Look out For

FOR EXTERNAL DISTRIBUTION TO THE FOLLOWING GROUP OF CUSTOMERS ONLY: 1. Accredited Investors (Singapore: Priority Banking).

Further distribution of this publication to other group(s) is STRICTLY PROHIBITED.

Asia Top30 equity strategy

This reflects the views of the Wealth Management Group equities | 20 January 2014

Stock ideas for 2014 Contents

 ADD: Stock ideas for 2014 1 – Baidu (BIDU US), Sina Corp (SINA US), CapitaCommercial Asia Top30 2 Trust (CCT SP) Top30 stocks review 2  CUT: – CLP Holdings (2 HK), Keppel Corp (KEP SP) Top down views 6 Asia Divi list 11  We remain Underweight Asia ex-Japan. While we expect positive returns, performance is likely, in our opinion, to continue lagging Technical Commentary 11 Developed Markets (DM) over the next 12 months. List of Equity Market Commentary Publications 22  Outlook for Asia markets remains mixed, with modest USD Important Information 23 strength and a tightening bias amongst Asia central banks, which is likely to impact domestic growth and local currencies.

 We retain our preference for North Asian to South/South East Asian markets, but would remain A.G.I.L.E in our allocation, should signs of fundamental or policy changes emerge.  Our preferred sectors are Technology and select Discretionary Audrey Goh, CFA Investment Strategist stocks. Utilities are upgraded to Neutral on the back of price

declines. We downgrade Financials to Neutral, with a focus on Rob Aspin, CFA Insurance, Singapore banks and selected REITs. Head, Equity Investment Strategy  The China Internet sector offers one of the best visible growth Victor Teo, CFA opportunities, in our opinion. Our preferred picks are Baidu, Sina Investment Strategist Corp, and we are looking to get back into Tencent.

Asia Top30 (Refer to appendix for a summary of the rationale behind each stock’s selection)

Consensus Div Div 1M% TR Ticker Name Country Sector Stock Price Rating 12m Fwd P/E 12m Fwd P/B Yield% Payout% Local

175 HK Geely Automobile Hong Kong Discretionary 3.29 4.1 7.0 1.2 1.2 12.8 -12.3% 1833 HK Intime Retail Gr China Discretionary 7.81 4.4 10.2 1.4 3.1 39.1 -0.4% 1928 HK Sands China Ltd Macau Discretionary 65.35 4.6 22.4 9.2 2.0 111.8 7.7% 1044 HK Hengan Intl China Staples 88.85 3.7 22.9 6.2 2.0 59.4 -3.6% WIL SP Wilmar Internati Singapore Staples 3.27 3.8 11.1 1.0 1.7 20.7 -2.1% 386 HK China Petroleu-H China Energy 6.12 4.4 7.3 0.9 5.0 41.7 -1.1% 1088 HK China Shenhua-H China Energy 21.70 4.1 7.8 1.1 5.6 39.1 -8.4% 1299 HK Aia Group Ltd Hong Kong Financials 38.05 4.3 16.8 1.9 1.0 19.0 0.7% 2388 HK Boc Hong Kong Ho Hong Kong Financials 24.30 4.3 10.8 1.5 5.1 62.5 -0.8% CCT SP Capitacommercial Singapore Financials 1.47 3.8 20.0 0.9 5.5 59.2 5.4% CMA SP Capitamalls Asia Singapore Financials 1.87 4.5 22.6 1.0 1.8 23.1 -2.1% 1109 HK China Res Land Hong Kong Financials 18.92 4.5 9.5 1.3 1.8 18.5 -1.7% DBS SP Dbs Group Hldgs Singapore Financials 17.41 4.9 11.1 1.2 3.2 35.9 3.9% ICICIBC IN Icici Bank Ltd India Financials 1039.25 4.6 8.6 1.5 1.9 24.0 -4.0% 1398 HK Ind & Comm Bk-H China Financials 4.78 4.4 4.7 0.9 6.3 35.0 -7.9% KBANK TB Kasikornbank Pcl Thailand Financials 165.50 4.7 8.6 1.5 1.8 2.9 -2.1% 2318 HK Ping An Insura-H China Financials 67.00 4.3 12.1 1.9 0.9 17.8 -0.1% 4 HK Wharf Hldg Hong Kong Financials 58.20 4.5 13.2 0.6 2.9 10.6 -2.9% CIMB MK Cimb Group Holdi Malaysia Financials 7.09 3.2 11.4 1.5 4.4 25.7 -6.7% HPHT SP Hutchison Port-U Singapore Industrials 0.68 3.3 22.9 0.7 8.8 195.0 4.7% 694 HK Beijing Cap Ai-H China Industrials 5.64 3.9 11.7 1.1 2.6 40.0 -8.3% SINA US Sina Corp China Technology 75.02 4.3 35.4 3.0 NA 0.0 -6.1% BIDU US Baidu Inc-Sp Adr China Technology 170.14 4.3 25.4 6.7 NA 0.0 -1.9% NTES US Netease Inc-Adr China Technology 79.45 4.5 12.5 2.6 1.2 22.5 6.6% 992 HK Lenovo Group Ltd China Technology 10.18 4.6 15.3 3.7 2.0 39.0 11.6% 005930 KS Samsung Electron South Korea Technology 1316000.00 4.7 6.5 1.2 0.6 6.9 -7.8% 347 HK Angang Steel-H China Materials 4.98 3.3 24.6 0.6 NA NA -9.3% 914 HK Anhui Conch-H China Materials 29.90 4.5 11.6 1.9 1.1 20.9 4.9% 358 HK Jiangxi Copper-H China Materials 13.78 3.3 11.8 0.8 4.6 33.5 0.1% 941 HK China Mobile Hong Kong Telco 76.65 3.4 10.2 1.4 4.5 43.2 -4.1%

Source: Bloomberg, Standard Chartered, data as of 20 January 2014

This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. This is not a research 1 report and has not been produced by a research unit. Important disclosures can be found in the Disclosures Appendix.

equity strategy – Asia Top30 | 20 January 2014

Asia Top30

Our key themes and sector calls in Asia over the next 12 months Consumer Discretionary (OW)  Macau Gaming for good earnings visibility. Prefer the mass to premium segments  China autos, but be selective. Prefer the SUV segment  Korea auto (cheap valuation, DM demand proxy) Energy (OW)  Prefer those companies that benefit from pricing reforms in China o This includes clean energy, downstream refiners, gas producers Technology (OW)  Prefer China Internet, software and services  Focus on smartphone/component makers that can expand market share Industrials (OW)  Airlines  China infrastructure Prefer North Asia over South Asia  OW Korea (cheap valuation, exposure to DM and China recovery)  OW Malaysia (visible growth, positive fiscal initiatives, Ringgit downside likely limited) Growth scarcity  EM Asia is slowing, therefore premium valuation for stocks with good growth visibility

Source: Standard Chartered

Top30 stocks review Stock Ticker Change Baidu ADR BIDU US Add  Add: SINA Corp SINA US Add – Baidu ADR (BIDU US), SINA Corp (SINA US), CapitaCommercial Trust CCT SP Add CapitaCommercial Trust (CCT SP) CLP Holdings 2 HK Cut  Cut: Keppel Corp KEP SP Cut – CLP Holdings (2 HK), Keppel Corp (KEP SP) China Shenhua 1088 HK Under Review Angang Steel 347 HK Under Review  Under Review: – Angang Steel (347 HK), China Shenhua (1088 HK)

While DM equities have been re-rated upwards, MSCI AxJ has been de-rated due to headwinds from a lacklustre growth outlook and weakness in Asian currencies. We believe it is important to be selective – look for alpha rather than beta opportunities in Asia, as a DM recovery may have a less positive impact on Asian equities than it did in the past. In such an environment, stocks with resilient growth visibility are likely to outperform the market.

ADD: Baidu ADR (BIDU US)

Profile: Baidu is the largest internet PC search engine in China. It has c.81% revenue share (c.60% traffic share) in the China search engine market. Its „mobile search‟ efforts are starting to pay off and are now a Baidu has a leading market share in the China online significant 15% of total revenue. The recent acquisition of 91 Wireless search market positioned Baidu as one of the strongest app distribution platforms in China. Share of China search engine market by revenue

Key drivers: 100%

14.7 13.1

16.2

14.4

15.1

19.2

18.7

17.9 18.3  Mobile revenue growth seems to be at an inflexion point. 80% 22.2 Investments/improvements to its mobile platform are starting to 60% bear fruit, with mobile revenue reaching c.15% of total revenue in

40%

Market Market share 81.4

3Q13. 80.6

80.1

79.7

79.5

77.6

77.3 77.3

77.1 74.6

 Baidu is likely to follow the path of Google. It took Google 20% three years to successfully migrate from PC to mobile. Advertisers‟ increasing adoption of mobile ads and the improving 0% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 Q2 user experience on Baidu‟s platform should continue to drive 13E 13E click-through rates and prices per click, which in turn would drive Baidu Google China Others revenue. Source: Bloomberg, Standard Chartered

This reflects the views of the Wealth Management Group 2

equity strategy – Asia Top30 | 20 January 2014

 Baidu is beefing up its distribution channels to entrench its We view any correction as a good opportunity to gain position in the mobile internet space. The acquisition of 91 exposure to stock Wireless (China‟s largest app distribution network) not only Baidu’s stock price diversifies its income sources, but also brings a mobile ecosystem 200

that Baidu can scale up and monetise in the future. 180 Valuations: The stock trades at c.26x 12-month forward P/E, which is 160 a std deviation discount to its historical mean. We believe the share 140 price will continue to be driven by mobile-related revenue growth. USD Technicals: We believe Baidu has entered a fresh up-cycle and is 120 unlikely to fall below 160. It is likely to trend higher, in our opinion. 100 Risks: Stronger-than-expected cannibalisation between mobile and 80 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 PC traffic, failure to integrate new acquisitions efficiently, higher-than- BIDU US Equity 50 dma expected investment costs. 100 dma 200 dma Source: Bloomberg, Standard Chartered

ADD: Sina Corp ADR (SINA US) Profile: Sina Corp is one of the best known online companies in China. It has multiple service platforms, with the key ones being:  The Sina.com (online advertising) portal, which focuses on news and media content; and

 Weibo, a microblogging platform, sometimes known as the Twitter of China, which has over 400m users. Alliance with Alibaba should boost Sina’s advertising Sina Corp‟s legacy portal ad business is generating steady cash flow revenues but has been losing market share to social/video ads. It derives c.80% Sina’s advertising revenues of its revenue from online advertising. 100

80 Key drivers:  Rising monetisation of Weibo (China’s no. 1 micro blogging 60 platform) to drive profit growth. Its 400m user base is still 40 largely undermonetised, with new initiatives such as a messenger

system, payment options and ecommerce tie-ups expected to (m) CNY 20 improve the user experience and drive revenue. Active daily users on the Weibo platform rose 11.2% q/q to reach 60m in 0 September 2013. Mar-09 Feb-10 Jan-11 Dec-11 Nov-12

 Alliance with ecommerce platform Alibaba offers significant Source: Bloomberg, Standard Chartered upside. This helps increase Weibo‟s popularity with advertisers

and also enables Weibo to monetise traffic through ecommerce.

Alibaba has committed to spend USD 380m worth of advertising

on Weibo in the next three years.  Negative earnings revisions have stabilised. The trend of declining margins over the past two years seems to have ended. Operating margins improved to 13% for the first time in three Sina’s share price re-rated recently on the back of a years on the back of strong revenue growth in Weibo. turnaround in Weibo’s operating margins  A potential takeover target by Alibaba longer term. Alibaba Sina Corp’s stock price acquired 18% of Sina Weibo in April 2013, with the option to 100

extend its holding to 30%. 90

Valuations: Sina Corp trades at c.35x 12-month forward P/E, 80 marginally below the mean. On a PEG basis, it is c.0.30, which we 70 believe is attractive, taking into account consensus earnings growth of USD c.60% in the next three years. 60 Technicals: The recent pullback was restricted to 38% Fibonacci 50 support level, which is a positive sign. Current levels and any decline 40 to 67.5 is an attractive accumulation range, in our opinion. Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 SINA US Equity 50 dma Risks: Slower-than-expected monetisation of Weibo, vague and 100 dma 200 dma tighter regulations on social media by the Chinese government, Source: Bloomberg, Standard Chartered increased competition from other internet portals, failure to achieve synergies with Alibaba, higher-than-expected investment costs.

This reflects the views of the Wealth Management Group 3

equity strategy – Asia Top30 | 20 January 2014

ADD: CapitaCommercial Trust (CCT SP) CCT’s stable occupancy is enhanced by long-term anchor tenants Profile: CapitaCommercial Trust is one of the largest office REITs in CCT’s portfolio occupancy rate Singapore. It derives 91% (as of September 2013) of its net property 102 99.6 99.9 income from Grade A and prime offices. 98.9 100 98.3 98.2 97.3 97.1 97.6 Key drivers: 98 96 93.8 94 97  We expect CCT to benefit from a lack of new office supply in 94 96.4 Singapore’s CBD in 2015. Its 40%-owned JV CapitaGreen is on 92 93.1 93.1 93.5 92.3 92.4 track to be completed by Q4 14, positioning it well for 2015. rate Occupancy 90 90.7 88 90  It is likely to see positive rental reversion in 2014/15.C.15% 86 and c.30% of its Singapore portfolio is due to be renewed in 2014 84 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 and 2015, respectively, as office rents gradually recover. CCT CBRE Core CBD Occupancy Rate  High proportion of fixed debt mitigates some interest-rate risk. CCT has 75% of its debt fixed, and net gearing is below Source: Company, Standard Chartered

30%, one of the lowest in the sector, with average debt maturity

of 3.7 years.

Valuations: CCT offers an attractive c.5.5% forward dividend yield and 0.9x 12-month forward P/B.

Technicals: Momentum indicators have started moving higher, suggesting prices could soon follow suit. We believe key support is at Healthy demand for office space should continue to 1.35. A crossover above 1.55 confirms further strength. support positive rental revisions Risks: Global economic slowdown, deterioration in the outlook for CCT - Average rent per month for office portfolio office space 9.0 8.73 8.5 8.64 CUT: CLP Holdings (2 HK) 8.0  CLP has underperformed the Asia market since we included it in 8.03

SGD/sf 7.94 7.5 7.84 7.79 7.83 our Top30. 7.66 7.64 7.96 7.53 7.45 7.39  CLP is a diversified power supplier, with the bulk (c.70%) of their 7.0 earnings coming from Hong Kong and the remaining from China, Australia and other Asian countries. 6.5 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13  We have decided to cut the stock, as we expect upside to be limited from its utilities business. Source: Company, Standard Chartered

 For investors who own the stock, we would advocate that, while it still offers a decent yield of 4%, overall performance may lag the broader market.  The stock has been cut from our top div list.

CUT: Keppel Corp (KEP SP) Keppel Corp has significant orderbook visibility  Keppel Corp has performed in line with the Asia market since we Keppel Corp net order book included it in the Top30. 16 13.6  It is a leading rig builder globally. It also has interests in property 14 12.8 12.2 development via Keppel Land and undertakes infrastructure- 12 10.5 10.8 9.4 related investments. 10  We decided to cut the name as its growth outlook is less 8 7.2 5.6 compelling compared to the downstream segments of the marine 6 4.6 SGD SGD (m) 3.4 industry (such as oil services and subsea). 4 1.9  For investors who own the stock, we believe that the investment 2 offers a decent yield (c.4%) and visible earnings growth from its 0 orderbook backlog of years. 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 3Q Source: Company, Standard Chartered

This reflects the views of the Wealth Management Group 4

equity strategy – Asia Top30 | 20 January 2014

 However, the upside may be modest, as marine activities are Valuations for China Shenhua are depressed shifting downstream after years of investment in rigs equipment. China Shenhua 12m forward P/E  The stock remains on the Asia top div list. 50

30 Under review: China Shenhua (1088 HK) 20  The stock has not performed as we expected due to the P/Ex sustained weakness in China coal prices. Increased domestic 10 supply as well as cheaper coal imports continue to weigh on 0 prices. Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

 The Chinese government has continued to add coal capacity, 1088 HK +1 std dev (10y) approving the construction of more than 100m tonnes of new coal -1 Std dev (10y) Median

capacities in 2013. Source: Bloomberg, Standard Chartered  Valuation is cheap and further downside to coal prices is likely limited. Catalysts for higher prices, though, are likely limited in 2014. We would not add to this position until there is greater clarity on coal prices.

 For investors who own the stock, we believe catalysts for immediate re-rating are not visible, though valuation does look cheap longer term (two to three years), once domestic growth China steel prices weakened into the seasonally weak starts to accelerate again. Chinese New Year period China domestic steel spot prices 5,500

Under review: Angang Steel (347 HK) 5,000  Angang is one of the largest steel companies in China. We expect the company to benefit if the government executes on curbing 4,500

excess capacity, shutting down polluting, smaller mills in the steel 4,000

industry. CNY/metric tonne CNY/metric  Closer to the Chinese New Year (a seasonally weak period), 3,500

major mills have cut back production and sentiment amidst 3,000 traders remains soft. Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14  We continue to hold this name in the Asia Top30, but would Rebar (Long) HRC (flat) monitor closely for any shift in steel prices/cost that may affect the Source: Bloomberg, Standard Chartered company‟s outlook.  Short-term technicals seem to have weakened.

This reflects the views of the Wealth Management Group 5

equity strategy – Asia Top30 | 20 January 2014

Top-down views MSCI Asia ex-Japan’s sector views Consumer Discretionary OW  Technology and Discretionary remain key preferred sectors. Energy OW  We downgrade Financials to Neutral, focusing on Insurers and select Banks and REITS. Industrials OW  Upgrade Utilities to Neutral. Focus on China Gas and Power Information Technology OW Plants. Financials N Below, we highlight our sector changes and most preferred OW Consumer Staples N sectors (Technology and Discretionary) to position in 2014. Healthcare N

Materials N Utilities N Financials – Downgrade to Neutral Telco UW

We believe the sector is likely to lag the performance of the broader Source: Standard Chartered markets. China‟s focus on banking reforms and credit control would limit upside among Chinese banks. At the same time, higher interest rates present headwinds for property developers, which also account for a significant part of the sector.

Within Financials, we prefer the Insurance sector and would be selective within Banks and Real Estate. There is some value Strong correlation between income and insurance emerging within the REIT sector. demand China’s average urban salaries and wages vs. average sector life premiums Insurance: The past few years of a low-yield environment have 20,000 1,200 made it difficult for insurers to offer products with attractive returns. 1,000 Some normalcy in interest rates would be helpful, as would increased 15,000 800 investment alternatives (driven by China policy), an ageing population

and a growing, affluent middle class in Asia. 10,000 600

CNY CNY 400 5,000 Our preferred picks are as follows: 200  AIA Group (1299 HK): 0 0 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 – The company offers broad, diversified exposure to rising Avg. sector life premiums (RHS) household income in Asia, which should support insurance Avg. urban salaries & wages demand. Source: Bloomberg, Standard Chartered

– The restructuring of its operations to focus on higher margin products are positive for new business value. AIA would also benefit from the opening up of select insurance segments in China to foreign insurers.

Risks: Potential weakness in Asian local currencies, slowdown in new business momentum. AIA offers diversified exposure to insurance demand across Asia  Ping An Insurance (2318 HK): AIA’s revenue exposure FY 2012 – Ping An Insurance would be a key beneficiary of reforms in the China Insurance sector. 6.6% – The expansion of healthcare insurance coverage, potential 9.9% 23.5% pricing liberalisation and further momentum in premium growth are key catalysts for the stock to re-rate higher. 10.4%

– Having recently completed a capital raising, Ping An Bank 12.0% 22.1% has removed an important overhang on capital solvency, which should be supportive for further growth and re-rating. 15.4%

Risks: Weaker-than-expected demand for life insurance in China, Thailand Hong Kong Singapore Others Korea China Malaysia asset quality issues at Ping An Bank, execution risks from government reforms. Source: Bloomberg, Standard Chartered

This reflects the views of the Wealth Management Group 6

equity strategy – Asia Top30 | 20 January 2014

Banks: A tighter liquidity environment will weigh on growth and asset DBS, with the largest deposit franchise, would benefit quality. We prefer banks in Singapore, Taiwan, and to a certain extent more from a higher-interest-rate environment in Korea, where liquidity and asset quality are likely less of a concern. Customer deposits of Singapore banks Hong Kong banks‟ outlook is unexciting, with CNY-related business 300 being a key growth driver, offset by a slowdown in property and China- 250 related loans demand. 200

150 Our preferred pick is SGD (Bn) 100  DBS Bank (DBS SP): – The bank is most leveraged to rising interest rates among the 50 three local banks in Singapore due to its large deposit 0 franchise. Dec-12 Mar-13 Jun-13 Sep-13 DBS OCBC UOB – Its limited exposure to Southeast Asian countries is a Source: Bloomberg, Standard Chartered blessing in disguise, as it would be less impacted than its peers from the weaknesses in emerging Asian local currencies and the related asset quality concerns. Risks: Deterioration in asset quality, sharp slowdown in HK/China loans demand, continued decline in SIBOR interest rates.

DBS’s share price continues to demonstrate a steady uptrend REITS: The Singapore REIT sector (FSTREI Index) has corrected by DBS’s stock price c.21% since the first mention of Fed tapering on May 2013. We believe a fair bit of the bad news may have been priced in, with the 19 sector now marginally below its historical mean, trading at c.0.95x 12- 18 month P/B and offering a decent yield of 6.6%. We prefer those 17 REITs with the ability to reprice “rents” higher in 2014, good 16

fundamentals and trading at reasonable valuations. SGD 15

14 Our new add is 13  CapitaCommercial Trust (CCT SP): Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 – A gradual recovery in demand for prime office space and DBS SP Equity 50 dma limited new prime office space supply (CCT‟s CapitaGreen is 100 dma 200 dma the only significant completion) are supportive factors for the Source: Bloomberg, Standard Chartered

next two years.

– Prime office rents bottomed in 2013 and started picking up on the back of better leasing activity.

Risks: A downturn in the Singapore economy, weakness in prime office space rents, sharp rise in long-term yields. Hutchison ports offers an attractive yield of c.8% Hutchison Port’s 12m forward dividend yield Update on: 10

 Hutchinson Ports Holding Trust (HPHT SP): 9 – Concerns over a dividend cut may be misplaced. Yantian

% 8 port‟s throughput rebounded in December after a disappointing Q3 13. This should help alleviate some 7 concerns over dividend cuts. 6 – HPHT‟s ports are well positioned to benefit from a recovery in 5 global trade and its c.8.8% yield is likely sustainable, in our Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 opinion. HPHT +1 std dev (10y) -1 std dev (10y) Median Risks: A collapse in global trade, strikes by port workers. Source: Bloomberg, Standard Chartered

This reflects the views of the Wealth Management Group 7

equity strategy – Asia Top30 | 20 January 2014

Utilities – Upgrade to Neutral Weakness in coal prices should be positive for the operating margins of China power companies This is on the back of a recent c.10% price correction since May 2013. It is one of the smallest sectors in Asia ex-Japan, but we believe the Asia seaborne and China local thermal coal prices sector could be well supported, as investors continue to seek income. 170 We would avoid pure yield plays, focusing on companies with 1) 150 potential positive catalysts, and 2) strong cash generating 130 abilities. 110

90 We prefer the Utilities and Integrated Power Plants (IPP) in China. USD/mt Malaysia Utilities are also likely to outperform on the back of 70 tariff hikes driven by the government. HK Utilities offer decent 50 yield from a stable tariff regime but would likely underperform in a rising yield environment. Newcastle 6000Kc Indonesian 5000Kc Qinhuangdao 5800kc Source: Bloomberg, Standard Chartered China Utilities: The government‟s focus on clean energy, market- based tariffs and pollution control measures is expected to result in continued upward pressure on the tariff for water, gas distribution and electricity. The shift away from coal to cleaner gas is negative for coal prices but positive for IPP margins. ]

Utilities names we are considering:  China Resources Power (836 HK)

 ENN Energy (005380 KS)

Technology (OW) – Remains our preferred Overweight

The secular shift from desktop to mobile usage is likely to continue. Emerging markets remain a key driver for Smartphones are becoming more main stream and volume is likely to smartphone growth grow at a slower pace, with rising competition in the mass segment. Smartphone shipments by region 200 We prefer the China Internet sector (including platforms, content, 150 gaming and ecommerce). In the smartphone space, we focus on companies with strong cost control and those that are able to take 100

market share. Units (m) Units 50 China Internet: Fundamental drivers of growth are 1) increase in 0 mobile internet population (shift from desktop to mobile), 2) potential 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 multiple re-rating due to its growth visibility as a potential consumption Emerging Markets Developed Markets proxy, and 3) increasing ability by Internet companies to monetise Source: Bloomberg, Standard Chartered their large reach/traffic.

Our new ADDS are  Baidu ADR (BIDU US): – Mobile revenue key to drive further re-rating and revenue growth. – Advertisers‟ increasing adoption of mobile ads and improving user experience on Baidu‟s platforms should continue to drive click-through rates and prices per click, which in turn is driving revenue. Risks: Stronger-than-expected cannibalisation between mobile and PC traffic, failure to integrate new acquisitions efficiently, higher-than- expected investment costs, failure to meet high expectations.

This reflects the views of the Wealth Management Group 8

equity strategy – Asia Top30 | 20 January 2014

 Sina Corp (SINA US): – At the stage of monetising Weibo (China‟s no. 1 micro blog). – Alliance with ecommence platform Alibaba offers significant

upside to drive ad revenues on Weibo. Alibaba has committed

to spend USD 380m worth of advertising on Weibo in the

next three years. Risks: Slower-than-expected monetisation of Weibo, increased competition from other Internet portals, failure to achieve synergies with Alibaba, higher-than-expected investment costs, failure to meet high expectations.

Other technology names we are considering:

 Tencent Holdings (700 HK)  Sohu.com ADR (SOHU US)

Discretionary (OW) – Remains Overweight

We believe the sector would continue to outperform the broader market. Retail spending in China and Korea seems to have bottomed, though any upside is still not visible. Macau Gaming revenue growth continues to surprise on the upside. In the Asian Auto space, Korean Auto is expected to continue doing well, while industry sales growth is projected to slow in China.

Within Discretionary, we continue to prefer the Macau Gaming sector. We advocate being selective within Asian Auto, favouring Gross gaming revenue a key driver of share price SUV-related exposure in China and Korea automakers for their Sands China’s quarterly revenue vs. stock price exposure to global demand. 4,300 70

3,800 60 Macau Gaming: After a great run-up in 2013, it is hard to make a case that the sector is cheap. However, we do believe that the positive 3,300 50 sentiment surrounding:1) strong revenue momentum into the 2,800 40 HKD

Chinese New Year, 2) a lack of new casino supply until 2016, and (m) USD 2,300 30 3) new infrastructure to drive visitations to Macau could help sustain the sector at its current valuations. 1,800 20 1,300 10 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Our preferred pick is Revenue Stock price (RHS) Source: Bloomberg, Standard Chartered  Sands China (1928 HK): – We continue to like it for its defensive exposure to the mass gaming segment. The company has the largest casino SUV sales continue to outpace passenger car sales in capacity in Macau. China China passenger vehicle and SUV sales, y/y% – With no new capacity until 2016, Sands offers a significant 250 opportunity for yield enhancement on its existing properties. It is also on track to open a new retail area in 2014. 200

Risks: Regulatory control by China, delay in new openings, credit 150 % risks from VIP lending. 100 50 Asian Auto: In China, the secular trend towards SUV/premium cars 0 remains intact, though this has been negatively impacted by China‟s -50 anti-corruption campaign and passenger car purchase restriction in Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 select cities. Passenger vehicle (PV) sales growth is likely to slow as a China Passenger Vehicle China SUV result of these issues and a high base in 2013. We like Korean autos, Source: Bloomberg, Standard Chartered given low expectations and cheap valuation. We would focus on companies with a strong new model refresh pipeline in 2014.

This reflects the views of the Wealth Management Group 9

equity strategy – Asia Top30 | 20 January 2014

Update on: Geely’s strong SUV model cycle in 2014 should drive sales momentum  Geely Automobile Holdings (175 HK): Geely’s sales of basic passenger vehicles and SUVs – The stock has disappointed due to slower-than-expected 60,000 sales growth in 2013. Unit sales grew by 14% to 549,518 units, missing management‟s target of 560,000 units. 50,000 – Management expects sales to slow to 6% in 2014, below the 40,000

8-10% industry growth expected by China Association of Units 30,000 Automobile Manufacturers, which surprised the market. 20,000

– Concerns over new model delays and renewed restrictions 10,000 on PV sales by the Chinese government continue to be 0 overhangs on the stock. Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13

– We still believe SUV sales growth will outpace the overall PV Domestic Sales - SUV Domestic Sales - Basic Passenger Vehicle market in China, with any decline due to concerns over new Source: Bloomberg, Standard Chartered model delays a potential buying opportunity. – We believe the current share price is nearing a strong support level. Risks: Execution risks, policy risks from increased pollution measures impact car sales

Other discretionary names we are considering:  Wynn Macau (1128 HK)  Hyundai Motor (005380 KS)

This reflects the views of the Wealth Management Group 10

equity strategy – Asia Top30 | 20 January 2014

Asia Div list

The Asia dividend list delivered a total return of -11.2% this month on an equally weighted basis. Year to date, the dividend list was down 2.7% in USD terms, underperforming the broader Asia ex-Japan market, which was down 2.0%.  CUT: CLP holdings  ADD: CapitaCommercial Trust (CCT SP)

Asia Dividend list

Stock 12m Fwd 12m Fwd P/B Div Net Debt/ Ticker Name Sector Price Dvd Yield P/E Trailing Payout% Equity TR 1M% TR YTD%

1088 HK China Shenhua-H Energy 21.70 5.0 7.8 1.3 39.1 10.3 -8.4% -11.2% MINT SP Mapletree Indust Financials 1.30 7.5 13.5 1.2 54.3 53.2 -0.8% -3.0% CCT SP Capitacommercial Financials 1.47 5.5 20.0 0.9 59.2 34.4 5.4% 1.4% SGREIT SP Starhill Global Financials 0.77 6.5 14.5 0.9 73.1 40.9 0.7% -1.9% 2388 HK Boc Hong Kong Ho Financials 24.30 5.8 10.8 1.7 62.5 -56.2 -0.8% -2.2% DBS SP Dbs Group Hldgs Financials 17.41 3.5 11.1 1.3 35.9 6.9 3.9% 1.8% PBK MK Public Bank Bhd Financials 19.18 3.0 14.7 3.5 43.4 -33.4 3.5% -1.1% BBL TB Bangkok Bank Pub Financials 175.00 4.5 8.5 1.1 10.6 -104.8 -3.6% -1.4% 1398 HK Ind & Comm Bk-H Financials 4.78 7.4 4.7 1.1 35.0 -184.2 -7.9% -8.8% HPHT SP Hutchison Port-U Industrials 0.68 8.0 22.9 0.7 NA 26.9 4.7% 0.0% KEP SP Keppel Corp Ltd Industrials 10.94 4.2 12.0 2.2 36.1 20.1 0.8% -2.2% ST SP Singapore Teleco Telco 3.49 5.1 14.2 2.4 76.2 29.3 -2.2% -4.6% 941 HK China Mobile Telco 76.65 4.4 NA NA 43.2 -51.4 -4.1% -4.7%

Source: Standard Chartered Data as of 20 January 2014

Technical Commentary

Below, we present the technical views for our Asia Top30 stocks. The stocks are given a rating of 1-5, with 1 being the most favourable technicals and 5 being the least favourable technicals on a 1-3 month basis. This is from a pure technical standpoint and may run contrary to the fundamental views we hold on the stocks within the portfolio, which are on a 12-month basis.

Asia Top30 Technical rating Name Ticker Sector Rating Name Ticker Sector Rating Geely Automobile 175 HK Discretionary 2 KasikornbankPcl KBANK TB Financials 2 IntimeDepartmen 1833 HK Discretionary 3 CIMB Group CIMB MK Financials 3 Sands China Ltd 1928 HK Discretionary 3 Ping An Insura-H 2318 HK Financials 4 Hengan Intl 1044 HK Staples 3 Wharf Hldg 4 HK Financials 3 WilmarInternati WIL SP Staples 4 Hutchison Port-U HPHT SP Industrials 4 China Petroleu-H 386 HK Energy 3 Bejjing Capital Airports 694 HK Industrials 3 China Shenhua-H 1088 HK Energy 4 Lenovo Group Ltd 992 HK Technology 3 AIA Group Ltd 1299 HK Financials 3 Samsung Electron 005930 KS Technology 3 Boc Hong Kong Ho 2388 HK Financials 3 Anhui Conch-H 914 HK Materials 3 CapitaCommercial Trust CCT SP Financials 2 Angang Steel 347 HK Materials 4 Capitamalls Asia CMA SP Financials 3 Jiangxi Copper 358 HK Materials 4 China Res Land 1109 HK Financials 2 China Mobile 941 HK Telco 3 Dbs Group Hldgs DBS SP Financials 2 Sina Corp SINA US Technology 3 Icici Bank Ltd ICICIBC IN Financials 2 NetEase NTES US Technology 3 Ind&CommBk-H 1398 HK Financials 4 Baidu ADR BIDU US Technology 3

Source: Standard Chartered Views as of 17 January 2014 On the following pages, we present the Technical charts for stocks which are most favourable.

This reflects the views of the Wealth Management Group 11

equity strategy – Asia Top30 | 20 January 2014

Technical Commentary (cont‟d)

 Geely Automobile Holdings Ltd (175 HK) – We believe the current share price is nearing a good support area. It has retraced back to its 200 WMA at 3.2, which lies just above the medium-term rising trend line running across 2.8.

Daily Chart

 DBS Group Holdings Ltd (DBS SP) – The stock continues to consolidate in a narrow range after witnessing a sizeable rally from the 2011 lows. We think the stock is set to break out of this range above 17.6. We remain positive on the near-term outlook and believe the uptrend is incomplete.

Weekly Chart

 China Resource Land (1109 HK) – The stock has declined to the lower end of a sideways trend channel, where it has usually found support at 18.55. Momentum indicators have dropped to oversold levels, which signal it could recover back to the 22 level (200 DMA). We believe the stock is likely to rebound from current levels.

Weekly Chart Source: Reuters, Standard Chartered

This reflects the views of the Wealth Management Group 12

equity strategy – Asia Top30 | 20 January 2014

Technical Commentary (cont‟d)

 Sina (SINA US) – The recent pullback is likely to be restricted to key Fibonacci support levels of 73.5 to 67.50, given the longer term positive outlook. Any decline to these support levels will serve as an attractive accumulation range, in our opinion

Daily Chart

 Baidu Inc (BIDU US) – The stock has witnessed remarkable momentum since 2009, which it continues to exhibit as it climbs to new highs. We believe it is unlikely to fall below 160 (the 50% retracement projection of the 2008- 2011 up-leg) from current levels. We expect it to trend higher.

Weekly Chart

 CapitaCommercial Trust (CCT SP) – We think the stock may have completed a corrective decline judging by the improvement in momentum indicators. It appears to have bottomed out at 1.35, a key support level. A crossover above 1.55 would confirm further strength in share price.

Weekly Chart Source: Reuters, Standard Chartered

This reflects the views of the Wealth Management Group 13

equity strategy – Asia Top30 | 20 January 2014

Technical Commentary (cont‟d)

 CLP Holdings (2 HK) – The recent breach below the support of 61.75 signals further deterioration in the trend, which is likely to see prices fall to the longer term trend line running along 57. The cyclical trend indicators have been sloping lower, in line with the recent weakness. We believe any rebound to 62.5 is likely to attract sellers once again.

Daily Chart

 Angang Steel (347 HK) – The stock failed to sustain the momentum after making a recent high of 6, but gave up significant gains as it turned around quite sharply. Last week‟s shift lower signalled a reversal in trend and may cut short the rally expected. Once 4.52 is breached, the crucial support at 3.60 would be exposed going forward in our view.

Weekly Chart Source: Reuters, Standard Chartered

This reflects the views of the Wealth Management Group 14

equity strategy – Asia Top30 | 20 January 2014

Asia Top30 – Performance & Valuations

Asia Top30 performance and valuations (local currency)

Consensus 12m 12m Fwd Div 1M% TR Ticker Name Country Sector Stock Price Rating Fwd P/E Fwd P/B Yield% Div Payout% Local

Source: Bloomberg, Standard Chartered Closed trades (local currency)

Closed Initiation Closed Local Ticker Name Country Sector Price Date Date P/L TR

1818 HK Zhaojin Mining-H China Materials 8.26 20130131 20130513 -29% 753 HK Air China Ltd-H China Industrials 5.8 20130131 20130612 -12% 823 HK Link Reit Hong Kong Financials 37.95 20130131 20130813 -4% 700 HK Tencent Holdings China Technology 409.2 20130131 20130923 51% SUN SP Suntec Reit Singapore Financials 1.675 20130131 20130923 1% BBRI IJ Bank Rakyat Indo Indonesia Financials 7850 20130514 20130923 -16% 1114 HK Brilliance China Hong Kong Discretionary 13.4 20130131 20131112 30% 2 HK Clp Hldgs Ltd Hong Kong Utilities 60.9 20130131 20140120 -4% KEP SP Keppel Corp Ltd Singapore Industrials 10.94 20130131 20140120 2%

Source: Bloomberg, Standard Chartered As of 20 January 2014

This reflects the views of the Wealth Management Group 15

equity strategy – Asia Top30 | 20 January 2014

Asia Top30 – Stock Rationales

Asia Top30 stock rationales (pg1) Company Ticker Sector Rationale

Only insurer with pan-Asia exposure and wholly owned insurance operations in China; AIA Group 1299 HK Financials Structural tailwinds from low insurance penetration in Asia; Steeper yield curve to lead to higher reinvestment rates, resulting in stronger EV and value of New Business Growth. One of the largest steel companies in China. Expect to be a long-term beneficiary from Angang Steel 347 HK Materials China's drive to consolidate industry's overcapacity and closing down of polluting, small mills. Product upgrades and fixed asset investment are key drivers for the company. Recovery of property and infrastructure investments is likely to drive demand outlook going forward. Anhui Conch 914 HK Materials Sector dynamics are favourable, given the government has restricted capacity addition and is looking to consolidate the industry. Anhui, being one of the largest cement producer should likely benefit. The leading search engine in China with c.80% share by revenue. It is well positioned to benefit from a transition to mobile internet, with a large traffic base to monetise. Recent Baidu ADR BIDU US Technology acquisition of 91 Wireless, the largest app distributor in China, further augments its mobile- related offerings. Beijing Capital Airport is the sole international airport in Beijing. It has two key segments: Aeronautical-related revenue (58% of total revenue in 2012) from fees levied on both passengers and airlines (landing fees) using its facilities, and non-aeronautical-related Beijing Capital Int Airport 694 HK Industrials revenue (42%). We expect the company to benefit from continued growth in passenger volume as well as Chinese airlines' plan to add capacity. Valuation is inexpensive against its own history. Increased use of CNY in cross-border trade settlement business is supportive of BOC HK BOC HK 2388 HK Financials CNY-related business. Loan growth outlook in Hong Kong is lacklustre. CapitaCommercial Trust is one of largest office REITs in Singapore. It derives 91% (as of September 2013) of its net property income from Grade A and prime offices. A gradual pickup CapitaCommercial Trust CCT SP Financials in prime office demand and limited new prime office supply in 2015 are supportive factors. Prime office rents bottomed in 2013 and started picking up on the back of better leasing activities. A stock for longer-term holding, as management continues to build scale in China. Almost half of its retail mall portfolio is in China, where operating leverage is expected to improve Capitamalls Asia CMA SP Financials after the initial investment over the past few years; potential capital recycling through the sales of its mature assets is a longer objective to improve ROE. First mover in the shift to higher speed LTE 4G. We expect China Mobile to benefit from rising data demand, given the strong growth in smartphone unit sales. Near-term risks from higher China Mobile 941 HK Telco subsidies for iphone and potential capex increase on its 4G network. We expect its attractive dividend yield of 4% to offer good valuation support. China Resources Land is one of the largest property developers in China. Its landbank is well diversified, with presence in more than 70 cities, with a focus on first and second tier cities. China Resources Land 1109 HK Financials Demand and supply appears well balanced into 2014. Expect undersupply in 1st/2nd tier cities to continue, which would benefit CRL. Significant policy risks likely limited, though noise surrounding the implementation of property tax could revive again. A more defensive proxy within the China coal space. Further downside in coal prices are China Shenhua 1088 HK Energy fairly limited, but upside is curbed by increased import supply as well as a continued ramp up in domestic capacity. Expected to benefit from higher loan growth in Malaysia due to the Economic Transformation Programme. A steeper yield curve should lead to better investment opportunities. CIMB is CIMB Group Holdings CIMB MK Financials one of the better managed banks in Malaysia. Recent capital raising is positive to boost capital adequacy. Potential risks from renewed IDR depreciation impacting profits from its Indonesia operations through Bank Niaga. The largest Singapore bank with the best deposit franchise among peers; most leveraged to DBS Group DBS SP Financials benefit from higher interest rates. Limited exposure to Southeast Asia countries relative to peers. We believe the trend of higher SUV penetration in China remains intact despite renewed concerns over car purchase restrictions to curb pollution. The SUV segment‟s growth in China Geely Holdings 175 HK Discretionary is expected to continue to outpace passenger vehicle unit growth in 2014. We believe Geely's new sedan models as well as SUV launches will drive better share performance this year. Valuation is cheap, though any delay to new model launches could impact growth. Continues to solidify its position as the market leader in hygiene products through new Hengan Intl 1044 HK Staples product launches. Better product mix and cost control should drive margin expansion over time. Also a small beneficiary of the abolishment of China's one-child policy. Largest port operator in the world with key assets in Shenzhen and Hong Kong. Recent concerns over dividend cuts from lower throughput growth may be misplaced. Valuation is Hutchison Ports Holdings HPHT SP Industrials attractive with dividend yield of c.8%, supported by strong cash flow generation from its mature portfolio of port holdings.

Source: Standard Chartered

This reflects the views of the Wealth Management Group 16

equity strategy – Asia Top30 | 20 January 2014

Asia Top30 – Stock Rationales (cont‟d)

Asia Top30 stock rationales (pg2) Company Ticker Sector Rationale Favour larger banks within the banking sector, as they would be better positioned to ICBC 'H' 1398 HK Financials withstand further tightening on the interbank markets and deposit liberalisation. Valuation is cheap with c.7% dividend, though significant upside is probably limited. Structural growth prospect from reform measures to boost loans and investment growth. ICICI Bank ICICIBC IN Financials Prefer ICICI Bank, given its relative strength in balance sheet compared to state-owned banks. Intime is a play on the shift to consumption in China. Performance has been lacklustre due to the ongoing anti-corruption campaign by policymakers. It has the best stores profile with more Intime Department Store Group 1833 HK Discretionary than half of its portfolio 2-5 years old, the best period to enjoy operating leverage. Its malls are well located in cities with low vacancy rates. We believe retail sales in China have likely bottomed, though any recovery is not visible yet. Jiangxi Copper is the largest copper producer and integrated copper mining and smelting company in China. It is one of the lowest cost producers in China and has a strong balance Jiangxi Copper 358 HK Materials sheet (less than 20% gearing), allowing it to better weather through severe industry conditions. Dominant player in SME banking in Thailand; Well leveraged to housing loans growth and Kasikornbank KBANK TB Financials corporate spending in Thailand. Macro unrest has impacted stock, and the valuation now looks more attractive. Lenovo is the largest notebook and consumer PC brand in the world. Near-term growth drivers to come from its smartphone segment, particularly in non-China EM sales, where Lenovo Group 992 HK Technology margins are higher. A bottoming in the PC market and any recovery would provide upside to Lenovo. Lenovo continues to be on the lookout for M&A targets. NetEase is one of the largest online game developers in China. Online games-related fees contributed to 87.8% of total revenue in 2012. The company's legacy games such as World of Warcraft, Westward Journey and Westward Journey II have been remarkably successful and NetEase NTES US Technology helped the company acquire a large user base, generating stable recurring free cash flows. Key drivers to come from growth of new PC and mobile games, given the relative maturity of its legacy games To benefit from reforms to China insurance. The expansion of healthcare insurance coverage, potential pricing liberalisation and further momentum in premium growth, are key catalysts for the stock to get re-rated. Ping An has the largest life insurance agency force in Ping An Insurance 'H' 2318 HK Financials China and would be well positioned in the policy drive to more protection-related products; steeper yield curve to lead to higher reinvestment rates, resulting in stronger EV and value of new business growth. Samsung is a global leader in the tech industry, with market leadership in most of its segments (memory, panels, handsets etc). Earnings momentum has been weak recently due Samsung Electronics 005930 KS Technology to a slowdown in smartphone sales. While there are limited fresh significant catalysts to drive growth, we believe Samsung's earnings will likely remain resilient, on the back of its well- diversified portfolio of products. Current valuation is very cheap. Proxy to mass gaming in Macau. To benefit from a lack of casino supply in Macau for the next Sands China 1928 HK Discretionary two years. Upside from revenue growth and margins as utilisation improves. Sina Corp is one of the best known online companies in China. Its Sina.com (online advertising) portal focuses on news and media content; Weibo is a microblogging platform, Sina Corp ADR SINA US Technology sometimes known as the Twitter of China, which has over 400mn users. Rising monetisation of Weibo (China‟s no. 1 micro blog) to drive profit growth. Alliance with ecommence platform Alibaba also offers significant upside. A key beneficiary of fuel price reform to a more market-based regime. Refining margins Sinopec 386 HK Energy expected to improve on the back of improving demand; Shale gas development would be a longer-term positive. Wharf Holding is a diversified property developer in Hong Kong. Its exposure is mostly within Hong Kong and China, with both retail, residential and commercial assets. We like it for its Wharf Holding 4 HK Financials over one-third exposure to HK prime retail, which we expect to do well from increasing tourist arrivals from China. Asia‟s largest integrated agriculture business. Valuation is inexpensive. Near-term drivers from margin recovery in the grains and seeds segment. Mandates to increase biodiesel- Wilmar International WIL SP Staples diesel blending in parts of Asia are positive for Wilmar, though any delay in the implementation of these mandates may post downside risks.

Source: Standard Chartered

This reflects the views of the Wealth Management Group 17

equity strategy – Asia Top30 | 20 January 2014

Sector and Country – Performance and Valuations

MSCI Asia ex-Japan Sectors (USD)

Div Div Name Last Price 12m Fwd P/E 12m Fwd P/B Yield% Payout% 1M TR USD YTD TR USD

Consumer Staples 412.3 20.1 2.6 1.9 46.1 -0.7% -2.2% Consumer Discretionary 593.9 11.3 1.8 1.8 20.8 0.5% -0.8% Energy 627.5 8.7 1.1 3.8 35.9 -2.9% -3.9% Financials 286.6 9.1 1.0 3.1 27.1 -2.0% -2.8% Healthcare 618.4 22.2 3.0 0.8 27.0 6.9% 5.0% Industrials 169.6 13.3 1.2 2.3 39.6 -0.7% -3.2% Information Technology 328.3 11.1 1.9 1.5 18.1 1.1% -0.1% Materials 317.8 12.6 1.2 2.0 34.7 -2.2% -3.6% Telecommunication Svs 134.4 13.2 1.8 4.3 61.1 -2.3% -2.9% Utilities 212.1 12.9 1.4 2.5 45.6 0.9% -1.5% Index 540.1 10.9 1.4 2.5 29.0 -0.8% -2.0%

Source: Bloomberg, Standard Chartered

MSCI Asia ex-Japan Countries (local currency)

Div Div Name Last Price 12m Fwd P/E 12m Fwd P/B Yield% Payout% 1M TR USD YTD TR USD

China 61.2 8.6 1.3 3.2 30.3 -2.8% -3.2% South Korea 562.7 8.6 1.0 1.1 15.8 -3.5% -5.2% Thailand 462.0 11.0 1.8 3.4 34.9 -5.9% 0.4% Singapore 1669.2 13.4 1.3 3.6 47.5 -0.2% -3.1% Hong Kong 12351.9 15.0 1.3 2.6 29.3 2.0% 0.8% Indonesia 5147.8 13.2 2.7 2.6 41.1 7.0% 6.1% India 815.5 13.9 2.2 1.4 23.7 3.0% 0.2% Philippines 1013.7 17.3 2.5 2.4 34.7 -1.1% 0.2% Malaysia 647.8 15.3 2.0 3.3 48.2 -3.1% -3.3% Taiwan 302.4 14.5 1.5 2.8 64.5 1.3% -1.1% Index 540.1 10.9 1.4 2.5 29.0 -0.8% -2.0%

Source: Standard Chartered

Asia ex-Japan Country Preferences

Country View Rationale

Hong Kong N Valuation is fair. We expect property/banks may likely be negatively impacted from higher rates and credit control in China China N Mixed outlook, as policymakers are more focused on controlling credit than stimulating growth South Korea OW Cheap valuations. A DM and China recovery proxy Thailand N Valuations look increasingly attractive, but continued political unrest remains a key risk Singapore N Lack of domestic drivers, but market still offers attractive dividend yield India N Monetary policy likely to stay tight in the near term, with potential impact on domestic growth Indonesia N Rupiah volatility a key. Upcoming elections could pose uncertainty to the market Taiwan N Outlook is dependent on end demand of PCs as well as a pickup in US corporate spending Malaysia OW A more defensive market within Asia ex-Japan. Recent initiatives to reform and cut back on subsidies are positive. Ringgit weakness a potential risk

Source: Standard Chartered As of 17 January 2014

This reflects the views of the Wealth Management Group 18

equity strategy – Asia Top30 | 20 January 2014

Valuations and Earnings revisions

12m Forward P/E – MSCI India Earnings Revisions Ratio – MSCI India

25 2 10 1 8 6 0 20 4 -1 2

15 -2 0 % -3 -2 -4 Ratio -4 10 -6 12m P/Ex 12m Forward -5 -8 5 -6 -10 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI INDIA 14.072 P/Ex Median +- 1SD MSCI INDIA 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

12m Forward P/E – MSCI Singapore Earnings Revisions Ratio – MSCI Singapore

25 8 10 23 6 5 21 4 19 2 0 17 0

15 % -5

-2 Ratio 13 -4 11 -10

12m P/Ex 12m Forward -6 9 7 -8 -15 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI SINGAPORE 13.354 P/Ex Median +- 1SD MSCI SINGAPORE 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

12m Forward P/E – MSCI Thailand Earnings Revisions Ratio – MSCI Thailand

19 5 10 4 17 3 5 15 2 1 0 13 0

11 % -1 -5 Ratio 9 -2 -3 -10 12m P/Ex 12m Forward 7 -4 5 -5 -15 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI THAILAND 10.654 P/Ex Median +- 1SD MSCI THAILAND 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

12m Forward P/E – Indonesia Earnings Revisions Ratio – Indonesia

40 6 10 35 4 5 30 2 25 0 0

20 %

-5 Ratio 15 -2 10 -4 -10 12m P/Ex 12m Forward 5 0 -6 -15 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI INDONESIA 12.319 P/Ex Median +- 1SD MSCI INDONESIA 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

Source: Datatream, Standard Chartered

This reflects the views of the Wealth Management Group 19

equity strategy – Asia Top30 | 20 January 2014

Valuations and Earnings revisions (cont‟d)

12m Forward P/E – MSCI China Earnings Revisions Ratio – MSCI China

35 4 10 2 30 5 0 25 -2 0 20 % -4 -5 15 -6 Ratio -10

12m P/Ex 12m Forward 10 -8

5 -10 -15 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI CHINA 8.537 P/Ex Median +- 1SD MSCI CHINA 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

12m Forward P/E – MSCI Hong Kong Earnings Revisions Ratio – MSCI Hong Kong

25 10 10 8 8 6 6 20 4 4 2 2 0 15 0 -2 % -2

-4 Ratio 10 -4 -6 12m P/Ex 12m Forward -6 -8 5 -8 -10 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI HONGKONG 14.68 P/Ex Median +- 1SD MSCI HONGKONG 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

12m Forward P/E – MSCI Taiwan Earnings Revisions Ratio – MSCI Taiwan

40 20 15 35 15 10 10 30 5 5 25 0

0 % 20 -5 -5 Ratio 15 -10 -10

12m P/Ex 12m Forward 10 -15 -15 5 -20 -20 Mar-92 Mar-95 Mar-98 Mar-01 Mar-04 Mar-07 Mar-10 Mar-13 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI TAIWAN 14.158 P/Ex Median +- 1SD MSCI TAIWAN 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

12m Forward P/E – South Korea Earnings Revisions Ratio – South Korea

20 10 15 18 8 10 6 5 16 4 0 14 2 -5 12 0 -10

10 % -2 -15 Ratio 8 -4 -20

12m P/Ex 12m Forward 6 -6 -25 4 -8 -30 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 MSCI KOREA 8.586 P/Ex Median +- 1SD MSCI KOREA 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

Source: Datastream, Standard Chartered

This reflects the views of the Wealth Management Group 20

equity strategy – Asia Top30 | 20 January 2014

Definitions

YTD: Year to date. ITD: Inception to date. PT: Price Targets (SCB uses an investment horizon of 12 months for its price targets). RSI: Relative Strength Index. Relative Volatility index: A measure of the standard deviation of the daily price change. MA: Moving Average. Basket average performance: Basket average is the un-weighted performance of the shortlisted stocks Consensus rating: A rating provided by Bloomberg which reflects the aggregation of all brokers rating for a particular stock. 1 is a Sell, while 5 is a Strong Buy. P/E: Price/Earnings ratio. The Trailing P/E refers to 12m of trailing earnings, while the forward refers to 12m forecast earnings, against current price. P/B: Price/Book ratio. The book value refers to total shareholder‟s equity, while the forward refers to 12m forecast book value, against current price. EV/EBITDA: Enterprise value/Earnings Before Interest, Tax and Depreciation Amortisation. Earnings revision ratio: Net earnings revision (upgrades - downgrades) / Total earnings revision (upgrades + downgrades) ROE and ROA: Return on Equity (book value) and Return on Assets. Dividend Yield: Dividend paid/ current price. Net Interest Margin (NIM): Is a measure of difference between the net interest income generated from lending by financial institutions and the amount of interest paid out to their lenders (for example deposits) Beta: Correlation between a stock and the market. Is based on two years of weekly data, but modified by the assumption that a security's beta moves toward the market average over time.

Total return: Capital appreciation + dividend income received. Short term: Time horizon of 1-4 weeks. Medium term: Time horizon of 3-6 months. Strategy Team: Steve Brice Chief Investment Strategist

Rob Aspin, CFA Head, Equity Investment Strategy

Audrey Goh, CFA Investment Strategist

Victor Teo, CFA Investment Strategist

Manpreet Gill Head, FICC Investment Strategy

Aditya Monappa, CFA Head, Asset Allocation & Portfolio Construction

This reflects the views of the Wealth Management Group 21

equity strategy – Asia Top30 | 20 January 2014

List of Equity Market Commentary Publications

Equity Flash 1. Quick update on any major news flow or event that impacts equity markets 2. Provides notification of trade closure or switch (Release: Ad hoc)

Equity Strategy Top 30s Thematic and Opportunistic investment ideas globally and in Asia as well as country and sector views (Release: Monthly)

Equity Trade Note 1. Trade ideas that have a short to medium term duration 2. Based on fundamental developments and technical analysis (Release: Ad hoc)

Equity Strategy: India Top Picks

Top Equity picks as well as thematic and opportunistic investment ideas in India. (Release: Monthly)

This reflects the views of the Wealth Management Group 22

equity strategy – Asia Top30 | 20 January 2014

Important Information

This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within the Standard Chartered Bank, particularly those of the Global Research function. Standard Chartered Bank is incorporated in England with limited liability by Royal Charter 1853 Reference Number ZC18. The Principal Office of the Company is situated in England at 1 Basinghall Avenue, London, EC2V 5DD Standard Chartered Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. In Dubai International Financial Centre (“DIFC”), the attached material is circulated by Standard Chartered Bank DIFC on behalf of the product and/or Issuer. Standard Chartered Bank DIFC is regulated by the Dubai Financial Services Authority (DFSA) and is authorised to provide financial products and services to persons who meet the qualifying criteria of a Professional Client under the DFSA rules. The protection and compensation rights that may generally be available to retail customers in the DIFC or other jurisdictions will not be afforded to Professional Clients in the DIFC. Banking activities may be carried out internationally by different Standard Chartered Bank branches, subsidiaries and affiliates (collectively “SCB”) according to local regulatory requirements. With respect to any jurisdiction in which there is a SCB entity, this document is distributed in such jurisdiction by, and is attributable to, such local SCB entity. Recipients in any jurisdiction should contact the local SCB entity in relation to any matters arising from, or in connection with, this document. Not all products and services are provided by all SCB entities. This document is being distributed for general information only and it does not constitute an offer, recommendation, solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This document is for general evaluation only, it does not take into account the specific investment objectives, financial situation, particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons. Opinions, projections and estimates are solely those of SCB at the date of this document and subject to change without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance. Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be). This document has not and will not be registered as a prospectus in any jurisdiction and it is not authorised by any regulatory authority under any regulations. SCB makes no representation or warranty of any kind, express, implied or statutory regarding, but not limited to, the accuracy of this document or the completeness of any information contained or referred to in this document. This document is distributed on the express understanding that, whilst the information in it is believed to be reliable, it has not been independently verified by us. SCB accepts no liability and will not be liable for any loss or damage arising directly or indirectly (including special, incidental or consequential loss or damage) from your use of this document, howsoever arising, and including any loss, damage or expense arising from, but not limited to, any defect, error, imperfection, fault, mistake or inaccuracy with this document, its contents or associated services, or due to any unavailability of the document or any part thereof or any contents. SCB, and/or a connected company, may at any time, to the extent permitted by applicable law and/or regulation, be long or short any securities, currencies or financial instruments referred to on this document or have a material interest in any such securities or related investment, or may be the only market maker in relation to such investments, or provide, or have provided advice, investment banking or other services, to issuers of such investments. Accordingly, SCB, its affiliates and/or subsidiaries may have a conflict of interest that could affect the objectivity of this document. This document must not be forwarded or otherwise made available to any other person without the express written consent of SCB. Copyright: Standard Chartered Bank 2014. Copyright in all materials, text, articles and information contained herein is the property of, and may only be reproduced with permission of an authorised signatory of, Standard Chartered Bank. Copyright in materials created by third parties and the rights under copyright of such parties are hereby acknowledged. Copyright in all other materials not belonging to third parties and copyright in these materials as a compilation vests and shall remain at all times copyright of Standard Chartered Bank and should not be reproduced or used except for business purposes on behalf of Standard Chartered Bank or save with the express prior written consent of an authorised signatory of Standard Chartered Bank. All rights reserved. © Standard Chartered Bank 2014.

THIS IS NOT A RESEARCH REPORT AND HAS NOT BEEN PRODUCED BY A RESEARCH UNIT.