1. Absa Investments “SCROUNGING FOR GROWTH” Craig Pheiffer General Manager: Investments Absa Asset Management Private Clients

2. Global economic data has continued to disappoint Manufacturing PMI’s Global China Euro area Source: JP Morgan, Markit, Bloomberg

3. Growth expectations have been lowered across the board Oct 2011 Oct 2012 US 2.52.2 Euro area 0.9-0.5 UK 1.4-0.3 Japan 2.42.1 Brazil 3.91.5 Russia 4.43.9 India 7.65.4 China 8.47.5 S Africa 3.42.5 WORLD 3.73.1 GDP growth expectations for 2012 -0.3 -1.4 -1.7 -0.3 -2.4 -0.5 -2.2 -0.9 -0.6 Source: Barclays Capital Growth risks are still to the downside

4. This has necessitated further policy action Quantitative easing III - $40bn of monthly purchases in an open- ended programme. Commitment to keep interest rates at 0.0% - 0.25% into 2015. [$2,3tn was spent on QE1 & QE2] Interest rate cut of 25bp in July to 0,75%, Outright Monetary Transactions (OMT) programme introduced. [Another 25bp rate cut is expected on 6 Dec] Asset purchase programme increased to £375bn, “Funding for Lending Scheme” (FLS) introduced. [Expect MPC to loosen policy at its Nov meeting, with a £50bn extension of asset purchases and, more speculatively, a 25bp cut in Bank Rate] Asset purchase programme increased by ¥10 trillion ($126bn) to ¥80 trillion. Interest rates remain at 0,0% to 0,1%. Reserve requirements ratios for banks reduced, Interest rate cuts in June and July.

5. Interest rates are set to stay lower for longer JP US EU UK Key Central Bank interest rates Source: I-Net Bridge

6. Quarterly central bank interest rate forecasts to Q4 2013. US, UK, EU, Japan forecast interest rates Source: Barclays Capital Global Economics Weekly (05 Oct 2012) Current rate 20122013 Q1Q2Q3Q4Q1Q2Q3Q4 US 0.25 UK 0.50 0.25 EU 0.751.00 0.750.50 BoJ 0.10 Interest rates are set to stay lower for longer

7. Europe still the major concern Manufacturing PMI’s Source: JP Morgan, Markit, Bloomberg

8. Source: Barclays Capital Global Economics Weekly (05 Oct 2012) DEVELOPED 2010201120122013 US 3.01.82.22.0 Euro area 1.81.5-0.50.3 UK 1.80.9-0.31.4 Japan 4.1-0.82.10.9 DEVELOPING 2010201120122013 Brazil 7.52.71.54.1 Russia 4.04.33.93.6 India 8.97.45.46.7 China 10.59.27.57.6 S Africa 2.83.12.53.0 Y/Y 2010201120122013 WORLD 5.03.83.13.5 Q/Q (saar %) 201120122013 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 US 0.12.51.34.12.01.72.02.51.52.02.5 Euro area 2.51.00.3-1.4-0.1-0.7-0.60.71.01.21.4 UK 2.00.32.1-1.4-1.2-1.52.20.91.7 1.91.8 Japan -7.9-1.36.90.35.30.7-1.50.71.30.52.03.0 Y/Y % Changes in GDP: DEVELOPEDY/Y % Changes in GDP: DEVELOPING Q/Q % Changes in GDP: DEVELOPED Global growth outlook

9. The South African Economy

10. OctJulMay 20125.6 6.0 20135.25.15.5 20145.05.15.0 The SARB’s South African outlook (Oct/Jul/May 2012) Inflation Source: SARB MPC Policy Statement (19 July 2012), SARB Monetary Policy Review (29 May 2012), SARB Governor address to Nordic Business Chamber of SA (2 October 2012). GDP OctJulMay 20122.62.72.9 20133.43.83.9 20144.1*4.1 * Not mentioned

11. Real Retail Sales (%): 2004-2012 Corporate profits declining  falling remuneration  lower disposal income growth  lower household consumption (Debt/Disposable income still high). PMI < 50  lower manufacturing. [Manufactured exports = 27% of local manufacturing industry] Mining strikes  lower production. Manufacturing (%): 2004-2012 Mining production (%): 2004-2012 Jul: 4.2% y/y Jul: 5.8% y/y Jul: 6.7% y/y Faltering contributions to domestic GDP growth

12. Source: Barclays Capital Global Economics Weekly (05 Oct 2012) % 201120122013 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 GDP (q/q) 4.61.01.73.22.73.21.92.43.03.43.63.7 CPI (y/y) 3.94.65.46.1 5.75.2 5.45.05.35.2 CA Deficit : GDP -2.6-3.0-4.1-3.6-4.9-6.4-5.6-5.3-5.2 -5.3-5.6 Repo rate 5.5 5.0 Forecast: 2010201120122013 GDP (Y/Y) 2.93.12.53.0 Y/Y % Changes in GDP: Quarterly data: South African economic outlook

13. A last word on the currency Rand vs US Dollar: 2000 - 2012 Source: Bloomberg Negatives: Trade/Current account deficit Rating downgrade (politics/finances/unrest) Positives: Global fiscal & monetary stimulus  “Risk on” Citi World Government Bond Index inclusion

14. THANK YOU