l Global Research l

Economics Weekly | 19:45 GMT 20 June 2013

21-Jun In the aftermath of the Fed

Markets will look for further guidance from Fed speakers Euro-area surveys should confirm a positive trend Japanese data likely to continue to benefit from policy stimulus Elsewhere in Asia, activity is picking up, despite uncertainty in China
Euro-area peripheral sentiment improving EU Commission sentiment survey
120 110 100 90

Portugal

Greece

Overview
Sarah Hewin, +44 20 7885 6251, Sarah.Hewin@sc.com

80 70 Jan-07

Fed speakers this week are likely to add colour to the 19 June FOMC statement and Chairman Bernankes comments. Bernanke warned that asset-purchase tapering could begin later this year though the path of the economy remains key. This week, durable goods orders, personal income and expenditure, and new home sales will be in focus. The monthly core PCE inflation is expected to remain near record lows, but Bernanke expressed confidence that inflation will move higher in the medium term. Strong headline US durable goods orders (DGO) are likely, due to a surge in aircraft orders. But ISM new orders were weak, and a likely contraction in core DGO (ex-transportation) would suggest a softening investment trend. We expect modest growth in personal spending, but will be looking for signs that the fiscal squeeze is taking a toll. US housing data (the S&P Case-Shiller housing price index and new home sales) are likely to confirm the ongoing uptrend in the real estate market. Competitiveness, jobs and growth will be the themes at the EU leaders summit on 27-28 June, with discussions on country-specific structural reforms and national budgets (concluding the 2013 European co-ordination semester). Banking union will also be on the agenda, with difficult questions on the restructuring and winding up of failing banks still to be resolved. Euro-area economic surveys have improved in the past couple of months, although they still point to weak activity. Sentiment indicators are expected to confirm that the regions economy is moving in the right direction, albeit at a very modest pace, with even the peripheral economies doing better. The IFO business climate index should indicate that Germany is leading the other major economies in the region, even though manufacturing remains soft. It is a busy data week in Japan; we expect to see ongoing signs that policy stimulus, optimism over reforms and yen depreciation are supporting economic recovery. Industrial production, retail sales and household spending should continue to recover, while deflation is likely to have moderated in May. Elsewhere in Asia, there should be further signs that activity is picking up gradually, despite nervousness about Chinas economy and the liquidity squeeze there. Industrial production should move higher in Singapore, South Korea and Taiwan, and GDP is likely to have accelerated in Vietnam in Q2-2013. Trade data in Hong Kong, the Philippines and Thailand may, however, reveal still-weak global demand. Taiwans central bank is expected to remain cautious at its policy meeting on 27 June; we have lowered our growth forecast to 3.0% from 3.9% in 2013, lowered our CPI forecast, and pushed back our first rate hike expectation to Q1-2014.

Jan-09

Jan-11

Jan-13

Sources: Eurostat, Standard Chartered Research

Key data releases/events

SC Monday 24 June SG CPI, % y/y TW IP, % y/y VN CPI, % y/y DE IFO bus. climate indicator Prior

2.0 1.5 0.40 -0.88 6.60 6.36 106.2 105.7

Tuesday 25 June HK Exports, % y/y 3.4 7.7 PH Trade balance, USD bn -0.71 -0.59 US Case-Shiller housing, % y/y 10.50 10.87 US Durable goods orders, % m/m 3.6 3.5 US New home sales, '000s SAAR 465 454 Wednesday 26 June SG IP, % y/y 2.8 4.7

Thursday 27 June TW Lead. indicators index, % m/m 0.6 0.5 TW Benchmark interest rate, % 1.875 1.875 EA Economic sentiment 90.0 89.4 US Core PCE price index, % y/y 1.1 1.1 US Personal income, % m/m 0.2 0.0 Friday 28 June KR IP, % y/y -1.6 JP Hhold spending, % y/y 2.0 JP IP, % m/m, SA 1.2 JP Natl CPI ex-fresh food, % y/y -0.1 JP Retail sales % y/y -0.1 TH Current account, USD mn -1.64 DE CPI, % y/y 1.6 US Chicago manufacturing PMI 55.0 25-30 June VN GDP YTD, % y/y 5.0 1.7 1.5 0.9 -0.4 -0.2 -3.36 1.6 58.7 4.9

Key central bank policy calls

Now US Euro area China India Korea Indonesia Thailand South Africa Brazil 0.25 0.5 6.00 7.25 2.50 6.00 2.50 5.00 8.00 Next Q3-2015 Q3-2015 Q1-2014 Q4-2013 Jul-2013 11-Jul-13 H2-2014 Q2-2014 10-Jul-13 Chg +25 +25 +25 -25 -25 +25 +25 +50 +50

Source: Standard Chartered Research

Important disclosures can be found in the Disclosures Appendix

All rights reserved. Standard Chartered Bank 2013 research.standardchartered.com

Economics Weekly

Key events/data in the week ahead

Africa
Economy Key data/event Period May May GMT 10:00 12:00 Forecast 10.5 -10.00 Previous 10.6 -15.02 Wednesday 26 June Ghana CPI, % y/y Friday 28 June South Africa Trade balance, ZAR bn

Asia
Economy Friday 21 June Vietnam Monday 24 June Taiwan Singapore Taiwan Vietnam Tuesday 25 June Philippines Philippines Philippines Hong Kong Hong Kong Hong Kong Wednesday 26 June Singapore New Zealand New Zealand New Zealand Thursday 27 June Taiwan Taiwan South Korea South Korea Japan Japan Japan Japan Japan Japan Japan Japan Japan Japan Friday 28 June Thailand Thailand Thailand India 25-30 Jun Vietnam Vietnam Vietnam Vietnam Vietnam Vietnam 24-26 June Thailand Thailand Thailand Key data/event National assembly releases economic assessment Unemployment rate, %, SA CPI, % y/y Industrial production, % y/y CPI, % y/y Trade balance, USD bn Imports, % y/y Total monthly imports, USD bn Trade balance, HKD bn Exports, % y/y Imports, % y/y Industrial production, % y/y Trade balance, NZD mn Exports, NZD bn Imports, NZD bn Leading indicators index, % m/m Benchmark interest rate, % Industrial production, % y/y Industrial production, % m/m, SA Overall hhold spending, % y/y Jobless rate, % Job-to-applicant ratio Natl CPI, % y/y Natl CPI ex fresh food, % y/y Natl CPI ex food, energy, % y/y Industrial production, % m/m, SA Industrial production, % y/y Retail sales, % m/m, SA Retail sales, % y/y Current account, USD mn Private investment, % m/m Private consumption, % m/m Current account deficit, USD bn Retail sales YTD, % y/y Industrial production, % y/y GDP YTD, % y/y Imports YTD, % y/y Exports YTD, % y/y Trade balance, USD mn Customs-based exports, % y/y Customs-based imports, % y/y Customs-based trade balance, USD mn May May May Jun Apr Apr Apr May May May May May May May May 27-Jun May May May May May May May May May P May P May May May May May Q1 Jun Jun Q2 Jun Jun Jun May May May 07:30 07:30 07:30 00:30 05:00 08:00 4.17 2.0 0.40 6.60 -0.71 -0.5 4.75 -36.5 3.4 3.5 2.8 350 4.10 3.75 0.6 1.875 -1.6 0.5 2.0 4.2 0.89 -0.5 -0.1 -0.3 1.2 -0.9 1.1 -0.1 -1.64 -0.8 1.0 18.5 12.7 8.0 5.0 20.6 19.3 927 -4.4 -4.0 -1.76 4.19 1.5 -0.88 6.36 -0.59 -8.4 4.92 -42.7 7.7 9.0 4.7 157 3.95 3.80 0.5 1.875 1.7 0.8 1.5 4.1 0.89 -0.7 -0.4 -0.6 0.9 -3.4 0.6 -0.2 -3.36 -1.6 -0.5 32.5 11.9 6.7 4.9 20.5 18.0 -553 2.8 8.9 -4.14 Period GMT Forecast Previous

01:00 01:00 01:00 08:30 08:30 08:30 05:00 22:45 22:45 22:45 08:00 09:00 23:00 23:00 23:30 23:30 23:30 23:30 23:30 23:30 23:50 23:50 23:50 23:50 07:30 07:30 07:30 11:30

GR13AP | 21 June 2013

Economics Weekly

Europe
Economy Friday 21 June UK Euro area Monday 24 June Germany Wednesday 26 June Germany UK Thursday 27 June Germany Germany Euro area UK Euro area Euro area EU Friday 28 June Switzerland Germany Key data/event PSNB ex interventions, GBP bn ECB announces 3Y LTRO payment IFO business climate GfK consumer confidence CBI reported sales Unemployment change, 000s Unemployment rate, % M3 money supply, % y/y GDP, % q/q (final) Economic sentiment Business climate EU leaders summit KOF leading indicator CPI, EU harmonised, % y/y Period May Weekly June July May June June May Q1 June June GMT 08:30 10:00 08:00 06:00 09:00 07:55 07:55 08:30 08:30 09:00 09:00 13.45 07:00 09:00 Forecast 12.6 106.2 6.5 -6 10 6.9 3.3 0.3 90.0 -0.62 Previous 6.3 105.7 6.5 -11 21 6.9 3.2 -0.3 89.4 -0.76

June June P

1.15 1.6

1.10 1.6

Latin America
Economy Friday 21 June Brazil Mexico Monday 24 June Brazil Mexico Tuesday 25 June Mexico Friday 28 June Chile Colombia Key data/event IPCA-15 inflation % m/m Monetary policy meeting minutes Central bank weekly economist survey Bi-weekly CPI % bw/bw IGAE economic activity index % y/y (m/m) Monetary policy meeting minutes Monetary policy decision, % Period Jun Jun GMT 14:00 15:00 13:30 15:00 15:00 14:30 Forecast 0.36 Previous 0.46

Jun-15 Apr Jun Jun

0.04 1.6 (0.2) 3.25

0.02 -1.8 (0.3) 3.25

United States
Economy Monday 24 June United States Tuesday 25 June United States United States United States United States United States Wednesday 26 June United States United States Thursday 27 June United States United States United States United States United States United States United States Friday 28 June United States United States United States United States Key data/event Feds Fisher speaks in London Durable goods orders, % m/m Durable goods orders ex transportation, % m/m S&P Case-Shiller 20-city housing price, % y/y Conference board consumer confidence New home sales, 000s SAAR GDP, %q/q SAAR Core PCE, % q/q Initial jobless claims, 000s Core PCE price index, % y/y Personal income, % m/m Personal spending, % m/m Pending home sales, m/m Feds Powell speaks on monetary policy Feds Lockhart speaks on the economy Feds Lacker speaks on economic outlook Chicago manufacturing PMI U of Michigan consumer confidence Feds Williams speaks on monetary policy May May Apr Jun May Q1 T Q1 T 21 Jun May May May May Period GMT 16:30 12:30 12:30 13:00 14:00 14:00 12:30 12:30 12:30 12:30 12:30 12:30 14:00 14:30 16:30 13:15 13:45 13:55 19:30 3.6 -0.5 10.5 75.2 465 2.3 1.3 345 1.1 0.2 0.3 1.1 3.5 1.5 10.87 76.2 454 2.4 1.3 354 1.1 0.0 -0.2 0.3 Forecast Previous

Jun Jun F

55.0 83.0

58.7 82.7

GR13AP | 21 June 2013

Economics Weekly

Recent macro publications (13-19 June 2013)

On the Ground Taiwan Still on the path to recovery
Eddie Cheung | Lawrence Lai | Tony Phoo We lower our GDP growth forecast for 2013 to 3.0% (from 3.9%); keep 2014 forecast unchanged at 4.3% We revise down our 2013 inflation forecast to 1.4% (from 1.8%); revise up 2014 to 1.9% (from 1.3%) We expect policy makers to keep the benchmark rate unchanged in 2013 and resume hikes in Q1-2014 We revise up our USD-TWD forecasts, in line with our GDP growth and inflation forecasts We have an Underweight duration outlook on TWD bonds; curve to bear steepen on rising UST yields

On the Ground China The smog in Beijing

Lan Shen | Li Wei | Stephen Green The really important trends to define 2013-14 growth in China resist analysis The bonfire of the chops has just started, again and Premier Li reportedly wants more Some are calling for a rate cut, but it is very unclear what help this would be We revise down our CPI inflation calls for 2013-14 and push our rate hike call into 2014

Economic Alert India RBI is cautious now, data-dependent later

Anubhuti Sahay Nagaraj Kulkarni Priyanka Kishore Samiran Chakraborty The RBI leaves policy rates unchanged on recent INR weakness and upside risks to inflation We expect no rate cut in July on marginally higher inflation; a rate cut in H2-FY14 is data-dependent Supply pressure to offset support from rate-cut expectations; we remain Neutral duration A dovish RBI is positive for the INR but global conditions will determine the extent of recent gains

On the Ground Philippines Infrastructure boom to boost growth

Jeff Ng We now expect the economy to grow faster 6.9% in 2013, 6.3% in 2014 and 7.0% in 2015 Core scenario: GDP growth to be boosted by PPP and non-PPP investment growth, and to peak in 2015 We expect more PPP projects to be finalised by end-2013, and PPP construction to peak in 2014-15

On the Ground United States Fed likely to emphasise gradualism

John Calverley | John Davies | Sophii Weng | Thomas Costerg

Chairman Bernanke is set to hint that policy tightening remains distant as the economy is still fragile We still expect the Fed to start reducing QE in January, although risks are skewed towards an earlier date The underlying momentum is softer than initially expected: we lower slightly our H2 growth forecast Economic Alert India We expect a repo rate cut; it is a close call
Anubhuti Sahay | Nagaraj Kulkarni | Priyanka Kishore | Samiran Chakraborty

We expect the RBI to cut the repo rate by 25bps on 17 June Recent INR weakness and inflation worries pose risks to this view and may keep the RBI on hold Rates market does not expect a repo rate cut; stay Neutral GoISec duration Indication of no more rate cuts may stall INR gains ahead of the FOMC outcome on 19 June

Economic Alert Pakistan FY14 budget to stimulate growth

Sayem Ali The PMLN governments first budget targets 4.4% growth and a 35% increase in investment spending The FY14 deficit target is 6.3% of GDP, down from 8.8% in FY13, on higher taxes and subsidy cuts The budget is in line with IMF requirements for approval of a new USD 5bn Extended Term Facility Positive for the PKR; bond yields are likely to rise on inflation concerns and increased deficit financing
GR13AP | 21 June 2013 4

Economics Weekly

Summary tables
Central bank outlook
Current Benchm ark rate Majors US Fed funds target rate 0.25 0 31-Jul-13 Q3-2015 +25bps 15-Dec-08 -75bps (%) 1Y change (bps) Next Meeting Forecast next change Date SC forecast Last change Date Action

We expect QE to continue until year-end at USD 85bn/month, before being reduced slowly.

Euro area

Refi rate

0.50

-50

4-Jul-13

Q3-2015

+25bps

2-May-13

-25bps

The ECB is likely to utilise non-conventional policies to further stimulate growth

UK

Bank rate

0.50

4-Jul-13

Q1-2015

+25bps

5-Mar-09

-50bps

We expect the asset-purchase total to rise to GBP 400bn by end Q3-201 3.

Japan

O/N call rate

0.0 - 0.1

11-Jul-13

Q1-2016

+10bps

19-Dec-08

-20bps

The monetary base target is an annual pace of about JPY60-70tn.

Canada Australia New Zealand Sw itzerland Asia China Hong Kong Taiw an Korea Philippines Malaysia Indonesia

O/N lending rate Cash rate Cash rate 3M LIBOR target

1.00 2.75 2.50 0.0-0.25

0 -75 0 0

17-Jul-13 2-Jul-13 25-Jul-13 19-Sep-13

Q3-2014 Q3-2013 Q4-2013 on hold

+25bps -25bps +25bps --

9-Sep-10 7-May-13 10-Mar-11 3-Aug-11

+25bps -25bps -50bps -25bps

1Y lending rate Base rate Discount rate Base rate Reverse repo rate O/N policy rate BI rate

6.00 0.50 1.88 2.50 3.50 3.00 6.00

-25 0 0 -75 -50 0 25

N/A 31-Jul-13 27-Jun-13 11-Jul-13 25-Jul-13 11-Jul-13 11-Jul-13

Q1-2014 Q3-2015 Q1-2014 Jul-13 Q4-2013 Q4-2013 11-Jul-13

+25bps +25bps +12.5bps -25bps +25bps +25bps +25bps

6-Jul-12 16-Dec-08 30-Jun-11 9-May-13 25-Oct-12 5-May-11 13-Jun-13

-31bps -100bps +12.5bps -25bps -25bps +25bps +25bps

We expect BI to hike the BI rate and the FASBI rate both by 50bps to 6.50%and 4.75% respectively in Q3-201 3

Thailand India Pakistan Sri Lanka Vietnam

1-day repo Repo rate Discount rate Repo rate Refi rate

2.50 7.25 9.50 7.00 7.00

-100 -75 -250 -50 -500

10-Jul-13 30-Jul-13 Jun-13 12-Jul-13 N/A

H2-2014 Q4-2013 Jan-14 Q1-2014 Q3-2013

+25bps -25bps +50bps -25bps -50bps

29-May-13 3-May-13 7-Dec-12 10-May-13 13-May-13

-25bps -25bps -50bps -50bps -100bps

Other Em erging Markets South Africa Kenya Nigeria Ghana Uganda Brazil Chile Colombia Mexico Peru Turkey UAE Saudi Arabia Repo rate Central bank rate Monetary policy rate Prime rate Central bank rate Selic rate Overnight rate Min. repo rate TdF Rate Reference rate 1-w eek repo Overnight repo rate Reverse repo rate 5.00 8.50 12.00 16.00 11.00 8.00 5.00 3.25 4.00 4.25 4.50 1.00 0.25 -50 700 575 200 800 -50 0 -200 -50 0 -125 -50 -50 18-Jul-13 July-2013 23-Jul-2013 19-Jul-13 Jul-2013 10-Jul-13 11-Jul-13 28-Jun-13 12-Jul-13 11-Jul-13 23-Jul-13 N/A N/A Q2-2014 Q2-2014 Q1-2014 Q1-2014 Mar-14 10-Jul-13 Q4-2013 Q4-2013 Q3-2013 Q1-2014 Sept -13 N/A N/A +50bps +50bps +100bps -50bps +50bps +50bps +25bps +25bps -50bps +25bps -25bps +25bps +25bps 19-Jul-12 7-May-13 20-Sep-11 22-May-12 4-Dec-12 May-13 Jan-12 Mar-13 Mar-13 May-11 16-May-13 19-Dec-08 16-Jun-09 -50bps -100bps +275bps +100bps -50bps +50bps -25bps -50.bps -50.bps +25bps -50bps -25bps -25bps

Bold, underlined: Change in forecast since last Economics Weekly

Source: Standard Chartered Research

GR13AP | 21 June 2013

Economics Weekly

Rates forecasts
Forecasts in BLUE (RED) indicate upward (downward) revision
End-period United States Policy rate 3M LIBOR 10Y bond yield Euro area Policy rate 3M EURIBOR 10Y bond yield United Kingdom Policy rate 3M LIBOR 10Y bond yield Australia China Policy rate 3M OIS Policy rate 7-day repo rate 10Y bond yield Hong Kong India 3M HIBOR 10Y bond yield Policy rate 91-day T-bill rate 10Y bond yield Indonesia Policy rate FASBI rate 10Y bond yield Malaysia Policy rate 3M KLIBOR 10Y bond yield Philippines Policy rate 3M PDST-F 10Y bond yield Singapore South Korea 3M SGD SIBOR 10Y bond yield Policy rate 91-day CD rate 10Y bond yield Taiw an Policy rate 3M TAIBOR 10Y bond yield Thailand Policy rate 3M BIBOR 10Y bond yield Vietnam Policy rate (Refi rate) Overnight VNIBOR 2Y bond yield Ghana Policy rate 91-day T-bill rate 5Y bond yield Kenya Policy rate 91-day T-bill rate 10Y bond yield Nigeria Policy rate 91-day T-bill rate 10Y bond yield South Africa Policy rate 91-day T-bill rate 10Y bond yield Current 0-0.25 0.27 2.36 0.50 0.21 1.56 0.50 0.51 2.13 2.75 2.65 6.00 10.77 3.46 0.38 1.66 7.25 7.41 7.35 6.00 4.25 6.73 3.00 3.21 3.50 3.50 1.96 3.35 0.38 2.11 2.50 2.69 3.24 1.88 0.88 1.39 2.50 2.55 3.75 7.00 0.93 6.70 15.00 23.10 19.35 8.50 5.42 11.85 12.00 11.48 14.75 5.00 5.21 7.59 Q2-13 % 0-0.25 0.28 2.40 0.50 0.20 1.75 0.50 0.50 2.30 2.75 2.65 6.00 4.50 3.45 0.38 1.60 7.25 7.00 7.25 6.00 4.25 6.75 3.00 3.20 3.40 3.50 2.00 3.50 0.40 1.80 2.50 2.60 3.00 1.88 0.88 1.35 2.50 2.55 3.55 6.50 1.00 6.50 16.00 21.70 19.00 8.50 10.20 11.80 12.00 11.90 14.00 5.00 5.19 7.75 Q3-13 % 0-0.25 0.28 2.10 0.50 0.20 1.50 0.50 0.55 2.00 2.50 2.50 6.00 3.50 3.60 0.40 1.65 7.25 7.00 7.25 6.50 4.75 7.00 3.00 3.20 3.50 3.50 1.75 3.80 0.40 1.90 2.00 2.10 3.10 1.88 0.88 1.40 2.50 2.60 3.55 6.50 1.50 6.60 16.00 20.00 17.50 8.50 9.75 12.50 12.00 11.40 13.00 5.00 5.22 7.65 Q4-13 % 0-0.25 0.28 2.25 0.50 0.25 1.60 0.50 0.60 2.15 2.50 2.85 6.00 4.00 3.90 0.40 1.75 7.00 7.20 7.50 6.50 4.75 7.10 3.25 3.45 3.70 4.00 1.50 4.00 0.40 2.00 2.00 2.10 3.20 1.88 0.88 1.45 2.50 2.65 3.60 6.50 2.00 6.70 16.00 19.00 17.00 8.50 9.25 12.00 12.00 10.90 13.80 5.00 5.26 7.55 Q1-14 % 0-0.25 0.28 2.50 0.50 0.30 1.75 0.50 0.65 2.35 3.00 3.10 6.25 4.30 4.10 0.40 1.90 7.00 7.20 7.75 6.50 4.75 7.20 3.25 3.45 3.75 4.00 1.50 4.20 0.40 2.20 2.00 2.10 3.30 2.00 0.96 1.50 2.50 2.70 3.60 6.50 2.00 7.00 15.50 18.20 17.50 8.50 8.75 11.70 13.00 11.90 14.20 5.00 5.38 7.50 Q2-14 % 0-0.25 0.28 2.75 0.50 0.35 2.00 0.50 0.70 2.60 3.25 3.25 6.75 5.00 4.30 0.40 2.30 7.00 7.25 7.75 6.50 4.75 7.30 3.25 3.45 3.80 4.00 1.50 4.50 0.40 2.40 2.00 2.10 3.40 2.13 1.02 1.55 2.50 2.75 3.70 6.50 2.00 7.50 14.50 16.20 17.00 9.00 8.80 11.50 13.00 11.70 15.00 5.50 5.56 7.50

Source: Standard Chartered Research

GR13AP | 21 June 2013

Economics Weekly

Macro forecasts
Forecasts in BLUE (RED) indicate upward (downward) revision
Country 2011 Majors US^ Euro area Japan UK Canada Sw itzerland Australia New Zealand Asia Bangladesh* China CNH Hong Kong India* Indonesia Malaysia Pakistan* Philippines Singapore South Korea Sri Lanka Taiw an Thailand Vietnam Africa Angola Botsw ana Cameroon Cte d'lvoire The Gambia Ghana Kenya Nigeria Sierra Leone South Africa Tanzania Uganda Zambia MENA Bahrain Egypt* Jordan Kuw ait* Lebanon Oman Qatar Saudi Arabia Turkey UAE Latin Am erica Argentina Brazil Chile Colombia Mexico Peru Global 1.3 1.7 1.4 -0.7 0.9 2.5 1.9 2.5 1.3 7.3 6.7 9.2 5.0 6.2 6.5 5.1 2.4 3.6 5.3 3.6 8.3 4.0 0.1 5.9 4.9 3.7 8.0 3.5 -5.8 -5.0 14.4 4.9 7.2 5.2 3.5 6.1 4.4 6.6 6.8 1.9 1.8 2.4 6.3 1.5 4.5 16.9 6.8 8.5 4.2 3.9 6.5 2.7 5.9 5.7 3.9 6.9 3.1 Real GDP grow th (%) 2012 1.1 2.2 -0.6 1.9 -0.1 1.8 0.9 3.6 3.0 6.2 6.1 7.8 1.4 5.0 6.2 5.6 3.7 6.8 1.3 2.0 6.4 1.3 6.4 5.0 4.9 6.8 3.8 4.7 8.0 -1.7 7.9 5.1 6.9 20.0 2.5 6.5 5.1 7.0 4.2 3.9 2.2 2.9 3.0 1.3 8.3 4.5 6.8 3.0 3.4 2.2 0.5 0.9 5.6 4.0 3.9 6.3 2.5 2013 1.0 1.8 -0.5 1.9 0.7 1.7 1.2 2.5 2.7 6.4 6.3 7.7 3.4 5.5 6.2 4.7 3.6 6.9 3.2 2.5 6.5 3.0 4.0 5.5 5.0 7.4 4.1 4.7 6.5 9.7 8.2 5.5 6.6 8.0 2.8 6.8 5.3 7.4 3.9 4.5 2.0 3.2 3.0 2.5 4.0 4.9 4.8 4.0 3.5 3.5 2.5 3.2 4.5 4.0 3.6 6.0 2.7 2014 1.9 2.7 1.3 1.1 1.5 2.5 2.1 3.0 2.8 6.7 6.5 7.5 4.5 6.0 6.5 5.3 4.0 6.3 5.4 3.8 7.2 4.3 5.5 6.2 5.2 5.5 4.2 4.5 6.5 8.3 7.6 5.9 7.3 7.0 3.4 7.0 5.0 7.5 4.1 5.0 3.5 3.5 3.5 4.5 4.0 4.8 4.2 4.5 3.3 4.1 3.0 4.0 5.0 5.0 4.0 6.0 3.4 2015 1.7 3.0 1.5 1.3 1.9 3.0 1.9 3.3 2.6 6.7 6.5 7.5 4.5 6.5 6.7 5.0 4.5 7.0 5.0 3.6 8.0 4.8 6.0 6.5 5.5 5.5 4.3 4.5 6.5 6.0 7.2 6.2 7.5 5.0 3.8 7.2 5.6 7.8 4.2 4.5 4.5 4.0 4.0 4.5 4.3 4.8 3.9 4.8 3.2 4.1 3.5 3.6 5.0 5.0 4.5 5.8 3.1 Inflation (yearly average %) 2011 1.9 1.4 2.7 -0.2 4.4 2.5 0.3 3.3 4.1 5.8 8.8 5.4 5.3 8.7 5.4 3.2 13.9 4.8 5.1 4.0 6.7 1.4 3.8 18.6 8.5 15.0 6.9 2.6 3.0 6.0 9.0 14.0 10.9 16.0 5.0 11.3 18.7 8.8 5.5 -0.4 11.3 4.6 5.0 5.0 4.0 2.4 6.1 6.5 0.9 7.0 23.5 6.5 3.3 3.7 3.8 3.4 3.9 2012 1.8 1.8 2.5 0.0 2.8 2.1 -0.7 1.8 1.1 3.7 10.6 2.6 4.1 7.4 4.3 1.7 10.8 3.1 4.6 2.2 7.6 1.9 2.9 9.3 8.5 10.7 7.5 3.0 2.0 5.0 9.4 9.6 12.3 11.0 5.6 15.6 14.6 6.4 5.8 3.2 8.7 4.5 4.4 6.4 3.0 2.1 4.9 9.0 1.5 6.4 25.0 5.4 3.0 2.4 3.6 3.7 3.3 2013 1.4 1.2 1.5 0.2 2.8 2.0 0.4 2.6 1.8 3.6 7.7 2.8 4.5 6.3 5.2 2.6 8.5 3.6 3.9 1.8 7.5 1.4 2.5 7.2 7.0 8.5 6.3 3.0 2.5 6.0 10.9 6.0 9.4 10.0 5.4 9.8 5.5 7.3 5.4 3.0 7.7 5.0 2.6 5.5 3.3 3.8 4.9 7.6 2.9 6.9 28.0 5.8 2.7 2.7 3.8 2.7 3.0 2014 1.8 1.8 1.3 1.9 2.5 2.2 0.9 2.7 2.4 4.3 7.5 4.1 4.5 6.0 5.1 3.4 9.0 4.0 3.5 2.5 7.2 1.9 3.2 8.2 7.7 8.0 5.9 2.5 2.5 4.0 9.3 6.6 13.0 10.0 5.1 7.4 8.2 7.4 5.4 2.8 8.5 5.2 3.7 5.0 3.5 5.1 5.0 6.8 2.8 6.5 25.0 5.5 3.0 3.0 3.8 2.5 3.3 2015 1.9 2.0 1.5 1.4 1.9 2.2 0.9 2.6 2.3 3.7 8.0 3.0 4.0 6.0 4.8 2.7 9.0 4.0 3.5 2.8 7.5 1.4 4.0 5.8 7.5 7.5 5.7 2.5 2.5 4.0 7.4 6.1 13.4 8.0 4.9 6.7 8.1 6.2 5.2 2.8 8.0 5.0 3.6 4.5 3.6 3.4 4.2 7.0 3.2 6.2 23.0 5.3 3.0 3.0 3.8 2.5 3.8 Current account (% of GDP) 2011 -0.9 -3.1 0.3 2.0 -1.9 -3.0 10.5 -2.4 -4.0 2.3 0.9 2.8 5.2 -4.2 0.2 11.0 0.3 3.1 21.9 2.4 -7.6 8.8 3.7 -5.5 1.7 12.0 -1.5 -3.8 1.0 -17.0 -9.2 -9.3 12.2 -50.0 -3.4 -9.5 -10.2 3.2 8.9 12.0 -2.6 -12.0 30.0 -17.5 10.0 32.0 22.0 -9.8 11.2 -1.7 -0.4 -2.1 -1.3 -3.1 -0.8 -1.9 -2012 -1.0 -3.0 0.9 1.0 -3.8 -3.2 12.7 -3.7 -5.0 1.7 1.5 2.6 3.0 -5.2 -2.8 6.4 -2.1 2.8 18.6 3.8 -6.6 10.2 0.6 0.3 -1.8 8.5 3.9 -4.0 -3.0 -14.0 -9.8 -13.7 6.0 -9.0 -6.3 -16.0 -11.0 1.2 9.0 10.5 -3.1 -14.1 40.0 -18.0 12.0 30.0 21.0 -7.5 10.2 -1.9 0.1 -2.4 -3.8 -3.1 -0.8 -2.8 -2013 -0.6 -3.0 1.5 2.0 -2.0 -2.8 12.3 -4.1 -5.6 2.3 3.0 3.3 3.5 -4.4 -2.1 8.0 -1.0 4.2 17.0 3.0 -4.5 8.0 -0.4 0.4 -2.0 8.0 3.4 -3.8 -1.5 -13.0 -8.5 -12.2 3.8 -7.0 -5.9 -13.4 -12.5 2.6 7.6 10.0 -2.9 -9.9 35.0 -16.0 7.5 27.0 19.5 -8.0 8.5 -2.0 0.4 -2.5 -4.2 -3.3 -1.0 -2.8 -2014 -0.6 -3.1 1.3 2.3 -1.8 -2.6 10.5 -3.9 -5.8 2.6 2.5 3.7 4.5 -3.8 -1.0 10.0 -2.0 4.2 19.0 2.5 -4.0 7.0 -0.9 -0.5 -2.5 6.0 2.7 -3.5 -3.0 -13.0 -9.5 -11.0 2.1 -6.0 -5.5 -11.5 -11.7 2.9 7.5 10.0 -2.5 -8.0 35.0 -15.0 7.0 25.0 18.7 -7.2 7.4 -2.0 0.0 -2.4 -3.2 -2.7 -1.2 -2.5 -2015 -0.8 -2.9 1.0 2.1 -2.5 -2.3 10.0 -5.9 -6.4 2.8 2.0 77.80 3.9 6.18 6.160 77.00 6.15 6.140 7.765 53.50 9,900 3.10 41.50 1.26 1,100 126.0 29.80 30.25 76.00 6.13 6.120 7.780 53.00 9,800 3.07 41.25 1.25 1,110 125.0 29.30 30.25 77.00 6.10 6.080 7.800 52.00 9,700 3.00 41.00 1.24 1,080 124.0 28.90 30.00 77.00 6.07 6.050 7.810 53.00 9,800 3.08 41.75 1.26 1,080 123.5 29.30 30.50 N.A. 1.29 98.0 1.48 1.05 0.97 0.96 0.82 N.A. 1.32 96.0 1.52 1.03 0.95 0.98 0.85 N.A. 1.29 97.0 1.46 1.03 0.98 0.98 0.86 N.A. 1.30 102.0 1.48 1.04 0.98 0.96 0.91 N.A. 1.27 102.0 1.47 1.02 1.03 0.94 0.89 Q2-13 Q3-13 FX Q4-13 Q1-14 Q2-14

5.0 7.765 -3.7 54.50 -0.4 9,950 10.0 3.12

-2.2 101.00 103.00 105.00 106.50 107.00 4.3 42.00 20.0 1.27 2.2 1,130 -3.8 126.5 7.5 29.95 -1.5 30.50 -2.6 5.5 96.00 2.4 8.05 -3.5 508.5 -3.0 508.5 -13.0 33.50 -8.2 2.01 -9.0 87.00 1.0 159.0 -7.0 4,340 -5.4 10.30 -10.2 1,630 -9.9 2,680 3.0 7.0 10.0 -2.1 -6.5 30.0 7.0 24.0 18.7 -7.6 7.1 -2.0 0.0 -2.4 -3.0 -3.0 -2.5 -5.25 2.16 505 1,910 2.75 5.45 2.07 500 1,880 12.75 2.70 5.65 2.03 490 1,850 12.40 2.65 5.85 2.00 480 1,820 11.99 2.63 6.05 2.02 485 1,850 11.90 2.62 0.38 6.88 0.71 0.27 0.39 3.64 3.75 1.85 3.67 0.38 6.95 0.71 0.27 1,500 0.39 3.64 3.75 1.85 3.67 0.38 6.98 0.71 0.27 1,500 0.39 3.64 3.75 1.80 3.67 0.38 7.16 0.71 0.27 1,500 0.39 3.64 3.75 1.80 3.67 0.38 7.20 0.71 0.27 1,500 0.39 3.64 3.75 1.80 3.67 5.20 96.30 8.03 496.9 496.9 34.00 2.03 88.00 4,350 10.05 1,660 2,720 5.10 96.50 7.98 508.5 508.5 35.00 2.06 88.50 4,360 10.20 1,650 2,750 5.05 96.90 7.69 504.6 504.6 36.00 2.10 89.00 160.4 4,380 10.30 1,660 2,770 5.10 97.10 7.86 516.5 516.5 36.50 2.16 89.00 162.0 4,390 10.50 1,665 2,790 5.30

-0.8 21,000 21,000 21,000 20,900 20,800

158.00 159.80

-14.0 1,500

-1.4 13.05

* Fiscal year starts in April in India and Kuwait, July in Bangladesh, Pakistan, and Egypt ^ Inflation: Core PCE deflator used for US Source: Standard Chartered Research
GR13AP | 21 June 2013 7

Economics Weekly

Forecasts Equity
MSCI DM Data as of 18 Jun 2013
Aggregate Country Australia Canada Euro area Japan New Zealand Switzerland United States United Kingdom MSCI DM Weight1 3% 4% 12% 9% <1% 4% 54% 9% 2012 -4% -1% -10% 15% -3% 0% 7% -6% 2% EPS growth 2013 9% 4% 14% 57% 8% 17% 7% 3% 11% 2014 10% 12% 14% 20% 13% 12% 11% 9% 12% 2012 15 14 14 24 18 17 16 12 16 PE ratio 2013 14 14 13 15 16 15 15 12 14 2014 13 12 11 13 14 13 14 11 13 2012 1.9 1.8 1.3 1.3 1.8 2.5 2.5 1.8 2.0 PBV 2013 1.9 1.7 1.3 1.2 1.9 2.3 2.3 1.7 1.8 2014 1.8 1.6 1.2 1.1 1.8 2.1 2.1 1.6 1.7 Dividend yield 2013 5% 3% 4% 2% 5% 3% 2% 4% 3% Dividend payout 2013 69% 44% 48% 31% 82% 48% 31% 47% 38% Performance YTD 5% 0% 4% 27% 3% 13% 16% 8% 11%

EPS growth Sectors Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities 2012 19% 6% -4% 7% 4% 3% 3% -23% -4% 3% 2013 21% 9% 0% 20% 2% 9% 7% 10% 9% 9% 2014 15% 10% 10% 10% 9% 14% 13% 19% 9% 17% 2012 19 19 12 15 16 16 16 15 15 18

PE ratio 2013 16 17 12 12 16 15 15 14 13 16 2014 14 16 11 11 14 13 13 12 12 14 2012 2.7 3.6 1.6 1.2 3.3 2.4 3.0 1.7 2.0 1.4

PBV 2013 2.5 3.3 1.5 1.1 3.1 2.2 2.7 1.6 1.9 1.3 2014 2.3 3.1 1.4 1.0 2.8 2.0 2.4 1.5 1.8 1.3

Dividend yield 2013 2% 3% 3% 3% 2% 2% 2% 3% 5% 4%

Dividend payout 2013 30% 49% 37% 38% 37% 37% 26% 39% 64% 72%

Performance YTD 18% 13% 6% 11% 19% 11% 10% -7% 10% 7%

MSCI EM Data as of 18 Jun 2013

Aggregate Country Brazil Chile China Colombia Egypt India (FY) Indonesia Korea Malaysia Mexico Morocco Peru Philippines Russia South Africa Taiwan Thailand Turkey MSCI EM Aggregate Sectors Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities 2012 4% 13% -16% 7% 19% -7% 41% -42% 3% 10% Current local index 49,465 9,734 12-month index forecast2 60,500 14,500 12-month return forecast2 22% 49% Weight1 12% 2% 18% 1% <1% 7% 3% 15% 4% 5% <1% <1% 1% 6% 7% 12% 3% 2% 2012 -28% -26% 0% -3% -3% 9% 7% 9% 11% 23% -3% -6% 13% -12% 6% -1% 13% 19% -3% EPS growth 2013 21% 23% 11% 11% 25% 12% 6% 21% 1% 12% 11% -0% 6% -0% 6% 35% 10% 10% 10% PE ratio 2014 15% 17% 3% 12% 20% 26% 13% 15% 7% 16% 2012 13 24 7 10 24 15 14 13 13 12 2013 11 23 6 9 22 14 10 12 12 12 2013 10 20 6 8 18 11 9 10 12 10 2012 2.0 3.8 0.8 1.4 3.5 1.4 2.1 1.2 2.1 0.9 2014 13% 23% 11% 11% 20% 15% 17% 16% 10% 14% 5% 11% 9% 1% 14% 13% 13% 9% 12% 2012 13 22 10 17 11 16 17 10 16 19 11 11 21 5 15 20 14 11 11 PE ratio 2013 11 18 9 16 9 14 15 8 16 17 10 11 19 5 13 14 13 11 10 2013 10 14 8 14 7 12 13 7 15 15 10 10 18 5 12 13 11 10 9 PBV 2013 1.9 3.6 0.8 1.3 3.3 1.4 1.9 1.2 2.1 1.0 2014 1.6 3.2 0.7 1.2 2.9 1.3 1.6 1.1 1.9 0.9 2012 1.3 2.0 1.4 1.8 1.3 2.5 3.7 1.2 2.2 2.8 2.2 2.5 3.2 0.7 2.3 1.8 2.3 1.8 1.5 PBV 2013 1.3 1.8 1.3 1.6 1.3 2.2 3.3 1.0 2.1 2.5 2.0 2.1 2.9 0.6 2.1 1.7 2.2 1.6 1.4 2014 1.2 1.7 1.2 1.5 1.1 1.9 2.8 0.9 2.0 2.3 1.8 1.8 2.7 0.6 1.9 1.6 1.9 1.4 1.3 Dividend yield 2013 4% 2% 4% 4% 5% 2% 3% 1% 3% 2% 5% 3% 2% 4% 4% 3% 3% 3% 3% Dividend payout 2013 43% 43% 32% 63% 40% 24% 40% 10% 51% 30% 54% 30% 42% 21% 49% 46% 42% 31% 31% Dividend payout 2013 20% 49% 27% 32% 29% 31% 19% 37% 56% 44% Performance YTD -11% -9% -11% -12% -12% -2% 7% -7% 7% -9% -9% -25% 12% -8% -3% 3% -4% -1% -10% Performance YTD -6% -4% -16% -8% -2% -9% -2% -23% -9% -8%

19,223 4,840 1,901 1,774 39,460

22,000 4,800 2,100 1,750 55,000

14% -1% 10% -1% 39%

6,519 1,314 36,599 8,011 1,427 77,740 954

8,000 1,800 34,000 9,700 1,650 96,000 1,200

23% 37% -7% 21% 16% 23% 26%

EPS growth 2013 10% 7% 3% 5% 14% 5% 37% 14% 2% 7%

Dividend yield 2013 2% 2% 4% 4% 1% 2% 2% 3% 5% 4%

Notes: All country data refers to local currency, aggregate data to USD; EPS = earnings per share, PE = price/earnings, PBV = price to book value; Sources: FactSet, except (1) MSCI, (2) Standard Chartered Research
GR13AP | 21 June 2013 8

Economics Weekly

Commodities forecasts
Market close
12-Jun-13

m/m %

Change YTD %

y/y %

Q1 - 13 Q2 - 13 vs Fwd Q3 - 13 vs Fwd Q4 - 13 vs Fwd Q1 - 14 vs Fwd A F % F % F % F %

2012 A

2013 vs Fwd F %

2014 vs Fwd F %

Energy Crude oil (nearby future, USD/b) NYMEX WTI ICE Brent Dubai spot 1 Refined oil products cracks and spreads Singapore naphtha (USD/b)1 Singapore jet kerosene (USD/b)1 Singapore gasoil (USD/b)1 Singapore regrade (USD/b)1 Singapore fuel oil 180 (USD/b)1 Europe jet (USD/b)1 Europe gasoil (USD/b)1 Rotterdam 3.5% barges (USD/b)1 Coal (USD/t) API4 API2 globalCOAL NEWC*1 Metals Base metals (LME 3m, USD/t) Aluminium Copper Lead Nickel Tin Zinc Iron ore (USD/t) Iron ore2 Steel** (CRU assessment, USD/t) HRC, US1 HRC, Europe1 HRC, Japan1 HRC, China1 Precious metals (spot, USD/oz) Gold (spot) Palladium (spot) Platinum (spot) Silver (spot) Agricultural products Softs (nearby future) NYBOT cocoa, USD/t LIFFE coffee, USD/t *** NYBOT coffee, USc/lb NYBOT sugar, USc/lb TOCOM RSS3 rubber#, JPY/kg Fibres NYBOT cotton No.2, USc/lb Grains & oilseeds (nearby future) CBOT corn (maize), USc/bushel CBOT soybeans, USc/bushel CBOT wheat, USc/bushel CBOT rice, USD/cwt Thai B rice 100%, USD/tonne*1 Edible oils (nearby future) Palm oil (MDV,MYR/t) Soyoil (CBOT, USc/lb) 2,420 48 +6.1 -2.9 +4.3 -2.0 -17.0 -1.9 2,458 51
1

95.9 103.5 99.9

-0.1 +0.0 -0.5

+3.6 -7.4 -6.4

+15.1 +5.9 +4.2

94 113 108

93 106 103

-1% 2% -

98 110 107

2% 7% -

98 108 105

3% 6% -

98 105 102

5% 3% -

94.2 111.7 108.9

96 109 106

1% 4% -

99 105 103

9% 6% -

-6.0 15.9 18.1 -2.2 -2.9 15.5 13.1 -12.0

+3.6 +4.0 +5.7 +19.8 -43.9 +10.8 +0.9 +5.0

+47.4 -9.6 +23.2 -174.9 -74.3 -8.2 -2.0 -41.2

-64.1 +3.5 +22.5 -463.3 -1070.2 -11.8 -21.5 +87.9

-1.8 20.2 19.5 0.7 -7.4 18.9 15.7 -16.1

-3 17 17 -2 -6 14 17 -13

-2 18 18 -1 -7 15 17 -11

2 19 19 -1 -6 14 17 -13

-5.5 17.8 17.1 0.6 -3.3 18.4 16.3 -12.4

-1.2 18.6 18.2 -0.6 -6.6 15.5 16.3 -13.0

79 75 87

-2.3 -8.8 -1.3

-11.6 -16.3 -8.0

-6.6 -12.1 -4.1

86 87 93

82 83 87

1% 3% -

84 83 86

8% 6% -

87 85 90

9% 4% -

87 88 92

6% 4% -

93 94 97

85 84 89

4% 3% -

88 90 91

3% 2% -

1,864 7,120 2,118 14,275 20,400 1,865

-0.3 -4.5 +4.5 -6.7 -2.4 -0.6

-10.2 -10.7 -9.9 -16.4 -12.9 -10.9

-5.2 -4.2 +10.4 -16.0 +4.8 -1.6

2,039 7,952 2,305

1,900 7,250 2,100

2% 0% 2% 6% 5% 3%

2,000 7,500 2,200 17,000 24,000 2,000

8% 5% 4% 19% 18% 8%

2,100 7,750 2,200 17,000 24,000 2,100

11% 9% 3% 19% 18% 11%

2,200 8,500 2,400 18,000 24,500 2,300

15% 19% 12% 25% 20% 21%

2,052 7,948 2,074 17,583 21,113 1,965

2,010 7,613 2,201 16,840 23,515 2,013

6% 4% 2% 11% 10% 6%

2,200 8,500 2,400 18,000 24,500 2,300

13% 18% 11% 24% 20% 19%

17,360 16,000 24,058 22,000 2,052 1,900

124

-9.5

-8.8

148

124

112

127

127

129

128

120

639 614 589 605

-3.5 -5.4 -3.8 -4.0

-13.3 -10.6 -28.8 -13.7

680 664 648 679

638 622 597 602

606 606 605 562

576 559 598 600

759 564 620 650

724 666 820 654

625 613 612 611

734 576 669 651

1,389 757 1,480 22

-3.0 +4.5 -1.2 -7.9

-17.2 +6.4 -4.9 -28.2

-14.2 +21.0 -0.1 -24.4

1,632 741 1,632 30.1

1,400 740 1,500 23

-2% 2% 1% -2%

1,400 750 1,550 24

1% -1% 4% 10%

1,500 800 1,650 25

8% 5% 11% 14%

1,500 850 1,800 25

7% 12% 21% 14%

1,669 645 1,552 31.2

1,483 758 1,583 26

2% 2% 4% 5%

1,500 850 1,800 25

7% 12% 21% 13%

2,372 1,747 123 16 231 89

+2.1 +2.1 -15.2 -6.1 -21.3 +2.9

+5.7 -12.1 -14.8 -17.0 -23.5 +17.8

+4.7 -17.4 -19.6 -18.7 -4.7 +17.9

2,177 2,047 143 18.4 303.0 82

2,300 1,975 135 17 315 85

0% 3% 2% 0% -1%

2,350 2,100 140 18 320 90

-1% 19% 12% 9% 1%

2,350 2,100 145 19 320 80

-1% 17% 13% 8% -9%

2,400 2,100 150 20 315 90

1% 16% 14% 14% 3%

2,346 2,016 175 21.6 274.3 80

2,294 2,056 141 18 315 84

-1% 9% 7% 4% -2%

2,400 2,100 150 21 323 90

0% 14% 11% 19% 5%

651 1,541 683 16 600

-9.4 +0.8 -2.7 +6.0 +0.3

-6.8 +8.1 -12.3 +9.6 -0.7

+9.8 +8.9 +10.8 +17.2 +2.9

715 1,448 739.2 15.3 600

660 1,460 700 16 600

0% -1% 1% 0% -

650 1,450 725 16 625

12% 3% 5% -2% -

625 1,400 730 16 625

16% 6% 3% -3% -

660 1,350 740 15 630

20% 2% 3% -9% -

694 1,464 750.3 14.9 589

663 1,439 724 16 613

6% 2% 2% -1% -

685 1,375 748 15 630

24% 5% 1% -10% -

2,350 49

0% 0%

2,600 51

6% 6%

2,750 50

12% 5%
2

2,800 53

13% 12%

2,959 53

2,539 50

5% 3%

2,819 54

14% 15%

*weekly quote; **monthly average; ***10 tonne contract; no forward price comparison available; cost and freight at Chinas Tianjin port, 62% iron content, Indian origin; #6th contract; Sources: Bloomberg, Platts, Standard Chartered Research
GR13AP | 21 June 2013 9

Economics Weekly

FICC on-the-run Rates

10Y bond Majors United States EU* Asia ex-Japan China 3.46 2.36 1.56 3M 3-12M Fundamentals Current trades

Fiscal tightening will weigh on Q2 growth, but we expect very gradual upward momentum to be maintained. The economy remains weak; we expect the refi rate to stay low for a prolonged period following the cut on 2 May.

Near-term performance will be affected by ultra-tight liquidity conditions; weaker-than-expected macro data, inflation likely to be contained for longer and potentially delay the rate-hiking cycle. We see HKD short rates as range-bound at current low levels on flush liquidity; long-dated bonds to track USTs; higher volatility expected. Supply pressure expectations. to offset support from rate cut

Hong Kong

1.66

India Indonesia Malaysia

7.35 6.73 3.50

Sell IDR 10Y bond Receive 5Y MYR IRS Long 7Y MGS Sell PHP 20Y bond 2/10 KRW IRS steepener THB 3/10Y IRS steepener

Yields to rise on risk of higher supply, weak global demand and low real yields. Structural demand to limit foreign selling. We prefer the belly due to long-end supply risk. Concerns about higher bond supply to offset monetary policy easing. Fundamentals are positive, but yields are too low; we expect a sell-off, particularly at the long end. Long-dated SGS to rise with USTs and near-term supply risk. Dovish BoK to mitigate Fed QE tapering fears, while IRS curve should bull steepen. Curve to bear steepen driven by rising yields on UST and recovering local macro outlook. We see a risk of a bond sell-off amid potential capital-flow measures. Yields have bottomed ahead of the anticipated last policy rate cut by the SBV.

Pakistan Philippines Singapore South Korea Taiwan Thailand Vietnam

10.95 3.35 2.11 3.24 1.39 3.75 7.75

Sub-Saharan Africa Ghana** Kenya Nigeria South Africa Uganda Zambia 19.35 11.85 14.73 7.59 13.90 16.00 Prospect of a larger sovereign bond to alleviate pressure on local yields. New fiscal-year supply outlook to weigh on sentiment. Supportive bond supply and inflation outlook. Sell-off is overdone; valuations to revive offshore investor appetite. Increased bond supply weighs on sentiment. Range-trading amid an uncertain monetary stance. Long GHS 3Y

* German government bond yields; ** 3Y benchmark

Source: Standard Chartered Research

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FICC on-the-run Credit

Sector Sovereigns 3M Rationale Tight spreads and higher susceptibility to a UST sell-off skew risk/reward to the downside. The PHILIP curve trades tight on a rating-adjusted basis; however, positive fundamentals and strong investor support will support the space. While the INDON curve offers a decent pick-up over the global BBB sovereigns, supply risk and fundamental concerns should limit spread tightening. The fundamental backdrop for HY sovereigns will remain challenging in the next 6-12 months, which could lead to volatility. Picks INDON 18S PHILIP 19N MONGOL 18 Pans INDON 23/43 PHILIP 24N/37

Financials Senior

Thai names appear slightly more attractive than Malaysian names. We prefer Korean policy banks over commercial banks, although they are rich in the Asian context. While liquidity can be patchy, some of the Indian UT2s offer an attractive yield pick-up over Indian seniors and other Asian sub-debt. We also like some of the HK LT2s, which are attractive from a spread vs. DV01 perspective. Tier 1 names offer value on a rating-adjusted basis, though liquidity is an issue. SBIIN 18 KOFCOR 17 OCBC23 BCHINA 20 BNKEA 22 ICICI 22 SBIIN 7.14 49 MAYMK 17 SHNHAN 18 BCHINA 17

Tier 2

Tier 1 High-grade corporates China corporates

While Chinese SOEs offer a pick-up over US credits on a rating-adjusted basis, they appear fairly valued versus the Korean and Hong Kong credits. Hence, we are Neutral on the space. HK property-sector names have solid credit profiles, while the industrial names enjoy high ratings and a strong local bid. We believe some triple-B corporates offer good risk/reward. Korean quasi-sovereigns no longer trade very tight against China and Hong Kong credits. Korean private corporates face weakening fundamentals and ratings overhang (in most cases). While the Indonesian quasi-sovereigns offer some value, we think corporates in India and Malaysia are fairly valued. Singapore and Thai corporates are a bit rich, in our view.

CHINAM 22 VANKE 18 HAIAIR 20 SUNHUN 22 LIFUNG 20 WHEELK 17 NOBLSP 20 KOSEPW 17

SINOCH 20 SINOPC 43 CHINLP 23 CHEUNG 49

Hong Kong corporates

Korea corporates

SKM 18 HIGHWY 17 POHANG 21 TOPTB 23

Other HG corporates High-yield corporates China corporates

PERTIJ 22 NTPCIN 21

While most developers have reported strong 5M-2013 contracted sales, the sales of some may be negatively affected by policy controls in the coming months. We still expect most of them to achieve their full-year sales targets. The developers liquidity positions are strong, backed by offshore fund-raising this year. Similarly, refinancing pressure on the industrial corporates has eased, although their earnings and credit metrics will remain under pressure. We maintain our Overweight recommendation on the sector given that selected bonds still offer RV and/or good carry. Also, the recent market dislocation and correction have provided more attractive entry levels than before. HY bonds from the Philippines, India and Indonesia continue to provide a diversification opportunity for investors. EVERRE 15 YUZHOU 15 AGILE 16 CHINSC 17 SUNAC 17 CIFIHG 18 MIEHOL 16 MINMET 18 XIN 18

Other HY corporates Middle East Sovereigns

ADROIJ 19 FIRPAC 19

CIKLIS 19

We expect fundamentals to remain robust given supportive oil prices. That said, we see better value in the financials and quasi-sovereigns, with the exception of Dubai, where we like the sovereign. We like the Abu Dhabi quasi-sovereigns, as they are a close proxy for the illiquid sovereign curve. While Dubai Inc. tightened considerably in 2012, HY Dubai corps. continue to offer value within the region.

DUGB 17

QATAR 18 DUGB 23 INTPET17 QTELQD 43

Quasi-sovereigns

SECO 43 TAQAUH 21 MUBAUH 21 QTELQD 21 DEWA 20 EMAAR 16 FGBUH 2.862 17 GULINT 17 TAMWEE 17 EBIUH 23 EBIUH 49

Financials

The NPL cycle in the UAE has bottomed out, in our view. Dubai financials look attractive at current levels and should perform in line with sovereign paper. Abu Dhabi financials have defensive qualities.

NBADUH 17 QNBK 20 KWIPKK 20

Source: Standard Chartered Research

GR13AP | 21 June 2013

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Economics Weekly

FICC on-the-run FX
Spot Asia ex-Japan CNY
6.13

3M
FX weighting

3-12M
FX weighting

Fundamentals

Current trades

Mild CNY appreciation in 2013 and medium-term

Buy 5M USDCNH, Sell 5M USD-CNY NDF

HKD KRW TWD IDR MYR PHP SGD THB VND INR

7.76 1,126 29.85 9,923 3.12 42.82 1.25 30.56 21,003 57.74

No peg change likely; downward pressure on USD-HKD to abate over time BoP surplus to limit KRW losses near-term, drive medium-term rebound TWD to stabilise and recover medium-term on strengthening fundamentals Current account deficit and FX policy to weigh on the IDR short-term MYR to outperform medium-term on current account and palm oil Stretched local asset valuations to counter strong fundamentals MAS to maintain gradual appreciation THB vulnerable to UST rate move and heavy positioning Further devaluation is unlikely given slowing inflation, narrowing trade deficit Volatile flows vs. high carry to keep INR range-bound near-term Sell USD-TWD 1Mx6M spread

Sub-Saharan Africa KES NGN GHS ZAR

85.65 161 2.01 10.29

Pick-up in economic activity to weigh on trade and current account deficit Oil export revenues and steady portfolio inflows remain supportive Vulnerable to swing in portfolio flows as the trade deficit remains wide Vulnerable to a still-wide current account deficit

Latin America ARS BRL CLP COP MXN PEN Majors EUR JPY AUD NZD CHF GBP CAD
1.32 98.03 0.92 0.78 0.93 1.55 1.04 5.34 2.22 500 1,896 13.31 2.74

Systemic currency depreciation continues; contado con liqui trades at 8.45 IOF removal is positive for future inflows once risk appetite stabilises Weakening copper prices eroding Chiles terms of trade; rate cuts mooted Cyclical economic weakness is weighing more heavily on local sentiment Higher US rates and reduction in MXN positioning to keep MXN soft near-term Central bank may cut USD reserve requirements as onshore liquidity tightens

Strong current account position supports the EUR despite elusive growth BoJ easing and anticipated Japanese investor flows drive JPY weakness Slowing portfolio flows and USD strength to weigh on AUD Stable growth and positive rate differentials are supportive going forward Recurrent euro-area tensions and current account offset valuation concerns Sluggish growth and abysmal current account dynamics remain GBP bearish Weak growth and a fragile housing market will weigh on the CAD for now Buy USD-CAD 3M forward outright

Source: Standard Chartered Research

GR13AP | 21 June 2013

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Economics Weekly

FICC on-the-run Commodities

Exchange Energy Oil WTI Coal Newcastle (USD/t) globalCOAL NYMEX 3-6M Fundamentals

We expect prices to remain well supported by tight supply fundamentals and tensions in the Middle East.

Thermal coal prices are likely to face downside risks due to persistent oversupply in the market. However, the marginal cost of production may provide a price floor.

Agriculture Softs Cocoa (USD/t) Coffee (USc/lb) Sugar (USc/lb) Fibres (USc/lb) Cotton NYBOT NYBOT NYBOT NYBOT

Although the market is well off its lows for the year, a further rally is being limited by firming global supply. We favour Robusta over Arabica, as Arabica prices are likely to remain under pressure given the large crop harvest in Brazil. Prices have slumped close to cost-of-production levels and should start to trend higher as demand improves.

Prices have plateaued for now, but underlying demand from Asia and moderately lower global output are supportive factors.

Grains & oilseeds (USc/bu) Corn Soybeans Wheat Metals Base metals (USD/tonne) Aluminium Copper Lead Nickel Tin Zinc Precious metals Gold Palladium Platinum Silver Spot Spot Spot Spot LME LME LME LME LME LME CBOT CBOT CBOT

Corn prices have regained momentum following planting delays in the US Midwest. Prices should now stay range-bound unless yields slump. The soybean market is being pressured by a large Latam harvest, but supported by logistical delays in Latam and low old-crop inventories. Poor weather in the US is adversely impacting crop development.

Demand growth is strong and producers are cutting back, but high stock levels will limit the upside. We see some upside risks, but worries about a supply ramp-up are expected to limit the upside. Medium-term prospects look good as the automotive sector improves. We expect fundamentals to remain weak and the complex to stay range-bound. Fundamentals are improving. Medium-term fundamentals are turning.

We see a range-bound market for now. Investors are still selling ETFs, but physical appetite has been very strong. Supply cuts in South Africa are combining with an improving auto market. Supply cuts in South Africa are denting supply, and margins are being squeezed by rising costs. We see a range-bound market for now.
Source: Standard Chartered Research

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Disclosures Appendix
Recommendations structure Standard Chartered terminology Issuer Credit outlook Positive Stable Negative Impact Improve Remain stable Deteriorate Definition We expect the fundamental credit profile of the issuer to <Impact> over the next 12 months

Standard Chartered Research offers trade ideas with outright Buy or Sell recommendations on bonds as well as pair trade recommendations among bonds and/or CDS. In Trading Recommendations/Ideas/Notes, the time horizon is dependent on prevailing market conditions and may or may not include price targets. Credit trend distribution (as at 19-Jun-2013) Coverage total (IB%) Positive Stable Negative Total (IB%) 4 (0.0%) 204 (31.5%) 77 (26.9%) 285 (29.8%)

Credit trend history (past 12 months) Company -

Date -

Credit outlook -

Please see the individual company reports for other credit trend history

Regulatory Disclosure:
Subject companies: Abu Dhabi National Energy Co., Agile Property Holdings Ltd., Bank of China (HK), Bank of East Asia Ltd., BOC Aviation PTE Ltd., Cheung Kong Infrastructure Holdings Ltd., China Merchants Holdings International Ltd., China Petroleum and Chemical Corp., China South City Holdings Ltd., China Vanke Co. Ltd., CIFI Holdings Group, CLP Power Hong Kong Ltd., Dubai Electricity and Water, Emaar Properties PJSC, Emirates Islamic Bank, Evergrande Real Estate Ltd., First Gulf Bank PJSC, First Pacific Co. Ltd., Government of Dubai, Gulf International Bank, Hainan Airways Hong Kong Ltd., ICICI Bank, IPIC GMTN Ltd., Korea Expressway Corp., Korea Finance Corp, Korea South-East Power Co. Ltd., Kuwait Projects Company, Li & Fung Ltd., Malayan Banking Bhd., MIE Holdings Corp., Minmetals Land Ltd., Mongolian People's Republic, Mubadala Development Co., National Bank of Abu Dhabi PJSC, Noble Group Ltd., NTPC Ltd., Oversea-Chinese Banking, POSCO, PT Andaro Energy Tbk., PT Cikarang Listrindo, PT Pertamina Persero, Qatar National Bank, Qatar Telecom QSC, Republic of Indonesia, Republic of the Philippines, Saudi Electricity Co., Sinochem Group, Shinhan Bank, SK Telecom, State Bank of India, State of Qatar, Sun Hung Kai Properties Ltd., Sunac China Holdings Ltd., Tamweel PJSC, Thai Oil PCL, Wheelock & Co. Ltd., Xinyuan Real Estate Co. Ltd. Yuzhou Properties Co. Ltd. SCB and/or its affiliates have received compensation for the provision of investment banking or financial advisory services within the past one year: Abu Dhabi National Energy Co., CLP Power Hong Kong Ltd., Dubai Electricity and Water, Emaar Properties PJSC, First Gulf Bank PJSC, Gulf International Bank, ICICI Bank, Mubadala Development Co., Noble Group Ltd., POSCO, Qatar National Bank, Shinhan Bank, Sun Hung Kai Properties Ltd., Wheelock & Co. Ltd. SCB makes a market in securities issued by this company: Bank of China (HK), BOC Aviation PTE Ltd., Cheung Kong Infrastructure Holdings Ltd., China Petroleum & Chemical Corp., Evergrande Real Estate Ltd., Li & Fung Ltd., Sun Hung Kai Properties Ltd. SCB and/or its affiliates owns 1% or more of any class of common equity securities of this company: China Petroleum & Chemical Corp., Sun Hung Kai Properties Ltd. SCB was a lead manager of a public offering for this company within the past 12 months, for which it received fees: Sun Hung Kai Properties Ltd. SCB has managed or co managed a public offering for this company within the past 12 months, for which it received fees: Gulf International Bank, Qatar National Bank, Republic of Indonesia, Thai Oil PCL

GR13AP | 21 June 2013

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Analyst Certification Disclosure: The research analyst or analysts responsible for the content of this research report certify that: (1) the views expressed and
attributed to the research analyst or analysts in the research report accurately reflect their personal opinion(s) about the subject securities and issuers and/or other subject matter as appropriate; and, (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views contained in this research report. On a general basis, the efficacy of recommendations is a factor in the performance appraisals of analysts.

Global Disclaimer: Standard Chartered Bank and or its affiliates (SCB) makes no representation or warranty of any kind, express, implied or statutory
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The contents of this document may not be suitable for all investors as it has not been prepared with regard to the specific investment objectives or financial situation of any particular person. Any investments discussed may not be suitable for all investors. Users of this document should seek professional advice regarding the appropriateness of investing in any securities, financial instruments or investment strategies referred to on this document and should understand that statements regarding future prospects may not be realised. Opinions, forecasts, assumptions, estimates, derived valuations, projections and price target(s), if any, contained in this document are as of the date indicated and are subject to change at any time without prior notice. Our recommendations are under constant review. The value and income of any of the securities or financial instruments mentioned in this document can fall as well as rise and an investor may get back less than invested. Future returns are not guaranteed, and a loss of original capital may be incurred. Foreign-currency denominated securities and financial instruments are subject to fluctuation in exchange rates that could have a positive or adverse effect on the value, price or income of such securities and financial instruments. Past performance is not indicative of comparable future results and no representation or warranty is made regarding future performance. While we endeavour to update on a reasonable basis the information and opinions contained herein, there may be regulatory, compliance or other reasons that prevent us from doing so. Accordingly, information may be available to us which is not reflected in this material, and we may have acted upon or used the information prior to or immediately following its publication. SCB is not a legal or tax adviser, and is not purporting to provide legal or tax advice. 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This document is not directed at persons who are retail clients as defi ned in the Australian Corporations Act 2011. Brazil: SCB disclosures pursuant to the Securities Exchange Commission of Brazil (CVM) Instruction 483/10: This research has not been p roduced in Brazil. The report has been prepared by the research analyst(s) in an autonomous and independent way, including in relation to SCB. THE SECURITIES MENTIONED IN THIS REPORT HAVE NOT BEEN AND WILL NOT BE REGISTERED PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE COMMISSION OF BRAZIL AND MAY NOT BE OFFERED OR SOLD IN BRAZIL EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS AND IN COMPLIANCE WITH THE SECURITIES LAWS OF BRAZIL. 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Singapore: This document is being distributed in Singapore by SCB Singapore branch, only to accredited investors, expert investors or institutional investors, as defined in the Securities and Futures Act, Chapter 289 of Singapore. Recipients in Singapore should contact SCB Singapore branch in relation to any matters arising from, or in connection with, this document. South Africa: SCB is licensed as a Financial Services Provider in terms of Section 8 of the Financial Advisory and Intermediary Services Act 37 of 2002. SCB is a Registered Credit Provider in terms of the National Credit Act 34 of 2005 under registration number NCRCP4. UAE (DIFC): SCB is regulated in the Dubai International Financial Centre by the Dubai Financial Services Authority. This document is intended for use only by Professional Clients and should not be relied upon by or be distributed to Retail Clients. United States: Except for any documents relating to foreign exchange, FX or global FX, Rates or Commodities, distribution of this document in the United States or to US persons is intended to be solely to major institutional investors as defined in Rule 15a-6(a)(2) under the US Securities Act of 1934. All US persons that receive this document by their acceptance thereof represent and agree that they are a major institutional investor and understand the risks involved in executing transactions in securities. Any US recipient of this document wanting additional information or to effect any transaction in any security or financial instrument mentioned herein, must do so by contacting a registered representative of Standard Chartered Securities (North America) Inc., 1095 Avenue of the Americas, New York, N.Y. 10036, US, tel + 1 212 667 0700. WE DO NOT OFFER OR SELL SECURITIES TO U.S. PERSONS UNLESS EITHER (A) THOSE SECURITIES ARE REGISTERED FOR SALE WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND WITH ALL APPROPRIATE U.S. STATE AUTHORITIES; OR (B) THE SECURITIES OR THE SPECIFIC TRANSACTION QUALIFY FOR AN EXEMPTION UNDER THE U.S. FEDERAL AND STATE SECURITIES LAWS NOR DO WE OFFER OR SELL SECURITIES TO U.S. PERSONS UNLESS (i) WE, OUR AFFILIATED COMPANY AND THE APPROPRIATE PERSONNEL ARE PROPERLY REGISTERED OR LICENSED TO CONDUCT BUSINESS; OR (ii) WE, OUR AFFILIATED COMPANY AND THE APPROPRIATE PERSONNEL QUALIFY FOR EXEMPTIONS UNDER APPLICABLE U.S. FEDERAL AND STATE LAWS. Copyright 2013 Standard Chartered Bank and its affiliates. All rights reserved. All copyrights subsisting and arising out of all materials, text, articles and information contained herein is the property of Standard Chartered Bank and/or its affiliates, and may not be reproduced, redistributed, amended, modified, adapted, transmitted in any way without the prior written permission of Standard Chartered Bank. Document approved by Data available as of Document is released at

John Calverley Global Head of Macro Economic Research

19:45 GMT 20 June 2013

19:45 GMT 20 June 2013

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World Wide Wrap

Focus issues for next 3 months
Global

One year ahead outlook

We expect the current global economic weakness to gradually give way to faster growth in H2, helped by recent monetary policy easing and receding risks related to Europe and US fiscal policy. Asian central banks will finish easing and some will look to tighten. Inflation should be well behaved. Key risks are politics in Europe, US fiscal policy and Middle East instability. We forecast GDP growth of 7.7% for 2013 and 7.5% for 2014, reflecting the slower-than-expected recovery so far in 2013 and the new governments shift in focus to economic reform. We have also lowered our CPI inflation forecast to 2.8% y/y for 2013 and to 4.1% for 2014. We expect the rate-hiking cycle to resume in Q1-2014, followed by two more hikes in Q2-2014. An improvement in Indias FY14 GDP growth will depend on government efforts to unfreeze the investment cycle. A faster rebound is unlikely, as politics are likely to limit changes in economic policy. We expect FY14 GDP growth of 5.5% from 5.0% in FY13, despite benefits from lower commodity prices, interest rate cuts and higher government expenditure. Local authorities flexibility in providing monetary and fiscal stimulus, along with a possible influx of foreign capital, results in a positive growth outlook for the region. Policy makers will need to remain vigilant to the risk of a resumption of asset- and consumer-price inflation, as well as a re-acceleration of lending and money growth. We expect a gradual recovery. The export outlook is improving and fiscal and monetary easing will support domestic demand. Inflation should stay below the BoKs target range, and the housing market should find a floor thanks to policy support. The government will seek new ways to finance the proposed welfare programme expansion, increasing the risk of effective tax hikes. High oil prices should support GCC economies in 2013 as growth slows moderately. Non-oil-producing countries face challenges. Transition continues in some, while others still face political turmoil. The economic fortunes of key newcomer Iraq (with rising hydrocarbon exports) will depend on how quickly it removes impediments to investment and implements structural reforms. Although global uncertainty weighs on the outlook for SubSaharan Africa, Africas broad-based economic recovery looks set to continue. Domestic growth momentum should drive GDP performance in 2013. The election in Zimbabwe will be closely watched. Politics will play a key role in determining economic outcomes. The region, Brazil in particular, is set for stronger growth in 2013. The more market-oriented economies including Brazil, Mexico, Colombia, Peru and Chile show promise, while distortions in Argentina and Venezuela may lead to greater challenges. FX reserves are generally robust and banks well capitalised. Dependence on commodity prices is a vulnerability. We expect the economy to pick up materially in 2014, boosted by robust business investment, a continued housing recovery, moderating fiscal headwinds and increased bank lending. The energy boom should underpin future growth. We see the Fed ceasing QE by Q3-2014, and its first rate hike in Q3-2015, when the unemployment rate is expected to drop below 6.5%. Euro-area concerns are affecting confidence throughout the region. This adds to tight fiscal policy and still-difficult credit conditions. We expect the economy to stabilise and begin a sluggish recovery. We think officials and the ECB will eventually do enough to restore a degree of confidence among investors, even if Greece leaves the euro area. 2013 still looks challenging. Despite our higher GDP forecast, raised on the back of the quantitative and qualitative monetary easing programme, it remains unclear whether the current improvement in local sentiment will translate into a sustainable longer-term recovery. We do not expect the 2% inflation target to be achieved soon.

In the US, the focus will be on the pace of growth, fiscal policy negotiations, and Fed thinking on monetary policy. In Asia, activity data will be key particularly Chinas economic upswing and property-sector prospects. In Europe, the evolution of ECB and government policies, the extent of the recession, and deficit reduction will be watched, as well as the overall political situation.

Greater China The acceleration of Chinas 2013 economic growth is taking a little longer than we expected. A disappointing March was followed by a moderately weak April. We expect clearer signs of momentum to emerge in H2 as housing, infrastructure and exports become more supportive. We believe short-term stimulus is unlikely unless the employment situation deteriorates markedly. South Asia

Recent INR weakness complicates Indias monetary policy as it can exacerbate inflationary pressures and strain fiscal health. We expect the RBI to keep the repo rate unchanged at its July policy meeting. While the C/A deficit is likely to narrow after a series of measures to curb gold imports, funding the deficit could be challenging in the current global environment. The slowdown in export growth has been largely offset by resilient domestic demand, with the exception of Singapore. Central banks in the region have finished or almost finished easing, as the growth slowdown has been modest and prospects for H2 are better. Food prices are a potential concern. Exports should continue to recover, while headwinds to domestic demand, such as the household debt burden and weak housing market, may persist. Headline inflation is expected to stay below 2%, and the current account surplus should be maintained. The National Assembly has approved a KRW 17.3tn supplementary budget, and the BoK has embarked on another easing cycle. Oil exporters are benefiting from high oil prices, with Saudi Arabia and Qatar taking the lead in government spending and Abu Dhabi having given the green light for previously delayed projects. Regional geopolitical challenges remain, and sluggish global growth should cap y/y oil output growth in 2013. The Levant countries will be the most exposed to geopolitics. South African economic activity will be monitored to assess the risk of further policy easing. We do not expect further easing. Kenyattas victory in Kenyas presidential election should provide a more stable backdrop for economic growth, and Kenya should experience a firmer recovery in 2013. Brazil is hiking rates as the deterioration in the inflation outlook takes centre stage. The central bank is using its tools to try to prevent BRL volatility. The industrial sector is starting to recover, and the weaker currency should help. In Argentina, strict capital controls are part of a worrisome policy backdrop. Attention in Mexico will shift to the PRIs ability to promulgate much-needed structural reforms. We expect GDP growth to stay soft in Q3-2013 as fiscal headwinds continue, and the business inventory cycle turns less favourable. Inflation is likely to remain low, while the jobless rate will likely edge down gradually. The Fed intends to start tapering QE later this year, but we think this may happen in January 2014, when activity picks up more sustainably. The focus is on activity and politics. Markets will monitor (1) whether politics in the euro-area periphery will support necessary austerity measures and reforms, ensuring backing from core governments; and (2) the ECBs stance and actions, in particular peripheral bond-market support and liquidity facilities for banks. The economy remained in recession in Q1-2013. The BoJ plans to double the monetary base over the next two years and extend JGB buying across the curve. This is likely to affect the economy by lowering the yield curve and raising inflation expectations. The focus now will be on Upper House elections (July) and the long-term growth strategy, due to be announced this summer, with hopes of new reforms.

South East Asia

South Korea

MENA

Sub-Saharan Africa

Latin America

United States

Europe

Japan

Important disclosures can be found in the Disclosures Appendix

GR13AP | 21 June 2013

Source: Standard Chartered Research

16