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Media- Equity Market Apr 10 2013 Christopher G. Gilmour-Investment Analyst 1 Global Markets 2 Company confidential US Equity Market-S&P 500 Index-Long series 3 Company confidential Company confidential S&P 500 and 200-day moving average 4 Company confidential Company confidential S&P 500 deflated by US CPI 5 Company confidential Company confidential S&P 500 PE Ratio (x) 6 Company confidential Company confidential US Yield Gap 7 Company confidential Company confidential US Corporate Earnings Growth 8 Company confidential Company confidential Nikkei 225 Index-Long series 9 Company confidential Company confidential Local Markets 10 Company confidential The long term case for equities YTD 2013 2.36% 11 Company confidential Company confidential JSE All Share Index-Very Long Term YTD 2013 2.36% 12 Company confidential Company confidential JSE ALL Share Index YTD 13 Company confidential Company confidential JSE Alsi still looking attractive in USD and in real terms 14 Company confidential Company confidential FTSE/JSE All Share PE Ratio (x) 15 Company confidential Company confidential FTSE/JSE FINDI PE Ratio (x) 16 Company confidential Company confidential FTSE/JSE Resources PE Ratio (x) 17 Company confidential Company confidential FTSE/JSE FINDI Earnings Growth ( YoY % Change) 18 Company confidential Company confidential Alsi & its Underlying Earnings Growth 19 Company confidential Company confidential Consumption: Real retail sales 20 Company confidential Company confidential Conclusion 21 Company confidential Conclusion In immediate future, possibility of a correction in the US equity market. US economy grudgingly gaining traction, with China maintaining momentum. Medium term, things looking distinctly better in the US. Much improved home sales and falling unemployment (apart from Friday 5 April’s figure!). But US equity market discounting far higher economic growth than is likely to be the case. Japanese market likely to perform well on the back of a significantly weaker yen Demand for commodities still remaining reasonably high, though more subdued than in recent years. Single commodity stocks remain vulnerable. JSE Resources index PE ratio still high historically. 22 Company confidential Company confidential Conclusion-continued Against this background, difficult to see how SA can maintain a high economic growth path. Interest rates staying at current levels until 2014 at earliest. Sluggish economic growth at best and far below that of our African peers. Financial and Industrial index earnings growth looking much better and sustaining the rarefied level of the index. But investors have bought quality stocks for the longer term, pushing valuations up. Deep value in quality stocks increasingly difficult to find. Retail sales growth looks vulnerable to local cost input shocks, such as a weaker rand and higher food, fuel and administered prices. Our favourite retail stocks remain Mr Price, Shoprite and Woolworths. The African growth story will continue to sustain many retail shares. . 23 Company confidential Company confidential Thank You 24 Absa presentation title Date of presentation Company confidential Company confidential use only / Unrestricted distribution
