February 19, 2013

KOREA

Morning

Economy & Strategy Update Major Indices Close Chg Chg (%) Fixed Income Weekly KOSPI 1,981.91 0.73 0.04 KTB market should soon heed economic forces KOSPI 200 261.63 0.02 0.01 KOSDAQ 518.52 3.94 0.77

Turnover ('000 shares, Wbn) Volume Value KOSPI 420,692 2,874 KOSPI 200 56,463 2,123 KOSDAQ 477,324 1,904

Market Cap (Wbn) Value KOSPI 1,147,771 KOSDAQ 114,799

KOSPI Turnover (Wbn) Buy Sell Net Foreign 764 747 17 Institutional 650 607 43 Retail 1,420 1,480 -60

KOSDAQ Turnover (Wbn) Buy Sell Net Foreign 79 64 15 Institutional 78 71 6 Retail 1,735 1,754 -19

Program Buy / Sell (Wbn) Buy Sell Net KOSPI 484 391 93 KOSDAQ 15 13 1

Advances & Declines Advances Declines Unchanged KOSPI 385 413 102 KOSDAQ 541 375 83

KOSPI Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value KODEX LEVERAGE 12,670 -30 271 Electronics 1,490,000 -8,000 211 KODEX INVERSE 7,465 5 101 Hyundai Motor 209,500 -4,000 96 KODEX 200 26,435 -10 86

KOSDAQ Top 5 Most Active Stocks by Value (Wbn) Price (W) Chg (W) Value Agabang 9,800 880 66 EG 46,200 4,700 46 AHNLAB 62,600 1,700 43 Openbase 2,655 105 41 BITComputer 5,850 250 40 Note: As of February 18, 2013

This document is a summary of a report prepared by Daewoo Securities Co., Ltd. („Daewoo‰) and published on our website. Please review the compliance notices contained in the original report. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified. Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information and opinions contained in this document. Daewoo accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed or published in whole or in part for any purpose.

February 18, 2013

Fixed Income Weekly

KTB market should soon heed economic forces Daewoo Securities Co., Ltd. Yeo-sam Yoon Senior Fixed Income Strategist “Abenomics” will likely be on pause +822-768-4022 [email protected]

Throughout last week’s G7 and G20 meetings, participating nations appeared to agree that competitive currency depreciation was not a good thing for global trade. As such, it should be easy to conclude that global tensions over F/X rates—more specifically, worries over the weakening of the yen—are likely to ease, at least in the

short term. Thus, it is logical to expect that economic fundamentals, notably those of the US, Europe, and China, will play a bigger role in determining the direction of the

KTB market down the line.

Time to be cautious

It is ample liquidity that is currently keeping KTB yields low. But domestic institutions cannot simply stick with their wait-and-see stance forever, while expectations of a rate cut still linger, and foreign investors keep buying Korean debt in both the spot and futures markets. It is true that the outlook for the domestic economy still lacks clarity, especially as the new government is scheduled to kick off later this month. But one thing seems to be clear: the outlook for the global economy should continue to improve, which will in turn improve the outlook for KoreaÊs economy. It is time to be cautious about building long positions.

In January, the Bank of Korea (BoK) lowered its 2013 GDP growth forecast from 3.2% to 2.8%. But the revised growth rate is still higher than the 2.0% figure recorded in 2012. Moreover, even adjusting for the low base of comparison (the Lunar New Year holidays came in January last year, vs. February this year), KoreaÊs capital goods imports surged in January, raising expectations of a strong recovery in capital expenditures this year. Also, inventory shipments and the economic sentiment indicator (ESI) are currently trending upward, raising hopes that KoreaÊs economy may indeed have already turned the corner.

If 10Y UST yield breaks through 1.8% or KOSPI falls below 1,900p, rate cut might occur in March

(%) (p) 2.4 10Y UST yield (L) 2200 KOSPI (R) 2.2 2100

2.0 2000 1.8 1900 1.6

1800 1.4 If financial market turbulence (e.g., falls in UST yield or KOSPI) occur, the BoK might cut the base rate; But the likelihood seems small 1.2 1700 1/12 3/12 5/12 7/12 9/12 11/12 1/13 3/13

Source: KOFIA, Bloomberg

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U.S.

Key Universe Valuations February 19, 2013

※All data as of close February 18, 2013, unless otherwise noted.

12F Earnings growth Mkt Cap Price P/E (x) P/B (x) ROE (%) Ticker Company Div Yield OP EPS (Wbn) (W) (%) 12F 13F 12F 13F 12F 13F 12F 13F 12F 13F 005930 219,476 1,490,000 0.5 81.8 22.4 75.0 20.4 11.1 9.0 2.1 1.7 21.6 21.2 005380 Hyundai Motor 46,148 209,500 0.9 7.4 -7.8 11.8 -6.4 7.3 7.5 1.4 1.2 20.8 16.3 005490 POSCO 31,823 365,000 2.7 -36.2 41.3 -21.6 25.9 12.2 10.1 0.7 0.7 6.5 7.8 012330 28,911 297,000 0.7 8.6 9.6 17.7 1.1 7.9 8.0 1.8 1.5 23.2 19.4 032830 Samsung Life 21,500 107,500 2.0 33.2 0.0 23.0 4.2 18.4 17.7 1.1 1.0 6.2 6.0 000270 Motors 21,282 52,500 1.2 2.3 -16.2 11.5 -11.0 5.9 6.2 1.5 1.1 25.5 18.6 051910 LG Chem 20,279 306,000 1.2 -30.8 25.2 -29.0 19.7 16.1 12.5 2.3 1.9 15.0 15.9 055550 19,253 40,600 2.0 -18.2 -1.5 -14.1 2.3 8.1 8.3 0.7 0.7 9.2 8.7 000660 SK Hynix 17,979 25,900 - - - - - 17.0 2.0 1.8 - 10.2 096770 SK Innovation 16,366 177,000 1.7 -38.5 52.8 -62.8 58.3 13.8 8.9 1.1 1.1 7.9 11.5 009540 16,302 214,500 -56.4 20.9 -63.3 55.1 19.6 11.2 1.2 1.0 5.7 8.4 105560 KB Financial Group 14,430 37,350 1.6 -19.5 3.6 -11.8 3.5 7.2 6.8 0.6 0.5 8.5 8.2 066570 LG Electronics 12,290 75,100 0.7 301.4 3.3 - 848.5 199.3 21.4 1.2 1.1 0.5 5.0 023530 Lotte Shopping 12,030 382,000 0.4 -15.3 11.7 8.4 12.6 10.8 9.8 1.1 1.0 7.0 7.4 035420 NHN 11,815 245,500 0.3 13.2 26.0 22.1 16.8 19.9 18.4 3.9 3.5 29.8 27.7 010950 S-Oil 11,044 98,100 3.1 -50.1 97.1 -52.1 121.6 21.2 9.0 2.3 1.8 10.8 21.6 003550 LG Corp. 10,871 63,000 1.5 13.8 8.8 22.5 9.1 9.6 8.5 1.0 0.9 10.9 10.9 033780 KT&G 10,832 78,900 4.0 -8.8 4.8 -9.6 5.8 15.0 13.9 2.1 1.9 15.0 14.9 034220 LG Display 10,448 29,200 1.0 - 63.8 - 244.1 46.7 12.8 1.1 1.0 2.3 7.8 000810 Samsung F&M 10,446 220,500 2.3 12.6 20.2 17.0 19.2 12.2 10.2 1.3 1.1 11.1 11.7 086790 9,758 40,150 2.9 49.3 -19.3 66.0 -32.8 4.4 7.5 0.9 0.6 16.1 9.4 051900 LG Household & Health Care 9,543 611,000 0.5 0.5 35.0 14.8 24.7 38.3 28.6 35.9 15.4 27.2 27.2 011170 Lotte Chemical 8,843 258,000 0.8 -68.8 78.1 -60.4 63.5 20.2 13.0 1.5 1.4 6.9 11.2 010140 Samsung Heavy Industries 8,831 38,250 2.5 0.7 -6.5 15.3 11.2 9.6 1.5 1.3 16.0 15.9 003600 SK Holdings 8,289 176,500 1.1 -28.1 20.1 -35.3 27.3 7.9 6.1 2.1 1.4 9.7 11.2 086280 7,631 203,500 0.9 26.9 11.7 34.4 6.9 20.5 17.6 4.7 3.6 25.2 21.9 004020 7,346 86,100 0.6 -32.1 40.1 6.6 18.6 9.4 7.8 0.8 0.7 8.4 9.1 010130 Korea Zinc 7,256 384,500 0.6 -18.8 24.0 -19.1 30.3 13.4 9.8 2.0 1.6 15.6 17.5 009150 Samsung Electro-Mechanics 6,961 93,200 0.8 89.6 14.3 26.1 18.0 17.5 13.9 2.1 1.7 11.8 12.4 035250 6,846 32,000 2.6 -19.2 23.7 -22.2 28.6 20.4 17.4 2.4 2.4 13.1 15.6 024110 6,825 12,500 3.4 -11.0 -15.4 -13.0 -12.3 6.0 7.2 0.5 0.5 9.3 7.6 088350 Hanwha Life 6,505 7,490 3.3 - - 11.5 3.5 10.9 10.6 0.9 0.9 8.8 8.6 139480 Emart 6,467 232,000 0.3 56.3 4.1 72.2 3.3 12.6 11.9 1.1 1.0 9.2 8.7 078930 GS 6,383 68,700 1.7 -21.8 67.6 -34.4 64.6 13.4 7.8 1.2 1.0 8.2 12.4 006400 Samsung SDI 6,378 140,000 1.3 720.9 -87.1 359.7 -57.1 4.8 10.5 1.0 0.8 21.8 8.3 001800 Orion 6,284 1,053,000 0.3 16.4 26.5 37.3 44.0 48.1 32.0 7.5 6.1 14.7 18.4 090430 Amorepacific 5,910 1,011,000 0.5 7.3 14.4 -2.4 16.1 26.3 18.8 3.7 2.7 14.1 14.4 161390 5,500 44,400 1.0 211.0 221.5 26.7 7.9 1.9 1.5 6.9 20.6 068270 5,480 27,300 17.2 36.3 1.3 30.2 26.3 21.2 6.5 5.7 17.6 19.2 034730 SK C&C 5,250 105,000 1.2 15.9 13.7 -8.2 30.6 12.8 10.0 1.8 1.5 16.1 17.3 004940 Bank 4,811 7,460 2.3 -51.5 -4.8 -55.1 0.0 6.6 6.5 - - - - 097950 CJ CheilJedang 4,750 363,000 0.6 38.2 13.3 5.7 49.7 15.9 2.8 11.0 14.3 001300 4,672 89,100 0.8 23.8 24.1 -21.6 58.8 23.7 14.1 1.7 1.4 6.3 9.4 034020 Doosan Heavy I&C 4,499 42,500 3.3 0.8 -88.1 1307.8 146.4 9.8 1.3 1.2 0.7 9.6 016360 Samsung Securities 4,296 56,200 1.4 9.6 19.4 24.0 18.6 16.7 14.1 1.2 1.1 6.9 7.7 010060 OCI 4,090 171,500 2.0 -77.6 31.9 -86.7 24.8 38.1 31.7 1.2 1.3 3.1 3.9 011210 Hyundai Wia 4,040 157,000 0.9 67.6 3.5 72.6 8.4 10.6 8.9 2.6 1.9 25.5 22.3 011780 3,717 122,000 1.5 -72.4 89.1 -71.7 135.9 30.5 12.1 2.8 2.2 9.6 20.2 069960 Hyundai Department Store 3,464 148,000 0.5 -2.9 4.1 1.1 6.0 10.5 9.2 1.3 1.1 13.6 12.7 005830 Dongbu Insurance 3,285 46,400 3.1 19.7 11.9 21.4 13.0 6.7 5.9 1.2 1.0 19.6 18.3 Source: KDB Daewoo Research

Market Data February 19, 2013

※All data as of close February 18, 2013, unless otherwise noted.

Other Major Indices Economic Indicators Close Net Chg 1D (%) YTD (%) Close 1D ago 1M ago 1Y ago MSCI Korea* 422.79 2.61 0.62 -1.50 USD/KRW 1,079.00 1,084.70 1,058.20 1,127.80 KOSPI 1,981.91 0.73 0.04 -2.42 JPY100/KRW 1,149.95 1,167.73 1,174.93 1,429.68 KOSDAQ 518.52 3.94 0.77 3.37 EUR/KRW 1,440.52 1,449.16 1,415.50 1,480.91 Dow Jones* 13,981.76 8.37 0.06 4.24 3Y Treasury 2.71 2.72 2.75 3.45 S&P 500* 1,519.79 -1.59 -0.10 3.92 3Y Corporate 3.06 3.07 3.20 4.25 NASDAQ* 3,192.03 -6.63 -0.21 2.56 DDR2 1Gb* 1.18 1.18 1.22 1.34 Philadelphia Semicon* 428.50 -2.58 -0.60 7.20 NAND 16Gb* 1.93 1.93 1.90 2.59 FTSE 100* 6,328.26 0.90 0.01 4.99 Oil (Dubai)* 112.58 113.66 107.55 116.22 Nikkei 225 11,407.87 234.04 2.09 6.73 Gold* 1,608.80 1,634.70 1,683.90 1,726.30 Hang Seng* 23,444.56 31.31 0.13 0.57 Customer deposits (Wbn)* 16,880 16,581 18,177 20,631 Taiwan (Weighted) 7,943.53 36.88 0.47 2.11 Equity type BC (Wbn)(Feb. 15) 92,970 93,012 94,016 101,605 Note: * as of February 15, 2013 Source: KSDA, FnGuide, DRAMeXchange, MSCI

KOSPI Top 10 Foreign Net Buy / Net Sell (Wbn) KOSPI Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Orion 38.04 KB Financial Group 20.29 Industrial Bank of Korea 15.70 Orion 21.32 Hynix 15.71 Samsung Electronics 17.38 LG Electronics 12.31 Hyundai Motor 14.81 SK Telecom 13.20 Kia Motors 11.25 Hyundai Heavy Industries 11.81 SK Telecom 12.47 HANKOOK TIRE 9.95 KEPCO 9.61 KODEX INVERSE 10.43 LG Display 9.34 LG Chem 7.04 Hyundai Motor 8.75 KB Financial Group 9.62 Hyundai Hysco 9.12 Samsung Electronics (P) 6.48 KODEX 200 8.26 Samsung Electronics 9.51 KODEX LEVERAGE 7.30 BS Financial Group 5.91 SK Energy 7.50 SK Energy 7.28 Samsung Electronics (P) 6.87 Hyundai Mobis 5.74 Industrial Bank of Korea 7.24 LG Uplus 7.23 KODEX FTSE CHINA A50 6.25 Hana Financial Group 5.65 KT 6.85 Samsung Corp. 6.61 Kia Motors 5.75 Samsung Heavy Ind. 5.21 Cheil Industries 4.46 KT 6.55 Hyundai Mobis 5.71 Source: KSDA, FnGuide

KOSDAQ Top 10 Foreign Net Buy / Net Sell (Wbn) KOSDAQ Top 10 Institutional Net Buy / Net Sell (Wbn) Net Buy Net Sell Net Buy Net Sell Celltrion 3.33 Daum Communications 2.48 Semiconductor 3.00 CJ E&M 3.52 OSSTEM IMPLANT 2.22 Silicon Works Co., Ltd. 1.19 SMC 2.49 OSSTEM IMPLANT 2.80 CJ E&M 2.15 Modacom 1.13 Paradise 2.49 Gamevil 2.60 DUKSAN HI-METAL 1.39 Danal 0.91 Korea SPAC No.1 2.43 Com2us 1.84 Interflex 1.33 NEOWIZ Games 0.88 Daum Communications 2.06 SK Broadband 1.17 Everdigm 1.33 KOLEN 0.81 Wemade 1.68 INICIS 1.12 SFA 1.30 Digital Innovation Display 0.64 INFRAWARE 1.38 Bioland 1.07 Maeil Dairy Industry 1.27 Gamevil 0.63 NEPES 1.20 Interflex 1.01 Amotech 1.24 CJ O SHOPPING 0.62 DUKSAN HI-METAL 1.11 GemVax 0.91 Eugene Technology 1.10 Innochips Technology 0.57 KH Vatec 0.86 Macrogen 0.89 Source: KSDA, FnGuide

KOSPI Top 10 by Market Cap (Wbn) KOSDAQ Top 10 by Market Cap (Wbn) Close (W) Chg (W) Mkt Cap Close (W) Chg (W) Mkt Cap Samsung Electronics 1,490,000 -8,000 219,476 Celltrion 27,300 300 4,772 Hyundai Motor 209,500 -4,000 46,148 Paradise 19,300 0 1,755 POSCO 365,000 1,000 31,823 CJ O SHOPPING 278,000 -1,700 1,725 Hyundai Mobis 297,000 -3,000 28,911 Seoul Semiconductor 27,850 250 1,624 107,500 0 21,500 SK Broadband 4,700 -75 1,391 Kia Motors 52,500 -1,300 21,282 Daum Communications 98,500 -600 1,332 Samsung Electronics (P) 897,000 -11,000 20,482 CJ E&M 34,150 900 1,296 LG Chem 306,000 2,000 20,279 GS Home Shopping 181,900 4,200 1,194 KEPCO 31,300 500 20,093 Dongsuh 18,650 50 1,104 Shinhan Financial Group 40,600 500 19,253 SEEGENE 64,200 200 1,049 Source: Korea Exchange