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Global Economics -
Strategy 4eam

&' (anuar+ ,--.

Developed Markets / Global today's key snapshots
US: Shopping not stopping. DesCite some much Rarmer than usual Reather in /all times GMT9
DecemberT retail sales Rere not as bad as the+ could have beenK US6 National Holiday
Martin Luther Kin< Da+
Italy: An agreement de façade, but little consensus yet on market friendly ING@nAa cons@nAa Crev@nAa
reforms. The much aRaited reformVridden Chase , of <overnment action is +et to taJe offT
EU:;6 <fficial ceremony to mark
as the much h+Ced <overnment meetin< could onl+ +ield an eas+ comCromise on risJless
Slovenia’s entry into the EurozoneD
Colitical issuesK LFublFana
ECBHs Trichet and GasCari to sCeaJ at
EMEA &-&' GMTK
Emerging markets: Iran update. Ke+ US oCConents of a striJe on Iran have been ING@nAa cons@nAa Crev@nAa
reClacedT Patriot missile deClo+ment is another si<nalT neRs a<encies have Rarned Iran Rill EU:;6 Nov industrial production
be a maaor issue in an acute Ra+K HMoMJK H:LLLK
We looJ for a health+ rise /in eNcess of
Ukraine: President Yushchenko is pushed out of mainstream politics. On -K'O MoM9 in EuroPone industrial
Frida+T &, (anuar+ ,--.T the Carliamentar+ coalition uneNCectedl+ bacJed an a<reement Croduction in NovemberK Data out
Rith the embattled T+moshenJo overridin< the CresidentHs veto on the laR on the Cabinet of earlier shoRed Croduction in France
MinistersK It maJes the Cabinet of Ministers the centre of the eNecutive CoRersT <rabbin< the contractedT but this Rill be more than
offset b+ a sharC rebound in German
CresidentHs constitutional authorit+ over forei<n and defence Colicies and leavin< him Rith
Croduction in this monthK
onl+ a ceremonial roleK The CresidentHs last hoCe to restore his CoRers is the Constitutional ING@-KU cons@-K. Crev@V-K&
CourtK

Russia/Belarus: Belarus oil conflict resolved. Russia and Belarus si<n a<reement
on oil suCCl+ and transit Prophet opportunities

Poland: The week ahead. We eNCect loR inflation and Croduction numbersT and there Long Indonesia N.PQ PL:Q - Short
Philippines S.SNQ PL:Q
is some risJ associated Rith Ra<es but Re eNCect moderate <roRthK Entr+ Coint V'
SCot ,,
Poland: Money supply accelerating. Tar<et X'
StoC loss V,-
Slovakia: December inflation slightly down: major part of disinflation only Call Yold
Rationale: DesCite the Cositive moment for
to come in 2007. Inflation to benefit from sta<natin< administered Crices and stron< PhiliCCinesH debtT Re still Cerceive better
ratin< momentum in Indonesia as the
Joruna in ,--.K <overnment attemCt to tacJle more structural
issues such as labour reformsT a neR
Slovakia: November wages surprised on the downside, upturn expected in Investments LaR and the chronic lacJ of
efficienc+ on <overnmentVoRned enterCrisesK
2007. ]c-dHs ReaJ marJet sector Ra<e data are a CuPPleK The local stor+ has also been suCCortin< Indo
more stron<l+ than PhiliCCinesT esCeciall+ if
Turkey: Great budget data. Another tremendous fiscal Cerformance b+ TurJe+K Re taJe into account the Cossible rise on
Colitical risJ ahead of the modVterm elections
Latin America in Ma+ ,--.K

Buy BANES4;.NQ P/:: - Sell CAXAMM;.Q
Brazil: December IPCA inflation posted a 0.48% increase. ,--d IPCA inflation ;/::
came in at XK&OT for the first time beloR the centre of the tar<etK Entr+ Coint XKU
SCot XK-

Closing prices
Tar<et &K-
StoC loss ]K'
Call Yold
Developed markets closing prices Rationale: BANESTXK.' ,A&& is at least ,KUbC
undervalued versus the CA(AMMXK' XA&& from
Emerging markets closing prices an historical and credit qualit+ CersCective

Research Analyst Contacts

SEE 4HE YISCL<SURES APPENYI[ F<R IMP<R4AN4 YISCL<SURES ANY ANAL]S4 CER4IFICA4I<N
ProChet &' (anuar+ ,--.

Developed Markets / Global
US

Shopping not stopping
Yespite some much warmer than usual weather in YecemberD retail sales were not as bad as they could have been.

US retail sales for December aCCeared to come in stron<er than had been eNCectedT esCeciall+ <iven soft indications from
ReeJl+ chainVstore salesT and also some of the anecdotal evidence over the month from retailersT man+ of Rhich su<<ested
that hot Reather had adversel+ affected sales of seasonal itemsT Carticularl+ clothin<K Yeadline sales rose -KeO MoMT Rhile
the core rate rose &K-OK

Fig : US Confidence and retail sales

/indeN9 /YoYO9
&'- &,
&]- &-
&X- U
&,-
d
&&-
]
&--
,
e-
U- -
Conference Board confidence indeN
/lhs9 V,
.-
Retail salesT current Crices /rhs9
d- V]
(anVeU (anVee (anV-- (anV-& (anV-, (anV-X (anV-] (anV-' (anV-d

Source: EcoWin
g

That saidT the release shoRed substantial doRnRard revisions to Crevious months dataT and taJin< these into accountT
neither the headlineT nor the core rate of sales /eNcludin< autos9 ended uC Carticularl+ different to eNCectationsT and
consequentl+T the eventual marJet reaction ou<ht not to have been Carticularl+ substantialK

LooJin< at the breaJdoRn of the releaseT it Ras no surCrise to see sales at <asoline stations risin< b+ XKUOT almost eNactl+
matchin< the rise in the retail Crice of <asoline over the monthK Sales of vehicles and Carts rose onl+ -KXOT less than the
volume increase of ]KXOT and su<<ests further falls in the neR car se<ment of CPI due out neNt ReeJK Buildin< suCClies
Rere doRn &K&O on the Crevious month h echoin< the on<oin< ReaJness in the housin< sectorK There Ras a lar<e fall in the
sale of miscellaneous <oodsT but sales of aCCarelT Rhich should have been imCacted ne<ativel+ b+ the unseasonabl+ Rarm
Reather in DecemberT mana<ed a relativel+ imCressive -KdO increaseT Rhile the Rarm Reather also seemed to boost
sCendin< at restaurants and barsT Rhere sales rose ,KXOK

OverallT this release has to be vieRed as better than mi<ht have been eNCectedT esCeciall+ <iven the anecdotes of
ReaJness that had been reCortedK And this could result in some uCRard revisions to forecastersi eNCectations for fourth
quarter GDPK

Investment implications: Some further near-term support for the USD.

Rob Carnell, London (44 20) 7767 6909

P
ProChet &' (anuar+ ,--.

Italy

An agreement de façade, but little consensus yet on market friendly reforms
4he much awaited reform_ridden phase P of government action is yet to take offD as the much hyped government
meeting could only yield an easy compromise on riskless political issues.

Faced to a steeC decline in consensusT and Cressured from the reformVCrone moderates of his coalition PM Prodi called a
meetin< of his ministers and of the coalition CartiesH leadersT Rhich Ras held late last ReeJK The declared aim of the meetin<
Ras to set the <overnmentHs a<enda for ,--.T Rhile correctin< at the same time some communication mistaJes Rhich had
at best disoriented the electorateK B+ leavin< the blame for Cublic discontent Rith insufficient communications sJills on the
<overnmentHs sideT PM Prodi clearl+ tried to divert the attention from the underl+in< Croblems Rhich continue to affect the
<overnin< coalitionK NotRithstandin< his attemCtT the CerceCtion of a clear diver<ence of vieRs betReen the reformists and
radical left jconservativesH Rithin the <overnin< coalition remainsK YoCin< in a sudden solution to eNistin< Croblems at the
meetin< Ras Cure Rishful thinJin<K It Ras thus inevitable that the meetin< Rould end Rith a loR Je+ comCromiseT Rhich
Rould accuratel+ circumnavi<ate man+ crucial oCen Colitical issuesK With a local elections round due in sCrin<T an overt
failure to find a formal cohesion Rould have been a Colitical suicide for the <overnment coalition CartiesK The chief Criorit+
Ras thus to show cohesionT at the Crice of a lacJ of hard facts to sell to the CublicK YoReverT the loR Je+ comCromise
reached is not neutral and leaves the reformVCrone moderates more vulnerable at the CollsK

LooJin< be+ond the Colitical marJetin< side of the meetin<T can Re sa+ that it has been a success on the more relevant
front of the reform a<endak Even thou<h it is too earl+ to aud<eT our feelin< is that if it RasT it Ras a ver+ Cartial oneK Nobod+
eNCected the meetin< to +ield a detailed list of a<<ressive measuresT but the outcome is at best little ambitiousK The sin<le
Coint Rhere <enuine consensus Ras reached Ras on the National strate<ic frameRorJ for ,--.V,-&XT Rhich allocates EU
structural funds and national funds aliJeK It Ras decided to sCend U'O of available funds in the Southern Italian re<ionsT
Rith increased focus on human caCital formationT on comCetitiveness enhancin< RlD and on a sustainable use of
environmental resourcesK Unfortunatel+T no a<reement Ras reached on a much hoCedVinto liberalisation CacJa<e neither on
the Cension reform issueK These issues Rere not deemed ur<entT orT more maliciousl+T the+ Rould have been too CoRerful a
catal+ser of internal divisionsK Given the crucial imCortance of reforms in consolidatin< economic <roRthT Re remain
convinced that their discussion table Rill be carefull+ JeCt oCenT and eNCect that some concrete result Rill be obtained b+
the end of &c-.K

Ironicall+T the surCrisin<l+ <ood Cerformance of the underl+in< Cublic accounts in ,--d /net of eNtraordinar+ factors9 is
comClicatin< thin<sK In factT the hardliners of the left mi<ht levera<e on imCroved balances to turn doRn an+ sCendin< cut
claimK This Rould be dan<erous indeedT as marJet friendl+ reforms and serious moves to fi<ht Cublic administration
inefficiencies /also throu<h Coliticall+ costl+ reor<anisations9 are badl+ needed to turn a c+clical recover+ into a structural
imCrovement of Cotential outCutK

The divided nature of the <overnin< coalition Rill inevitabl+ affect the reform CathK With an ultra thin mar<in at the Senate
an+ reform measure Rill be meticulousl+ Condered uCon and the sCeed of reforms Rill result inevitabl+ sloRK Some issues
/in Carticular the reform of the electoral s+stem9 mi<ht even be deemed too risJ+T and s+stematicall+ CostConedK PM ProdiHs
difficult and often frustratin< mission Rill be that of continuousl+ striJin< a balance betReen the different souls of his coalition
Rithout stoCCin< the reform convo+K

Investment implications: If the agreement reached at last weeks government meeting has
probably helped reducing short term political risk, it proved nonetheless that reaching consensus
on deep reforms is a harder quest. Failure to speed up this process would hinder the hopes of
closing the growth gap with euro zone peers any time soon.

Paolo Pizzoli, Milan (39 02) 89629 3630

;
ProChet &' (anuar+ ,--.

EMEA
Emerging markets

Iran update
Key US opponents of a strike on Iran have been replacedD Patriot missile deployment is another signalD news
agencies have warned Iran will be a maFor issue in an acute way.

4he US may accept the Iranian nuclear bomba

In looJin< bacJ over recent neRs stories on IranT Re found this reCort from the UK neRsCaCerT The Sunday TimesT
Cublished on & October ,--dT and titled mThe US ma+ acceCt Iranian nuclear bombnK We have italicised the articleK

“General John Abizaid, commander of US forces in the Middle East, has warned that striking Iran could
cripple oil supplies, unleash a “surrogate” terrorist army and lead to missile attacks on America’s regional
allies. The army is particularly concerned about Iran’s ability to destabilise an already chaotic Iraq.

John Negroponte, director of national intelligence, has told President George W Bush that there is no rush
to use force as Iran’s nuclear programme is beset with technical errors. “He has been saying, ‘Slow down,
it’s not an immediate problem’,” said Patrick Clawson, an Iran expert at the Washington Institute for Near
East Policy.

Condoleezza Rice, the secretary of state, has staked her reputation on achieving a negotiated settlement
with the help of the “EU3” nations of Britain, France and Germany.

“President Bush is not going to take military action against the advice of the secretary of state, US generals
and the director of national intelligence,” Clawson said.

Note in December General AbiPaid resi<ned from his Cost and Ras reClaced in (anuar+ b+ Admiral FallonK Ye has also
resConded to AbiPaidHs concernsT b+ Cromisin< to deClo+ antiVmissile s+stems /see beloR9T he has announced the
deClo+ment of an additional ,&T'-- trooCs to IraqT Rhile tRo carrier <rouCs ma+ helC Crevent an+ criCClin< of oil suCCliesK

In (anuar+T Ne<roConte Ras also reClacedT in Rhat Ras Ridel+ seen as a surCrisin< move and a Cossible demotionK We
have seen no convincin< eNClanation for this moveK Ye has been reClaced b+ retired Nav+ oice Admiral (K Michael
McConnellK Bush declared that mAdmiral McConnell has decades of eNCerience ensurin< that our militar+ forces had the
intelli<ence the+ need to fi<ht and Rin RarsnK

This leaves Rice Rho has lon< been a Bush lo+alist and bacJed the Rar in IraqT but Rho reco<nises that attemCts at a
diClomatic solution need to be tried before a militar+ oCtionK Note that in the Cast ReeJ she has JeCt the diClomatic oCtion
oCenK Rice has Cublicl+ su<<ested that if Iran stoCs the enrichment CrocessT she Rill meet an+ Iranian official at an+ timeK

The Cersonnel issue is reminiscent of the ,--,V-X CeriodK

Rice’s trip to the Middle East b Iran HState YepartmentK or Irac HBush’s speechKa

President BushHs sCeech included an interestin< lineK Ye declared that mon Frida+ p&, (anuar+qT Secretar+ Rice Rill leave for
the re<ionT to build suCCort for Iraq and continue the ur<ent diClomac+ required to helC brin< Ceace to the Middle EastnK This
is a different emChasis from that reCorted b+ Bloomber< on e (anuar+ /NI IRAN mGon9T Rhen it cited the State DeCartment
sCoJesman sa+in< that Rice Rould be <oin< to the Middle East to discuss the mcommon threatn from Iran and Rould be
mla+in< the foundations for Cotential future actionsnK

Bush’s speech b Patriot missile and carrier group deployment

Another notable Cara<raCh in his sCeech mWeire also taJin< other steCs to bolster the securit+ of Iraq and Crotect American
interests in the Middle EastK I recentl+ ordered the deClo+ment of an additional carrier striJe <rouC to the re<ionK We Rill
eNCand intelli<enceVsharin< and deClo+ Patriot air defense s+stems to reassure our friends and alliesK We Rill RorJ Rith the
<overnments of TurJe+ and Iraq to helC them resolve Croblems alon< their borderK And Re Rill RorJ Rith others to Crevent
Iran from <ainin< nuclear ReaCons and dominatin< the re<ionKn /httC:AARRRKsCie<elKdeAinternationalA-T&'&UT]'e-].T--Khtml9

We have alread+ noted that in our Attacking Iran reCort of Tuesda+T e (anuar+ that the deClo+ment of tRo carrier <rouCs
/one arrived in December alread+T the second should arrive Rithin ,VX ReeJs9 imClies the use of forceK This is not a normal

d
ProChet &' (anuar+ ,--.

rotation of forcesK The deClo+ment of Patriot missiles Rould be needed if the US feared ballistic missile attacJ h e< from
IranHs ShahabVX missilesK It Rill be curious to see if these <o onl+ to Israel or also to GCC statesK

ehite House warns news channels that Iran will move up the agenda

“At a not-for-quotation pre-speech briefing on January 10, George W. Bush and his top national security aides unnerved
network anchors and other senior news executives with suggestions that a major confrontation with Iran is looming.
Commenting about the briefing on MSNBC after Bush’s nationwide address, NBC’s Washington Bureau Chief Tim Russert
said “there’s a strong sense in the upper echelons of the White House that Iran is going to surface relatively quickly as a
major issue – in the country and the world – in a very acute way.” Russert and NBC Anchor Brian Williams depicted this
White House emphasis on Iran as the biggest surprise from the briefing as Bush stepped into the meeting to speak
passionately about why he is determined to prevail in the Middle East. httC:AARRRKconsortiumneRsKcomA,--.A-&&&-.Khtml

Investment implications: Geopolitical tension will likely rise in February/March, impacting on risk
appetite and asset prices across the board.

Charles Robertson, London (44 20) 7767 5310

Ukraine

President Yushchenko is pushed out of mainstream politics
<n FridayD :P Xanuary PLLND the parliamentary coalition unexpectedly backed an agreement with the embattled
4ymoshenko overriding the president’s veto on the law on the Cabinet of Ministers. It makes the Cabinet of
Ministers the centre of the executive powersD grabbing the president’s constitutional authority over foreign and
defence policies and leaving him with only a ceremonial role. 4he president’s last hope to restore his powers is the
Constitutional Court.

In the Crevious issue of Prophet, Re discussed Cossible develoCments for the talJs amon< the troiJa of the countr+Hs toC
Cosition holders h CresidentT Crime minister and sCeaJer of CarliamentK We emChasised the cooCerative mood of the
ne<otiations over a number of issues Rith the main ones bein< the Constitution and Cabinet of Ministers laRK There Rere
si<ns that these three CeoCle and their Colitical forces Rould find a consensus on additional chan<es to the constitution and
RorJ out an a<reed draft laR for the Cabinet of MinistersK

The same da+ of this meetin< the Cresident vetoed the Cabinet of Ministers laR that Ras adoCted b+ the Carliament Rith a
simCle maaorit+ aust recentl+K This version of the laR Ras solel+ develoCed b+ the Re<ions Part+Vled coalitionT in Rhich the
laRHs authors undermined the CresidentHs constitutional authorities to submit nominations for PM to Carliament and aCCoint
the ministers for the defence deCartment and forei<n affairsK In shortT this version of the laR subordinates the CresidentHs Rill
toRards coalition decisionVmaJin< on formin< the Cabinet of MinistersK The Cresident reaected the laR on the <rounds that it
violates his constitutional authorit+ on these issuesK

YoReverT Re did not Ca+ CroCer attention to the thinJin< and manoeuvrin< of T+moshenJoHs BlocT Rho Ras considered a
lame ducJ in this situationK It aCCeared that the embattled Yulia T+moshenJo sou<ht to Cush the Cresident himself outside
the mainstream of Colitical life b+ findin< a common <round Rith the Re<ions Part+Vled coalitionK She decided to suCCort the
coalition in its bid to override the Cresidential vetoK In returnT her blocHs le<islative suCCort maJes her oCCosition a mi<htier
force in the oblast and municiCal le<islaturesK

So eventuall+ on Frida+T &, (anuar+ ,--.T the laR Ras suCCorted b+ tRoVthirds of MPs to override the vetoK The Cresident
noR has to si<n this into laR Rithin a constitutional Ceriod of time and in the case of his refusalT the Carliamentar+ sCeaJer
si<ns it the laRT Rhich Rill taJe effect from the date of CublicationK

Such a sRift and uneNCected develoCment sCarJed an eNCected reaction from the CresidentT Rho said he Rould si<n the
laR and submit it to the Constitutional Court Rith an inquir+ asJin< it to denounce the laR as it violates the ConstitutionK

LooJin< forRardT it Rill taJe some time for the Constitutional Court to consider this inquir+ and durin< this timeT this laR Rill
be in effectK Shortl+ the remainin< ministers from the CresidentHs circle Rill be fired Rith a further Cush to reClace them Rith
coalition membersK YenceT the CroVEU and CroVNATO rhetoric is to be buried for an uncertain timeK The Cresident and his
Carliamentar+ suCCorters in Our UJraine are liJel+ to lose out in the Cublic aCCroval ratin<s as the+ continue to be outsiders

Q
ProChet &' (anuar+ ,--.

in this harsh rivalr+K Their suCCorters are liJel+ to sRitch to T+moshenJoT eNCectedl+ oCenin< the Ra+ for dual Cart+ rivalr+ in
future election racesK

YoReverT the last hoCe for the Cresident is the Constitutional CourtT Rhich Rith its neR squad in Clace has not +et made an+
rulin<sK It is difficult to Credict hoR unbiased it Rill be considerin< the hi<hl+ sensitive Colitical disCutes over the
constitutional authoritiesK But chances that the court ma+ reverse the neR laR and even ,--]Hs constitutional chan<es are
not necessaril+ direK

Investment implications: For the next one to three months the Cabinet of Ministers is to be the
centre of all executive powers in the country. It will be up to the Constitutional Court to decide
whether to maintain the status quo or to overturn Friday’s new law.

Alexander Valchyshen, Kiev (38 044) 230 3017

Russia/Belarus

Belarus oil conflict resolved
Russia and Belarus sign agreement on oil supply and transit

Last Frida+T the oil conflict betReen Russia and BelarusT Rhich earlier last ReeJ even resulted in the closure of the DruPhba
CiCelineT Ras full+ resolvedK Last ReeJ Re commented on Rh+ the conflict betReen former best friends had been Cossible at
all /see our dail+ ProChet reCort on eA-&A-.9 h althou<h the rhetoric of both sides Ras tou<h and the situation aCCeared as a
deaaVvu of last +earHs <as Rar betReen Russia and UJraineT it Ras not as serious and Re believed the conflict Rould be
quicJl+ resolvedK The Belarusian economic miracle Rith an annual avera<e economic <roRth of &-rO in ,--]V-d and
stead+ <roRth in incomes Ras caused b+ eNternal reasons h mainl+ hi<h subsidies from RussiaK (ust the Pero oil eNCort
dut+ for Belarus helCed to subsidies the countr+Hs econom+ b+ USsXK.bnT or &-O of GDP /the subsid+ associated Rith loR
<as Crices for the countr+ can be estimated at another USsXKdbnT or &-O of GDPT includin< ,O of GDP direct subsidies to
the bud<et9K In ,--.T Russia Ranted to eliminate the oil subsid+ and si<nificantl+ reduce reduced the <as subsid+T Rhich
resulted in the oil conflictK On the other handT it Ras not Cossible for the conflict to last lon< as further a<<ravation of Russia
threatened Belarus Rith economic collaCseT Rhile Russia rushed to resolve the conflict to reduce risJs to its reCutation as
the main ener<+ suCClier to EuroCeK

The si<ned a<reement Rill stimulate Belarus to turn to marJet reformsK The subsid+ Rill be removedT althou<h the Crocess
is Clanned to be ver+ <radual /five +ears9T Rhich should helC to avoid a stron< suCCl+ side shocJ for the countr+K In ,--.T
Belarus Rill Ca+ an oil eNCort dut+ of USs'XbnT Rhich Rill reduce the oil subsid+ from USsXK.bn in ,--d /&-O of GDP9 to
USs,K'bn in ,--. /dK'O of GDP9K The <as a<reement Cromotes the same CrinciCle: in ,--.T the Crice has been increased
from the USs]. Cer &--- cubic meters Belarus enao+ed in ,--d to USs&-- in ,--.T and Rill continue to <raduall+ increase
to marJet levels in the comin< +earsK This Rill reduce the <as subsid+ from USsXKdbn to USs,KdbnK ThusT cumulativel+
Russia has mana<ed to reduce the subsid+ b+ USs,bn and <uarantee smooth functionin< of the CiCelineK As RussiaHs
Curchase of the control of over '-O of BelarusH CiCeline s+stem for USs,K'bn has become a Cart of the <as dealT in ,--.
Re do not eNCect an+ ne<ative consequence for the countr+Hs economic Cerformance and eNCect it to deliver remarJable
<roRth fi<uresT Rhile in the comin< +ears a soft landin< has become a ver+ liJel+ scenarioK On the Colitical frontT Re cannot
rule out a neR round of ne<otiations on a RussiaVBelarus unionT but do not believe the Croaect is viableK

Investment implications: The resolution of the conflict is very important for Russia and its
reputation as a reliable energy supplier. The compromise is positive for Belarus as it will help to
avoid any external shocks in 2007 and give sufficient time for adjustment to market conditions.
Although we expect more rhetoric on a Russia-Belarus union in the coming months, we do not
expect the project to be viable.

Julia Tsepliaeva, Moscow (7 495) 755 5489

g
ProChet &' (anuar+ ,--.

Poland

The week ahead
ee expect low inflation and production numbersD and there is some risk associated with wages but we expect
moderate growth.

The ReeJ be<ins Rith the CPI releaseK Our model Coints to &K'O YoY /V-K&O MoM9T Rhich is at the bottom of the MPCHs
inflation tar<et and beloR eNCectations from the Crevious monthsK The main assumCtions in our forecast are a decrease in
fuel Crices /V]O MoM9 and a moderate rise of food Crices /-K,'O MoM9K ACart from suCCl+ factorsT Re estimate that
demandVrelated Crices ma+ also have a Cositive imCact on December CPI /Rith a decrease for aCCarel and shoes9K
Considerin< our assumCtionsT Re estimate that core inflation in December sli<htl+ increased to &K.O YoY /this fi<ure Rill be
released neNt ReeJ9K

The other crucial fi<ure Rill be Ra<esT but the d+namics of incomes for December is quite uncertainK On the one sideT
turbulence in seasonalities in the last months of ,--' /the earlier bonus Ca+ment in coal minin<9 Rill raise uC +earl+ <roRth
in December ,--dT but on the other hand the trade unions and the board of KGYM /the lar<est coCCer minin< comCan+ in
Poland9 have a<reed that emClo+ees Rill receive an eNtra bonus in (anuar+ ,--. instead of the usual DecemberK
Consequentl+T Re forecast an increase of Ra<es b+ ]KUO YoYT but d+namics above 'O YoY Rould be also Cositive for the
marJetK

The CAA is unliJel+ to Crovide an+ breaJin< neRsT as Re eNCect still robust eNCort <roRth and a sli<htl+ hi<her trade deficit
than the month beforeK The CAA deficit should amount to tX&-mT Rhich means that the eNternal stabilit+ of the Polish
econom+ is still not in dan<erK

Conversel+T the marJet Rill closel+ scrutinise Croduction fi<uresK We eNCect a ReaJ increase to dK.'O YoYT due to the
difference in RorJin< da+sK MoreoverT car Croduction Ras not imCressive and the mild Reather Rill Crobabl+ result in loRer
numbers for utilities and the minin< sectorK DesCite ReaJ manufacturin< CroductionT the construction sector should Crovide
a Cositive contributionT hence GDP <roRth in ]c-d Rill be close to the robust XcK
g

Fig 2 The week ahead

Yate GM4 Yescription Consensus Previous
&'V(an &X:-- Dec CPI /YoYO9 &K' &Kd &K]
&dV(an &X:-- Dec CorCorate Ra<es /YoYO9 ]KU dK, XK&
&dV(an &X:-- Dec CorCorate emClo+ment /YoYO9 XKe XKe XKU
&dV(an &X:-- Nov Current Account /tm9 VX&- V].' V]U,
&dV(an &X:-- Nov Trade Balance /tm9 V,., VXe& V,--
&eV(an &X:-- Dec PPI /YoYO9 ,Ke XK- ,Kd
&eV(an &X:-- Dec Industrial Croduction /YoYO9 dK.' .K' &&K.
Source: Bloomber<T ING forecasts

Investment implications: December’s macro figures should further reduce hike expectations. This
matched with the bearish core markets (and fading out of easing expectations in the US) should
result in curve steepening. MPC members’ comments on Polish macro figures will likely be
cautious, in order to not support weaker expectations for hikes (which is inconsistent with the
MPC members’ intentions).

Rafal Benecki, Warsaw (48 22) 820 4696

Money supply accelerating
All mone+ a<<re<ates accelerated in DecemberT in line Rith our vieRK Overall MX <roRth increased from &]K]O to &'KddO
YoY /our forecast Ras &'KXO9K Both household and corCorate deCosits aumCed marJedl+ /from 'K.O to UO and from ,&O to
,XO resCectivel+9T and the same haCCened to credit /corCorate credit increased from &-K,O to &XK&O and household credit
<roRth aumCed from ,eKd to X&K'O YoYu all numbers reCresent real <roRth9K The fi<ures are in line Rith solid domestic
demand <roRthT Rhich Re eNCect to continueK

N
ProChet &' (anuar+ ,--.

Fig ;! Money aggregates

X-O
,'O
Real <roRth /YoYO9

,-O
&'O
&-O
'O
-O
V'O
V&-O
(anVeU NovVeU SeCVee (ulV-- Ma+V-& MarV-, (anV-X NovV-X SeCV-] (ulV-' Ma+V-d

Firms credits Firms deCosits Youseholds credits Youseholds deCosits

Source: NBP
g

Investment implications: Low upcoming industrial output does not signify a GDP slowdown yet.
Rate hike expectations might diminish, but will not be eliminated altogether.

Mateusz Szczurek, Warsaw (48 22) 820 4698

Slovakia

December inflation slightly down: major part of disinflation only to come in 2007
Inflation to benefit from stagnating administered prices and strong koruna in PLLN.

December headline inflation declined sli<htl+ from ]KXO YoY in November and reached ]K,OK The fi<ure came in sli<htl+
beloR both our eNCectations and the marJetHs at ]KXOK Thus ,--d avera<e inflation si<nificantl+ accelerated to ]K'O YoY
from ,K.O YoY in ,--'T mostl+ on the bacJ of hi<h ener<+ Crices and related bi<<er adaustments of administered CricesK In
additionT the develoCment of food Crices had a CroVinflationar+ imCact in ,--d in contrast to ,--' /see fi< beloR left9K

From a Colic+ Coint of vieRT more imCortant is the develoCment of eNVfuelAfood core inflationK In DecemberT the <roRth of this
measure of inflation sloRed doRn to XK,O YoY from XK]O in NovemberK Overall in ,--dT underl+in< inflation Ras hi<her in
,--d than in ,--' oRin< both to stron<er inflationar+ Cressures in marJet services and less disinflation in eNVfuel tradablesK
This liJel+ reflects the <roRin< Curchasin< CoRer of SlovaJsT some secondar+Vround effects emanatin< from hi<her ener<+
Crices as Rell as the ReaJer Joruna durin< the surroundin< the electionK Partl+ to fi<ht these factorsT the CB hiJed interest
rates b+ &.'bC in several moves durin< ,--dK

S
ProChet &' (anuar+ ,--.

Fig d Avg headline inflation and components Fig Q Yemand_pulled indices H]o]K

eK-O UKdO
.K'O
&dO
UK-O .KXO
&]O
.K-O
&,O
dK-O
&-O
'K-O XKXO ]K'O
,K.O
UO
]K-O
,KXO dO
XK-O
,K-O ]O
&K-O ,O
-K-O -O
V&K-O ,--& ,--, ,--X ,--] ,--' ,--d ,--.F V,O
V]O
DemandVCull Fuel
&ee] &eed &eeU ,--- ,--, ,--] ,--d
Food Re<ulated
Yeadline inflation EN fuel tradable <oods MarJet services

Source: SU SRT ING estimates Source: SlovaJ central banJT ING calculation

ehat to expect in the upcoming months

Since Crice dere<ulation is over for noR and re<ulated items have a relativel+ lar<e share in the consumer basJetT Re
eNCect headline inflation to droC from ]K,O YoY in December to ,K.O in (anuar+ and ,KXO YoY in ACrilK Our ,--. +earVend
forecast remains at ,K,OK EU harmonised inflation is more imCortant for the CB as this measure of inflation is assessed in
&
the Maastricht criteriaK Since administered Crices have an even lar<er imCact in this methodolo<+ T EU harmonised inflation
ma+ decline even beloR the ,O level h a ver+ ambitious tar<et for the CBK As the eNCected date of assessment for the
Maastricht criteria is liJel+ to be MarchVACril ,--UT the ,--. inflation rate Rill be crucialK With such an eNCected
,
develoCment T the CB mi<ht feel comfortable about meetin< the inflation criterion at the momentK YoReverT Re thinJ that
risJs still eNist and the CB should remain cautiousK

Fig g Maastricht criterion likely to be met Fig N ING and CB forecasts vs. targets ;

UK--O 'K-O
Forecast ]K'O
.K--O
]K-O
dK--O
XK'O
'K--O Maastricht assessment XK-O

]K--O ,K'O
,K-O
XK--O
&K'O
,K--O &K-O
&K--O -K'O

-K--O -K-O
(anV-' (ulV-' (anV-d (ulV-d (anV-. (ulV-. (anV-U (ulV-U &c-' Xc-' &c-d Xc-d &c-. Xc-. &c-U Xc-U

NBS forecast NBS Tar<ets ING Forecast
ENCected reference level YICPT YoY &,M MA

Source: INEKOT ING estimates Source: SlovaJ central banJT ING calculation

&
In additionT imCuted rentsT the item Rith a stron< inflationar+ imCact on the national measure of inflationT are not included in the EU harmonised consumer
basJetK
,
Accordin< to the latest surve+ of local anal+sts b+ thinJVtanJ INEKOT the reference value should be at ,KUO YoYK
X
The CBHs forecast accordin< to the CBHs latest re<ular quarterl+ inflation reCortK This forecast is liJel+ to be biased uCRard since the adaustment of
administered Crices Ras eNCected to be lar<er Rhen the reCort Ras Cublished than finall+ aCCroved b+ the Ratchdo< a<enc+K Tar<ets defined usin< YICP
inflation /loRer b+ -K&O comCared to CPI9K Areas reCresent confidence re<ions of the NBS forecastK The broadest area mirrors a e-O confidence re<ionK The
NBS forecast counts on no dere<ulation of <as and heatK ING forecastsv eNcludin< dere<ulation of <as and heatK

h
ProChet &' (anuar+ ,--.

The folloRin< factors ma+ endan<er the fulfilment of the Maastricht inflation criterion:

&9 The outCut <aC should be sli<htl+ CositiveT and there is a risJ emanatin< from the hi<h <roRth of the econom+u real
Ra<es should <roR b+ 'rO in ,--. uC from XrO in ,--dK

,9 The <overnment shoRs no Rill to use eNtra revenues from the stron< <roRth of the econom+ to cut the fiscal
deficitK It rather seems that the <overnment intends to use the eNtra mone+ on CoCulist measuresK ConsumCtionV
inducin< fiscal sCendin< ma+ create some additional inflationar+ CressuresT esCeciall+ in Crices of nonVtradablesK

X9 There is still a relativel+ lon< Ceriod ahead of the assessment dateK Yence the authorities should JeeC in mind the
risJ of a ne<ative shocJK This aCClies both to food and ener<+ CricesT and effects from eNo<enous factorsT as Rell as
tradables <oods sensitive to currenc+ movesK

Investment implications: Hence we think these risks could restrain the CB from cutting rates too
early. However, once the CB starts to feel confident about the inflation criterion a cut may be in
the pipeline. From our point of view, the most probable scenario is still a 50bp cut in 2H07. But
should the koruna strengthen beyond the SKK34.0/EUR mark in the very short-term, one cannot
completely rule out an earlier cut. This is still not our base scenario though.

Eduard Hagara, Bratislava (421 2) 5934 6392

November wages surprised on the downside, upturn expected in 2007
diLg’s weak market sector wage data are a puzzle.

November industrial Ra<es surCrised on the doRnsideT reachin< a mere -KXO YoY in real terms vs our forecast at &K.O
YoYK This looJs odd Carticularl+ in the conteNt of the neRs that some emClo+ees /in the re<ions Rhere neR FDIVClants are
bein< Cut to RorJ9 have started to talJ about labour shorta<esK ThereforeT Re eNCect a CicJVuC in Ra<es in ,--.T Rhich
should first start in manufacturin<K ThanJs to a droC in headline inflationT the fullVeconom+Hs real Ra<es could accelerate to
'rO Rith an uCside risJ on the bacJ of Ra<e increases in the Cublic sectorK

In NovemberT a<<re<ate Ra<e <roRthT Rhich corresConds to tRoVthirds of the econom+Hs emClo+mentT increased b+ a soft
&K&O YoY in real termsT doRn from ,KdO YoY a month a<oK YoReverT the trendHs momentum does not Coint to a further
sloRdoRn at CresentT as it is uC to ,K.O from a Crevious ,KXOT Rhich reCresents the hi<hest fi<ure since Februar+ last +earK

The hi<her Curchasin< CoRer of SlovaJs /Rhich is noR chiefl+ driven b+ a combination of domestic and forei<n emClo+ment9
is still mirrored in retail sales <roRthK NovemberHs readin< came in at .K]O YoY in real terms vs our eNCectation at dKXO
YoYK Thus ]c-d household consumCtion should Cost a drO YoY fi<ureK

:L
ProChet &' (anuar+ ,--.

Fig : Consumer confidence beats all_time highs Fig P Retail sales growth6 ]o] vs recent
despite modest wage growth momentum

,-K-O &- &'K-O

&'K-O - &-K-O
&-K-O
V&- 'K-O
'K-O
V,- -K-O
-K-O
VX- V'K-O
V'K-O

V&-K-O V]- V&-K-O

V&'K-O V'- V&'K-O
MarV-, MarV-X MarV-] MarV-' MarV-d (anV-X (ulV-X (anV-] (ulV-] (anV-' (ulV-' (anV-d (ulV-d

Wa<e <roRth momentum
Retail salesT YoY
EmClo+ment <roRth momentum
Consumer confidence /rhs9T XM MA Annualised coc <roRth of calendarVadausted retail sales

Source: SUSRT ING Source: SUSRT ING

Note: Wa<e and emClo+ment momentum is calculated as XM MA of YoY Note: Recent momentum is calculated as coc annualised <roRth rates of the
annualised <roRth rates of the seasonall+ and Rda adausted seriesK seasonall+ and Rda adausted seriesK

Investment implications: While 4Q06’s full-economy wages might be a disappointment, the wage
risks might erase in this year, posing a possible threat to 2H inflation. Before that, wage-driven
pressures should not play first fiddle.

Lucia Steklacova, Bratislava (421 2) 5934 6393

Turkey

Great budget data
Another tremendous fiscal performance by 4urkey.

It is unfortunate for TurJe+ that <eoColitical tension ma+ otherRise undermine Rhat Rould be a <reat stor+ in the comin<
monthsK Bud<et fi<ures shoR a fullV+ear ,--d deficit of TRYUbn or aCCroNimatel+ &K]O of GDP Rhich is another eNcellent
achievement and comes Rith a Crimar+ surClus Re estimate at dK.O of GDPK These are tremendous fi<uresT in our vieRK
Were it not for <eoColiticsT Re Rould also forecast the currenc+ remainin< at &K]-AUSD in the comin< monthsT and inflation
Clun<in< doRn to dV.O in Ma+V(uneK For those CreCared to dismiss our <eoColitical concernsT bein< lon< local currenc+
TurJe+ looJs a <ood trade for the comin< monthsK Unfortunatel+T Re see <eoColitical issues as threatenin< to send the lira
to &Kd-AUSD in March ,--. and CerhaCs CromCtin< the central banJ to hiJe another &--bCK TurJe+ Rould be a bi< Rinner
from a diClomatic solution to the Iranian nuclear ReaCons issueK

Investment implications: If tension in the Persian Gulf does not rise, being long local Turkey would
be great trade in the coming months, but we see a high risk of 1.60/USD and a possible rate hike.

Charles Robertson, London (44 20) 7767 5310

::
ProChet &' (anuar+ ,--.

Latin America
Brazil

December IPCA inflation posted a 0.48% increase
PLLg IPCA inflation came in at ;.:JD for the first time below the centre of the target.

December IPCA inflation came in at -K]UOT Rithin the ran<e of eNCectationsT Rhich Ras -K]-V-K'-OT and sli<htl+ above our oRn
forecast of -K]'OK ThusT ,--d IPCA inflation closed the +ear at XK&OT marJin< the fourth consecutive +ear of decreasesT and the
first +ear beloR the centre of the tar<etK As Re mentioned in the last edition of this CublicationT chances Rere that the December
fi<ure surCrised on the stron< sideK Avera<e core inflation Ras -KXXOT and Ras actuall+ someRhat stron<er that Re Rere
anticiCatin< /-K,dO9K ENVmonitoredT eNVfood core inflation came in at -KX]OT Rith the unsmoothed trimmed mean core inflation at
-K,.O and smoothed trimmed mean at -KX.OK DisCersion Ras hi<her both at the headline fi<ure and on core inflation /see table
beloR9T reflectin< a more homo<eneous increase in industrial comConentsK We vieR such an increase as normalT since industrial
Crices varied ver+ little for most of ,--dT as BRL aCCreciation Ras <raduall+ embedded into tradables inflationK Services inflation
Ras contained at -K&eOK The acceleration of the headline fi<ure is eNClainedT as eNCectedT b+ the increase in Cublic transCortation
tariffsK We reaffirm our call for a '-bC reduction on the SELIC rate at the ,] (anuar+ meetin<K See Frida+Hs EMBR for detailsK

Fig S IPCA ]o]J inflation b selected groups Fig h IPCA ]o]J inflation b selected groups
,] &U
,,
&d
,-
&U &]
&d
&,
&]
&, &-
&- i i
U
U
d d
]
, ]
- ,
OctV-]

OctV-'

OctV-d
ACrV-'

ACrV-d
(anV-'

(anV-d
(ulV-'
ACrV-X

ACrV-]
OctV-X

(ulV-]

(ulV-d
(anV-X

(anV-]
(ulV-X

(ulV-X

(ulV-'

(ulV-d
(anV-X
ACrV-X

OctV-X
(anV-]
ACrV-]
(ulV-]
OctV-]
(anV-'
ACrV-'

OctV-'
(anV-d
ACrV-d

OctV-d
monitored tradables services core /avera<e9 headline marJet Crices

Source: IBGET ING Source: IBGET ING
g

Fig 10 IPCA inflation

<ct_Lg Nov_Lg Yec_Lg
IPCA_:Q IPCA IPCA_:Q IPCA IPCA_:Q IPCA

IPCA -K,e -KXX -KX. -KX& -KX' -K]U
marJet Crices -KXd -K]X -K]U -K]' -KX' -KX,
Monitored Crices -K&X -K&, -K&, -K-- -KX] -KU]
Core /eN food and monitored Crices9 -KXX -K,e -K&U -K,X -KX, -KX]
Core /smoothed trimmed mean9 -KX. -KX& -K,. -K,d -K,U -KX.
Core /trimmed mean9 -K,] -K&e -K&d -K&, -K&e -K,.
Core avera<e -KX, -K,d -K,- -K,- -K,d -KXX
Tradables -KX- -K]X -K'e -K'' -K], -K]-
NonVtradables -K], -K], -KXU -KXd -KX- -K,]
NonVtradables eN food -K,. -K,X -K,- -KX] -K]X -K]-
Services -K]- -K]- -K,& -K&. -K,- -K&e
Food /at home9 -K]e -KeU &K.] &KXU -K'& -K,,
Industrial core /eN food and fuel9 -K,. -K-e -K-& -K,- -K]- -KXd
Durable <oods V-K-] V-K,. V-KX. V-K&d V-K-, -K--
DisCersion -K'U -K'U -K'] -K'e -K'' -Kd&
DisCersion on Core /eN food and monitored Crices9 -Kd- -Kd- -K'] -K'e -K'. -Kd]
Source: IBGET ING
g

:P
ProChet &' (anuar+ ,--.

Investment implications: Contained core inflation and the identification of an acceleration in
headline inflation on seasonal price pressures is one of the pillars upon which our call for a 50bp
cut in the next COPOM meeting rests.

Pedro Jobim, São Paulo (55 11) 4504 6131

:;
ProChet &' (anuar+ ,--.

Closing prices
Developed markets closing prices
Cash Market Last Chg YoY Chg eoe ]ield curves/ Last Chg YoY Chg eoe Chg MoM Swap Spd Chg YoY
bp bp swap spreads bp bp bp bp bp
US &Vmth 'KX,- -K- -K- US ,+r <ovt ]KU.d ,Kd &,K. &'Ke XdK- -K-
XVmth 'KXd- -K- -K- '+r <ovt ]K.d- XKe &,K& &eKX ]&KU -K-
dVmth 'KXUX -Kd XK] &-+r <ovt ]K..' ]K' &XK& &UK, ]UKU -K-
&,Vmth 'KXdU ,KU &&KU &-sV,s /bC9 V&- VU VU Vd
EU&, &Vmth XKd&- V-K' V&K' EU&, ,+r <ovt XKe]. V-KX XK, &]K] ,,K] V-KX
XVmth XK.]' V&K, &K- '+r <ovt XKee& V-K& 'K. &eK- ,-K- -K-
dVmth XKU.d V,KU &K, &-+r <ovt ]K-d] -K& eK& ,dK' ,XK' V-KX
&,Vmth ]K-', V,Kd ,KU &-sV,s /bC9 &, &, &U X-
UK &Vmth 'K]-X ,-K- ,,K, UK ,+r <ovt 'K]&- V-Kd &dK, X&Ke X]K- -K-
XVmth 'K'XX &dKU ,-KX '+r <ovt 'K&dX VXKd dK. ,'Ke XUK] -K-
dVmth 'Kd.U &eKU ,XKU &-+r <ovt ]Ke-] ]KU &-K, ,UKe XdK- -K-
&,Vmth 'KUXe &eKe ,]Ke &-sV,s /bC9 V'& V]' V'& V']
(aCan &Vmth -Kd-& &K& &K& (aCan ,+r <ovt -KUX' &K- -K- &KU &'Kd -K-
XVmth -K'&d &K- &K' '+r <ovt &KX-' -K& &K' 'K- &]K& -K-
dVmth -KddX -KU -K, &-+r <ovt &K.]' -K& ,Kd .K' &dK- -K-
&,Vmth -K.U- -K' V-K' &-sV,s /bC9 e& e- eX eU
Canada &Vmth ]K,d. V-K& -K] Canada ,+r <ovt ]K-.- &Ke .K. &eKU ,-Ke -K,
XVmth ]K,.- -K- -KU '+r <ovt ]K-], ,K] &-K& ,XKd ,dKe V-K&
dVmth ]K,U- -KU ,K. &-+r <ovt ]K&X' ,K' &-K- ,XKd ]-K] -K,
&,Vmth ]K,U. &Ke UKX &-sV,s /bC9 d . e &X

Spot F[ Last Abs chg Abs chg Abs chg Market forwards
YoY eoe MoM :mth ;mth gmth :Pm
EURAUSD &K,eX& -K---. V-K--eX V-K-&'- &K,e'& &K,eU, &KX-,d &KX-e'
USDA(PY &,-K,e V-K-] &K]e ,K&, &&eK.' &&UKUe &&.K', &&]KeU
EURA(PY &''K'' -K-] -KU] -Ke. &''K&- &']KX] &'XK-e &'-K'U
GBPAUSD &Ke'e] -K---, -K-,&] -K--.& &Ke'e] &Ke'UU &Ke'.& &Ke',&
EURAGBP -Kd'ee -K---X V-K-&,& V-K-&-, -Kdd&- -Kdd,U -Kdd'd -Kd.-e
EURASEK eK-d,' V-K-,d- V-K-].- -K--'U eK-'e] eK-'&' eK-],e eK-X&U
EURANOK UKX,.X V-K--X. -K-dXX -K&.'d UKX,e- UKX,e] UKXX]. UKXd-'
EURACYF &Kd&X& -K--&, -K--,e -K-&'' &Kd&-U &Kd-d. &Kd--X &K'U.e

USDACAD &K&dU. V-K--&e V-K--d' -K-&-U &K&d.d &K&d'd &K&d,' &K&'de
AUDAUSD -K.U'- -K--&X -K--'& -K--X' -K.U]X -K.UX- -K.U-d -K..',
NwDAUSD -KdeX, -K--,d -K--Xe -K--XX -Kde&U -KdUeX -KdU', -Kd.dd

Ecuity markets Last J chg J chg J chg Commodity Last J chg J chg J chg
YoY eoe MoM markets YoY eoe MoM
US DoR (ones &,''d -KX &KX -Ke Brent Crude /bbl9 ',K' -KX V]K- V&dK&
SlP '-- &]X& -K' &K' -KX Brent &mth fRd /bbl9 'XK, -K] V]K] V&dKX
Nasdaq ,'-X -K. ,KU &Ke WTI /bbl9 'XK- ,K& V'Ke V&XK,
OPEC basJet /bbl9 ]eK& V]K- V.K. V&]Ke
EU EurotoC X-- &'&- -K] &Kd &K]
DAx d.-' -KX &K. &KU Base metalsv ,,.K& -K- &K& VdKe
CAC 'd&U -K& &KU &K] Gold /oP9 d,'Kd V-KX ,Kd &K.
Milan MIBX- ],-U, -K] &K, &K, Precious metalsv ,X,K. &K' ,KU &KU

UK FTSE &-- d,Xe -K& -KX V-KX Food l fibrev &&eK- -K- V&K, -K]
FTSE allVshare X,,. -K& -K, V-K&
*Bloomberg index
(aCan NiJJei ,,' &.,&- -Ke -K. &K.
ToCiN &.-' &K& &K. ,KU

Source: Bloomberg

:d
ProChet &' (anuar+ ,--.

Emerging markets closing prices

Key external debt prices
Country Benchmark Moodyjs/ Price Price support Price resistance Spread HbpK ]4M HJK 4otal return HJK
asset S-P Close !YoY II I I II Close !YoY close YoY eoe ]4Y

USD denominated

Algeria Tranche X NARANAR eeK.' -K-- .XKed e'K,, &&dK]. &X.K.X
Brazil BraPil &&O i]- Ba,ABB &X,K,U V-K,, &X&K]d &X,K-X &XXK&d &X,K'e &X- V, dK&& V-K&& V-K,-
Bulgaria ReC UK,'O i&' BaaXABBBr &&UK,& V-K]& &&dK]' &&.K&] &&UK', &&eK,- d- - 'K]& V-K,d &K--
Chile ReC 'K'O i&X A,AA &-,K]] -K-- &-&K.. &-,K,& &-,Kd] &-XK-. ,, V' 'K-, -K-& -K&]
China ReC ]K.'O i&X A,AA e.KU- V-K&& edKe- e.K]] eeK-' eUK'& XX VX 'K&] V-K-U V-K&e
Colombia ReC UK,'O i&] Ba,ABB &&XKXX -K-] &&,KU. &&XKX& &&XK.] &&]K&U &X- Vd dK&- -K-' V-K]e
Yom Rep ReC eK-]O i&X BX AvrAD &--K-& ]K-& e-KdU e'K-, &-XK.& &-UK-' ],] Ve' eK-] XK&. V-Kee
Egypt ReC UK.'O i&& Ba&ABBr &&XK,. -K&. &&,K.' &&XK-e &&XK]X &&XK.U 'U Ve 'KXU -K&] -K,&
El Salv ReC UK'O i&& BaaXABBr &&&KX' -K-- &&-Ke' &&&K&' &&&K'' &&&KX' U, V' 'Kd, -K-, -K,&
Hungary ReC ]K.'O i&' A,ABBBr e'Ke& V-K,, e'K-- e'K', e.K-. edK'' '. V, 'KXU V-K,- V-Kd.
Ivory Cst FLIRB NARANAR ,XKe] -K-- ,XK-e ,XK'' ,]K]. ,]K-& XT]&' X XUKd, -K-, -K,.
Kazakhstan ReC &&K&,'O i-. Baa,ABBB &-&Ke] -K,. &-&KXe &-&K., &-,K.- &-,KX. ]KU- -K,, -K-]
Korea ReC ]KU.'O i&] AXAA eUK-U -K-- e.K&X e.K.] eUKX' eUKed X. V' 'K&U -K-& -K-e
Lebanon ReC &-K&,'O i-U BXABV &-XK-d V-K-X &-,KX, &-XK-, &-XK.& &-]K]& X.U - UKd. -K-- -K&]
Malaysia ReC .K'O i&& AXAAV &-UK.] V-K&] &-UK,, &-UKd, &-eKU, &-eK], ]e V& 'K,e V-K-e V-K,U
Mexico UMS dKd,'O i&' Baa&ABBB &-dKU- V-K,- &-'KUU &-dK]. &-UK,, &-.Kd] .d V, 'K'. V-K&] V-KdU
Morocco Tranche A Ba&ABBr eeKUU -K-- U,KXU e.Kd, &&,KU' &,UK-U
Nigeria Par NARANR &--K-- -K-- .]K&. e'K]U &&dK.e &XUK&- 'X' - eKe-
Pakistan ReC dK.'O i-e B&ABr &--Kee V-K-& &--K]d &--K.X &-&K,. &-&K-- &XU VX dK,X -K-& V-K-.
Panama ReC .K,'O i&' Ba&ABB &-UK'd V-K-d &-.KU] &-UK,d &-eK&- &-UKdU &&- V] 'Ke& V-K-X V-KX.
Peru ReC eKU.'O i&' BaXABBr &,.K,' -K-e &,dK-' &,dK.d &,.K]U &,UK&e U& V. 'Kd, -K-U V-K&,
Philippines ReC UK,'O i&] B&ABBV &&,K'- V-KXU &&&K'& &&,K,' &&,Kee &&XK.X &,X & dK-X V-K,' V-K],
Poland ReC 'K,'O i&] A,ABBBr eeKU& -K-- eeK,U eeKdU &--KUe &--K]e ]U V' 'K,U -K-& V-KX-
Russia ReC 'K--O iX- Baa,ABBBr &&,K&d V-KX, &&&K,] &&&KU' &&XKdd &&XK-d ee , 'K.X -K-] V-KX,
S Africa ReC dK'O i&] Baa&ABBBr &-]Ke, V-KX, &-]KX. &-]K.' &-dK,. &-'KUe U. - 'Kd. V-K,' V-K]U
4hailand K<dm .K.'O i-. Baa&ABBBr &--K'& V-K-& &--KX. &--K]e &--KUd &--K.] ]- ' 'K'X -K-& -K-.
4unisia ReC .KX.'O i&, Baa,ABBB &-.Ke, V-K&. &-.K'& &-.KUd &-UKe] &-UK'U U& V& 'Kd, V-K&& V-K-U
4urkey ReC .K,'O i&' BaXABBV &-XKdX -K-- &-XK-- &-XKdX &-]K,' &-]KUU &U' V' dKdd -K-, -K-,
Ukraine ReC .Kd'O i&X B&ABBV &-.Kde V-K&, &-.KX- &-.K'd &-UK&- &-.KUX &X. VX dK&U V-K-. V-K,U
Uruguay ReC .K'O i&' B&ABr &-UK&- -K-d &-.KU, &-UK-, &-UK,, &-UK], &&. Vd 'KeU -K-d -K-'
Venezuela ReC eK,'O i,. B,ABBV &,XKU- V-K&X &,&Kd' &,XK'X &,.K,e &,'K]& ,&d V] .K-] V-K-. V&K.U

Euro denominated

Brazil ReC .KX.'O i&' Ba,ABB &&]K-' V-KX& &&XK.X &&]K,U &&dK'& &&'Ke' &,] ' 'K&X V-Kde V&K]]
Bulgaria ReC .K'O i&X BaaXABBBr &&dK'& V-K,d &&'KX& &&'Ke] &&UK]X &&.KU& XU X ]K,. V-K,& V-K,d
China ReC ]K,'O i&] A,AA eeK.- -KXU eUK', eeK,U &-&K'' &--K.e X] V. ]K,' -KXe V-K-.
Colombia ReC &K'O i&& Ba,ABB &,]KU, V-K]X eXK]X &,-K,U &].K&X &.XKeU &-e e ]Ked V-KX&
Croatia ReC 'O i&] BaaXABBB &-XK], V-K,U &-,Kd, &-XKXd &-'K'e &-]KU' ]U X ]KXe V-K,' V-K,U
Czech Rep ReC ]Kd,'O i&] A&AAV &-,K'' V-K,. &-&KXe &-,KXX &-'K&' &-]K,& ,d , ]K&. V-K,' V-K,e
Hungary ReC ]K'O i&] A,ABBBr &--K.d V-K,. eeKe' &--K., &-XK-] &-,K,. ], X ]KX, V-K,] V-K,'
Lebanon ReC .K,'O i-e NARABV &-XK&X V-K-d &-,K-- &-,K'U &-]KX& &-XK.X &U] ] 'KdU V-K-] V-K]'
Mexico UMS ]K,'O i&' Baa&ABBB edKUd V-KXd e]KUX e'Ke, &--K,. eeK&U .' ' ]Kd' V-KX' V-K'.
Peru ReC .K'O i&] BaXABBr &&]K&- V-K&. &&XKU' &&]K,& &&'Kd. &&'KX& &,U X 'K&. V-K&X V-Kd'
Poland ReC ]K'O i&X A,ABBBr &-&K&e -K-. &--KX] &-&K-& &-XK-, &-,KX' XX VX ]K,X &K-e -K.,
Philippines ReC eK&,'O i&- B&ABBV &&,KX, -K-, &&&Ke' &&,K,& &&,Kee &&,K.X UX V& ]K.- -K-X -K-e
Romania ReC UK'O i&, BaaXABBBV &&eK-' V-K,X UeK,U &&]Ke' &]-Kd& &ddK,U ]d ] ]KX] V-K&.
Slovakia ReC ]K'O i&] A&ANAR &-&K,. V-KX' eeKd] &--K]d &-XK.U &-,Ke' X] ] ]K,' V-KX, V-KX&
Slovenia ReC 'KXUO i&& Aa,AAA &-]KU, -K-. &-]K&X &-]KdX &-dK&d &-'Kd' &U VX ]K-. ,Ke' ,K.d
S Africa ReC 'K,'O i&X Baa&ABBBr &-XKU- V-KX' &-,K., &-XK]d &-'Kd' &-]Ke, d- d ]K]e V-KX& V-K,.
4urkey ReC dK'O i&] BaXABBV &-'Kdd -K&] &-'K,& &-'K'd &-dKd- &-dK,' &'d V& 'K]] VXK'e V]K--
Venezuela ReC .O i&' B,ABBV &-XK.& -K]- &-XK-- &-XKUd &-.KX, &-dK]d ,]] V, dKX- -KXe V,KU]

All data as of 'PM Londonu &st resistanceAsuCCort level @ rAV &Vstandard deviation from ],Vda+ avera<e
&9 EMBI GlobalAEuro dail+ chan<es reCresent estimates based on ING equivalent indices
Source: ING
g

:Q
ProChet &' (anuar+ ,--.

Local markets instruments: FX and forwards
F[ rate/USl NYF outright HofferK NYF Implied yield Hoffer JK
Bid <ffer Mid :M ;M gM :PM :M ;M gM :PM

USl RA4ES
Latin America
Ar<entina XK-U- XK-UX XK-U& dK-de XK-U, XK&,- XK,&. dK,. dKdd .KXd .KeU
BraPil ,K&]- ,K&]X ,K&], ,K&'. ,K&UX ,K,&e ,K,Ue &XK-, &,KU& &,Kd& &,K]]
Chile 'XeKX 'XeKU 'XeKd ']-K- ']-K& ']-K] ']-Ke 'Kd] 'K'U 'K'e 'K'U
Colombia ,T,&e ,T,,, ,T,,& ,T,,U ,T,]- ,T,'. ,T,e] UK'. UKd] UKd- UK.]
MeNicov &-KeU &-Kee &-Kee &&K-& &&K-] &&K-e &&K,, .KXU .K,d .KX] .Kd-
Peru XK&e- XK&e& XK&e& XK&Ue XK&UU XK&Ue XK&e& ]K'd ]Ke, 'K,d 'KX.
oenePuela ,T&]' ,T&'- ,T&]. ,T,-- ,T&d- ,T&e' ,TXU- XXKX' .K&' eKd- &dK].

EMEA
Bul<aria &K'&] &K'&] &K'&] &K'&, &K'-e &K'-d &K'-. XK'' XKee ]KX- ]KUe
Croatia 'Kdee 'K.-U 'K.-] 'K.-, 'KdeU 'KdeX 'KdU] XKe, ]Kd- ]KU] ]KeX
CPech ReCv ,&K]e ,&K'] ,&K', ,&K]e ,&KXe ,&K,d ,&K-X ,K]. ,Kd- ,K.] ,Ke&
Yun<ar+v &e'K- &e'K] &e'K, &e'Ke &edK. &eUK- ,--KX UK,, UK-X UK-' .Ke]
Polandv ,Kee. XK--, ,Keee ,KeeU ,Kee, ,KeU' ,Ke.] ]K-X ]K&& ]K,' ]K],
Romania ,KdX, ,KdXd ,KdX] ,KdX& ,Kd,' ,Kd,& ,Kd-d XK&e XKde ]K&e ]K&e
Russia ,dK'. ,dK'. ,dK'. ,dK'e ,dK'. ,dK'] nAa dK-- 'K,e 'K&, nAa
SlovaJiav ,dKed ,.K-- ,dKeU ,dKeU ,dKe] ,dKU. ,dKU- ]K]. ]K]- ]K]- ]K'U
South Africa .K,-X .K,]X .K,,X .K,d. .KX&] .KXe& .K''& eK&d eK,e eK'X eK.U
TurJe+v &K],U &K]X, &K]X- &K]]e &K]U& &K'X& &KdXd &eK&, &UKUX &eK,X ,-K-U
UJraine 'K-'. 'K-d. 'K-d, 'K-d. 'K&.& 'K&.& 'K,'] 'K,. &XK'U eK'' eK,&

Asia
China .K.ed .K.ed .K.ed .KU-' .K.]- .Kd., .K']d ]Kee &Ke& &KU' &Ke&
Yon< Kon<v .K.ee .KU-- .K.ee .K.e- .K..] .K.'- .K.&- XKU. ]K-, ]K-U ]K&.
Indonesiav eT&&- eT&X- eT&,- eT&d- eT,&, eT,UU eT]d- eK&' UKed UKe, eK&&
Koreav e]- e]- e]- e]- eXe eXU eXd ]K&X ]K], ]KX] ]K,,
Mala+siav XK'&, XK'&. XK'&' XK'&, XK'-, XK]U. XK]d& XK'. XKdd XKd' XK.&
PhiliCCines ]UKe- ]eK-' ]UKeU ]eK&] ]eK,, ]eK&, ]eKXe .K'& dK.X 'KdU dK-e
Sin<aCorev &K']X &K']] &K']X &K']& &K'X. &K'X- &K'&d XK'] XK'. XK'X XK',
TaiRan X,K.' X,K.. X,K.d X,K.d X,K.d X,K.d X,K.' &K., &KU- &K.d &K.e
Thailandv X'Ke& X'Ke] X'KeX XdKX] XdK', XdK.d XdKUe &UKX- &&KUX &-K-] UK&-

F[ rate/m NYF outright HofferK NYF Implied yield Hoffer JK
Bid <ffer Mid :M ;M gM :PM :M ;M gM :PM

EUR< CR<SS RA4ES
EMEA
Bul<aria &Ke'd &Ke'd &Ke'd NAA NAA NAA NAA NAA NAA NAA NAA
Croatia .KXdU .KX.X .KX.& .KX.U .KXUU .K]- .K]X ]KXU ]K'' ]Kd' ]KU'
CPech ReCv ,.K.. ,.KU, ,.K.e ,.K.e ,.K.] ,.Kd' ,.K'- ,K', ,Kd, ,K.- ,KU.
Yun<ar+v ,',K- ,',K] ,',K, ,'XK] ,''K& ,'.Kd ,d,KX UK,d UK-d UK-, UK-.
Polandv XKU., XKU.. XKU.] XKU.U XKUU- XKUUX XKU'- ]K-d ]K-U ]K&U XKX]
Romania XKXee XK]-] XK]-, XK]-d XK]&, XK],' XK]X' ]K,& ]KdX 'K-e ]Kee
Russia X]KX, X]KXX X]KXX NAA NAA NAA NAA NAA NAA NAA NAA
Serbia .UKee .eK&. .eK-U d-KUX d,K-e -K-- -K-- &dK]' &dKXd -K-- -K--
SlovaJiav X]KU, X]KUd X]KU] X]KUU X]Ke& X]Ke. X]Kd' ]K'& ]K]& ]K'X XK]'
TurJe+v &KU]d &KU'& &KU]U NAA NAA NAA NAA NAA NAA NAA NAA
Israel 'K]X' 'K]]U 'K]], NAA NAA NAA NAA NAA NAA NAA NAA
South Africa eKX,U eKXX& eKXX- NAA NAA NAA NAA NAA NAA NAA NAA

All data as of 'PM London
v ForRards are deliverable
Source: ING

:g
ProChet &' (anuar+ ,--.

Research Analyst Contacts
Yeveloped Markets 4itle 4elephone Email
London MarJ Cliffe Global Yead of Economics and Strate<+ /]] ,-9 ..d. d,UX marJKcliffeyuJKin<Kcom
Rob Carnell Senior EconomistT UST Canada /]] ,-9 ..d. de-e robKcarnellyuJKin<Kcom
(ames Kni<htle+ EconomistT UKT UST Scandinavia /]] ,-9 ..d. dd&] aamesKJni<htle+yuJKin<Kcom
Chris Turner Yead of Forei<n ENchan<e Strate<+ /]] ,-9 ..d. &d&- christoCherKturneryuJKin<Kcom
Tom Levinson Forei<n ENchan<e Strate<ist /]] ,-9 ..d. U-'. tomKlevinsonyuJKin<Kcom
Loic de Robert Yautequere Yead of EuroCean Yi<h Yield Research /]] ,-9 ..d. dd'd loicKderobertyuJKin<Kcom
Amsterdam Maarten Leen PrinciCal Economist /X& ,-9 'dX ]]-d maartenKleenymailKin<Knl
Martin van oliet EconomistT EuroPone /X& ,-9 'dX e',U martinKvanKvlietymailKin<Knl
Dimitr+ Flemin< EconomistT NetherlandsT US /X& ,-9 'dX e',- dimitr+Kflemin<ymailKin<Knl
Padhraic Garve+ Yead of Investment Grade Debt Strate<+ /X& ,-9 'dX Ue'' CadhraicK<arve+yin<banJKcom
(eroen van den BroeJ Yead of Investment Grade Credit Strate<+ /X& ,-9 'dX Ue'e aeroenKvanKdenKbroeJyin<banJKcom
Uman< oithlani Credit Derivatives Strate<ist /X& ,-9 'dX Ued, uman<Kvithlaniyin<banJKcom
Wilson Chin Debt Strate<ist /X& ,-9 'dX Ue'd RilsonKchinyin<banJKcom
Maureen Schuller Debt Strate<ist /X& ,-9 'dX Ue]& maureenKschulleryin<banJKcom
Yiu Chun< Cheun< Rates Derivatives Strate<ist /X& ,-9 'dX Ue'X +iuKchun<Kcheun<yin<banJKcom
MarJ Yarmer Yead of Investment Grade Credit Research /X& ,-9 '-& X,'e marJKharmeryin<banJKcom
Shaunn Griffiths Senior Credit Anal+stT Telecoms l Utilities /X& ,-9 '-& X,'X shaunnK<riffithsyin<banJKcom
Mischa YuCCeretP Credit Anal+stT Industrials /X& ,-9 '-& X,', mischaKhuCCeretPyin<banJKcom
RoelofV(an van den AJJer Technical Anal+st /X& ,-9 'dX U&.U roelofVaanKvanKdenKaJJeryin<banJKcom
Brussels Peter oanden Youte Chief EconomistT Bel<iumT EuroPone /X, ,9 ']. U--e CeterKvandenhouteyin<Kbe
AnnicJ Pierard EconomistT (aCanT UST SRitPerland /X, ,9 ']. XX'- annicJKCierardyin<Kbe
EriJ Sonnta< EconomistT German+ /X, ,9 ']. Ud', eriJKsonnta<yin<Kbe
Ivan van de Cloot EconomistT Bel<ium /X, ,9 ']. X&d& ivanKvanVdeVclootyin<Kbe
Milan Paolo PiPPoli Senior EconomistT EMUT Ital+T Greece /Xe -,9 Ued,e XdX- CaoloKCiPPoliyin<Kit
Emerging Markets 4itle 4elephone Email
London Charles Robertson Chief EconomistT EMEA /TurJe+T UJraine9 /]] ,-9 ..d. 'X&- charlesKrobertsonyuJKin<Kcom
A<ata Urba!sJa EconomistT Central EuroCe l BalJans /]] ,-9 ..d. de.- a<ataKurbansJayuJKin<Kcom
Dorothze Gasser EconomistT Middle East and Africa /]] ,-9 ..d. d-,X dorotheeK<asseryuJKin<Kcom
Courtne+ Ruesch Research AssistantT Baltics /]] ,-9 ..d. ''d. courtne+KrueschyuJKin<Kcom
Luis Costa Emer<in< MarJets Strate<ist /]] ,-9 ..d. d]d] luisKcostayuJKin<Kcom
Pavel SimaceJ Senior Credit Anal+st /]] ,-9 ..d. d'X' CavelKsimaceJyuJKin<Kcom
An<ela Deviatova Credit Anal+st /]] ,-9 ..d. d&&U an<elaKdeviatovayuJKin<Kcom
Andre Andriaanovs Credit Anal+st /]] ,-9 ..d. d']- andreKandriaanovsyuJKin<Kcom
Bratislava (an Toth Chief EconomistT SlovaJia /],& ,9 'eX] dXU& aanKtothyin<KsJ
Lucia SteJlacova Senior EconomistT SlovaJia /],& ,9 'eX] dXeX luciaKsteJlacovayin<KsJ
Eduard Ya<ara EconomistT SlovaJia /],& ,9 'eX] dXe, eduardKha<arayin<KsJ
Bucharest Florin Citu Chief EconomistT Romania /]- ,&9 ,-e &]&' florinKcituyin<romaniaKro
CiCrian Dascalu EconomistT Romania /]- ,&9 ,-e &,e] ciCrianKdascaluyin<romaniaKro
Budapest G+or<+ BarcPa Chief EconomistT Yun<ar+ /Xd &9 ,X' U.'. <+or<+KbarcPayin<Khu
David Nemeth EconomistT Yun<ar+ /Xd &9 ,'' ''U& nemethKdavidyin<Khu
Kiev AleNander oalch+shen Credit Anal+stT UJraine /XU -]]9 ,X- X-&. aleNanderKvalch+shenyin<banJKcom
Mexico City Salvador Moreno Chief EconomistT MeNico /', ''9 ','U ,&ee salvadorKmorenoyamericasKin<Kcom
David (aime EconomistT MeNico /', ''9 ','U ,-]' davidKaaimeyamericasKin<Kcom
Ro<elio Urrutia CorCorate Debt Anal+st /', ''9 ','U ,&]] ro<elioKurrutiayamericasKin<Kcom
Moscow (ulia TseCliaeva Chief EconomistT Russia l CIS /. ]e'9 .'' ']Ue auliaKtseCliaevayin<banJKcom
Stanislav PonomarenJo Credit Anal+stT Russia /. ]e'9 .'' ']U- stanislavKConomarenJoyin<banJKcom
Ol<a Golub Credit Anal+stT Russia /. ]e'9 .'' '&.d ol<aK<olubyin<banJKcom
Mumbai Yarish Menon EconomistT India /e& ,,9 ,]ee U&,U harishmyin<v+s+abanJKcom
New ]ork Y David SCe<el Global Yead of Emer<in< MarJets Strate<+ /& d]d9 ],] d]d] davidKsCe<elyamericasKin<Kcom
WR Eric Ollom Yead of CorCorate Debt Research /Latam9 /& d]d9 ],] .e&X RilliamKollomyamericasKin<Kcom
Die<o Torres CorCorate Debt Anal+st /& d]d9 ],] .,]. die<oKtorresyamericasKin<Kcom
Prague ooatech Benda Senior EconomistT CPech ReCublic /],- ,9 '.]. ]]X, voatechKbendayin<KcP
Sao Paulo Pedro (obim Chief EconomistT BraPil /'' &&9 ]'-] d&X& CedroKaobimyamericasKin<Kcom
Singapore Tim Condon Yead of Research l Chief EconomistT Asia /d'9 d,X, d-,- timKcondonyasiaKin<Kcom
PraJash SaJCal EconomistT Asia /d'9 d,X, d&U& CraJashbKsaJCalyasiaKin<Kcom
Nicholas Chen< Credit Anal+stT Telecom l Utilities /d'9 d,X, d-]- nicholasKchen<yasiaKin<Kcom
Warut Promboon Credit Anal+stT CorCorates /d'9 d,X, d-X& RarutKCromboonyasiaKin<Kcom
Brett Williams Credit Anal+stT Financials /d'9 d,X, d-,X brettKRilliamsyasiaKin<Kcom
earsaw MateusP SPcPureJ Chief EconomistT Poland /]U ,,9 U,- ]deU mateusPKsPcPureJyin<banJKCl
Rafal BenecJi Senior EconomistT Poland /]U ,,9 U,- ]ded rafalKbenecJiyin<banJKCl
BartosP PaRloRsJi EconomistT Poland /]U ,,9 U,- ]d-U bartosPKCaRloRsJiyin<banJKCl

:N
ProChet &' (anuar+ ,--.

Yisclosures Appendix
ANALYST CERTIFICATION
The anal+st/s9 Rho CreCared this reCort hereb+ certifies that the vieRs eNCressed in this reCort accuratel+ reflect
hisAher Cersonal vieRs about the subaect securities or issuers and no Cart of hisAher comCensation RasT isT or Rill be
directl+ or indirectl+ related to the inclusion of sCecific recommendations or vieRs in this reCortK

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:S
ProChet &' (anuar+ ,--.

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