2010 Global Sovereign Brands Study: attitudes to sovereign wealth funds and the countries that host them 15 th June 2010

$3.5 trillion

SOVEREIGN WEALTH AND THE COMPETITIVE LANDSCAPE

Q. How familiar are you with the following as sources of investment? (% Very/somewhat familiar) Base: PSB Sovereign Wealth Study (among all) 1064 Sovereign Wealth Funds have the lowest familiarity...

... but are viewed more favourably than hedge funds while trailing rest of field Q. In general how favourable are you to the following sources of investment? (% Very favourable) Base: PSB Sovereign Wealth Study (among all) 1064

Familiarity/Favourability: a clear correlation r2*-= Base: PSB Sovereign Wealth Study (among all) 1064

Low familiarity and favourability accompanied by lower trust levels Q. How trustworthy do you consider the following sources of investment to be?(Very/somewhat trustworthy) Base: PSB Sovereign Wealth Study (among all) 1064

The underlying level of concern with SWFs versus other investments are significant Q. How concerned, if at all, would you be if a sovereign wealth fund were to invest in your country compared with other forms of finance? Base: PSB Sovereign Wealth Study (among all)

Key concern – political motivation Q. When compared with other sources of investment, to what extent, if any, are you concerned about the motives of sovereign wealth funds from the following countries, for example, that they might be trying to assert political influence ? (Very/somewhat concerned)

Key concern – political motivation Q. When compared with other sources of investment, to what extent, if any, are you concerned about the motives of sovereign wealth funds from the following countries, for example, that they might be trying to assert political influence ? (Very/somewhat concerned) AllUKUSEgyptBrazilGermanyChinaIndia Russia China N/A84 Libya Kazakhstan Algeria Nigeria Botswana Kuwait Qatar Malaysia Brunei Darussalam Abu Dhabi Mexico Oman Hong Kong N/A50 Bahrain Dubai Singapore Norway

THE ECONOMIC DOWNTURN CREATES MORE INTEREST IN SWFs 11

Elites are more favourable towards SWFs since the global downturn 12 Q. How, if at all, has your favourability towards sovereign wealth funds changed since the global downturn? Impact of downturn AllUKUSEgyptBrazilGermanyChinaIndia Much more favourable towards sovereign wealth funds Somewhat more favourable towards sovereign wealth funds No more or less favourable toward sovereign wealth funds Somewhat less favourable towards sovereign wealth funds Much less favourable towards sovereign wealth funds Base: PSB Sovereign Wealth Study (among all) 1064

Favourability particularly high in Brazil, India and China Q. How, if at all, has your favourability towards sovereign wealth funds changed since the global downturn? Impact of downturn AllUKUSEgyptBrazilGermanyChinaIndia Much more favourable towards sovereign wealth funds Somewhat more favourable towards sovereign wealth funds No more or less favourable toward sovereign wealth funds Somewhat less favourable towards sovereign wealth funds Much less favourable towards sovereign wealth funds Base: PSB Sovereign Wealth Study (among all) 1064

... and attitudes look set to become more favourable as the global economy improves 14 Q. Are you likely to become more or less favourable toward sovereign wealth funds as the global economy improves? Impact of recovery AllUKUSEgyptBrazilGermanyChinaIndia Much more favourable Somewhat more favourable No change Somewhat less favourable Much less favourable Base: PSB Sovereign Wealth Study (among all) 1064

THE OPPORTUNITY FOR SWFS IN THE FUTURE

Q. Would you say most sovereign wealth funds tend to invest more for the long term or short term? Base: PSB Sovereign Wealth Study (among all) 1064 Q. Based on your impressions, to what extent do you agree or disagree that the investment activities of the sources of investment below contribute more to market turmoil and uncertainty than other forms of investment? (Strongly/somewhat agree) Sovereign Wealth is not seen as responsible for market turmoil compared to other forms of investment 68% of Elites think Sovereign Wealth funds invest for the long term Investment form% Sovereign Wealth40 Investment banks65 Hedge funds65 SWFs are viewed among least likely to have contributed to market turmoil

Q. How reliable do you consider the following sources of investment compared to other sources of investment? (Much more reliable) Base: PSB Sovereign Wealth Study (among all) 1064 SWFs are seen as more reliable than private equity and hedge funds

SWFs have high approval to invest in a range of industries – excluding defence Q. To what extent do you approve or disapprove of sovereign wealth funds investing in the following sectors of your country’s economy? % Strongly/somewhat approve Base: PSB Sovereign Wealth Study (among all) 1064

SWF IMAGE IS TIED TO HOST COUNTRY IMAGE 19

Country reputation is key in shaping perceptions of SWFs Q. In your opinion, how important is the reputation of the country of origin of a sovereign wealth fund in terms of how positively or negatively you might view that sovereign wealth fund? (% Very important) 98% say country of origin reputation is very / somewhat important in driving SWF reputation Base: PSB Sovereign Wealth Study (among all) 1064

Country reputation is highly correlated to perceptions of SWFs % saying very important in driving positive perception of SWF Base: PSB Sovereign Wealth Study (among all) 1064 % saying very important in driving positive perception of country r2-=0.95

SWF RANKINGS 22

Approval of SWFs investment from different countries Q. To what extent do you approve or disapprove of sovereign wealth funds from the following countries investing in your country? Base: PSB Sovereign Wealth Study (among all) 1064

Cross country approval ratings of SWFs 24 Q: To what extent do you approve or disapprove of sovereign wealth funds from the following countries investing in your country? (% strongly/somewhat approve) Base: PSB Sovereign (each respondent sees 9 of 19) total 500 approx. Chinese respondents were not asked about China. Sources of investment AllUKGermanyUSIndiaEgyptBrazilChina Norway Singapore Hong Kong Kuwait Dubai Abu Dhabi Malaysia Bahrain Qatar Russia Mexico China Oman Brunei Darussalam Kazakhstan Libya Algeria Botswana Nigeria

CORE REPUTATIONAL METRICS

Key SWF metrics: transparency and accountability Q. How important to you are the following factors in deciding whether you would approve or disapprove of a sovereign wealth fund investing in your country and industries? % Very important Base: PSB Sovereign Wealth Study (among all) 1064

Sovereign Wealth comparison: Transparency Q. What is your impression of how transparent these sovereign wealth funds are or would be in terms of their decision-making compared with other sources of investment? % Very/somewhat transparent Base: PSB Sovereign Wealth Study (among all) 1064 (respondents see 9 of 19 countries)

Sovereign Wealth comparison: Accountability Q. To the best of your knowledge, which of these factors do you think apply to the following country sovereign funds: accountability? (% Applies) % Very/somewhat transparent Base: PSB Sovereign Wealth Study (among all) 1064 (respondents see 9 of 19 countries)

SUMMARY & IMPLICATIONS

Summary Low familiarity with SWFs driving: – Low favourability – Low trust – Underlying concerns, e.g., political agenda Interest increasing through the downturn – Less blame for market turmoil – Seen as long term investors – Accelerating BRIC interest SWF image currently tied to host country image – Political, economic stability, rule of law, international standards are key drivers for country image and therefore SWF approval – Transparency and Accountability key SWF metrics Highest performers on key country and SWF metrics: Norway, Singapore, Hong Kong achieve

IMPLICATIONS

The competitive challenge 1.SWFs are set to face greater competition from each other – as well as other sources of funding – for the best assets and investments 2.SWFs may face resistance, and in some cases protectionism, founded on continuing concerns over their behaviour; and 3.The pace of their adoption of global standards of corporate accountability – and their ability to communicate progress – will be a factor in both the above

The communications challenge 1.Expectations will increase with importance 2.Need to act to combat protectionism 3.Competition for assets will become keen 4.Building trust at home 5.Building trust abroad 6.Country image – business inhibitor or competitive advantage?

Practical strategies for Sovereign Wealth Funds 1.Adopt international standards of corporate behaviour 2.Open a real dialogue 3.Build reputation in the round 4.Focus: stakeholder and country based communication 5.Tackle the country challenge 6.Leaders exceed societal expectations

Adopt international standards of corporate behaviour

Practical strategies for Sovereign Wealth Funds 1.Adopt international standards of corporate behaviour 2.Open a real dialogue 3.Build reputation in the round 4.Focus: stakeholder and country based communication 5.Tackle the country challenge 6.Leaders exceed societal expectations

Practical strategies for Sovereign Wealth Funds 1.Adopt international standards of corporate behaviour 2.Open a real dialogue 3.Build reputation in the round 4.Focus: stakeholder and country based communication 5.Tackle the country challenge 6.Leaders exceed societal expectations

Practical strategies for Sovereign Wealth Funds 1.Adopt international standards of corporate behaviour 2.Open a real dialogue 3.Build reputation in the round 4.Focus: stakeholder and country based communication 5.Tackle the country challenge 6.Leaders exceed societal expectations

Practical strategies for Sovereign Wealth Funds 1.Adopt international standards of corporate behaviour 2.Open a real dialogue 3.Build reputation in the round 4.Focus: stakeholder and country based communication 5.Tackle the country challenge 6.Leaders exceed societal expectations

Practical strategies for Sovereign Wealth Funds 1.Adopt international standards of corporate behaviour 2.Open a real dialogue 3.Build reputation in the round 4.Focus: stakeholder and country based communication 5.Tackle the country challenge 6.Leaders exceed societal expectations

Q&A AND DISCUSSION