Asian Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University, Beijing National Accounting Institute and CFO magazine Asian Business Outlook Duke University /CFO Magazine Sept

Top Concerns of Asian CFOs 1.Economic Uncertainty 2.Government policy 3.Difficulty attracting qualified employees 4.Employee productivity 5.Regulatory requirements 6.Currency risk 7.Access to capital 8.Weak demand for product/services 9.Cost of borrowing 10.Employee morale Asian Business Outlook Duke University /CFO Magazine Sept

Business Optimism Index Global Trends Country / Region Sep 2016 Response Notes: Presented data are the mean value for each region or country, Scale from Country Business Optimism Index Own-Firm Business Optimism Index Own Company Asian Business Outlook Duke University /CFO Magazine Sept On average, Asian CFOs are the most optimistic in the world, though it varies by country

Expected Product Price Inflation Notes: Presented data are the mean or median values for each region or country. Product Prices Global Trends Asian Business Outlook Duke University /CFO Magazine Sept 2016 Sep 2016 Outlook Inflation remain low in Asia, especially compared to Africa and Latin America  High inflationary pressures in India are offset by softer inflationary readings in China, Japan and Malaysia.  CFOs in Asia expect flat prices, whereas CFOs in Europe and the US expect low inflation. Inflation expectations highest in India  Of responding countries, India has the highest inflationary expectations.  CFOs in China, Japan and Malaysia expect prices of their products to fall.  Recent decline in commodity prices are likely the main reason for the downward pressure on regional prices. Asia inflationary expectations decrease to the lowest in the world 4

Expected Growth in Sales Revenue Global Trends Revenue Asian Business Outlook Duke University /CFO Magazine Sept 2016 Sep 2016 Outlook 5 Overall, CFOs in Asia expect moderate growth in sales revenue. Asian revenue growth decreases slightly  Revenue expectations remain weak.  On average, Asian revenue growth expectations trail other emerging economies. India and Australia expect most rapid revenue growth, followed closely by China  Overall Asian growth is pulled down by Japan and Malaysia.  India has the highest sales growth, much greater than the inflation rate, attributed partially to surging private consumption.  China’s growth in sales revenue is powered by an exploding middle class. Notes: Presented data are the mean or median values for each region or country.

Global Trends Capital Spending Capital Spending Plans Notes: Presented data are the mean or median values for each region or country. Asian Business Outlook Duke University /CFO Magazine Sept 2016 Sep 2016 Outlook 6 Asian capital spending will be moderate, lifted by China Moderate capital spending plans  Asian CFOs expect moderate business spending growth.  Business spending continues to weaken in the US, where spending is not expected to increase over the next year. Business spending is largely positive in Asia  China, Japan, Singapore, Malaysia and Australia anticipate growth in capital expenditures.  China expects the largest growth in capex, undeterred by a slowing economy and volatile stock market.  Capital spending in Japan is lifted partially by Abe’s Y7.5tn stimulus package, though there are mixed sentiments towards this move, with a many Japanese companies reporting that this carries little to no direct impact on them.

Global Trends Expected Change in Earnings Notes: Presented data are the mean public company value for each region or country. Earnings Asian Business Outlook Duke University /CFO Magazine Sept 2016 Sep 2016 Outlook 7 Earnings growth are expected to dip in Asia after a previous high of around 10% growth Positive Asian earnings growth  Asian earnings are still expected to grow over the next 12 months, though by a more subdued rate compared to Q2.  All major continents expect earnings to increase. Mixed earnings growth across Asia  China, India and Australia anticipate positive earnings growth.  Japan, Singapore and Malaysia expect negative earnings growth.  China’s 12% expected increase in earnings is largely supported by their high country & own-firm business optimism index.  Japan’s expected negative earnings growth can be attributed to an uncertain global economic outlook, poor wage growth and drag on exports due to stronger Yen.

Global Trends # FT Employees Fulltime Employment Outlook Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees Asian Business Outlook Duke University /CFO Magazine Sept 2016 Sep 2016 Outlook 8 Asian CFOs expect to moderately increase fulltime domestic employment over the next year Positive employment outlook in Asia  Asian CFOs expect positive employment growth in the next year.  Only Latin America expect employment to fall. Employment growth varies across Asia  China, Japan and Singapore expect modest increase in fulltime employment, with China leading the pack.  Malaysia expects fulltime employment to fall.

Global Trends Wages & Salaries Expected Wage and Salary Increases Notes: Presented data are the mean value for each region or country Sep 2016 Outlook Asian Business Outlook Duke University /CFO Magazine Sept Asian wages and salaries are projected to increase by 3.8% over the next year High but volatile wage growth in Asia  Asia has volatile historical wage growth of % but wage growth is expected to slow.  Africa has % wage growth and expects the high growth to continue, with wages outgrowing inflation.  Europe has the lowest wage growth. Moderate wage growth in most Asian countries  Wages will increase 2.7% in Japan; which is good news in a deflationary environment.  China anticipates a modest wage increase.

Political uncertainty How would you rate the degree of political uncertainty or political risk in your country? Asia has the lowest degree of political risk, compared to US, Latin America and Africa  68% of Asia CFOs think their country’s political risk is moderate-to-high, compared to 79% for US.  Within Asia, China has the highest political uncertainty, and Japan has the lowest.  Due to the upcoming election and Washington gridlock, the US faces high political risk. Asian Business Outlook Duke University /CFO Magazine Sept

68% of Asia CFOs rate political risk as moderate-to-high.  The biggest concern is potential for tax reform.  Concerns about potential government gridlock and regulations also cause firms to become cautious.  41% of Asian CFOs indicate that concern about these issues has caused their firms to plan cautiously. Which political uncertainties are the source of business caution? Asian Business Outlook Duke University /CFO Magazine Sept

Effects of political uncertainty Has political uncertainty or political risk in your country led your company to be more cautious in...? Asian Business Outlook Duke University /CFO Magazine Sept Asian CFOs are less concerned about political risks  51% of Asian CFOs say their firm has reduced hiring due to political risk in their country -- and 68% curtail spending in response.  Within Asia, political uncertainty has the biggest impact on Chinese firms, and smallest for Singaporean firms.

U.S. Presidential election Has uncertainty about the upcoming U.S. Presidential election in November led your company to delay any investment plans? Asian Business Outlook Duke University /CFO Magazine Sept Upcoming US Presidential election curtails spending by US firms; not much effect elsewhere  Only 9% of Asian firms are delaying investment plans due to the presidential election, compared to 26% in US.  In China, about 10% of firms reported that uncertainty about the upcoming U.S. presidential elections have led to delay in investment plans.

Asian Business Outlook Duke University /CFO Magazine Sept Among firms affected by the US election, will your firm continue to hold off or restart investment if Hillary Clinton/Donald Trump is elected US president? US firms will invest more cautiously if Clinton is elected president (light blue) Among Asian firms affected by US election, they will be more cautious if Trump wins (pink) U.S. Presidential election – What happens if Clinton wins? Trump Wins?

Borrowing cost Asian Business Outlook Duke University /CFO Magazine Sept How much would your borrowing costs have to increase to cause your company to reduce capital spending plans? Asia is the most sensitive to the change of borrowing cost among all regions. Small interest rate increases would harm Asian companies’ investment, especially in China and Malaysia.

Most Important Value Driver Asian Business Outlook Duke University /CFO Magazine Sept Percentage of firms that rank the following items as a Top 3 value driver CFOs in Asia ranks CEO as the most important creator of value at their firm, followed by the Strategic Plan and Corporate Culture.  Though not shown in the graph, US firms rank corporate culture as most important.

Brexit How is your business affected by the speed at which the UK exits the European Union? Brexit has the biggest impact in Europe, with 50.3% European CFOs respond Brexit has an impact on their business  Across all the continents and countries, CFOs generally prefer slower Brexit, except CFOs in Malaysia.  In Asia, only 20% of the CFOs feel that Brexit will impact their business  Most companies in Japan, India and Singapore believes they are better off with a slow Brexit schedule compared with a fast one. Asian Business Outlook Duke University /CFO Magazine Sept

Return on Assets (ROA) Profit growth in Asia is expected to be weaker than other regions such as US, Europe and Latin America. Profit margins are expected to rise in all regions, relative to 2016 profits  CFOs in Asia expect profits to grow as measured by ROA.  Despite substantial risk in Africa, CFOs there expect high ROA.  CFOs in China and Singapore expect the lowest ROA among Asian countries, while Malaysia and India expect the highest expected ROA. Asian Business Outlook Duke University /CFO Magazine Sept

Asian Business Outlook Part of the Global Business Outlook Asian Business Outlook Duke University /CFO Magazine Sept 2016 A joint survey effort between Duke University, Beijing National Accounting Institute and CFO magazine 19