1. Economic & Market Overview  17 January 2013 Unrestricted distribution Economic Overview 17 January 2013 Craig B Pheiffer 1

2. Economic & Market Overview  17 January 2013 Unrestricted distribution The Global Economy 2

3. Economic & Market Overview  17 January 2013 Unrestricted distribution 3 Overall Chinese exports (Y/Y % growth) - a pickup in December Late 2012 improvement in economic data

4. Economic & Market Overview  17 January 2013 Unrestricted distribution Global China Euro area Source: JP Morgan, Markit, Bloomberg Manufacturing PMIs Late 2012 improvement in economic data 4

5. Economic & Market Overview  17 January 2013 Unrestricted distribution The Global Economy Global growth slowed in Q2 2012 with most regions contributing to that deceleration. An uneven recovery in H2 2012 is likely to continue into 2013. Growth out of Emerging Asia of about 6,7% (including China, India, Indonesia, Malaysia, Singapore) expected to lead the way in 2013. A further contraction in the euro area in Q4 2012 is expected to be followed by a modest recovery in the core regions leaving overall growth flat in 2013. A “slow and grinding” recovery is forecast for the United Kingdom in 2013 after a flat year in 2012. Japan’s economy is expected to have grown positively in Q4 2012 and forecasts have been revised higher for the region in 2013 and 2014. Moderate growth expected out of the United States in 2013 but lower than in 2012. 5 Operating at different speeds

6. Economic & Market Overview  17 January 2013 Unrestricted distribution Major themes in 2013 Declining household income in Q1 to slow growth but lower savings to support consumption in H2. Moderate, sluggish growth on business/household caution but that makes recession risk low. ECB not considering rate cuts with inflation expected to fall - rates flat through 2013. Recent trade & industrial production data suggest GDP contracted in Q4 2012 - but turning point may have been reached. Stagnant output with much spare economic capacity suggests further monetary policy easing but inflation above target & food prices rising. New PM’s drive to boost economy & eradicate deflation - new stimulus measures said to create 600,000 jobs and boost GDP by 2pp. Recent economic data has surprised on the upside boosting optimism in the economic growth recovery. Caution still warranted but 8% GDP growth is the benchmark for 2013. Urbanise now! 6

7. Economic & Market Overview  17 January 2013 Unrestricted distribution Source: Barclays Capital Global Economics Weekly (11 Jan 2013) DEVELOPED 2011201220132014 US 1.82.32.12.5 Euro area 1.5-0.40.01.4 UK 0.90.01.22.1 Japan -0.62.10.81.0 DEVELOPING 2011201220132014 Brazil 2.70.93.03.6 Russia 4.33.73.33.5 India 7.45.36.57.2 China 9.37.77.98.1 S Africa 3.12.52.83.5 Y/Y 2011201220132014 WORLD 3.83.13.34.0 (saar %) 201120122013 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 US 0.12.51.34.12.01.33.12.51.52.02.5 Euro area 2.60.90.4-1.4-0.1-0.7-0.2-1.30.10.71.11.3 UK 1.80.62.3-1.1-1.53.8-0.61.01.8 1.9 Japan -7.3-2.810.40.35.7-0.1-3.50.71.01,72.43.7 Y/Y % Changes in GDP: DEVELOPEDY/Y % Changes in GDP: DEVELOPING Q/Q % Changes in GDP: DEVELOPED Global growth outlook 7

8. Economic & Market Overview  17 January 2013 Unrestricted distribution The South African Economy 8

9. Economic & Market Overview  17 January 2013 Unrestricted distribution 9 DefinitionMoody'sS&PFitch Investment grade AaaAAA Aa1AA+ Aa2AA Aa3AA- A1A+ A2AA A3A- Baa1BBB+ Baa2BBB Baa3BBB- Speculative grade Ba1BB+ Ba2BB Ba3BB- B1B+ B2BB B3B- Significant risk of default Caa1CCC+ CCC Caa2CCC Caa3CCC- CA CC C In default C D DDD DD D Source: S&P, Fitch, Moody's South Africa - Not getting good grades “We also expect that South Africa's underlying social tensions will increase spending pressures and reduce fiscal flexibility for the government” - S&P. “The revision reflects Moody’s view of the South African authorities’ reduced capacity to handle the current political and economic situation and to implement effective strategies that could place the economy on a path to faster and more inclusive growth” " Economic growth performance and prospects have deteriorated, affecting the public finances and exacerbating social and political tensions” - Fitch OUTLOOK: NEGATIVE OUTLOOK: STABLE

10. Economic & Market Overview  17 January 2013 Unrestricted distribution Oct: 1.0% y/y. Consumption: Real retail sales 10 Jan - Oct YTD growth of 4,7% y/y - slowing trend becoming more evident

11. Economic & Market Overview  17 January 2013 Unrestricted distribution Consumption: New passenger car sales Dec: 7.6% y/y 11 Positive sales growth of 9,2% in 2012 (623,918 units) - still shy of record 714,315 units in 2006

12. Economic & Market Overview  17 January 2013 Unrestricted distribution Nov: 3.4% y/y. Production: Manufacturing 12 Recovering exports on a weaker rand helping manufacturing sector growth momentum

13. Economic & Market Overview  17 January 2013 Unrestricted distribution Oct: -7.9% y/y. Production: Mining 13 Strikes added extra pressure to the sector

14. Economic & Market Overview  17 January 2013 Unrestricted distribution Q4: -3 FNB/BER Consumer Confidence 14 Still at a low ebb

15. Economic & Market Overview  17 January 2013 Unrestricted distribution Q4: 46 RMB/BER Business Confidence 15 Business remains cautious

16. Economic & Market Overview  17 January 2013 Unrestricted distribution Barcap forecasts: ZAR USD BRENT$/b 2011111 2012112 2013125 Q1119 Q2130 Q3126 Q4125 2015135 Forecasts: Barclays Capital Commodities Weekly 11 Jan 2013 Brent crude oil prices (per barrel): 2004-2013 16 Weaker rand raising the domestic price of oil

17. Economic & Market Overview  17 January 2013 Unrestricted distribution Jan: 1186c/l. Petrol price (95 octane at the reef) 17 Weaker rand adding to fuel price pressures

18. Economic & Market Overview  17 January 2013 Unrestricted distribution Wheat Sugar Maize Global food prices 18 Lower prices recently but inflationary pressures persist

19. Economic & Market Overview  17 January 2013 Unrestricted distribution Rand/dollar exchange rate in 2012 19 Weaker over the year but still on the back foot

20. Economic & Market Overview  17 January 2013 Unrestricted distribution Source: Barclays Capital Global Economics Weekly (11 Jan 2013) % 201120122013 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 GDP (q/q) 4.81.9 3.32.53.41.21.52.93.63.8 CPI (y/y) 3.94.65.46.1 5.75.15.75.85.56.05.5 CA Deficit : GDP -2.6-3.0-4.1-3.6-4.8-6.4 -6.1-3.4-5.9-6.1-6.5 Repo rate 5.5 5.0 Forecast: 2011201220132014 GDP (Y/Y) 3.52.52.83.5 Y/Y % Changes in GDP: Quarterly data: South African economic outlook 20

21. Economic & Market Overview  17 January 2013 Unrestricted distribution Market Overview 17 January 2013 Christopher Gilmour 21

22. Economic & Market Overview  17 January 2013 Unrestricted distribution “ A riddle, wrapped in a mystery, inside an enigma” 22

23. Economic & Market Overview  17 January 2013 Unrestricted distribution A riddle, wrapped in a mystery, inside an enigma  2012 was a great year for SA equity investment, with a total return of +26.7%. Even in USD term, the JSE Alsi was up by almost 22%  And yet, amid a truly awful developed economy background and a sluggish SA economy, it didn’t feel like an especially good market.  Large cap resources stocks performed poorly, with Anglo American being down 12%, Anglogold Ashanti down by 24% and Angloplats down by 16%. Even Sasol, which had strong operating performance, saw its share price decline by 7%.  Like the rest of the world, our equity market appears not to be aligned with the underlying economic fundamentals.  This is due in large part to the fact that the Alsi is becoming less representative of South Africa Incorporated. 23

24. Economic & Market Overview  17 January 2013 Unrestricted distribution A riddle, wrapped in a mystery, inside an enigma  Of the Top Twenty shares in the Alsi, very few have the majority of their earnings emanating from South Africa.  But the disconnect may also be due to markets anticipating greatly improved economic growth much further down the track than has been the norm.  A similar situation, of course, exists in the US, where the top companies in the S&P 500 index earn around one-third of their profits outside of the US.  The PE on the JSE ALSI is becoming expensive, while the PE on the FINDI is VERY expensive  US earnings growth is slowing but SA’s is still reasonable 24

25. Economic & Market Overview  17 January 2013 Unrestricted distribution JSE Alsi Top Twenty Movements 2012 Share2012 Movement BAT12 SABMiller38 BHP Billiton25 Anglo American-12 Richemont63 MTN24 SASOL-6 Naspers54 Kumba14 Standard Bank20 Vodacom39 FirstRand49 Amplats-16 Old Mutual44 Absa16 Shoprite50 Implats0 Nedbank30 Sanlam55 Anglogold Ashanti-24 25

26. Economic & Market Overview  17 January 2013 Unrestricted distribution S&P 500 Index Still below its historic highs of 2000 but slowly moving upwards. 26

27. Economic & Market Overview  17 January 2013 Unrestricted distribution S&P 500 Earnings Growth (%) Two year secular downtrend and now in negative territory on a y/y basis 27

28. Economic & Market Overview  17 January 2013 Unrestricted distribution JSE Alsi Earnings Growth (%) 28

29. Economic & Market Overview  17 January 2013 Unrestricted distribution JSE FINDI Earnings Growth (%) Upwards & onwards 29

30. Economic & Market Overview  17 January 2013 Unrestricted distribution The Reverse Yield Gap Gap Opening again. 30

31. Economic & Market Overview  17 January 2013 Unrestricted distribution US Yield Gap YG Yield gap narrowing 31

32. Economic & Market Overview  17 January 2013 Unrestricted distribution JSE ALSI PE Ratio (x) Becoming expensive. Lower Anglo earnings will exacerbate this. 32

33. Economic & Market Overview  17 January 2013 Unrestricted distribution JSE FINDI PE Ratio (x) Highest rating in a decade. Justified? 33

34. Economic & Market Overview  17 January 2013 Unrestricted distribution Retail Sales growth flagging? 34

35. Economic & Market Overview  17 January 2013 Unrestricted distribution Conclusion  “Muddling-through” approach in the US and Europe likely to persist. But the decline in US corporate earnings growth may be slowing and perhaps even reversing.  A strong start to 2013 equity market performance on the back of a compromise on the US Fiscal Cliff and a perceived improvement in China’s GDP growth. But the year as a whole seems likely to be choppy.  The ALSI is becoming pricier in terms of historical valuation.  Retail stocks get a boost from lower interest rates. If further rate reductions materialise, they could benefit further, notwithstanding that most are priced for perfection. However, a sustainably weaker rand could be negative for retail stocks. 35

36. Economic & Market Overview  17 January 2013 Unrestricted distribution A riddle, wrapped in a mystery, inside an enigma “I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key.” Winston Churchill, 1 October 1939, in his capacity as First Lord of the Admiralty. 36

37. Economic & Market Overview  17 January 2013 Unrestricted distribution Thank you 37