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 Dec 2016

Top Concerns of Asian CFOs 1. Economic Uncertainty 2. Weak demand for product/services 3. Government policy 4. Currency risk 5. Difficulty attracting qualified employees 6. Employee productivity 7. Access to capital 8. Employee morale 9. Regulatory requirements 10. Rising wages and salaries Asian Business Outlook Duke University /CFO Magazine Dec 2016

Business Optimism Index  High optimism in China is offset by weaker optimism in several other Asian countries Global Trends Dec 2016 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 Dec 2016

Expected Product Price Inflation Asia inflationary expectations increases, boosted by China and Malaysia Global Trends Dec 2016 Outlook Product Prices Inflation remain low in Asia, especially compared to Africa and Latin America High inflationary pressures in China and Malaysia are offset by softer expected inflationary readings in Japan, India and Australia. CFOs in Asia and the US expect low inflation, while CFOs in Europe expect flat prices. Inflation expectations highest in China Of responding Asian countries, China has the highest inflationary expectations. Producer prices have accelerated to a near-five high in China, fueled by stronger government spending, record bank lending and a red-hot property market. CFOs in Japan, India and Australia, conversely, expect prices of their products to fall. Asia GDP-weighted = 1.3% Notes: Presented data are the mean or median values for each region or country. Asian Business Outlook Duke University /CFO Magazine Dec 2016

Expected Growth in Sales Revenue Overall, CFOs in Asia expect moderate growth in sales revenue. Global Trends Dec 2016 Outlook Revenue Asian revenue growth increases Revenue expectations in Asia increases from last quarter. Overall, Asian revenue growth expectations lead other emerging economies. China and Australia expect most rapid revenue growth, followed by India Overall Asian growth is pulled down by Japan and Singapore. China 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 and encouraged by stronger government spending Asia GDP-weighted = 7.3% Notes: Presented data are the mean or median values for each region or country. Asian Business Outlook Duke University /CFO Magazine Dec 2016

Capital Spending Plans Asian capital spending will be moderate, with a slight dip from last quarter Global Trends Dec 2016 Outlook Capital Spending Moderate capital spending plans Asian CFOs expect moderate business spending growth, though expectations have dipped from last quarter. Business spending is still weak in the US, but sentiment has improved slightly from previous quarter Expectations have dropped drastically in Europe, underscoring uncertainty related to Brexit Business spending is largely positive in Asia China, India, Singapore, Malaysia and Vietnam anticipate growth in capital expenditures Singapore expects the largest growth in capex, undeterred by slowing GDP growth and headwinds such as slow external demand Capital spending in Japan is largely muted as firms are adopting a cautious stance towards uncertainties overseas. Businesses are holding tight on spending amid sluggish demand both at home and abroad. Asia GDP-weighted = 6.8% Japan: Median = 3 Notes: Presented data are the mean or median values for each region or country. Asian Business Outlook Duke University /CFO Magazine Dec 2016

Expected Change in Earnings Earnings growth is expected to dip in Asia after a previous high of around 10% growth Global Trends Dec 2016 Outlook Earnings Asia GDP-weighted = 2.1% Positive earnings growth, except in Latin America Asian earnings are expected to grow but at a lower pace compared to the previous quarter. All major continents expect earnings to increase except Latin America, which earnings are expected to decline due to expected changes following the US election and political turmoil in several key economies. Mixed earnings growth across Asia China lowers expected earning growth, possibly caused by fluctuations in USD/RMB that impact export business. India and Singapore anticipate slight positive earnings growth, while Malaysia expect negative growth. Notes: Presented data are the mean public company value for each region or country. Asian Business Outlook Duke University /CFO Magazine Dec 2016

Fulltime Employment Outlook Asian CFOs expect fulltime domestic employment to grow strongly next year Global Trends Dec 2016 Outlook # FT Employees Asia GDP-weighted = 2.7% Positive employment outlook in Asia Asian and US CFOs expect positive employment growth in the next year, with the Asian expectation much stronger Latin America and Africa expect fulltime employment to shrink. Chinas lead employment growth in Asia China expect positive growth in fulltime employment, much stronger than other countries around the globe. Japan and India expect employment to moderately grow. Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees Asian Business Outlook Duke University /CFO Magazine Dec 2016

Notes: Presented data are the mean value for each region or country Expected Wage and Salary Increases Asian wages and salaries are projected to increase by 6.8% over the next year Global Trends Dec 2016 Outlook Wages & Salaries Asia GDP-weighted = 6.7% High but volatile wage growth in Asia Asia has volatile historical wage increases, and wage growth is expected to rise in Q4. Africa has high wage growth and the trend is expected to continue, with wages outgrowing inflation. Europe has the lowest wage growth. Moderate wage growth in most Asian countries Wages will increase 3% in Japan; which is good news in a deflationary environment. China anticipates a strong wage increase, which is highest among Asia countries. Notes: Presented data are the mean value for each region or country Asian Business Outlook Duke University /CFO Magazine Dec 2016

Has borrowing exposed firms to greater financial risk? Increased debt usage exposes some Asian firms to greater financial risks Please consider the amount of debt taken on by other firms in your industry over the past three years… Has borrowing exposed firms to greater financial risk? Asian Business Outlook Duke University /CFO Magazine Dec 2016

Debt-induced financial risk is larger in developing economies Please consider the amount of debt taken on by other firms in your industry over the past three years… Asian Business Outlook Duke University /CFO Magazine Dec 2016

Debt is primarily used to finance business spending and hiring Please consider the amount of debt taken on by other firms in your industry over the past three years: How have these firms used the debt proceed: Asian Business Outlook Duke University /CFO Magazine Dec 2016

Debt burden will limit future investment opportunities Will the debt burden of these firms limit their ability to pursue future investment opportunities? Asian Business Outlook Duke University /CFO Magazine Dec 2016

Debt burden will limit investment opportunities in developing economies Will the debt burden of these firms limit their ability to pursue future investment opportunities? Asian Business Outlook Duke University /CFO Magazine Dec 2016

Most firms have the correct mix of floating and fixed rate debt Do firms have the correct mix between floating and fixed rate debt? Asian Business Outlook Duke University /CFO Magazine Dec 2016

1-in-5 Asian CFOs expect to be CEO within five years  What is the probability that you will be a CEO in 5 years? Asian Business Outlook Duke University /CFO Magazine Dec 2016

Half of Asian respondents say CFO job tasks train them to be CEOs  Do your current job tasks adequately prepare you to be a CEO at some point in the future? Asian Business Outlook Duke University /CFO Magazine Dec 2016

China’s Anti-Corruption Efforts Moderately Improves Competitiveness Within China, have anti-corruption efforts helped the competitiveness of firms in your industry? Change in competitiveness By industry Asian Business Outlook Duke University /CFO Magazine Dec 2016

China’s Anti-Corruption Efforts Lead Firms To Be Too Cautious Have the anti-corruption efforts affected the amount of risk firms in your industry are willing to take on? Change in risk taking By industry Asian Business Outlook Duke University /CFO Magazine Dec 2016

Japan's Corporate Governance Code Has Positive Effect How does the introduction of Japan's Corporate Governance Code affect... Jun 2012 18 Asian Business Outlook Duke University /CFO Magazine Dec 2016

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 mostly expect ROA to be higher in 2017, relative to 2016, with the exception of India, Singapore and Malaysia. CFOs in Vietnam and Singapore expect the highest ROA in 2017. Asian Business Outlook Duke University /CFO Magazine Dec 2016

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 Dec 2016