Capital Market Presentation August 2011: Real Assets Hans-Jörg Naumer, Dennis Nacken, Stefan Scheurer Not for circulation to private investors

2 Where Do I Invest My Money? Performance of different asset classes (in %) Source: Datastream; Allianz Global Investors Capital Market Analysis

3 Concern 1: Fear of Escalation of European Debt Crisis Risk premia of 10y European government bonds vs. German government bonds (-1 year) Source: European Commission, Datastream; Allianz Global Investors Capital Market Analysis

4 Concern 2: US Debt US debt in % of GDP since 1792 Civil War 27% Great depression & World War II 122% Financial Crisis 70% Forecast 2015 ~100% Source: Congressional Budget Office; Allianz Global Investors Capital Market Analysis

5 Concern 2: US Economy US labor market recovering slowly; US housing market lagging behind Source: Datastream; Allianz Global Investors Capital Market Analysis

6 Concern 3: Growth – Sliding into a New Recession? Leading indicators suggest cooling down but remain largely on expansionary side. Source: Datastream; Allianz Global Investors Capital Market Analysis

7 Concern 4: Inflation – Especially for China Expansive monetary policy in industrial nations, restrictive monetary policy in growth countries. Source: Datastream; Allianz Global Investors Capital Market Analysis

8 P/E ratios 12 months forward Valuations Continue to Suggest Equity Investments Source: Datastream; Allianz Global Investors Capital Market Analysis

9 Earnings Season: Excessive Expectations 71% of S&P 500 Q reports exceeded analysts‘ expectations. Source: Bloomberg; Allianz Global Investors Capital Market Analysis

10 Sales growth & EBITDA margins (12m fwd) in the US, Europe and Emerging Markets. Earnings Season: Sales Growth but Margin Pressure on the Horizon Source: Datastream; Allianz Global Investors Capital Market Analysis

11 Market Participants Remain on the Sidelines Robust equity market despite reticent investors. Source: Datastream; Allianz Global Investors Capital Market Analysis

12 Investment Theme: Small Caps Small caps continue to drive performance vs. average premium paid in the US. Source: Datastream, Bloomberg; Allianz Global Investors Capital Market Analysis Ø premium Small Caps: 24,2% Ø premium Mid Caps: 27,3% Ø premium Large Caps: 7,6% Ø Small Caps Ø Mid Caps Ø Large Caps

13 Decisive Insights: In spite of the continued uncertainty, we believe that a slight overweight in equities is advisable.  Despite weaker leading indicators, the underlying trend in the global economy seemingly continues to be positive, making it seem unlikely that the global economy will slip into a second recession.  The EU rescue package is likely to provide a boost to the capital markets, although concerns about the US and its debt problems displaced the relief felt following the EU summit.  The artificial growth created through debt and an increasing risk of inflation present unfavourable conditions for bond investors.  In spite of the continued uncertainty, we believe that a slight overweight in equities is advisable. The reasons for this include the attractive valuation of equities versus bonds and the confidence resulting from the second quarter reporting season

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