ssell and Nikkei on a tear higher. This is not how we were positioned so we need to ask the question of whether and what we need to change. Table 2: MSCI EM Asia at a 2PE point discount to other equity markets Chart 27: Japan relatively cheap at 14.1x fwd earnings Ase iM MSCIJapan MSCIEurope — MSCIUS 50 f

3% 12.2% Shanghai SE 2117 42% Utilities 47% 8.2% -20.4% 5.2% *Levels/returns as of Nov 08, 2012 Overall 15.6% 13.2% 4.4% 12.2% Local currency except MSCI EM $ Source: J.P. Morgan HOUSE_OVERSIGHT_026576 --- PAGE BREAK --- Global Asset Allocation The J.P. Morgan View 09 November 2012 Jan Loeys (1-212)

such as Mexico and Malaysia. See "Consensus Asset Allocation", Adrian Mowat and team, Mar 26th. Open overweights in Mexican and Malaysia equities vs MSCI EM. • For long-term investors we just released our quarterly publication "Trade opportunities for long term investors" Mar 27. We monetize risk premia i

such as Mexico and Malaysia. See "Consensus Asset Allocation", Adrian Mowat and team, Mar 26th. Open overweights in Mexican and Malaysia equities vs MSCI EM. • For long-term investors we just released our quarterly publication "Trade opportunities for long term investors" Mar 27. We monetize risk premia i

Taiwan Inds Otani South Russia Memo Thatand Malays., Saud. OaMn A Alma rabia SOW* Guam** &Mk FTSE. BAMM000,1 Atom LP FTSE inclusion done; MSCI EM decision to be announced in June Saudi Arabia is also nominated for inclusion in the widely tracked MSCI EM Index, with a decision on inclusion to

uted response; Next China Potential catalyst - Xi's visit to Hong Kong Date: June 21.2017 at 10:05:58AM EDT To: Richard Kahn Saudi Arabia added to MSCI EM watchlist This should kick off a 2 year review and implementation process with MSCI. International institutions can no longer ignore this market as

ur cmngbbal growth forecast. Consensus YTD 2012 and expected 2013 returns by asset class %. U Is unItedged into USD. H means hedged 2013E 2012 MSCI EM 15.0 17.4 EM Local Fl (U) 10.0 8.9 EMFX 10.0 7.5 GSCI 10.0 0.1 MSCI World 10.0 16.0 US HY 7.5 16.2 CEMBI 7.0 16.7 EMBIG 7.0 18.5 JACI

vely long in EM local markets, favouring Poland, South Africa and Brazil. • Equities — We exit our OWs in EM vs. DM, our overweight in MSCI BRICs vs MSCI EM and Cyclical vs. Defensive sectors globally. • Credit — Stay with a range of credit overweights: Long US, EM and Europe. • Foreign exchange — Carr

han EM. • Are depressed valuations a good reason to buy EM equities? We do not think so, either. It is true that the PE gap between MSCI World and MSCI EM indices has been widening for two years now to well above historical averages, 3.8 pts currently vs. a historical average of 2.7. This 3.8pt gap is

/CNY 6.9 Market Index End-June 2017F S&P 500 2100 DAX 10300 Eurostoxx 50 2900 Stoxx 600 330 MSCI Japan 800 SMI 8150 FTSE 100 6200 MSCI EM 830 MSCI Asia ex Japan 500 MSCI Latam 2100 End-June 2017F Gold spot 1390 WTI spot 55 F = Forecasts. Please soo risk warnings for more info

44,04 South 344s:a 1014440 Thadan4 Pda14.44 Saudi 004% ACTIca 444%. 121% Scats Deatikahe Sat ASE abbnladepfrarlte LP FTSE inclusion done; MSCI EM decision to be announced in June Saudi Arabia is also nominated for inclusion in the widely tracked MSCI EM Index, with a decision on inclusion to

for absolute returns has changed very much since we made a tentative forecast of a negative return of 10.15% for 2013. At the time of writing, the MSCI EM total return is only -2%, so whilst we may have got the direction right, we were too pessimistic, mainly because Chinese equities have recorded a s

% 4.0% 5.0% 6.0% 7.0% 4Q03 1Q05 2006 3Q07 4Q08 1010 2Q11 3Q12 4013 1Q15 Average EM Growth Premium (LHS) (AVG) Average EM Growth Premium (LHS) MSCI EM (local) - S&P 500 Index (RHS) — Emerging market equities have benefitted from superior economic growth over the developed markets in recent years.

an EM. * Are depressed valuations a good reason =o buy EM equities? We do not think so, either. It is true that the PE gap between=MSCI World and MSCI EM indices has been widening for two years now to well=above historical averages, 3.8 pts currently vs. a historical average of 2=7. This 3.8pt gap is

i (16%) and Qatar (19%) which were =ncluded in the indices in 2014. 2. Currently there is $350b1n of passive and $1.3Trn of a=tive money following MSCI EM Index products. Bank of America estimates the=inclusion would ultimately result in —$20bIn of inflows going into 32 securities with a combined curr

.5bn into their equity market * We estimate Sabic=to get $727M, Al Rajhi $504M, National Commercial Bank $385M (see table in=the attached pdf) • MSCI EM decision announced in June 2018 • If t=ey get in -> $39bn inflows and the actual inclusion would happen in Jun= 2019 • These flows are already ha

st global investors: Best way to access the trade: M1SAP (MSCI Saudi =rovisional Index) 32-name =SCI-owned index, that will rebalance into the full MSCI EM index upon =nclusion Trades =90m/ day based on bottleneck liquidity • Tradable on swap at lml.+90bps, std comm applies; also =ccessible on fully f