2. Risks & Opportunities in Asia Florence Tan, ANZ Wealth Asia

3. DISTINCTIVELY ASIA Breakdown of MSCI Asia ex Japan Source: MSCI. December 2013. 2015 GDP growth forecasts Source: ANZ Research. March 2015. *Old series

4. The MSCI Asia ex Japan Index returned 9.3%* (AUD terms) over the last 10 years. WHY ASIA? Source: Bloomberg. March 2015. Price Index. *Including dividends

5. The AS51 Index returned 9%* over the same time period. WHY ASIA? Source: Bloomberg. March 2015. Price Index. *Including dividends

6. THE NEW NORMAL Chinese economy in transition Source: Bloomberg. September 2014. Falling commodity prices Source: ANZ Research. September 2014.

7. LOW OIL PRICES – WINNERS & LOSERS Impact of 25% drop in oil prices on 2015 current balance for oil importers. Source: IIF Calculations. Feb 2015. Oil importers account for 98% of MSCI Asia Pacific’s market capitalisation Source: BofA Merril Lynch Global Research, EIA, MSCI.

8. UPSIDE FROM REFORMS 9 June 2014BBC Indian government announces rapid economic reforms

9. Maintaining fiscal discipline Focus on infrastructure investment Trim subsidy burden Improve ease of doing business Empowering state governments INDIA - A REFORMIST BUDGET

10. Lower GDP and fixed asset investment growth targets Price reforms Fiscal reforms CHINA – CLUES FROM THE NPC

11. A MULTI-YEAR RESTRUCTURING STORY SOE share in listed securities EM SOEs have underperformed Source: BofA Merrill Lynch Global Research, Factset, Bloomberg. Based on stocks with market cap above US$1b. August 2014. Source: BofA Merrill Lynch Global Research, Factset. August 2014.

12. MULTIPLE INVESTMENT OPPORTUNITIES This document is published by ANZ Wealth Management Asia. All charts and tables are individually sourced. “ANZ analysts” refer to investment professionals within ANZ Regional Investment Committee, ANZ Economics & Market Research and ANZ Wealth Management Asia. Clean energy IT services Healthcare Consumer Electronics Technology Food

13. CHINESE PROPERTY CASTS A LONG SHADOW China: 70 cities property prices (%mom) Source: ANZ Research. February 2015. Source: Financial Times. August 2014.

14. Large FX reserves China has a record of buying bad loans from the commercial banks in the past decade Most of the debt is RMB denominated Most of the USD-denominated debt is trade-related and short term A relatively closed capital account CHINA – NO HARD LANDING

15. TAPER TANTURM 2.0? Current Accounts (% of GDP) Source: Bloomberg. March 2015. Source: IIF Portfolio Flows Tracker. February 2015. Non-Resident Portfolio Flows into Emerging Markets

16. VALUATIONS LOOK FAIR Source: ANZ Global Wealth. March 2015. MSCI Asia ex Japan

17. STAY ACTIVE Monthly excess returns of EM equity funds vs MSCI EM Returns in AUD. As of Dec 2013. This output should be read in conjunction with, and is subject to, MercerInsight MPA: Improtant notices and Third- party data attributions. See www.mercerinsight.com/omportantnotices for details. Copyright: @2013 Mercer LLC. All rights reserved.www.mercerinsight.com/omportantnotices

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