The Latest Episode of the Turkish Electoral Soap Opera Ended Climatically Last Week When

Emerging Markets Desk EMEA NEWS FLASHES  The latest episode of the Turkish electoral soap opera ended climatically last week whenWeekly Recep Tayyip Erdogan, the leader of the highly popular Islamist AKP party, was banned from runningReport for on government Markets due to a past conviction for religious sedition. Domestic markets edged up towards the end of the week on the back of increasing certainty over the timing and format of the elections. in the EMEA & Latam Region 23rd September 2002  The leaders of the Czech coalition government signed an agreement mid-week to hold further talks relating to upcoming key votes. PM Spilda and the Freedom Union agreed to discuss fiscal policy and tax issues ahead of domestic negotiations that precede the EU’s Copenhagen summit. Domestic markets ended the week up, in reaction to the news that the republic’s EU accession journey appears to be back on track.

 South Africa’s CPIX inflation jumped 0.9%q/q in August to 10.8%. The data was worse than expected and it justifies the SARB’s anti-inflationary geared interest rate rise last week.

 At the International Energy Forum in Osaka Japan OPEC member’s pointed to large reserves and ample extra capacity but no indication was given that output would be increased in order to cool US/Iraq war- driven price rises. ‘If there’s no real shortage, what’s the point?’ OPEC President Rilwanu Lukman declared. On the corporate front both of our oil Russian oil holdings, Sibneft and Yukos ended the week up as markets reacted to this news.

LATAM NEWS FLASHES  A very weak week in Latin American markets. Although attention again focuses on Brazil, Mexico suffered a 8.44% drop, including a 2.68% fall in the peso. The Bovespa in Brazil fell by 5.8%, but in dollar terms was worse off since the real fell by 8.24%. In the past few weeks, the market's favoured candidate Jose Serra has managed to reclaim 2nd position, which offered some stability to the real in the first half of September. However the latest election polls have not confirmed gains on current leader Lula da Silva, who has a chance of winning the elections outright and therefore dashing the market's hopes for policy continuity.

 What knocked the Mexican peso off its perch was the threat of a union strike over a wage hike at national oil monopoly Pemex. This is scheduled for October 1st and will be the first in Pemex's history. The union has links to the PRI party and the strike may be related to current government investigations into whether the previously long-ruling PRI party used election funds from Pemex. After President Fox's speech asking for cooperation from all political parties, little headway was made towards deregulation of the electricity sector.

 Fiel industrial production indicators for August were -9.6% yoy and -0.2% mom, conflicting with the official INDEC figures of +2.1% mom. We have not seen any solid evidence of progress in the country dealing with its economic mess. The high price of agricultural commodities recently, such as wheat, may lend a short- term boost to the countries trade statistics.

INSIGHTS Economics EMEA  Hungary’s industrial output rose 5.1% y/y in July.  Polish CPI dropped 0.1%m/m to 1.2% in August and the country’s GDP grew 0.3% q/q, or 0.8% y/y, in Q2.  South Africa’s CPIX inflation increased to 10.8%, up 0.9% q/q, in August.  Expected this Week –Czech trade balance and South African PPI for August.

LATAM  Chile’s balance of trade reported a deficit of $226.2m from July’s $256m surplus.  Brazil’s COPOM decided to leave interest rates unchanged at 18%.  Expected this Week- Mexican trade balance and Chilean trade balance for August. Plus Brazil’s Q3 inflation report.

COMPANY VISITS MADE LAST WEEK

Date Name of Company Country Sector September Richter Gideon Hungary Pharmaceuticals 16th September Komercni Bank Czech Banking

Emerging Markets (Ex-Asia) Desk Weekly Report – 23rd September 2002 Pg. 1 16th Republic September OTP Bank Hungary Banking 16th September Standard Bank South Africa Banking 16th September Hansabank Balitcs Banking 16th September Pekao Poland Banking 17th September Absa South Africa Banking 17th September BPH PBK Bank Poland Banking 17th September Nedcor South Africa Banking 18th

INDICES PERFORMANCE

LATAM Indices WOW MTD YTD 20/09/2002 13/09/2002 20/08/2002 28/12/2001 Argentina MSCI US$ Argentina -5.80% -4.64% -62.63% 358.59 380.66 376.05 959.59 Brazil MSCI US$ Brazil -13.46% -6.05% -41.78% 345.83 399.59 368.11 593.97 Chile MSCI US$ Chile -4.80% -11.45% -27.20% 414.42 435.32 468.03 569.26 Colombia MSCI US$ Colombia -2.57% -4.16% -5.58% 54.25 55.68 56.60 57.459 Mexico MSCI US$ Mexico -8.44% -10.49% -20.13% 1,381.27 1,508.59 1,543.10 1,729.37 Peru MSCI US$ Peru -2.88% -1.65% 6.65% 153.73 158.29 156.31 144.15 Venezuela MSCI US$ Venezuela -0.06% 4.49% -26.32% 69.45 69.49 66.46 94.25 Latam MSCI Latin America Free -9.78% -8.50% -31.74% 601.44 666.63 657.31 881.16 Argentine Peso -0.68% -0.96% -72.68% 3.66 3.64 3.63 1.00 Brazil Real -8.24% -9.95% -32.57% 3.43 3.14 3.09 2.31 Colombian Peso -1.57% -6.14% -18.39% 2,786.50 2,742.75 2,615.35 2,274.00 Mexico Peso -2.68% -4.32% -10.26% 10.23 9.96 9.79 9.18

EMEA Indices WOW MTD YTD 20/09/2002 13/09/2002 20/08/2002 28/12/2001 Czech Republic MSCI US$ Czech Rep 3.20% 1.81% 34.36% 101.58 98.43 99.77 75.60 Egypt MSCI US$ Egypt -0.13% 0.02% -6.04% 71.25 71.34 71.24 75.83 Hungary MSCI US$ Hungary 0.39% 2.46% 12.96% 233.83 232.93 228.21 206.99 Israel MSCI US$ Israel -4.03% -6.35% -30.73% 91.81 95.67 98.03 132.54 Poland MSCI US$ Poland 1.22% 4.73% -14.11% 306.45 302.75 292.62 352.50 Russia MSCI US$ Russia -1.44% -4.95% 7.78% 255.95 259.70 269.28 237.47 South Africa MSCI US$ South Africa -1.33% 3.98% 1.99% 127.64 129.35 122.75 125.14 Turkey MSCI US$ Turkey 0.55% -5.61% -43.30% 93.71 93.19 99.27 165.26 EMEA MSCI EMEA Free -1.38% 0.15% -7.43% 95.54 96.88 95.39 103.21 Czech Koruna 1.02% 2.46% 17.44% 30.61 30.92 31.36 35.95 Egyptian Pound -0.76% -1.40% -1.40% 4.65 4.61 4.58 4.58 Hungarian Forint 0.73% 1.47% 11.57% 248.31 250.12 251.95 277.05 Israeli Shekel -1.78% -3.88% -8.73% 4.82 4.73 4.63 4.40 Polish Zloty 1.09% 0.61% -3.49% 4.12 4.17 4.15 3.98 Russia Ruble 0.35% 0.13% -3.31% 31.55 31.66 31.59 30.51 South Africa Rand -0.57% 1.77% 13.06% 10.58 10.52 10.77 11.97 Turkish Lira -0.06% -2.16% -13.01% 1,665,100.00 1,664,100.00 1,629,100.00 1,448,500.00

Emerging Markets (Ex-Asia) Desk Weekly Report – 23rd September 2002 Pg. 2