Asian Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University and CFO magazine Asian Business Outlook Duke University /CFO Magazine Sept 2017

Top Concerns of Asian CFOs 1. Economic Uncertainty 2. Difficulty attracting qualified employees 3. Government policies 4. Currency risk 5. Weak demand for product/services 6. Access to capital 7. Rising input or commodity costs 8. Data security 9. Employee productivity 10. Geopolitical/Health crises Asian Business Outlook Duke University /CFO Magazine Sept 2017

Business Optimism Index The Asian Optimism Index fell in Q3. CFOs are more optimistic about their own firm’s outlook then about the business outlook for their countries. China is still the most optimistic Asian country. Global Trends Sep 2017 Response Country Business Optimism Index Country / Region Own-Firm Business Optimism Index Within Asia itself, there’s a varying level of business optimism. China & India CFOs seem most optimistic. CFOs are relatively optimistic about the future of their own firms in Asia. Own firm-optimism is highest in China, India and then Australia. CFOs in Japan and Singapore are less optimistic. Own Company Notes: Presented data are the mean value for each region or country, Scale from 0-100 Asian Business Outlook Duke University /CFO Magazine Sept 2017

Expected Product Price Inflation Asian inflation outlook increases, boosted by Singapore and Malaysia Global Trends Sep 2017 Outlook Product Prices Relative to other regions, inflation expectations currently are the lowest in Asia and highest in Africa Asia’s inflation expectation increased as major Asian countries such as China, Japan, Singapore and Malaysia all have positive inflation expectations. Inflation expectations increase across many Asian countries Within Asia, Malaysia has the highest expected inflation, even though the outlook is lower than six months ago. CFOs in China and Japan expect prices of their products to increase, while CFOs in Philippines are expecting a reversal with a price decrease this year. 17q3: Singapore median is higher; india is around -16%, excluded; Philippine using median Notes: Presented data are the mean or median values for each region or country. Asian Business Outlook Duke University /CFO Magazine Sept 2017

Expected Growth in Sales Revenue CFOs in Asia expect slightly lower growth in sales revenue (2.9%), the lowest among the regions surveyed Global Trends Sep 2017 Outlook Revenue Asian revenue growth expectations are slightly lower than those of the previous quarter CFO’s expectations about revenue growth decreased in Asia compared to those in last quarter. Overall, Asian revenue growth expectations are the lowest. Singapore expects the most rapid revenue growth, followed by China Overall Asian growth is pulled down by Japan Singapore has the highest revenue growth outlook at around 5.9%, followed by China at 5% Both China and Singapore’s sales revenue growth expectations have dropped since last quarter’s survey, while Japan’s sales revenue growth projection remains the same. March 2017: India already using median, mean = 20.1% Notes: Presented data are the mean or median values for each region or country. Asian Business Outlook Duke University /CFO Magazine Sept 2017

Capital Spending Plans Asian capital spending is on the upswing, while Europe and the Africa are scaling back on future expansion Global Trends Sep 2017 Outlook Capital Spending Capital spending plans on the rise Asian CFOs expect a rise in business spending growth, signaling a shift from the flat/decline of the past 2 quarters Business spending is expected to increase in Asia, the United States and Latin America, while expectations have dropped in Europe and Africa. Business spending is positive in Asia All Asian countries anticipate growth in capital expenditures In China, expectations indicate a significant boost in capital spending, much higher than last quarter 17q3: Japan using median, mean = 15.9% China using mean, median is 20% Notes: Presented data are the mean or median values for each region or country. Asian Business Outlook Duke University /CFO Magazine Sept 2017

Expected Change in Earnings Earnings growth is the lowest in Asia compared to other regions, due to the smaller expectations in all Asian countries. Global Trends Sep 2017 Outlook Earnings 17q3: China using median, mean = -8.7 Outlook less positive for Asia and United States Asian earnings are expected to grow but at a lower pace compared to last quarter, and the lowest relative to other regions Europe and Latin America have higher earnings expectations Earnings growth outlook is positive in Asia, however smaller than last quarter All countries in Asia anticipate positive earnings growth. However, except for India, the growth rates are lower than last quarter Notes: Presented data are the mean public company value for each region or country. Asian Business Outlook Duke University /CFO Magazine Sept 2017

Fulltime Employment Outlook Asia CFOs expect flat fulltime employment, while all other regions’ CFOs expect it to grow moderately next year Global Trends Sep 2017 Outlook # FT Employees Employment outlook in Asia continues decline to zero Asia expects no change in employment Latin America sees a marginal increase q-o-q from zero to 1%, while the US registers positive growth in employment, now leading the world in employment growth expectations CFOs in Africa have flat expectations, reversing the negative outlook in FTE employment China and Japan lead employment growth in Asia China and Japan expect positive growth in fulltime employment, however, decreasing relative to June 2017 levels but are still among the highest in Asia Indian’s outlook reverses to be negative and declined by more than 11% as compared to the previous quarter Asia using median (mean is -0.5) 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 2017

Notes: Presented data are the mean value for each region or country Expected Wage and Salary Increases While Asian wages and salaries are projected to increase by 1.7% over the next year, there are notable variations among its constituent countries Global Trends Sep 2017 Outlook Wages & Salaries Wage growth converges to 2-5% range across regions Wage growth outlook is the highest for the Africa at 4.9%, lowest for Asia at 1.7% Asia’s wage growth has been declining for the past two quarters, this quarter being the lowest among the past 6 quarters Africa expects the greatest uptick in wage growth q-o-q across regions China’s wage growth much higher than other countries and regions China’s wage growth outlook has decreased from 9.1% during the previous quarter to 6.6% in September 2017, still remaining the highest Wages in Japan are expected to be flat over the next 12 months 17q3: All using mean Median: China =8.23 Japan = 0.61 India = 10.00 Notes: Presented data are the mean value for each region or country Asian Business Outlook Duke University /CFO Magazine Sept 2017

Hurdle Rates and Investment Decisions What hurdle rate does your company use to evaluate investment projects? (orange line) Does your company pursue all NPV>0 projects? (gray and blue rectangles) Asian Business Outlook Duke University /CFO Magazine Sept 2017

Asian Business Outlook Duke University /CFO Magazine Sept 2017 Why Not Pursue All Value-Enhancing Projects? What prevents you from pursuing all projects that are expected to earn a return > hurdle rate? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Why Not Pursue All Value-Enhancing Projects? What prevents you from pursuing all projects that are expected to earn a return > hurdle rate? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Why Not Pursue All Value-Enhancing Projects? What prevents you from pursuing all projects that are expected to earn a return > hurdle rate? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Shortage of Management Time or Expertise? Does a shortage of management time or expertise prevent your firm from pursuing some NPV>0 projects that you would otherwise pursue? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Why Not Hire More Managers? Among firm with a shortage of managers: Why doesn't your firm hire more managers? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Does Management Shortage Cause Higher Hurdle Rates? Does your firm require that proposed projects earn a higher expected return (e.g., set a higher hurdle rate) because of a shortage of management time or expertise? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Shortage of Non-management Workers? Does a shortage of non-management labor prevent your firm from pursuing some NPV>0 projects that you would otherwise pursue? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Why Not Hire More Non-management Workers? Among firm with a shortage of workers: Why doesn't your firm hire more –non-management labor? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Does non-Management Worker Shortage Cause Higher Hurdle Rates? Does your firm require that proposed projects earn a higher expected return (e.g., set a higher hurdle rate) because of a shortage of non-management labor? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Shortage of Technology Talent? Does your company have difficulty attracting and retaining qualified technology employees? Asian Business Outlook Duke University /CFO Magazine Sept 2017

Technology Talent Shortage Which areas/aspects of your organization are currently adversely impacted by a technology talent shortage? Asian Business Outlook Duke University /CFO Magazine Sept 2017

How Many NPV>0 Projects Are on the Back-burner? Compared to 3 years ago, has the number of NPV>0 projects that your firm has 'back-logged' changed? Asian Business Outlook Duke University /CFO Magazine Sept 2017

WACC vs Hurdle Rate Asian Business Outlook Duke University /CFO Magazine Sept 2017

Return on Assets (ROA) Return on Assets in Asia is the second highest relative to other regions, surpassed by Africa March 2017: Argentina too high: 21.1 & 23.3 Return on assets are expected to rise in all regions, relative to 2016 Regional ROAs expected to rise between 0.14 and 3.82 percentage points in 2017 versus 2016 CFOs in most Asian countries expect ROA to be the same or higher in 2017 relative to 2016 CFOs in Indian expect the highest ROA in 2017 among Asian countries Asian Business Outlook Duke University /CFO Magazine Sept 2017

Asian Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University and CFO magazine Asian Business Outlook Duke University /CFO Magazine Sept 2017