Will the monetary cycle derail the emerging equities outperformance? May 24 th, 2010 This material is solely for the attention of "professional” investors

Will the monetary cycle derail the emerging equities outperformance?

May 24th, 2010

This material is solely for the attention of "professional” investors (see more details and definitions at the back).

Will the monetary cycle derail GEM growth? - 19/04/23page 2

Abundant flow of funds on the EM asset class


Stellar relative performance

Relative performance of MSCI Emerging Markets vs. MSCI World

Past performance is not a guarantee or a reliable indicator for current or future performance and returns

Source: Datastream, Amundi - 01/01/1988 – 17/05/2010 - USD

100

150

200

250

300

350

400

01

/01

/19

88

01

/01

/19

89

01

/01

/19

90

01

/01

/19

91

01

/01

/19

92

01

/01

/19

93

01

/01

/19

94

01

/01

/19

95

01

/01

/19

96

01

/01

/19

97

01

/01

/19

98

01

/01

/19

99

01

/01

/20

00

01

/01

/20

01

01

/01

/20

02

01

/01

/20

03

01

/01

/20

04

01

/01

/20

05

01

/01

/20

06

01

/01

/20

07

01

/01

/20

08

01

/01

/20

09

01

/01

/20

10


0

5

10

15

20

25

17/0

5/19

95

17/1

1/19

95

17/0

5/19

96

17/1

1/19

96

17/0

5/19

97

17/1

1/19

97

17/0

5/19

98

17/1

1/19

98

17/0

5/19

99

17/1

1/19

99

17/0

5/20

00

17/1

1/20

00

17/0

5/20

01

17/1

1/20

01

17/0

5/20

02

17/1

1/20

02

17/0

5/20

03

17/1

1/20

03

17/0

5/20

04

17/1

1/20

04

17/0

5/20

05

17/1

1/20

05

17/0

5/20

06

17/1

1/20

06

17/0

5/20

07

17/1

1/20

07

17/0

5/20

08

17/1

1/20

08

17/0

5/20

09

17/1

1/20

09

17/0

5/20

10

avg EM avg DEV

Synchronized monetary policy this time around

EM:: Taiwan, Russia, Korea, Indonesia, India, China, Brazil DEV:US, EEC, Japan

Central bank rates (%)


Monetary policy: tightening in EM vs on hold in DM


Higher GDP growth differential to accelerate

Growth differential between Emerging and developed countries

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source : EIU, MSCI, AmundiGDP (real, %YOY) Average

Source: Datastream, MSCI, EU, Amundi


Change in real GDP forecasts

Source: JP Morgan, Amundi


Superior sovereign risk

Emerging economies enjoy strong macroeconomic fundamentals compared with developed countries:

Key economic data YearEmerging Countries Developed Countries

% of GDP

Gross Government Debt 2009 42% 94%

Budget Balance 20092010e

-4.4%-4.0%

-8.2%-8.5%

Gross External Debt 2009 26% 135%

Current Account Balance

20092010e

2.9%1.7%

-1.6%-1.9%

Source: MSCI, EIU, JEDH, Fitch, Amundi


A twin deficit: a ten years story

Current account (% GDP) + Budget balance (% GDP)

BrazilMexico

China

India

Korea

MalaysiaTaiwan

PolandRussia

Turkey

Israel

South Africa

USA

Japan

Portugal

Greece

Italy

UK

Germany

-25

-20

-15

-10

-5

0

5

10

15

20

25

-15 -10 -5 0 5 10 15

2009

1999

Source: EIU, Amundi

worsening


Emerging markets’ relatively low leverage

Total of Private and Public Debt (% GDP) - 2009

0

50

100

150

200

250

300

350

Japa

n

Uni

ted

Kin

gdom

Uni

ted

Sta

tes

Spa

in

Por

tuga

l

Gre

ece

Fra

nce

Ger

man

y

Tai

wan

Chi

na

Kor

ea

Hun

gary

Tha

iland

Indi

a

Mor

occo

Bra

zil

Sou

th A

fric

a

Egy

pt

Pol

and

Cze

ch R

epub

lic

Chi

le

Phi

lippi

nes

Tur

key

Arg

entin

a

Col

ombi

a

Mex

ico

Rus

sia

Indo

nesi

a

Per

u

General government debt Private creditsource : Fitch


A change in risk perception

CDS 10 y

0

100

200

300

400

500

600

04/0

5/07

04/0

6/07

04/0

7/07

04/0

8/07

04/0

9/07

04/1

0/07

04/1

1/07

04/1

2/07

04/0

1/08

04/0

2/08

04/0

3/08

04/0

4/08

04/0

5/08

04/0

6/08

04/0

7/08

04/0

8/08

04/0

9/08

04/1

0/08

04/1

1/08

04/1

2/08

04/0

1/09

04/0

2/09

04/0

3/09

04/0

4/09

04/0

5/09

04/0

6/09

04/0

7/09

04/0

8/09

04/0

9/09

04/1

0/09

04/1

1/09

04/1

2/09

04/0

1/10

04/0

2/10

04/0

3/10

04/0

4/10

04/0

5/10

RUSSIA CHINA BRAZIL GREECE PORTUGAL SPAIN

EM

DV

1200

1000

800

Source: Datastream, AmundiDonnées au 5 mai 2010

CDS 10y


On the road to premium valuation

PE next 12 months

5

7

9

11

13

15

17

19

21

23

25

Jan-

90

Jul-9

0

Jan-

91

Jul-9

1

Jan-

92

Jul-9

2

Jan-

93

Jul-9

3

Jan-

94

Jul-9

4

Jan-

95

Jul-9

5

Jan-

96

Jul-9

6

Jan-

97

Jul-9

7

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

MSCI Emerging Markets MSCI World Source : Ibes


EPS growth forecasts (IBES consensus)


EM currencies: appreciation to further

Source : Datastream, Amundi

Global Real Effective Emerging Markets Exchange Rates (*)

70

75

80

85

90

95

100

105

110

Sep

93

Mar

94

Sep

94

Mar

95

Sep

95

Mar

96

Sep

96

Mar

97

Sep

97

Mar

98

Sep

98

Mar

99

Sep

99

Mar

00

Sep

00

Mar

01

Sep

01

Mar

02

Sep

02

Mar

03

Sep

03

Mar

04

Sep

04

Mar

05

Sep

05

Mar

06

Sep

06

Mar

07

Sep

07

Mar

08

Sep

08

Mar

09

Sep

09

Mar

10

REER vs Trade weighted $

Asian crisis

'(*) weighted average REER of Korea, Brazil, Mexico, China, South Africa, India, Malaysia, Israel and Russia.


Is EM inflation really a threat ?

Differential between Emerging and Developed Countries

0

1

2

3

4

5

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

source : EIU, MSCI, AmundiCPI (%yoy - average) Average


Monitoring inflation


Conclusion

No decoupling in a more and more globalized world

Emerging Countries will suffer if and when developed economies collapse

– Global imbalances still present

– Impact of “Greek turmoil” (and its consequences) on European growth

Nevertheless we remain strongly convinced on GEM equities on a relative basis

Continuation of global economic recovery should force many investors defensively positioned to reallocate assets– Strong macroeconomic conditions and higher growth compared with developed countries:

– Relative risk perception of Emerging markets should continue to improve

– Current Emerging market discount not justified (but US equity market not cheap)


Disclaimer

This material is provided for information purposes only and does not constitute a recommendation, a solicitation, an offer, an advice or an invitation to purchase or sell any fund, SICAV, sub-fund, (“the Funds”) described herein and should in no case be interpreted as such.This material, which is not a contract, is based on sources that Amundi considers to be reliable. Data, opinions andestimates may be changed without notice.Amundi accepts no liability whatsoever, whether direct or indirect, that may arise from the use of information contained in this material. Amundi can in no way be held responsible for any decision or investment made on the basis of information contained in this material.The information contained in this document is disclosed to you on a confidential basis and shall not be copied, reproduced, modified, translated or distributed without the prior written approval of Amundi, to any third person or entity in any country or jurisdiction which would subject Amundi or any of “the Funds”, to any registrationrequirements within these jurisdictions or where it might be considered as unlawful. Accordingly, this material is for distribution solely in jurisdictions where permitted and to persons who may receive it without breaching applicable legal or regulatory requirements.Not all funds, or sub-funds will be necessarily be registered or authorized in all jurisdictions or be available to allinvestors.Investment involves risk. Past performances and simulations based on these, do not guarantee future results, nor are they reliable indicators of futures performances.The value of an investment in the Funds, in any security or financial product may fluctuate according to market conditions and cause the value of an investment to go up or down. As a result, you may lose, as the case may be, the amount originally invested.All investors should seek the advice of their legal and/or tax counsel or their financial advisor prior to any investment decision in order to determine its suitability.It is your responsibility to read the legal documents in force in particular the current French prospectus for each fund, as approved by the AMF, and each investment should be made on the basis of such prospectus, a copy of which can be obtained upon request free of charge at the registered office of the management company.The information contained in this document is deemed accurate as at 13/01/2010.


Amundi, French joint stock company (“Société Anonyme”) with a registered capital of € 578 002 350 and approved by the French Securities Regulator (Autorité des Marchés Financiers-AMF) under number GP 04000036 as a portfolio management company, 90 boulevard Pasteur -75015 Paris- France – 437 574 452 RCS Paris.

This material is solely for the attention of institutional, professional, qualified or sophisticated investors and distributors. It is not to be distributed to the general public, private customers or retail investors in any jurisdiction whatsoever nor to “US Persons”.

Moreover, any such investor should be, in the European Union, a “Professional” investor as defined in Directive 2004/39/EC dated 21 April 2004 on markets in financial instruments (“MIFID”) or as the case may be in each local regulations and, as far as the offering in Switzerland is concerned, a “Qualified Investor” within the meaning of the provisions of the Swiss Collective Investment Schemes Ordinance of 23 June 2006 (CISA), the Swiss Collective Investment Schemes Ordinance of 22 November 2006 (CISO) and the FINMA’s Circular 08/8 on Public Offering within the meaning of the legislation on Collective Investment Schemes of 20 November 2008. In no event may this material be distributed in the European Union to non “Professional” investors as defined in the MIFID or in each local regulation, or in Switzerland to investors who do not comply with the definition of “qualified investors” as defined in the applicable legislation and regulation.

DisclaimerThis document contains information about Amundi Funds Emerging World, (the “Sub-Fund”), a sub-fund of Amundi Funds (the“Sicav”), an undertaking for collective investment in transferable securities existing under Part I of the Luxembourg law of 20 December 2002, organised as a société d’investissement à capital variable and registered with the Luxembourg Trade and Companies Register under number B68.806. The SICAV has its registered office at 5, allée Scheffer, l-2520 Luxembourg.Amundi Funds has been authorised for public sale by the Commission de Surveillance du Secteur Financier in Luxembourg.Not all sub-funds of the SICAV (the "Sub-Funds") will necessarily be registered or authorized for sale in all jurisdictions or be available to all investors.Subscriptions in the Sub-Funds will only be accepted on the basis of the SICAV’s latest complete and simplified prospectuses, its latest annual and semi-annual reports and its articles of incorporation that may be obtained, free of charge, at the registered office of the SICAV or respectively at that of the representative agent duly authorized and agreed by the relevant authority of each relevant concerned jurisdiction.Consideration should be given to whether the risks attached to an investment in the Sub-Funds are suitable for prospective investors who should ensure that they fully understand the contents of this document. A professional advisor should be consulted to determine whether an investment in the Sub-Funds is suitable.The value of, and any income from, an investment in the Sub-Funds can decrease as well as increase. The Sub-Funds have no guaranteed performance. Further, past performance is not a guarantee or a reliable indicator for current or future performance and returns. The performance data do not take account of the commissions and costs incurred on the issue and redemption of units.This document does not constitute an offer to buy nor a solicitation to sell in any country where it might be considered asunlawful, nor does it constitute public advertising or investment advice.The information contained in this document is deemed accurate as at 02/03/2010.

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Will the monetary cycle derail the emerging equities outperformance? May 24 th, 2010 This material is solely for the attention of "professional” investors