This material has been produced by RBS sales and trading staff and should not be considered independent.

The Round Up
4 November 2009
Issue No. 211
The Round Up is a comprehensive daily note produced by the RBS Warrants
team providing an overview of market movements along with quality ideas for
warrant traders and investors.

In today’s issue
Global Market Action
Aussie Market Action
DJS (DJSSZX)
QAN (QANKZJ)
Banks (NAB,ANZ,WBC)
Round Up Corner
Scoreboard, commentary
SPI Comment, Events & Dividends
SFI Investment Buy – Upgrade
MINI Trading Buy – Beneficiary of high AUD
Sector Update – WBC Today
RBS Monthly Market Review - October

Equities

Move Last % Move Range Volume

ASX 200 -8.9 4531.5 -0.2% -9 to -9.u.c $3.0 bn(L)
SPI - yesterday -25.0 4518.0 -0.6% -31 to +33 25,948(A)
Dow Jones -17.5 9771.9 -0.2% -86 to -2 Avg
S&P 500 +2.5 1045.4 +0.2% -9 to +3 Avg
Nasdaq +8.1 2057.3 +0.4% -18 to +8 Avg
FTSE -67.3 5037.2 -1.3% -119 to u.c Avg

Commodities

Move Last % Today % Past Month

Oil-WTI spot +1.3 79.5 +1.7% +13.8%
Gold Spot +25.7 1085.2 +2.4% +8.3%
Nickel (LME) -12.3 804.9 -1.5% +3.2%
Aluminium (LME) -0.4 85.0 -0.4% +5.9%
Copper (LME) -4.3 291.9 -1.5% +9.9%
Zinc (LME) -0.7 97.7 -0.7% +16.2%
Silver +0.8 17.2 +4.8% +6.8%
Sugar +0.5 23.4 +2.2% +0.8%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) -0.01 0.00 +13.5 c 14.97 +2.5 c
RIO (UK) -27.00 -0.01 +27.9 c 50.69 -1211.6 c
BLT (BHP UK) -39.50 -0.02 +16.5 c 30.03 -670.8 c
BXB (UK) -7.25 -0.02 +3.9 c 7.11 +1.0 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) 0.07 0.00 +66.6 c 36.88 +14.2 c
AWC (US) -0.07 -0.01 +5.8 c 1.62 -1.0 c
TLS (US) -0.24 -0.02 +14.5 c 3.21 -1.5 c
ANZ (US) -0.24 -0.01 +20.3 c 22.46 -12.4 c
WBC (US) -0.98 -0.01 +115.2 c 25.54 +10.5 c
NAB (US) -0.70 -0.03 +25.5 c 28.26 -12.6 c
LGL (US) 2.02 0.07 +30.1 c 3.34 +17.0 c
RMD (US) -0.57 -0.01 +49.0 c 5.43 -2.9 c
JHX (US) 0.25 0.01 +31.7 c 7.02 -2.2 c
PDN (CAN) 0.07 0.02 +3.9 c 4.06 -1.1 c

Overnight Commentary
United States Commentary
Some signs of indecision in both camps overnight, but heading into the close, the bears out number the bulls and the Dow is trading
well off lows but down 20pts. Better than expected economic numbers offset by selling across the semiconductor space and weakness
in financials. Elsewhere, the S&P up 0.2% and the Nasdaq 0.2% higher.
Eco - Factory Orders for September marginally higher than expected at +0.9% vs +0.8% and a significant improvement on -0.8% in the
month prior.
Financials - To be expected following some reasonably bleak news from UK/European counterparts, US financials were under
pressure. Capital One down around 3%, BoNY 2.5% lower and Citigroup gave back 1.5%.
Growth - More than offset by weakness across the financials and heavyweight techs, the better than expected Factory Orders number
got behind a couple of the economic barometers. Alcoa around 1% higher, Caterpillar +1.2%, Dupont and United clinging to small
gains.
Techs - Intel keeping a lid on the Dow(-3.2%), the worst performer and among the bigger point takers post a broker downgrade. Citing
chip inventories and "other factors" the report included a cut from "Attractive" to "Cautious" and was part of a larger move from the
broker in question, moving to a cautious stance on the entire semiconductor space.
Techs - Falling in sympathy with Intel, Microsoft and HP both struggled, heading into the close both are in the bottom 10 and down
around 1.3% and 1.2% respectively.

Corporate - The two clear standouts on the S&P, Black&Decker up 25% with the market given a chance to respond to the Stanley
announcement and Burlington Northern almost 30% higher on news Mr Buffet will look to buy the 77.4% he doesn’t already own.

United Kingdom & Europe Commentary

The FTSE fell 1.3% or 67pts as banks again weighed on sentiment. The FTSE Eurofirst 300 was off 1.2%, the DAX fell 1.4% and the
CAC ended 1.5% lower.

UK Banks - RBS fell 7% after it confirmed it would receive another £25.5bn in public money as it entered the government asset
protection scheme, raising the state’s economic interest in the company to 84.4%. Lloyds rose 2.7% after it said it would raise £22bn,
raising £13.5bn through a rights issue and swapping £7.5bn of debt into a form of bond financing.

Euro Banks - UBS slumped 5.8% after worse than expected results with inflows still low and redemptions still high while Swiss peer
Credit Suisse ended 2% lower. Deutsche Bank fell 4.2%, Commerzbank was off 4%, BNP dropped 4.3% and SocGen was also off
4.3%.
Retail - Tesco climbed 0.5% after a broker upgrade with the retailer expected to benefit with its move into the UK banking market as
competition increases. Sainsbury was up 0.6% and Morrison eked out a gain of 0.1%.

Pharma - Despite its defensive qualities GlaxoSmithKline fell 1.5% after a broker downgrade saying the stock appeared fully valued.
AstraZeneca was off 1.1% and Shire fell 1.3%.

Commodiites Commentary
Miners - US factory orders were better than expected but the move by the RBA led to investors seeing falling demand in the future as
govt stimulus packages are wound back. BHP fell 2.3%, Rio was off 1%, Anglo dropped 1.3%, Xstrata sank 2% and Vedanta ended
1.1% lower.

Energy - Crude prices were flat in London trading with Europe not seeing the price rise late in the session. BP fell 0.75%, Shell was off
0.6%, BG Group dropped 0.8% and Tullow sank 2.5%. In Europe Total was off 0.5%, Statoil fell 1.3% and Repsol dropped 2.1%.

SPI Commentary
The SPI traded down 25pts or 0.55% to 4518. Open at 4560 with a high of 4576 and a low of 4512. Volume 30,318. Overnight the SPI
traded up 12pts to 4530.

SPI Intraday SPI Daily

*SPI report taken from the 9:50am open to the 4:30pm close on the previous trading day. Charts taken from IRESS

Upcoming Economic Events for the Week

Monday AUS AIG/PWC manufacturing PMI, TDMI inflation gauge, ABS existing house price
US
Tuesday AUS RBA cash rate decision
US ISM, pending home sales, construction spending
Wednesday AUS AIG/CBA services PSI, nominal retail trade, real retail trade, building approvals, RBA Governor speans
US Factory orders
Thursday AUS Trade balance
US ADP employment report, non-manufacturing ISM, FOMC funds rate decision
Friday AUS AIG/HIA construction PCI, RBA Statement on Monetary Policy, Deputy Governor Battellino speaks
US Non-farm productivity, non-farm payrolls, unemployment rate, average hourly earnings
*Dates are indicative only and may change
SFI Investment Buy:

David Jones (DJSSZX) - Upgrade

RBS Research have upgraded DJS to a Buy, believing market forecasts do not sufficiently reflect the operational
leverage DJS should enjoy as consumer spending rebounds through FY11F and FY12F. Shorter term we see positive
catalysts in upgraded FY10 and 'aspirational through-the-cycle' operational guidance. Use the recent pullback to buy DJS
for a move back up through $6. Play through DJSSZX

Source: IRESS

RBS Research believe DJS is likely to surprise the market in FY10F with an increase to its through-the-cycle gross
margin guidance of 39.5-40.0% with upgraded FY10F guidance likely, from 0-5% to 5-10% underlying NPAT growth..

RBS research believe DJS can achieve a through-the-cycle sustainable gross margin of up to 41.0% (currently 39.6%)
and a cash CODB of 27.5% (currently 28.1%)..

DJS is present in only 16 of Australia’s top-30 shopping centres by turnover. Excluding those to be entered as part of the
previously disclosed store-rollout programme, RBS Research have identified a further six that we believe have
demographics attractive to DJS and that would be unlikely to significantly cannibalise the company’s existing store sales.

RBS Research upgrade NPAT forecasts as follows: FY10 +1.0% to A$170.5m; FY11 +0.4% to A$193.3m; FY12 +6.9% to
A$220.5m. RBS now sit 5.5% and 10.4% above FY11F and FY12F consensus Bloomberg EPS forecasts, respectively.
Target price to A$6.40

Buy DJSSZX

RBS SFIs over DJS

Security ExDate ExPrc CP ConvFac Delta Description

DJSSZX 4-Feb-19 169 Call 1 0 Rbs Feb19 169 I W
MINI Trading Buy:

Qantas Airways (QANKZJ) – Load factor and yields improving

QAN is leveraged to an economic recovery and is a big beneficiary of the appreciating AUD/USD. Comments at QAN’s
AGM suggest management is confident it has passed the worst. Updated currency forecasts result in earnings upgrades
for FY10-11F. Given strengthening economic conditions and higher currency, RBS Research maintain Buy
recommendation with $3.35 target price. September traffic statistics also highlighted increased load factors and
improvements to domestic yields. Use the recent pullback to buy QAN. Play thorugh QANKZJ

Source: IRESS

QAN management appears increasingly confident that the worst is behind the company. The next critical piece of
information is to see yield improvement, which RBS Research believe may become evident in 2H10 as demand has
stabilised and the worst of the discounting appears to have passed.

QAN is also a beneficiary of a rising AUD/USD. With an estimated 39% of QAN’s cost base exposed to the USD,
earnings are positively impacted. Given the spot price sits at $0.92, further earnings upside potential exists. On RBS
estimates a 1c increase in the AUD equates to a A$14m increase in NPAT (4.3%).

RBS Research has a Buy recommendation on QAN with a target price of $3.35. With the economic environment
strengthening and currency movements positively impacting the cost base, we think there remains momentum behind the
airlines.

Buy QANKZJ
Sector Update:

Banking Sector (NAB,ANZ,WBC) – WBC reporting today

WBC is the last bank to report today. RBS Research believe this results season is likely to be dominated by talk of
recovery. A faster domestic recovery than is generally expected will probably have significant positive implications for
BDDs, margins and asset growth. Expect this to form the basis for cautiously optimistic outlook statements. RBS
Research have an overweight sector call on the banks. Play the banking reporting season and associated dividends
through RBS Self funding isntalments which benefit from dividends, franking credits and interest deductibility. ANZSZW,
NABSZW and WBCSZV are the products to use.

Source: IRESS

National Australia Bank (NAB) – NAB reported cash NPAT of A$3,841m, 3% above RBS forecasts and driven by lower
than expected BDD’s. Dividend was 73cpswith a ex date of 13th November. The outlook was cautiously optimistic with
indications that BDD’s are peaking.

ANZ Banking Group (ANZ) - ANZ reported NPAT of A$3,350mln which was about A$400mln ahead of RBS research
forecast driven by larger than expected reversal in credit intermediation charges and sustained markets performance in
2H09. Margins were strong, tier 1 ratio is strong and underlying profit growth is strong. BDD’s also look like being lower in
FY10 compared to FY09. The stock goes ex dividend 56c on 5th November

RBS forecasts for WBC: cash NPAT A$4,432m, FY09 dividend A$1.12. WBC reports tomorrow

RBS Research believe this result season is likely to provide confirmation of improvement in the form of both less stressed
exposures and declining arrears, and possibly at least one CEO calling ‘the top’ of the BDD cycle. A faster recovery is
likely to have significant implications for BDDs, margins and asset growth.

Also expect outlook statements to be cautiously optimistic. However, recovery brings its own challenges, with concerns
around funding growth in the current high-cost environment, the impact of higher interest rates on asset growth, and
impending regulation following stabilisation in the US and the UK.

With greater earnings upside potential and narrowing relative discounts, we believe NAB and ANZ (both Buy) have the
most upside potential and they are RBS Research preferred recovery plays.

RBS SFIs to trade bank reporting season

Security ExPrc Stop Loss CP ConvFac Delta Description

ANZSZW 10.633 11.67 Long 1 1 Self Funding Instalment
NABSZW 13.6710 15.00 Long 1 1 Self Funding Instalment
WBCSZV 14.1220 15.50 Long 1 1 Self Funding Instalment
RBS Round Up Corner:

RBS Monthly Market Review – October 2009

The Australian market looks fully valued at present, in RBS Research view. A 12-month forward PE of 16x for the market
is pushing towards a standard deviation of 1.5 above its long-run mean. Other valuation metrics also look full. Therefore,
for the market rally to be sustained, earnings growth is key from here. However, US broker revisions seem to be losing
momentum, while Aussie broker revisions are flat. From a bottom-up perspective, we are looking for earnings growth of a
modest 6.3% in 2010. Increasingly, the market is likely to look towards 2011 for support; we are looking for 28.6% EPS
growth in the S&P ASX 200.

Australia's performance vs the world

In local currency, the All Ordinaries (-1.9%) only just outperformed the US S&P 500 (-2.0%) and in line with the World
MSCI ex Australia Index (-1.9%), but it underperformed the regional MSCI ex Japan Index (-0.4%).

The best and worst performing sectors

The best performers for the month were Consumer Staples (+1.4%), Utilities (+0.6%) and Telecommunication Services
(+0.4). Most sectors were negative, with the worst being Property (-9.0%), Energy (-5.3%) and Healthcare (-4.1%).

The top five and bottom five performing S&P/ASX 200 stocks
The top five performers from the S&P/ASX 200 (price) Index for the month were Macquarie Media (+19.6%), Virgin Blue
Holdings (+17.4%), Energy World Corporation (+16.7%), Flight Centre (+13.7%) and St Barbara (+13.0%). The bottom
five performers were Babcock & Brown Infrastructure (-30.2%), Lynas Corporation (-28.1%), Elders (-22.9%), Paperlinx (-
18.5%) and Crane Group (-17.6%).

MINIs approaching stop loss

Approx. MINI Share:

Underlying MINI Code MINI Type Strike Stop Loss Share Price
Value Stop Loss

WES WESKZU Short $32.24 $29.01 $ 28.09 $ 4.15 3.3%

WDC WDCKZH Long $10.59 $11.66 $ 12.27 $ 1.68 5.0%
CBA CBAKZN Long $44.87 $49.36 $ 52.25 $ 7.38 5.5%
TOL TOLKZR Short $10.73 $9.12 $ 8.57 $ 2.16 6.4%
LEI LEIKZJ Long $30.33 $33.37 $ 36.00 $ 5.67 7.3%
For further information please do not hesitate to contact us on the details below

Contact
Equities Structured Products & Warrants
Toll free 1800 450 005 www.rbs.com.au/warrants
Trading Products Team
Ben Smoker 02 8259 2085 ben.smoker@rbs.com
Robbie Taylor 02 8259 2018 robbie.taylor@rbs.com
Ryan Corrigan 02 8259 2425 ryan.corrigan@rbs.com
Investment Products Team
Elizabeth Tian 02 8259 2017 elizabeth.tian@rbs.com
Tania Smyth 02 8259 2023 tania.smyth@rbs.com
Robert Deutsch 02 8259 2065 robert.deutsch@rbs.com
Mark Tisdell 02 8259 6951 mark.tisdell@rbs.com

Disclaimer:
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240530) (“RBS Equities”) and has been taken from sources believed to be reliable. RBS Equities does not make representations that the information is
accurate or complete and it should not be relied on as such. Any opinions, forecasts and estimates contained in this report are the views of RBS
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© Copyright 2009. RBS Equities. A Participant of the ASX Group.

Explanation of Warrant Tables:

Security – refers to the code ascribed to the warrant, ExDate – refers to the date on which the warrant expires or is reset, ExPrc – refers to the
exercise price, or second instalment payment, CP – tells you whether the warrant is a call or a put, ConvFac – the conversion factor of the warrant
which tells you how many warrants you need to exercise in order to take possession of 1 share, Delta – tells you how much the warrant will move for a
1c move in the underlying security, Description – Tells you the type of warrant.
All charts taken from IRESS unless indicated otherwise