Dynamic Asia Capital Detail)

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Dynamic Asia Capital Protected
Strictly for internal use by CIMB Group bank staff only. All contents strictly private & confidential to CIMB Group. Under no
circumstances are the contents of this document to be distributed to persons who are not employees of CIMB Group. This
document has been compiled for information purposes only, and nothing in its contents are to be construed as a representation,
warranty or to be relied upon in any way by any persons whatsoever. This is not an advertisement or promotional material nor is it
an offer or invitation to subscribe for, or to invest in any securities, investments or bank deposits.
CONTENTS
Section 1 – Introduction
Section 2 – Dynamic Asia Capital Protected Features
Section 3 – Dynamic Management Rule
Section 4 – Currency Exposure & Secondary Market
Section 5 – Backtesting Result & Key Product Features
Appendix 1 – Work Example

Appendix 2 – Dynamic Management Rule
Appendix 3 – Underlying Assets
circumstances are the contents of this document to be distributed to persons who are not employees of CIMB Group. This 3
Section 1 – Introduction
China’s booming economy fueling global growth

Domestic demand growth recovers on the back of investment
China’s role in the global economy is increasing
Source: NBS
Source: IMF
Domestic Demand vs. Export-led growth
For the first time, China is now
contributing more to global GDP growth Domestic demand is much more
(16%, measured at market exchange important. This year the increase in China's
rates) than the United States is. net exports (i.e. less imports) is likely to
account for about one quarter of its growth, a
record amount.
Source: CIMB, The World Bank, The Economist & IMF
Capital Flow: Domestic Institutional Investor Scheme (DII)

Hang Seng Index rose by 40% since August 20th, led by the H-shares
August 20th
Source: Bloomberg
On Monday 20 August China’s State Administration of Foreign Exchange Control announced that Chinese
individuals will be permitted to buy stocks traded on the Hong Kong stock exchange through the Domestic
Institutional Investor scheme (DII).
DII boosted Hong Kong-listed shares of Chinese companies, which had been valued by far less than on the mainland.
Source: CIMB, The World Bank, JP Morgan & Bank of America
Japan’s Recovery and Singapore’s Aspiration

MSCI Sg Cash IX Index Nikkei 225
300% 200%
250%
150%
200%
150% 100%
100%
50%
50%
0% 0%
Sep 02 Sep 03 Sep 04 Sep 05 Sep 06 Sep 07 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06 Sep 07
Japan
Singapore Foreign trade contribution should continue to trend upwards, driven by the
Singapore –the “Switzerland of the East” is a significant wealth
vigour of Asia and, notably, China that, with Hong Kong, has become the country’s
management centre for the region. Strategically located in the midst of the
largest trading partner. Imports, for their part, increased 0.6% q/q in the second
booming Asian economies, Singapore's strategic geographical location
quarter, after gaining 0.9% in the first quarter.
enables it to access 500 million people in the Southeast Asian market and
the 2.8 billion strong Asian market.
Key Highlights
• BoJ’s Tankan Survey in June 07 showed that businesses are still upbeat about
Key highlights
business conditions, particularly among large and medium-sized corporations.
• World's fourth largest foreign exchange trading centre.
• The unemployment rate dropped to 3.7% in Jun 07 (4.1% in Dec 06), which bodes
• World's 3rd largest oil refining centre, top bunker port and the Asia Pacific
well for consumer spending.
centre for the pricing and trading of oil and rubber.
• Analysts continue to expect the economy to sustain growth at 2.2% in 2007 and
• In December 2005, the Banker named Singapore as the "Financial
2.4% in 2008, underpinned by healthy private consumption arising from an
Centre of the Future" in its inaugural ranking of international financial
improved labour market and robust investment spending due to better corporate
centres.
balance sheets.
Source: CIMB & Bloomberg warranty or to be relied upon in any way by any persons whatsoever. This is not an advertisement or promotional material nor is it
Making the right decision in a volatile market environment

Dow Jones Industrial Index
104%
102%
Is it sustainable?
100% Should I buy, hold or sell?
98%
96%
94%
2- 9- 16- 23- 30- 6- 13- 20- 27- 3- 10- 17- 24- 1- 8- 15-
Jul- Jul- Jul- Jul- Jul- Aug- Aug- Aug- Aug- Sep- Sep- Sep- Sep- Oct- Oct- Oct-
07 07 07 07 07 07 07 07 07 07 07 07 07 07 07 07
Subprime problems
In the month of August saw the Dow Jones Industrial Average dropped 8.25%
from it’s previous high of 14,000.41 to 12,845.78 due to the subprime crisis – a
huge USD$392 Billion wipe out in a month.
Despite bad news from the housing market and warnings from the treasury
secretary, America's equity markets are still higher than they were in May.
The crisis that sparked the drop has led to investors questioning the
sustainability of the market.
GREED vs. FEAR
Source: CIMB, Bloomberg & The Economist
Section 2 - Dynamic Asia Capital Protected Features

Dynamic Asia Capital Protected provides investors with the following
portfolios;
1. Hang Seng Index
2. MSCI Sing Cash IX Index
3. Nikkei 225
PLUS
Dynamic Management Rule
• Capture market performance similar to how Fund Manager
does, but with a more transparent and systematic rule-based
approach.
• Provides flexibility to market volatility.

Dynamic Asia Capital Protected is a dynamically managed 3 year Single
Premium Investment-Linked Plan that offers potential unlimited returns at
maturity, along with the safety of 100% capital protection when held to
maturity.
Features
• Average annual return of 11.61% p.a.*
• 100% capital protected if held to maturity, with unlimited pay out at maturity
• Dynamic Management Rule ensures prudent adjustments according to market conditions
• Insurance coverage up to 125% of amount invested
• 2.5% bid offer spread of amount invested
*Calculation based on simple average returns
Section 3 - Dynamic Management Rule
Why Dynamic Index Management Rule?
Capture Market Performance

• The Dynamic Index Management, depending on market conditions would automatically adjust
it’s exposure to the market similarly to what a fund manager would do
• Adjustments are done systematically using a transparent pre-determined dynamic management
rule
Static Index vs. Dynamic Index

• Static Index would not be able to change its exposure in the market
• A Dynamic Index would be able to adjust its exposure in the market automatically to best suit
market conditions
Benefit more from uptrend market conditions

• Unlike existing funds in the market, the Dynamic Index Management could give investors
additional exposure into the market beyond 100% of their investment
• This creates an even bigger upside potential for investors, while protecting the downside at
maturity.

DYNAMIC REBALANCING – Dynamic Index is made up of a Reference and a defensive asset
such as Fixed Income. The Dynamic Index works by rebalancing every day between the Reference
Portfolio and the Defensive Asset depending on how the market is performing.
Bullish Market Bearish Market

Reference Portfolio:
A weighted basket comprising of the
following:-
Reference
Portfolio Hang Seng Index (Bloomberg: HSI) 50%
Reference MSCI Sg. Cash IX Index (Bloomberg: SGY) 25%

Total value Portfolio
Nikkei 225 (Bloomberg: NKY) 25%
of the Daily
Dynamic Rebalancing Fixed Income
Index
Defensive Asset:
Fixed Low risk fixed income assets
Income
i.e. Fixed Income

• Rebalances the exposure of the Dynamic Index
To find Target Exposure according to previous performances
STEP 1
& Current Exposure • Calculation is done daily to determine the need to
rebalance
Dynamic Index • Target Exposure is determined using the
110 level
following formula :
105
Known as Cushion
100
 Dynamic Index Level − Reference Level 
Reference Level Target Exposure =   × Multiplier
95  Dynamic Index Level 
Cushion
90 • Current Exposure is the proportion, in
percentage terms, of the value of the Dynamic
85
Index allocated to the Reference Portfolio as
80
determined according to the Dynamic
Management Rule.
Rebalancing is determined using current exposure and Target Exposure (Please refer to Step 2)

STEP 2
Rebalancing is based on these fixed set of rules
• Determined using a systematic set of rules
Rebalanced* Rebalanced*
Current Exposure, -10%

Current Exposure,
+10%
re-balances to Target Exposure re-balances to
Target Exposure Target Exposure
If Current Exposure falls within this range of ±10% of

Target Exposure, no re-balancing is done
• *Rebalancing is based on these fixed set of rules which are :

1) If Current Exposure > 110% of Target Exposure, then the Current Exposure will be rebalanced to Target Exposure
2) If Current Exposure < 90% of Target Exposure, then the Current Exposure will be rebalanced to Target Exposure
3) If Current Exposure is between 90% and 110% of Target Exposure, then Exposure Level is maintained
• Target exposure is capped at 150% with a minimum of 20%

• Dynamic Index follows a systematic rule to adjust it’s exposure to the Reference Portfolio in
order to maximise returns or to minimise risk
• Details on how the Dynamic Index rebalancing rule works are given in the Appendix.
Bullish Market Bearish Market

Max. Exposure Min. Exposure
Once the exposure
exceeds 100% the 150% 20%
Fixed Income
exposure is zero.
Reference
Leveraged
Portfolio
50% 20%
Dynamic
Dynamic Reference Index Fixed
Index Portfolio Income
100%
• Increased exposure in the reference portfolio to reap the • Reduce exposure in the reference portfolio to reduce risk
benefits of the performing market faced by the Dynamic Index
• Maximum exposure of 150% to avoid over exposure into • Minimum exposure of 20% to ensure even during a
the market in case market conditions changes abruptly Bearish Market, the Dynamic Index is able to generate
positive returns.

What is Adjustment Factor?
A notional cost of managing the Dynamic Index which is deducted from the level of the
Dynamic Index and NOT a direct charge or fee to the investor. (1/360)% of the
prevailing Dynamic Index Level is deducted from it daily.
Why is there an Adjustment Factor?
The Participation Rate of the product is sensitive towards the Adjustment Factor
whereby the presence of the Adjustment Factor in the structure enables investors to
benefit from a higher Participation Rate.
A high Participation Rate is vital for an investor to be more exposed to the growth of the
indices. However, a high Participation Rate comes with a price and this is reflected in
the increase of the Adjustment Factor which is the notional managing cost.
Section 4 – Currency Exposure & Secondary Market
Currency Exposure
The principal IS NOT exposed to
currency fluctuations and IS fully Returns 7% - 7%x10%
protected in Ringgit if held to = 6.30%
maturity because it is guaranteed
by placements in local money Not Capital Loss = -10%
market instruments. Protected
Net Returns = -3.70%
RM100
Ringgit appreciates = 10%
Returns 7% - 7%x10%
Returns = 7% = 6.30%
Capital Loss = Nil
Only the return IS exposed to US Capital
Dollar – Ringgit exchange rate
fluctuations because the
Protected
Net Returns = 6.30%
underlying option of the structure
is valued in US Dollars
Secondary Market
CIMB Bank provides secondary market liquidity on all structured investments
sold. This is crucial for investors to time their exit in light of evolving market
conditions, or due to liquidity needs.
A redemption before maturity date may yield a higher or lower principal,

dependent on the current market conditions. Instead of viewing a medium term
structured investment as an illiquid investment, investors can view these as
superior open ended investments with a pre-defined principal protection
milestone checkpoint.
For example, a 3 year equity linked structured investment with committed

secondary market liquidity, could be seen as a more superior alternative than
direct share purchases or open ended equity unit trust as it provides 100%
principal protection at a predetermined maturity date, with similar secondary
market liquidity.
Section 5 – Backtesting Result & Key Product Features
Backtesting Results
Distribution of Returns
93%
90%
80%
70%
Frequency Distribution
60%
50%
40%
Based on historical backtesting, 30%
Dynamic Asia would have 20%
beaten current Fixed Deposit 10%
0%
rates 93.15% of the time. 0%-1% 1%-2% 2%-3% 3%-4% 4%-5%

Average Return (% p.a.)
5%-6% > 6%
• Test Period: 27-Jul-02 to 27-Jul-07

• CIMB Bank 3-Year F.D. rate of 3.65% as at 23rd August 2007
• Average annual return = 11.61% p.a. (calculation based on simple average returns)
• Results are based on indicative participation rate of 70%. Results will vary depending on actual participation rate, which will be determined at issue date.
Returns are shown with the effect of currency adjustments.
• Historical backtesting is a method for analysing the hypothetical performance of a product using historical market prices of the underlying assets. It is not
meant to be a guarantee, representation or indication of future performance. These historical tests were conducted based on current product features. Fund
returns and the value of the fund vary depending on the fund’s investment performance. Investment-linked fund returns are NOT GUARANTEED and
investment risks under the policy will be borne solely by the policy holder. Returns are calculated after (net of) investment tax.
Key Product Features

100% Capital
Your initial investment is protected provided it is held to maturity.
Protected
Maturity 3 years
Potential capital
Unlimited pay out at maturity
gains
Currency Capital is fully protected in Ringgit, while potential returns are valued in
Protection US Dollars.
Dynamic Increase exposure when market performs well
Management Rule Reduce exposure and put in lower-risk assets when market is down
Bid Offer Spread 2.50% of amount invested
Minimum
RM 25,000
Investment
Insurance
Up to 125% of amount invested
Coverage
Surrender charges None
Annual
None
Management Fees
Thank You

Example
Coupon Calculation at Maturity (Year 3)
Assumptions:
Participation Rate = 70%

Final Dynamic Index = 150.00
Exchange rate at start = 3.4500 RM per USD
Exchange rate at Year 3 = 3.3810 RM per USD
 DynamicIndex - 100   FXEnd

Coupon = Participation Rate × max , 0%  ×
 100   FXStart
 150.00 − 100  3.3810
= 70% x max  , 0%  ×
 100  3.4500
= 34.3% or equivalent to 11.43% p.a.

Year 3 (At maturity)
  Dynamic Index - 100   FX
Coupon = Participation Rate × Max   End
 , 0%  × FX
  100  Start
This ensures investors’ principal is protected upon Maturity. (e.g. When Dynamic Index makes negative returns,
principal is not affected.
  150 − 100   3.3810

= 70% × Max   , 0%   ×
  100   3.4500
This selects the larger value between the best performing Dynamic Index’s return and 0%.
3.3810
= 70% × 50% ×
3.4500
3.3810
= 35% ×
3.4500
= 34.3% or equivalent to 11.43% p.a. (10.52% p.a. after investment tax of 8%)

Dynamic Index is rebalanced according to a systematic Dynamic Management Rule.
This rebalancing takes place on a daily basis.

Decides how much to allocate
to the Reference Portfolio and
Reference
Total Portfolio how much goes to Fixed
value of Income.
the
Dynamic
Index The percentage allocated to
Fixed
Income
the Reference Portfolio is
called the Exposure

• Rebalances the exposure of the Dynamic Index
To find Target Exposure according to previous performances
STEP 1
& Current Exposure • Calculation is done daily to determine the need to
rebalance
Dynamic Index • Target Exposure is determined using the
110 level
following formula :
105
Known as Cushion
100
 Dynamic Index Level − Reference Level 
Reference Level Target Exposure =   × Multiplier
95  Dynamic Index Level 
Cushion
90 • Current Exposure is the proportion, in
percentage terms, of the value of the Dynamic
85
Index allocated to the Reference Portfolio as
80
determined according to the Dynamic
Management Rule.
Rebalancing is determined using current exposure and Target Exposure (Please refer to Step 2)

STEP 2
Rebalancing is based on these fixed set of rules
• Determined using a systematic set of rules
Rebalanced* Rebalanced*
Current Exposure, -10%

Current Exposure,
+10%
re-balances to Target Exposure re-balances to
Target Exposure Target Exposure
If Current Exposure falls within this range of ±10% of

Target Exposure, no re-balancing is done
• *Rebalancing is based on these fixed set of rules which are :

1) If Current Exposure > 110% of Target Exposure, then the Current Exposure will be rebalanced to Target Exposure
2) If Current Exposure < 90% of Target Exposure, then the Current Exposure will be rebalanced to Target Exposure
3) If Current Exposure is between 90% and 110% of Target Exposure, then Exposure Level is maintained
• Target exposure is capped at 150% with a minimum of 20%

How to determine the Target Exposure for the Reference Portfolio
Target Exposure = Multiplier x Cushion

The Multiplier is a fixed number, for example 5 times.
The Cushion is calculated as follows:
Cushion = (Dynamic Index level – Reference Level) / Dynamic Index Level
Where
• The Dynamic Index level is simply the value of the Dynamic Index on the relevant rebalancing
date.
• The Reference Level is a notional benchmark level that starts from 85 at start date and
increases in a straight line to 100 at the end date.
• Adjustment factor of 1% per annum is accrued and deducted from the Dynamic Index on a daily
basis. This is to represent the notional costs of managing the Dynamic Index.

What is the rationale of the Dynamic Management Rule?
The Cushion determines how much risk we 110 Dynamic

Index level
can afford to take :
105
• The higher the Dynamic Index level, the
100
more risk we can afford to take since we Reference
95 Cushion = Dynamic Index level – Reference Level Level
have more “buffer”.
90
• However, the closer we are to maturity,
the less risk we can take, since we have 85
less time to recover. 80

Start Date
We then multiply the Cushion by the Multiplier in order to determine the Target Exposure, which is
how much exposure to the Reference Portfolio we should have. We also put maximum and
minimum limits on the Target Exposure to further reduce risk while still maintaining a minimum
level of exposure to the Reference Portfolio.

Dynamic Rebalancing Example
At Start Date
110 Dynamic
Dynamic Index level = USD 100 Index level
105
Reference Level = 85
100
• Cushion = (100 – 85)/100 = 15% 15% Reference

• Target Exposure* 90
85
= Multiplier x Cushion
80
= 5 x 15% = 75%* Start Date
* Equals to Current Exposure on Start date
75 % Reference This means USD 75 of the Dynamic Index will be allocated to the Reference Portfolio. The
Portfolio
remainder will be allocated to the Fixed Income asset.
25 % Fixed
Income

Dynamic Rebalancing Example (cont.)
End Of Day 1 (1st rebalancing date)
Assume:
Reference Portfolio returns 13% absolute
Fixed Income returns 6% p.a.
Day 1 - Current Exposure
Reference Portfolio = USD100 x 75% x 113% = USD84.75

Fixed Income = USD100 x 25% x 6% x 1/360 = USD25.00
Dynamic Index Level before Adjustment Factor = USD84.75 + USD25.00 = USD109.75
Adjustment factor = USD109.75 x 1% x 1/360 = USD0.0030
New level of Dynamic Index @ end of Day 1
= 109.75 – 0.0030
= 109.7470
Note: The Adjustment Factor represents the notional cost of managing the Dynamic Index and is
deducted from the level of the Dynamic Index. It is not a direct charge or fee to the investor.

Leverage Facility Example
At Start Of Day 2
Dynamic
Dynamic Index level = USD 109.7470 110
Index level
Reference Level = 86 105
• Cushion = (109.7470 – 86)/109.7470 100
= 21.64%
21.64 % Reference
• Target Exposure 90
= Multiplier x Cushion 85
= 5 x 21.64% = 108.2%
80
Start Date
• Current Exposure = 108.2%*
* If Day 1 Current Exposure (75%) < 90%# of Day 2 Target Exposure(108.2%), then the Day 2 Current
8.2% Leverage Exposure will be rebalanced to Day 2 Target Exposure. # 75%/108.2% = 69.32% is less than 90%
100% Reference This means all USD 109.747 will be allocated into the Reference Portfolio with an additional
Portfolio 8.2% ( 8.2% x USD 109.747 = USD 9.00 ) which can be obtained through the notional
leverage facility
0% Fixed
Income

Leverage Facility Example (cont.)
End Of Day 2 (2nd rebalancing date)
Assume:
Reference Portfolio returns 10% absolute
Additional 8.2% we have to borrow (Leverage Amt)
Overnight Libor Rate = 5.25% p.a.
Reference Portfolio + 10% Returns
Reference Portfolio = USD109.7470 x 108.2% x 110% = USD130.62

Leverage Facility Cost = USD109.7470 x (108.2%-100%) x [1 + (5.25%+0.5%) x 1/360]
= USD9.0007 Cost of Borrowing
the additional 8.2%
Dynamic Index Level before Adjustment Factor = USD130.62 - USD9.0007 = USD121.6193
Adjustment factor = USD121.6193 x 1% x 1/360 = USD0.0034
Dynamic Index @ end of day 2 = 121.6193 – 0.0034
= 121.6159
Note: The Leverage Facility is a notional mechanism used in determining the levels of the Dynamic Index
and is not a loan facility or any other form of credit facility extended to the investor in this product.
Appendix 3 – Underlying Assets
China’s booming economy fueling global growth

China’s role in the global economy is increasing Domestic demand growth recovers on the back of
NO COUNTRY in history has investment
sustained such a blistering
rate of growth over three
decades as China. Since 1978
it has grown by an average of
almost 10% a year—more than
Japan or the Asian Tigers
achieved over similar periods
when their economies took off. Source: IMF Source: NBS
Changing Trends
For the first time it is now Domestic Demand vs. Export-led
The European Union and
other emerging economies contributing more to global GDP Growth
are now more important growth (16%, measured at market Domestic demand is much more
markets. In the three months exchange rates) than the United important. This year the increase in
to August, Chinese exports to States is. The fate of the world China's net exports (i.e., less imports) is
America increased by 14% economy now hinges not just on likely to account for about one quarter of
compared with a year earlier, its growth—a record amount. But even
America, but also on China's economic
whereas those to the EU grew
fitness. without this external boost, GDP growth
by 40%.
would still have been a respectable 9%.
Source: CIMB, The World Bank, The Economist & IMF
Domestic Institutional Investor Scheme (DII)

On Monday 20 August China’s State Administration of Hang Seng Index rose by 40% since August 20th, led by the H-shares
Foreign Exchange Control announced that Chinese
individuals will be permitted to buy stocks traded on the
Hong Kong stock exchange through the Domestic
Institutional Investor scheme (DII).
Prior to the announcement of DII it is forecasted that an

estimated US$100bn Chinese capital flowing into the Hong
Kong and overseas equity markets in the coming year. The
DII news adds to the confidence. The DII scheme can be
more powerful than Qualified Domestic Institutional
Investor (QDII). This is the first time that individuals can August 20th
diversify some of their asset offshore legally. The
diversification benefits are lower valuations and less policy
risk. Wealthy Chinese investors prefer to invest directly.
Source: Bloomberg
This should make the DII scheme more attractive than
pooled investments via QDII. What are H-shares?
H-shares are shares in Chinese companies issued in China under Chinese law. They are
DII boosted Hong Kong-listed shares of Chinese companies, listed on the Hong Kong Stock Exchange and subject to its stringent listing and disclosure
requirements. The shares are denominated in H.K. dollar and trade like any other shares
which had been valued by far less than on the mainland. listed on the Hong Kong Exchange.
What is QDII? There are now 91 companies offering H shares giving exposure to more than a dozen
sectors including Telecommunications, Insurance, Real Estate, Airlines, Logistics as well
QDII scheme has been adopted since last year to promote investment in as Infrastructure such as roads and electricity, Oil, Mining and Basic Materials such as
overseas securities markets. Currently there are 4 types of QDII products: steel, cement, aluminum and petrochemicals. They are required to meet the same
insurance QDII, bank QDII, mutual fund QDII, and brokerage house QDII standard of disclosure required of all companies listed on the SEHK
Source: CIMB, The World Bank, JP Morgan & Bank of America
Hong Kong SAR

Overview
• The economy grew by 7.5% in 2005 and 6.9% in 2007.
• More visitors than ever before (around 25 million a year) are coming to Hong Kong.
• It is the world’s third-biggest air-cargo hub and second-biggest container port by throughput.
• It tops the list of world’s freest economies, resulting in it becoming a favourite among investors around the
• globe.
• Forecasted GDP for 2007 and 2008 are USD198.7 billion and USD215.6 billion respectively.
(Source: BNP Paribas estimates)
• Hong Kong is currently experiencing capital inflows and this is reflected in the interest rates differential
The floodgates are opened

20 August 2007 - China’s State Administration of Foreign Exchange
Control announced that Chinese investors will be permitted to buy
stocks traded on the Hong Kong stock exchange through the Domestic
Institutional Investor (DII) scheme.
China’s household savings are estimated to be at RMB17 trillion (USD2.1 trillion)

Total deposits in the banking system amount to RMB38 trillion (USD5 trillion)
There is no investment limit imposed on Chinese investors hoping to
invest in Hong Kong. The expected capital flow from China into the
Hong Kong stock markets is forecasted to drive up stock prices in Hong
Kong.
Hong Kong SAR

Appreciating RMB fuels growth
Hang Seng Index will benefit from the expected RMB
appreciation and subsequent diversification of China’s foreign
reserves into equities.
Due to Hong Kong’s proximity and cultural affinity, it is

expected to capture 10% of the outflows arising from China
setting up a “sovereign wealth fund”.
Beneficiary of and Robustness to China’s Economy

• The development of new financial services with the mainland under the Closer Economic Partnership Arrangement, which led to
the launch of yuan denominated retail banking services in Hong Kong, has helped to boost demand for financial services.
• Rising demand for Chinese exports directly affects the Hong Kong re-export market positively.
• While riding on the rapid growth of China, Hong Kong also has a robust wage growth, a 9-year low unemployment rate, past
increases in real estate, businesses from China and integration with the world markets to partly offset the economic impact of an
equity correction in China.
Hong Kong SAR – Hang Seng Index (HSI)

The Hang Seng Index is a free float-adjusted market
capitalization-weighted stock market index in Hong Kong. It is
used to record and monitor daily changes of the largest
companies of the Hong Kong stock market and is the main
indicator of the overall market performance in Hong Kong. These
40 companies represent about 65% of capitalization of the Hong
Kong Stock Exchange.
Top 10 Companies by Market Capitalisation

7.50%
Companies Current Market Cap (USD $) Industry Sector
12.50%
China Mobile Ltd 381.8 Billion Utilities
Ind & Comm Bank of China - H 337.9 Billion Financial Com m erce & Industry
China Petroleum & Chemical - H 269.6 Billion Utilities Finance

53%
China Life Insurance Co - H 239.9 Billion Financial Properties
HSBC Holdings PLC 228.3 Billion Financial Utilities

China Construction Bank - H 223.1 Billion Financial 27.50%
Bank of China Ltd - H 210.2 Billion Financial
Ping An Insurance Group Co - H 123.8 Billion Financial
Bank of Communications Co - H 85.1 Billion Financial
CNOOC Ltd 80.0 Billion Utilities
HSI by Sector
Singapore
Growth in domestic demand
Due to the positive wealth effect from surging equities, rising asset prices, improved job market and private
consumption growth. The Singapore government has raised its 2007 GDP growth forecast from 5-7% to 7-8%*.
Services Financial services leads overall services growth
Aims to be a high value financial services and business

exhibition hub. Evidently, UBS having set up a new wealth
management campus and Citigroup having consolidated
its Global Wealth Management international division
headquartered in Singapore.
• Uptrend in financial services contribution

• Singapore based AUM rose 24% y/y in 2006 to $891
billion, up 190% since 2001.
Trend set to persist, given the
• Strong corporate governance environment

• Availability of skilled professionals
• Attractive tax rates ( corporate tax rates cut from 18% in
to 2007 from 20%) Source: CEIC, UBS estimates
Singapore
Construction growth picking up
Property and Construction
Cyclically, the glut of housing supply since the property market decline in 1997
has since dissipated as there would be some key structural factors propelling
the cyclical recovery forward.
• Rising income
• High skilled foreign labour influx
• Population expansion plan (population base to increase to 6.5 million by
2015 from 4.2 million currently)
• Large scale development projects (the two integrated resorts and new
shopping malls are estimated to cost $10.5 billion to build in the next 2 years
alone) Source: CEIC, UBS estimates
Tightening demand-supply conditions
Integrated resort 1: Marina Bay Sands Sentosa Cove

Source: CEIC, UBS estimates
Singapore
Consumption
Rising wages, low unemployment help spur consumption
Private consumption trends shows that the contribution to growth

appears to have dwindled over time. Higher wage growth, population
growth and skilled labour influx are key factors spurring consumption
growth.
• Private consumption rose to 5.8% y/y, the strongest since in 4.5 years.
(Source: CIMB-GK Research)
• Nominal wage growth in Q1 reached a quarterly high of 5.5% in 2007

while employment gains grew 6.7% y/y led by services sector gains.
Singapore
Tourism
Tourism receipts to treble by 2015 following the development of the two
integrated resorts (and casino) and the holding of F1 formula races
• An estimated S$15 billion have been set aside for spending on

tourism projects.
• The rising foreign ownership holdings of properties in Singapore also indicate a

trend towards higher tourist spending.
• In May 2007, the average hotel room rate (ARR) in fact reached an all time high
of $195 (up 25% y/y) corroborating forecasted uptrend in tourist spending.
Retails sales and tourist arrivals expected to grow

Singapore
MSCI Sing Cash Index is a derivate of MSCI
Singapore Free Index calculated in SGD by MSCI. The
MSCI Singapore Index is a capitalisation weighted
index that monitors the performance of stocks from the
country of Singapore. It has a base date of Jan 1,
1988 of 100.
Top 10 Companies by Market Capitalisation 5.72%
Companies Current Market Cap (USD $) Industry Sector

15.62%
SINGAPORE TELECOM 22.2 Billion Telecom
UNITED OVERSEAS BANK 18.8 Billion Financials Financials
DBS GROUP HOLDINGS 17.1 Billion Financials Industrials
OCBC BANK 15.8 Billion Financials
Utilities & I.T 52%
KEPPEL CORP 11.5 Billion Real Estate
Consum er & Health
SINGAPORE EXCHANGE 8.4 Billion Financials Care
CAPITALAND 8.4 Billion Real Estate 26.53%
SINGAPORE AIRLINES 7.1 Billion Consumer
CITY DEVELOPMENTS 5.5 Billion Real Estate
SINGAPORE PRESS HLDG 4.7 Billion Media
MSCI Sing Cash IX Index by Sector
Japan
Future Outlook (Trillion Yen) Japanese Quarterly GDP (Jan 2000 to Sept 2007 )
520
• Brisk business expenditure has been a key driver
of Japan’s economy, which is enjoying its longest 515
spell of growth in the postwar era. 510 Rising Trend
505
• Continued strength in personal consumption
500
expenditures and renewed acceleration in exports
may be cited as underlying the results. However, 495
majority of the growth has been driven by capital 490
expenditures. 485 Quarterly GDP
480
• For the first time in 17 quarters it has fallen in the 1-year Moving Average
latest figures released in September 2007. One 475
reason for the decline was that production 470
facilities acquired from and after FY2007 may be
Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07
treated as expenses in their entirety, and some
companies postponed capital outlays with the aim Source: Bloomberg
of benefiting from changes in the tax treatment of
depreciation which will help lower their taxes.
• It is estimated that prior to the planned tax

increase, personal consumption spending will
likely to grow by two tenths of a percentage point
over the year before (FY2007), in turn lifting the
real growth rate by one tenth of a percentage
point.
Japan
Future Outlook (Cont’d)
The economy will likely return to its potential growth
rate in the remaining FY2007, with business
conditions reaccelerating in the latter half of FY2007.
In the main, the following five factors may be cited as
underlying these projections: -
• Undervalued yen to shore up exports
• U.S. Fed hopefully will achieve a soft landing in

the United States, with Japanese exports
modestly accelerating as a result.
• Albeit the slow down in production figures,

there is little risk that industrial production
adjustments overall will be prolonged or
intensified. Citing the strength of corporate
earnings, inventory adjustments in the
automobile and other manufacturing industries
have for the most part run their course.
• Despite the capital outlays being sluggish

recently, the basic trend remains upward. (see
diagram)
• Strong employment conditions, underlying

support for the basic trend is gradually firming
Japan
The Nikkei 225 is the most watched index of Asian stocks. It has
been calculated daily by the Nihon Keizai Shimbun (Nikkei)
newspaper since 1971. The Nikkei 225 Stocks Average is a price-
weighted average of 225 top-rated Japanese companies listed in
the First Section of the Tokyo Stock Exchange. The components
are reviewed once a year.
Top 10 Companies by Market Capitalisation 6.22%
Companies Current Market Cap (USD $) Industry Sector 8.44%
Toyota Motor Corp 194.7 Billion Commerce & Industrial

Mitsubishi UFJ Financial Group 94.9 Billion Financial 10.67% Com m erce & Industrial
Finance
Nippon Telegraph & Telephone 71.5 Billion Utilities
Consum er
Canon Inc 68.0 Billion Consumer Utilities 56%
Takeda Pharmaceutical Co Ltd 61.8 Billion Consumer Transportation
NTT Docomo Inc 61.1 Billion Utilities 18.67%

Honda Motor Co Ltd 60.8 Billion Commerce & Industrial
Mizuho Financial Group Inc 59.4 Billion Financial
Japan Tobacco Inc 58.0 Billion Consumer
Sumitomo Mitsui Financial Group 54.6 Billion Financial Nikkei 225 by Sector
Disclaimer
The above reflects the views of CIMB Bank Berhad (“CIMB”) at the time of writing, which may change from time to time
depending on prevailing economic and financial conditions. The information above is based on information obtained from
sources believed to be reliable, but no representation or warranty, express or implied, is made as to its accuracy
completeness, timeliness or correctness for any particular purpose. As such, CIMB has not assured any responsibility to
independently verify such information and accordingly, neither CIMB nor any of its employees shall be liable in any
manner what so ever for any consequences (including but not limited to any direct, indirect or consequential losses, loss
of profits and damages) arising from any reliance thereon or usage thereof.
This document is published for information purposes only and does not have regard to the specific objectives, financial
situation and particular needs of any specific person who may receive this document. The information is not and should
not be construed or considered as an offer, recommendation or solicitation to buy or sell any securities, related
investments or other financial instruments thereof. Prospective investor should carefully consider whether an investment
in such product is suitable in light of their own circumstances, financial resources and entire investment programme.
Important Notice
The information, analysis and discussions in this document are provided by the Bank for information purposes only.
While all information in this document has been produced or compiled from sources believed to be reliable, the Bank
makes no representation as to its accuracy or completeness. All worked examples and/ or historical testing results
presented in this document are strictly for illustration purposes and are not a projection, guarantee, warranty or
representation to future performance. Nothing in this document is to be construed as a solicitation or offer of legal,
investment, tax or other advice or a recommendation to engage in any transaction. None of the exchanges on which
any of the underlying assets trade, nor any of the information sources quoted in this document gives any warranty,
representation or advice as to the suitability of this product for any investor.
Prospective investors should understand the risks involved in this product and should reach an investment decision
only after careful consideration, with their relevant advisers, of the suitability of investing in this product. Investors are
required to read the Risk Disclosure Statement before deciding to invest. Capital protection applies only if held to
maturity.
Index Disclaimer
Nikkei 225 Disclaimer
The Nikkei Stock Average ("Index") is an intellectual property of Nikkei Inc.* "Nikkei", "Nikkei Stock Average", and "Nikkei 225" are the service marks of
Nikkei Inc. Nikkei Inc. reserves all the rights, including copyright, to the index. Nikkei Digital Media, Inc., a wholly-owned subsidiary of Nikkei Inc. calculates
and disseminates the Index under exclusive agreement with Nikkei Inc. Nikkei Inc. and Nikkei Digital Media Inc. are collectively “Index Sponsor”.
* Formerly known as Nihon Keizai Shimbum, Inc. Name changed on 1 January 2007.
Dynamic Asia Capital Protected (the “Product”) is not in any way sponsored, endorsed or promoted by the Index Sponsor. The Index Sponsor
does not make any warranty or representation whatsoever, express or implied, either as to the results to be obtained as to the use of the Index or the
figure as which the Index stands at any particular day or otherwise. The Index is compiled and calculated solely by the Index Sponsor. However, the
Index Sponsor shall not be liable to any person for any error in the Index and the Index Sponsor shall not be under any obligation to advise any
person, including a purchase or vendor of the Products, of any error therein.
In addition, the Index Sponsor gives no assurance regarding any modification or change in any methodology used in calculating the Index and is
under no obligation to continue the calculation, publication and dissemination of the Index.
MSCI Singapore Index Disclaimer
THIS FINANCIAL PRODUCT IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MORGAN STANLEY CAPITAL INTERNATIONAL INC. (“MSCI”), ANY AFFILIATE OF MSCI OR ANY OTHER PARTY INVOLVED IN, OR
RELATED TO, MAKING OR COMPILING ANY MSCI INDEX. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE MARK(S) OF MSCI OR ITS AFFILIATES AND HAVE
BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY CIMB Aviva Assurance Berhad. NEITHER MSCI, ANY OF ITS AFFILIATES NOR ANY OTHER PARTY INVOLVED IN, OR RELATED TO, MAKING OR COMPILING ANY MSCI
INDEX MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THIS FINANCIAL PRODUCT OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF INVESTING IN
FINANCIAL SECURITIES GENERALLY OR IN THIS FINANCIAL PRODUCT PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE
THE LICENSORS OF CERTAIN TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THIS FINANCIAL
PRODUCT OR THE ISSUER OR OWNER OF THIS FINANCIAL PRODUCT. NEITHER MSCI, ANY OF ITS AFFILIATES NOR ANY OTHER PARTY INVOLVED IN, OR RELATED TO, MAKING OR COMPILING ANY MSCI INDEX HAS
ANY OBLIGATION TO TAKE THE NEEDS OF THE ISSUERS OR OWNERS OF THIS FINANCIAL PRODUCT INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE MSCI INDEXES. NEITHER MSCI, ITS
AFFILIATES NOR ANY
OTHER PARTY INVOLVED IN, OR RELATED TO, MAKING OR COMPILING ANY MSCI INDEX IS RESPONSIBLE FOR OR HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THIS
FINANCIAL PRODUCT TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH THIS FINANCIAL PRODUCT IS REDEEMABLE FOR CASH. NEITHER MSCI, ANY OF ITS AFFILIATES NOR
ANY OTHER PARTY INVOLVED IN, OR RELATED TO, THE MAKING OR COMPILING ANY MSCI INDEX HAS ANY OBLIGATION OR LIABILITY TO THE OWNERS OF THIS FINANCIAL PRODUCT IN CONNECTION WITH THE
ADMINISTRATION, MARKETING OR OFFERING OF THIS FINANCIAL PRODUCT. ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE MSCI INDEXES FROM
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THE ORIGINALITY, ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NEITHER MSCI, ANY OF ITS AFFILIATES NOR ANY OTHER PARTY INVOLVED IN, OR RELATED TO,
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BY LICENSEE, LICENSEE’S CUSTOMERS OR COUNTERPARTIES, ISSUERS OF THE FINANCIAL SECURITIES, OWNERS OF THE FINANCIAL SECURITIES, OR ANY OTHER PERSON OR ENTITY, FROM THE USE OF ANY MSCI
INDEX OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. NEITHER MSCI, ANY OF ITS AFFILIATES NOR ANY OTHER PARTY INVOLVED IN, OR
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STRICTLY PRIVATE & CONFIDENTIAL

FOR INTERNAL CIRCULATION ONLY

Dynamic Asia Capital Protected

Appendix 1 – Work Example

China’s booming economy fueling global growth

Capital Flow: Domestic Institutional Investor Scheme (DII)

Japan’s Recovery and Singapore’s Aspiration

Making the right decision in a volatile market environment

Section 2 - Dynamic Asia Capital Protected Features

Dynamic Asia Capital Protected

Dynamic Asia Capital Protected

• Dynamic Management Rule ensures prudent adjustments according to market conditions

• Insurance coverage up to 125% of amount invested

• 2.5% bid offer spread of amount invested

*Calculation based on simple average returns

Section 3 - Dynamic Management Rule

Why Dynamic Index Management Rule?

Capture Market Performance

Static Index vs. Dynamic Index

Benefit more from uptrend market conditions

Dynamic Management Rule

Bullish Market Bearish Market

Reference MSCI Sg. Cash IX Index (Bloomberg: SGY) 25%

Dynamic Management Rule

Dynamic Management Rule

Current Exposure, -10%

If Current Exposure falls within this range of ±10% of

• *Rebalancing is based on these fixed set of rules which are :

Dynamic Management Rule

Bullish Market Bearish Market

Dynamic Management Rule

Why is there an Adjustment Factor?

Section 4 – Currency Exposure & Secondary Market

A redemption before maturity date may yield a higher or lower principal,

For example, a 3 year equity linked structured investment with committed

Section 5 – Backtesting Result & Key Product Features

Based on historical backtesting, 30%

Dynamic Asia would have 20%

beaten current Fixed Deposit 10%

rates 93.15% of the time. 0%-1% 1%-2% 2%-3% 3%-4% 4%-5%

• Test Period: 27-Jul-02 to 27-Jul-07

Key Product Features

Dynamic Asia Capital Protected

Appendix 1 – Work Example

Appendix 1 – Work Example

Participation Rate = 70%

 DynamicIndex - 100   FXEnd

= 34.3% or equivalent to 11.43% p.a.

Appendix 1 – Work Example

  150 − 100   3.3810

Appendix 2 – Dynamic Management Rule

Appendix 2 – Dynamic Management Rule

Dynamic Management Rule

Dynamic Management Rule

Dynamic Management Rule

Current Exposure, -10%

If Current Exposure falls within this range of ±10% of

• *Rebalancing is based on these fixed set of rules which are :

Appendix 2 – Dynamic Management Rule

Target Exposure = Multiplier x Cushion

The Cushion is calculated as follows:

Cushion = (Dynamic Index level – Reference Level) / Dynamic Index Level

Appendix 2 – Dynamic Management Rule

The Cushion determines how much risk we 110 Dynamic