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Asia Pacific Equity Research 14 September 2015

Asia Pacific Strategy Dashboards

See page 20 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

0B0B0B0B0B0BAsia Pacific Strategy Team 1B1B1B1B1B1BCountry Recommendation Adrian MowatAC Asian and Emerging Markets Equity Strategist [email protected] (852) 2800 - 8599 J.P. Morgan Securities (Asia Pacific ) Limite00d Overweight Robert Smith Quantitative Strategist [email protected] (852) 2800 8569 J.P. Morgan Securities (Asia Pacific ) Limited Korea, Taiwan, China, India, Indonesia and the

Philippines Jahangir Aziz Economic and Policy Research [email protected] (1-202) 585 -1254 J.P. Morgan Securities LLC Bert Gochet Emerging Asia, Rates and Forex Strategy [email protected] (852) 2800 - 8327 J.P. Morgan Securities (Asia Pacific ) Limited Underweight Rajiv Batra Asian and Emerging Markets Equity Strategy [email protected] (91-22) 6157-3568 J.P. Morgan India Private Limited Australia, Singapore and Malaysia Kevyn Kadakia, CFA Asian and Emerging Markets Equity Strategy [email protected] (91-22) 6157-3250 J.P. Morgan India Private LimitedAditi Singh Asian and Emerging Markets Equity Strategy [email protected] (91-22)6157-5089 J.P. Morgan India Private Limited

Key Changes

Market performance to 11 September 2015 • Week: MSCI Asia Pacific ex Japan 2.7% outperformed MSCI World by 0.7% • Top three markets during the week: China 4.3%, Taiwan 3.7% and Hong Kong 3.5% • Bottom three markets during the week: Indonesia -2.1%, Philippines -1.8% and Thailand 0.3% • YTD Performance: MSCI Asia Pacific ex Japan -14.6% underperformed MSCI World by 8.6% • YTD Top three markets in US$: Hong Kong, Philippines and India • YTD Bottom three markets in US$: Indonesia, Malaysia and Singapore

Sector performance • Week: MSCI APxJ Financials 3.8% outperformed MSCI APxJ by 1.1% • Week: MSCI APxJ Healthcare -0.4% underperformed MSCI APxJ by 3.1% • Top three key sectors during the week in US$: China Consumer Discretionary 8.7%, China Industrials 6.9% and Korea Industrials 6.2% • Bottom three key sectors during the week in US$: Australia Energy -1.9%, Hong Kong Consumer Discretionary -0.4% and India Information Technology 0.5% • YTD Top three key sectors in US$: Hong Kong Industrials 23.2%, India Information Technology 0.3% and China Information Technology -0.4% • YTD Bottom three key sectors in US$: Australia Energy -42.8%, Hong Kong Consumer Discretionary -32% and China Energy -29.6%

Demand classification sector performance • YTD: Domestic Demand -12.2%, Global Capex -15.2%, Global Price Takers -16.2% and Global Consumer -17.9%

Headline inflation data published since the last publication: • China: CPI 2.0%oya (J.P. Morgan 1.8%, Consensus 1.8%) • Taiwan: CPI -0.5%oya (J.P. Morgan -0.8%, Consensus -0.8%) • India: WPI -5.0%oya (Consensus -4.4%)

J.P. Morgan's revisions to 2015 GDP forecasts • Positive: Global 2.5%[2.4%], Developed Markets 1.9%[1.8%] • Negative: Asia Pacific 4.4%[4.5%], Japan 0.6%[0.8%]

J.P. Morgan's revisions to 2016 GDP forecasts • Negative: Asia Pacific 4.6%[4.7%], Japan 1.0%[1.4%], Global 2.9%[3.0%], Emerging Markets 4.1%[4.2%]

2BTable of Contents 3BPage # Regional Summary 2

Market Performance 3

Liquidity Monitor 4

Monitoring Inflation 5

Market Drivers 6

Earnings Revisions 7,8

Cross-section Earnings Growth 9

Market Implied Growth Rates 10

Sector-Country PE Matrix 11

Valuation Distribution 12

Demand Classification 13

Currency Forecasts 14

Economic Momentum 15

Interest Rate Trend 16

Asia in Perspective 17

Asian Balance Sheets 18

Index Weightings 19

Please see Against the tide: Perspectives and Portfolios-Lite, Mowat et al, 14 September 2015, for our latest

Asian equity strategy

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Asia Pacific Equity ResearchJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599 , [email protected]

Summary: Regional, Country and Sector Valuations

11-Sep-15 Hist.^ P/EPS Current 12m Hist.^ Current Hist.^ CurrentMSCI Index Trough (Trend) Trailing Fwd 2014E 2015E 2016E Peak Trailing 2015E 2016E Trough Trailing 2015E 2016E 2013 2014E 2015E 2016E 2014E 2015E 2016E

Global* 455 9.4 9.7 15.4 14.3 15.6 15.3 13.9 4.1 2.4 2.5 2.6 1.3 2.1 2.1 1.9 8.1 3.9 1.6 10.6 14.2 13.9 14.4USA* 1879 11.6 11.5 17.9 16.6 18.0 17.8 16.1 4.0 2.0 2.0 2.1 1.4 2.7 2.7 2.5 8.4 5.4 1.0 10.9 15.6 15.3 16.0Europe* 1378 9.8 7.9 15.2 14.1 15.4 15.1 13.8 6.1 3.3 3.3 3.6 1.1 1.9 1.8 1.8 (5.4) 1.4 1.8 10.1 12.4 12.3 13.0Asia Pacific* 124 14.8 5.4 14.8 13.7 15.4 14.5 13.3 3.3 2.5 2.6 2.8 1.2 1.5 1.5 1.4 22.9 9.1 6.3 8.8 10.6 10.6 10.8Asia Pacific ex-Japan 451 11.2 5.4 12.3 11.5 12.5 12.2 11.2 4.9 3.5 3.5 3.8 1.1 1.1 1.1 1.0 5.4 3.6 2.5 9.2 9.9 9.5 9.7Pacific ex-Japan 369 5.2 5.8 15.5 15.2 14.7 15.9 14.9 5.7 4.1 4.0 4.3 1.3 1.6 1.6 1.5 (6.4) 11.1 (7.9) 7.2 11.5 10.2 10.5EMF Asia 651 10.3 6.9 11.4 10.3 12.1 11.1 10.0 3.4 2.9 2.9 3.2 1.0 1.4 1.3 1.2 8.3 4.4 8.3 10.9 12.6 12.5 12.8Japan* 900 11.5 23.7 15.4 13.5 17.5 16.7 14.0 3.0 1.4 1.9 2.1 0.9 1.7 1.4 1.3 10.9 75.2 4.9 19.1 NM 8.6 9.6Australia 1030 12.1 10.0 14.9 14.7 14.4 15.2 14.4 6.7 5.3 5.3 5.4 0.8 0.8 0.8 0.7 5.6 4.9 (5.0) 5.1 5.7 5.2 5.1China 58 7.2 3.1 9.3 8.5 9.4 9.2 8.2 5.7 3.4 3.4 3.8 0.5 1.2 1.2 1.1 11.5 4.0 1.9 12.1 14.8 13.6 13.8Hong Kong 12918 9.7 11.9 13.8 13.5 13.0 14.2 13.2 5.7 3.5 3.3 3.5 0.9 1.1 1.1 1.1 11.0 1.3 (8.2) 7.0 8.9 7.9 8.4India 973 9.6 9.3 19.4 16.2 21.3 18.7 15.3 2.6 1.6 1.6 1.8 1.4 3.0 2.9 2.6 7.5 4.5 13.9 22.2 16.0 16.4 17.8Indonesia 5064 4.8 6.1 14.1 13.9 13.6 14.3 13.7 5.9 2.8 2.8 2.9 0.9 2.5 2.4 2.2 3.4 7.7 (5.0) 4.3 21.2 17.8 16.9Korea 503 7.7 4.3 10.6 9.5 12.0 10.1 9.2 2.9 1.8 1.9 2.1 0.5 0.9 0.9 0.8 (4.4) (9.0) 18.2 9.9 8.4 9.3 9.6Malaysia 555 9.8 9.9 15.3 14.2 15.1 15.3 13.7 5.1 3.4 3.4 3.7 0.6 1.6 1.6 1.5 1.0 (7.4) (1.4) 11.6 11.8 10.9 11.5Philippines 1194 8.8 22.9 19.2 17.3 20.3 18.8 16.8 4.9 2.1 2.1 2.1 0.9 2.7 2.6 2.3 8.7 10.1 7.8 12.2 14.4 14.3 14.7Singapore 322 8.9 6.7 11.9 11.5 12.0 11.9 11.3 5.9 4.2 4.2 4.4 0.9 1.1 1.1 1.1 (4.4) 7.4 0.8 5.7 9.8 9.5 9.6Taiwan 309 11.5 11.0 12.0 11.7 12.2 12.0 11.5 7.8 4.0 4.1 4.4 1.2 1.6 1.5 1.4 36.9 26.3 1.8 4.0 14.0 13.1 12.9Thailand 474 7.7 4.6 15.1 13.6 16.8 14.5 13.3 5.9 3.2 3.3 3.5 0.6 1.9 1.8 1.7 6.4 (16.3) 16.3 8.8 12.2 13.2 13.3

Shanghai** 3200 9.6 - 13.0 11.7 13.8 12.8 11.4 3.3 2.7 2.7 3.0 1.3 1.6 1.5 1.4 12.4 3.9 8.0 11.9 12.5 12.1 12.3Shenzhen** 1781 14.1 - 26.8 20.7 35.1 24.8 19.7 2.3 1.2 1.3 1.6 1.5 3.1 2.9 2.6 28.1 3.9 41.3 26.3 10.1 11.8 13.3

Asia Pacific ex-Japan Sector Valuations

11-Sep-15 # Hist.^ P/EPS Current 12m Hist.^ Current Hist.^ CurrentMSCI Index # Trough (Trend) Trailing Fwd 2014E 2015E 2016E Peak Trailing 2015E 2016E Trough Trailing 2015E 2016E 2013 2014E 2015E 2016E 2014E 2015E 2016E

Energy 403 6.1 1.8 11.9 10.7 10.4 12.6 9.9 6.5 4.2 3.6 4.5 0.2 0.2 0.2 0.2 (8.2) (20.5) (17.4) 27.6 2.3 1.8 2.1Materials 272 7.9 3.5 16.3 15.1 15.6 16.6 14.5 4.8 4.3 4.2 4.2 1.0 1.1 1.1 1.1 (15.7) (7.7) (6.1) 14.6 7.2 6.8 7.6Industrials 152 9.1 12.3 18.0 14.6 19.2 17.5 13.4 4.4 2.7 2.5 2.8 0.9 1.3 1.4 1.3 (21.5) (10.6) 10.2 30.2 6.7 7.6 9.8Cons Disc 278 9.9 5.8 11.8 10.9 11.6 11.9 10.5 5.0 2.8 2.7 2.9 1.1 1.5 1.5 1.3 7.8 (6.7) (2.7) 12.9 14.0 12.9 13.4Cons Staples 321 14.9 9.4 20.9 18.8 22.4 20.3 18.2 4.0 2.9 2.9 3.1 1.9 2.5 2.5 2.3 (2.1) 5.0 10.6 11.6 11.9 12.6 13.3Healthcare 906 19.3 12.0 26.3 22.0 29.3 25.0 20.7 2.8 1.3 1.3 1.5 1.7 4.9 4.8 4.1 16.3 16.2 17.5 20.3 18.8 20.0 21.2Financials 219 8.7 5.8 9.8 9.4 10.1 9.7 9.3 6.3 4.4 4.4 4.7 0.9 1.2 1.1 1.1 8.7 9.9 3.4 4.9 12.8 12.1 11.8Info Tech 298 10.3 7.5 12.3 11.6 12.3 12.3 11.3 4.5 2.5 2.6 2.9 1.4 1.8 1.7 1.6 29.9 8.1 (0.5) 9.6 16.4 14.6 14.5Telecoms 118 10.7 11.7 16.0 14.9 16.7 15.7 14.6 6.0 3.8 3.8 4.1 1.9 2.1 2.0 1.9 1.4 (2.2) 6.2 7.6 13.2 13.3 13.6Utilities 222 9.9 10.8 11.9 12.0 13.8 11.1 12.4 4.7 3.6 3.7 3.8 0.9 1.4 1.3 1.3 27.8 26.8 24.8 (10.8) 11.2 12.6 10.5

Source: I/B/E/S, MSCI, J.P. Morgan estimates. Updated as of 11-Sep-2015* Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. US trailing PE is calculated as per reported earnings**Market forecast numbers are derived from bottom-up calculations of SHCOMP and SZCOMP constituents using I/B/E/S estimates.For all other markets and sectors, forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and I/B/E/S estimates for the rest. Companies with different yearends are calendarised to December yearends and are free float adjusted for aggregation. Historical numbers are from MSCI.Hist.^ refers to the historically lowest valuation of the MSCI indices since Jan 1991. Trough PE represents the lowest 12 month trailing PE. For dividend yield the highest values are taken to represent the best multiple.USA, Europe and Japan PE are I/B/E/S aggregate estimates. Japan Valuation estimates are for the financial year ending March.P / EPS (Trend) uses the trend EPS for the indices calculated by the linear regression on the natural log of trailing EPS. For more, please refer to 'Mayday call for the shorts - Perspectives and Portfolios', 5 May 2009, Mowat et al.P / EPE (Trend)' is NM for indices where the modeled relationship is weak with a less than 0.50 R-square. The start dates China and Singapore models are modified to make them more relevant. Sector indices inputs have not been altered.

Prospective Prospective Prospective

Prospective Prospective Prospective

P/E (x) Div. Yield (%) P/BV (x) Earnings growth (%) ROE (%)

14 September 2015

P/E (x) Div. Yield (%) P/BV (x) Earnings growth (%) ROE (%)

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Market Performance: MSCI AC Performance by Region, Country and Sector

1 Week PerformanceG

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Consumer Discretionary 2.4% 2.1% 3.2% 2.6% 3.2% 0.4% 4.1% 3.6% 0.5% 9.0% 3.3% 5.2% -0.4% 3.9% -0.3% 2.5% -1.7% -0.5% -4.3%Consumer Staples 0.8% 0.9% 1.5% -0.5% 1.1% 0.3% 1.5% -1.0% -1.3% 2.5% 2.9% 2.7% 3.0% -1.5% -4.4% 1.9% -0.9% 3.2% 0.3%Energy -0.6% -1.3% 1.0% 0.4% 0.4% -2.7% 1.2% 1.6% -4.4% 1.4% 2.3% 1.2% 1.5% 3.7% -3.8% -0.4%Financials 2.4% 1.8% 2.7% 3.4% 3.8% 3.7% 3.8% 3.6% 2.1% 6.2% 2.5% 2.8% 4.3% 2.9% 1.4% 0.7% -2.8% 0.6% -0.9%Healthcare 2.2% 2.9% 1.9% -0.2% -0.4% -0.3% -0.5% 1.1% -2.1% 1.8% 2.6% -1.3% 0.0% -7.5% -3.6%Industrials 2.2% 2.3% 2.4% 1.9% 3.5% 2.1% 4.5% 2.1% -0.5% 7.2% 5.5% 4.7% 2.9% 2.4% 2.0% -0.2% -8.6% 1.6% -1.7%Information Technology 2.8% 3.1% 1.9% 1.6% 2.2% 3.6% 2.2% 1.6% 4.1% 0.8% 0.0% 4.4% -0.6% 0.6% 2.6%Materials 2.3% 1.5% 3.1% 2.3% 2.5% 1.4% 3.5% 3.3% -0.4% 7.6% 4.3% 2.7% 1.3% 0.6% 10.1% -1.6%Telecommunication Services 0.7% 0.8% 0.9% 0.6% 0.6% 1.4% 0.3% 1.8% -0.2% 0.8% 5.0% 1.2% 0.2% -1.4% 0.8% 1.6% -2.3% 1.5% -3.4%Utilities 1.4% 1.0% 1.6% 2.2% 2.7% 2.4% 3.0% 2.5% -1.5% 5.6% 3.1% 3.7% 3.6% 0.9% -4.1% -2.3% -6.2%Regional benchmark 1.9% 1.9% 2.2% 2.0% 2.7% 2.6% 2.7% 2.4% 0.6% 4.3% 2.3% 3.7% 3.5% 0.9% 1.1% 1.0% -2.1% 0.3% -1.8%Change vs dollar -1.3% 2.6% -0.3% 0.7% 0.2% 0.0% -0.1% 1.0% -1.3% -1.0% -0.1% -0.3%

YTD Performance

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Consumer Discretionary 0.2% 3.7% -0.4% -6.8% -18.5% -26.7% -15.4% -0.5% 5.0% -13.7% -5.3% -4.8% -32.1% -13.4% -22.8% -12.3% -16.3% -18.3% -14.8%Consumer Staples -3.6% -4.1% -1.9% -1.5% -11.5% -23.5% -4.7% 13.3% -10.8% -13.3% 30.8% 6.7% -6.8% -1.7% -25.5% -9.1% -14.9% 0.2% - Energy -21.4% -23.1% -15.0% -24.3% -26.2% -39.3% -22.2% -7.9% -29.6% -27.0% 16.7% 8.0% -9.8% -6.8% -48.5% -19.5%Financials -8.5% -8.2% -4.3% -10.4% -16.2% -15.7% -16.4% 8.2% -7.0% -16.4% -6.3% -4.2% -5.4% -8.7% -15.1% -11.2% -15.6% -19.7% -0.1%Healthcare 4.6% 4.7% 3.5% 10.0% -5.5% -12.2% 0.7% 21.5% 2.6% -13.8% 61.9% 11.0% 20.7% -15.3% 35.4%Industrials -6.6% -9.1% -2.6% -4.0% -6.6% -1.6% -10.0% -1.9% 8.3% -3.3% -3.3% -21.0% 23.2% 4.6% -18.6% -12.8% -7.9% 0.6% -2.1%Information Technology -4.2% -2.5% -7.5% -9.9% -13.8% -22.7% -13.7% -0.2% -12.3% 2.2% -16.8% -12.7% -19.5% 5.5% 23.8%Materials -15.0% -15.5% -12.5% -14.6% -17.8% -21.8% -13.5% -8.3% -9.1% -13.1% 1.5% -11.9% -21.3% 7.2% -30.1% 9.1%Telecommunication Services -4.3% -4.5% -1.6% -1.2% -9.4% -14.5% -7.7% 13.9% -3.8% -0.4% 0.6% -1.2% -17.2% -7.2% -5.4% -10.9% -10.4% -6.3% -8.3%Utilities -13.0% -14.2% -14.6% -3.9% -11.6% -5.7% -16.5% 15.3% 12.7% -4.0% 9.2% -4.2% -27.0% -12.9% -55.3% -5.9% -20.1%Region / CountryBenchmark

-6.0% -5.4% -4.3% -7.7% -14.6% -16.2% -13.6% 3.8% -6.8% -11.8% -6.2% -10.0% -5.3% -4.3% -15.4% -10.0% -18.3% -9.3% -4.0%

Change vs dollar -0.7% -13.2% -2.7% -7.9% -3.0% 0.1% -5.3% -6.0% -19.0% -13.5% -8.6% -4.6%

Notes: (1) Country headings sorted left to right according to relative weight within the MSCI.(2) Indices: Regions in US$ and countries in local currency. Local currency movements against the dollar : appreciation / (depreciation)(3) Country and sector cross sections in italic blue have outperformed their indices by more than 2%. Shaded areas have underperformed their indices by more than 2%.

14 September 2015

Source: Bloomberg, MSCI.updated as of 11-Sep-2015

Asia Pacific Equity Research

J.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599 , [email protected]

Equity Markets Liquidity MonitorCountry Stock FF Mkt Cap

Exchange (US$ Bn) 1 Wk Avg 3 MMA 14 Avg 1 Wk Avg 3M Avg 14 Avg

Developed Markets

US NYSE + NASDAQ + AMEX 21,264 47 53 46 0.22 0.24 0.22

UK London Stk Exchange 3,191 6.7 8.0 8.1 0.21 0.23 0.22

Japan Tokyo Stk Exchange 3,552 22 22 20 0.62 0.58 0.59

Australia ASX 996 3.9 3.8 3.9 0.40 0.34 0.29

HK HKSE 2,604 7.0 9 6.6 0.27 0.32 0.28

Singapore SSE 280 0.7 0.8 0.8 0.26 0.27 0.23

EM Asia

China Shanghai & Shenzhen A 2,771 75 135 33 2.79 3.77 1.74

India BSE & NSE 494 2.8 3.1 3.2 0.57 0.57 0.66

Indonesia JSE 132 0.3 0.3 0.5 0.22 0.23 0.30

Korea KSE 718 3.9 5.1 3.6 0.57 0.68 0.49

Malaysia Bursa Malaysia 152 0.4 0.5 0.6 0.28 0.28 0.28

Philippines PSE 75 0.1 0.2 0.2 0.16 0.20 0.26

Taiwan TWSE & OTC 621 3.1 3.5 3.9 0.52 0.52 0.55

Thailand TSE 117 1.0 1.1 1.3 0.85 0.87 0.97

EMEA

Russia RTS + MICEX + DR 174 0.5 0.6 1.4 0.29 0.33 0.52

South Africa Johannesburg Stk Exchange 540 1.5 1.5 1.5 0.28 0.26 0.23

Turkey Istanbul Stk Exchange 65 0.9 1.2 1.6 1.32 1.50 1.68

Poland Warsaw Stk Exchange 83 0.7 0.7 0.7 0.86 0.83 0.68

Greece Athens Stock Exchange 21 0.0 0.1 0.2 0.14 0.42 0.36

UAE Abu Dhabi Securities Market 32 0.05 0.06 0.16 0.15 0.17 0.50

Qatar Qatar Stock Exchange 44 0.08 0.06 0.16 0.19 0.14 0.36

LatAm

Brazil Bovespa + DR 259 3.3 3.2 4.9 1.26 1.00 1.00

Mexico Mexico Stk Exchange + DR 237 0.8 1.1 1.3 0.34 0.44 0.48

Chile Santiago Stk Exchange 75 0.06 0.07 0.11 0.08 0.09 0.12

Colombia Bogota Stk Exchange 35 0.03 0.04 0.08 0.10 0.11 0.11

Peru Lima Stk Exchange 23 0.01 0.01 0.02 0.04 0.05 0.07

Source: Bloomberg, J.P. Morgan. Notes: Market cap uses all exchanges covered by Bloomberg for a specific country and primary security of company only. Updated as of 11 September 2015

The latest one week average is red (grey box in B&W, dark blue in blue scale) if less than 90% of the three month average or blue (solid black box in B&W, light blue in blue scale) if greater than 110% of the three month average.

To calculate the free float we use the MSCI free float factor for all markets except for Hong Kong, Russia and South Africa where we calculate the free float for the Hong Kong Composite Index, MICEX, and JSE.

Trading value calculation for Russia, Mexico and Brazil, includes value of depository receipts traded (DR) along with local stock exchange turnover. South Africa and Australia market capitalisation and trading value includes only local listed portion of dual listed stocks.

Velocity Ratio = (Trading Value / Free float market cap) * 100

Emerging ASEAN Trading Value (US$ bn, 3MMA)

14 September 2015

Daily Trading Value (US$ bn) Daily Velocity Ratio (%) BRIC Trading value (US$ bn, 3MMA)

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14 September 2015

Monitoring Inflation: The real threat to EM equitiesInflation CB Inflation JPM f'cast CPI (YoY) Policy Rate Policy Rate Policy Rate

Country Rate Target (%) CY2015 Date Previous Latest MoM 3M ann Previous Latest YoY 3M ann Current Last Change Next ChangeDeveloped Markets

United States Chained CPI na 0.2 Jul-15 0.2 0.2 0.1 3.6 1.7 1.5 1.8 1.8 0.13 16 Dec 08 (-87.5bp) Sep 15 (+25bp)

US core PPI Core PPI SA na na Aug-15 2.2 2.1 (0.1) 1.7 - - - - - - -

US Unit Labor Cost LC Nonfarm na na Jun-15 1.2 1.7 NA (1.4) - - - - - - -

Euro Area CPI 2% 0.1 Aug-15 0.2 0.2 0.0 (2.4) 0.8 0.5 1.0 (1.1) 0.05 4 Sep 14 (-10bp) 3Q 18 (+20bp)

Japan CPI na 0.7 Jul-15 0.4 0.2 (0.1) 0.0 2.5 2.5 0.6 0.8 0.05 5 Oct 10 (-5bp) On hold

Australia CPI 2 - 3% 1.8 Jun-15 1.3 1.5 NA 2.6 1.9 1.3 na na 2.00 5 May 15 (-25bp) 3Q 16 (+25bp)

Hong Kong CPI na 2.9 Jul-15 3.2 2.5 0.3 2.6 4.2 4.4 2.0 (4.9) 0.50 17 Dec 08 (-100bp) Sep 15 (+25bp)

Singapore CPI na -0.2 Jul-15 (0.3) (0.4) (0.4) 0.0 1.9 1.9 2.0 9.5 - - -

EM Asia

China CPI 3.0% 1.6 Aug-15 1.6 2.0 (1.8) (7.0) 2.7 3.7 1.8 1.9 4.60 26 Aug 15 (-25bp) On Hold

Korea CPI 3.0 (±1) 1.0 Aug-15 0.7 0.7 0.2 1.5 2.2 2.2 2.1 1.4 1.50 11 Jun 15 (-25bp) On hold

Indonesia CPI 4.5 (±1) 5.5 Aug-15 7.3 7.2 0.4 7.7 - 2.9 6.1 2.2 7.50 17 Feb 15 (-25bp) 1Q16 (-25bp)

India WPI na na Aug-15 (4.1) (5.0) (0.6) 2.5 2.9 (1.2) (2.7) 1.2 7.25 2 Jun 15 (-25bp) 29 Sep 15 (-25bp)

India CPI 6% 10.5 Jul-15 5.4 3.8 (0.6) 2.5 2.9 (1.2) (2.7) 1.2 7.25 2 Jun 15 (-25bp) 29 Sep 15 (-25bp)

Malaysia CPI na 1.1 Jul-15 2.5 3.3 0.8 7.3 3.4 3.8 3.3 4.0 3.25 10 Jul 14 (+25bp) 1Q16 (-25bp)

Philippines CPI 4.0 (±1) 1.5 Aug-15 0.8 0.6 0.1 1.4 4.6 4.0 2.5 1.2 4.00 11 Sep 14 (+25bp) 1Q16 (-25bp)

Thailand CPI 0.5 - 3.0 -0.8 Aug-15 (1.0) (1.2) (0.2) (0.7) 0.7 0.6 0.2 0.8 1.50 29 Apr 15 (-25bp) 4Q 15 (-25bp)

Taiwan CPI na -0.4 Aug-15 (0.6) (0.5) 0.6 4.9 1.8 3.1 1.1 3.1 1.88 30 Jun 11 (+12.5bp) Sep15 (-13bp)

Latin America

Brazil CPI IPCA 4.5 (±2) 8.8 Aug-15 9.6 9.5 0.2 6.7 10.5 10.6 9.2 10.5 14.25 29 Jul 15 (+50bp) 20-Jul-2016 (-25bp)

Colombia CPI 3.0 (±1) 4.7 Aug-15 4.5 4.7 0.5 3.1 5.7 6.1 na na 4.50 29 Aug 14 (+25bp) 25 Sep 15 (+50bp)

Mexico CPI 3.0 (±1) 2.9 Aug-15 2.7 2.6 0.2 2.1 4.0 3.2 2.3 2.4 3.00 6 Jun 14 (-50bp) Sep 15 (+25bp)

Peru CPI 2.0 (±1) 3.4 Aug-15 3.6 4.0 0.4 4.7 4.3 4.8 3.5 4.4 3.50 10 Sep 15 (-25bp) Oct 15 (+25bp)

Chile CPI NSA 3.0 (±1) 4.5 Aug-15 4.6 5.0 0.7 6.5 7.5 8.2 5.7 6.8 3.00 16 Oct 14 (-25bp) Oct 15 (+25bp)

Europe, Middle East and Africa

Czech Republic CPI 2.0 (±1) 1.3 Aug-15 0.5 0.3 0.1 0.7 (0.9) (1.1) 0.7 2.2 0.05 1 Nov 12 (-20bp) On hold

Greece CPI 2% - Aug-15 (2.2) (1.5) (0.4) (4.4) 0.9 4.3 (0.2) (1.2) 0.05 - -

Hungary CPI 3% 0.2 Aug-15 0.4 0.0 3.3 14.9 1.0 1.0 1.2 1.5 1.35 21 Jul 15 (-15bp) On hold

Poland CPI 1.5 - 3.5% -0.8 Jul-15 (0.8) (0.7) 0.6 2.4 (1.1) (1.1) 0.4 0.2 1.50 4 Mar 15 (-50bp) On hold

Russia CPI 4% 15.4 Aug-15 15.6 15.8 4.0 18.1 18.8 18.3 16.6 8.0 11.00 15 Jun 15 (-50bp) Jan 15 (-25bp)

South Africa CPI 3 - 6% 4.8 Jul-15 4.7 5.0 1.0 7.2 4.3 4.4 5.4 4.5 6.00 23 Jul 15 (+25bp) 19 Nov 15 (+25bp)

Turkey CPI 5.0 (±2) 7.6 Aug-15 6.8 7.1 0.4 (0.1) 9.3 9.7 7.7 2.7 7.50 24 Feb 15 (-25bp) 22 Sep 15 (+50bp)

Source: J.P. Morgan Economics, Bloomberg. Note: Current inflation data for countries which outside/above target range is highlighted. MoM and 3 month annualised data is calculated from inflation indices.# Countries where central banks target is not available. We have given J.P. Morgan Economic estimates. In case of Taiwan, Estimate by DGBAS,CB targets M2 growth (6.0-6.5% for 2015) Updated as of 11-Sep-2015Russia's CBR is not yet in a full-fledged inflation targeting, so they can change the target during the year.Bold figures on policy columns indicates tightening

CPI (YoY) CPI (%) Food CPI (YoY) Core CPI (%)

6


Outlook: Market Drivers 14 September 2015

Global and developed market driversCountry Positive NegativeGlobal Acceleration in DM growth Diverging G4 monetary policy, dollar strength, and EM weaknessUS Recovering housing market, fiscal drag easing Higher bond yields. higher mortgage rates, declining NIMs and increasing pressure on marginsEurope Better macro backdrop, credit recovery, improving financing conditions and more aggressive ECB. Political headwinds.

UK Strong domestic recovery, unemployment rate going down. EU referendum (political uncertainty), index heavily weighted in commodities and has a defensive bias, potential start of tightening cycle and pound strength against the Euro.

Source: J.P. Morgan

Asia Pacific Market DriversCountry Positive Negative

Japan Weak yen, Asset price inflation. Softening demand in Asia and global risk-off

Australia Low sovereign debt, monetary policy flexibility, high dividend yield market attracting local and global flows. Risk to growth from capex/terms of trade downturn, potential currency fragility, high household debt levels, and exposure to growth risks in China. High and escalating house prices alongside high debt levels.

Singapore Any external-led lift may help buoy Singapore’s exports.Policy is a constraint on demand in Singapore, both for property and elsewhere, as such policy action could be a positive spur.

Singapore’s transition from a labor-driven economic model to a productivity-driven one remains challenging, with productivity gains still in the negative territory. This transformation is expected to create inflationary pressures on both earnings and economic growth rates. Domestic demand will likely continue to be a drag, with recent data pointing to the same as retail sales continued to slump in March and credit growth slowed to 2008-09 lows.

Hong Kong Stabilizing property price, falling land prices. DM economic recovery drives HK exports. Closer integration with the China financial system. Vulnerable to the weakness in China growth leading to weak GDP in Hong Kong. Credit risk from trade financing for banks.

China Stabilizing growth prospects; valuations partly discounting fundamental weakness, capital account liberalization Less policy flexibility, growth sectors expensive, excessive leverage

Korea Higher shareholders return (dividend payment and buyback announcement), recovery in domestic demand, benefitting from DM economic growth Low earnings visibility for Korea’s deep cyclical names, weakening of the JPY and CNY relative to KRWTaiwan The market will deliver US$35 Bn cash dividend, implying a 3.6% cash dividend yield in the upcoming divided season, which we believe would

attract investors’ interest. Our economic team expects the global economy to turn up from 2H15 onwards; with decent recovery in Taiwan’s major market –US. Higher interest and fee incomes resulted in consistently positive EPS revisions for Taiwan financials.

Tech volume growth is forecast to be weak: (1) The big 3Cs cycle in 2004-2014 is coming to a saturation point; (2) Prolonged fabless semiconductor inventory correction; (3) PC demand is weak and we forecast that iPhone 6 shipments will peak in1H15, this just leaves iWatch and Macbook as drivers of growth. We believe TWSEELEC (Taiwan electronic index) is probably just half way through the earnings cut/ share price correction cycle.

India Improved inflation outlook, Monetary easing, Progress of monsoon not as bad as feared, Easy global liquidity and India’s relative edge in the EM universe, Improved twin deficit situation.

Continued weak growth and earnings downgrade cycle, Political logjam and uncertainty over the GST bill, High investor expectations, NPA situation and risk averse banks

Malaysia Government fiscal consolidation gaining traction with ongoing subsidy cuts and GST implementation. Railway-related capex fueling domestic growth. Client positioning major UW.

Weak MYR, political concerns, and high foreign MGS ownership. Lower oil prices hurting fiscal position. Weak consumption, and moderating exports.

Indonesia Power and toll-road is leading infrastructure development. Newly introduced economic stimuli package aimed to boost foreign investment. Inflation is easing and should meet central bank’s 4% target. Banks’ liquidity has started to build up, patiently waiting for a recovery.

Unsettling fiscal balances may pose further risk to infrastructure spending, which is slow to materialize. The Rupiah is constantly under pressure. Bank’s asset quality is deteriorating.

Thailand Flexible monetary condition, healthy corporate balance sheet, strong tourism Political uncertainties, low public spending, high household debt, negative EPS revisionPhilippines Strong private consumption trend, relatively resilient market EPS revision trend, robust external position, benign inflation environment. Government spending and infrastructure bottlenecks, moderating loan and M3 growth, political noises ahead of the upcoming May 2016 elections, sustained weakness in exports,

external events that could lead to capital flight.Source: J.P. Morgan.

Other emerging market driversCountry Positive NegativeBrazil Large and liquid market offering many bottom up options, large infrastructure investment program, labor market still sturdy. Stagflation still deepening, risk of sovereign debt downgrade, already high taxes rising across the board.

South Africa SA as a consensus UW in GEM portfolios. Quality global growth stocks keep going Valuations stretched v bond yields. Growth/inflation trade-off worsening. Gold mining strikes could hurt sentiment

Russia Positive momentum. Rebound from trough valuations. Consensus UW. Oil prices rising Valuations much higher now than 2011-13 when oil was high and no sanctions. RUB too strong according to CBR and government.

Mexico High correlation to US, undervalued FX, underpenetrated credit sector, internal economy picking up from low inflation and higher job creation, reform agenda to boost competitiveness, investments and growth.

High valuations, no room for disappointment on economic growth and/or earnings growth, negative FX momentum on Fed hiking rates, market depth.

Turkey Low valuations, especially in banks. Real rates high. Foreign ownership near 2-year low. Politics – waiting on the formation of a government. Vulnerable to early Fed hikesPoland Growth. Low rates not going lower. Stable EUR can bring back GEM investors. European recovery and QE help. Downside from politics in many sectors – insurance, banks, etc. Valuations not cheap.

Greece Population supports Euro. Banks still look cheap v peers. 30 July IMF payment date looks like the real deadline for a deal with the Troika. Absence of deal and dwindling liquidity increase Grexit fears. Economy back in recession.

Qatar & UAE Valuations look in line with EM. Emaar sub book value. Momentum now negative. More EPS downgrades to come. Dubai real estate prices are falling.

Czech Republic Low bond yields. High payout ratios. Growth outlook improving. Small not very liquid stock market with limited choices. Only 2 stocks in MSCI.

Hungary Plans to cut bank tax big positive. Low rates, strong growth and current account surplus. Russian and Ukrainian exposure of listed companies hurts.Source: J.P. Morgan Updated as of 11-Sep-2015

7

Asian Equity Strategy ResearchJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599 , [email protected]

Monitoring the Trend in Country EPS Forecasts (2015 and 2016)

Updated as of 4 September 2015Source: I/B/E/SNotes: All yearends are for December except Australia which is for June. EPS figures are normalized, starting at 100 on base date Feb 2014 for ease of comparison. These numbers are directly from IBES aggregate and may differ from those in the growth expectations pages where changes are made for exceptional items. This dashboard aims to show changes in earnings expectations.Countries' earnings revisions are in local currency whereas APxJ regions' earnings revisions are in US $

14 September 2015

Indonesia Thailand Malaysia

60

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Feb 14 Jun 14 Oct 14 Jan 15 May 15 Sep 15

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Singapore

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China

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India

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8


Monitoring the Trend in Sector EPS Forecasts (2015 and 2016)

Updated as of 4 September 2015Source: I/B/E/SNotes: All yearends are for December. EPS figures are normalized, starting at 100 on base date Feb 2014 for ease of comparison. These numbers are directly from IBES aggregate and may differ from those in the growth expectations pages where changes are made for exceptional items. This dashboard aims to show changes in earnings expectations.Countries' earnings revisions are in local currency whereas APxJ regions' earnings revisions is in US $

14 September 2015

Utilities

9095

100105110115120125130


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Telecom

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85

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95

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Materials

55

65

75

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95

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115


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Information Technology

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Industrials

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Health Care

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Energy

50556065707580859095

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9


Profit Outlook: Earnings Forecast Matrices for Countries and SectorsAsia Pacific ex-Japan Weight Korea Weight Thailand Weight

(%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016Total Market 100 7.7 2.5 9.2 9.1 4.9 8.9 Total Market 100 21.5 18.2 9.9 18.2 21.9 7.5 Total Market 100 10.4 16.3 8.8 8.2 8.6 12.0Consumer Discretionary 6.8 5.8 (2.7) 12.9 6.9 (0.8) 11.1 Consumer Discretionary 15.9 (1.0) (1.7) 8.6 3.5 0.4 7.7 Consumer Discretionary 3.9 10.9 (6.6) 14.8 7.1 (4.8) 14.7Consumer Staples 6.0 12.8 10.6 11.6 12.7 13.2 10.6 Consumer Staples 8.7 49.3 42.8 16.4 53.9 44.3 8.9 Consumer Staples 11.4 23.2 16.7 9.9 30.9 29.9 16.4Energy 4.3 (8.8) (17.4) 27.6 5.3 (18.4) 17.1 Energy 1.9 NM NM NM NM NM NM Energy 17.3 48.3 105.0 13.8 5.6 15.8 12.5Financials 37.5 5.8 3.4 4.9 7.0 5.9 5.8 Financials 14.2 13.7 9.9 6.2 15.0 7.4 3.9 Financials 28.8 (12.6) (12.6) 0.9 (7.5) (7.1) 10.7Health Care 3.4 17.2 17.5 20.3 19.3 17.7 17.8 Health Care 1.6 18.8 11.6 41.1 18.8 11.6 41.1 Health Care 5.7 29.9 25.3 16.5 29.9 25.3 16.5Industrials 8.9 13.6 10.2 30.2 12.3 0.5 23.9 Industrials 11.8 45.3 NM NM 30.2 NM 203.8 Industrials 6.4 (15.9) (15.3) 7.9 11.0 17.4 11.8Information Technology 16.3 2.4 (0.5) 9.6 5.8 3.5 8.5 Information Technology 34.8 7.2 (4.2) 9.1 9.0 (3.2) 6.1 Information Technology 1.6 7.7 7.7 9.9 7.7 7.7 9.9Materials 6.8 6.6 (6.1) 14.6 12.6 9.0 20.0 Materials 7.8 57.3 116.5 9.0 62.5 114.9 18.1 Materials 11.8 46.8 48.8 12.8 56.0 52.0 8.1Telecommunication Services 6.0 5.7 6.2 7.6 7.1 6.3 8.0 Telecommunication Services 1.0 45.4 137.6 8.5 33.8 137.6 NM Telecommunication Services 11.8 61.7 14.0 18.2 61.5 13.5 20.2Utilities 3.9 5.5 24.8 (10.8) 10.9 36.5 (9.9) Utilities 2.3 NM NM NM NM NM NM Utilities 1.5 3.4 3.4 4.5 (4.9) (4.9) 1.9

Australia Weight J.P. Morgan Consensus Taiwan Weight J.P. Morgan Consensus Malaysia Weight J.P. Morgan Consensus(%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016

Total Market 100 6.3 (5.0) 5.1 7.6 (1.3) 8.3 Total Market 100 1.8 1.8 4.0 1.3 4.7 4.7 Total Market 100 3.4 (1.4) 11.6 3.9 3.5 9.6Consumer Discretionary 2.2 17.0 23.6 NM 7.6 12.8 8.8 Consumer Discretionary 4.7 1.1 6.1 11.8 1.1 8.7 11.8 Consumer Discretionary 9.0 5.6 (0.5) 15.9 (2.5) (5.6) 14.7Consumer Staples 7.8 (1.2) 1.0 4.7 5.0 1.8 5.2 Consumer Staples 3.1 13.8 19.6 7.5 14.6 20.9 12.7 Consumer Staples 8.9 (31.8) (20.3) 29.8 0.8 4.9 10.5Energy 4.0 (28.7) (39.6) 44.2 (2.1) (36.6) 18.3 Energy 0.6 147.0 147.0 2.8 281.2 281.2 1.4 Energy 2.9 (8.1) (0.1) 10.8 30.2 17.6 9.7Financials 53.7 5.7 3.8 0.2 6.7 3.2 3.9 Financials 18.5 6.8 7.3 4.9 8.0 9.4 0.5 Financials 31.3 3.3 (2.4) 10.4 0.8 (0.2) 9.9Health Care 6.0 17.6 17.3 11.6 13.8 10.4 11.8 Health Care 0.0 NA NA NA NA NA NA Health Care 3.2 28.3 28.3 23.2 20.8 20.8 22.4Industrials 6.1 9.4 13.2 12.2 10.6 10.3 11.7 Industrials 2.6 0.6 48.0 17.8 (6.5) 55.3 12.1 Industrials 14.3 7.2 (8.0) 15.9 10.0 7.8 10.9Information Technology 0.4 0.3 0.3 31.2 (0.8) (0.8) 6.7 Information Technology 56.7 (1.6) (0.7) 2.6 (2.0) 1.0 5.6 Information Technology 0.0 NA NA NA NA NA NAMaterials 15.2 (0.7) (40.6) 13.6 4.7 (13.7) 24.1 Materials 9.0 (8.0) (10.1) 4.6 4.2 5.8 3.7 Materials 4.6 3.3 (9.2) 27.8 10.9 4.3 16.8Telecommunication Services 2.5 12.9 3.6 8.5 16.4 5.7 8.2 Telecommunication Services 4.9 5.3 4.4 4.8 1.5 0.5 4.3 Telecommunication Services 11.9 0.5 1.9 6.1 0.9 1.3 7.5Utilities 2.0 (2.3) (5.5) 29.7 10.5 8.0 7.6 Utilities 0.0 NA NA NA NA NA NA Utilities 13.9 7.3 11.7 3.7 8.2 11.4 4.4

Hong Kong Weight J.P. Morgan Consensus China Weight J.P. Morgan Consensus Indonesia Weight J.P. Morgan Consensus(%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016

Total Market 100 (2.0) (8.2) 7.0 3.2 (7.3) 7.6 Total Market 100 10.1 1.9 12.1 11.3 3.7 9.9 Total Market 100 1.2 (5.0) 4.3 2.3 (3.1) 12.7Consumer Discretionary 9.2 (39.9) (29.6) 14.8 (38.9) (26.8) 6.7 Consumer Discretionary 4.3 11.8 7.7 12.8 14.4 9.2 14.3 Consumer Discretionary 17.6 5.8 0.8 14.7 5.8 (10.2) 16.0Consumer Staples 0.8 (8.5) (8.5) 13.0 (8.5) (8.5) 13.0 Consumer Staples 3.9 8.7 8.1 13.7 10.4 19.2 15.3 Consumer Staples 12.4 8.1 (0.7) 17.9 4.9 2.3 15.6Energy 0.0 NA NA NA NA NA NA Energy 8.5 (51.3) (47.5) 47.2 (38.5) (45.7) 27.5 Energy 1.1 (17.5) (16.7) 11.1 6.9 12.1 10.7Financials 62.0 (1.2) (5.4) 5.6 4.3 9.6 6.6 Financials 41.0 4.1 5.3 6.9 5.4 6.6 5.9 Financials 39.5 (6.9) (9.4) (7.7) (2.1) (2.4) 12.8Health Care 0.0 NA NA NA NA NA NA Health Care 2.3 17.4 19.4 21.1 20.1 18.7 18.9 Health Care 3.0 8.7 8.7 14.4 8.7 8.7 14.4Industrials 13.2 7.4 9.4 10.5 (0.1) (40.5) 13.0 Industrials 8.9 14.0 18.2 14.4 12.9 21.3 11.4 Industrials 3.6 16.2 11.4 15.2 (1.7) (12.8) 4.1Information Technology 0.5 5.6 5.6 18.3 5.6 NM NM Information Technology 13.1 21.9 11.5 46.8 28.2 39.5 32.1 Information Technology 0.0 NA NA NA NA NA NAMaterials 0.0 NA NA NA NA NA NA Materials 1.8 (6.7) 77.0 23.2 (13.5) 12.8 30.7 Materials 5.4 (6.7) (7.0) 4.0 (9.1) (9.5) 7.6Telecommunication Services 1.4 3.7 (4.1) 10.9 (4.7) (10.9) 13.0 Telecommunication Services 11.4 4.7 2.4 8.3 10.3 4.4 6.6 Telecommunication Services 14.8 13.2 17.7 11.0 11.4 17.0 13.7Utilities 12.9 (6.3) (22.8) 2.8 (0.7) (1.0) 4.7 Utilities 4.8 NM NM NM NM NM NM Utilities 2.5 (38.0) (38.0) 28.5 (23.3) (23.3) 8.7

Singapore Weight J.P. Morgan Consensus India Weight J.P. Morgan Consensus Philippines Weight J.P. Morgan Consensus(%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016 (%) Median 2015 2016 Median 2015 2016

Total Market 100 2.9 0.8 5.7 (0.7) (0.6) 7.4 Total Market 100 14.9 13.9 22.2 20.2 17.8 18.6 Total Market 100 12.1 7.8 12.2 12.1 8.4 12.2Consumer Discretionary 6.4 (17.2) (16.1) 28.9 (14.3) (14.0) 7.4 Consumer Discretionary 8.6 14.5 7.9 26.4 24.7 23.2 25.9 Consumer Discretionary 3.6 4.0 4.0 11.0 10.1 10.1 17.7Consumer Staples 3.2 13.2 1.5 11.1 3.1 4.5 15.1 Consumer Staples 11.3 17.4 41.1 17.5 19.1 18.4 17.7 Consumer Staples 7.4 13.1 13.1 21.9 15.3 15.3 18.9Energy 0.0 NA NA NA NA NA NA Energy 9.7 9.4 (3.1) 17.0 13.9 11.8 13.6 Energy 0.0 NA NA NA NA NA NAFinancials 57.1 7.9 1.4 3.2 5.0 2.7 7.6 Financials 16.0 18.5 19.3 21.8 19.7 18.4 18.1 Financials 45.8 15.9 14.5 14.2 12.2 12.7 14.7Health Care 0.0 NA NA NA NA NA NA Health Care 13.2 14.7 16.6 33.9 24.1 30.7 24.0 Health Care 0.0 NA NA NA NA NA NAIndustrials 18.6 (3.1) 2.4 7.6 (11.4) (9.9) 5.2 Industrials 7.2 30.7 27.1 25.6 30.4 31.0 18.1 Industrials 24.5 9.9 9.1 13.5 14.2 9.9 12.7Information Technology 0.0 NA NA NA NA NA NA Information Technology 22.1 9.4 9.9 13.6 12.6 12.5 12.2 Information Technology 0.0 NA NA NA NA NA NAMaterials 0.0 NA NA NA NA NA NA Materials 5.9 19.7 36.6 53.9 27.3 23.2 36.0 Materials 0.0 NA NA NA NA NA NATelecommunication Services 14.6 0.9 3.3 4.3 2.2 5.4 7.4 Telecommunication Services 4.4 23.1 26.4 4.4 16.3 7.8 20.2 Telecommunication Services 13.7 6.0 (4.1) 2.1 3.2 (3.4) 1.8Utilities 0.0 NA NA NA NA NA NA Utilities 1.7 5.0 12.1 26.2 17.2 15.7 14.7 Utilities 5.0 (3.5) (6.1) 12.2 2.8 2.8 13.6

Source: I/B/E/S, MSCI, J.P. Morgan estimates. Updated as of 11-Sep-2015

14 September 2015

J.P. Morgan Consensus J.P. Morgan Consensus J.P. Morgan Consensus

10


Value: Market Implied Growth Rates

Perpetual 10 year Perpetual 10 year EPS GDP Min Max JPM Consensus (%) (%)Global -0.6 -0.8 3.5 5.0 4.7 6.0 5 10 NA 4.6 2.0 38USA 0.6 0.9 4.2 7.1 5.5 3.9 4 10 5.4 5.1 2.2 36Europe -0.9 -2.1 2.4 2.5 2.1 3.5 5 13 NA 3.0 1.7 51Asia Pacific -0.6 -2.8 3.7 3.8 4.1 8.9 9 17 5.4 4.2 2.3 37Asia Pacific ex-Japan -1.1 -3.2 3.6 3.2 5.3 13.1 4 14 9.2 8.5 3.1 43Pacific x J 0.2 -0.7 2.4 3.0 3.6 8.4 4 10 6.0 5.7 2.5 64EMF Asia -1.5 -4.3 4.6 3.6 5.0 14.0 8 15 9.9 9.2 3.5 32Japan -1.6 -2.8 2.5 0.7 4.3 0.6 0 10 2.5 0.8 0.3 80Australia 0.1 0.0 1.4 2.7 3.7 8.6 5 7 6.0 6.0 2.7 80China -3.3 -7.9 4.2 0.8 12.2 18.2 8 16 11.3 9.4 3.6 31Hong Kong -1.3 -1.7 2.5 3.7 8.5 5.7 3 9 6.2 4.6 1.7 46India 6.4 7.2 10.2 14.3 8.6 11.1 8 15 11.3 11.8 7.8 30Indonesia 3.0 3.8 7.2 9.8 11.9 12.7 8 15 12.0 12.4 5.9 39Korea -3.6 -8.4 4.4 2.2 2.3 6.9 5 15 7.5 8.0 2.3 19Malaysia 1.1 0.8 4.3 5.5 5.0 10.1 8 15 7.0 7.8 3.6 51Philippines 4.4 9.4 7.7 14.4 17.6 12.6 5 25 10.1 5.7 6 39Singapore -1.5 -2.0 2.7 3.0 4.3 10.6 4 10 5.3 6.5 2.9 50Taiwan -3.1 -4.1 1.2 1.8 2.2 4.5 5 15 6.3 6.0 1.3 49Thailand 0.9 -1.0 4.6 4.8 0.5 9.0 5 15 8.9 7.8 3.8 47

Long Term 2014E 2015E 2016E 2014E 2015E 2016EGlobal* 10.2 3.9 1.6 10.6 15.6 15.3 13.9USA* 11.0 5.4 1.0 10.9 18.0 17.8 16.1Europe* 9.1 1.4 1.8 10.1 15.4 15.1 13.8Asia Pacific* 10.2 9.1 6.3 8.8 15.4 14.5 13.3Asia Pacific ex-Japan 9.4 3.6 2.5 9.2 12.5 12.2 11.2Pacific x J 8.7 11.1 -7.9 7.2 14.7 15.9 14.9EMF Asia 11.5 4.4 8.3 10.9 12.1 11.1 10.0Japan* 11.3 75.2 4.9 19.1 17.5 16.7 14.0Australia 5.8 4.9 -5.0 5.1 14.4 15.2 14.4China 10.8 4.0 1.9 12.1 9.4 9.2 8.2Hong Kong 4.7 1.3 -8.2 7.0 13.0 14.2 13.2India 16.7 4.5 13.9 22.2 21.3 18.7 15.3Indonesia 9.5 7.7 -5.0 4.3 13.6 14.3 13.7Korea 12.7 -9.0 18.2 9.9 12.0 10.1 9.2Malaysia 7.9 -7.4 -1.4 11.6 15.1 15.3 13.7Philippines 13.8 10.1 7.8 12.2 20.3 18.8 16.8Singapore 6.5 7.4 0.8 5.7 12.0 11.9 11.3Taiwan 7.8 26.3 1.8 4.0 12.2 12.0 11.5Thailand 16.1 -16.3 16.3 8.8 16.8 14.5 13.3

Source : Bloomberg, Consensus Economics Inc, Datastream, I/B/E/S, MSCI, J.P. Morgan estimatesNotes: 1. Nominal GDP growth forecast is based on the range of real GDP and inflation rate forecast over the next 10 years provided by Consensus Economics Inc and EIU for Phils, Global, US and Europe. Updated as of 11 September 2015Notes to Earnings growth forecasts:* Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. For all other markets and sectors, forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and I/B/E/S estimates for the rest.Companies with different year ends are calendarised to December year ends and are free float adjusted for aggregation. 10-year CAGR from 2004-2014. Long term EPS Growth forecast is next 3-5 years IBES EPS growth expectation.

100% Payout Ratio Historic Payout Ratio EPS (%) Nominal GDP1 (%)

EPS Growth Forecasts P/E Ratio

14 September 2015

Market Implied Earnings Growth 10 Year Historic Nominal

CAGR(%)

J.P. Morgan Forecast of 10-year Potential Growth Range 10 Year

Risk FreeRate

Payout Ratio 2015E

11


Value: PE Matrix for Countries and Sectors and change in Key Sectors' Forward PE in the past 12 months

12-month forward PE

Asi

a Pa

cific

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New

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Phili

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es

Consumer Discretionary 10.9 17.6 14.8 14.0 7.9 NM 8.8 14.1 16.1 13.4 21.8 NA 34.4Consumer Staples 18.8 16.0 NA 11.1 17.5 21.1 19.4 31.0 23.8 19.1 22.4 NA NAEnergy 10.7 15.2 NA NA 6.7 31.2 10.7 10.1 13.5 7.4 8.9 NA NAFinancials 9.4 12.5 13.3 10.9 8.3 8.7 5.8 12.9 11.5 13.5 11.0 NA 17.2Health Care 22.0 19.3 NA NA NA NA 17.3 25.4 NA NA NA NA NAIndustrials 14.6 21.1 11.7 10.6 85.2 15.5 10.1 23.9 14.0 11.3 NA 27.9 17.0Information Technology 11.6 16.6 12.8 NA 8.4 11.2 21.6 17.2 NA NA NA NA NAMaterials 15.1 20.3 NA NA 10.2 17.0 9.1 12.6 19.4 12.4 12.1 11.2 NATelecommunication Services 14.9 15.8 13.6 14.9 10.4 17.8 13.1 20.8 21.3 15.6 19.7 16.1 15.9Utilities 12.0 22.5 17.2 NA NM NA 11.0 10.2 11.0 7.9 14.3 19.7 12.1Market Aggregate 11.5 14.7 13.5 11.5 9.5 11.7 8.5 16.2 14.2 13.9 13.6 17.3 17.3Sector Neutral* 11.5 15.3 13.7 11.8 9.9 11.6 8.8 15.0 13.4 12.5 12.8 11.9 15.8Source: IBES, MSCI, J.P. Morgan estimates. Note: PEs are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and IBES estimates for the rest.

Re/De-rating for Asia Pacific ex-Japan key sectors

Source: IBES, MSCI. Note: Above chart shows change in 12-month forward PE estimates in past one year, positive change indicates rerating and negative change indicates derating of PE.*Sector neutral PE are calcuated by using sector weights of MSCI APXJ and sector PE of respective markets (MSCI APXJ sector PE used where country sector does not exist) Updated as of 11-Sep-2015

14 September 2015

-4

-2

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12


Value: Distribution Tables for PE, PBR, DY and RoE2015E: Price to Earnings Ratio (x) 2015E: Price to Book Value Ratio (x)

Weighted Quartiles Weighted QuartilesAverage Min Lower Median Higher Max Average Min Lower Median Higher Max

Global 15.3 2.9 13.2 17.2 22.6 585 Global 2.1 0.0 1.2 2.0 3.5 76USA 17.8 4.7 15.2 18.8 25.1 585 USA 2.7 0.4 1.7 2.9 4.8 76Europe 15.1 4.4 14.2 17.2 21.6 110 Europe 1.8 0.3 1.2 2.2 3.5 23Japan 16.7 6.0 13.8 17.6 24.5 104 Japan 1.4 0.6 1.1 1.4 2.1 13Asia Pacific ex-Japan 12.2 2.9 10.2 14.4 20.8 569 Asia Pacific ex-Japan 1.1 0.0 0.9 1.5 2.7 59Australia 15.2 7.8 12.8 16.9 21.1 60 Australia 0.8 0.0 1.2 1.7 2.9 12.4China 9.2 3.0 7.2 11.6 17.1 280 China 1.2 0.3 0.8 1.2 1.9 8.9Hong Kong 14.2 7.9 10.9 13.1 17.4 31.2 Hong Kong 1.1 0.4 0.6 1.2 2.0 12.4India 18.7 3.7 13.5 21.1 30.8 122 India 2.9 0.4 1.7 3.4 6.1 40.6Indonesia 14.3 7.4 11.0 13.7 19.7 55.7 Indonesia 2.4 0.4 1.5 2.3 3.2 58.6Korea 10.1 2.9 8.0 12.4 21.9 152.1 Korea 0.9 0.3 0.7 1.0 2.1 14.9Malaysia 15.3 6.1 11.9 18.7 24.6 151.0 Malaysia 1.6 0.5 1.0 1.5 3.1 36.6Philippines 18.8 9.7 14.3 18.0 21.1 37.0 Philippines 2.6 1.2 2.0 2.4 3.3 7.0Singapore 11.9 4.1 10.4 15.2 18.7 29.6 Singapore 1.1 0.3 0.7 1.0 1.4 42.8Taiwan 12.0 4.7 9.7 12.6 18.4 569 Taiwan 1.5 0.5 1.0 1.4 2.1 11.9Thailand 14.5 8.0 11.1 16.6 26.0 65.0 Thailand 1.8 0.7 1.2 2.1 3.9 14.6

2015E: Dividend Yield (%) 2015E: Return on Equity (%)Weighted Quartiles Weighted QuartilesAverage Min Lower Median Higher Max Average Min Lower Median Higher Max

Global 2.5 0.0 1.2 2.2 3.5 15 Global 13.9 -92 7.9 12.2 18.5 357USA 2.0 0.0 0.4 1.7 2.8 12.8 USA 15.3 0.2 8.8 15.2 22.6 357Europe 3.3 0.0 2.0 2.9 4.1 10.6 Europe 12.3 0.4 8.3 12.8 18.7 141Japan 1.9 0.0 1.2 1.6 2.2 3.7 Japan 8.6 1.4 6.3 8.6 11.3 45Asia Pacific ex-Japan 3.5 0.0 1.4 2.8 4.5 15 Asia Pacific ex-Japan 9.5 -92 7.4 11.7 16.9 255Australia 5.3 0.0 3.3 4.9 6.1 8.3 Australia 5.2 -1 7.9 10.8 17.3 63China 3.4 0.0 1.5 2.6 4.1 14.7 China 13.6 -8.5 8.7 12.2 16.0 30Hong Kong 3.3 1.3 3.1 3.9 4.6 7.1 Hong Kong 7.9 1.5 4.7 10.0 13.8 66India 1.6 0.0 0.5 1.3 2.3 5.6 India 16.4 1.4 11.9 17.6 25.2 104Indonesia 2.8 0.0 1.8 2.4 3.5 7.0 Indonesia 17.8 -2.2 14.2 17.0 20.1 138Korea 1.9 0.0 0.5 1.5 2.7 5.6 Korea 9.3 -91.8 5.6 8.9 11.9 27.3Malaysia 3.4 0.6 1.9 3.0 3.8 9.6 Malaysia 10.9 0.6 6.8 9.6 12.7 177Philippines 2.1 0.2 1.0 1.5 2.7 5.9 Philippines 14.3 8.7 10.8 13.1 19.0 32.1Singapore 4.2 1.4 3.0 4.0 6.0 8.0 Singapore 9.5 1.7 5.2 7.9 13.1 255.2Taiwan 4.1 0.0 2.7 4.1 5.8 10.0 Taiwan 13.1 -28.3 8.1 11.8 16.9 39.5Thailand 3.3 0.0 1.6 2.9 4.1 6.7 Thailand 13.2 1.4 8.4 14.2 18.6 81

Source: Datastream, IBES, MSCI, J.P. Morgan. Updated as of 11-Sep-2015Note: Weighted average numbers based on aggregate of MSCI contituents. Consensus numbers are used for stocks not covered by J.P. Morgan.For Japan, finanacial year ending march numbers are used

14 September 2015

13


Demand Classification: MSCI Asia Pacific ex-Japan Index Composition by Countries

MSCI AC Asia Pacific ex-JapanWeightings (%)

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Domestic Demand 15.5 18.7 7.8 4.0 2.1 6.1 2.2 0.4 1.3 3.3 3.9 1.7 67.1Global Capex 0.1 0.4 0.0 1.8 0.0 2.6 0.1 0.0 0.0 0.6 3.3 0.0 8.9Global Consumer 0.3 0.5 2.2 0.1 0.0 3.8 0.1 0.0 0.0 0.0 3.6 0.0 10.6Global Price Takers 5.3 2.2 0.1 2.0 0.0 1.4 0.5 0.1 0.1 0.4 1.0 0.4 13.4TOTAL 21.2 21.9 10.2 7.8 2.1 13.9 2.9 0.5 1.3 4.3 11.8 2.1 100.0

Source: Datastream, MSCI. J.P. Morgan. MSCI Asia Pacific ex Japan companies have been classified in five categories. Namely Global Price takers, Global Capex, Global Consumer, Global Consumer/Capex and Domestic Demand. Of the five categories, In Global Consumer/Capex (Tech-Hardware) weighting is equally divided between Global consumer and Global Capex. The above table contains MSCI free float market capitalization as a percentage of MSCI APxJ market cap. Charts show the absolute and relative performance of Asia Pacific ex Japan sectors by demand classification. Updated as of 11-Sep-2015

14 September 2015

45

55

65

75

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105

115

0

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Relative to APxJ (rhs)

050100150200250300350400450500

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255075100125150175200225250275300325

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Jan 90 Dec 96 Nov 03 Oct 10

Absolute (lhs)


APXJ Domestic Demand Sector Absolute and relative (vs APxJ) Index APXJ Global Capex Sector Absolute and relative (vs APxJ) Index

APxJ Global Price Taker Sector Absolute and relative (vs APxJ) Index APxJ Global Consumer Sector Absolute and relative (vs APxJ) Index

Asian Equity Strategy ResearchJ.P. Morgan Securities (Asia Pacific) Limited: Adrian Mowat (852) 2800-8599, [email protected]

Economic Forecasts: Currency Movements and Forecasts

Source: Bloomberg, Datastream, Consensus Economics Inc., J.P. Morgan economics.

14 September 2015

Updated as of 11-Sep-2015

Euro (EUR) Japansese Yen (JPY) Australian Dollar (AUD) Singapore Dollar (SGD)

South Korea Won (KRW) Thai Baht (THB) Indian Rupee (INR)

Malaysian Ringgit (MYR) Chinese Yuan (CNY) Indonesian Rupiah (IDR) Philippine Peso (PHP)

Expected gains vs. USD from 12-month forwards

Taiwan NT$ (TWD)

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Sep 04 Feb 07 Jun 09 Oct 11 Feb 14 Jun 16

Forward

Consensus

J.P. Morgan

J.P. Morgan forecast:end Sep 15: 1.08end Dec 15: 1.05end Mar 16: 1.03

65

75

85

95

105

115

125

135

145

Sep-04 Feb-07 Jun-09 Oct-11 Feb-14 Jun-16

Forward

Consensus

J.P. Morgan

J.P. Morgan forecast:end Sep15: 124end Dec15: 121end Mar 16: 123

0.55

0.65

0.75

0.85

0.95

1.05

1.15


ForwardConsensus

J.P. Morgan


1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80


ForwardConsensus

J.P. Morgan

J.P. Morgan forecast:end Sep 15:1.43end Dec 15:1.47end Mar 16: 1.49

2728293031323334353637


Forward

Consensus

J.P. Morgan


900

1,000

1,100

1,200

1,300

1,400

1,500

1,600


Forward

Consensus

J.P. Morgan

J.P. Morgan forecast:end Sep 15: 1200end Dec 15: 1250end Mar 16: 1250

27

29

31

33

35

37

39

41

43


Forward

Consensus

J.P. Morgan

J.P. Morgan forecast:end Sep15: 35.60end Dec15: 36.00end Mar 16: 36.25

374043464952555861646770


Forward

Consensus

J.P. MorganJ.P. Morgan forecast:end Sep 15: 65.6end Dec 15: 66.5end Mar 16: 67.3

2.75

3.00

3.25

3.50

3.75

4.00

4.25

4.50

4.75

5.00


Forward

Consensus

J.P. Morgan


5.8

6.2

6.6

7.0

7.4

7.8

8.2


Forward

Consensus

J.P. Morgan


8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000


Forward

Consensus

J.P. Morgan

J.P. Morgan forecast:end Sep 15: 14000end Dec 15: 14300end Mar 16: 14700

36

39

42

45

48

51

54

57

60


Forward

Consensus

J.P. Morgan


-16% -12% -8% -4% 0% 4% 8% 12%

INDRUP$JAPAYE$

AUSTDO$INDORU$

HKDKORSWO$THABAH$PHILPE$

CNYSINGDO$TAIWDO$

MYR

J.P. Morgan Consensus

14

15


Economic Forecasts: Changes in Real GDP ForecastsReal GDP Growth (%Y/Y) Change in Forecasts Past 3 months (%) Economic Momentum Inflation

2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E 3Q15E 4Q15E 1Q16E 2015E 2016EUS 2.5 2.5 2.3 2.7 0.5 0.0 (0.2) (0.1) 2.0 2.5 2.5 0.2 1.9Euro 1.6 2.1 1.5 1.7 (0.0) (0.4) 0.0 0.0 1.8 2.0 2.3 0.1 0.9Japan 0.6 1.0 0.8 1.4 (0.3) (0.5) (0.1) (0.1) 0.8 1.0 1.0 0.7 0.5Australia 2.4 3.0 2.5 2.9 (0.4) (0.2) 0.2 (0.0) 3.2 3.3 2.8 1.8 2.7New Zealand 2.7 2.4 2.7 2.6 (0.1) 0.1 (0.3) 0.0 3.2 4.0 1.8 0.5 2.5China 6.9 6.8 6.9 6.7 (0.2) (0.4) (0.1) (0.0) 6.6 7.3 6.1 1.6 2.8Hong Kong 2.5 3.0 2.5 3.0 0.2 0.0 (0.1) 0.0 2.7 3.2 2.2 2.9 3.5India 7.8 8.0 7.4 7.6 0.0 0.0 (0.1) (0.1) 10.0 9.5 9.0 5.0 5.7Indonesia 4.4 4.0 4.8 5.5 (0.0) (1.0) (0.3) (0.2) 3.5 4.2 4.2 5.5 2.9Korea 2.5 3.2 2.7 3.2 (0.5) (0.5) (0.3) (0.3) 3.6 3.6 3.2 1.0 2.3Malaysia 4.0 3.3 4.9 5.0 (0.4) (1.7) 0.1 (0.1) 0.0 1.0 4.0 1.1 1.8Philippines 4.1 5.4 6.0 6.2 (1.5) 0.0 (0.2) (0.0) 4.0 4.0 8.0 1.5 2.4Singapore 1.7 1.5 2.5 3.1 (1.0) (0.8) (0.5) (0.3) 1.0 2.0 2.0 (0.2) 1.0Taiwan 1.0 2.1 2.6 3.1 (2.3) (1.3) (1.0) (0.4) 0.5 3.2 3.2 (0.4) 1.5Thailand 2.4 2.8 2.8 3.5 (1.1) (1.0) (0.7) (0.5) 1.0 2.0 3.5 (0.8) 1.7

Source: Bloomberg, Consensus Economics Inc, J.P. Morgan economics. Updated as of 11-Sep-2015

14 September 2015

J.P. Morgan Consensus J.P. Morgan Consensus GDP SAAR % Y/Y

-1.8 -1.4 -1.0 -0.6 -0.2 0.2 0.6

MalaysiaSingaporeIndonesia

TaiwanPhilippines

ThailandJapan

USNew Zealand

KoreaHong Kong

AustraliaChinaEuroIndia

-1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2

TaiwanThailandSingaporeNew ZealandIndonesiaKoreaUSPhilippinesHong KongJapanChinaIndiaEuroMalaysiaAustralia

2.1

2.3

2.5

2.7

2.9

3.1

3.3

Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Aug 15

2015E 2016E

Change in Consensus Forecasts for 2015 GDP over last 3 months (%)

Current J.P. Morgan vs. Consensus Forecasts for 2015 GDP (%) US Consensus Economic Forecasts


Economic Forecasts: Policy Rate Trends and ForecastsUnited States United Kingdom

Country 4Q'14 1Q'15 2Q'15 Current 3Q'15F 4Q'15F 1Q'16F 2Q'16F 3Q'16F Last Change Next ChangeUSA Fed Funds 0.125 0.125 0.125 0.125 0.500 0.750 1.000 1.250 1.500 16 Dec 08 (-87.5bp) Sep 15 (+25bp) Change in policy rates

3-month 0.26 0.27 0.28 0.34 0.55 0.55 0.80 1.05 1.3010-year 2.17 1.84 2.34 2.18 2.20 2.45 2.55 2.65 2.80

UK Repo rate 0.50 0.50 0.50 0.50 0.500 0.500 0.750 0.750 1.000 5 Mar 09 (-50bp) 1Q 16 (+25bp)3-month 0.56 0.57 0.58 0.59 0.55 0.55 0.85 0.85 1.1010-year 1.76 1.62 2.00 1.83 2.00 2.05 2.30 2.50 2.70

EU Refi rate 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 4 Sep 14 (-10bp) 3Q 18 (+20bp)3-month 0.08 0.02 -0.01 -0.04 0.00 0.04 -0.04 -0.04 -0.0410-year 0.54 0.19 0.75 0.65 0.75 1.15 1.20 1.30 1.40

Japan O/n call rate 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 5 Oct 10 (-5bp) On hold3-month 0.11 0.10 0.10 0.09 0.00 0.01 0.02 0.02 0.0210-year 0.33 0.36 0.49 0.33 0.40 0.45 0.50 0.65 0.70

Australia Cash Rate 2.50 2.25 2.00 2.00 2.00 2.00 2.00 2.00 2.25 5 May 15 (-25bp) 3Q 16 (+25bp)3-month 2.50 2.08 1.99 1.98 n.a. n.a. n.a. n.a. n.a.10-year 2.81 2.33 3.07 2.71 2.95 3.10 3.15 3.30 -

China 1-yr working capital 5.60 5.35 4.85 4.60 4.60 4.60 4.60 4.60 4.60 26 Aug 15 (-25bp) On Hold7-day repo 3.13 3.13 2.78 2.36 - - - - -10-year 3.65 3.58 3.59 3.35 3.50 3.45 3.30 - -

Hong Kong Discount window base 0.50 0.50 0.50 0.50 0.75 1.00 1.25 1.50 1.75 17 Dec 08 (-100bp) Sep 15 (+25bp)3-month 0.08 0.07 0.01 0.01 - - - - -10-year 1.86 1.39 1.85 1.73 1.97 2.02 2.07 2.12 - Source: J.P. Morgan Economics

India Repo rate 8.00 7.50 7.25 7.25 7.00 7.00 7.00 7.00 7.00 2 Jun 15 (-25bp) 29 Sep 15 (-25bp)3-month 8.21 8.04 7.82 7.70 - - - - -10-year 7.88 7.72 7.75 7.76 7.90 7.85 7.80 7.80 - Asia ex Japan policy rate

Indonesia BI rate 7.50 7.50 7.50 7.50 7.50 7.50 7.25 7.25 7.25 17 Feb 15 (-25bp) 1Q16 (-25bp)3-month 7.18 6.79 6.79 7.56 - - - - -10-year 7.77 7.26 8.24 9.30 8.20 7.90 7.80 7.70 -

Korea O/n call rate 2.00 1.75 1.50 1.50 1.50 1.50 1.50 1.50 1.50 11 Jun 15 (-25bp) On hold3-month 2.13 1.85 1.65 1.60 - - - - -10-year 2.28 1.80 2.13 1.87 2.60 2.65 2.70 2.85 -

Malaysia O/N call rate 3.25 3.25 3.25 3.25 3.25 3.25 3.00 3.00 3.00 10 Jul 14 (+25bp) 1Q16 (-25bp)3-month 3.72 3.72 3.73 3.73 - - - - -10-year 4.08 3.86 3.96 4.18 4.10 4.20 4.20 4.20 -

Philippines Reverse repo rate 4.00 4.00 4.00 4.00 4.00 4.00 3.75 3.75 3.75 11 Sep 14 (+25bp) 1Q16 (-25bp)3-month 1.84 2.11 2.37 2.32 - - - -10-year 4.37 4.06 4.41 4.06 3.80 3.90 3.95 4.00 -

Singapore No policy rate n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.3-month NA NA NA NA 1.04 1.29 1.54 1.79 -10-year 2.28 2.15 2.72 2.88 2.87 2.92 2.97 3.02 -

Taiwan Official discount rate 1.875 1.875 1.875 1.88 1.75 1.63 1.63 1.63 1.63 30 Jun 11 (+12.5bp) Sep15 (-13bp)3-month 0.88 0.88 0.88 0.86 - - - - -10-year 1.62 1.55 1.52 1.20 1.60 1.63 1.65 1.68 -

Thailand 1-day repo rate 2.00 1.75 1.50 1.50 1.50 1.25 1.25 1.25 1.25 29 Apr 15 (-25bp) 4Q 15 (-25bp)3-month 2.18 1.94 1.66 1.63 - - - - -10-year 2.73 2.64 2.93 3.08 3.05 3.10 3.15 3.20 -

Source: J.P. Morgan EconomicsSource: Datastream, Bloomberg, J.P. Morgan Economics. Bold figures on next change column indicates tightening.

14 September 2015

Updated as of 11-Sep-2015

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14 September 2015

Perspective: Asian Balance Sheets

Debt/Equity Debt/Assets Debt/Mkt. Cap Asset Turnover Current Ratio Interest Coverage Altman Z ScoreJapan 0.89 0.33 0.65 0.71 1.35 9.73 4.0Australia 0.56 0.27 0.35 0.60 1.11 7.81 3.9China 0.67 0.28 0.96 0.84 1.04 7.54 2.9Hong Kong 0.34 0.23 0.34 0.19 2.03 5.89 3.4India 1.02 0.37 0.40 0.75 1.23 4.73 5.7Indonesia 0.39 0.22 0.13 0.84 1.88 14.45 7.6Korea 0.28 0.17 0.29 0.87 1.37 10.76 4.7Malaysia 0.63 0.31 0.32 0.47 2.08 6.35 4.7Philippines 0.72 0.32 0.25 0.40 1.40 5.14 3.7Singapore 0.46 0.25 0.57 0.50 1.69 5.48 2.6Taiwan 0.41 0.21 0.20 1.06 1.21 13.61 5.0Thailand 0.78 0.35 0.40 1.20 1.28 8.31 4.7

Source: Datastream, Bloomberg, J.P. Morgan.Note: All ratios are calculated from latest financial reports available ex Banks, Diversified financials and Insurance sectors and calculations are based on weighted average of companies in MSCI Asia Pacific universe. Data as of 30 January 2014Each box indicates quartile levels and markets with values exceeding the scale are indicated by the open-ended top box.The diamond indicates weighted average for each market. The 3 horizontal lines on the Altman z-score chart are at 1.8, 2.7 and 3.0. Companies with scores of less than 1.8 indicates bankruptcy likely, between 1.8-2.7 bankruptcy likely within 2 years and more than 3 most likely safe from bankruptcy.

Debt to Equity Ratios Quartile Distribution Chart (x) Altman Z-Score Bankruptcy-Predictor Distribution Chart

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Perspective: Demographics and Key Economic Statistics

Age Gross Secondary2014 Growth Dependency School US$ Per capita Total Per capita Total Per capita 10 year CAGR YoY %

million %YoY Ratio Enrollment (%) billion (US$) (%) (%) (%) (%) (%) (%)Japan 126 -0.4 0.6 102 4,881 38,686 0.6 0.7 0.7 0.8 -0.3 0.8China 1,367 0.5 0.4 87 10,331 7,557 18.2 17.6 9.9 9.4 9.0 11.8India 1,284 1.4 0.5 69 2,073 1,614 11.1 9.5 7.4 5.8 12.4 14.2Australia 24 1.2 0.5 131 1,509 63,976 8.6 7.0 2.8 1.3 6.5 3.6Korea 49 0.1 0.4 97 1,403 28,601 6.9 6.6 3.5 3.3 5.6 2.9Indonesia 251 1.2 0.5 81 851 3,388 12.7 11.5 5.8 4.6 16.5 7.3Taiwan 23 0.3 0.3 na 531 22,605 4.5 4.2 3.6 3.2 2.8 3.4Thailand 71 0.6 0.4 87 381 5,384 9.0 8.2 3.4 2.7 6.6 2.0Malaysia 31 2.2 0.5 67 327 10,655 10.1 8.1 4.8 3.0 6.4 5.4Hong Kong 7 0.7 0.4 80 290 39,618 5.7 5.0 3.9 3.2 5.3 4.8Singapore 5 1.0 0.3 na 308 57,310 10.6 7.8 5.5 2.8 na naPhilippines 100 1.8 0.6 85 285 2,843 12.6 10.6 5.4 3.5 na naNew Zealand 5 1.0 0.5 119 195 42,829 7.0 5.8 1.8 0.7 na naMSCI APxJ 3,217 1.0 18,483 4,292 13.1 8.8

Foreign Current 2014 2014 September 2015reserves * account 2015E 2016E 2015E 2016E Region Population GDP Market Cap.(US$bil) %GDP (US$bil) % GDP %GDP %GDP %GDP %GDP % total % total % MSCI

Japan 1188 0.5 na na (5.4) (4.7) 246 247 North America 5.0% 26.2% 55.6%Australia 42 (4.1) na na (2.7) (2.2) 38 40 Developed Europe 7.5% 24.6% 23.1%New Zealand 17 (4.2) na na 0.2 0.5 33 34China 3557 2.1 1135 10.4 (2.3) (2.5) 43 46 Asia 49.8% 31.5% 18.2%Hong Kong 334 0.5 na na 1.0 0.8 6 6 Australia 0.3% 1.9% 2.2%India 326 (1.3) 511 22.9 (3.9) (3.6) 64 63 China 19.4% 14.0% 2.3%Indonesia 105 (2.8) 250 27.9 (1.9) (1.9) 26 26 Japan 1.8% 6.2% 7.9%Korea 368 6.3 423 17.4 (0.4) (0.2) 37 38 Malaysia 93 4.5 57 17.4 (3.2) (2.8) 57 55 CEEMEA 5.0% 6.2% 1.7%Philippines 80 4.5 61 20.8 (2.0) (2.0) 35 34 LatAm 7.0% 6.5% 1.3%Singapore 250 19.5 52 17.4 (1.6) (1.5) 98 95 Others 25.6% 5.5% 0.0%Taiwan 425 11.1 200 39.2 (1.5) (1.5) 37 36Thailand 148 3.5 84 20.8 (2.7) (2.7) 48 47 Global 100.0% 100.0% 100%

Source: CEIC, Datastream, Bloomberg, MSCI, World Bank, UNESCO, CIA, US Bureau of Statistics, IMF, J.P. Morgan estimatesNotes: Age dependency ratio defined as dependents to working-age population. Data for Gross secondary school enrollment as of 2011 except for Phillipines(2009),Malaysia(2010), Updated as of 11-Sep-2015Hong Kong and Thailand(2012)*Foreign reserves as of September 2015 or as of latest data available **10-year CAGR for period 2004-2014, in local currency. *** Population data from J.P. Morgan, IMF ****10 year CAGR for period 2003-2013, in local currency except China(2004-2014) and Malaysia (2005-2013)

External (2015) Fiscal position Asia In the WorldExternal debt Fiscal deficit Public sector debt

14 September 2015

Population and demographics Nominal GDP Real GDPPopulation*** 2014 10 year CAGR** 10 year CAGR** Personal Disposable Income****

19


Perspective: MSCI Asia Pacific ex-Japan Index Composition by Country and Sector 684 Companies, US$6291 billion total market capitalization


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Consumer Discretionary 0.5 0.9 2.2 0.5 0.9 0.7 0.3 0.3 0.4 0.1 0.0 6.8Consumer Staples 1.6 0.8 1.2 0.4 0.1 0.9 0.1 0.3 0.3 0.2 0.1 6.0Energy 0.8 1.8 0.3 0.1 0.8 0.1 0.0 0.4 4.2Financials 11.4 9.0 2.0 2.2 6.3 1.3 2.4 0.9 0.8 0.6 0.6 37.5Health care 1.3 0.5 0.2 1.0 0.1 0.1 0.1 0.0 3.4Industrials 1.3 1.9 1.7 0.3 1.3 0.6 0.8 0.4 0.1 0.1 0.3 0.1 8.9Information Technology 0.1 2.8 4.8 6.7 0.1 1.7 0.0 16.3Materials 3.2 0.4 1.1 1.1 0.5 0.1 0.1 0.2 0.1 6.8Telecommunication Services 0.5 2.5 0.1 0.6 0.1 0.3 0.6 0.3 0.3 0.3 0.2 0.1 6.0Utilities 0.4 1.1 0.3 1.3 0.1 0.4 0.1 0.0 0.1 0.1 3.9TOTAL 21.2 21.8 14.0 11.8 10.2 7.8 4.3 2.9 2.1 2.1 1.3 0.5 100.0

Composition by Countries and Sectors - Daily Turnover > US$5 million 569 Companies, US$5932 billion total market capitalization


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Consumer Discretionary 0.5 1.0 2.4 0.4 0.9 0.7 0.3 0.1 0.3 0.0 6.7Consumer Staples 1.7 0.9 1.2 0.4 0.1 0.9 0.1 0.1 0.3 0.1 5.8Energy 0.9 1.9 0.3 0.1 0.8 0.0 0.4 4.3Financials 12.1 9.3 2.0 2.2 6.7 1.3 2.6 0.8 0.8 0.6 0.5 38.9Health care 1.3 0.5 0.2 1.0 0.1 0.1 3.4Industrials 1.4 2.0 1.7 0.2 1.3 0.6 0.3 0.1 0.1 7.7Information Technology 0.1 3.0 5.1 7.0 0.1 1.8 17.1Materials 3.4 0.4 1.1 1.0 0.4 0.1 0.1 0.3 0.1 6.9Telecommunication Services 0.5 2.7 0.2 0.6 0.2 0.4 0.7 0.4 0.3 0.3 0.2 0.1 6.3Utilities 0.5 0.3 1.4 0.1 0.4 0.1 0.1 2.8TOTAL 22.5 21.6 14.6 11.8 10.6 8.0 3.7 2.2 1.5 2.1 0.9 0.3 100.0

Source: MSCI, J.P. Morgan. Updated as of 11-Sep-2015

Note: Within Australia Financials we are N Banks and N Fin. Ex. Banks. Within China Financials we are OW Banks and OW Fin. ex. Banks.

14 September 2015

Note: Overweight (green shading/ light shading in B&W) and underweight (red shading/ dark shading in B&W) sectors in countries is from the perspective of the regional strategy team, not country. The country recomendation is also shown with green and red shading.


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J.P. Morgan Equity Strategy Team and Asia Pacific Macro TeamChief Equity Strategists Adrian Mowat Asia and Emerging Markets (852) 2800 8599 [email protected] Martins Junior LatAm (55-11) 4950-4121 [email protected] Aserkoff CEEMEA (44-20) 7134-5887 [email protected] Frontier MarketsAditya Srinath ASEAN (62-21) 5291 8573 [email protected] Bilandani MENA (971) 4428 1763 [email protected] Celedon Southern cone and Andean (562) 425 5245 [email protected] Developed MarketsDubravko Lakos-Bujas US Equity and Quantitative Strategy (1-212) 622-3601 [email protected] Matejka Global and European Equity Strategy (44-20) 7325 5242 [email protected] StrategistsAdrian Mowat China (852) 2800 8599 [email protected] Leung Hong Kong (852) 2800 8526 [email protected] Srinath Indonesia (62-21) 5291 8573 [email protected] Iyer India (9122) 6157 3600 [email protected] Sullivan Singapore (65) 6882 2374 [email protected] Jirajariyavech Thailand (66-2) 684 2684 [email protected] Park Korea (822) 758-5717 [email protected] Kit Mak Malaysia (60-3) 2270 4728 [email protected] Yutan Philippines (63-2) 878 1131 [email protected] Sector ResearchNick Lai Auto & Auto parts (852) 2800 8543 [email protected] Klaczek Banks (852) 2800 8534 [email protected] Leung Conglomerates & Property (852) 2800 8526 [email protected] Sener Consumer & Media (852) 2800 8521 [email protected] Wu Healthcare (852) 2800 8538 [email protected] Li Infrastructure (852) 2800 8589 [email protected] Kim Insurance (852) 2800 8517 [email protected] Yao Internet (852) 2800 8535 [email protected] Kang Metals and Mining (852) 2800 8570 [email protected] Darling Oil & Gas (852) 2800 8578 [email protected] Chik SMID Caps (852) 2800 8590 [email protected] Park Technology (822) 758-5717 [email protected] Sullivan Telecommunications (65) 6882 2374 [email protected] Png Transportation (65) 6882 1514 [email protected] Kan Utilities (852) 2800 8573 [email protected] & Policy ResearchJahangir Aziz Emerging Asia (1-202) 585 1254 [email protected] Kanno Japan (81-3) 5573 1166 [email protected] Chinoy India (91-22) 6157 3386 [email protected] Lim Korea (82-2) 758 5509 [email protected] Ng Taiwan (852) 2800 7002 [email protected] Zhu China (852) 2800 7039 [email protected] Jiang Hong Kong (852) 2800 7053 [email protected] Walters Australia (61-2) 9220 1599 [email protected] ResearchScott C Speaker Global Commodities Research and Strategy (1-212) 834 3878 [email protected] ResearchBert Gochet Emerging Asia, Rates & Forex Strategy (852) 2800 8327 [email protected]

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