2050 Hindsight….

“Trends, like horses, are easier to ride in the direction they are going”

- John Naisbitt, Megatrends, 1982

CFA Societies of South Africa and Mauritius

Lawrence SpeidellChief Investment Officer, CEO

Frontier Market Asset Managementlarry@frontiermkt.com

February 2013

2050 Hindsight

• Where are we… where were we?

• Growth Drivers

– Human Capital

• Demographics

• Education, Innovation, Wages

• Middle Class

– Investment

– Government

• Economic Freedom & Rule of Law

• Governability and Veto Points

– Culture

• Trust & Behavior

• 2050 Success and Failure

Today’s World

2050

Source: Frontier Market Asset Management, WDI Database, 2012

2050

Source: Frontier Market Asset Management, WDI Database, 2012

History

Source: FMAM 2012

1974 Post-it notes1974 ATM machines1974 Liposuction1975 Push thru drink tabs1975 Laser printer1976 VHS1976 “Breakout” video game1977 MRI1978 VisiCalc spreadsheet1979 Cellphone1979 Walkman1979 Rollerblades1981 IBM PC1981 MTV1984 Apple Macintosh1985 Microsoft Windows1985 CDs

1987 Disposable contacts1988 Prozac1989 Iron Curtain Falls1990 Internet1991 Digital camera1993 DVD1994 Sony Playstation1994 GPS1998 Viagra2001 iPod2001 9/11 Attacks2001 TSA introduced2001 Polaroid bankrupt2002 PowerPoint2003 Prius2004 Facebook2005 YouTube2007 iPhone2008 Personal DNA kit2012 Kodak bankrupt

History: Limits to Growth – Club of Rome 1972

The GUM Department Store 1991… and 2002

History

China…the Country

GDP per Capita (2000 $)

10

100

1,000

10,000

100,000

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

VietnamIndia

China

Philippines

Japan

USA

Singapore S Korea

Brazil

Sri Lanka

Russia

ChinaGDPperCapita0901

Bangladesh

Botswana

History

$192

$1791

$686

12

Economic Growth in Frontier & Emerging Economies is High

Source: IMF, Jan 2012

GDP Growth

2050 Hindsight

Source: Bank for International Settlements, “The Future of Public Debt”, March 2010

2050 Hindsight

• Where are we… where were we?

• Growth Drivers

– Human Capital

• Demographics

• Education, Innovation, Wages

• Middle Class

– Investment

– Government

• Economic Freedom & Rule of Law

• Governability and Veto Points

– Culture

• Trust & Behavior

• 2050 Success and Failure

Human Capital

Bangladesh:Population 150 million81,508 primary schools16.5 million students 361,000 teachers (43% female) student teacher ratio of 46.

Photo: Frontier Market Asset Management, 2010

Demographics

2011 2025Population

Growth RateBulgaria 7.7 7.1 -0.6%Ukraine 46.7 43.2 -0.6%Belarus 9.8 9.1 -0.5%Moldova 3.6 3.4 -0.5%Georgia 4.3 4.0 -0.5%Lithuania 3.4 3.1 -0.5%Russia 144.1 136.5 -0.4%Malawi 16.2 23.3 2.6%Occupied Palestine 4.6 6.6 2.7%Somalia 9.6 14.0 2.7%Benin 9.5 13.8 2.7%Tanzania 46.6 67.7 2.7%Burkina Faso 16.8 24.9 2.8%Afghanistan 30.2 45.1 2.9%Uganda 35.0 53.6 3.1%Niger 16.5 27.4 3.7%

Demographics - Favor the Poor Countries

.

Population Demographics

0

2

4

6

8

10

12

14

16

18

20

0 10 20 30 40 50 60 Age < 15

Ag

e >

64

Developed Markets

Emerging Markets

Frontier Markets

Japan

Italy

Germany

GreeceBulgaria

Singapore

Ireland

Argentina

Uganda

Pakistan

UAE

ZambiaBahrain

Peru

Sri Lanka

Nigeria

Vietnam

China

Source: World Development Indicators, 2006 FrontierCountries0607

Poland

Romania

Demographics – China versus India Today

China 2011

(80,000) (40,000) - 40,000 80,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

1,385,864

Population

Source: United Nations Population Prospects, 2009

2011

(80,000) (40,000) - 40,000 80,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

India

1,240,387

Population (000)

2050

(80,000) (40,000) - 40,000 80,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

India 1,663,998

PopulationChina 2050

(80,000) (40,000) - 40,000 80,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

1,536,074

Population

Demographics – China versus India in 2050

Source: United Nations Population Prospects, 2009

Demographics: Japan – Now & 2050

2011

(10,000) (5,000) - 5,000 10,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

Japan

137,002

Population

2050

(10,000) (5,000) - 5,000 10,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

Japan 120,721

Population

Demographics: U.S. – Now & 2050

2011

(20,000) (10,000) - 10,000 20,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

United States of America

335,705

Population2050

(20,000) (10,000) - 10,000 20,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

United States of America

444,168

Population

Demographics: Nigeria – Now & 2050

2011

(20,000) (10,000) - 10,000 20,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

Nigeria

162,394

Population2050

(20,000) (10,000) - 10,000 20,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

Nigeria 291,619

Population

Demographics: Russia – Now & 2050

2011

(10,000) (5,000) - 5,000 10,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

Russian Federation

144,561

Population2050

(10,000) (5,000) - 5,000 10,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80+

80-84

85-89

90-94

95-99

100+

Females

Males

Russian Federation

124,943

Population

% Young Rebels

% Young RebelsPopulation age 15-24

5

7

9

11

13

15

17

19

21

23

25

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

% o

f Po

pu

latio

n

Pakistan

South Africa

China

US

Russia

Japan

Source: UN Population Database, July 2008