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Guide to the Markets
MARKET INSIGHTS
Asia | 2Q 2016 | As of March 31, 2016
Americas Europe Asia
Dr. David P. Kelly, CFANew York
Stephanie H. FlandersLondon
Tai HuiHong Kong
Andrew D. GoldbergNew York
Manuel Arroyo Ozores, CFAMadrid
Kerry Craig, CFAMelbourne
Anastasia V. Amoroso, CFAHouston
Tilmann Galler, CFAFrankfurt
Yoshinori ShigemiTokyo
Julio C. CallegariSão Paulo
Lucia Gutierrez-MelladoMadrid
Marcella ChowHong Kong
James C. Liu, CFANew York
Vincent JuvynsLuxembourg
Akira KunikyoTokyo
Samantha M. AzzarelloNew York
Dr. David StubbsLondon
Dr. Jasslyn Yeo, CFASingapore
David M. LebovitzNew York
Maria Paola ToschiMilan
Ian HuiHong Kong
Gabriela D. SantosNew York
Michael J. Bell, CFALondon
Ben LukHong Kong
Hannah J. AndersonNew York
Alexander W. DrydenLondon
Anthony Tsoi, CFAHong Kong
Abigail B. Dwyer, CFANew York
Nandini RamakrishnanLondon
Ainsley E. WoolridgeNew York
Global Market Insights Strategy Team
3
| 3GTM – Asia
Fixed income45. Global fixed income: Yields and returns46. United States: Sources of bond returns47. G3 government bond yields48. Global investment grade bonds49. U.S. high yield bonds50. European high yield bonds51. Emerging markets debt: Market size and fundamentals52. Asia: Sovereign debt
Other asset classes53. Asset class returns54. Asset class returns contribution to diversified portfolio55. Asset class correlations56. Volatility and correlation57. Rate rise impact on different asset classes58. Interest rates and equities correlation59. Asset class returns in different inflation environments60. Alternative sources of income61. U.S. dollar trend62. Currency valuations63. Oil: Short-term market dynamics64. Oil: Long-term fundamentals
Investing principles65. Real return on cash and yields66. Global households’ financial asset allocation by region67. Investors’ market timing68. Annual returns and intra-year declines69. Portfolio construction, asset class returns and volatility70. Global and Asian retirement trends
Regional and local economy4. Asia: Economic performance5. Asia: Exports and industrial production6. Asia: Oil reliance and import coverage ratio7. Asia: Private sector credit8. China: Economic snapshot9. China: Cyclical indicators10. China: Investment and fiscal policy11. China: Monetary policy12. China: Exchange rate and foreign reserves13. India: Economic snapshot14. India: Investment flows and balance of payments15. Japan: Consumption and labor market16. Japan: Corporate governance17. Japan: Monetary policy18. Japan: Exchange rate and interest rate differential
Global economy19. Global growth20. Global inflation21. G4 policy rates and balance sheets22. Policy rates and inflation expectations23. Global Purchasing Managers’ Index (PMI): Manufacturing24. Global Purchasing Managers’ Index (PMI): Services25. Global productivity and demographics26. Global debt dynamics27. United States: Cyclical indicators28. United States: Labor market and inflation29. United States: Monetary policy30. United States: Earnings31. Europe: Economic snapshot32. Europe: Monetary policy33. Europe: Banking sector34. Europe: Earnings and profitability
Equities35. Global and Asia equity markets: Returns36. Global corporate profitability37. Global equity markets: Valuations 38. Developed markets: Cyclically-adjusted price-to-earnings (CAPE)39. Emerging markets: Price-to-book valuations40. Emerging markets: Valuation analysis41. APAC ex-Japan: Price-to-book valuations42. APAC ex-Japan: Valuation analysis43. The compounding effect44. High dividend equities
Page reference
|GTM – Asia 4
4
Regi
onal
and
loca
l eco
nom
y
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Asia: Economic performance
Source: (All charts) CEIC, J.P. Morgan Asset Management. *Consumption includes both private/household and public/government consumption. Asia aggregate real GDP weighted by individual country’s GDP. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
EM Asia real GDP growthContribution to growth
Gross capital formation (investment)Consumption*
Net exportsGDP (% y/y)
EM Asia ex-China real GDP growthContribution to growth
Gross capital formation (investment)Consumption*
Net exportsGDP (% y/y)
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
|GTM – Asia 5
5
Regi
onal
and
loca
l eco
nom
y
-30%
-20%
-10%
0%
10%
20%
30%
40%
'00 '02 '04 '06 '08 '10 '12 '14 '16-40%
-20%
0%
20%
40%
60%
'00 '02 '04 '06 '08 '10 '12 '14 '16
Asia: Exports and industrial production
Source: (All charts) J.P. Morgan Economics, J.P. Morgan Asset Management. *Exports measured in USD.**Korea and Taiwan weighted by GDP. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Industrial productionYear-over-year % change, 3-month moving average
ChinaEM Asia ex-ChinaKorea and Taiwan**
Exports*Year-over-year % change, 3-month moving average
ChinaEM Asia ex-ChinaKorea and Taiwan**
|GTM – Asia 6
6
Regi
onal
and
loca
l eco
nom
y
Asia: Oil reliance and import coverage ratio
Source: (Left) CEIC, IMF, J.P. Morgan Asset Management. (Right) CEIC, J.P. Morgan Asset Management. *Import coverage ratio refers to the ratio of a country’s imports to its foreign exchange reserves. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
-39.7%-27.1%
-12.9%-11.0%
-4.4%-0.9%-0.6%
0.6%1.6%2.2%2.2%3.3%4.2%4.7%5.0%5.2%5.7%6.4%6.6%6.9%7.2%7.3%
14.0%
-50% -40% -30% -20% -10% 0% 10% 20%
Saudi ArabiaUAE
RussiaIran
VietnamMalaysia
MexicoAustralia
BrazilChina
New ZealandIndonesia
JapanSouth Africa
IndiaPhilippines
HungaryHong Kong
TaiwanTurkey
SingaporeKorea
Thailand
Oil imports Net imports (imports minus exports) as % of GDP, 2014 IMF estimates
Asia PacificSelected EM countries
0
5
10
15
20
25
30
Mal
aysi
a
Hon
g K
ong
Indo
nesi
a
Thai
land
Kor
ea
Indi
a
Phi
lippi
nes
Taiw
an
Chi
na
Sin
gapo
re
Import coverage ratio*Number of months
10-year average
Latest (1/2016)
|GTM – Asia 7
7
Regi
onal
and
loca
l eco
nom
y
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
'08 '09 '10 '11 '12 '13 '14 '15-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
'08 '09 '10 '11 '12 '13 '14 '15
Asia: Private sector credit
Source: (All charts) BIS, Central Bank of Taiwan, FactSet, IMF, J.P. Morgan Asset Management. *Domestic private bank loans are used as a proxy for private sector credit growth.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
ASEAN-5 credit growth*Year-over-year % change
North Asia credit growth*Year-over-year % change
China
KoreaTaiwan
Hong Kong
Singapore
Indonesia
MalaysiaThailand
Philippines
|GTM – Asia 8
8
Regi
onal
and
loca
l eco
nom
y
China: Economic snapshot
Source: (Left) FactSet, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Right) Caixin/Markit, FactSet, J.P. Morgan Asset Management.Guide to the Markets – Asia 2Q 2016.Data reflect most recently available as of 31/3/16.
China’s contribution to real GDP growth Caixin/Markit Purchasing Managers’ Indices
Manufacturing
Services
Level
-8%
-4%
0%
4%
8%
12%
16%
20%
'80 '85 '90 '95 '00 '05 '10 '15
Net exports
Gross capital formation (Investment) Consumption
GDP (% y/y)
46
48
50
52
54
56
58
60
'10 '11 '12 '13 '14 '15 '16
|GTM – Asia 9
9
Regi
onal
and
loca
l eco
nom
y
|
-20%
-10%
0%
10%
20%
30%
'11 '12 '13 '14 '15 '16
China: Cyclical indicators
Electricity consumptionYear-over-year % change
Secondary
Tertiary
Source: (All charts) CEIC, FactSet, National Bureau of Statistics of China, J.P. Morgan Asset Management. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Retail and auto salesYear-over-year % change, 3-month moving average
Retail sales Auto sales
Urban disposable income per capitaYear-over-year % change
12/2015: 6.6%
Chinese tourists traveling to other Asian countries
5%
10%
15%
20%
'03 '05 '07 '09 '11 '13 '150
2
4
6
8
Singapore Japan Korea Thailand
2015
2010
Visitors, millions
|GTM – Asia 10
10
Regi
onal
and
loca
l eco
nom
y
|
-10%
0%
10%
20%
30%
'11 '12 '13 '14 '15 '16
-40%
-20%
0%
20%
40%
60%
80%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Source: (Top left) FactSet, J.P. Morgan Economics, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Top right) J.P. Morgan Economics, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Bottom left) CEIC, FactSet, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Bottom right) BofA/Merrill Lynch, CEIC, J.P. Morgan Asset Management. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Residential floor space sold and startedYear-over-year % change, 3-month moving average
Floor space soldFloor space started
China home prices
Tier-2 cities
Tier-1 cities
Tier-3 cities
Year-over-year % change
Newly started projects and infrastructure investmentYear-over-year % change, 3-month moving average
17%
19%
21%
23%
25%
-5%
5%
15%
25%
35%
06/13 12/13 06/14 12/14 06/15 12/15
Infrastructure fixed asset investment
Newly started projects
Central government fiscal deficit% of GDP
-3%
-2%
-1%
0%
1%
'85 '90 '95 '00 '05 '10 '15
2016 target: -3.0%
China: Investment and fiscal policy
|GTM – Asia 11
11
Regi
onal
and
loca
l eco
nom
y
0
500
1,000
1,500
2,000
'08 '09 '10 '11 '12 '13 '14 '15 '16
China: Monetary policy
Source: (Left) People’s Bank of China, J.P. Morgan Asset Management. (Top and bottom right) FactSet, People’s Bank of China, J.P. Morgan Asset Management.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Total social financing (TSF) breakdownRMB billions, 3-month moving average
Short-term lending rates7-day repo rate
1-year benchmark interest rate
Reserve requirement ratio (RRR)
RRR (Large depository institution)
RRR (Small and medium depository institutions)
RRR (Average)
TSF ex-bank loans, corporate bonds and equity financing RMB bank loansCorporate bond financingEquity financing
|GTM – Asia 12
12
Regi
onal
and
loca
l eco
nom
y
China: Exchange rate and foreign reserves
Source: (Top and bottom left) FactSet, J.P. Morgan Asset Management. (Bottom right) FactSet, People’s Bank of China, J.P. Morgan Asset Management.*Difference of onshore RMB (CNY) over offshore RMB (CNH); negative spreads indicate CNH weaker than CNY. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
RMB onshore (CNY) and offshore (CNH) ratePer USD, inverted scale
Chinese yuan exchange rate: NEER vs. USDIndex, rebased 2014 = 100
Nominal effective exchange rate (NEER)
Weaker Chinese yuan
Stronger Chinese yuan
USD/RMB
FX reserves: Change vs. stockChange in monthly FX reserves (USD bn) Total FX reserves (USD trn)
USD/CNY (Left)
USD/CNH (Left)
CNY/CNH spread* (Right)
StockChange
|GTM – Asia 13
13
Regi
onal
and
loca
l eco
nom
y
|
0
1,500
3,000
4,500
6,000
7,500
9,000
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
-6%
-2%
2%
6%
10%
14%
18%
'05 '07 '09 '11 '13 '15
-5%
0%
5%
10%
15%
20%
'98 '00 '02 '04 '06 '08 '10 '12 '14
India: Economic snapshot
Source: (Top left) J.P. Morgan Economics, Ministry of Statistics and Programme Implementation, J.P. Morgan Asset Management. (Top right) Centre for Monitoring Indian Economy, CLSA, J.P. Morgan Asset Management. (Bottom left) Reserve Bank of India, J.P. Morgan Asset Management. (Bottom right) FactSet, Society of Indian Automobile Manufacturers, J.P. Morgan Asset Management. *Consumer Price Index (CPI) series starts in January 2012, and value shown is year-over-year % change.**Wholesale Price Index (WPI) value shown is year-over-year % change. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Real GDP growth Year-over-year % change 15-yr avg. 4Q15
Real GDP growth 7.0% 7.3%
Inflation and repo rate
Repo rate
Wholesale Price Index (WPI)**
Consumer Price Index (CPI)*
LatestRepo rate 6.75%CPI 5.2%WPI -0.9%
Auto salesYear-over-year % change, 3-month moving average
Commercial vehicle sales
Passenger vehicle sales
New project announcementsINR billions Latest
Private sector 692bnGovernment 357bn
-30%
-20%
-10%
0%
10%
20%
30%
'11 '12 '13 '14 '15 '16
|GTM – Asia 14
14
Regi
onal
and
loca
l eco
nom
y
|
-20
-10
0
10
20
30
40
'00 '02 '04 '06 '08 '10 '12 '14 '16
INR per USD Year-over-year % change
India: Investment flows and balance of payments
Source: (Top and bottom left) Bloomberg, Securities and Exchange Board of India, J.P. Morgan Asset Management. (Top right) Bloomberg, J.P. Morgan Asset Management. (Bottom right) FactSet, Reserve Bank of India, Reuters, J.P. Morgan Asset Management. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Foreign institutional fund flowsUSD billions Foreign institutional investment (equity)
Foreign institutional investment (debt)
Current account% of GDP
Current account balance 4Q15: -1.1%
Domestic equity fund flowsUSD billions Domestic institutional investment
Domestic mutual fund flows
YTD ’16
USD/INR
India currency and change in reserves
Change in foreign reserves
-6%
-4%
-2%
0%
2%
4%
'00 '02 '04 '06 '08 '10 '12 '14
-2.5
-1.5
-0.5
0.5
1.5
2.5
04/15 06/15 08/15 10/15 12/15 02/16
|GTM – Asia 15
15
Regi
onal
and
loca
l eco
nom
y
Japan: Consumption and labor market
Source: (Top) FactSet, Japanese Cabinet Office, Ministry of Internal Affairs and Communications, J.P. Morgan Asset Management. (Bottom left) FactSet, Japanese Statistics Bureau and Statistics Center, Ministry of Health, Labour and Welfare, J.P. Morgan Asset Management. (Bottom right) FactSet, Ministry of Health, Labour and Welfare, Ministry of Internal Affairs and Communications, J.P. Morgan Asset Management. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Real wage growth and core CPI inflationYear-over-year % change
Labor marketRatio of job offers to job applicants %, inverted scale
Consumer spending and sentiment indicatorYear-over-year % change, 3-month moving average Diffusion Index
Economy watcher survey, householdReal consumption spending
Total real cash earnings (6MMA)
Core CPI (ex-food and energy)Unemployment rateRatio
|GTM – Asia 16
16
Regi
onal
and
loca
l eco
nom
y
Japan: Corporate governance
Source: (Left) FactSet, Ministry of Finance, Ministry of Internal Affairs & Communications, J.P. Morgan Asset Management. (Top right) IMF, J.P. Morgan Asset Management. (Bottom right) Nomura, J.P. Morgan Asset Management. *Cash and cash-equivalent holdings derived from IMF's working paper, “Unstash the Cash! Corporate Governance Reform in Japan," written by Chie Aoyagi and Giovanni Ganelli. **Share buyback data are for repurchases of common stock, excluding repurchases from Resolution and Collection Corp and repurchases of preferred stock. FY16 (2016) dividend and share buyback amounts are Nomura estimates.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Listed companies’ cash and cash-equivalent holdings*% of market capitalization, average between 2004 and 2012
Capital expenditure (CAPEX) and operating profits
Listed companies’ dividend payout and share buybacksJPY trillions
DividendsShare buybacks**
JPY trillions (Ministry of Finance Business Survey, ex-financials)
Operating profits (4Q moving average)
Nominal CAPEX
44%
27% 25% 21% 20% 18% 15%0%
10%
20%
30%
40%
50%
Japan Germany Italy France UK U.S. Canada
0
4
8
12
16
20
'95 '00 '05 '10 '15
|GTM – Asia 17
17
Regi
onal
and
loca
l eco
nom
y
Japan: Monetary policy
Bank loans and lending ratesJPY trillions, seasonally adjusted % per annum, 3MMA
Bank loans Lending rates on new long-term bank loans
Bank of Japan’s asset purchases
JPY billions
BoJ annual purchases of ETFs, J-REITs and JGBs BoJ total
JGB holdings
BoJ totalJGB holdings
as % of marketETFs J-REITs JGBs
2010 28 2 7,827 58,051 8.0%
2011 800 64 9,579 67,631 8.9%
2012 640 45 23,272 90,902 11.6%
2013 1,095 30 52,714 143,616 17.2%
2014 1,285 37 63,530 207,146 23.3%
2015 3,069 92 81,195 288,342 31.6%
2016* 650 20 - - -
Source: (Top left) Bank of Japan, J.P. Morgan Asset Management. (Bottom left and right) Bank of Japan, FactSet, J.P. Morgan Asset Management. *ETF and J-REITs data as of 31/3/16 and JGBs data as of 31/12/15.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Bank lending by sectorYear-over-year % change
Individuals
Corporates
|GTM – Asia 18
18
Regi
onal
and
loca
l eco
nom
y
Japan: Exchange rate and interest rate differential
Source: (All charts) FactSet, J.P. Morgan Asset Management.*Correlation based on the daily change between the currency and the equity market. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
TOPIX and Japanese yenIndex JPY per USD
1/2015 – 3/2016Correlation*: 0.87
1/2010 – 12/2014Correlation*: 0.96
USD/JPYTOPIX
Interest rate differential & yen/dollar2-year U.S. and Japanese treasury bond spread JPY per USD
USD/JPYInterest rate differential
JPY depreciates
JPY appreciates
|GTM – Asia 19
19
Glob
al e
cono
my
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Global growth
Source: IMF, J.P. Morgan Asset Management.*Forecasts are from the IMF’s January 2016 World Economic Outlook. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Year-over-year % changeReal GDP growth
Forecast*Global GDP growthEM GDP growth
DM less EM growth
DM GDP growthDM growth
outperforms EM
EM growth outperforms DM
|GTM – Asia 20
20
Glob
al e
cono
my
Country Feb2015
Mar 2015
Apr 2015
May 2015
Jun 2015
Jul 2015
Aug 2015
Sep2015
Oct2015
Nov 2015
Dec2015
Jan2016
Feb2016
Central bank
target/ forecast
Central bank policy rate*
China 1.4 1.4 1.5 1.2 1.4 1.6 2.0 1.6 1.3 1.5 1.6 1.8 2.3 3.0 4.35 ( 10/2015)
India 5.4 5.3 4.9 5.0 5.4 3.7 3.7 4.4 5.0 5.4 5.6 5.7 5.2 2.0 – 6.0 6.75 ( 09/2015)
Indonesia 6.3 6.4 6.8 7.2 7.3 7.3 7.2 6.8 6.3 4.9 3.4 4.1 4.4 3.0 – 5.0 6.75 ( 03/2016)
Japan 2.2 2.3 0.6 0.5 0.4 0.2 0.2 0.0 0.3 0.3 0.2 0.0 0.3 2.0 -0.10 to 0.00 ( 02/2016)
Korea 0.5 0.4 0.4 0.5 0.7 0.7 0.7 0.6 0.9 1.0 1.3 0.8 1.3 2.0 1.50 ( 06/2015)
Malaysia 0.1 0.9 1.8 2.1 2.5 3.3 3.1 2.6 2.5 2.6 2.7 3.5 4.2 2.0 – 3.0 3.25 ( 07/2014)
Taiwan -0.2 -0.6 -0.8 -0.7 -0.6 -0.7 -0.5 0.3 0.3 0.5 0.1 0.8 2.4 1.2 1.50 ( 03/2016)
Thailand -0.5 -0.6 -1.0 -1.3 -1.1 -1.1 -1.2 -1.1 -0.8 -1.0 -0.9 -0.5 -0.5 1.0 – 4.0 1.50 ( 04/2015)
U.S. 0.0 -0.1 -0.2 0.0 0.1 0.2 0.2 0.0 0.2 0.5 0.7 1.4 1.0 2.0 0.25 – 0.5 ( 12/2015)
Eurozone -0.3 -0.1 0.0 0.3 0.2 0.2 0.1 -0.1 0.1 0.2 0.2 0.3 -0.2 2.0 0.00 ( 03/2016)
UK 0.0 0.0 -0.1 0.1 0.0 0.1 0.0 -0.1 -0.1 0.1 0.2 0.3 0.3 2.0 0.50 ( 03/2009)
Global inflation
Source: FactSet, J.P. Morgan Economics, J.P. Morgan Asset Management.All data shown above are headline CPI inflation. *The arrows and dates in the central bank policy rate column indicate the direction and date of last change, respectively. The central bank’s policy rate for each country includes the one-year benchmark lending rate (China), RBI policy repo rate (India), BI benchmark policy rate (Indonesia), the BoJ will adopt a three-tier system in which a negative interest rate of -0.1% will be applied to the policy rate balance of the aggregate amount of all financial institutions that have current accounts at the BoJ (Japan), BoK base rate (Korea), overnight policy rate (Malaysia), discount rate (Taiwan), one-day repurchase rate (Thailand), fed funds rate (U.S.), eurozone main refinancing operations rate (Eurozone) and BoE official bank rate (UK).Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Monthly inflation trendYear-over-year % change Rising inflation Unchanged Falling inflation
|GTM – Asia 21
21
Glob
al e
cono
my
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
G4 policy rates and balance sheets
Source: (Left) Bloomberg, FactSet, J.P. Morgan Asset Management. (Right) Bank of England, Bank of Japan, European Central Bank, FactSet, Federal Reserve System, J.P. Morgan Economics, J.P. Morgan Asset Management. *Key deposit rates that central banks charge commercial banks on their excess reserves. **The BoJ will adopt a three-tier system in which a negative interest rate of -0.1% will be applied to the policy rate balance of the aggregate amount of all financial institutions that have current accounts at the BoJ. ***Balance sheet forecasts are based on central bank’s stated economic intentions, i.e. assumptions are that the BoJ will expand its balance sheet at an annual rate of JPY 80 trillion; the ECB will expand its balance sheet at a monthly rate of EUR 80 billion, BoE and Fed both will keep their balance sheets at their current levels. Nominal GDP growth forecasts provided by J.P. Morgan Economics. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Central bank balance sheets% of nominal GDP
Fed
BoE
ECB
BoJ
Projections***
'00 '02 '04 '06 '08 '10 '12 '14 '16-1%
0%
1%
2%
3%
4%
5%
6%
7%
Central bank key policy ratesPolicy rate Deposit
rate*Sweden -0.50% -1.25%
Switzerland -0.75% -0.75%
Denmark 0.05% -0.65%
EU 0.00% -0.40%
Japan -0.10 to 0.0% -0.10%
UK 0.50% 0.00%
U.S. 0.25 to 0.50% 0.00%
Federal funds rate (Fed)
BoE official bankrate (BoE)
Eurozone mainrefinancing operationsrate (ECB)
BoJ uncollateralized overnight call rate** (BoJ)
|GTM – Asia 22
22
Glob
al e
cono
my
0.59%
0.69%
0.85%
0.40%
0.63%
0.82%
-0.04%
-0.29%
-0.21%
0.01%
-0.14% -0.16%
-0.5%
0.0%
0.5%
1.0%
06/16 06/17 06/18
Policy rates and inflation expectations
Source: (Left and top right) Bloomberg, J.P. Morgan Asset Management. (Bottom right) Bloomberg, BofA/Merrill Lynch, J.P. Morgan Asset Management. Index shown is the BofA/Merrill Lynch Global Government Bond index.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Medium-term inflation expectations5-year/5-year breakeven inflation expectation
U.S.
Japan
Yield on global government bonds% of government bonds below 1%% of government bonds below 0%
Market expectations for policy rates
Eurozone
U.S.
Japan
Eurozone
UK
-0.5%
0.5%
1.5%
2.5%
3.5%
'12 '13 '14 '15 '16
0%
20%
40%
60%
80%
'14 '15 '16
|GTM – Asia 23
23
Glob
al e
cono
my
Global Purchasing Managers’ Index (PMI): Manufacturing
Source: Australian Industry Group, Markit, National Bureau of Statistics of China (NBS), J.P. Morgan Asset Management.Heatmap colors are based on PMI relative to 50, which indicates contraction (below 50) or expansion (above 50) of the sector.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 4/4/16.
Global Purchasing Managers’ Index for manufacturing
May
'14
Jun'
14
Jul'1
4
Aug
'14
Sep'
14
Oct
'14
Nov
'14
Dec
'14
Jan'
15
Feb'
15
Mar
'15
Apr
'15
May
'15
Jun'
15
Jul'1
5
Aug
'15
Sep'
15
Oct
'15
Nov
'15
Dec
'15
Jan'
16
Feb'
16
Mar
'16
Global 51.9 52.4 52.4 52.3 52.0 52.0 51.7 51.4 51.6 51.8 51.5 50.8 51.1 50.9 50.8 50.4 50.4 51.1 51.0 50.7 50.9 50.0 50.5DM 53.5 54.1 53.2 54.1 53.6 53.4 52.8 52.4 52.5 52.8 53.0 52.1 52.4 52.1 52.5 52.4 52.1 53.1 52.6 52.1 52.3 50.9 50.9U.S. 56.4 57.3 55.8 57.9 57.5 55.9 54.8 53.9 53.9 55.1 55.7 54.1 54.0 53.6 53.8 53.0 53.1 54.1 52.8 51.2 52.4 51.3 51.5Euro area 52.2 51.8 51.8 50.7 50.3 50.6 50.1 50.6 51.0 51.0 52.2 52.0 52.2 52.5 52.4 52.3 52.0 52.3 52.8 53.2 52.3 51.2 51.6Germany 52.3 52.0 52.4 51.4 49.9 51.4 49.5 51.2 50.9 51.1 52.8 52.1 51.1 51.9 51.8 53.3 52.3 52.1 52.9 53.2 52.3 50.5 50.7France 49.6 48.2 47.8 46.9 48.8 48.5 48.4 47.5 49.2 47.6 48.8 48.0 49.4 50.7 49.6 48.3 50.6 50.6 50.6 51.4 50.0 50.2 49.6Italy 53.2 52.6 51.9 49.8 50.7 49.0 49.0 48.4 49.9 51.9 53.3 53.8 54.8 54.1 55.3 53.8 52.7 54.1 54.9 55.6 53.2 52.2 53.5Spain 52.9 54.6 53.9 52.8 52.6 52.6 54.7 53.8 54.7 54.2 54.3 54.2 55.8 54.5 53.6 53.2 51.7 51.3 53.1 53.0 55.4 54.1 53.4Greece 51.0 49.4 48.7 50.1 48.4 48.8 49.1 49.4 48.3 48.4 48.9 46.5 48.0 46.9 30.2 39.1 43.3 47.3 48.1 50.2 50.0 48.4 49.0UK 56.5 56.9 54.9 53.3 51.8 53.1 53.3 52.8 52.9 54.1 53.7 51.7 51.7 51.4 52.0 51.8 51.7 55.3 52.5 51.8 53.0 50.8 51.0Australia 49.2 48.9 50.7 47.3 46.5 49.4 50.1 46.9 49.0 45.4 46.3 48.0 52.3 44.2 50.4 51.7 52.1 50.2 52.5 51.9 51.5 53.5 58.1Japan 49.9 51.5 50.5 52.2 51.7 52.4 52.0 52.0 52.2 51.6 50.3 49.9 50.9 50.1 51.2 51.7 51.0 52.4 52.6 52.6 52.3 50.1 49.1EM 50.1 50.4 51.2 50.5 50.4 50.5 50.6 50.4 50.8 50.9 49.8 49.3 49.4 49.2 48.8 48.3 48.3 48.9 49.0 49.2 49.2 48.8 50.1China 49.4 50.7 51.7 50.2 50.2 50.4 50.0 49.6 49.7 50.7 49.6 48.9 49.2 49.4 47.8 47.3 47.2 48.3 48.6 48.2 48.4 48.0 49.7China (NBS) 50.8 51.0 51.7 51.1 51.1 50.8 50.3 50.1 49.8 49.9 50.1 50.1 50.2 50.2 50.0 49.7 49.8 49.8 49.6 49.7 49.4 49.0 50.2Indonesia 52.4 52.7 52.7 49.5 50.7 49.2 48.0 47.6 48.5 47.5 46.4 46.7 47.1 47.8 47.3 48.4 47.4 47.8 46.9 47.8 48.9 48.7 50.6Korea 49.5 48.4 49.3 50.3 48.8 48.7 49.0 49.9 51.1 51.1 49.2 48.8 47.8 46.1 47.6 47.9 49.2 49.1 49.1 50.7 49.5 48.7 49.5Taiwan 52.4 54.0 55.8 56.1 53.3 52.0 51.4 50.0 51.7 52.1 51.0 49.2 49.3 46.3 47.1 46.1 46.9 47.8 49.5 51.7 50.6 49.4 51.1India 51.4 51.5 53.0 52.4 51.0 51.6 53.3 54.5 52.9 51.2 52.1 51.3 52.6 51.3 52.7 52.3 51.2 50.7 50.3 49.1 51.1 51.1 52.4Brazil 48.8 48.7 49.1 50.2 49.3 49.1 48.7 50.2 50.7 49.6 46.2 46.0 45.9 46.5 47.2 45.8 47.0 44.1 43.8 45.6 47.4 44.5 46.0Mexico 51.9 51.8 51.5 52.1 52.6 53.3 54.3 55.3 56.6 54.4 53.8 53.8 53.3 52.0 52.9 52.4 52.1 53.0 53.0 52.4 52.2 53.1 52.2
|GTM – Asia 24
24
Glob
al e
cono
my
30
35
40
45
50
55
60
65
'99 '01 '03 '05 '07 '09 '11 '13 '15
Global Purchasing Managers’ Index (PMI): Services
Source: Markit, National Bureau of Statistics of China (NBS), J.P. Morgan Asset Management.Heatmap colors are based on PMI relative to 50, which indicates contraction (below 50) or expansion (above 50) of the sector.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 4/4/16.
Global Purchasing Managers’ Index for services
Global Purchasing Managers’ Index
Global services PMI
Global manufacturing PMI
Index
Apr
'14
May
'14
Jun'
14
Jul'1
4
Aug
'14
Sep'
14
Oct
'14
Nov
'14
Dec
'14
Jan'
15
Feb'
15
Mar
'15
Apr
'15
May
'15
Jun'
15
Jul'1
5
Aug
'15
Sep'
15
Oct
'15
Nov
'15
Dec
'15
Jan'
16
Feb'
16
Global 52.7 54.4 55.8 56.0 55.6 55.2 53.6 53.4 52.5 53.0 54.1 55.2 54.8 54.0 53.6 54.2 54.6 53.3 53.5 53.9 52.9 52.8 50.7DM 53.3 55.3 56.5 57.1 56.3 55.8 54.2 53.9 52.7 53.6 54.7 56.1 55.6 54.6 54.5 54.9 55.5 54.1 54.1 54.8 53.7 53.3 51.1U.S. 55.0 58.1 61.0 60.8 59.5 58.9 57.1 56.2 53.3 54.2 57.1 59.2 57.4 56.2 54.8 55.7 56.1 55.1 54.8 56.1 54.3 53.2 49.7Euro Area 53.1 53.2 52.8 54.2 53.1 52.4 52.3 51.1 51.6 52.7 53.7 54.2 54.1 53.8 54.4 54.0 54.4 53.7 54.1 54.2 54.2 53.6 53.3Japan 46.4 49.3 49.0 50.4 49.9 52.5 48.7 50.6 51.7 51.3 48.5 48.4 51.3 51.5 51.8 51.2 53.7 51.4 52.2 51.6 51.5 52.4 51.2EM 50.7 50.7 53.0 51.0 52.9 53.0 51.4 51.7 52.2 50.9 51.9 51.9 51.9 51.3 49.8 51.3 50.7 49.8 50.4 50.2 49.7 51.0 49.4China 51.4 50.7 53.1 50.0 54.1 53.5 52.9 53.0 53.4 51.8 52.0 52.3 52.9 53.5 51.8 53.8 51.5 50.5 52.0 51.2 50.2 52.4 51.2India 48.5 50.2 54.4 52.2 50.6 51.6 50.0 52.6 51.1 52.4 53.9 53.0 52.4 49.6 47.7 50.8 51.8 51.3 53.2 50.1 53.6 54.3 51.4
|GTM – Asia 25
25
Glob
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cono
my
Global productivity and demographics
Source: (Left) J.P. Morgan Economics , J.P. Morgan Asset Management. (Right) J.P. Morgan Economics, United Nations, J.P. Morgan Asset Management. Labor productivity is defined as GDP/Employment. *Excludes China and India. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Labor productivityYear-over-year % change
Global population and old age shareYear-over-year % change % of population
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
'02 '04 '06 '08 '10 '12 '14 '16
Emerging*
Developed
Forecast
9%
10%
11%
12%
13%
14%
15%
16%
0.5%
1.0%
1.5%
2.0%
2.5%
'60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15 '20
Population
Age 65+
|GTM – Asia 26
26
Glob
al e
cono
my
Japan
China
Hong Kong
India
Korea
Taiwan
IndonesiaMalaysia
Thailand
Singapore
Philippines
U.S.
Germany
UK
Australia
France
Mexico
Brazil
South Africa
Poland
Turkey
Canada
-40%
-20%
0%
20%
40%
60%
25% 50% 75% 100% 125% 150% 175% 200% 225%
Global debt dynamics
Source: (Left) BIS, Central Bank of Republic of China, IMF, J.P. Morgan Economics, J.P. Morgan Asset Management. (Right) BIS, CEIC, Haver, UBS, J.P. Morgan Asset Management. *Nominal GDP growth forecasts provided by J.P. Morgan Economics.**Split of household and corporate debt is unavailable for Philippines. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Total non-financial sector debt by country% of GDP*
Change in private sector debt
Cha
nge
in p
rivat
e se
ctor
deb
t sin
ce 2
010
(% o
f GD
P)
Corporate debtGovernment debt
Household debt
Non-financial private sector debt, 2014 (% of GDP)
EMDM
EM Asia
0 100 200 300 400
Indonesia
Mexico
Russia
Philippines**
Turkey
South Africa
India
Brazil
Taiwan
Thailand
Malaysia
Korea
China
UK
U.S.
Europe
Japan 405%
265%
252%
243%
221%
218%
180%
160%
157%139%
121%
107%
93%
84%
82%
62%
52%
|GTM – Asia 27
27
Glob
al e
cono
my
United States: Cyclical indicators
Source: (All charts) Census Bureau, FactSet, Federal Reserve, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management.*Capital goods orders deflated by producer price index for capital goods.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Millions, seasonally adjusted annualized rateLight vehicle sales
3/2016: 16.6
Average: 15.4
2/2016: 1,178
Housing startsThousands, seasonally adjusted annualized rate
Average: 1,335
Real capital goods orders*Non-defense capital goods orders ex-aircraft, USD billions, seasonally adjusted
Average: 56.7
2/2016: 57.1
Net % of domestic respondents reporting stronger demand for commercial & industrial loans
U.S. senior loan officer opinion survey
Small firms3/2016: -12.7%
Large & medium firms3/2016: -11.1%
|GTM – Asia 28
28
Glob
al e
cono
my
United States: Labor market and inflation
Source: (Left) FactSet, U.S. Bureau of Labor Statistics, J.P. Morgan Asset Management. (Right) FactSet, U.S. Bureau of Economic Analysis, J. P. Morgan Asset Management. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
InflationYear-over-year % change
Avg. since 1970
Avg. since 2000
2/2016
Headline CPI 4.1% 2.3% 1.0%
Core CPI 4.0% 1.9% 2.3%
Unemployment rate and average hourly earnings
Average hourly earnings(% y/y)
Unemployment rate
U.S. recession period
3/2016: 5.0%
3/2016: 2.3%
|GTM – Asia 29
29
Glob
al e
cono
my
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
'93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
United States: Monetary policy
Source: FactSet, Federal Reserve, U.S. Bureau of Labor Statistics, J.P. Morgan Asset Management.*The futures rate is a measure of the market’s prediction for the monthly average effective federal funds rate after allowing for the possibility of a non-zero risk premium. In general, the federal funds futures market is used as an indication of when the market anticipates a change in Fed policy. **Real GDP, the federal funds rate, unemployment rate and PCE inflation are median projections based on the FOMC’s summary of economic projections.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Federal funds rate expectations*FOMC and market expectations for the fed funds rate
Longer run
Federal funds rate
FOMC projection (longer run)
Fed’s March 2016 summary of economic projections**
Percent 2016 2017 2018 Longer run
Change in real GDP 2.2 2.1 2.0 2.0December 2015 forecast 2.4 2.2 2.0 2.0
Unemployment rate 4.7 4.6 4.5 4.8December 2015 forecast 4.7 4.7 4.7 4.9
PCE inflation 1.2 1.9 2.0 2.0December 2015 forecast 1.6 1.9 2.0 2.0
Federal funds rate 0.88 1.88 3.00 3.25December 2015 forecast 1.38 2.38 3.25 3.50
0.94%
0.53%0.72%
3.00%3.25%
1.88%
0.88%1.47%
Market expectations (as of 31/12/15)
Market expectations (as of 31/3/16)
FOMC median projections (as of 16/3/16)
0.93%
|GTM – Asia 30
30
Glob
al e
cono
my
-1%
3%
7%
11%
15%
19%
'12 '13 '14 '15 '16
-1
3
7
11
15
19
23
27
31
35
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
United States: Earnings
Source: (Left and bottom right) Compustat, FactSet, Standard & Poor’s, J.P. Morgan Asset Management. (Top right) Federal Reserve, S&P 500 individual company 10k filings, S&P Index Alert, J.P. Morgan Asset Management.EPS levels are based on operating earnings per share. *4Q earnings estimates are Standard & Poor’s consensus analyst expectations, based on actual earnings for the 96% of Standard & Poor’s companies that have reported and earnings estimates for the remaining 4% of companies. Currencies in the Trade Weighted U.S. Dollar Major Currencies Index are: British pound, Euro, Swedish kroner, Australian dollar, Canadian dollar, Japanese yen and Swiss franc. **Dollar major currencies index includes British pound, euro, Swedish kroner, Australian dollar, Canadian dollar, Japanese yen and Swiss franc. Year-over-year % change is calculated using the quarterly average for each period.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
S&P 500 earnings per shareQuarterly operating earnings (USD)
Energy sector earningsEnergy sector contribution to S&P 500 EPS, quarterly (USD)
S&P consensus analyst estimates*
U.S. dollarYear-over-year % change, quarterly, dollar major currencies index**
-3-2-101234
'12 '13 '14 '15 '16
Forecast
S&P consensus analyst estimates*
|GTM – Asia 31
31
Glob
al e
cono
my
60
80
100
120
140
-40
-30
-20
-10
0
'05 '07 '09 '11 '13 '15
Europe: Economic snapshot
Source: (Top left, top right and bottom left) Eurostat, FactSet, J.P. Morgan Asset Management. (Bottom right) European Automobile Manufacturers’ Association, Eurostat, FactSet, J.P. Morgan Asset Management. *Euro area (Eurozone) consumer and business confidence as reported by the European Commission, which measures the level of optimism that consumers and businesses have about the economy. **Non-core European countries include Portugal, Ireland, Italy, Greece and Spain. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Eurozone real GDP
Euro AreaQuarter-over-quarter % change
Eurozone consumer and business confidence*
Consumer Business
Index
Eurozone new auto registration and retail sales
New auto registration Retail sales
Year-over-year % change, 3-month moving average
Portugal, Spain, Italy (equal weighted)
Germany
France
-1.0%
-0.5%
0.0%
0.5%
1.0%
'12 '13 '14 '15
5%
10%
15%
20%
'98 '00 '02 '04 '06 '08 '10 '12 '14 '16
Euro Area
Europe unemployment rate
Germany and France
Non-core**
-4%
-2%
0%
2%
4%
-30%
-20%
-10%
0%
10%
20%
'05 '07 '09 '11 '13 '15
|GTM – Asia 32
32
Glob
al e
cono
my
-1.5%
0.0%
1.5%
3.0%
'12 '13 '14 '15 '16
Europe: Monetary policy
Source: (All charts) ECB, Eurostat, FactSet, J.P. Morgan Asset Management.*Core rate is CPI Inflation (HICP) excluding energy, food, alcohol and tobacco.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
ECB balance sheet and euro REEREUR trillions Real broad effective exchange rate (REER)
Forecast
Weaker euro
Stronger euro
ECB balance sheet
Euro REER(inverted scale)
Eurozone CPI inflationContribution to headline inflation, year-over-year % change
Food, alcohol, tobaccoCore rate*EnergyCPI
85
95
105
1150
1
2
3
4
'05 '07 '09 '11 '13 '15 '17
|GTM – Asia 33
33
Glob
al e
cono
my
5%
7%
9%
11%
13%
15%
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Europe: Banking sector
Eurozone bank lending and real GDPEUR billions, 3-month change Year-over-year % change
HouseholdsCorporatesReal GDP**
Source: (Top left) Bloomberg, J.P. Morgan Asset Management. CDS (Credit default swap) is defined as the premium (in basis points per annum of the contract’s notional amount) paid by protection buyer to seller. A CDS has a simple structure and flexible conditions, which banks and investors use to hedge their exposure to credit risk. (Bottom left) Morgan Stanley, SNL Financial, J.P. Morgan Asset Management. (Right) BIS, ECB, FactSet, J.P. Morgan Asset Management. *CET1 (Common equity tier-1 capital ratio) is a measurement of a bank’s core equity capital compared with its total risk-weighted assets, which is a standard measurement of a bank’s capital adequacy. **Real GDP growth rates for 1Q 2009, 2Q 2009 and 3Q 2009 were -4.9%, -4.7% and -3.8%, respectively, and is cut off to maintain a more reasonable scale. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Western European banks
U.S. banks
CET1* ratio comparison
European banks’ equity performance and CDS spreadsSpread (bps) Index
MSCI Europe Bank IndexCDS European banks
40
50
60
70
80
50
90
130
170
210
01/15 04/15 07/15 10/15 01/16
|GTM – Asia 34
34
Glob
al e
cono
my
Europe: Earnings and profitability
Source: (Top left) Morgan Stanley, MSCI, J.P. Morgan Asset Management. (Bottom left) FactSet, MSCI, J.P. Morgan Asset Management. (Right) FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.*RoW (Rest of World) denotes revenues coming from the world excluding Europe, Asia and the Americas. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
MSCI Europe Index: Geographical source of revenue U.S. and European operating profit marginsEarnings/sales for MSCI Europe and S&P 500
U.S.
Europe
10/2007: 9.8%
10/2007: 10.0%
3/2011: 8.8%
3/2016: 7.6%
3/2016: 10.5%Europe
54%Americas25%
Asia10%
RoW*11%
Margin expansion over the last 18 monthsEarnings per share / sales per share
-1.0%
0.0%
1.0%
2.0%
Ireland Portugal France Spain Germany Europeex-UK
Italy UK Switz.
|GTM – Asia 35
35
Equi
ties
Global and Asia equity markets: Returns
Source: FactSet, MSCI, J.P. Morgan Asset Management.Returns are total (net) returns based on MSCI indices in U.S. dollar terms. 10-yr total (net) return data is used to calculate annualized returns (Ann. Ret.) and 10-yr price return data is used to calculate annualized volatility (Ann. Vol.) and reflect the period 31/12/05 – 31/12/15. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q '16 Ann. Ret. Ann. Vol.
Kore a China India Ja pa n India ASEAN U.S . HK U.S . India Ja pa n AS EAN China India
5 7 .0 % 8 2 .9 % 7 3 .1% - 29 .2 % 10 2 .8 % 3 2 .2 % 1.4 % 28 .3 % 3 1.8 % 2 3 .9% 9 .6 % 10 .1% 10 .1% 31.1%
India India China U.S . Ta iwa n Kore a AS EAN India Ja pa n U.S . U.S . Ta iwan ASEAN China
3 7 .6 % 5 1.0 % 6 6 .2 % - 37 .6 % 79 .2 % 2 6 .7 % - 6 .3 % 26 .0 % 2 7 .2 % 12 .7 % 0 .7 % 7 .7 % 8 .5 % 2 7 .8 %
Ja pa n ASEAN HK Europe ASEAN HK Europe China Europe Ta iwa n HK Kore a HK Kore a
2 5 .5 % 4 2 .4 % 4 1.2% - 46 .4 % 74 .6 % 2 3 .2 % - 11.1% 22 .7 % 2 5 .2 % 9 .4 % - 0 .5 % 5 .1% 8 .3 % 2 7 .6 %Asia e x-
JPEurope Asia ex-
JPTa iwa n Asia e x-
JPTa iwa n Kore a ASEAN HK China Europe Asia ex-
JPIndia Ta iwa n
2 2 .7 % 3 3 .7 % 4 0 .1% - 46 .5 % 7 2 .1% 2 1.8% - 12 .0 % 22 .5 % 11.1% 8 .0 % - 2 .8 % 1.8 % 7 .2 % 2 3 .0 %
China Asia e x-JP ASEAN AS EAN Korea India Ja pa n Asia e x-
JP Ta iwan ASEAN India U.S . U.S . Asia e x-JP
19 .8 % 3 3 .3 % 3 9 .0 % - 47 .7 % 7 1.3 % 2 0 .9 % - 14 .3 % 22 .4 % 9 .1% 6 .2 % - 6 .1% 0 .8 % 6 .7 % 2 2 .6 %
AS EAN HK Kore a China China Asia ex-JP
HK Kore a Kore a HK Kore a HK Asia e x-JP
HK
10 .7 % 3 0 .4 % 3 1.9% - 50 .8 % 62 .3 % 19 .6% - 16 .0 % 2 1.2 % 3 .9 % 5 .1% - 6 .7 % - 0 .6 % 6 .2 % 2 1.9%
Europe Ta iwa n Europe HK HK Japa n Asia e x-JP
Europe China Asia e x-JP
China India Ta iwa n ASEAN
9 .4% 2 0 .0 % 13 .9% - 5 1.2 % 60 .2 % 15 .4% - 17 .3 % 19 .1% 3 .6 % 4 .8 % - 7 .8 % - 2 .5 % 4 .0 % 2 1.2%
HK U.S . Ta iwa n Asia e x-JP
Europe U.S . China Ta iwa n Asia ex-JP
Ja pan Asia e x-JP
Europe Europe Europe
8 .4% 14 .7 % 8 .4 % - 52 .4 % 35 .8 % 14 .8% - 18 .4 % 16 .7 % 3 .1% - 4 .0 % - 9 .2 % - 2 .5 % 3 .4 % 2 0 .3 %
Ta iwan Korea U.S . Kore a U.S . China Ta iwa n U.S . India Europe Ta iwa n China Korea Ja pa n
6 .4% 12 .6 % 5 .4 % - 55 .3 % 26 .3 % 4 .6 % - 20 .9 % 15 .3 % - 3 .8 % - 6 .2 % - 11.7 % - 4 .8 % 2 .9 % 15 .5%
U.S . Ja pan Japa n India Ja pa n Europe India Ja pa n AS EAN Korea ASEAN Ja pa n Ja pan U.S .
5 .1% 6 .2 % - 4 .2% - 64 .6 % 6 .3 % 3 .9 % - 37 .2 % 8 .2 % - 4 .7 % - 11.1% - 18 .5 % - 6 .5 % 0 .9 % 15 .1%
10-yrs ('06 - '15)
|GTM – Asia 36
36
Equi
ties
40
60
80
100
120
140
160
180
200
220
'05 '07 '09 '11 '13 '15
Global corporate profitability
Source: (All charts) FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Forward earnings per share Forward return on equity
U.S.
Europe
Japan
Asia ex-Japan
EM
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16-2%
0%
2%
4%
6%
8%
10%
12%
Global net margins
U.S.
Europe
Japan
Asia ex-Japan
EM
Index, rebased 2005 = 100
Asia ex-Japan
Europe
Japan
U.S.
EM
|GTM – Asia 37
37
Equi
ties
2.41.7 1.8 1.8
2.1 2.22.7
2.01.4
3.1
1.4 1.31.9
1.7
2.8
1.6
2.7
1.6 1.4 1.4 1.6 1.7 1.4 1.2 1.1
2.8
1.1 1.01.6
1.0
2.5
1.2
0x
1x
2x
3x
4x
5x
S&P 500 Europe ex-UK
Asia ex-Japan
Emergingmarkets
ASEAN Australia China A(CSI 300)
China Hong Kong India Japan Korea Taiwan Brazil Mexico Turkey
Global equity markets: Valuations
Source: (All charts) China Securities Index, FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.P/E and P/B ratios are in local currency terms. China A valuations based on the CSI300 Index and China valuations based on the MSCI China. 10-year range for P/E and P/B ratios are cut off to maintain a more reasonable scale. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Equity market valuations – Price to earningsForward P/E ratios
10-yr. averageLatest
10-yr. range37.7 36.741.7
Equity market valuations – Price to bookTrailing P/B ratios 10-yr. average
Latest
10-yr. range7.3
14.0 12.5 12.411.3
13.8 13.916.2
11.7
16.1 16.1 16.0
9.7
14.2
10.5
15.6
9.5
16.7 14.6
12.212.1
14.3 15.8
11.110.2
13.8
17.2
12.8 10.8 12.913.4
19.0
9.1
0x
10x
20x
30x
S&P 500 Europe ex-UK
Asia ex-Japan
Emergingmarkets
ASEAN Australia China A(CSI 300)
China Hong Kong India Japan Korea Taiwan Brazil Mexico Turkey
|GTM – Asia 38
38
Equi
ties
5x
15x
25x
35x
45x
'80 '85 '90 '95 '00 '05 '10 '15
+1 SD: 26.5x
Average : 20.5x
-1 SD: 11.9x
3/2016: 15.1x
5x
15x
25x
35x
45x
55x
'80 '85 '90 '95 '00 '05 '10 '15
3/2016: 24.4x
Developed markets: Cyclically-adjusted price-to-earnings (CAPE)
Source: (All charts) Datastream, MSCI, J.P. Morgan Economics, J.P. Morgan Asset Management.CAPE = Market price/10-year average earnings.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Cyclically-adjusted price-to-earnings ratio Cyclically-adjusted price-to-earnings ratioMSCI U.S. CAPE MSCI Europe CAPE
-1 SD: 14.1x
+1 SD: 31.4x
Average : 23.6x
|GTM – Asia 39
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Equi
ties
0.8x
1.2x
1.6x
2.0x
2.4x
2.8x
3.2x
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '160.2x
0.6x
1.0x
1.4x
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
Emerging markets: Price-to-book valuations
Source: (All charts) FactSet, I/B/E/S, MSCI, J.P. Morgan Economics, J.P. Morgan Asset Management.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
MSCI emerging markets P/B ratioTrailing P/B ratio
3/2016: 1.4x
+1 SD: 2.2x
-1 SD: 1.4x
Average: 1.8x
Emerging markets vs. developed markets relative P/B Relative MSCI EM/MSCI World P/B
EM relatively more expensive compared to DM
EM relatively cheaper compared to DM
3/2016: 0.71x
|GTM – Asia 40
40
Equi
ties
0
20
40
60
80
100
120
140
160
-1%
0%
1%
2%
3%
4%
5%
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
Emerging markets: Valuation analysis
Source: (All charts) Bloomberg, FactSet, MSCI, J.P. Morgan Asset Management.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
MSCI emerging markets: Price-to-book and returnsPrice-to-book ratio and next 12 months’ price returns
EM growth & equity outperformance
EM growth & equity underperformance
EM minus DM GDP growth
MSCI EM relative to MSCI DM
EM vs. DM growth and equity performanceMonthly, consensus expectations for GDP growth in 12 months
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0.8x 1.2x 1.6x 2.0x 2.4x 2.8x
Current level
|GTM – Asia 41
41
Equi
ties
1.0x
1.5x
2.0x
2.5x
3.0x
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
APAC ex-Japan: Price-to-book valuations
Source: (All charts) FactSet, MSCI, J.P. Morgan Asset Management.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
MSCI AC Asia Pacific ex-Japan P/B ratioTrailing P/B ratio
3/2016: 1.4x
+1 SD: 2.2x
-1 SD: 1.5x
Average: 1.9x
Asia Pacific ex-JP vs. developed markets relative P/B Relative MSCI AC APxJ/MSCI World P/B
APxJ relatively more expensive compared to DM
APxJ relatively cheaper compared to DM
3/2016: 0.72x
0.2x
0.6x
1.0x
1.4x
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
|GTM – Asia 42
42
Equi
ties
90
95
100
105
110
115
120
125
13020
40
60
80
100
120
140
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15
USD appreciation and Asian equity underperformance
APAC ex-Japan: Valuation analysis
Source: (All charts) FactSet, J.P. Morgan Asset Management.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Relative APxJ / DM Equity Performance and USD REERIndex, rebased 1995 = 100
MSCI AC APxJ / MSCI The World (DM)
USD REER (inverted scale)
MSCI APAC ex-JP Index: Price-to-book and returnsPrice-to-book ratio and next 12 months’ price returns
USD depreciation and Asian equity outperformance
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0.80x 1.20x 1.60x 2.00x 2.40x 2.80x
Current level
|GTM – Asia 43
43
Equi
ties
-2.2%1.7%
0.6%1.5% 2.5% 4.3% 4.8% 5.1% 6.1% 8.1%
11.7%
-7.7%-4.4% -3.5% -1.9% 0.1%
3.1%
-0.9% 0.6%2.3%
4.8%1.6%
1.7% 4.9% 4.2%4.6%
4.4% 4.1% 4.9%5.8%
5.3%
7.6%
1.4% 2.8% 2.7% 2.3% 3.2%2.4%
3.3% 2.9%3.9%
3.3%
-10%
0%
10%
20%
Japan Korea Australia Taiwan Singapore HongKong
China Malaysia Thailand Indonesia Philippines Russia Poland Brazil Turkey SouthAfrica
Mexico Europe EM(EmergingMarkets)
AC AsiaPacific
ex-Japan
U.S.(S&P 500)
0
2,000
4,000
6,000
'70 '75 '80 '85 '90 '95 '00 '05 '10 '15
The compounding effect
Source: (All charts) FactSet, MSCI, J.P. Morgan Asset Management.*Reinvestment in cash based on the average U.S. 3-month Treasury bill (secondary market) yield since 1970, which is 5.1% per annum. **Returns are total (gross) returns based on MSCI indices in U.S. dollar terms. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
MSCI World Index: Performance under different scenariosIndex 100 = 1970
Annualized return Total return (dividends received and reinvested back into equities) 9.4%Total return (dividends received and reinvested in cash)* 8.6%Total return (dividends received but not reinvested) 7.1%Price return 6.2%
Total return**: Dividends vs. capital appreciationAverage annualized returns over 10 years Capital appreciation
Dividends with compounding
Asia Pacific Other EM Regions
4,538
6,248
2,313
1,548
|GTM – Asia 44
44
Equi
ties 0
100
200
300
400
500
600
700
'00 '02 '04 '06 '08 '10 '12 '14 '16
High dividend equities
Source: (Top) CLSA, FactSet, MSCI, J.P. Morgan Asset Management. (Bottom left and right) FactSet, MSCI, J.P. Morgan Asset Management. *Total returns based on MSCI indices in U.S. Dollar terms. **Annualized return and volatility based on total monthly return data (USD) between January 2001 and March 2016.***Risk-adjusted return is calculated by annualized return over volatility.Positive yield does not imply positive return. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
MSCI AC Asia Pacific ex-Japan: Performance by dividend yield*USD cumulative total return of tertiles with quarterly rebalancing (Jan. 2000 base = 100)
Top tertile
2nd tertile
Bottom tertile
All stocks
Risk and return profile: High dividend vs. broad index
MSCI indices
Asia Pacific ex-Japan EM DM
HD Broad HD Broad HD Broad
Annualized return** 9.1% 8.6% 13.1% 8.3% 5.5% 4.4%
Annualized volatility** 13.7% 21.1% 16.7% 22.9% 13.3% 15.8%
Risk-adjusted return***
0.67 0.41 0.79 0.63 0.42 0.28
Constituents of MSCI AC World IndexNumber of companies yielding greater than 2% by region
489
323281
156
0
200
400
600
EM Europe U.S. Japan
|GTM – Asia 45
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Source: (All charts) Barclays, Bloomberg, FactSet, J.P. Morgan Asset Management. Based on Barclays U.S. Aggregate Credit - Corporate High Yield Index (U.S. Corporate HY), Barclays U.S. Aggregate Credit – Corporate Investment Grade Index (U.S. Corporate IG), J.P. Morgan Government Bond Index – EM Global (GBI-EM) (Local CCY EMD), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (USD EMD), J.P. Morgan Asia Credit Index (JACI) (USD Asian), Barclays Pan European High Yield (Europe HY), J.P. Morgan Government Bond Index – Global Traded (DM Gov’t), J.P. Morgan Asia Credit Index – Non-investment Grade Corporate (Asia HY), Barclays Global U.S. Treasury – Bills (3-5 years) (U.S. Treasury) and Barclays U.S. Treasury – Bills (1-3 months) (Cash). 5-year data is used to calculate annualized returns (Ann. Ret.). Returns are in USD and reflect the period from 31/12/10 – 31/12/15. (Left) Duration is a measure of the sensitivity of the price (the value of the principal) of a fixed-income investment to a change in interest rates. *Duration is expressed as number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. 10-year data is used to calculate the correlation to the 10-year UST. Positive yield does not imply positive return. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Global fixed income: Yields and returns
USD EMD
Global bond opportunitiesYTM
Local CCY EMD
U.S. Corporate IG
USD Asian Bond
DM Government Bond
Asia Corporate HY
U.S. Treasury
Cash
7.1%
5.0%
6.1%
3.2%
1.3%
8.4%
1.1%
0.2%
Duration*(years)
4.6
7.0
3.8
7.1
6.1
4.2
7.8
0.2
Correl. to10-year
UST
0.02
0.18
-0.27
0.44
0.98
-0.25
0.61
0.07
Fixed income sector returns
U.S. Corporate HY
7.7% 3.2 -0.10
Europe HY
4.5% 5.1 0.22
5-yrs ('11 - '15)
2011 2012 2013 2014 2015 1Q '16 Ann. Ret.U.S .
Tre a sEurope
HYEurope
HYUSD
Asia nAsia HY Loc a l
EMDAsia HY
9 .8 % 3 0 .5 % 14 .9 % 8 .3% 5 .8 % 11.4 % 6 .6 %USD EMD Asia HY U.S . HY U.S . IG USD
Asia n DM Gov't USD Asia n
8 .5 % 2 5 .4 % 7 .4 % 7 .5% 2 .8 % 6 .7 % 5 .5 %
U.S . IG Loc a l EMD
Asia HY Asia HY USD EMD
Europe HY
USD EMD
8 .1% 19 .9 % 4 .3 % 5 .5% 1.2 % 5 .4 % 5 .1%
DM Gov't USD EMD
Ca sh USD EMD
U.S . Tre a s
USD EMD
U.S . HY
7 .2 % 18 .5 % 0 .0 % 5 .5% 0 .8 % 5 .2 % 5 .0 %
U.S . HY U.S . HY USD Asia n
U.S . Tre a s
Ca sh U.S . IG U.S . IG
5 .0 % 15 .8 % - 1.4 % 5 .1% 0 .0 % 4 .0 % 4 .5 %USD
Asia nUSD
AsianU.S . IG U.S . HY U.S . IG USD
AsianEurope
HY4 .1% 14 .3 % - 1.5 % 2 .5% - 0 .7 % 3 .6 % 4 .2 %
Ca sh U.S . IG U.S . Trea s
DM Gov't DM Gov't Asia HY U.S . Tre a s
0 .1% 9 .8 % - 2 .7 % 0 .7% - 2 .6 % 3 .4 % 2 .9 %Europe
HYU.S .
Tre a sDM Gov't Ca sh U.S . HY U.S . HY DM Gov't
- 5 .5 % 2 .0 % - 4 .5 % 0 .0% - 4 .5 % 3 .4 % 0 .3 %
Asia HY DM Gov't Loc a l EMD
Europe HY
Europe HY
U.S . Tre a s
Ca sh
- 5 .9 % 1.3 % - 5 .5 % - 6 .0 % - 7 .6 % 3 .2 % 0 .0 %Loc a l EMD
Ca sh USD EMD
Loc a l EMD
Loc a l EMD
Ca sh Loc a l EMD
- 6 .4 % 0 .1% - 6 .6 % - 6 .1% - 18 .0 % 0 .1% - 4 .0 %
|GTM – Asia 46
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1.3%
0.9%
-3.2%
-4.5%
1.3%
-0.7%
1.5%
0.5%
3.0%
4.8%
8.9%
3.4%
4.5%
4.0%
2.0%
3.0%
-10% 0% 10% 20%
5-yr.
10-yr.
30-yr.
U.S. HY
EM (USD)
IG Corp.
U.S. MBS
U.S. Agg.
-0.2%
-1.2%
-6.0%
-5.6%
-4.2%
-3.2%
-2.0%
-2.0%
2.6%
4.3%
8.2%
0.8%
2.0%
2.8%
1.5%
2.3%
-10% 10%
United States: Sources of bond returns
Source: Barclays, Federal Reserve, J.P. Morgan Asset Management. All returns reflect year-to-date returns. Treasury base, spread and coupon returns based on Barclays and J.P. Morgan Asset Management estimates. The sum of charts A and B equate to price return for each sector and the sum of charts A, B and C do not add up to the total return due to rounding. Indices used include Barclays U.S. Treasury Bellwethers (10Y), Barclays U.S. Aggregate, Barclays U.S. Aggregate Credit –Corporate Investment Grade, Barclays U.S. Aggregate Credit – Corporate High Yield, Barclays U.S. MBS Index, Barclays Floating Rate Index and Barclays Emerging Markets USD. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Total return“A + B + C”
Treasury base rate return Coupon return“C”“A”
Spread to Treasury return“B”
2015
2016 YTD
-5.8%
-0.1%
-1.6%
-0.1%
-0.5%
0.7%
1.2%
0.1%
-0.4%
-0.1%
-10% 0% 10% 20%
1.5%
2.1%
2.8%
7.0%
5.6%
4.1%
3.5%
3.1%
0.4%
0.5%
0.7%
1.8%
1.4%
1.0%
0.9%
0.8%
-10% 0% 10% 20%
5-yr.
10-yr.
30-yr.
U.S. HY
EM (USD)
IG Corp.
U.S. MBS
U.S. Agg.
|GTM – Asia 47
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G3 government bond yields
Source: FactSet, J.P. Morgan Asset Management.*Average since October 1972 for Germany and February 1986 for Japan due to data availability.Positive yield does not imply positive return. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
BoJ QQE2013
Fed QE32012
Fed QE22010
BoE QE2009
Fed QE2008
Oil shock1981
Black Friday1987
Britain leaves ERM1992
Asian currency crisis1997
9/11 attacks2001
Dot com bubbleFeb 2000
Fed rate hike, ECB QE, ECB QE2
2015
Fall of Berlin Wall 1989
Oil crisis1973 Energy crisis
1979
Averagesince 1970* Latest
U.S. 6.7% 1.77%Germany 5.9% 0.15%Japan 2.6% -0.05%
ECB negative interest rate,BoJ QQE2
2014
BoJ negative interest rate
2016
10-year bond yields
|GTM – Asia 48
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-20%
-10%
0%
10%
20%
1Q07 1Q09 1Q11 1Q13 1Q15
6x
8x
10x
12x
14x
16x
1Q00 1Q03 1Q06 1Q09 1Q12 1Q15
Global investment grade bonds
Source: (All charts) J.P. Morgan, J.P. Morgan Asset Management.*EBITDA stands for earnings before interest, tax, depreciation and amortization. **Interest coverage ratio is EBITDA over interest expense. Positive yield does not imply positive return. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Yield-to-maturity (%)Investment grade corporate bond yields across regions
Interest coverage ratio**
EBITDA* growth
U.S.
UK
Eurozone
Last 12-month EBITDA Last 12-month EBITDA (ex-energy, metals/mining)
Year-over-year % change
EBITDA / Interest expense
EBITDA / Interest expense (ex-energy, metals/mining)
0%
1%
2%
3%
4%
5%
6%
'10 '11 '12 '13 '14 '15 '16
|GTM – Asia 49
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0%
4%
8%
12%
16%
20%
'90 '95 '00 '05 '10 '15
U.S. high yield bonds
Source: (All charts) J.P. Morgan, J.P. Morgan Asset Management. *Default rate is defined as the par value percentage of the total market trading at or below 50% of par value and includes any Chapter 11 filing, prepackaged filing or missed interest payments. Spreads indicated are benchmark yield-to-worst less comparable maturity Treasury yields. Positive yield does not imply positive return. **Leverage is net debt to earnings before interest, tax, depreciation and amortization (EBITDA). ***Interest coverage ratio is EBITDA over interest expense. ****Analysis since January 1987 due to data availability. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
U.S. high yield spread and default rate*Average Latest
HY spread to worst 584bps 753bpsHY spread to worst (ex-energy) 634bps 669bpsHY spread to worst (energy) 547bps 1,339bps
HY default rate 4.0% 3.2%
Leverage** and interest coverage ratio***U.S. high yield leverage measures
3.5x
4.0x
4.5x
5.0x
5.5x
'08 '09 '10 '11 '12 '13 '14 '15
LeverageInterest coverage ratio
Frequency (in months), as spread to worst exceeds 700bps****12-month forward return for U.S. high yield
2 215 12
18 21
411
0
5
10
15
20
25
<-20% -20% –-10%
-10% –0%
0% –10%
10% –20%
20% –30%
30% –40%
>40%
|GTM – Asia 50
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0
500
1,000
1,500
2,000
2,500
0%
5%
10%
15%
20%
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
% bps
26% 27%9% 5%
7% 13%23%
22%
13% 8%5% 6%
7% 29%4% 9%
8%
6%15% 7% 22%17%
22% 19% 21% 7%
7% 12% 10% 14%
0%
20%
40%
60%
80%
100%
U.S. Europe EM Asia
European high yield bonds
Source: (Top) BofA/Merrill Lynch, Credit Suisse, FactSet, J.P. Morgan Asset Management. Spread to worst is BofA/Merrill Lynch Euro Non-Financial High Yield Constrained. (Bottom left) J.P. Morgan, J.P. Morgan Asset Management. *EBITDA is earnings before interest, tax, depreciation and amortization. (Bottom right) J.P. Morgan, J.P. Morgan Asset Management. U.S. corporate high yield is represented by the J.P. Morgan Domestic High Yield Index. Europe corporate high yield is represented by J.P. Morgan Euro High Yield Index. EM corporate high yield is represented by J.P. Morgan CEMBI NON-IG Index. Asian corporate high yield is represented by J.P. Morgan Asia Credit Corporate High Yield Index. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Sector breakdown across high yield indices
Commodities
OtherTMT
Health CareReal EstateIndustrial
ConsumerFinancial
Year-over-year % changeEuropean high yield revenue and EBITDA growth
-40%
-20%
0%
20%
40%
'03 '05 '07 '09 '11 '13 '15
EBITDA*Revenue
European high yield spread and default rateAverage Latest
HY spread to worst 640bps 524bpsHY default rate 5.0% 1.0%
2002 default rate: 34%
|GTM – Asia 51
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0
10
20
30
40
50
60
70
80
90
100
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14
Emerging markets debt: Market size and fundamentals
Source: (Left) BIS, J.P. Morgan Asset Management. Based on an aggregate of the financial accounts of various EM countries. (Top right) J.P. Morgan Economics, J.P. Morgan Asset Management. (Bottom right) FactSet, Moody’s, J.P. Morgan Asset Management. *Latest data as of 30/9/2015 based on the BIS March 2016 Quarterly Review.**Latest crediting rating breakdown for 2016 as of 31/3/16. Positive yield does not imply positive return. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Size of the global bond marketUSD trillions
1995 2005 2015*U.S. 10.9 (53%) 23.8 (42%) 36.7 (39%)DM ex-U.S. 9.0 (44%) 27.7 (49%) 41.7 (44%)EM 0.7 (3%) 5.0 (9%) 16.2 (17%)World 20.6 56.5 94.6
DM ex-U.S.
U.S.
EM
U.S. Baa corporate bond (USD)
EM sovereign (USD)
Sovereign USD credit rating breakdown% of EMBI Global index
Unrated
BBB
IG
C
Yield to maturityEM sovereign debt and U.S. Baa corporate bond yields
0%
20%
40%
60%
80%
100%
'95-'99 '00-'04 '05-'09 '10-'14 '15-'16**
|GTM – Asia 52
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Asia: Sovereign debt
Source: FactSet, J.P. Morgan Asset Management. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Yield to maturity Country (31/3/16)Indonesia 7.6%India 7.5%Philippines 4.7%Malaysia 4.1%China 2.9%Australia 2.5%Korea 1.8%U.S. 1.8%Thailand 1.7%
10-year government bond yields
|GTM – Asia 53
53
Oth
er
asse
t cla
sses
Asset class returns
Source: Barclays, Dow Jones, FactSet, J.P. Morgan, MSCI, J.P. Morgan Asset Management. The “Diversified” portfolio assumes the following weights: 20% in the MSCI The World Index (DM Equities), 20% in the MSCI AC Asia ex-Japan (Asia ex-Japan), 5% in the average of the MSCI EM Latin America and MSCI EM EMEA Indices (EM ex-Asia), 10% in the J.P. Morgan EMBIG Index (EMD), 10% in the Barclays Aggregate (Global Bonds), 10% in the Barclays Global Corporate High Yield Index (Global Corporate High Yield), 15% in J.P. Morgan Asia Credit Index (Asian Bonds), 5% in MSCI U.S. REITs Index (U.S. REITs) and 5% in Barclays U.S. Treasury – Bills (1-3 months) (Cash). Diversified portfolio assumes annual rebalancing. All data represent total return in U.S. dollar terms for the stated period. 10-year total return data is used to calculate annualized returns (Ann. Ret.) and 10-year price return data is used to calculate annualized volatility (Ann. Vol.) and reflects the period 31/12/05 – 31/12/15. Please see disclosure page at end for index definitions. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q '16 Ann. Ret. Ann. Vol.
U.S . REITs EM e x-Asia
Globa l Bonds
EM e x-Asia
U.S . REITs U.S . REITs Asia ex-Ja pa n
DM Equitie s
U.S . REITs Asia n Bonds
EM e x-Asia
U.S . REITs EM ex-Asia
3 5 .9 % 4 1.1% 4 .8 % 9 1.3 % 28 .5 % 8 .7 % 2 2 .7 % 2 7 .4 % 3 0 .4% 2 .8 % 15 .9 % 7 .3 % 2 7 .0 %EM e x-
AsiaAsia e x-
Ja pa nCa sh Asia e x-
Ja panAsia e x-
Ja pa nEMD Globa l
Corp HYGloba l
Corp HYAsia n Bonds
U.S . REITs U.S . REITs Globa l Corp HY
U.S . REITs
3 5 .1% 4 0 .5 % 1.8 % 7 2 .5 % 19 .9 % 8 .5 % 18 .9 % 8 .4% 8.3 % 2 .5 % 6 .3 % 7.1% 2 5 .9 %Asia ex-
Ja pa n Dive rsifie d Asia n Bonds
Globa l Corp HY
EM e x-Asia
Globa l Bonds EMD Dive rsifie d EMD EMD Globa l
Bonds EMD Asia ex-Japa n
3 3 .7 % 14 .1% - 9 .8 % 6 3 .9 % 16 .6 % 5 .6 % 18 .5 % 5 .6% 5.5 % 1.2 % 5 .9 % 6 .7 % 2 2 .6 %DM
Equitie sDM
Equitie sEMD Dive rsifie d Globa l
Corp HYAsian Bonds
U.S . REITs Asia e x-Ja pa n
DM Equitie s
Ca sh EMD Asia n Bonds
DM Equitie s
2 0 .7 % 9 .6% - 10 .9% 4 0 .8 % 13 .8 % 4.1% 17 .8 % 3 .3% 5.5 % 0 .0 % 5 .2 % 6 .6 % 16 .4%
Dive rsifie d Globa l Bonds
Globa l Corp HY
DM Equitie s
Dive rsifie d Globa l Corp HY
EM e x-Asia
U.S . REITs Asia e x-Ja pa n
DM Equitie s
Globa l Corp HY
Asia e x-Ja pa n
Dive rsified
18 .8 % 9 .5% - 2 7 .9 % 3 0 .8 % 13 .4 % 2 .6 % 17 .0 % 2 .5% 5 .1% - 0 .3 % 3 .9 % 6 .5 % 12 .1%Globa l
Corp HYEMD Diversifie d U.S . REITs DM
EquitiesCa sh DM
Equitie sCa sh Diversifie d Dive rsifie d Asia n
BondsDive rsifie d Globa l
Corp HY13 .6 % 6 .3% - 2 8 .1% 2 8 .6 % 12 .3 % 0.1% 16 .5 % 0 .0% 4.5 % - 3 .1% 3 .6 % 5 .7 % 11.2 %
EMD Asia n Bonds U.S . REITs Asia n
Bonds EMD Dive rsifie d Dive rsified Asia n Bonds
Globa l Bonds
Globa l Bonds Dive rsifie d DM
Equities EMD
9 .9 % 5.4% - 3 8 .0 % 2 8 .3 % 12 .0 % - 2 .8% 15 .9 % - 1.4 % 0 .6 % - 3 .2 % 3 .4 % 5 .6 % 8 .8 %Asia n Bonds
Ca sh DM Equitie s
EMD Asia n Bonds
DM Equitie s
Asian Bonds
Globa l Bonds
Globa l Corp HY
Globa l Corp HY
Asia e x-Ja pa n
Globa l Bonds
Asian Bonds
7 .3 % 4 .8% - 4 0 .3 % 2 8 .2 % 10 .6 % - 5 .0% 14 .3 % - 2 .6 % 0 .2 % - 4 .9 % 1.8% 3 .7 % 7 .4 %Globa l Bonds
Globa l Corp HY
Asia e x-Ja pan
Globa l Bonds
Globa l Bonds
Asia e x-Japa n
Globa l Bonds
EMD Ca sh Asia e x-Ja pan
Cash Ca sh Globa l Bonds
6 .6 % 2 .6% - 5 2 .2 % 6 .9 % 5 .5 % - 17 .1% 4 .3 % - 6 .6 % 0 .0 % - 8 .9 % 0 .1% 1.2% 2 .7 %
Ca sh U.S . REITs EM e x-Asia Cash Ca sh EM ex-
Asia Ca sh EM e x-Asia
EM e x-Asia
EM e x-Asia
DM Equities
EM ex-Asia Ca sh
4 .8 % - 16 .8 % - 5 7 .2 % 0 .1% 0 .1% - 21.2 % 0 .1% - 8 .5 % - 20 .2 % - 2 2 .7 % - 0 .3 % - 0 .6% 0 .1%
10-yrs ('06 - '15)
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13.4%
-2.8%
15.9%
5.6%4.5%
-3.1%
3.4%
-10%
-5%
0%
5%
10%
15%
20%
'10 '11 '12 '13 '14 '15 '16
Source: Barclays, Dow Jones, FactSet, J.P. Morgan, MSCI, J.P. Morgan Asset Management. The “diversified portfolio” assumes annual rebalancing. All data represent total return in U.S. dollar terms for the stated period. Please see disclosure page at end for index definitions. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Return contribution to diversified portfolio Total returns in USD
Portfolio Weighting Cash 5%Global bonds 10%Global corporate high yield 10%EMD 10%Asian bonds 15%DM equities 20%U.S. REITs 5%EM ex-Asia equities 5%Asia ex-JP equities 20%Diversified portfolio 100%
Asset class returns contribution to diversified portfolio
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Asset class correlations
Source: Barclays, Bloomberg, DJ UBS, FactSet, J.P. Morgan Economics, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.Correlations based on MSCI AC Asia ex-Japan (Asia ex-Japan), MSCI Emerging Markets (EM Equities), S&P 500 (U.S. Equities), J.P. Morgan Asia Credit Index (JACI) (USD Asian Bond), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (USD EMD), J.P. Morgan Corporate Emerging Market Bond Index (CEMBI) (EM Corp), Barclays Pan European High Yield Index (European High Yield), Barclays U.S. Corporate High Yield Index (U.S. High Yield), Barclays U.S. Capital Aggregate (U.S. Agg), U.S. Dollar DXY Index (U.S. Dollar), Brent Crude Oil Price (USD/bbl) (Brent Crude Oil), London Gold PM Price Fixing (USD/oz) (Gold) and FTSE EPRA/NAREIT Developed REITs Index (Global REITs). 10-year correlations are based on monthly returns from 31/3/06 – 31/3/16, except for REITs as data were unavailable prior to April 2006 and 3-year correlations from 31/3/13 – 31/3/16. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Asia ex-Japan equity
EM equity U.S. equity Asian USD bond USD EMD EM corp European
high yieldU.S.
high yield U.S. agg U.S. Dollar (DXY)
Brent crude oil Gold REITs
Asia ex-Japan equity 1.00 0.98 0.76 0.65 0.67 0.68 0.68 0.73 0.16 -0.53 0.41 0.19 0.65
EM equity 0.97 1.00 0.78 0.65 0.69 0.69 0.69 0.74 0.14 -0.56 0.47 0.21 0.67
U.S. equity 0.70 0.72 1.00 0.55 0.61 0.60 0.64 0.73 0.04 -0.51 0.37 0.04 0.81
Asian USD bond 0.57 0.57 0.42 1.00 0.93 0.96 0.64 0.73 0.61 -0.48 0.27 0.40 0.65
USD EMD 0.63 0.66 0.56 0.90 1.00 0.92 0.63 0.77 0.58 -0.55 0.32 0.33 0.69
EM corp 0.69 0.72 0.62 0.88 0.94 1.00 0.70 0.78 0.54 -0.51 0.38 0.35 0.62
European high yield 0.62 0.62 0.72 0.56 0.60 0.69 1.00 0.87 0.10 -0.32 0.48 0.11 0.63
U.S. high yield 0.71 0.75 0.76 0.65 0.76 0.86 0.82 1.00 0.24 -0.46 0.44 0.15 0.78
U.S. agg 0.18 0.15 -0.01 0.77 0.56 0.52 0.29 0.35 1.00 -0.23 -0.13 0.35 0.29
U.S. Dollar (DXY) -0.28 -0.35 -0.28 -0.15 -0.37 -0.31 -0.04 -0.37 0.08 1.00 -0.40 -0.40 -0.50
Brent crude oil 0.37 0.46 0.41 0.00 0.28 0.38 0.33 0.51 -0.29 -0.46 1.00 0.24 0.19
Gold 0.11 0.14 -0.06 0.33 0.24 0.27 0.08 0.25 0.36 -0.16 0.08 1.00 0.10
REITs 0.55 0.49 0.48 0.75 0.71 0.64 0.52 0.59 0.70 -0.18 -0.12 0.09 1.00
10-year correlations
3-year correlations
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0
100
200
300
0
30
60
90
'99 '01 '03 '05 '07 '09 '11 '13 '15
-1.0
-0.5
0.0
0.5
1.0
'99 '01 '03 '05 '07 '09 '11 '13 '15
Volatility and correlation
Source: (Top) Bloomberg, FactSet, J.P. Morgan Asset Management. (Bottom) FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.*The VIX-CBOE Volatility Index measures market expectations of near-term volatility conveyed by S&P 500 Index (SPX) option prices. **The MOVE-Merrill Lynch Option Volatility Index is a blended implied normal volatility for constant one-month at-the-money options on U.S. Treasuries. ***G4 10-year sovereign bond yields based on the U.S., UK, Germany and Japan. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Equity (VIX)* and Fixed Income (MOVE)**
Dot com bust Post dot com
Global financial crisis
QE era
Post QEera
Index
Weekly rolling 6-month correlation of equities and sovereign bonds
Stocks and bonds moving in the same direction
Stocks and bonds moving in the opposite direction
MOVEVIX
MSCI World / G4 10-year sovereign bonds***
S&P 500 / U.S. 10-year Treasury
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Rate rise impact on different asset classes
Source: (Left) Barclays, FactSet, MSCI, J.P, Morgan Asset Management. (Top and bottom right) MSCI, J.P. Morgan Asset Management. *Periods of rising U.S. yields are defined as rolling 3-month periods when the U.S. 10-year Treasury yields increased more than 25bps from January 1994 to March 2016, data permitting. Returns are total returns in U.S. dollar terms. Asset classes shown above include MSCI Emerging Markets High Dividend Index (data since 2001), MSCI World High Dividend Index (data since 1995), MSCI AC Asia Pacific ex-Japan High Dividend Index (data since 1999), MSCI World Index, MSCI Emerging Market Index, MSCI AC Asia Pacific ex-Japan Index, MSCI U.S. REIT Index (data since 1996), Barclays U.S. Treasury (10-year) Bellwethers Index, Barclays U.S. Corporate High Yield Index (data since 2002), Barclays U.S. Investment Grade Credit Index, Barclays U.S. Aggregate Index, J.P. Morgan EMBI Global Index, J.P. Morgan GBI-EM Broad Composite Index, J.P. Morgan Asia Credit Index (data since 1999) and BofA Merrill Lynch U.S. Convertibles Index. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Total return impact in a rising yield environmentAsset classes, rolling 3-month average total return (USD), 1994-2016 YTD*
Sectors’ relative total return impact in a rising rate environmentRolling 3-month average total return (USD) relative to MSCI AC World broad index, 1994-2016 YTD*
Defensives Cyclicals Financials
MSCI AC World 45.5% 41.1% 13.4%
MSCI World (DM) 48.7% 42.0% 9.3%
MSCI EM 19.2% 43.8% 37.0%
MSCI AC AsiaPacific ex-Japan 25.2% 42.9% 31.9%
Composition of MSCI High Dividend Equity Indices
-3.1%
-0.7%
-0.7%
0.9%
1.3%
1.3%
2.5%
3.3%
4.1%
4.6%
4.9%
7.1%
7.8%
8.7%
8.8%
-6% -3% 0% 3% 6% 9%
U.S. 10-year Treasury
U.S. aggregate
IG corporate
EMD (LLC)
EMD (USD)
Asian bonds (USD)
U.S. high yield
U.S. REITs
Convertible bonds
High div. DM equities
DM equities
Asia Pac. ex-JP equities
High div. Asia Pac. ex-JP equities
EM equities
High div. EM equities
-3.8%-3.1%
-2.8%-1.9%
-0.4%1.1%
1.5%2.1%
2.6%3.1%
-6% -4% -2% 0% 2% 4%
UtilitiesHealth Care
Con. Stap.Telecom
FinancialsIndustrialsCon. Disc.
EnergyMaterial
I.T.
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-0.8
-0.4
0.0
0.4
0.8
0% 5% 10% 15%-0.8
-0.4
0.0
0.4
0.8
0% 3% 6% 9%
Interest rates and equities correlation
Source: FactSet, MSCI, Standard & Poor’s, U.S. Federal Reserve, J.P. Morgan Asset Management.Returns are based on price index in USD terms only and do not include dividends. Data available since 1970 for S&P 500, 1986 for STOXX 50 and 1988 for MSCI AC Asia ex-Japan and MSCI Emerging Markets (MSCI EM). Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Correlations between monthly stock returns and interest rate movements
Cor
rela
tion
coef
ficie
nt
10-year U.S. Treasury yield
Monthly MSCI AC Asia ex-Japan, MSCI EM, S&P 500 and STOXX 50 returns, change in monthly 10-year U.S. Treasury yield, rolling 2-year correlation
Positive correlation between yield movements and stock returns
Negative correlation between yield movements and stock returns
Asia ex-Japan(MSCI AC Asia
ex-Japan)
U.S. (S&P 500)
Europe(STOXX 50)
Emerging Markets (MSCI EM)
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Asset class returns in different inflation environments
Source: (All charts) Barclays, Bloomberg, Dow Jones, Federal Reserve, NCREIF, Strategas/Ibbotson, J.P. Morgan Asset Management. Period returns are the arithmetic average of the nominal annual returns for the years specified by category. High or low inflation distinction reflects whether U.S. inflation was above or below the median from 1972 to 2015. *High yield returns based on the period 1984-2015. **Hedge funds based on the period 1994-2015. Rising or falling inflation distinction is relative to the previous year. Commodities returns are based on GSCI, equities on the S&P 500 total return index, govt bonds are the Barclays Aggregate US Treasury Index, high yield is the Barclays US Corporate High Yield Index, real estate is based on NCREIF Total Property Index and hedge funds on the Credit Suisse Hedge Fund index. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Occurred in 7 years since 1972Low and rising inflation
Occurred in 16 years since 1972Low and falling inflation
Occurred in 14 years since 1972High and rising inflation
Occurred in 7 years since 1972High and falling inflation Falling inflation scenariosRising inflation scenarios
U.S. average inflation: 6.4%
U.S. average inflation: 2.4% U.S. average inflation: 2.2%
U.S. average inflation: 5.7%
U.S. Median Inflation:
3.4%
2%7%
13%7%
-1%
13%
-2%
-20-100102030
-20-10
0102030 22%
8%
-8%
13%
-3%
10%
0%
-20-100102030
-20-10
0102030
19%
2%10%
6%12% 11% 13%
-20-100102030
-20-10
0102030
12%3% 1%
6%12% 8% 8%
-20-100102030
-20-10
0102030
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Alternative sources of income
Source: Alerian, Bank of America, Barclays, Clarkson, Drewry Maritime Consultants, FactSet, Federal Reserve, FTSE, MSCI, NCREIF, Standard & Poor’s, J.P. Morgan Asset Management. Maritime = Unlevered yields for maritime assets are calculated as the difference between charter rates (rental income) and operating expenses as a percentage of current asset value. Yields for each of the sub-vessel types above are calculated and the respective weightings are applied to arrive at the current sub-sector specific yields, which are then weighted to arrive at the current indicative yield for the World Maritime Fleet, Alerian MLP – (MLPs), BAML Hybrid Preferred Securities – (Preferreds), NCREIF ODCE – (Private Real Estate), FTSE NAREIT Global/USA REITs – (Global/U.S. REITs), S&P Global Infrastructure Index – (Listed Infrastructure), Barclays U.S Convertibles Composite – (Convertibles), J.P. Morgan Government Bond Index EM Global (GBI-EM) – (Local EMD), J.P. Morgan Emerging Market Bond Index Global (EMBIG) – (USD EMD), J.P. Morgan Asia Credit Index Non-investment Grade Corporate – (Asia HY), MSCI Emerging Markets – (EM Equity), MSCI The World Index – (DM Equity), MSCI USA – (U.S. Equity). Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Asset class yields
8.7%8.4%
7.7%
7.1%
6.2% 6.1%
4.9%
3.9% 3.8% 3.8%3.5%
2.8% 2.7%2.1%
1.8%
0%
2%
4%
6%
8%
10%
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70
80
90
100
110
120
130
'73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15
-72%-59% -56% -55%
-46%-35% -33% -33% -30% -28% -27% -24% -23%
-15% -14% -11% -9% -9% -7%
0%
-80%
-60%
-40%
-20%
0%
U.S. dollar trend
Source: (All charts) FactSet, Federal Reserve, Reuters, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management.*The real trade-weighted exchange rate index is the weighted average of a country’s currency relative to a basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country’s currency, with other countries within the basket. **The Dollar Index is a trade-weighted index calculated using six major world currencies. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
U.S. dollar performance
Currency performance vs. USD
7 years: +52.7%
8 years: +34.2%
Average: 91.4
Average: 95.7
U.S. Dollar Index (DXY)**Real trade-weighted exchange rate index (REER)*
4 years: +21.6%
3/2016: 94.6 3/2016: 97.8
EM Asian countriesOther EM countriesDM countries
% since the beginning of the USD uptrend in April 2011
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Currency valuations
Source: FactSet, J.P. Morgan Asset Management. Real effective exchange rate (REER) is a measure of the weighted average of a country’s currency against an inflation-adjusted and trade-weighted index of other currencies. Currency valuation analysis starts in 1990 for China and 1993 for Russia due to data availability. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Currency deviation from average since 1970 in real effective exchange rate termsNumber of standard deviations away from average
-1.8 -1.6 -1.5-1.3
-1.2 -1.2 -1.1-0.9 -0.9 -0.8 -0.6 -0.5 -0.4 -0.3 -0.1 -0.1
0.1
0.91.2
1.72.5
-3
-2
-1
0
1
2
3
4
5
Current valuationLong-term rangeMax
Min
FX above long-term average
FX belowlong-term average
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29
30
31
32
'13 '14 '15 '16
80
90
100
11020
40
60
80
100
120
140
'13 '14 '15 '16
Oil: Short-term market dynamics
USD/bbl USD real effective exchange rateBrent crude and dollar exchange rate
Brent crude oil
USD REER(inverted scale)
OPEC crude oil productionMillion barrels
OPEC quota: 30M barrels/day
USD depreciation
USD appreciation
Source: (Left) FactSet, J.P. Morgan Asset Management. (Top and bottom right) Baker Hughes, EIA, OPEC, J.P. Morgan Asset Management. *Weekly U.S. crude oil and petroleum ending inventory excludes strategic petroleum reserve, and active rig count represents both natural gas and oil rigs.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
1.0
1.1
1.2
1.3
1.4
400
1,000
1,600
2,200
'09 '10 '11 '12 '13 '14 '15 '16
U.S. oil inventory and rig count* Number of rigs Billion barrels
Rig count U.S. oil inventory
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0
40
80
120
0 10 20 30 40 50 60 70 80 90
Oil: Long-term fundamentals
Source: (Top left and right) IEA, J.P. Morgan Asset Management. (Bottom) Deloitte MarketPoint, IMF, Reuters, J.P. Morgan Asset Management.*Global demand and non-OPEC supply based on IEA forecast, whereas the OPEC supply for 2016 is estimated to be the same as 2015. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Global crude breakeven cost curveProduction cost 2013, USD/bbl
Production capacity, million barrels per day
Middle EastOther
conventionalsRussia
Other offshores
Heavyoils
North Sea
Deep-water
U.S. shale/
light oil
Canadian oil sands
Arctic
Oil supply and demand breakdownMillion barrels per day
World oil supply and demandMillion barrels per day
68
78
88
98
'95 '00 '05 '10 '15
Oil demand
Oil supply
IEA forecast*
37.5 37.5 38.7 38.7
53.8 56.3 57.7 57.1
91.9 92.8 94.4 95.6
0
20
40
60
80
100
2013 2014 2015 2016
91.3 93.8 96.4 95.8
IEA forecast*
Global demand Non-OPEC supply OPEC supply
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Inve
stin
g pr
inci
ples
-0.1% 0.2%1.2% 0.5% -0.3%
2.5% 1.8% 1.2% 2.9% 1.4% 1.8%
7.6%9.8%
1.4%
7.5%
1.7%
5.9%
13.3%
9.1%
-0.5% -0.1% 0.0% 0.4% 0.9% 1.0% 1.0% 1.0% 1.3% 1.4% 1.4%
1.7% 1.8% 1.9% 2.5% 2.6%
3.3%
4.1% 4.2%
-4%
0%
4%
8%
12%
16%
Real return on cash and yields
Source: (Top) FactSet, IMF, J.P. Morgan Asset Management. (Bottom) FactSet, J.P. Morgan Asset Management. *Real yield based on the last 12-month average CPI for each respective country. Nominal yields are the 10-year government bond yield for each respective country.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Average annual real deposit rateBased on respective country’s deposit rate less year-over-year inflation 2000 – 2007
2008 – 2016 YTD
Real and nominal yields*
Nominal yieldReal yield
3.3%
0.9%1.6%
0.6% 0.6%
-0.1%
2.7%
0.8%
0.0%
0.3%
2.5%1.8%
1.0%0.3% 0.1% 0.0%
-0.1% -0.1%-0.8%
-1.4%-2.1%
-3.4%-6%
-3%
0%
3%
6%
Korea Australia Taiwan Japan China Thailand India U.S. Malaysia Singapore Hong Kong
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66
Inve
stin
g pr
inci
ples
Global households’ financial asset allocation by region
Source: CEIC, Central Bank of the Republic of China (Taiwan), Goldman Sachs Global Investment Research, Hong Kong Securities and Futures Commission, OECD, Statistics Singapore, J.P. Morgan Asset Management. Eurozone includes Austria, Belgium, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Slovakia, Slovenia and Spain due to data availability. Hong Kong data are based on Stock Investor Survey (2006) by the Hong Kong Securities and Futures Commission, insurance is included in Others and pension is not included due to data availability. Equities and fixed income in total made up of 15% of Singapore households’ financial assets, simple 50/50 is taken for illustration purpose. China data are based on OECD, CEIC and Davies et al. (2009) paper, which was provided by Goldman Sachs Global Investment Research. Total may not sum to 100% due to rounding.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
36%
7%12%7%
28%
11%
TaiwanHong Kong Singapore Korea
JapanUnited States Eurozone AustraliaUnited Kingdom
Cash and deposits Fixed income Equities Mutual funds Insurance and pensions Other
Households’ financial asset class breakdown
14%
9%
31%11%
32%
3%
29%
1%9%
2%
54%
4%
54%
3%
9%4%
26%
4%
22%
17%
1%
57%
2%
45%
1%
30%
7%
0% 16%
45%
9%
17%
23%
5%
36%
8%8%
5%
44% 42%
21%2%
22%
12%
72%7%
2% 11%7%
China
|GTM – Asia 67
67
Inve
stin
g pr
inci
ples
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
-80
-60
-40
-20
0
20
40
60
80
100
120
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15
Investors’ market timing
Source: (Left) FactSet, Investment Company Institute (ICI), Standard & Poor’s, J.P. Morgan Asset Management. (Right) FactSet, Standard & Poor’s, J.P. Morgan Asset Management.*More than 9,000 trading days used to calculate the total cumulative price return of S&P 500 since 1/1/80. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Market timing of retail investorsRolling 3-month U.S. equity flows (USD billions) S&P 500 Index
S&P 500Mutual fund + ETF flows
S&P 500 cumulative price return since 1980*Hypothetical investment of $100,000
Under different scenarios
Actual loss from missing daysImplied compounding loss
1,908,2281,710,175
1,168,871920,802
714,090
11,581
45,465
75,781
101,862
186,472
693,892 911,646
1,092,276
0
400,000
800,000
1,200,000
1,600,000
2,000,000
Stayinvested
Missed top1 day
Missed top5 days
Missed top10 days
Missed top15 days
|GTM – Asia 68
68
Inve
stin
g pr
inci
ples
17 20
-15
26
9
80
-19
5 7
-21 -5
43
-27
-2
-13
27
1320 23
27
-47
52
8
-17
16
5
0
-12
1
-10 -12
-24
-8 -10-3
-24
-11 -10
-32-35
-11
-30 -31-26
-12 -13-8
-15 -15
-54
-15 -13
-25
-11 -12 -12
-27
-13
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Annual returns and intra-year declines
Source: FactSet, MSCI, J.P. Morgan Asset Management.Returns are price returns based on MSCI AC Asia Pacific ex-Japan Index in U.S. dollar terms. Intra-year decline is the largest peak to trough decline during the respective year. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
MSCI AC Asia Pacific ex-Japan intra-year declines vs. calendar year returns
Calendar year returnIntra-year decline
Despite average intra-year drops of -18% (median: -13%), annual returns are positive in 18 of 29 years (62%)
YTD
|GTM – Asia 69
69
Inve
stin
g pr
inci
ples
Source: Barclays, Dow Jones, FactSet, MSCI, Standard and Poor’s, J.P. Morgan Asset Management. Hypothetical portfolios were created to illustrate different risk/return profiles and are not meant to represent actual asset allocation. USD total return calculations are based on MSCI Total Return, Barclays and J.P. Morgan indices. AxJ stands for MSCI AC Asia ex-Japan and APxJ stands for MSCI AC Asia Pacific ex-Japan. *Monthly total returns between 31/12/00 and 31/3/16.Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Annualized returns and volatilityTotal returns in USD*
Annualized volatility
Annu
aliz
ed re
turn
s
EquitiesBonds and cash
Portfolios
High dividend (HD) equities
Alternatives
Hypothetical portfolio constructionConservative Balanced Aggressive
DM equities 10% 30% 20%EM equities 5% 10% 40%U.S. HY 10% 15% 10%U.S. bonds 25% 10% 5%Cash 35% 10% 0%EMD 10% 15% 5%REITs 5% 10% 20%
DM Europe
U.S.
AxJEMD
U.S. HY
U.S. bonds
Cash
REITs
Balanced
Aggressive
Conservative
Asian bonds
EM HDAxJ HD
DM HD
APxJ HDAPxJ EM
Hedge fund - mkt neutral
Hedge fund - macroHedge fund - distressed
Hedge fund - rel val
0%
3%
6%
9%
12%
15%
0% 5% 10% 15% 20% 25%
Portfolio construction, asset class returns and volatility
|GTM – Asia 70
70
Inve
stin
g pr
inci
ples
Global and Asian retirement trends
Source: (Left) HSBC, J.P. Morgan Asset Management. Based on HSBC's "The Future of Retirement: Life after work?" Figures represent the expected portion of retirement that will not be covered by retirement savings based on survey data. (Top right) National Development Council of Taiwan (NDC), UN, J.P. Morgan Asset Management. *All data from UN except Taiwan from NDC. (Bottom right) Response to the CSIS survey of non-retired respondents on their preference of how the benefit should be paid when they retire. Total does not sum up to 100% as some respondents did not see a change. Guide to the Markets – Asia 2Q 2016. Data reflect most recently available as of 31/3/16.
Aging population% of population over 65
20252000
2050
Perceived retirement savings shortfall# of years
Years of savings expected to last after retirement
Years of perceived savings shortfallafter retirement
0%
20%
40%
60%
80%
Singapore Hong Kong Korea Taiwan China
Preference on benefit allotment Monthly paymentsLump sum payment
% of respondents
0%
5%
10%
15%
20%
25%
30%
35%
40%
Korea Australia China Singapore Hong Kong Japan Taiwan*
1412 12 11 11 11 10 10 10 9 9 9
7
7 11
5 86
10
85
10
8 9 8 12
0
5
10
15
20
25
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J.P. Morgan Asset Management: Index DefinitionsAll indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. The S&P 500 Index is widely regarded as the best single gauge of the U.S. equities market. This world-renowned index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 Index focuses on the large-cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ideal proxy for the total market. An investor cannot invest directly in an index. The Tokyo Stock Price Index ('TOPIX') is a composite index of all common stocks listed on the First Section of Tokyo Stock Exchange (TSE).The index is basically a measure of the changes in aggregate market value of TSE common stocks. The base for the index is the aggregate market value of its component stocks as of the close on January 4, 1968. The aggregate market value is calculated by multiplying the number of listed shares of each component stock by its price and totaling the products derived there from.The Bombay Exchange Sensitive Index (‘SENSEX), first compiled in 1986, was calculated on a "Market Capitalization-Weighted" methodology of 30 component stocks representing large, well-established and financially sound companies across key sectors. The base year of SENSEX was taken as 1978-79. SENSEX today is widely reported in both domestic and international markets through print as well as electronic media. It is scientifically designed and is based on globally accepted construction and review methodology. Since September 1, 2003, SENSEX is being calculated on a free-float market capitalization methodology.The Korea Composite Stock Price Index (‘KOSPI) is market capitalization based index on all common stocks listed on the Stock Market Division of the Korea Exchange (KRX) and excludes preferred stocks. The stock price index is calculated using the actual price traded on the market and not the “base price” used for market management such as establishment of price change limits. When no market price is available for issues that are not being traded or have halted trading, the latest closing price is used. KOSPI was a assigned a base index of 100 set to January 4, 1980.The China Shenzhen Composite Index is an actual market-cap weighted index that tracks the stock performance of all the A-share and B-share lists on Shenzhen Stock Exchange. The index was developed on April 3, 1991 with a base price of 100. The MSCI® EAFE (Europe, Australia, Far East) Net Index is recognized as the pre-eminent benchmark in the United States to measure international equity performance. It comprises 21 MSCI country indexes, representing the developed markets outside of North America. The MSCI Emerging Markets IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of June 2007, the MSCI Emerging Markets Index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009 the MSCI ACWI consisted of 45 country indices comprising 23 developed and 22 emerging market country indices.The following MSCI Total Return IndicesSM are calculated with gross dividends:This series approximates the maximum possible dividend reinvestment. The amount reinvested is the dividend distributed to individuals resident in the country of the company, but does not include tax credits.The MSCI Europe IndexSM is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe. As of June 2007, the MSCI Europe Index consisted of the following 16 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The MSCI Pacific IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the Pacific region. As of June 2007, the MSCI Pacific Index consisted of the following 5 Developed Market countries: Australia, Hong Kong, Japan, New Zealand, and Singapore.
The MSCI Europe ex UK IndexSM is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe, excluding the United Kingdom. The MSCI Europe ex UK Index consists of the following 15 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, and Switzerland.The MSCI Pacific ex Japan IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the Pacific region, excluding Japan. As of June 2007, the MSCI Pacific Index consisted of the following 4 Developed Market countries: Australia, Hong Kong, New Zealand, and Singapore. The MSCI USA IndexSM is designed to measure the performance of the large and mid cap segments of the U.S. market. With 586 constituents, the index covers approximately 84% of the free float-adjusted market capitalization in the U.S.. The MSCI USA Index was launched on Dec ember 31, 1969.The MSCI China IndexSM captures large and mid cap representation across China H shares, B shares, Red chips and P chips. With 148 constituents, the index covers about 84% of this China equity universe. The MSCI China Index was launched on December 31, 1992.The MSCI Indonesia IndexSM is designed to measure the performance of the large and mid cap segments of the Indonesian market. With 25 constituents, the index covers about 84% of the Indonesian equity universe. The MSCI Indonesia Index was launched on December 31, 1990.The MSCI Korea IndexSM is designed to measure the performance of the large and mid cap segments of the South Korean market. With 105 constituents, the index covers about 84% of the Korean equity universe. The MSCI Korea Index was launched on December 31, 1989.The MSCI India IndexSM is designed to measure the performance of the large and mid cap segments of the Indian market. With 71 constituents, the index covers about 84% of the Indian equity universe. The MSCI India Index was launched on December 31, 1993.The MSCI Japan IndexSM is designed to measure the performance of the large and mid cap segments of the Japan market. With 315 constituents, the index covers approximately 84% of the free float-adjusted market capitalization in Japan. The MSCI Japan Index was launched on December 31, 1969.The MSCI Hong Kong IndexSM is designed to measure the performance of the large and mid cap segments of the Hong Kong market. With 42 constituents, the index covers approximately 84% of the free float-adjusted market capitalization of the Hong Kong equity universe. The MSCI Hong Kong Index was launched on December 31, 1972.The MSCI Taiwan IndexSM is designed to measure the performance of the large and mid cap segments of the Taiwan market. With 113 constituents, the index covers approximately 84% of the free float-adjusted market capitalization in Taiwan. The MSCI Taiwan Index was launched on December 31, 1989.West Texas Intermediate (WTI) is the underlying commodity for the New York Mercantile Exchange's oil futures contracts. The Dow Jones-UBS Commodity Index is composed of futures contracts on physical commodities and represents nineteen separate commodities traded on U.S. exchanges, with the exception of aluminum, nickel, and zinc.The Dow Jones-UBS Commodity Subindexes represent commodity groups and sectors, as well as single commodities, that make up the Dow Jones-UBS Commodity Index. The subindexes track exchange-traded futures of physical commodities, and the commodity groups and sectors, like in the case of the broad index, are weighted to account for economic significance and market liquidity. The different subindexes are Energy, Livestock, Grains, Industrial Metals, and Precious Metals.
72
The Euro Stoxx 600 Index represents large, mid and small capitalization companies across 18 European countries.The Barclays High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeroes, step-up coupon structures, and 144-As are also included.The Barclays 1-3 Month U.S. Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value. In addition, the securities must be denominated in U.S. dollars and must be fixed rate and non convertible.The Barclays Corporate Bond Index is the Corporate component of the U.S. Credit index.The Barclays TIPS Index consists of Inflation-Protection securities issued by the U.S. Treasury.The J.P. Morgan EMBI Global Index includes U.S. dollar denominated Brady bonds, Eurobonds, traded loans and local market debt instruments issued by sovereign and quasi-sovereign entities.The J.P. Morgan GBI-EM Global Diversified consists of regularly traded, liquid fixed-rate, domestic currency government bonds to which international investors can gain exposure. The weightings among the countries are more evenly distributed within this index.The J.P. Morgan Corporate Emerging Markets Bond Index (CEMBI): The CEMBI tracks total returns of US dollar-denominated debt instruments issued by corporate entities in Emerging Markets countries, and consists of an investable universe of corporate bonds.The J.P. Morgan Domestic High Yield Index is designed to mirror the investable universe of the U.S. dollar domestic high yield corporate debt market.The VIX-CBOE Volatility Index measures market expectations of near-term volatility conveyed by S&P 500 Index (SPX) option prices. The MOVE-Merrill Lynch Option Volatility Index is a blended implied normal volatility for constant one-month at-the-money options on U.S. Treasuries.
Price to forward earnings is a measure of the price-to-earnings ratio (P/E) using forecasted earnings. Price to book value compares a stock's market value to its book value. Price to cash flow is a measure of the market's expectations of a firm's future financial health. Price to dividends is the ratio of the price of a share on a stock exchange to the dividends per share paid in the previous year, used as a measure of a company's potential as an investment.Bonds are subject to interest rate risks. Bond prices generally fall when interest rates rise.The price of equity securities may rise, or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. These price movements may result from factors affecting individual companies, sectors or industries, or the securities market as a whole, such as changes in economic or political conditions. Equity securities are subject to “stock market risk” meaning that stock prices in general may decline over short or extended periods of time.Small-capitalization investing typically carries more risk than investing in well-established "blue-chip" companies since smaller companies generally have a higher risk of failure. Historically, smaller companies' stock has experienced a greater degree of market volatility than the average stock.Mid-capitalization investing typically carries more risk than investing in well-established "blue-chip" companies. Historically, mid-cap companies' stock has experienced a greater degree of market volatility than the average stock.Real estate investments may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Real estate investments may be subject to risks including, but not limited to, declines in the value of real estate, risks related to general and economic conditions, changes in the value of the underlying property owned by the trust and defaults by borrower.International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies can raise or lower returns. Also, some markets may not be as politically and economically stable as other nations. Investments in emerging markets can be more volatile. The normal risks of international investing are heightened when investing in emerging markets. In addition, the small size of securities markets and the low trading volume may lead to a lack of liquidity, which leads to increased volatility. Also, emerging markets may not provide adequate legal protection for private or foreign investment or private property.Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic or market conditions than other types of investments and could result in losses that significantly exceed the original investment. The use of derivatives may not be successful, resulting in investment losses, and the cost of such strategies may reduce investment returns.There is no guarantee that the use of long and short positions will succeed in limiting an investor's exposure to domestic stock market movements, capitalization, sector swings or other risk factors. Investing using long and short selling strategies may have higher portfolio turnover rates. Short selling involves certain risks, including additional costs associated with covering short positions and a possibility of unlimited loss on certain short sale positions.
J.P. Morgan Asset Management: Index Definitions, Risks and Disclosures
73
J.P. Morgan Asset Management: Risks and DisclosuresThe Market Insights program provides comprehensive data and commentary on global markets without reference to products. It is designed to help investors understand the financial markets and support their investment decision making (or process). The program explores the implications of economic data and changing market conditions for the referenced period and should not be taken as advice or recommendation.
The views contained herein are not to be taken as an advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yield may not be a reliable guide to future performance.
J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. This communication is issued by the following entities: in the United Kingdom by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other EU jurisdictions by JPMorgan Asset Management (Europe) S.à r.l.; in Hong Kong by JF Asset Management Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia) Limited; in India by JPMorgan Asset Management India Private Limited; in Singapore by JPMorgan Asset Management (Singapore) Limited, or JPMorgan Asset Management Real Assets (Singapore) Pte Ltd; in Taiwan by JPMorgan Asset Management (Taiwan) Limited; in Japan by JPMorgan Asset Management (Japan) Limited which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Korea by JPMorgan Asset Management (Korea) Company Limited; in Australia to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Cth) by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919); in Brazil by Banco J.P. Morgan S.A.; in Canada for institutional clients’ use only by JPMorgan Asset Management (Canada) Inc., and in the United States by JPMorgan Distribution Services Inc. and J.P. Morgan Institutional Investments, Inc., both members of FINRA/SIPC.; and J.P. Morgan Investment Management Inc.
In APAC, distribution is for Hong Kong, Taiwan, Japan and Singapore. For all other countries in APAC, to intended recipients only.
Copyright 2016 JPMorgan Chase & Co. All rights reserved.
Prepared by: David Kelly, Tai Hui, Kerry Craig, Yoshinori Shigemi, Marcella Chow, Akira Kunikyo, Jasslyn Yeo, Ian Hui, Ben Luk and Anthony Tsoi.
Unless otherwise stated, all data are as of March 31 2016 or most recently available.
MI-GTMASIA-E APRIL2016