PP 7767/09/2010(025354)

Economic Highlights
Global
•
MARKET DATELINE

30 March 2010

1 Consumer Spending Will Likely Sustain US Economic

Growth In The 1Q

2 Euroland’s Business Confidence Improved While

Consumer Confidence Remained Stable In March

3 Japan’s Retail Sales Strengthened In February

Tracking The World Economy...

Today’s Highlight

Consumer Spending Will Likely Sustain US Economic Growth In The 1Q

US personal consumption expenditure (PCE) moderated to 0.3% mom in February, after remaining stable at +0.4% in
the previous two months. This was the fifth straight month of increase, albeit slower, indicating that consumers are still
keen to spend in line with a recovery in the economy and employment. In real terms, PCE inched up to 0.3% mom
in February, from +0.2% in January. As a result, the PCE grew at a faster annualised rate of 3.1% in February, compared
with +1.9% in January, suggesting that consumer spending will contribute positively to the economy in the 1Q. The US
uses this figure to compute its consumer spending in real GDP. Stronger consumer spending, however, could be offset
partially by a slowing investment and a smaller contribution from inventories rebuilding, leading to a slower real GDP
growth in the 1Q, compared with +5.6% in the 4Q. Meanwhile, income remained unchanged in February, after rising
by 0.3% mom in January, due partly to bad weather conditions. A rise in consumer spending without an increase in
income suggests that consumers are dipping into their savings to spend. Consequently, the personal savings rate fell
to 3.1% of disposable income in February, the lowest level in 16 months and from 3.4% in January.

Separately, the headline PCE price index stagnated in February, after remaining stable at 0.2% mom in the last three
consecutive months. Yoy, the headline PCE price index moderated to +1.8% in February, from +2.1% in the previous
two months. Similarly, the core PCE price index remained unchanged for two consecutive months in January-February,
after rising by 0.1% mom in December. Yoy, the core PCE price index eased to 1.3% in February, from +1.5% in January
and +1.6% in December. This suggests that price pressures are easing, providing more room for the US Fed to hold
its key policy rate unchanged at between 0-0.25% in the near term. The Fed, however, will continue to exit its quantitative
easing policy and emergency lending programmes.

The Euroland Economy

Business Confidence Improved While Consumer Confidence Remained Stable In March

◆ Business confidence in the Euroland fell by a smaller magnitude of 10 in March, compared with -13 in
February. This was the 12th consecutive month of improvement, pointing to an improvement in business confidence,
in line with the improvement in economic activities in the region. As a result, businesses expect future production
to pick up and current production to improve. Also, they expect the decline in exports and orders to narrow and
they would slow down labour retrenchment. The decline in consumer confidence, on the other hand,

Peck Boon Soon

(603) 9280 2163
Please read important disclosures at the end of this report.
bspeck@rhb.com.my

A comprehensive range of market research reports by award-winning economists and analysts are Page 1 of 2
exclusively available for download from www.rhbinvest.com
 30 March 2010

remained stable at -17 in March, the same level as in February. This suggests that consumer confidence
remained stable but weak, as consumers expect economic conditions to remain weak and their income may fall
further. Also, they expect labour market to remain relatively stable without much improvement. As a result, they
are still not ready to increase major purchases going forward, suggesting that a recovery in consumer spending
will likely be slow. In tandem with the improvement in business confidence, the region’s sentiment index rose to
97.7 in March, from 95.9 in February. This was the 12th straight month of increase and the highest in almost two
years, suggesting that the Euroland economy will likely sustain its improvement in the months ahead.

Asian Economies

Japan’s Retail Sales Strengthened In February

◆ Japan’s retail sales moderated to 0.9% mom in February, from +2.0% in January. Yoy, the retail sales
strengthened to 4.2% in February, from +2.3% in January. This was the second consecutive month of increase
and the fastest in more than a decade, signalling that an improvement in job market is feeding through to higher
consumer spending. Japan’s economy added the most jobs in more than three decades in January and workers’
pay declined at the slowest pace in 19 months, as export recovery and stimulus spending have started to create
jobs and support wages. A pick-up in consumer spending will likely help sustain the country’s economic
growth.

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI
and RHB Investment Bank Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under
such circumstances as may be permitted by applicable law. The opinions and information contained herein are based on
generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to
opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This
report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not
warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall
give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an interest
in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual
financial circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for
all investors. RHBRI recommends that investors independently evaluate particular investments and strategies, and encourages
investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an
investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents
accepts any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and
financing activities as well as providing investment banking and financial advisory services. In the ordinary course of its trading,
brokerage, banking and financing activities, any member of the RHB Group may at any time hold positions, and may trade or
otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans of any
company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding
company and the respective directors, officers, employees and agents of each of them. Investors should assume that the
“Connected Persons” are seeking or will seek investment banking or other services from the companies in which the securities
have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been
reviewed by, and may not reflect information known to, professionals in other business areas of the “Connected Persons,”
including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have
received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive
factors and firm revenues.

A comprehensive range of market research reports by award-winning economists and analysts are Page 2 of 2
exclusively available for download from www.rhbinvest.com