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YOUR FINANCES AND ALL THAT MATTERS TO YOU ISSUE 4 KDN : PQ/PP1505(16208)(3) by Money Matters HAPPY DEALS Return to make you happy! Pg 2 Feature Story INFLATION, DEFLATION AND REFLATION Which way are we headed? Pg 4 Market Pulse THE DRAGON AND THE ELEPHANT Leading the herd in recovery Pg 9 FEBRUARY 2010 off the cuff Hello 2010! 2009 was a challenging one and we want to thank you for your unwavering support. We’re glad that we were able to help you navigate the economic challenges of the past year and for gaining your trust as the bank you’ll most likely recommend to others in Malaysia. As for 2010, the new year seems to have brought with it positive signs of recovery. These signs have given our HSBC Global Research optimism to believe that Malaysia’s GDP growth forecast for 2010 should hit 6.8%.* This optimism is an indication of a recovering economy, we hope. Knowing that we can use some cheer to start off the year, HSBC has launched its popular Happy Deals again. You’ll be able to enjoy extra privileges when you sign up for our products and services during our Happy Deals promotion. See more information about the deals in the following pages. For our Feature section, we delve into inflation, deflation and reflation, with a special focus on where Malaysia and other countries stand in the scheme of things. China and India especially catch our eye as they rise in economic power in the Asian recovery. Well, life is not all about work. Do spend time to rest and relax with your loved ones and enjoy the Chinese New Year celebrations in February. We at HSBC Bank Malaysia Berhad thank you for continually banking with us in 2009 and we truly look forward to a happy and prosperous new year with you. Cheers, Lim Eng Seong General Manager Personal Financial Services PUBLISHER HSBC Bank Malaysia Berhad (Company No 127776-V) EDITORIAL Benny Chee Jennifer Kwok Yap Mei Mei PRINTED BY Percetakan Lai Sdn Bhd No. 1, Persiaran 2/118C Kawasan Perindustrian Desa Tun Razak 56000 Cheras, Wilayah Persekutuan Kuala Lumpur For more information on HSBC products and services, please feel free to contact us. s#ALL s#LICKWWWHSBCCOMMY s6ISITYOURNEAREST(3"#BRANCH © Copyright. HSBC Bank Malaysia Berhad (Company No.127776-V) 2009. All right reserved. 4HISPUBLICATIONISFORPRIVATECIRCULATION to selected customers of HSBC Bank Malaysia Berhad (”HSBC”), and may NOTBEREDISTRIBUTEDREPRODUCEDCOPIED ORPUBLISHEDINWHOLEORINPARTFOR ANYPURPOSE4HISPUBLICATIONISSOLELY for general information and does not constitute any advice, recommendation OROFFERBY(3"# The opinions, statements and information CONTAINEDINTHISPUBLICATIONAREBASED ONAVAILABLEDATADELIVEREDTOBERELIABLE HSBC does not warrant the accuracy, completeness of fairness of such opinions, statements and information and reliance thereon shall give rise to any claim whatsoever against HSBC. * “Asian Economics,” Fourth Quarter 2009, HSBC Global Research. HSBC Bank Malaysia Berhad February 2010 1 money matters money matters r o t c a f s s e The happin ! y p p a h u o y e k a m o t n r retu tions, ew resolu n e k a m me to nces in ar is the ti e y w e e, get fina n m a o , y h n p a u m t For t, se A new lose weigh t, e s lo c ssibilities. o e p th f t o u ll o fu r a cle ss and tion, ems endle e s t s it rejuvena li h e it th w g … r in e g ord l – brin e for the sou g n ri p to close th s y e p k p li a h is r e a ye ny will b d. lution. Ma o s re mes ahea ti d r n e a l tt a e b w e to ren r ward nd look fo a 9 0 0 2 n chapter o appy popular “H r u o k c a b ught ing r we’ve bro a e y e ncial plann th a n ff fi o r k u ic o k y To rt on y, the a head sta u o y e iv ated to bu g it s to e h ” e ls a ’v e u D e yo your dream hom e th it n or even e la B p . 0 to 1 0 r 2 a e in f last y taken all o r your e ’v u o y g to invest fo s s weddin e in d a re g that seein w o n k e w future, e will s come tru n la p e s e th e. to your fac e il m s ig b bring a rinkle here to sp And we’re ess s of happin p a e h s u genero make e steps to as you tak happen. your plans Getting a home is one of the happiest moments in life as you finally find a place to call your own. What is better is being able to save and shorten your financing tenure to half. Which is why HomeSmart/ HomeSmart-i offers flexible payment options that make it easier and faster for you to achieve your dreams. Now you can enjoy all that with HSBC Happy Deals and get a free Home Theatre System for every accepted HomeSmart/HomeSmart-i with Takaful Mortgage Protector/ Takaful Mortgage Protector Plus for a minimum financing amount of RM250,000. Enjoy a new confidence knowing that your money is invested right. Our Foreign Currency Time Deposit is designed to offer you potentially higher returns with attractive rates. What’s more, with our HSBC Happy Deals, you’ll be enjoying 2% more or double (2X) the interest rates on Foreign Currency Time Deposit, whichever is higher. That’s not all. Life is even better when you know that your future is well taken care of. That is why our investment plans are specially designed for you to benefit from over 143 years of experience in managing investments worldwid e, to ensure a smoother journey into your future. Not only that, you can now enjoy this and more with HSBC Happy Deals plus receive a free 32-inch LCD TV with a minimum investment of RM250,000 in Equity Unit Trust Funds and/or Structure d Investment with HSBC Premier/HSBC Amanah Premier. Talk to us on 1300 88 0181 about our value-added offers on home financing, personal financing, Takaful, foreign currency time deposit, unit trust and Structured Investments. With HSBC, you’ll have plenty of reasons to be happy. FREE Panasonic Home Theatre System1 with HomeSmart/HomeSmart-i 2 With HSBC, you can enjoy every minute of the viewing pleasure in a home of your own. INVESTMENT HOME FINANCING TAKAFUL PERSONAL FINANCING FOREIGN CURRENCY TIME DEPOSIT Call 1300 88 0181 Click www.hsbc.com.my Visit any HSBC branch Issued by HSBC Bank Malaysia Berhad (Company No.127776-V) (“HSBC Bank”). HSBC Happy Deals Programme Terms & Conditions apply. Programme period until 31 March 2010. 1 Limited to the first 1,000 eligible customers on first-come-first-served basis based on Customers Pays Cost package with minimum financing amount of RM250,000 and 5 years lock-in period. 2 This is a product of HSBC Amanah Malaysia Berhad (Company No. 807705-X). HSBC Bank is a distributor of this product. 2 HSBC Bank Malaysia Berhad February 2010 HSBC Bank Malaysia Berhad February 2010 3 feature Which way are we headed? There are two schools of thoughts.2 1. Central banks and governments have introduced measures to increase money supply which usually lead to a fall in interest rates, depreciation in exchange rates and an increase in inflation rates. 2. Prices of goods will continue to fall, as demand is far below the global economy’s output capacity leading to a deflationary period. INFLATION TO RETURN FOR MOST OF THE COUNTRIES IN 2010 14 12 10 8 6 4 2 The monetary policies, put in place after the global financial crisis, could be deemed inflationary. But there is debate that with output running at well below capacity, inflation is unlikely and deflation will most possibly rear its ugly head. “Inflation pressures may get out of hand, leading to a replay of the first half of 2008 when the region grappled with exploding CPI indices. There are already signs that price pressures are returning and policymakers are well advised to maintain vigilance,” the HSBC Global Research team further states. It further predicts inflation to return to most countries in Asia in 2010, noting that price pressures are beginning to resurface.1 0 2009f Pakistan Vietnam India Indonesia Sri Lanka Philippines Korea New Zealand Australia Malaysia Hong Kong Singapore China Taiwan -2 Thailand Over the past year, the region’s governments have implemented some of the worlds’ biggest fiscal stimulus programs, while cutting policy rates with equal panache.”1 Japan Y ear 2009 will long be remembered as a tumultuous one. Asian markets fell and then bounced back with equal vigor. HSBC’s Asian Economics notes that “the rebound, in part, reflects the deft policy response by both central banks and treasuries, with rate cuts and spending boosts coming hard and fast once the data started to wobble. Where is Asia heading? CPI (% YR) Inflation Deflation Reflation feature 2010f SHARP DECELERATION IN 2009, WITH A GRADUAL PICK IN 2010 F’cast 10 4 HSBC Bank Malaysia Berhad February 2010 Central banks will have the delicate job of pinpointing a suitable time to tighten the reins and dampen the effects of inflation. Just the same, tightening too early has its risk and may slow down growth too rapidly or suddenly, a risk Asian markets can ill afford to take especially when the export sector is far from robust. INFLATION (% YR) 8 INFLATION IS WELL AND ALIVE However, a closer look at the Asian markets show that inflation is the more likely scenario for Asia ex Japan. Notably, consumer price indices have started to peak again and firms are reporting rising output prices.1 Inflation pressures may not necessarily explode immediately but over the course of the year, central banks in Asia may have to face the question of how and when to reel back on their pump-priming measures. 6 4 2 0 98 99 00 01 02 Asia-ex China & Japan 03 04 05 06 07 Asia-ex Japan 08 09f 10f 11f Asia Source: CEIC, HSBC HSBC Bank Malaysia Berhad February 2010 5 feature feature Not so for Japan, though. Japan has once again, fallen into the gnawing mouth of deflation, an old foe it has battled for over 10 years, in what is now notoriously named “The Lost Decade”. Three years ago, the Bank of Japan (BoJ) declared that it was finally free of the clutches of deflation. Its return must have exasperated policymakers. Hence, deflation was greeted with a weary hello at the end of 2009, in the form of ¥10 trillion ($115 billion) threemonth loans fixed at a 0.1% interest rate. The move was an attempt to boost liquidity and reverse a deflationary spiral. Worth just 2% of GDP, the measure is considered by analysts to be insufficient to reflate the Japanese economy or weaken the yen which on 27 November 2009 soared to its strongest level against the dollar in 14 years. He adds, “Japan will continue to be burdened with a negative output gap, but industrial production and capacity utilisation rates should rise, reflecting increased exports to rapidly growing 6 HSBC Bank Malaysia Berhad February 2010 REFLATION STRATEGY IN REVERSING DEFLATION In the face of deflation or a slowing economy, policymakers may put into motion reflation strategies. Reflation is the intentional reversal of deflation through a fiscal or monetary policy by central banks and governments. Reflation policies can include increased government spending, lowering interest rate and increasing money supply. Asian policymakers in the wake of the global financial crisis pumped in massive dollars, with China alone injecting a 4 trillion yuan ($586 billion) stimulus package to its economic veins. But which is winning? Deflation or reflationary measures? Judging from the surges in the commodity markets and recent positive growth in Asian markets, reflationary forces seems to be gaining the upper hand, which could augur well for us. Inflation, deflation and reflation will continue to battle it out in 2010. While the Malaysian economy is currently experiencing modest inflation, we believe that the government’s reflation strategies will continue, though perhaps at a slower pace until exports and the economy picks up traction. INFLATION IS IN GDP ) (% y-o-y Year 2008 2009f 2010f 2011f 4.6 -2 6.8 5.5 n Inflatio ) (% y-o-y 5.4 0.8 3.3 2.5 , er 2009 h Quart Source: s,” Fourt conomic “Asian E al Research. lob HSBC G In Malaysia, the Central Bank anticipates inflation to be modest in the absence of further unanticipated price adjustments and external influences, it said in a statement reported by Reuters.1 The Edge also reports that inflation will likely spike in the second half of 2010 but at a manageable rate.2 In November 2009, the central bank has held interest rates steady at 2.0 per cent for a sixth straight time, with the current monetary policy stance deemed appropriate and supportive of economic activity. Price pressures and inflation expectations are expected to remain contained going forward, it added. Source: 1 “Central bank holds rates, sees ‘modest’ inflation”, Malaysian Insider, 24 November 2009. 2 The Edge Financial Daily, 10 August 2009. WHAT’S THE DEAL ABOUT INFLATION? Inflation as defined by Inv estopedia.com is “the rat e at which the general level of pric es for goods and servic es is rising, and, subsequently, purchasin g power is falling. As infl atio n rises, every dollar will buy a smaller percentage of a good. For exa mple, if the inflation rate is 2%, the n a $1 pack of gum will cost $1.02 in a year.” Inflation is not necessar ily a bad thing and a mo dest inflation often signifies a growing eco nomy. But when inflatio n goes out of hand, there are repercussion s such as: ` Reduced purchasing power. Those with retirem ent funds or fixed income may find that their savings or inc om e is insufficient to provide for the lifesty le they’ve enjoyed previo usly. ` Greater uncertainty in investments as it would be difficult to ensure that returns are greater than the inflatio n rate. ` Domestic products be come less competitive globally due to the increased prices. ` In severe cases, hyp erinflation can occur. The value of the currency declines so rap idly that it is not worth the paper it is printed on. This may res ult in the complete bre akd own of the economy. RM97 after a year If you save RM100 in a can. In a year, your money will be worth RM97. Expected return Actual return (eaten by inflation) Investment nvestment If you invested RM100 in an investment with a 4% p.a. return. You’ll get RM104 after a year but the real rate of return is only 1%, which means your RM104 only has the purchasing power of RM101 a year ago. 10 RM Bank 0 before inflati RM 99 on after inflation Borrower If you took up a loan of RM100, with an interest rate of 2% p.a. After a year you will owe RM102 but the actual worth is only RM99. Inflation has reduced the value of your debt. WHAT ABOUT DEFLATION? in the supply of money es, often caused by a reduction pric in line dec eral gen a as on flati today at $1 could cost Investopedia.com defines “de y, which means a pack of gum enc curr the of er pow ing has purc or credit.” Deflation increases the r. yea a only $0.80 in g n has its hidden dangers. Declinin d thing to consumers but deflatio goo a m see may es, g: pric win er follo low the Deflation, with its al of negatives which may include create a vicious deflationary spir prices, if they persist, generally ts for companies. er spending causing falling profi ` Delay or reduction in consum dcount or cut back on wages. as companies close, reduce hea mes inco g nkin shri and ent ` Rising unemploym by companies and individuals. ` Increasing defaults on loans Products are economy. a lower level of demand in the cheaper! ` Economic depression due to Ch re d deflation is 3% or example, if de For Source: 1 “Asian Economics”, Fourth Quarter 2009, HSBC Global Research. 2 “Inflation or Deflation? Which way is Asia headed” by James Chong, Economic Pulse, Cushman & Wakefield, 27 October 2009. RM100 RM100 a year... RM103 after a year with you. At the end of Let’s say you have RM100 cash e amount of cash but its sam the have the year, you’ll still increased to RM103. purchasing power would have so So products are cheaper. What’s is er dang The tion? defla t bad abou l, a in falling into a deflationary spira vicious cycle of negatives. Job l spe ess People nd le ss ucts rod rp its pe prof ea uce However, Seiji Shiraishi, Chief Japan Economist for HSBC Securities (Japan) Limited is still positive about Japan, raising an earlier forecast for real GDP growth in 2009 to -5.7% from -6.3%. He also foresees a GDP growth at 1.2% for 2010, but warns that Japan will continue to be burdened with a negative output gap. Asian countries. Manufacturers will probably continue to curtail their personnel costs, so employees’ income will probably continue to decline.”1 The Malaysian pulse For example, if inflation is 3% a year... m p so any can m ’t an yw orkers DEFLATION MAKES A COMEBACK IN JAPAN In early 2009, in the thick of the global financial crisis, Asia seemed headed for a long drawn deflation. However, a few short months after, Asian markets appear to have steered clear of deflation. Inflation and Deflation 101 panies lower pric Com ntice people es to to e ore buy m ³,QÀDWLRQGHÀDWLRQDQG UHÀDWLRQZLOOFRQWLQXHWR EDWWOHLWRXWLQ´ Co d or aff HSBC Bank Malaysia Berhad February 2010 7 feature feature SO WHAT CAN WE DO ABOUT INFLATION AND DEFLATION? Inflation and deflation are the “yin and yang” of the equation and need to be deftly balanced to aid a country’s economic growth. One way central banks achieve this delicate balance of inflation and deflation is via the adjustment of interest rates. Lowering rates to increase economic activity. Risk of higher inflation. Higher inflation Slowing economy Usually, it is kept in balance. Slowing economy Lower interest rates Growing economy Higher inflation Central Bank Lower inflation ce inflation. du re to s te ra Increase omy. down the econ g in ow sl of Risk er High inflation Slowing economy Modest rates Growing economy Modest rates Central Bank Lower inflation The Dragon and The EElephant lephant Leading the herd in recovery Higher interest rates Central Bank conomy Growing e Source: Charts based on the “Visual guide to inflation and deflation”, mint.com tion Lower infla Enjoy 2% more or 2X the interest rate, whichever is higher with Foreign Currency Time Deposit With HSBC, you’ve so much more to gain in life. INVESTMENT HOME FINANCING TAKAFUL PERSONAL FINANCING FOREIGN CURRENCY TIME DEPOSIT Call 1300 88 0181 Click www.hsbc.com.my Visit any HSBC branch Issued by HSBC Bank Malaysia Berhad (Company No.127776-V) (“HSBC Bank”). HSBC Happy Deals Programme Terms & Conditions apply. Programme period until 31 March 2010. 8 HSBC Bank Malaysia Berhad February 2010 HSBC Bank Malaysia Berhad February 2010 9 market pulse market pulse 16.2% I y-o-y in October 2009. t’s no secret. China and India are helping Asia reshape the path to RECOVERYAFTERTHEGLOBAL economic slump. The two populous nations’ swift and strong fiscal measures as well as the sheer strength of domestic demand, have launched them into growth sooner than expected, with much appreciated spillover to the rest of Asia. Already, both nations are chalking up impressive numbers. China’s GDP growth is expected to reach 9.5% next year.1 India’s 2009/10 GDP growth forecast have also been revised upwards to 7.2% from 6.2%.2 Despite the global slowdown, China and India have witnessed growth and have risen to be the world’s fastest growing economies. 10 HSBC Bank Malaysia Berhad February 2010 GDP forecast for 2010 at 8.5%. 2010 GDP previous quarter. Commodities surge! Electricity output rebounded 17.1% y-o-y dramatically to in October from 9.5% in September, the fastest pace since February 2006. The growth of coal and crude steel production quickened to 21.1% y-o-y and 42.4% y-o-y, respectively in October 2009, from 12.7% and 28.7% in September 2009. OPTIMISTIC NUMBERS The HSBC Global Research team in their November report of China revealed a firmer economic recovery underpinned by stronger domestic demand despite the slow recovery of exports. “The biggest upside surprise comes from industrial production (IP) growth, which accelerated to 16.1% year-on-year (y-o-y) in October from 13.9% in September, close to the pre-crisis level,” says Qu Hongbin, economist for the HSBC Global Research team.1 A lot of its current growth is attributed to domestic demand. Retail sales recorded its best in October 2009, the highest pace since January 2009.1 External trade while still lagging is expected to improve gradually. Exports slowed to 13.8% y-o-y in October from -15.2% in September, impiying a slow exports recovery due to the still weak external demand. However you look at the numbers, the smoldering amber of China’s economy looks set to turn red hot in 2010. A RECORD RECOVERY India’s upward GDP revision to 7.2% from 6.2% is pegged to what can only be described as a remarkable JulySeptember GDP release. The HSBC India Economic Watch reports that “Our calculations suggest that total output rose 3.3% (13.9% annualised) in quarter-on-quarter seasonally adjusted terms – the biggest quarterly rise the economy has enjoyed since the data began in 1996! The 7.9% y-o-y rise compared with a market expectation of a 6.3% increase and was the strongest since January-March 2008.”3 Ex-agriculture growth picked up to 9% – the highest since January to March 2008. Even the “drought” has not done much to dampen Indian spirits. Despite the negative impact of rainfall 23% below normal during the June-September monsoon, lead indicators show that the nonagricultural economy is filling in the lack, left vacant by lower agriculture outputs.4 India’s economy looks set to stampede its way to growth. ASIA ANSWERS THE CALL Fuelled by positive growth in India and China, the world economy is starting to recover, reports the International Monetary Fund (IMF). “The rebound in emerging and other developing economies is being led by a resurgence in Asia, most notably in China and India, fuelled by policy stimulus and a turn in the global manufacturing cycle,” the report said. International Monetary Fund (IMF) Agriculture Total Output in October 09. Source: Data compiled from HSBC India Economic Watch (Issue 60) 19 November 2009, (Issue 61) 10 December 2009 and HSBC Global Research, “Do the rains still reign in India?”, 2 November 2009. Ex-agriculture 16.1% y-o-y ³7KHUHERXQGLQHPHUJLQJ DQGRWKHUGHYHORSLQJ Total output rose 3.3% HFRQRPLHVLVEHLQJOHGE\ (13.9% annualised) DUHVXUJHQFHLQ$VLDPRVW in the July to September 2009 QRWDEO\LQ&KLQDDQG,QGLD´ quarter from the THE ELEPHANT TRUMPETS Inward Foreign Retail sales growth jumped to Commodities 2010 GDP Retail 9.5% Industrial production (IP) growth accelerated to Exports GDP forecast for 2010 at Sector Source: Data compiled from HSBC China Economic Spotlight, 11 November 2009. 39 sectors all posting positive y-o-y growth, with the biggest growth in transportation, machinery, chemistry products and ferrous metals. Industrial Production FIRE RETURNS TO THE DRAGON Agriculture growth slowed to 0.9% due to the worst drought in decades, with rainfall 23% below normal during the June to September 2009 Inward Foreign Direct monsoon. Investment picking up again and is currently running at just over USD3 billion a month. The policy stimulus in China could support recoveries in other parts of Asia, and the world. “China’s moves have also helped its neighbours increase industrial production sharply from recession lows. Since hitting a trough in late 2008 and early 2009, industrial production has jumped 28% in Korea and 26% in Taiwan. In July (09), American industrial production rose for the first time since December 2007, but it remains just half a percentage point above the bottom in June (09),” states the New York Times in its article, “Asia’s Recovery Highlights China’s Ascendance”.5 Perhaps, Mr. Dominique StraussKahn, Managing Director of the International Monetary Fund (IMF), said it best in a speech to the International Finance Forum in Beijing last November at the conclusion of his visit to China. “For China and for Asia as a whole, a growing voice on the international stage means tremendous opportunities to contribute to the shaping of the post-crisis global economy. This is entirely appropriate, given Asia’s economic weight in the world.”6 For the first time, the catalyst for recovery is coming from China, India and the rest of Asia to the world. Source: 1 HSBC China Economic Spotlight, 11 November 2009. 2 HSBC India Economic Watch (Issue 61), 10 December 2009. 3 HSBC India Economic Watch (Issue 60), 19 November 2009. 4 HSBC Global Research, “Do the rains still reign in India?”, 2 November 2009. 5 New York Times, “Asia’s Recovery Highlights China’s Ascendance”, 23 August 2009 6 International Monetary Fund, “China’s Leadership Key in Global Economic Recovery and Reform, IMF Managing Director Dominique Strauss-Kahn Says” Press Release No. 09/408,16 November 2009 HSBC Bank Malaysia Berhad February 2010 11 market pulse market pulse Locally, the economy sprang back to life in the second quarter of 2009, registering 17% quarter-on-quarter annualised growth. The economy contracted in 2009 as expected but at a smaller rate of -2.0% compared to the earlier forecast of -3.8%. Malaysia’s 2010 GDP growth numbers are expected to expand and hit 6.8%. More good news, the Malaysian equity market, like its neighbours, have also rebounded positively. Overall, the country looks set to enjoy a sustained, V-shaped recovery.3 Positioning for THE ASIAN RECOVERY Talk to your Relationship Manager for more information on the above funds. 100 Investors are advised to read and understand the contents of the prospectus before investing. Among others, investors should consider the fees and charges involved. The price of units and distributions payable, if any, may go down as well as up. 90 80 70 60 40 Hang Seng Index Drawdown Analysis +63.5% 1 6 11 16 21 26 31 41 Source: 1 Bloomberg & HSBC. Data as of September 2009. 46 51 56 Market Crash 1987 1993 Fed Tightening & Mexico Crisis 2000 Internet Bubble Financial Crisis Peak Date Sep-87 87 Market Crash 19 Dec-93 & Mexico Crisis Fed Tightening Jul-97 l Crisis ia nc na Fi an si A Mar-00 e bl ub B et rn Inte Oct-07 Financial Crisis 2009 ptember r. Data as of Se sta Source: Morning 12 36 HSBC Bank Malaysia Berhad February 2010 Decline Duration (Month) 66 s'LOBALRECOVERYLEDBY!SIAN economic growth sChina India to lead the Asian economic growth s'LOBALRECOVERYLEADTOHIGHER demand for commodities 71 76 Commodities Funds Regional/Malaysia Funds s"ENElTFROMHIGHERDEMAND arising from global economic recovery OSK UOB Golden Dragon s(EDGEDAGAINSTINmATIONAND weakening USD ($"3'LOBAL#OMMODITIES&UND OSK UOB Energy Fund OSK UOB Gold and General Fund !M'LOBAL!GRIBUSINESS&UND AmPrecious Metals Fund Alliance Advantage GEM Fund PruAsia Select Income Fund OSK UOB Asian Growth Opportunities CIMB Islamic Asia Pacific Equity PruAsia Pacific Equity Fund HDBS Select Opportunity Fund OSK UOB Smart Treasure Fund 2 Bloomberg. Data as of August 2009. 3 HSBC Global Research, Asian Economics, “All show, no go?” Forth quarter 2009. Asian Stock Market Crisis 1997 Recovery Duration (Month) 2 44 13 20 13 16 36 42 16 61 Choice of Equity Funds Current valuations at fair value potentially present opportunities to diversity into different asset classes. HSBC offers the asset class themes with a focus on Asia. HANG SENG INDEX REBOUNDED STRONGLY 50 ASSET CLASS THEMES More than a year after the global economic crisis, Asian economies have shown their mettle in weathering the crisis relatively well. Equity markets have also rebounded strongly. Current valuations are not at bargain levels compared to early 2009 but they are still at fair value.1 China and Hong Kong valuations remain appealing with its price-to-book ratio rebounded to historical average. Although not at the high levels of early 2009 the Earnings Yield Gap remains attractive.2 The Hang Seng Index rebounded by as much as 63.5% in almost 10 months. FREE 32” LCD TV 1 with HSBC Premier/HSBC Amanah Premier’s investment plans With HSBC, you can be assured of a smoother life’s journey. INVESTMENT HOME FINANCING TAKAFUL PERSONAL FINANCING PERSONAL FINANCING FOREIGN CURRENCY TIME DEPOSIT Call 1300 88 0181 Click www.hsbc.com.my Visit any HSBC branch Issued by HSBC Bank Malaysia Berhad (Company No.127776-V) (“HSBC Bank”). HSBC Happy Deals Programme Terms & Conditions apply. Programme period until 31 March 2010. 1 Valid only for HSBC Premier/HSBC Amanah Premier customers with minimum investment of RM250,000 worth of selected Equity Unit Trust Funds or Structured Investment distributed by HSBC Bank or HSBC Amanah only. Limited to the first 1,000 eligible new-to-Premier customers and 500 eligible existing customers on first-come-first-served basic. HSBC Bank Malaysia Berhad February 2010 13 Our financial experts in 86 countries are focused on just one thing: putting a smile on your face. When your money is well invested, you can afford to be optimistic. That’s why over 100 million customers worldwide choose to grow their wealth with us. Our experience, expertise and network will help you keep your finances fit, and your ambitions well within reach. Put your wealth in good hands. Invest with HSBC