Panel Discussion

Investment Opportunities in 2H 2010 and beyond:

Singapore, Asia and Global Markets

Moderated by

Joseph Cherian

May 22, 2010

Alumni Homecoming Conference & Dinner 2010

CENTER FORASSET MANAGEMENTRESEARCH &INVESTMENTS

The Art of Forecasting

Big Banks’ US$ Outlook for 2010:

• US$ has limited downside with respect to Yen and Euro. Cyclical

near-term weakness followed by gradual dollar recovery further out

• If global economic growth disappoints, US$ will strengthen

• US$ will remain weak but strengthen in late 2010

• US$ downside limited, in fact likely to rally significantly against Euro,

especially given the US$-funded carry trade is probably overdone

TURNS OUT BIG BANKS ARE BECOMING GOOD AT FORECASTING FX!

Forecasts dated Jan 2010!!

Source: Bloomberg

The Year-to-Date Empirical Evidence Euro | Yen | SG$ versus US$

EUR weakens significantly

JPY slight strengthening

SGD flat

Source: Bloomberg

The Year-to-Date Empirical EvidenceEuro | US$ | Yen versus SG$

EUR weakens significantly

USD flat

JPY slight strengthening

Comparing Stock Index Price Returns (in USD)

Source: Bloomberg

• From its Mar 2009 lows, Straits Times Idx the best performing on a 1YR basis

Order: Straits Times Index, MSCI Asia Apex 50, S&P 500, Nikkei 225

• On a Year-to-Date basis, S&P 500 down the least

Order: S&P 500, Nikkei 225, Straits Times Index, MSCI Asia Apex 50

Comparing ValuationsSource: Bloomberg

2 ½YR Median: 11.5

10YR Median: 17.8

10YR Median: 15.0

10 YR Median: 14.3

10YR Median: 25.4

Volatility Index (VIX)Reflecting Market Sentiment?

Source: Bloomberg

10YR Median: 17.8

10YR Median: 15.0

10YR Median: 25.4

• But the recent Euro zone sovereign debt crisis, increase in U.S. jobless claims, and

drop in Leading Economic Indicators (LEI) are bringing new worries and concerns

• Would this be unfavorable for Equities and the Dollar? Favorable for Treasuries and

Gold?

• Unfavorable for Cyclicals, Telecom, Financials?

• 2009 was forecasted to be one of

the worse periods in the investment

environment, but it turned out ok

(STI: 74.7%; HSI: 56.6%; SPX:

26.5%; NKY: 18.4%)

• Which by 2010, heralded

proclamations that the global

economic recovery was here to stay!

Closed at 45.8 on 20/05/10!

Reduction in risk appetite?

• VIX now at 46, 10-year average is 21