134.9UBS import price index (1996=100) Index s.a. 158.5 161.6 161.0 160.1 156.1 149.1 140.3 134.9 135.4 134.3 133.5

Producer price index (1996=100) % y/y 8.8 10.0 10.1 9.1 6.6 2.0 -1.1 -3.4 -4.5 -6.0 -6.6Raw materials price index (1996=100) % y/y 13.5 15.4 15.3 14.0 11.0 4.7 -1.3 -5.3 -7.1 -8.9 -9.6Corporate goods price index (1994=100) % y/y 9.5 9.4 8.2 7.0 4.0 -0.4 -3.1 -4.2 -6.0 -6.6 -7.1UBS import price index (1996=100) % y/y 18.6 20.7 20.8 19.8 12.7 3.7 -6.0 -12.4 -14.2 -14.0 -14.8

M0 RMB bn (s.a.) 3177 3217 3224 3206 3267 3269 3359 3400 3432 3406 3443M1 RMB bn (s.a.) 15467 15646 15689 15684 15860 15828 16231 16343 16544 17494 17777M2 RMB bn (s.a.) 44001 44550 45034 45580 46213 46806 48095 49486 50194 52262 53220Loans RMB bn (s.a.) 29930 30449 30855 31372 31917 32565 33433 34457 34948 36571 37078Deposits RMB bn (s.a.) 43348 44149 44757 45357 46394 46815 47569 49180 49919 51573 52515

M0 % y/y 12.3 12.3 10.9 9.3 10.6 9.0 12.7 12.0 8.3 10.9 11.3M1 % y/y 14.2 14.0 11.5 9.4 8.9 6.8 9.1 6.7 10.9 17.0 17.5M2 % y/y 17.4 16.4 16.0 15.3 15.0 14.8 17.8 18.8 20.5 25.5 26.0Loans % y/y 14.1 14.6 14.3 14.5 14.6 16.0 18.8 21.3 24.2 29.8 29.7Deposits % y/y 18.8 19.6 19.3 18.8 21.1 19.9 19.7 23.0 23.0 25.7 26.2

Reserve money RMB bn (s.a.) 11575 11879 12068 11956 12122 12230 12260 12190 12448 12649Reserve money (adjusted) y/y% 14.9 15.1 16.3 16.8 18.0 18.4 25.2 27.5 28.6 27.1Banks' excess reserve ratio % 2.4 2.5 2.6 2.4 2.6 3.1 5.9 3.0 3.5 2.6

Nominal fixed asset investment (monthly) % y/y 26.7 28.1 29.0 28.7 27.0 25.6 23.2 23.9 24.9 27.7 30.2Real investment (GDP-consistent basis) % y/y 6.8 7.2 7.5 7.3 6.4 6.7 6.7 9.5 12.1 16.4 20.5

Industrial sales RMB bn 4647 4267 4238 4386 4058 3909 4189 3049 3195 4028 4083Real industrial sales % y/y 18.6 18.1 16.2 14.2 10.5 6.8 7.4 10.1 13.7 9.2 9.1Real industrial value added % y/y 16.0 14.7 12.8 11.4 8.2 5.4 5.7 3.8 3.8 8.3 7.3

Industrial inventories RMB bn 1935 2001 2067 2102 2136 2170 2010 1850 1850Inventory/sales ratio % 45.5 45.9 46.6 47.2 48.0 48.0 47.7 47.2 47.1

Industrial profits (ytd) RMB bn 1352 1610 1868 2048 2227 2407 2785 219 219Profit margin % (s.a.) 5.6 5.6 5.5 4.6 4.4 4.3 4.2 4.0 4.0

Retail sales RMB bn 864 863 877 945 1008 979 1073 1076 932 932 934Real retail sales (adjusted) % y/y 13.6 14.6 16.3 16.6 16.2 17.2 16.8 17.0 13.4 16.2 16.8

Urban per capita income RMB (s.a.) 1830.6 1841.2 1866.7 1886.5 1941.9 1965.2 1987.7 1895.4 1917.1 1939.8Urban per capita expenditure RMB (s.a.) 1674 1639 1656 1670 1704 1722 1738 1686 1700 1717Rural cash income RMB (s.a.) 1503 1519 1536 1554 1390 1404 1417 1498 1517 1536Rural cash expenditure RMB (s.a.) 1352 1322 1335 1348 1347 1362 1377 1367 1380 1393

Composite construction index % y/y 2.3 2.4 -1.4 -6.6 -11.2 -14.9 -13.9 -7.8 -0.8 2.4 4.2Property price index % y/y 7.6 6.9 5.1 3.4 2.4 1.1 -0.1 -0.5 -0.8 -1.1 -1.1Land price index % y/y 9.2 8.5 7.0 5.6 4.9 3.8 2.8 2.3 2.0 1.5

Exports USD bn 121.2 136.7 134.9 136.3 128.2 114.9 111.0 90.4 64.9 90.3 91.9Imports USD bn 100.4 111.4 105.9 106.8 92.7 74.7 72.1 51.4 60.1 71.7 78.8Trade balance USD bn 20.7 25.2 29.0 29.5 35.4 40.2 39.0 39.0 4.8 18.5 13.1

Real export growth % y/y 9.5 17.0 10.2 9.7 7.7 -9.9 -8.2 -19.3 -25.3 -14.5 -18.8Real import growth % y/y 12.4 12.4 2.3 0.5 -2.2 -26.9 -24.0 -40.1 -14.8 -13.5 -10.2

FDI utilized (ytd) USD bn 52.4 60.7 67.7 74.4 81.1 86.4 108.3 7.5 13.4 21.8 27.7FDI utilized (monthly) USD bn (s.a.) 8.2 9.1 8.2 7.7 7.0 5.7 9.4 6.9 6.9 7.4 6.8

FX reserves USD bn 1808.8 1845.2 1884.2 1905.6 1879.7 1884.7 1946.0 1913.5 1912.1 1953.7Monthly FX intervention (adjusted) USD bn (s.a.) 46.0 57.3 62.7 46.2 34.2 10.7 -19.2 16.6 60.7 10.7

Current account (estimate) % GDP 9.2 9.4 9.7 10.3 10.5 10.9 11.3 11.0 10.5 10.1FDI % GDP 2.5 2.5 2.5 2.4 2.2 1.9 2.0 2.0 2.1 1.9"Other" capital (residual) % GDP 9.0 4.0 3.7 3.0 0.7 -4.5 -10.9 -12.3 -7.3 -4.1

RMB 3-month NDF premium (implied) 1.1% 1.2% 0.5% -0.1% -1.2% -1.1% -1.8% -1.1% -0.5% -0.2% 0.2%RMB 12-month NDF premium (implied) 5.7% 5.3% 3.1% 0.5% -2.4% -2.1% -3.6% -2.9% -1.9% -0.9% 1.0%7-day interbank market rate % per annum 3.39 3.09 3.26 3.17 3.17 2.65 1.53 0.97 0.98 0.98 0.97Average long bond yield % per annum 4.27 4.50 4.44 3.90 3.28 2.97 2.71 2.70 2.98 2.94 3.11Shanghai composite index (month average) Index 3012 2802 2496 2172 1981 1876 1951 1939 2205 2228 2460Source: UBS


UBS 22

Key Economic Indicators and Forecasts Economic Indicators Country China H.K. India7 Indo. Japan Korea Malay.Nominal GDP (2007, USDbn) 3382.6 207.1 1076.7 432.3 4379.0 1049.6 186.1Per Capita GDP (2007, USD) 2,560 29,781 946 1,916 34,647 21,661 6,849Per Capita GDP (2007 USD PPP) 5,540 42,010 2,740 3,570 33,548 26,570 13,220Real GDP Growth: 2008E 9.0% 2.4% 6.7% 6.1% -0.7% 2.2% 4.6%

2009E 7.5% -3.4% 6.2% 3.3% -6.6% -3.4% -4.5%2010E 7.5% 1.8% 8.0% 4.7% 1.8% 3.0% 2.7%

2003-07 (Avg) 11.0% 6.4% 8.9% 5.5% 2.1% 4.3% 6.0%CPI (Yearly average): 2008E 5.9% 4.3% 9.1% 9.8% 1.4% 4.7% 5.4%

2009E 0.5% 0.7% 6.2% 6.6% -1.1% 1.7% 0.5%2010E 2.0% 0.5% 6.0% 6.2% -0.4% 2.3% 1.1%

2003-07 (Avg) 2.6% 0.4% 5.0% 8.6% -0.1% 2.9% 2.2%Exports (%): 2008E 17.2% 5.4% 3.9% 19.9% 25.8% 13.6% 13.1%

2009E -6.0% -8.9% -0.1% -20.0% -38.2% -17.0% -23.5%2010E 5.0% 2.7% 23.8% 10.0% 6.4% 8.0% 5.8%

2003-07 (Avg) 30.3% 11.5% 24.9% 14.9% 11.4% 18.2% 13.4%Imports (%): 2008E 18.5% 5.7% 14.2% 40.5% 41.1% 22.0% 6.6%

2009E -12.0% -7.5% -11.5% -24.0% -20.9% -24.0% -19.3%2010E 7.5% 2.1% 25.3% 11.0% 6.5% 10.0% 5.0%

2003-07 (Avg) 26.8% 12.1% 32.0% 19.8% 13.7% 18.6% 13.2%Trade balance (USDbn): 2008E 295.5 -25.9 -107.7 32.4 44.3 -13.3 42.6

2009E 345.7 -28.9 -76.3 30.1 -111.6 19.5 27.12010E 338.1 -27.5 -98.1 32.3 -119.0 14.4 29.8

2003-07 (Avg) 119.9 -14.5 -44.1 32.2 102.7 19.7 25.8Current A/C (USDbn):1 2008E 426.1 30.6 -30.4 0.6 178.8 -6.4 38.7

2009E 455.0 18.0 -10.1 2.0 8.8 10.0 19.22010E 450.2 22.3 -17.3 4.0 17.9 5.0 24.2

2003-07 (Avg) 180.1 20.2 -5.0 6.3 170.8 13.3 21.3Current A/C % GDP 2008E 9.8% 14.2% -2.8% 0.1% 3.5% -0.7% 17.4%

2009E 9.5% 8.9% -0.9% 0.4% 0.2% 1.3% 10.4%2010E 8.5% 11.0% -1.3% 0.6% 0.3% 0.7% 12.4%

2003-07 (Avg) 6.8% 11.1% -0.4% 1.9% 3.8% 1.7% 14.7%Fiscal Balance % GDP (2007)2 0.6% 7.5% -2.7% -1.3% -3.0% 1.6% -3.2%

Pakistan Phil. Sing. Taiwan Thai. Vietnam Asia10

167.0 143.8 167.0 384.6 263.7 71.1 7293.51,019 1,621 36,393 16,819 4,183 835 12,2732,480 3,290 41,140 34,410 7,840 2,600 18,0331.0% 4.6% 1.1% 0.1% 2.6% 6.2% 6.2%3.0% 1.8% -6.5% -6.1% -5.0% 6.0% 3.3%

N/A 3.4% 4.5% 2.3% 3.4% N/A 5.9%7.0% 5.8% 7.1% 4.9% 5.6% 8.1% 8.8%

18.0% 9.3% 6.5% 3.5% 5.5% 23.1% 6.3%9.0% 3.0% -0.2% -1.3% -1.1% 10.0% 1.8%

N/A 3.7% 0.8% 0.3% 1.5% N/A 2.7%8.3% 5.2% 1.1% 1.2% 3.2% 7.0% 3.3%6.0% -2.9% -1.9% 3.6% 16.9% 29.5% 12.5%

24.7% -21.9% -15.0% -29.5% -16.0% N/A -12.0%N/A 4.6% 5.0% 4.3% 9.5% N/A 6.6%

11.7% 7.6% 15.9% 12.8% 17.4% 23.8% 16.7%-12.0% 2.0% 31.0% 9.7% 27.6% 32.7% 16.8%10.0% -22.1% -14.1% -32.2% -22.1% N/A -16.3%

N/A 4.0% 2.9% 3.9% 14.2% N/A 8.5%27.2% 7.2% 15.8% 14.4% 17.1% 25.4% 17.7%-14.7 -7.6 18.3 15.2 -0.8 -18.0 248.6-13.1 -5.8 19.4 17.2 10.3 N/A 358.2

N/A -5.8 24.7 18.6 4.6 N/A 331.1-11.1 -4.8 29.6 20.2 2.7 -6.5 186.5-8.6 4.2 27.0 24.6 -0.2 -9.2 514.9-8.4 5.8 22.0 27.1 5.2 N/A 554.3N/A 5.8 29.0 29.8 2.1 N/A 555.2-5.1 3.3 28.8 25.4 3.3 -2.1 296.9

-4.9% 2.5% 14.8% 6.3% -0.1% -10.3% 6.2%-5.2% 3.9% 14.2% 8.3% 2.2% N/A 6.6%

N/A 3.5% 17.5% 9.0% 0.8% N/A 5.9%-3.3% 2.7% 22.7% 7.3% 1.4% -3.6% 7.0%-3.8% -0.2% 2.9% -0.2% -1.6% -3.4% 0.3%

Sovereign Credit Risk Indicators Country China H.K. India7 Indo5 Japan Korea3 Malay.Total Foreign Debt (07E, USDbn)6 350.1 75.3 149.2 140.4 N/A 230.1 53.6Foreign Public LT debt (07E,USDbn)4 84.0 2.8 91.0 69.7 Nil 53.4 21.5Foreign ST Debt (07E, USDbn) 197.4 29.8 14.0 36.0 N/A 160.2 13.7Total Foreign Debt/GDP 10.1% 37.2% 13.2% 32.5% N/A 25.6% 28.7%Total Foreign Debt/Exports Goods & Services 24.0% 14.3% 52.1% 102.7% N/A 49.9% 24.7%T. Debt Services/Exports Goods & Services 2.1% 2.0% 7.0% 10.9% N/A 5.4% 4.8%Foreign Ex. Reserves (USDbn) 1953.7 194.0 241.4 56.6 1011.5 212.5 87.7Reserves/Imports (months) 27.0 22.5 14.2 10.4 27.2 8.7 12.0Sovereign Rating Moody/S&P A1/A+ Aa2/AA+ Baa2/BBB- Ba3/BB- Aaa/AA A2/A A3/A-

Pakistan Phil.9 Sing. Taiwan Thai. Vietnam Asia38.0 59.9 25.6 98.4 56.1 21.9 1238.534.1 36.0 1.4 0.4 10.9 18.7 371.11.7 5.8 9.7 83.2 18.4 3.0 568.4

26.1% 41.6% 15.3% 25.1% 22.8% 30.7% N/A130.0% 74.6% 6.2% 33.0% 29.7% 34.5% N/A12.9% 14.2% 1.3% 3.4% 7.7% 1.5% N/A

11.2 39.3 167.0 304.7 116.8 23.8 3373.74.8 12.7 21.7 24.8 12.3 4.1 N/A

B3/CCC+ B1/BB- Aaa/AAA Aa3/AA- Baa1/BBB+ Ba3/BB Nil

1 Singapore: NODX; 2 Philippines, India = Public Sector Balance; Latest data available; 3 Source of foreign debt: IMF; 4 Indonesia Total Public Sector Debt; 5 Source of foreign debt: Bank Indonesia; 6 Source for all other information: EIU; 7 India GDP and current account balance, Fiscal years beginning April; 8 Total Public Debt as at end 1996; 9 Total Public Debt Figures; 10 All aggregate series calculated using 2005 Nominal GDP fixed weight, Asia (ex. Sri Lanka, Pakistan & Vietnam). Prices in forecast and databank tables are as at 30th May 2009.



UBS 23

Economic Databank USD Exchange Rate (period end)

2008 2009 20091980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd Avg

China* 1.50 3.20 5.73 8.32 8.28 8.07 7.29 6.82 6.80 6.60 7.01 6.99 6.94 6.86 6.84 6.83 6.79 6.84 6.83 6.82 6.84 6.84 6.83 6.82 6.83 6.83Hong Kong 5.11 7.81 7.80 7.73 7.80 7.75 7.80 7.75 7.80 7.80 7.78 7.80 7.80 7.80 7.80 7.80 7.77 7.75 7.75 7.75 7.75 7.76 7.75 7.75 7.75 7.75India* - 12.16 18.12 34.63 46.68 44.95 39.41 48.58 49.00 45.00 40.02 40.45 42.15 42.93 42.47 43.25 46.45 49.40 49.55 48.58 48.83 50.88 50.87 49.91 47.16 48.53Indonesia 625 1125 1889 2291 9675 9830 9419 10950 11000 9500 9217 9234 9318 9225 9118 9153 9378 10995 12151 10950 11330 11980 11575 10713 10340 11188Japan 203.00 200.70 135.80 103.40 114.41 117.88 112.00 90.79 95.00 95.00 99.85 104.53 105.46 106.17 108.10 108.69 105.94 98.28 95.46 90.79 89.83 97.74 99.15 98.82 96.49 96.41Korea 890 715 809 773 1265 1010 936 1262 1350 1450 989 1005 1029 1047 1012 1089 1206 1278 1468 1262 1380 1533 1372 1273 1241 1360Malaysia 2.22 2.42 2.70 2.54 3.80 3.78 3.31 3.45 3.55 3.55 3.19 3.16 3.23 3.27 3.26 3.39 3.44 3.55 3.62 3.45 3.61 3.71 3.64 3.51 3.49 3.59Pakistan 9.90 15.98 21.79 31.01 58.00 59.79 61.42 79.11 95.00 N/A 62.79 64.51 66.87 68.01 71.55 76.16 78.15 81.70 78.86 79.11 78.97 79.90 80.41 80.49 80.99Philippines 7.59 19.00 27.20 26.22 50.00 53.07 41.40 47.49 48.00 48.00 41.87 42.19 43.88 44.76 44.14 45.69 46.92 48.75 48.88 47.49 47.08 48.24 48.42 48.70 47.55 48.00Singapore 2.09 2.11 1.74 1.41 1.73 1.66 1.44 1.44 1.60 1.52 1.38 1.36 1.36 1.36 1.37 1.42 1.43 1.48 1.51 1.44 1.51 1.55 1.52 1.47 1.44 1.50Taiwan 35.84 39.76 26.63 27.29 33.08 32.80 32.43 32.76 34.50 34.00 30.37 30.47 30.37 30.36 30.72 31.55 32.23 32.97 33.29 32.76 33.70 35.00 33.87 33.07 32.45 33.62Thailand 20.63 26.65 25.30 25.19 43.38 41.07 33.75 34.93 36.00 36.00 31.51 31.74 32.46 33.52 33.54 34.17 34.02 34.99 35.47 34.93 34.93 36.05 35.52 35.30 34.38 35.23Vietnam - - 8125 11015 14505 15900 16015 17433 N/A N/A 16105 16116 16246 16842 16755 16540 16585 16813 16974 17433 17475 17480 17756 17783 17784 17656 *China: Official Rate before 1989, Shanghai Swap Rate 1989-93, Unified Rate from January 1994; India: Currency unified Mar 1993.

Money Market Interest Rates 2008 2009 2009

1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd AvgChina - - - - 3.15 1.55 2.57 1.12 0.80 1.20 2.89 2.80 3.15 3.30 3.81 3.08 3.27 2.83 2.11 1.12 0.89 0.97 1.02 1.01 0.96 0.97Hong Kong - 6.63 7.94 5.88 5.93 4.23 3.45 0.95 0.50 1.00 1.98 2.08 1.97 2.31 2.31 2.26 3.66 3.35 1.95 0.95 0.99 0.85 0.90 0.76 0.37 0.77India - - - 12.97 8.75 6.11 7.35 4.71 3.50 5.20 7.23 7.35 7.48 8.73 9.36 9.07 8.56 7.44 7.14 4.71 4.79 4.75 4.95 3.32 3.32 3.32Indonesia - 11.45 18.83 13.99 14.53 12.75 8.00 10.85 7.00 8.50 7.96 7.99 8.31 8.73 9.21 9.28 9.71 10.98 11.24 10.85 9.50 8.74 8.21 7.59 7.25 8.26Japan 8.63 6.56 7.91 0.52 0.56 0.10 0.86 0.74 0.20 0.20 0.84 0.84 0.84 0.86 0.85 0.85 0.87 0.89 0.88 0.74 0.73 0.71 0.65 0.61 0.58 0.66Korea - - - 12.30 6.88 4.09 5.82 3.93 1.50 2.20 5.38 5.36 5.36 5.37 5.68 5.79 5.83 5.98 5.45 3.93 2.96 2.49 2.43 2.41 2.41 2.54Malaysia 9.40 7.79 7.60 6.78 3.22 3.22 3.61 3.37 1.64 1.64 3.61 3.61 3.61 3.69 3.70 3.70 3.69 3.66 3.39 3.37 2.60 2.13 2.11 2.11 2.13 2.22Pakistan - - - - - 8.07 9.39 13.46 13.00 N/A 9.60 9.64 10.96 11.38 12.04 12.44 12.59 12.48 13.10 13.46 13.11 11.37 12.14 12.84 13.16Philippines - - - - 15.88 5.22 6.38 5.25 5.25 5.50 6.44 5.81 6.75 6.06 5.19 4.63 4.13 4.25 4.94 5.25 5.31 5.06 4.50 4.00 4.00 4.58Singapore 13.00 5.31 5.25 2.89 2.81 3.25 2.38 0.96 1.00 1.40 1.38 1.44 1.31 1.25 1.13 1.23 1.85 1.36 0.82 0.96 0.65 0.69 0.67 0.67 0.69 0.67Taiwan - 4.14 6.61 6.26 5.40 1.50 2.22 1.09 1.00 1.10 2.23 2.22 2.24 2.25 2.26 2.25 2.22 2.09 1.81 1.09 0.74 0.58 0.54 0.51 0.51 0.58Thailand - 15.03 14.87 10.20 5.00 4.50 3.85 2.95 1.30 1.30 3.25 3.28 3.42 3.65 3.80 3.85 4.00 4.00 3.88 2.95 2.22 1.80 1.80 1.45 1.40 1.73Vietnam - - - - - 7.75 8.80 10.37 N/A N/A 9.32 13.94 13.38 20.47 17.33 16.91 17.18 14.81 11.53 10.37 6.51 8.33 7.65 7.38 7.39 7.45Singapore, Malaysia, Hong Kong, Philippines : 3m Interbank; Indonesia: 28Days SBI; Thailand: Onshore 3M interbank rate/ 3m implied forward before Jan 96/interbank call before 1988China: 7 Days Interbank Offered Rate; Taiwan: 31-90D CP; Korea: 91D NCD; India: 91D T-bill, Overnight rate prior to 1993; Vietnam: 3M Deposits rate; Sri Lanka: 3M T Bill; Pakistan: 3M T Bill; Japan: 3M CD

10Y Bond Yield 2008 2009 2009

1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd AvgChina - - 9.60 12.24 5.85 2.70 4.15 2.76 N/A N/A 3.78 3.70 3.72 3.81 4.04 3.90 3.42 2.65 2.14 2.76 3.02 3.10 3.16 3.16 3.07 3.10Hong Kong 17.00 7.00 10.00 9.00 6.46 4.18 3.44 1.19 2.00 3.10 2.58 2.70 3.21 3.47 3.67 3.01 2.90 2.38 1.66 1.19 1.64 1.95 1.95 2.10 2.77 2.08India 19.40 17.50 16.00 16.50 10.90 7.11 7.79 5.26 6.50 7.00 7.96 7.92 8.11 8.70 9.32 8.71 8.64 7.45 7.08 5.26 6.26 6.02 7.01 6.23 6.70 6.47Indonesia - 24.50 17.95 19.27 17.65 13.62 10.02 11.89 11.00 12.00 11.72 12.86 12.81 13.38 11.87 12.20 13.20 17.30 15.58 11.89 11.79 13.59 12.66 11.97 10.54 12.11Japan 9.22 6.17 7.01 2.67 1.63 1.46 1.50 1.16 1.00 1.50 1.27 1.58 1.75 1.59 1.53 1.40 1.46 1.47 1.39 1.16 1.29 1.27 1.34 1.42 1.48 1.36Korea 27.60 13.60 18.50 11.95 6.91 5.36 5.78 3.77 2.75 3.50 5.13 4.96 5.54 5.98 5.86 5.86 5.75 4.72 5.04 3.77 4.07 4.57 4.69 4.17 4.67 4.43Malaysia 8.50 10.75 7.50 6.90 5.69 4.19 4.13 3.17 4.00 4.00 3.79 3.75 3.99 4.77 4.84 4.72 4.57 4.35 3.67 3.17 3.07 4.07 3.85 3.96 4.27 3.84Pakistan - - - - - 9.37 10.40 16.23 12.00 N/A 11.35 11.56 12.32 13.42 14.33 14.58 14.40 14.69 16.60 16.23 15.46 15.46 12.99 10.28 10.18Philippines 14.00 28.61 26.80 15.43 18.20 10.19 6.58 7.44 8.00 8.80 7.27 8.58 8.93 9.43 9.66 8.06 8.14 9.48 9.45 7.44 7.49 8.08 8.16 8.13 7.95 7.96Singapore 13.60 7.20 7.73 6.26 4.09 3.21 2.68 2.05 2.00 2.50 2.27 2.44 3.30 3.59 3.21 3.19 3.21 2.95 2.29 2.05 2.07 2.05 2.03 2.04 2.61 2.16Taiwan 13.50 7.50 10.00 6.31 5.13 1.78 2.58 1.41 1.60 2.20 2.42 2.51 2.61 2.69 2.51 2.51 2.23 1.98 1.49 1.41 1.53 1.50 1.54 1.63 1.59 1.56Thailand 16.50 15.50 16.50 14.00 5.76 5.40 4.96 2.66 4.00 4.00 4.61 4.74 5.23 5.94 5.08 4.34 4.40 3.77 3.83 2.66 3.47 3.59 3.34 2.92 4.08 3.48Vietnam - - - - - - 9.08 10.18 N/A N/A 9.18 10.33 14.64 16.00 15.33 15.35 15.01 15.00 10.89 10.18 9.03 9.55 9.46 9.53 9.47 9.41SG: before June 98 Prime lending; MY: before 95 Prime lending; TH: before 95 MOR; ID: before Jul 03 Prime Lending; PH: before Oct 96 Prime lending; CN: before April 2002 Capital Construction Loan: 1 Year; HK: before 96 BLR; Taiwan: before 95 Prime Lending rate; IN: Before Jan 2000 Prime lending; Sri Lanka & Pakistan: 10y bond yield ; Korea: 3y Ref corp. bond yield before Oct 98/5Y Treasury Bond

Real GDP %YoY 2008 2009 2009

1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Q1 Q2 Q3 Q4 Q1 Ytd AvgChina 13.5% 13.5% 3.8% 10.9% 8.4% 10.4% 13.0% 9.0% 7.5% 7.5% 10.6% 10.1% 9.0% 6.8% 6.1% 6.1%Hong Kong 10.3% 0.7% 3.9% 2.3% 8.0% 7.1% 6.4% 2.4% -3.4% 1.8% 7.3% 4.1% 1.5% -2.6% -7.8% -7.8%India**** 6.5% 4.5% 5.4% 7.3% 4.4% 9.5% 9.0% 6.7% 6.2% 8.0% 8.6% 7.8% 7.7% 5.8% 5.8%Indonesia 9.9% 2.5% 9.0% 8.2% 4.9% 5.7% 6.3% 6.1% 3.3% 4.7% 6.2% 6.4% 6.4% 5.2% 4.4% 4.4%Japan 3.2% 4.3% 5.3% 2.0% 2.9% 1.9% 2.4% -0.7% -6.6% 1.8% 1.3% 0.6% -0.3% -4.3% -9.7% -9.7%Korea -1.5% 6.8% 9.2% 9.2% 8.5% 4.0% 5.1% 2.2% -3.4% 3.0% 5.5% 4.3% 3.1% -3.4% -4.3% -4.3%Malaysia 7.4% -1.0% 9.7% 9.8% 8.3% 5.3% 6.3% 4.6% -4.5% 2.7% 7.4% 6.7% 4.7% 0.1% -6.2% -6.2%Pakistan *** - - - 6.6% 2.0% 5.8% 5.8% 1.0% 3.0% N/A N/A N/A N/A N/APhilippines 5.2% -7.3% 3.0% 4.7% 6.0% 5.0% 7.2% 4.6% 1.8% 3.4% 3.9% 4.2% 4.6% 2.9% 0.4% 0.4%Singapore 9.7% -1.4% 9.2% 8.2% 10.1% 7.3% 7.8% 1.1% -6.5% 4.5% 6.7% 2.5% 0.0% -4.2% -10.1% -10.1%Taiwan 7.3% 5.0% 5.4% 6.5% 5.8% 4.2% 5.7% 0.1% -6.1% 2.3% 6.3% 4.6% -1.1% -8.6% -10.2% -10.2%Thailand 4.8% 4.7% 11.2% 9.2% 4.8% 4.6% 4.9% 2.6% -5.0% 3.4% 6.0% 5.3% 3.9% -4.2% -7.1% -7.1%Vietnam -2.9% 6.0% 5.1% 9.5% 6.8% 8.4% 8.5% 6.2% 6.0% N/A 7.5% 5.8% 6.5% 5.5% 3.1% 3.1%Malaysia: Historical GDP data up to 1996 use 1978 as the base year. Data from 1997 and forecasts use 1987; Thailand: Q498, Q199 are NESDB stats releases ;

CPI Inflation %YoY (period average) 2008 2009 2009

1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd AvgChina 6.0% 8.8% 9.9% 17.1% 0.4% 1.8% 4.8% 5.9% 0.5% 2.0% 8.3% 8.5% 7.7% 7.1% 6.3% 4.9% 4.6% 4.0% 2.4% 1.2% 1.0% -1.6% -1.2% -1.5% -0.8%Hong Kong - 3.5% 10.2% 9.0% -3.8% 0.9% 2.0% 4.3% 0.7% 0.5% 4.1% 5.4% 5.6% 6.1% 6.3% 4.5% 3.1% 1.8% 3.1% 2.0% 3.1% 0.8% 1.2% 0.6% 1.4%India* 11.5% 5.7% 11.2% 10.3% 3.7% 4.2% 6.2% 9.1% 6.2% 6.0% 7.9% 7.8% 7.8% 7.7% 8.3% 9.0% 9.8% 10.4% 10.4% 9.7% 10.4% 9.6% 8.0% 8.7% 8.7%Indonesia 18.1% 4.8% 7.2% 9.5% 3.8% 10.5% 6.4% 9.8% 6.6% 6.2% 7.1% 7.4% 8.6% 11.0% 11.9% 11.8% 12.1% 11.8% 11.7% 11.1% 9.2% 8.6% 7.9% 7.3% 6.0% 7.8%Japan 7.8% 2.0% 3.1% -0.1% -0.7% -0.3% 0.0% 1.4% -1.1% -0.4% 1.2% 0.8% 1.3% 2.0% 2.3% 2.1% 2.1% 1.7% 1.0% 0.4% 0.0% -0.1% -0.3% -0.1% -0.1%Korea 28.7% 2.5% 8.6% 4.5% 2.3% 2.8% 2.5% 4.7% 1.7% 2.3% 3.9% 4.1% 4.9% 5.5% 5.9% 5.6% 5.1% 4.8% 4.5% 4.1% 3.7% 4.1% 3.9% 3.6% 2.7% 3.6%Malaysia 6.7% 0.3% 3.1% 3.5% 1.6% 3.1% 2.0% 5.4% 0.5% 1.1% 2.8% 3.0% 3.8% 7.7% 8.5% 8.5% 8.2% 7.6% 5.7% 4.4% 3.9% 3.7% 3.5% 3.0% 3.5%Pakistan** 12.4% 4.4% 12.7% 10.8% 4.4% 7.9% 12.0% 18.0% 9.0% N/A 14.1% 17.2% 19.3% 21.5% 24.3% 25.3% 23.9% 25.0% 24.7% 23.3% 20.5% 21.1% 19.1% 17.2%Philippines 18.4% 24.8% 14.2% 6.8% 4.0% 7.7% 2.8% 9.3% 3.0% 3.7% 6.4% 8.3% 9.5% 11.4% 12.3% 12.4% 11.8% 11.2% 9.9% 8.0% 7.1% 7.3% 6.4% 4.8% 6.4%Singapore 13.6% 5.7% 3.4% 1.7% 1.4% 0.5% 2.1% 6.5% -0.2% 0.8% 6.7% 7.5% 7.5% 7.5% 6.5% 6.4% 6.7% 6.4% 5.5% 4.3% 2.9% 1.9% 1.6% -0.7% 1.4%Taiwan 19.2% -0.1% 4.1% 3.7% 1.3% 2.3% 1.8% 3.5% -1.3% 0.3% 3.9% 3.9% 3.7% 5.0% 5.8% 4.7% 3.1% 2.4% 1.9% 1.3% 1.5% -1.3% -0.1% -0.5% -0.1%Thailand 19.8% 2.4% 5.9% 5.7% 1.6% 4.5% 2.2% 5.5% -1.1% 1.5% 5.4% 6.1% 7.6% 8.8% 9.2% 6.5% 6.1% 3.9% 2.2% 0.4% -0.4% -0.1% -0.2% -0.9% -3.3% -1.0%Vietnam - - - - -1.6% 8.3% 8.3% 23.1% 10.0% N/A 19.4% 21.4% 25.2% 26.8% 27.0% 28.3% 27.9% 26.7% 24.2% 19.9% 17.5% 14.8% 11.3% 9.2% 5.6% 11.7%* India: Fiscal year beginning April; ** Pakistan: Fiscal year beginning July Source for all tables on this page: UBS estimates, Datastream & CEIC


UBS 24

Economic Databank Broad Money Supply Growth %YoY (Year-average)

2008 2009 20091980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd Avg

China 25.9% 37.0% 26.9% 32.2% 14.0% 17.6% 16.7% 17.8% 22.0% 16.0% 16.3% 16.9% 18.1% 17.4% 16.4% 16.0% 15.3% 15.0% 14.8% 17.8% 18.8% 20.4% 25.5% 26.0% 22.7%Hong Kong - 21.5% 20.7% 15.1% 8.0% 7.4% 18.6% 6.5% 3.4% 5.1% 13.5% 14.5% 11.4% 5.7% 8.2% 5.7% 1.9% -6.0% -3.5% 2.6% 3.2% 1.5% 4.2% 4.3% 3.3%India 16.4% 16.6% 16.7% 15.6% 15.8% 16.1% 21.8% 20.1% 17.0% 20.0% 20.9% 21.2% 22.5% 20.8% 19.6% 20.9% 18.9% 20.3% 19.3% 19.7% 19.7% 19.6% 18.6% 21.4% 21.4%Indonesia 46.0% 25.3% 46.8% 24.8% 9.9% 12.5% 16.0% 16.1% 10.0% 12.0% 15.3% 16.3% 17.5% 17.0% 14.0% 12.6% 16.9% 17.8% 18.3% 14.6% 17.1% 18.4% 20.3% 18.6%Japan 8.5% 8.2% 11.6% 3.2% 2.1% 1.9% 1.5% 2.1% 1.0% 2.1% 2.2% 1.9% 2.1% 2.2% 2.1% 2.4% 2.2% 1.9% 1.8% 1.8% 2.0% 2.1% 2.2% 2.1%Korea 25.8% 11.8% 21.2% 19.9% 5.6% 7.0% 10.2% 11.9% 6.0% 3.0% 11.9% 12.7% 13.1% 12.7% 12.2% 11.9% 12.2% 11.9% 11.4% 10.4% 9.2% 8.8% 8.4% 8.8%Malaysia 28.4% 8.0% 30.0% 15.1% 5.6% 11.6% 12.7% 12.5% 16.0% 16.0% 12.1% 12.2% 12.4% 14.0% 14.1% 12.8% 13.5% 11.5% 12.5% 11.9% 9.0% 7.8% 7.3% 6.1% 7.6%Pakistan - - - 15.5% 9.9% 16.5% 17.7% 10.0% 15.0% N/A 16.3% 15.3% 15.5% 15.3% 14.1% 14.4% 13.4% 11.8% 12.8% 8.7% 10.0% 10.7% Philippines 17.0% 8.2% 22.7% 32.7% 10.8% 13.8% 17.1% 8.1% 6.5% 11.7% 2.1% 0.8% 3.7% 5.1% 4.1% 9.8% 13.5% 13.1% 14.6% 15.6% 16.1% 14.6% 15.6% 15.4%Singapore 27.9% 3.6% 22.2% 12.4% 1.6% 5.2% 20.4% 10.8% 9.0% 8.0% 11.9% 11.9% 8.6% 7.5% 9.6% 8.7% 10.4% 12.1% 11.8% 12.0% 12.8% 11.2% 11.5% 9.7% 11.3%Taiwan 17.1% 21.5% 11.1% 11.6% 7.0% 6.2% 4.3% 2.7% 5.5% 5.1% 1.8% 2.1% 2.3% 1.7% 1.5% 2.1% 2.5% 4.1% 5.0% 6.4% 7.1% 6.1% 6.4% 6.8% 6.6%Thailand 19.2% 15.7% 29.2% 17.3% 2.5% 4.7% 7.4% 5.4% 8.3% 8.0% 5.7% 5.3% 4.6% 4.4% 2.9% 4.3% 4.7% 5.3% 7.3% 9.2% 9.4% 9.5% 9.0% 8.8% 9.2%Vietnam - - - - 35.4% 30.9% 49.1% N/A N/A N/A 37.0% 30.5% 29.1% 25.8% 23.1% 21.0% 21.3% 18.4%M2 except Malaysia, India, HK & Philippines: M3; Korea: Liquidity Aggregates of Financial Institutions; Japan: M2+CDs; Vietnam: Month end; Taiwan : Daily averages; Korea : Month-average; India: Fiscal year beginning April; Pakistan: Fiscal year beginning July

External Accounts (USD bn) 2008 2009 2009

1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd AvgChina Exports 32.1% 39.6% 50.4% 23.0% 27.8% 28.4% 25.8% 17.2% -6.0% 5.0% 30.6% 21.8% 28.1% 17.7% 26.9% 21.1% 21.3% 19.1% -2.2% -2.8% -17.5% -25.7% -17.1% -22.6% -20.7% Imports 27.4% 105.0% 14.2% 14.2% 35.8% 17.6% 20.8% 18.5% -12.0% 7.5% 24.8% 26.6% 40.1% 31.2% 33.6% 22.9% 20.9% 15.4% -18.0% -21.3% -43.1% -23.8% -24.9% -22.8% -28.6% Trade Balance -1.90 -14.90 8.75 16.70 24.11 102.00 262.69 295.47 345.72 338.07 13.41 16.68 20.21 21.35 25.28 28.69 29.37 35.24 40.09 38.98 39.11 4.84 18.56 13.14 75.65 Cur. Account 0.27 1.69 0.28 1.62 20.52 160.82 371.83 426.11 455.04 450.16 191.72 234.39 FX Reserves 2.5 12.7 29.6 73.6 165.6 818.9 1528.2 1946.0 2296.0 N/A 1682.2 1756.7 1797.0 1808.8 1845.2 1884.2 1905.6 1879.7 1884.7 1946.0 1913.5 1912.1 1953.7 1926.4

Hong Kong Exports 22.1% 6.6% 12.3% 14.8% 16.1% 11.6% 8.8% 5.4% -8.9% 2.7% 8.0% 14.8% 10.6% -0.6% 11.4% 2.0% 3.5% 9.4% -4.9% -10.8% -21.3% -22.6% -20.9% -17.8% -20.6% Re-Exports 50.5% 26.5% 19.6% 17.2% 17.6% 11.8% 10.4% 6.3% -7.7% 1.9% 8.4% 15.9% 11.6% 0.3% 12.7% 2.8% 4.5% 10.8% -3.8% -9.7% -20.2% -22.0% -20.2% -17.1% -19.9% Imports 24.2% -9.5% 5.7% 19.2% 18.6% 10.5% 10.0% 5.7% -7.5% 2.1% 7.0% 11.7% 15.7% 1.4% 15.6% 1.6% 3.8% 11.2% -7.6% -15.7% -26.6% -17.1% -22.5% -16.6% -20.7% Trade Balance -2.71 0.48 -0.34 -19.02 -10.98 -10.47 -23.49 -25.91 -28.94 -27.49 -3.61 -2.08 -3.52 -3.07 -2.50 -1.65 -2.06 -1.84 -1.05 -1.52 0.93 -2.99 -2.35 -2.11 -6.52 Cur. Account -1.27 1.90 3.51 - 6.99 20.18 25.53 30.64 18.02 22.34 6.56 4.04 9.67 10.39 FX Reserves 5.00 8.74 24.66 55.42 107.50 124.28 152.69 184.78 157.00 162.00 160.78 159.87 158.99 157.61 157.67 158.08 160.56 155.21 166.01 184.78 181.71 177.09 186.29 194.00 166.01

India Exports 6.4% 5.3% 9.2% 20.4% 19.6% 23.0% 27.5% 3.9% -0.1% 23.8% 34.1% 46.8% 27.4% 39.2% 37.1% 26.1% 13.5% -12.2% -20.1% -5.3% -15.9% -21.7% -33.3% -33.2% -33.2% Imports 46.3% 13.2% 13.5% 27.7% 1.8% 32.3% 33.9% 14.2% -11.5% 25.3% 37.6% 39.7% 38.2% 32.5% 58.5% 46.6% 55.3% 7.6% -1.4% -1.0% -18.2% -23.3% -34.0% -36.6% -36.6% Trade Balance -5.64 -5.62 -5.93 -4.89 -6.52 -44.87 -79.86 -107.66 -76.34 -98.15 -6.32 -8.75 -11.13 -9.21 -11.98 -13.14 -12.29 -9.91 -9.84 -6.27 -6.08 -4.91 -4.05 -5.00 -5.00 Cur. Account -1.79 -4.82 -5.93 -5.91 -2.67 -9.90 -17.03 -30.43 -10.10 -17.30 -1.53 -9.00 -12.83 -14.64 FX Reserves 6.94 6.42 2.24 17.04 39.55 145.11 299.23 241.43 313.70 376.40 299.23 304.23 304.88 302.34 295.92 286.12 277.30 244.05 238.97 246.60 238.89 238.72 241.43

Indonesia Non-Oil Exports 9.1% 3.5% 5.8% 15.1% 22.9% 18.8% 15.6% 17.3% -10.0% 4.6% 23.4% 14.4% 20.8% 27.1% 17.4% 22.9% 32.1% 7.0% 6.2% -11.1% -30.1% -25.2% -20.7% -14.6% -22.6% Total Exports 41.2% -8.1% 20.7% 13.4% 27.7% 19.7% 13.2% 19.9% -20.0% 10.0% 32.5% 22.5% 31.6% 34.1% 24.8% 29.9% 29.0% 4.7% -1.8% -18.7% -35.0% -32.3% -28.3% -22.6% -29.5% Imports 51.1% -20.1% 39.8% 27.0% 39.6% 24.0% 22.0% 40.5% -24.0% 11.0% 41.1% 65.7% 49.8% 63.4% 68.8% 45.4% 38.5% 40.3% -5.6% -8.0% -27.9% -40.1% -33.9% -45.3% -36.8% Trade Balance 11.07 8.33 3.74 4.79 28.61 27.96 39.63 32.36 30.08 32.29 4.04 1.57 3.24 2.99 1.79 2.41 2.87 1.97 2.51 2.60 1.87 2.42 3.35 3.34 10.98 Cur. Account 3.01 -1.92 -3.24 -6.76 7.99 0.28 10.49 0.61 2.00 4.00 2.82 -0.96 -0.89 -0.68 1.79 1.79 FX Reserves 5.39 5.85 8.66 18.76 29.39 34.72 56.92 51.64 53.64 57.00 58.99 58.77 57.46 59.45 60.56 58.36 57.11 50.58 50.18 51.64 50.87 50.56 54.84 56.57 53.21Exports, Imports and trade balance, customs basis; Current Account, FX Reserves,BoP basis, Export, import growth in USD terms


1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd AvgJapan Exports 25.2% 4.3% 3.7% 11.2% 13.0% 5.5% 10.0% 25.8% -38.2% 6.4% 19.6% 21.3% 20.6% 13.0% 23.5% 7.6% 10.2% 7.2% -15.8% -20.2% -35.8% -42.8% -45.0% -41.2% Imports 25.4% -4.9% 12.5% 22.9% 21.5% 15.7% 7.1% 41.1% -20.9% 6.5% 31.8% 31.9% 21.0% 35.2% 33.6% 26.5% 41.5% 25.1% -1.3% -3.1% -18.3% -36.5% -36.0% -30.2% Trade Balance 2.13 57.97 63.80 131.79 115.47 93.90 104.40 44.30 -111.60 -119.00 12.36 5.83 4.77 2.33 2.88 -1.29 3.00 1.37 -0.95 -2.15 -9.37 2.18 1.36 -5.84 Cur.Account -10.75 49.20 36.30 111.10 118.34 165.90 210.10 178.80 8.80 17.90 18.35 16.79 17.69 13.69 14.94 8.65 14.14 10.58 4.52 6.50 1.24 1.24 1.24 3.72 FX Reserves 25.23 26.51 77.05 182.82 361.70 846.90 973.40 950.0 960.00 940.00 1015.6 1003.8 997.0 1001.5 1004.7 996.74 995.89 977.72 1002.9 1030.6 1011.0 1009.4 1018.5 1011.5 1012.58

Korea* Exports 16.3% 3.6% 4.2% 30.3% 19.9% 12.0% 14.1% 13.6% -17.0% 8.0% 18.4% 26.4% 26.9% 16.4% 35.6% 18.1% 27.6% 7.8% -19.5% -17.9% -34.2% -18.5% -22.1% -19.6% -28.3% -24.6% Imports 9.6% 1.7% 13.6% 32.0% 34.0% 16.4% 15.3% 22.0% -24.0% 10.0% 26.7% 29.3% 29.6% 32.7% 47.0% 36.4% 45.4% 10.3% -15.0% -21.6% -31.6% -31.0% -35.9% -35.6% -40.4% -34.9% Trade Balance -4.79 -0.85 -4.83 -10.06 11.79 23.18 14.64 -13.27 19.46 14.40 -1.12 -0.41 0.68 -0.57 -1.99 -3.81 -2.10 1.01 -0.01 0.54 -3.60 2.87 4.26 5.79 5.15 14.47 Cur. Account -5.32 -0.89 -2.00 -8.51 12.25 14.98 5.88 -6.41 10.00 5.00 -0.11 -1.58 -0.38 1.82 -2.53 -4.70 -1.35 4.75 1.91 0.86 -1.64 3.56 6.65 4.28 12.86 FX Reserves 2.92 2.87 14.79 32.71 96.20 210.39 262.22 201.22 205.00 210.00 264.25 260.48 258.20 258.10 247.52 243.20 239.67 212.25 200.51 201.22 201.74 201.54 206.34 212.48 226.77 209.77

Malaysia Exports 16.4% -6.3% 17.7% 25.5% 16.1% 11.8% 9.9% 13.1% -23.5% 5.8% 15.6% 31.4% 30.1% 25.4% 32.8% 15.8% 16.0% -6.7% -10.9% -20.1% -34.0% -25.5% -26.8% -28.8% Imports 37.2% -1.2% 30.3% 30.0% 25.3% 8.7% 12.3% 6.6% -19.3% 5.0% 12.7% 17.3% 15.7% 19.0% 21.8% 9.1% 12.4% -9.3% -14.3% -27.5% -36.3% -35.8% -38.2% -36.8% Trade Balance 21.38 31.40 2.09 -3.68 16.27 27.29 29.19 42.58 27.12 29.82 2.51 3.90 4.82 3.95 4.44 3.79 4.28 2.73 3.21 3.25 2.27 3.32 3.40 8.99 Cur. Account -0.28 -0.63 -0.92 -8.63 9.15 19.98 29.27 38.66 19.18 24.24 7.47 11.37 11.25 8.57 FX Reserves 4.37 5.13 10.00 25.11 28.71 70.18 101.34 91.54 101.34 106.34 120.29 124.09 125.19 125.78 125.07 122.58 109.74 100.21 97.69 91.54 91.34 91.11 87.82 87.73 89.50Exports, Imports and trade balance, customs basis; Trade and Current Account, Ytd Sum, not Ytd Average. Philippines current account data due to major revisions done to incorporate results of data improvement activities. The monthly figures when sum up will not totally same with latest annual data.


1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd AvgPakistan Exports 20.9% 21.2% 5.8% 7.0% 7.4% 14.5% 13.7% 6.0% 24.7% N/A 17.3% 21.9% 22.8% 31.8% 29.5% 8.2% 19.2% 7.8% -1.0% -1.7% -7.8% -17.7% -26.5% Imports 26.1% 10.4% 8.1% 13.6% 4.1% 39.4% 30.9% -12.0% 10.0% N/A 45.8% 59.3% 41.2% 43.9% 37.9% 26.0% 39.2% 2.4% -13.9% -9.5% -28.4% -41.9% -38.4% Trade Balance - -0.20 -0.10 -3.10 -1.53 -12.13 -20.65 -14.69 -13.15 N/A -2.04 -2.31 -1.94 -1.97 -1.64 -1.88 -2.03 -1.95 -1.20 -0.82 -1.17 -0.86 -1.04 Cur.Account - - - -4.35 0.33 -4.99 -14.04 -8.60 -8.40 N/A -3.79 -4.19 FX Reserves - - - 2.07 3.22 13.14 11.28 8.00 13.00 N/A 13.23 12.36 11.26 11.28 10.28 9.11 8.21 6.72 9.06 9.96 10.18 10.11 10.48 11.15

Philippines* Exports 28.0% -3.0% 16.7% 29.4% 8.7% 4.0% 6.4% -2.9% -21.9% 4.6% -6.4% 4.9% 2.4% 9.2% 4.4% 6.6% 1.3% -14.4% -11.4% -40.3% -40.6% -39.0% -30.8% -36.8% Imports 27.8% -5.6% 30.8% 24.4% 12.3% 7.7% 7.2% 2.0% -22.1% 4.0% 12.2% 11.8% 11.2% 13.1% 16.7% 1.2% 3.1% -11.1% -31.5% -34.0% -34.5% -31.9% -36.2% -34.2% Trade Balance -2.32 -0.72 -4.02 -9.09 3.59 -6.16 -5.05 -7.62 -5.80 -5.81 -0.92 -0.53 -0.55 -0.80 -1.45 -0.65 -0.45 -0.59 0.03 -0.63 -0.76 -0.55 -0.36 -1.67 Cur. Account -1.90 -0.10 -2.57 -3.30 -2.23 1.98 7.12 4.23 5.82 5.82 0.20 0.48 0.31 0.16 -0.41 -0.14 0.28 0.65 0.80 0.83 FX Reserves 2.85 1.05 1.99 6.37 15.06 18.49 33.75 37.55 41.88 49.19 36.62 36.36 36.23 36.71 36.90 36.74 36.70 35.95 36.83 37.55 39.25 38.92 39.04 39.32 39.13

Singapore Non-Oil Dom. Exp. 26.2% -6.1% 17.3% 21.9% 9.8% 9.9% 7.8% -1.9% -15.0% 5.0% 3.6% 16.9% -0.2% 0.5% 5.1% -6.8% -0.4% -16.2% -20.8% -22.3% -37.5% -29.2% -25.2% -26.8% -29.7% Re-Exports 22.8% -6.6% 9.8% 25.8% 28.4% 14.4% 11.4% 13.1% -6.0% 4.0% 13.2% 26.4% 34.8% 26.0% 24.7% 9.3% 18.1% -2.2% -13.4% -15.4% -40.1% -23.3% -23.6% -28.5% -28.9% Retained Imports 139.5% -9.0% 28.5% 18.2% 16.2% 16.4% 8.7% 31.0% -14.1% 2.9% 52.7% 58.2% 30.5% 41.8% 62.4% 41.3% 53.0% 9.3% -12.6% -21.6% -31.5% -28.8% -46.0% -46.4% -38.2% Trade Balance -4.63 -3.47 -8.05 -6.24 3.28 29.65 36.27 18.29 19.44 24.73 1.17 1.53 1.70 1.37 1.50 2.62 1.46 0.37 1.00 0.67 0.54 0.80 2.69 2.36 6.38 Cur. Account -1.56 0.00 3.20 14.39 10.71 27.48 39.22 26.99 22.00 29.00 7.39 6.74 7.49 4.54 3.92 3.92 FX Reserves 6.43 12.77 28.10 68.81 80.24 115.96 163.33 174.13 178.00 185.00 176.92 174.96 175.48 175.76 176.06 171.70 169.43 162.76 166.27 169.51 169.36 166.54 165.39 167.00 167.07Exports, Imports & Trade balance, customs basis; *Export, Import growth in USD termsCurrent account, FX Reserves, BoP basis. India: fiscal year beginning April, monthly data may not add up to total because of prior revisions. Trade & current acc.t, Ytd sum, not Ytd avg Source for all tables on this page: UBS estimates, Datastream & CEIC


UBS 25


1980 1985 1990 1995 2000 2005 2007 2008 2009E 2010E Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ytd AvgTaiwan* Exports 23.0% 0.9% 1.5% 20.0% 22.8% 8.8% 10.1% 3.6% -29.5% 4.3% 23.1% 15.0% 20.9% 21.2% 8.0% 18.0% -1.7% -8.1% -24.0% -42.2% -44.5% -29.2% -36.1% -34.8% -36.1% Imports 33.6% -8.5% 4.7% 21.3% 26.6% 8.2% 8.2% 9.7% -32.2% 3.9% 37.7% 17.8% 17.6% 22.5% 11.8% 39.5% 9.9% -7.5% -13.8% -44.9% -56.7% -31.9% -49.7% -41.3% -44.9% Trade Balance 0.08 10.62 12.50 8.11 11.22 15.82 27.43 15.18 17.19 18.59 -0.96 0.14 1.37 0.52 -1.35 -1.10 -0.08 2.23 0.80 1.22 2.82 1.12 2.65 1.49 8.07 Cur. Account -0.91 9.20 10.73 5.47 8.90 17.58 32.98 24.64 27.10 29.81 8.47 6.74 1.87 7.55 12.99 12.99 FX Reserves 2.21 22.56 72.44 90.31 106.74 253.29 270.31 291.71 278.00 281.00 286.86 289.38 290.07 291.41 290.90 282.09 281.13 278.15 280.69 291.71 292.68 294.19 300.12 304.66 297.91

Thailand Exports 23.1% -4.0% 14.8% 24.9% 19.3% 15.0% 17.2% 16.9% -16.0% 9.5% 16.5% 30.1% 24.7% 30.5% 47.4% 17.7% 22.7% 5.2% -18.6% -12.5% -26.5% -11.4% -23.1% -26.1% -21.7% Imports 29.1% -11.1% 27.3% 30.1% 24.6% 25.7% 8.7% 27.6% -22.1% 14.2% 32.4% 43.2% 15.7% 30.7% 55.1% 26.9% 39.4% 21.7% 2.0% -6.5% -37.6% -40.3% -35.1% -36.3% -37.3% Trade Balance -2.71 -2.12 -9.74 -13.99 7.60 -7.24 12.13 -0.81 10.29 4.64 0.45 -1.34 1.71 1.01 -0.61 -0.40 0.56 -0.56 -1.20 0.35 1.38 3.58 2.10 0.59 7.64 Cur. Account -2.83 -4.80 -20.35 -13.23 9.33 -7.64 14.05 -0.18 5.20 2.10 0.96 -1.54 0.93 0.71 -0.49 -0.58 -0.28 -1.13 -0.93 0.09 2.29 4.42 2.40 0.43 9.54 FX Reserves 2.86 3.00 14.31 37.03 32.66 52.07 87.46 111.01 129.01 137.01 109.97 109.76 108.94 105.68 104.75 101.25 102.42 103.18 106.29 111.01 110.72 113.31 116.22 116.83 114.27

Vietnam Exports 23.5% 15.7% 35.8% 34.4% 25.5% 24.0% 22.2% 29.5% N/A N/A 24.6% 39.4% 43.6% 53.7% 54.2% 40.4% 44.8% 18.4% -6.2% -0.4% -24.3% 48.2% 10.8% -11.6% -29.0% -1.2% Imports 7.3% 54.4% 48.5% 40.0% 33.2% 17.0% 37.0% 32.7% N/A N/A 81.3% 84.9% 45.1% 43.0% 42.2% 18.4% 14.1% 4.1% -20.7% -9.6% -53.8% -32.1% -37.1% -37.4% -21.7% -36.4% Trade Balance -0.35 -0.94 -1.77 -2.71 -1.15 -4.6 -12.4 -18.0 N/A N/A -3.28 -3.22 -1.91 -0.74 -0.85 -0.26 -0.26 -0.80 -0.62 -1.02 0.39 0.86 0.25 -0.70 -1.93 -1.13 Cur. Account -0.26 -1.40 -1.20 -1.88 1.11 -0.6 -7.0 -9.2 N/A N/A FX Reserves - - - 1.32 3.42 9.05 - - - - 26.43 25.30 23.59 22.25 21.75 22.38 23.85 23.82Exports, Imports and Trade Balance, customs cleared basis; Current Account, FX Reserves, balance of payments basisTrade and Current Account Ytd Sum, not Ytd Average.

Foreign Exchange and Interest Rate Forecasts ASIAN CURRENCY

CURRENT 1 mth 3 mth 6 mth 1 YEAR 06 Avg 07 Avg End 2006 End 2007 End 2008E End 2009E End 2010EUSD/RMB 6.83 6.80 6.80 6.80 6.80 7.97 7.61 7.80 7.29 6.82 6.80 6.60USD/HKD 7.75 7.75 7.80 7.80 7.80 7.77 7.80 7.78 7.80 7.75 7.80 7.80USD/INR 47.16 47.00 48.00 49.00 48.00 45.19 41.18 44.11 39.41 48.58 49.00 45.00USD/IDR 10340 10250 12000 12500 10000 9167 9136 9020 9419 10950 11000 9500USD/JPY 96.49 100.00 95.00 95.00 95.00 108.15 117.78 119.07 112.00 90.79 95.00 95.00USD/KRW 1241.1 1250.0 1350.0 1350.0 1450.0 954.4 928.9 930.0 935.8 1262.0 1350.0 1450.0USD/MYR 3.49 3.56 3.70 3.60 3.55 3.67 3.44 3.53 3.31 3.45 3.55 3.55USD/PKR 80.99 80.00 85.00 90.00 95.00 60.29 60.72 60.88 61.42 79.11 95.00 N/AUSD/PHP 47.55 48.00 51.00 50.00 48.00 51.35 46.22 49.13 41.40 47.49 48.00 48.00USD/SGD 1.442 1.470 1.570 1.580 1.560 1.588 1.507 1.534 1.436 1.438 1.600 1.520USD/TWD 32.45 32.50 35.00 35.00 34.00 32.51 32.85 32.59 32.43 32.76 34.50 34.00USD/THB* 34.38 34.50 37.00 37.00 36.00 37.88 32.21 36.04 33.75 34.93 36.00 36.00USD/DONG 17784 N/A N/A N/A N/A 15982 16080 16055 16015 17433 N/A N/A* Onshore exchange rate

ASIAN MONEY MARKET INTEREST RATE/3 MONTH INTEREST RATE mid rate CURRENT 3 mth 6 mth 1 YEAR End 2006 End 2007 End 2008E End 2009E End 2010ERMB 7D Interbank 0.96 0.90 0.85 0.80 2.88 2.57 1.12 0.80 1.20HKD 3M HIBOR 0.37 0.25 0.25 0.75 3.90 3.45 0.95 0.50 1.00INR 91D T Bill 3.32 3.00 3.00 3.70 7.19 7.35 4.71 3.50 5.20IDR 28D SBI 7.25 7.25 7.00 7.25 9.75 8.00 10.85 7.00 8.503M JPY 0.58 0.40 0.20 0.20 0.54 0.86 0.74 0.20 0.20KRW 91D CD 2.41 1.75 1.50 2.20 4.86 5.82 3.93 1.50 2.20MYR 3M KLBOR 2.13 1.89 1.64 1.64 3.71 3.61 3.37 1.64 1.64PKR 3M T Bill 13.16 14.00 13.00 12.00 8.66 9.39 13.46 13.00 N/APHP 3M PHIBOR 4.00 5.25 5.25 5.50 6.94 6.38 5.25 5.25 5.50SGD 3M SIBOR 0.69 0.70 0.70 1.20 3.44 2.38 0.96 1.00 1.40TWD 90D CP 0.51 1.00 1.00 1.10 1.75 2.22 1.09 1.00 1.10THB 3M BIBOR 1.40 1.30 1.30 1.30 5.25 3.85 2.95 1.30 1.30VND 3M Deposit 7.39 N/A N/A N/A 8.55 8.80 10.37 N/A N/AASIAN BOND YIELD

CURRENT 3 mth 6 mth 1 YEAR End 2006 End 2007 End 2008E End 2009E End 2010ERMB 10Y GOV 3.07 N/A N/A N/A 2.66 4.15 2.76 N/A N/AHKD 10Y GOV 2.77 1.30 2.00 2.50 3.73 3.44 1.19 2.00 3.10INR 10Y GOV 6.70 6.50 6.50 6.50 7.61 7.79 5.26 6.50 7.00IDR 10Y GOV 10.54 13.00 12.00 12.80 10.18 10.02 11.89 11.00 12.00JPY 10Y GOV 1.48 1.10 1.00 1.20 1.67 1.50 1.16 1.00 1.50KRW 5Y TREASURYS 4.67 2.75 2.75 3.00 5.00 5.78 3.77 2.75 3.50MYR 10Y GOV 4.27 3.00 3.50 4.00 3.77 4.13 3.17 4.00 4.00PKR 10Y GOV 10.18 15.00 14.00 13.00 10.42 10.40 16.23 12.00 N/APHP 10Y GOV 7.95 8.50 8.50 8.75 6.38 6.58 7.44 8.00 8.80SNG 10Y GOV 2.61 2.00 2.00 2.50 3.05 2.68 2.05 2.00 2.50TWD 10Y GOV 1.59 1.30 1.30 1.90 2.03 2.58 1.41 1.60 2.20THB 10Y GOV 4.08 4.00 4.00 4.00 5.40 4.96 2.66 4.00 4.00VND 10Y GOV 9.47 N/A N/A N/A 8.81 9.08 10.18 N/A N/A

Source for all tables on this page: UBS estimates, Datastream & CEIC


UBS 26

Analyst Certification

Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.


UBS 27

Required Disclosures This report has been prepared by UBS Securities Co. Limited, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS.

For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. Company Disclosures

Issuer Name China (Peoples Republic of)

Source: UBS; as of 03 Jun 2009.


UBS 28

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