Nomura Global Quantitative Equity Conference

London

STRICTLY PRIVATE AND CONFIDENTIAL

Nomura

Review of 2011 Asia Quantitative Outlook and introduction of new ideas

Sandy Lee +852 2252 2101 / sandy.lee@nomura.com Equity Quantitative Strategies, Asia ex-Japan May 2011

YTD 2011 factor performance in Asia

Quality (ROE, profit margin), mid-term price momentum, and earnings revision-related indicators fared well. Value factors saw declining performance, while larger cap outperformed.
2010 annualised return %
Rank 1 2 3 4 5 6 7 8 9 10
Rank 41 40 39 38 37 36 35 34 33 32

YTD 2011 annualised return %

Rank 1 2 3 4 5 6 7 8 9 10
Rank 41 40 39 38 37 36 35 34 33 32

Top 10 factors 2010 annualised return (% ) Factor category Change in earnings yield 16.10 Revision & chg in EY Earnings yield 13.59 Valuation Earnings revision indicator (FY 12.67 Revision & chg in EY Normalised E/P 11.63 Revision & chg in EY StarMine predicted surprise 11.56 Revision & chg in EY Revision index 10.79 Revision & chg in EY Dividend yield 7.59 Valuation Price momentum (12M -1M) 5.89 Size, momentum & liquidity Sales/Price 4.95 Valuation Trade momentum (3M) 4.72 Size, momentum & liquidity
Bottom 10 factors Default probability * Shareholders equity ratio Average daily traded value Return on assets Asset turnover Price momentum (1M) Trailing profit margin Change in ROE (FY2) Trailing EBITDA/EV Long term price momentum 2010 annualised return (% ) Factor category (7.51) Financial strength (6.77) Financial strength (4.31) Size, momentum & liquidity (3.50) Financial strength (3.34) Financial strength (3.09) Size, momentum & liquidity (2.28) Financial strength (2.08) Growth (1.55) Valuation (1.31) Size, momentum & liquidity

Top 10 factors YTD annualised return (% ) Factor category Return on equity 15.47 Financial strength Change in earnings yield 13.15 Revision & chg in EY Price momentum (12M -1M) 13.09 Size, momentum & liquidity Price momentum (6M -1M) 12.41 Size, momentum & liquidity StarMine predicted surprise 12.18 Revision & chg in EY Long term price momentum 11.60 Size, momentum & liquidity Consensus rating * 11.09 Revision & chg in EY Earnings revision indicator (FY2) 11.01 Revision & chg in EY Change in ROE (FY2) 9.99 Growth Pretax profit margin 8.27 Financial strength
Bottom 10 factors Estimate dispersion Asset turnover B/P Price momentum (1M) Market cap * Volatility Trailing EBITDA/EV Shareholders equity ratio Sales/Price Default probability * YTD annualised return (% ) Factor category (10.56) Revision & chg in EY (9.54) Financial strength (7.33) Valuation (6.34) Size, momentum & liquidity (6.16) Size, momentum & liquidity (5.66) Size, momentum & liquidity (4.88) Valuation (3.93) Financial strength (3.41) Valuation (2.97) Financial strength

Notes: Factor returns are generated by calculating the subsequent performance of an equal-weighted portfolio that is long the highest quintile and short the quintile with the lowest scores (rebalanced monthly), except for the factors marked *, which are computed reverse-based. Factor returns do not include transaction costs. Universe is based on the MSCI Standard Index in AC Asia Pacific exJapan. Factor definitions are shown in Appendix I. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 3

Risk-adjusted factor performance in Asia

Among value, E/P outperformed while B/P underperformed. Growth, capex/sales saw improved IRs.
YTD 2011 IR
Market cap * Price momentum (1M) Price momentum (3M) Price momentum (6M -1M) Price momentum (12M -1M) Long term price momentum Volatility Average daily traded value Trade momentum (3M) Volume turnover ratio Dividend yield Dividend Payout Earnings yield B/P Sales/Price Cashflow yield Trailing EBITDA/EV EBITDA/EV Revision index Earnings revision indicator (FY2) Change in earnings yield Normalised E/P StarMine predicted surprise Estimate dispersion Consensus rating * Change in ROE (FY1) Change in ROE (FY2) Sales growth (1Y) Sales growth (FY1) Sales growth (FY2) EPS growth (FY1) EPS growth (FY2) Return on assets Return on equity Shareholders equity ratio Trailing profit margin Pretax profit margin Asset turnover Capex to assets Capex to sales Default probability * (5) (4) (3) (2) (1) 0 1 2 3 4 5

Notes: Figures are annualised information ratio. Universe is based on the MSCI Standard Index in AC Asia Pacific ex-Japan. Factor definitions are shown in Appendix I. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 4

Average alpha for DM catching up with EM

In the past few months, alongside net inflows and relative outperformance, the average factor alpha for developed Asia appears to have been catching up with its emerging peers. Of late, the average correlation between factor returns has been rising, as investors become more risk-averse.
Average factor performance (long short spread return by quintile)
40 35 30 25 20 15 10 5 0 -5 -10 Emerging Asia

Average correlation of typical quant factors and cumulative returns for select factors
40 35 30 25 20 0.5 Correlation (RHS) 0.4 0.3 0.2 Revision (LHS) 0.1 0 Cum. return (%) Correlation 0.7 E/P (LHS) 0.6

Asia Pacif ic ex Jp

Developed Pacif ic ex Jp

15 10 5 0 -5 -10

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Nov-09

Aug-09

Aug-10

Nov-10

Feb-09

Feb-10

May-09

Note: Universe is based on MSCI AC Asia Pacific ex-Japan. The charts show average factor performance for the 41 factors listed in Appendix I. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Note: For correlation, the chart shows short-term (60-day) rolling average (absolute) correlation of return for 12 typical quant factors. Factor performance is calculated by cumulating the return spread between group #3 and #1. Factor portfolios are rebalanced monthly with country diversification. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies 5

May-10

Feb-11

DM Asia saw improving IC since 2H 2010

Positive values of the information coefficient mean that our representative set of quant factors are, on average, demonstrating the ability to forecast returns, and vice versa. The utility of quant factors for investing has appeared more promising in emerging Asia since late 2009, while for developed Asia, it has been improving since 2H 2010.
Developed Pacific ex-Japan
0.08 0.06 0.04 0.02 0.00 -0.02 -0.04 -0.06 -0.08 6-month moving average
-0.04 -0.06 6-month moving average 0.02 0.00 -0.02

Emerging Asia
0.06 Factor ICs monthly

Factor ICs monthly

0.04

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Notes: The information coefficient measures the correlation of the monthly ranking of stocks according to quant factors and the subsequent months ranking of the returns of these stocks. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Jan-11

Notes: The information coefficient measures the correlation of the monthly ranking of stocks according to quant factors and the subsequent months ranking of the returns of these stocks. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies 6

Jan-11

Review on Quants Outlook 2011 (published 9 Dec 2010)

We believe productivity and scale, as well as the ability of companies to manage costs, sustain capital spending and grow market share, will likely be key return drivers in 2011. In terms of styles in Asia, we suggest adding exposure to a composite profitability and productivity factor (comprising ROE and capex/sales factors) and continue to stress earnings/price momentum and growth over value. Among value factors, we prefer E/P over B/P.

High-ROE stocks do not seem expensive by valuation viewpoints. In contrast, low-ROE stocks are vulnerable to rating downgrades. Net inflows from overseas to the Asian markets could continue in 2011. Factors that are typically preferred by foreign investors, such as capex, growth, price momentum and earning revisions, will see more upside potential. We recommend a composite productivity measure that comprises ROE and capex/sales factors. We think this helps to screen profitable stocks that offer capacity to invest for the future in order to remain competitive.
7

Nomura International (Hong Kong) Limited

Overall profitability is still improving in Asia

Asia earnings-revision trend has mean-reverted since the beginning of 2010 and margin compression has been undermining earnings expectations of late. The regional median ROE has been improving since mid-2009.

Earnings momentum index

2.5

Median ROE in Asia Pacific ex Japan

(%) 22 20 18 16 14

2.0 1.5 1.0 0.5

12
Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10

0.0

10

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Note: Earnings momentum index is defined as: % of companies with +ve Revi,t / % of companies with -ve Revi,t. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies

Note: Charts show median ROE in MSCI AC Asia-Pacific ex Japan universe. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies 8

Nomura International (Hong Kong) Limited

Jan-11

Is profitability factor becoming expensive?

High-ROE stocks have consistently outperformed in 2011 YTD. However, the recent relative P/E between high- and low-ROE groups remains quite stable compared with the level seen in 2010.
Ratio of P/B and P/E between high- and low-ROE groups
1.1
PER (LHS)

Daily factor return of ROE since 2009

10 5 (%)

3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 2.0 1.8

1.0 0.9
0

PBR (RHS)

0.8
-5 -10 -15

0.7 0.6 0.5

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Sep-09

Sep-10

Nov-10

Nov-09

May-09

May-10

Note: Performance is calculated by cumulating the return spread between high and low ROE groups (#1 and #3). Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

May-11

Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies

Dec-10

Mar-09

Mar-10

Mar-11

Jul-09

Jan-09

Jan-10

Jul-10

Jan-11

High-ROE stocks see faster rating upgrades

The average analyst rating remains on a rising trend, despite near the historical high. The extremely narrow rating spread between high- and low-ROE groups has started to turn around, suggesting the speed of rating upgrades is faster for high-ROE stocks.
Median consensus rating in Asia Pacific ex Japan seems to have peaked
1.8 2.0 2.2 2.4 2.6 2.8 3.0
Rating (market level)

Spread in consensus ratings between high and low ROE groups

1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1
Spread

Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

0.0

Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies

Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies

Nomura International (Hong Kong) Limited

Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11
10

Revisions for high-ROE stocks have slowed

A glance at the recent revision trend for high-ROE stocks suggests a decline in the first four months of 2011. Analysts revisions pose a key risk to the performance of highROE stocks, in our view.
Median revision index by ROE groups
5 4 3 2 1 0 -1 -2 -3 -4 -5 (%)
High ROE Low ROE

Apr-00

Oct-00

Apr-01

Oct-01

Apr-02

Oct-02

Apr-03

Oct-03

Apr-04

Oct-04

Apr-05

Oct-05

Apr-06

Oct-06

Apr-07

Oct-07

Apr-08

Oct-08

Apr-09

Oct-09

Apr-10

Oct-10

Note: Charts show median revision index (three-month average) for stock groups by ROE. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 11

Apr-11

We continue to prefer high-ROE stocks

We may see short-term pressure on high-ROE stocks following their outperformance. But we continue to prefer high-ROE stocks because: 1) their valuations are stable and the rating spread remains narrow against the low-ROE group; and 2) with inflationary pressures rising, growth and high-ROE stocks are more likely to benefit amid rising risk aversion and monetary tightening conditions.
Performance of composite productivity factor using ROE and capex/sales factor
(%) 30 20 10 0 (10) (20) (30) Composite productivity factor (capex/sales + ROE) ROE Capex/sales

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Note: Composite productivity measure is sorting good ROE companies with high capex/sales. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 12

Dec-10

Rising impact from foreigners

Foreign investors have been buying Asian equities since 2009. Net inflows to Asian markets could continue amid low interest rates in the US and with QE2. Our regression analysis suggests foreign investors prefer stocks with high exposure in factors related to capex, mid-term momentum, growth and earnings revisions.
Asia performance and net foreigners buy
160 140 120 100 80 60 40 20 150 100 50
Net foreigners' buy (LHS) MSCI AC AP ex JP (RHS)

t-stat of the coefficient for the quant factors

300 250 200
Capex to assets Capex to sales EPS growth (FY1) Price momentum (12M -1M) Market cap * Price momentum (6M -1M) Default probability * Shareholders equity ratio Sales growth (FY2) Earnings revision indicator (FY2) Long term price momentum EBITDA/EV Earnings yield Change in earnings yield 0 0.5 1 1.5 2 2.5

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Note: Net foreigners buy is defined as net foreigners buy volume divided by the total trading volume. Source: Bloomberg, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Note: y = + x + r + where y=factor return, x=net foreigners buy (adjusted by market return), r=market return. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies 13

Reiterating Quants Outlook 2011 thematic screen

We reiterate our Quants Outlook screen exhibiting stocks with good profitability/productivity
(ROE and capex/sales), positive earnings and price momentum (revision index, StarMinepredicted surprise, 12M-1M price return), and growth potential (sales growth and EPS growth). We consider the E/P factor in our screening process, to avoid picking stocks at expensive prices.
Quant screen individual factor performance
25
Composite profitability/productivity Composite momentum

Outlook quant screen outperformed YTD 2011

40 35 30 25 20 15 10 5 0 (5) (10) (15)
Quant Screen APxJ Benchmark (Equal-weighted) MSCI AC AP ex Japan Index (US$)

Cumulative Perf ormance (%)

20 15 10 5 0 (5)

Forecast earnings yield

Cumulative Performance (%)

Composite growth

Dec-09

Aug-10

Dec-10

Apr-10

Oct-10

Feb-10

Dec-09

Aug-10

Dec-10

Feb-10

Feb-11

Note: The chart shows cumulative long-short performance of the four factor categories in our quant screen. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Note: The chart shows cumulative long-only performance of our quant screen since the launch of investment idea. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies 14

Feb-11

Apr-10

Oct-10

Jun-10

Apr-11

Jun-10

Apr-11

Latest Quants Outlook screen basket

Stocks with productivity/profitability, positive earnings and price momentum, and growth potential
Market Australia Australia Australia Australia China China China China China India India India India India Korea Korea Korea Korea Korea Korea Malaysia Malaysia Malaysia Philippines Singapore Singapore Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Thailand Bloomberg code WPL AU GMG AU NAB AU AIO AU 151 HK 3968 HK 200002 CS 267 HK 3800 HK BJAUT IN ITC IN IIB IN LICHF IN DRRD IN 005270 KS 005830 KS 042670 KS 000660 KS 010130 KS 017670 KS IOI MK PBKF MK SPSB MK AP PM JCNC SP OLAM SP 2891 TT 2884 TT 2881 TT 2609 TT 8069 TT 6121 TT 3044 TT 2344 TT 2103 TT 3045 TT KBANK TB Name Woodside Petroleum Goodman International National Australia Bank Asciano Want Want China Hldgs China Merchants Bank H China Vanke Co B Citic Pacific Gcl Poly Energy Bajaj Auto ITC Indusind Bank Lic Housing Finance Dr Reddy's Laboratories Daegu Bank Dongbu Insurance Co Doosan Infracore Co Hynix Semiconductor Korea Zinc SK Telecom Co IOI Corp Public Bank Fgn SP Setia Aboitiz Power Jardine Cycle & Carriage Olam International Chinatrust Finl Hldgs E.Sun Financial Holdings Fubon Financial Holding Yang Ming Marine Transp E Ink Holdings Simplo Technology Co Tripod Technology Corp Winbond Electronics Corp TSRC Corp Taiwan Mobile Kasikornbank Sector Energy Financials Financials Industrials Consumer Staples Financials Financials Industrials Information Technology Consumer Discretionary Consumer Staples Financials Financials Health Care Financials Financials Industrials Information Technology Materials Telecom Services Consumer Staples Financials Financials Utilities Consumer Discretionary Consumer Staples Financials Financials Financials Industrials Information Technology Information Technology Information Technology Information Technology Materials Telecom Services Financials Composite Composite earnings/ Composite Forecast productivity price momentum growth earnings yield (%) 3.0 1.1 4.0 4.9 2.4 0.9 -0.8 8.5 -0.6 0.3 -1.0 9.4 -0.2 0.4 0.9 6.0 2.1 -0.6 0.9 4.2 0.3 1.5 0.0 10.0 -0.3 0.5 1.8 10.6 0.5 1.0 2.2 8.7 5.4 4.4 1.1 9.0 2.8 2.6 -0.5 6.9 0.5 2.8 -0.5 4.1 0.0 4.5 1.5 6.3 -0.2 3.3 0.3 9.6 0.4 0.0 0.3 5.2 -1.0 0.3 -0.5 13.8 0.1 0.7 0.9 11.0 1.4 2.0 0.4 9.6 2.4 1.6 0.6 10.4 1.7 6.4 -0.2 10.1 0.6 -1.3 -0.4 13.3 -0.4 -1.5 -1.4 6.7 -0.4 1.0 0.3 7.7 0.3 0.5 3.5 4.1 2.0 4.6 -1.5 9.1 -0.2 3.8 1.0 9.2 -0.5 0.4 1.4 6.2 -0.8 1.7 -0.2 6.8 -0.9 1.7 0.5 7.6 -1.0 1.5 -0.3 7.4 0.1 -0.4 0.9 13.3 0.5 1.2 5.2 9.7 0.5 -0.2 1.0 8.2 1.0 0.8 0.5 9.2 0.7 1.0 2.4 11.1 1.1 4.4 -0.1 9.7 1.5 0.9 -1.6 6.5 -0.4 -1.0 0.7 8.6 Fundamental rating BUY Not rated NEUTRAL Not rated BUY BUY Not rated Not rated BUY BUY BUY Not rated Not rated BUY BUY Not rated Not rated NEUTRAL Not rated BUY BUY NEUTRAL NEUTRAL Not rated Not rated BUY BUY BUY BUY REDUCE Not rated BUY NEUTRAL Not rated Not rated BUY NEUTRAL Price 29-Apr-11 46.80 0.71 27.08 1.65 6.97 20.00 11.00 23.20 5.55 1,474.00 192.35 259.80 219.25 1,663.90 17,900 51,000 29,600 33,800 422,000 162,500 5.29 13.10 4.18 31.55 36.88 2.87 26.25 20.30 42.00 24.25 58.30 194.00 135.50 9.03 85.50 73.90 126.50

Note: Data as of 30 April 2011. Selection of stocks screened from the MSCI Asia-Pacific ex-Japan. Stocks that fall in the top two quintiles of each market and sector on composite productivity, and those that are in the first half by composite momentum and composite growth are highlighted. We also consider value factor E/P in our screening process to avoid picking stocks at expensive prices and hence excludes the bottom two quintiles stocks by forecast E/P. Source: Worldscope, StarMine, I/B/E/S, MSCI, Nomura Quantitative Strategies

15

Introducing Style Selection Model

Different style strategies tend to cycle in and out of favor depending on the investment environment and macro circumstances. We exploit a systematic approach to select investment styles, with the objective of securing consistent performance in the long run. Changes in factor leadership over the cycle show the importance of style investing.

Performance of major factors (mid 2007 Feb 2011)

(%) 40 30 20 10 0 (10) (20) (30) Dividend yield E/P B/P Price momentum (12M-1M) Revision index

Investment styles matter: Factor returns by periods

Mar-08

Mar-09

Mar-10

Sep-09

Sep-10

Jun-10

Sep-08

Sep-07

Note: Universe is based on MSCI AC Asia-Pacific ex-Japan. Data run to 28 February. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Dec-07

Dec-08

Dec-09

Dec-10

Jun-07

Jun-08

Jun-09

200708 - 200902 200903 - 200912 201001 - 201102 Average Std.dev. IR Average Std.dev. IR Average Std.dev. IR Dividend yield 9.4 10.3 0.9 (1.4) 6.2 (0.2) 7.3 3.8 1.9 E/P (2.1) 8.1 (0.3) 22.2 5.6 4.0 13.7 4.4 3.1 B/P (2.8) 9.1 (0.3) 31.2 12.2 2.5 2.0 6.1 0.3 CF/P (2.7) 6.0 (0.4) 31.7 8.3 3.8 2.8 5.2 0.5 Mid-term price mtm 5.5 12.8 0.4 (35.0) 20.2 (1.7) 5.3 5.7 0.9 Revision index 11.5 4.7 2.4 (3.5) 5.6 (0.6) 10.2 3.7 2.7 Estimates dispersion (10.2) 7.0 (1.5) 27.2 7.8 3.5 (1.6) 4.8 (0.3) Default probability * 8.3 11.4 0.7 (40.5) 14.6 (2.8) (6.7) 6.6 (1.0)

Note: Factor returns are annualised figures and do not include transaction costs. The factors marked with * are reverse-based. Source: Worldscope, I/B/E/S, MSCI, Nomura Quantitative Strategies 16

Defining eight style themes

Our style selection model starts from creating stock portfolios through screening on eight style themes. Style indices are calculated by tracking performance of the long-short portfolios of a given investment style theme.
Definition of eight investment styles
Style Size * Definition Log of US$ market cap Last 12-month return less the last 1 month return in local currency Momentum Price momentum (12M -1M) Yield Dividend yield F12-month DPS / stock price Valuation Earnings yield F12-month EPS / stock price B/P Actual BPS / stock price (Number of upward analyst revisions - number of downward analyst revisions) / total number of analysts' estimate Revision Revision index Growth Sales growth (FY2) FY2 sales / FY1 sales EPS growth (FY2) FY2 EPS / FY1 EPS Profitability Return on equity F12-month net profit /actual shareholders' equity Change in pretax profit margin FY2 pretax profit margin - FY1 pretax profit margin Risk * Volatility Past 36-month price return volatility I/B/E/S FY1 consensus EPS standard deviation / Estimate dispersion absolute value for FY1 consensus EPS Default probability Default probability estimated using Merton model
Note: The factors marked with * are reverse-based. Reported data are sourced from Worldscope, consensus estimate data from I/B/E/S, and price data from Exshare. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 17

Illustration of screening methodology

Factors Market cap

+
Quintile 1 Asia Pacific exJapan Universe Sort by style factor (for each country and sector) Quintile 2 Quintile 3 Quintile 4 Quintile 5 Short portfolio Style return Long portfolio

Source: Nomura Quantitative Strategies

Return and correlation between style indices

We use a relatively small number of styles as it is important that these style indices offer good diversification.
Long-term performance and correlation between style indices
Performance statistics Size* Momentum Yield Valuation Revision Growth Profitability Risk* Annualised return (%) 3.74 3.84 4.48 9.86 8.50 1.14 1.24 -0.69 Standard derivations (%) 9.22 11.82 7.83 7.33 4.21 5.30 5.75 10.74 IR 0.41 0.33 0.57 1.34 2.02 0.21 0.21 -0.06 Correlation coefficients Size* Momentum Yield Valuation Revision Growth Profitability Risk* Size* Momentum Yield Valuation Revision Growth Profitability Risk* 1.00 -0.67 -0.21 0.54 -0.23 0.24 -0.35 -0.57 -0.67 1.00 0.10 -0.56 0.41 -0.10 0.53 0.54 -0.21 0.10 1.00 0.13 -0.04 -0.47 -0.09 0.59 0.54 -0.56 0.13 1.00 -0.27 -0.03 -0.35 -0.40 -0.23 0.41 -0.04 -0.27 1.00 0.00 0.14 0.20 0.24 -0.10 -0.47 -0.03 0.00 1.00 0.26 -0.37 -0.35 0.53 -0.09 -0.35 0.14 0.26 1.00 0.31 -0.57 0.54 0.59 -0.40 0.20 -0.37 0.31 1.00

Note: Factor returns are annualised figures and do not include transaction costs. The factors marked with * are reverse-based. Correlation is calculated by using monthly style returns since Jan-1999. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 18

Methodology to rank styles

In line with behavioural finance literature, we study key drivers of style rotation. We compute the combined style ranking scores based on the respective long-term relative-value and short-term relative-strength rankings of styles. We also use market return as a risk aversion proxy to improve style timing. We select the two styles with the best ranking scores and go long top quintile and short bottom quintile of the selected style.
Illustration of the style selection model ranking process
Long-term relativevalue of style E/P & B/P spread rank score

Rank by value spread Z-score 8 Styles Size Momentum Yield Valuation Revision Growth Profitability Risk Rank by style 6-month return momentum
Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

1st Style Combined style ranking 2nd Style if previous month's market return is +ve, 60%/40% on style momentum/value spread if previous month's market return is -ve, 40%/60% on style momentum/value spread 3rd Style 4th Style 5th Style

Short-term relativestrength of style Style momentum rank score

6th Style 7th Style 8th Style

19

How we derive the latest Asia style rankings

We illustrate how combined style ranking scores are derived using the latest style rankings in the Asia Pacific ex Japan region. Our model selects Momentum and Revision as the most attractive styles in May.
Current ranking of styles for Asia Pacific ex Japan (May 2011)

Size* Momentum Yield Valuation Revision Growth Profitability Risk*

E/P spread z-score -0.07 0.35 -0.68 -0.74 -0.21 -1.09 -0.88 -0.83

Values B/P spread Style z-score momentum -0.82 -3.24 0.28 7.70 -0.40 1.82 -0.70 1.91 -1.50 6.80 0.87 2.31 0.74 3.41 0.30 2.00

E/P spread z-score 2 1 4 5 3 8 7 6

Ranks B/P spread Style z-score momentum 7 8 4 1 5 7 6 6 8 2 1 4 2 3 3 5

Combined Score 6.6 1.6 6 5.8 3.4 4.2 3.6 4.8 Rank 8 1 7 6 2 4 3 5

Note: Since MSCI AC APxJ March return is +4.15%, the equation: combined score = 20% x E/P spread rank + 20% x B/P spread rank + 60% x style momentum (6M) rank is applied. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 20

Performance of Asia style selection model

Our style rotation model has delivered fairly consistent performance over the cycle.
Performance of style selection model for Asia Pacific ex Japan
(%) 250 190 130 60 70 30 10 (50) 0 (30) Long return (LHS) Short return (LHS) Long-short return (RHS) (%) 150 120 90

Nov-00

Nov-01

Nov-02

Nov-03

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09

Long Annualised return (%) Standard deviation (%) IR

Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Short 10.62 24.78 0.43

Long short 11.82 5.03 2.35

22.44 24.71 0.91

Nov-10

21

Performance compared with other selectors

Our Asia model delivers a consistent return and higher IR than other style selectors.
Performance of Asia style selection model versus alternative style selectors
(%) 140 120 100 80 60 40 20 0 (20) Our style selection model Relative-value only Short-term style mtm only 50-50 value & style mtm Average of 8 styles

Nov-00

Nov-01

Nov-02

Nov-03

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09

Long - short performance Annualised return (%) Standard deviation (%) IR Turnover (%)

Our style model (relative-value + style momentum + risk proxy) 11.82 5.03 2.35 34.43

Relativevalue only 7.78 4.59 1.69 40.92

Short-term style momentum only 9.96 5.80 1.72 21.72

50-50 between relative-value & style momentum 10.56 4.79 2.21 32.38

Nov-10
Average of eight style indices 3.94 2.45 1.61 -

Note: Turnover of the model is defined as the average number of one-way style switch each month over the total number of styles selected. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 22

Compare those with different parameters

Our Asia model yields a better IR than alternatives using different parameters.
Efficacy of other value and momentum parameters for Asia Pacific ex Japan model
Alternate value spread windows Annualised return (%) Standard deviation (%) IR Turnover (%) Alternate value factors Annualised return (%) Standard deviation (%) IR Turnover (%) Alternate momentum measures Annualised return (%) Standard deviation (%) IR Turnover (%) 3-month 11.46 5.51 2.08 38.1 E/P + B/P spread 11.82 5.03 2.35 34.4 6-month 11.82 5.03 2.35 34.4 Expanding window 24-month rolling window 11.82 11.19 5.03 5.43 2.35 2.06 34.4 43.3 E/P spread only 10.28 5.16 1.99 33.2 9-month 10.13 4.63 2.19 36.1 B/P spread only 9.48 4.99 1.90 41.4 12-month 10.92 5.53 1.98 36.2

Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 23

Asia model works with quarterly rebalance

Our Asia style selection model is effective using either monthly or quarterly rebalance
Efficacy of model with alternative 3-month rebalancing frequency
(%) 120 100 80 60 40 20 0 (20) Our style selection model Relative-value only Short-term style mtm only 50-50 value & style mtm Average of 8 styles

Nov-00

Nov-01

Nov-02

Nov-03

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09

Our style model (relative-value + style Long - short momentum + risk proxy) performance Annualised return (%) 10.24 Standard deviation (%) 4.74 IR 2.16 Turnover (%) 15.98
Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Relative- Short-term style value only momentum only 6.79 9.34 4.29 6.04 1.58 1.55 15.51 12.30

50-50 between relative-value & Average of eight style momentum style indices 10.17 2.97 4.92 2.46 2.06 1.21 14.89 -

Nov-10

24

Stock screen results using model output

We can present stock screen ideas based on styles that we selected from the model.
Performance of stock screen based on the results of style selection model for Asia Pacific ex Japan
(%) 300 250 200 150 100 100 50 0 (50) 50 0 (50) Long portfolio Short portfolio Asia Pacific ex-Japan Long-short return (RHS) 150 (%) 250 200

Nov-00

Nov-01

Nov-02

Nov-03

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09

Annualised return (%) Standard deviation (%) IR Turnover Number

Long 25.48 24.99 1.02 69.2 46

Short Benchmark Long short 4.71 16.03 20.77 24.64 24.59 9.37 0.19 0.65 2.22 69.0 4.8 138.2 40 605 85

Note: We take the long positions in the stocks that fall into top quintiles of the selected styles at the same time, and short positions in the stocks at the bottom quintiles of the selected styles. Asia Pacific ex-JP benchmark is the equal weighted return of the MSCI AC Asia Pacific ex-Japan universe, rebalanced monthly. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 25

Nov-10

Does style selection model work in China?

Applying the same style model to the CSI 300 universe also sees good performance.
Performance of style selection model for China CSI 300
(%) 180 150 120 90 60 30 0 (30) Long return (LHS) Short return (LHS) Long-short return (RHS) (%) 60 50 40 30 20 10 0 (10)

Mar-07

Mar-08

Mar-09

Mar-10

Sep-09

Sep-10

Jun-10

Sep-08

Sep-07

Dec-07

Dec-08

Annualised return (%) Standard deviation (%) IR

Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Long 34.33 43.15 0.80

Short 21.33 43.68 0.49

Dec-09

Long short 13.00 7.06 1.84

Dec-10

Jun-07

Jun-08

Jun-09

26

Style momentum fares best in China

The correlation of monthly returns between relative-value and relative-strength strategies is -0.37, implying better diversification opportunities in the long run.
Performance of China style selection model versus alternative style selectors
(%) 60 50 40 30 20 10 0 (10) (20) (30) (40) Our style selection model Relative-value only Short-term style mtm only 50-50 value & style mtm Average of 8 styles

Mar-07

Mar-08

Mar-09

Mar-10

Sep-09

Sep-10

Jun-10

Sep-08

Sep-07

Our style model 50-50 between (relative-value + style Relative- Short-term style relative-value & Average of eight Long - short momentum + risk proxy) value only momentum only style momentum performance style indices Annualised return (%) 13.00 -6.10 12.65 10.43 4.23 Standard deviation (%) 7.06 10.46 10.18 8.09 4.17 IR 1.84 -0.58 1.24 1.29 1.02 Turnover (%) 41.3 38.4 28.3 42.6 Note: The turnover of the model is defined as the average number of one-way style switch each month over the total number of styles selected. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 27

Dec-07

Dec-08

Dec-09

Dec-10

Jun-07

Jun-08

Jun-09

Same parameters also work for China model

As with the Asia style selection model, our preferred China style selection model yields a higher information ratio than do other alternatives.
Efficacy of other value and momentum parameters for China CSI 300 model
Alternate value spread windows Annualised return (%) Standard deviation (%) IR Turnover (%) Alternate value factors Annualised return (%) Standard deviation (%) IR Turnover (%) Alternate momentum measures Annualised return (%) Standard deviation (%) IR Turnover (%) 3-month 6.11 9.61 0.64 48.9 E/P + B/P spread 13.00 7.06 1.84 41.3 6-month 13.00 7.06 1.84 41.3 Expanding window 24-month rolling window 13.00 9.61 7.06 7.38 1.84 1.30 41.3 43.1 E/P spread only 9.21 7.55 1.22 36.2 9-month 0.95 8.18 0.12 41.7 B/P spread only 2.24 8.57 0.26 42.8 12-month 10.79 8.21 1.31 38.4

Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 28

Exhibit the latest style rankings in China

We illustrate how combined style ranking scores are derived using the latest style rankings in the China CSI 300 universe. Our model selects Yield and Low risk as the most attractive styles in May.
Current ranking of styles for China CSI 300 (May 2011)

Size* Momentum Yield Valuation Revision Growth Profitability Risk*

E/P spread z-score -1.19 0.75 -0.10 -0.32 0.36 -0.99 -1.63 0.16

Values B/P spread Style z-score momentum -0.66 0.12 0.23 -1.12 1.32 9.45 -0.35 16.78 -0.89 5.44 0.52 6.59 0.05 -6.17 -0.05 10.85

E/P spread z-score 7 1 4 5 2 6 8 3

Ranks B/P spread Style z-score momentum 7 6 3 7 1 3 6 1 8 5 2 4 4 8 5 2

Combined Score 6.6 4 2.7 3.7 5 4 6.8 3.2 Rank 7 4 1 3 6 4 8 2

Note: Since MSCI AC APxJ March return is -0.95%, the equation: combined score = 30% x E/P spread rank + 30% x B/P spread rank + 40% x style momentum (6M) rank is applied. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 29

Introducing high dividend yield strategy

Reference reports: Playing high yield: saving the score, 24 June, 2010. The dividend yield factor return in Asia is negatively correlated to the market return. The defensive nature of high-yield stocks is due to their perceived relatively lower risk. We observe that analyst estimate dispersion and estimate revision risks in association with DPS are the lowest among the high dividend yield stocks. Assuming investors prefer highyield stocks because of their lower uncertainty, we believe factors that reflect the reliability of dividends can be complementary to a high dividend yield strategy.
DPS estimate dispersion in dividend yield groups
(%) 35 30 25 20 Low High

DPS revisions in following 3 months by DY groups

(%) 8 7 6 5 4 Low High

15 10 5 0 #1 #2 #3 #4 #5 Universe

3 2 1 0 #1 #2 #3 #4 #5 Universe

Note: Chart shows the average of the monthly median DPS from January 2000 to June 2010. Source: Nomura Quantitative Strategies. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Note: Chart shows the average of the monthly median DPS revision in the following three months from January 2000 to June 2010. Source: Nomura Quantitative Strategies 30

Comparing performance by reliability

List of factors
Category Capability Earnings quality Growth Factor Payout ratio Accruals EPS growth DPS growth Forecast change Forecast EPS change Forecast DPS change Net upgrades Net analyst upgrades for EPS Net analyst upgrades for DPS Unincorporated revision Stability EPS revision - DPS revision DPS dispersion Volatility of DPS Psychological resistance
Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 31

Image of simulation
Hypothesised effect Negative

Bottom
Negative Positive Positive Positive Positive Positive Positive

Comparing the performances

Top

Dividend yield

Complementary factor
Positive Negative Negative Positive
Universe Period Country diversification Sector diversification MSCI AC Asia Pacific ex Japan Jan. 2000 - May 2010 Yes Yes (GICS Level 1)

Yield change

High reliability stocks outperformed for most factors

Factor return spread for high dividend yield stocks
Category Factor name Est. Sign Return over benchmark (annualized, %) Top Capability Earnings quality Grow th Payout ratio Accruals EPS grow th DPS grow th Momentum in revision EPS revision % EPS revision # DPS revision % DPS revision # Unincorporated Revision Stability of DPS EPS revision - DPS revision DPS dispersion Volatility of DPS Psychological resistance Yield change negative negative positive positive positive positive positive positive positive negative negative positive 0.60 0.99 4.88 2.23 4.34 3.81 3.97 4.29 4.47 3.37 1.03 4.33 Bottom 8.60 4.05 1.20 3.16 -0.92 0.32 -0.80 0.53 1.64 2.09 4.02 -1.83 Spread -8.01 -3.07 3.68 -0.93 5.26 3.49 4.77 3.76 2.83 1.28 -2.99 6.15

Note: Annualised returns vs the benchmark. The benchmark is an equally weighted portfolio of MSCI AC Asia Pacific ex Japan. Source: I/B/E/S, Worldscope, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 32

Our Asian high dividend yield strategy

Concept: Since investors look at high dividend yield as a form of safety net, factors that indicate the reliability and sustainability of the dividend yield are important in the highyield universe. We create a composite score based on factors that are considered good indicators of dividend reliability: earnings capability, earnings quality, growth, recent forecast change, net upgrades, DPS revision backed by EPS revision, stable DPS and psychological resistance.
Image of high dividend yield strategy
%
12 10 8 6 4 2 0 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 Reliability score

Dividend reliability composite score

Score Category Factor name Payout ratio Accruals EPS growth Forecast EPS change Net analyst upgrades for DPS EPS revision DPS revision Volatility of DPS Yield change Est. Sign Negative Negative Positive Positive Positive Positive Negative Positive Top 1/3 Middle 1/3 Bottom 1/3 -1 -1 +1 +1 +1 +1 -1 +1 0 0 0 0 0 0 0 0 +1 +1 -1 -1 -1 -1 +1 -1 Capability Earnings quality Growth Forecast change Net upgrades Unincorporated Revision Stability of DPS Psychological resistance

High yield stocks - distribution of reliability score

Long only high yield stocks with reliability score >= 0

Note: Universe is based on MSCI All Country Asia-Pacific ex-Japan. Portfolios are rebalanced monthly and grouping simulation is conducted with country and sector diversification. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 33

Performance summary (Asian DY models)

The performance of high dividend yield strategy improves significantly, from 2pp to 7pp annual excess return, when the composite score is used for checking the reliability of the high-yield stocks. Even during times where dividend yield is not effective, consideration of the extra reliability check in a high dividend yield strategy delivers better performance.
Performance of high dividend yield strategy by setting a minimum criterion for the composite score.
80 70 60 50 40 30 20 10 0 -10
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10

90 80
High yield with score >=0

70 60 50 40
score >=0

High yield with score >=1

score >=1 High yield

High yield

30 20 10 0 -10
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
34

Annualized return over benchm ark (%) Risk (%) IR

High yield 1.66 3.25 0.51

Score >=0 Score >= 1 2.57 3.17 1.41 2.01 1.82 1.58

High yield w ith Score >=0 Score >= 1 6.46 7.43 4.23 5.17 1.53 1.44

Note: Chart shows excess return over benchmark. Benchmark is the equally weighted return of the constituents in MSCI AC Asia Pacific ex Japan. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Appendix I: Definition of factors

# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Factor Market cap * Price momentum (1M) Price momentum (3M) Price momentum (6M -1M) Price momentum (12M -1M) Long term price momentum Volatility Average daily traded value Trade momentum (3M) Volume turnover ratio Dividend yield Dividend Payout Earnings yield B/P Sales/Price Cashflow yield Trailing EBITDA/EV EBITDA/EV Revision index Earnings revision indicator (FY2) Change in earnings yield Normalised E/P StarMine predicted surprise Estimate dispersion Consensus rating * Change in ROE (FY1) Change in ROE (FY2) Sales growth (1Y) Sales growth (FY1) Sales growth (FY2) EPS growth (FY1) EPS growth (FY2) Return on assets Return on equity Shareholders equity ratio Trailing profit margin Pretax profit margin Asset turnover Capex to assets Capex to sales Default probability * Description Log of US$ market cap Past 1-month local currency return Past 3-month local currency return Last 6-month return less the last 1 month return in local currency Last 12-month return less the last 1 month return in local currency Past 36-month local currency return Past 36-month price return volatility Monthly traded value in USD / number of traded days Past 1-month trading volume - previous 3-month average trading volume Past 1-month trading volume / shares outstanding at month-end F12-month DPS / stock price Actual dividends / actual net profit before extraordinary items F12-month EPS / stock price Actual BPS / stock price F12-month sales per share / stock price F12-month cashflow per share / stock price Actual EBITDA / (market cap + interest-bearing debt - cash - short-tern marketable securities) (F12-month net profit + actual interest expense + actual depreciation) / (market cap + interest-bearing debt - cash short-tern marketable securities) (Number of upward analyst revisions - number of downward analyst revisions) / total number of analysts estimate FY2 EPS / previous 3-month average FY2 EPS F12-month earnings yield - past 3-month average earnings yield (F12-month earnings yield - average earnings yield in past 36 months) / standard deviation of the earnings yields in the past 36 months (SmartEstimate F12-month - consensus mean) / max(divisor, |mean|) I/B/ES FY1 consensus EPS standard deviation / absolute value for FY1 consensus EPS I/B/E/S consensus analyst rating FY1 ROE - actual ROE FY2 ROE - FY1 ROE Actual sales / previous year actual sales FY1 sales / actual sales FY2 sales / FY1 sales FY1 EPS / actual EPS FY2 EPS / FY1 EPS Actual net profit / actual total assets F12-month net profit / actual shareholders equity Actual shareholders equity / actual total assets Actual net profit / actual sales F12-month pretax profit / F12-month sales Actual sales / actual total assets Actual capital expenditure / actual total assets Actual capital expenditure / actual sales Default probability estimated using Merton model

Note: The factors marked with * are reverse-based. Source: Worldscope, I/B/E/S, StarMine, MSCI, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 35

Appendix II: Publications and models

Asian Equity Quantitative Research reports
Quantitative Outlook 2011 Asia Pacific Quantitative Insight Quants Factor Dynamics, Quants/Technicals Bulletin Asia Pacific Fundflow Insight / Asia Technical Analysis Focus Index reshuffle projection research [coverage: HSI/HSCEI, S&P/ASX 200, FTSE STI, KOSPI 200, FTSE Xinhua China 25/A50 Indices] Customised Asia Pair Trade Monitor (statistical) / Asia Trading Places (statistical + fundamental) Hong Kong Short-Selling Activity / Asia Earnings Results Monitor Asia Pacific Quantitative Landscape - The changing landscape of Asian markets a quantitative view

Monthly update on Asia Equity/China A Quant models & daily factor performance (presentations) Asian Quant models reports
Style selection model A systematic style-switching approach Playing high yield: saving the score Short-selling activity A new source of alpha? Consensus Rating Strategy Cornering the market on ratings Mid-term Momentum Strategy Boosting the power of the Big Mo Downside Beta Strategy Fishing in the wind Value-based Accruals Strategy The impact of accruals and the flight to quality Enhanced Earnings Revision Strategy The long and the short of beating the herd Low Dispersion Return reversal: catching the swing China Quantitative Strategy Towards the futures Event-driven strategy Buyback announcement signals value Asia Pacific Statistical Pair Trading Managing the ups and downs
36

Nomura International (Hong Kong) Limited

Appendix III: Asia enhanced earnings revision models

Reference reports: 1) The long and the short of beating the herd: An enhanced earnings-revision strategy, 25 Sep 2009; 2) China Quantitative Strategy - Towards the futures, 5 Mar 2010. Concept: Investors can make better use of analysts earnings-revision information by quantifying market signals and factors such as valuations, predicted surprises and price/volume momentum that reinforce the impact of earnings revisions in each market. Long potential outperformers (high composite factor) in top earnings revision group; short potential underperformers (low composite factor) in bottom earnings revision group.
Results of Asia portfolio optimisation simulation
140 120 100 80 60 40 20 0
Enhanced earnings revision strategy (optimised long-short) Single-factor earnings revision strategy (optimised long-short)

Performance of enhanced earnings-revision strategy

350 300
Asia-Pacific Hong Kong Australia India Singapore China Korea Thailand

Performance of L/S portfolio

Malaysia Taiwan

250 200 150 100 50 0

Jul-03

Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jul-10

Jan-11

Note: Back test with 20% turnover and 8% risk control. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Note: Universe is based on the MSCI constituents. Source: Nomura Quantitative Strategies 37

Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10

(50)

Appendix IV: Low-dispersion return-reversal strategy

Reference reports: 1) Return reversal: catching the swing, 7 Dec 2009; 2) China Quantitative Strategy - Towards the futures, 5 Mar 2010. Our analysis indicates that stocks with low analyst estimate dispersion have a tendency to revert faster from investor overreaction than the high dispersion group, especially for undervalued (loser group) stocks. Using residual return (the excess return that is not explained by typical fundamental factors) can further enhance the return predictive power of a short-term return reversal strategy.
Performance of high- and low-dispersion reversal
180 160 140 120 100 80 60 40 20 0 -20

Performance of Low Dispersion Reversal Strategy

250
Pacific Singapore HK / China Australia Taiwan

Cumulative return (%)

Low dispersion

Performance of L/S portfolio

200 150 100 50 0 (50)

Korea

High dispersion

Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10
Low Earnings Dispersion High Earnings Dispersion 14.15 6.74 8.54 9.69 1.66 0.70 Spread 7.41 8.96

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Annualized Return Risk IR

Note: Universe is based on the constituents of MSCI Hong Kong, China (HK listed), Korea, Taiwan, Singapore, and Australia. Source: Nomura Quantitative Strategies Nomura International (Hong Kong) Limited

Note: Universe is based on the constituents of MSCI Hong Kong, China (HK listed), Korea, Taiwan, Singapore, and Australia. Source: Nomura Quantitative Strategies 38

Dec-10

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Jun-09

Jun-10

Appendix V: Enhancing value using HK short-sell factor

Reference reports: Short-selling activity, 10 November, 2010. We define short-sell factor as the amount of short-sell turnover divided by the total turnover of the stock. Despite both portfolios going long value stocks, the group with heavier short-selling pressure continues to see weak price performance. In contrast, the group with low P/E stocks and least short-selling pressure outperforms, leading to an annualised return spread of circa 24%.
Low P/E stocks with recent underperformance but different level of short sell pressure
150 100 50 0 (50) (100) Low P/E stocks heavily shorted by investors Low P/E stocks with minimal short sell pressure

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Jun-09

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Annualized return (%) Standard deviation (%) IR Number of stocks

Low P/E w ith low s hort s e lling 18.2 15.8 1.1 9.2

Low P/E w ith high s hort s e lling -5.6 11.4 -0.5 14.9

Note: Stocks in both portfolios are value stocks that underperformed the market in the previous month. The difference between the two portfolios is that one consists of stocks that have had considerably lower short selling activity. Annualized return by short-selling activity is relative to the market. Source: HKEx, I/B/E/S, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 39

Dec-09

Jun-10

Appendix VI: Capital flow information matters in China A

We analyze normalized 5-day capital flow ratio for each stock in the CSI 300 universe.
Normalized 5-day capital flow ratio = cumulative 5-day capital flow / cumulative 5-day traded value Capital flow = net capital flow from super funds + large investors medium investors small investors Order size: super fund (RMB over 1M), large investor (RMB 200K-1M), medium investor (RMB 40K-200K), small investor (RMB 0-40K)

Stocks with strong capital flow outperformed the market since 2010.
Performance of top 30 stocks by normalize 5-day capital flow ratio versus CSI 300 Index
180 160 140 120 100 80 60 Top 30-stocks portfolio CSI 300 Index

Aug-10

Dec-10

Apr-10

Oct-10

Nov-10

Feb-10

Sep-10

May-10

Mar-10

Feb-11

Note: We screen top 30 stocks ranked by normalized 5-day capital flow ratio, and rebalance the portfolio daily. Source: Wind, Nomura Quantitative Strategies Nomura International (Hong Kong) Limited 40

Mar-11

Apr-11

Jan-10

Jun-10

Jan-11

Jul-10

Appendix VII: Organisation of Nomura Global Quant Strategy

Tokyo Quantitative Research Center
Equity Quantitative Research Dept. Hiromichi Tamura (34)
Quant Solution Research Group

Hong Kong

London

New York

Asia Quantitative Research Dept. Sandy Lee (6) Kenneth Chan Yasuhiro Shimizu Rico Kwan Tacky Cheng Desmond Chan

Equity Strategy and Quantitative Research Team

Quantitative Research Dept. Joseph J Mezrich (5) Yasushi Ishikawa Gang Jiang Junbo Feng Aki Matsui

Ian Scott (9) Inigo Fraser-Jenkins Shanthi Nair Jane Pearce Mark Diver Rishav Dev Saurabh Katiyar Arjun Bhattacharya Maureen Hughes

Equity Quantitative Strategy Group Hiromichi Tamura (6)

IB Solution Research Group

Tomonori Uchiyama Yoko Ishige Akihiro Murakami Mami Ode Naoko Kato

Index Products Group

Nomura International (Hong Kong) Limited

41

Any Authors named on this report are Research Analysts unless otherwise indicated Analyst Certification
I, Sandy Lee, hereby certify (1) that the views expressed in this Research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this Research report, (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of my compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or any other Nomura Group company.

Important Disclosures
Conflict-of-interest disclosures Important disclosures may be accessed through the following website: http://www.nomura.com/research/pages/disclosures/disclosures.aspx . If you have difficulty with this site or you do not have a password, please contact your Nomura Securities International, Inc. salesperson (1-877-865-5752) or email grpsupport-eu@nomura.com for assistance. Online availability of research and additional conflict-of-interest disclosures Nomura Japanese Equity Research is available electronically for clients in the US on NOMURA.COM, REUTERS, BLOOMBERG and THOMSON ONE ANALYTICS. For clients in Europe, Japan and elsewhere in Asia it is available on NOMURA.COM, REUTERS and BLOOMBERG. Important disclosures may be accessed through the left hand side of the Nomura Disclosure web page http://www.nomura.com/research or requested from Nomura Securities International, Inc., on 1877-865-5752. If you have any difficulties with the website, please email grpsupport-eu@nomura.com for technical assistance. The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by Investment Banking activities. Industry Specialists identified in some Nomura International plc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they have coverage. Industry Specialists do not contribute in any manner to the content of research reports in which their names appear. Marketing Analysts identified in some Nomura research reports are research analysts employed by Nomura International plc who are primarily responsible for marketing Nomuras Equity Research product in the sector for which they have coverage. Marketing Analysts may also contribute to research reports in which their names appear and publish research on their sector.

Distribution of ratings (Global)

The distribution of all ratings published by Nomura Global Equity Research is as follows: 49% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 37% of companies with this rating are investment banking clients of the Nomura Group*. 40% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 46% of companies with this rating are investment banking clients of the Nomura Group*. 11% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 16% of companies with this rating are investment banking clients of the Nomura Group*. As at 31 March 2011. *The Nomura Group as defined in the Disclaimer section at the end of this report. . Nomura International (Hong Kong) Limited 42

Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America for ratings published from 27 October 2008
The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock. Analysts may also indicate absolute upside to price target defined as (fair value - current price)/current price, subject to limited management discretion. In most cases, the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis, etc. STOCKS A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company. Benchmarks are as follows: United States/Europe: Please see valuation methodologies for explanations of relevant benchmarks for stocks (accessible through the left hand side of the Nomura Disclosure web page: http://www.nomura.com/research);Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology. SECTORS A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.

Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published from 30 October 2008 and in Japan from 6 January 2009
STOCKS Stock recommendations are based on absolute valuation upside (downside), which is defined as (Price Target - Current Price) / Current Price, subject to limited management discretion. In most cases, the Price Target will equal the analyst's 12-month intrinsic valuation of the stock, based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A 'Buy' recommendation indicates that potential upside is 15% or more. A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%. A 'Reduce' recommendation indicates that potential downside is 5% or more. A rating of 'Suspended' indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.

Nomura International (Hong Kong) Limited

43

Explanation of Nomura's equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe, Middle East and Africa, US and Latin America published prior to 27 October 2008)
STOCKS A rating of '1' or 'Strong buy', indicates that the analyst expects the stock to outperform the Benchmark by 15% or more over the next six months. A rating of '2' or 'Buy', indicates that the analyst expects the stock to outperform the Benchmark by 5% or more but less than 15% over the next six months. A rating of '3' or 'Neutral', indicates that the analyst expects the stock to either outperform or underperform the Benchmark by less than 5% over the next six months. A rating of '4' or 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark by 5% or more but less than 15% over the next six months. A rating of '5' or 'Sell', indicates that the analyst expects the stock to underperform the Benchmark by 15% or more over the next six months. Stocks labeled 'Not rated' or shown as 'No rating' are not in Nomura's regular research coverage. Nomura might not publish additional research reports concerning this company, and it undertakes no obligation to update the analysis, estimates, projections, conclusions or other information contained herein. SECTORS A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next six months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next six months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next six months. Benchmarks are as follows: Japan: TOPIX; United States: S&P 500, MSCI World Technology Hardware & Equipment; Europe, by sector - Hardware/Semiconductors: FTSE W Europe IT Hardware; Telecoms: FTSE W Europe Business Services; Business Services: FTSE W Europe; Auto & Components: FTSE W Europe Auto & Parts; Communications equipment: FTSE W Europe IT Hardware; Ecology Focus: Bloomberg World Energy Alternate Sources; Global Emerging Markets: MSCI Emerging Markets ex-Asia.

Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published prior to 30 October 2008
STOCKS Stock recommendations are based on absolute valuation upside (downside), which is defined as (Fair Value - Current Price)/Current Price, subject to limited management discretion. In most cases, the Fair Value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc. However, if the analyst doesn't think the market will revalue the stock over the specified time horizon due to a lack of events or catalysts, then the fair value may differ from the intrinsic fair value. In most cases, therefore, our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value. Recommendations are set with a 6-12 month horizon unless specified otherwise. Accordingly, within this horizon, price volatility may cause the actual upside or downside based on the prevailing market price to differ from the upside or downside implied by the recommendation. A 'Strong buy' recommendation indicates that upside is more than 20%. A 'Buy' recommendation indicates that upside is between 10% and 20%. A 'Neutral' recommendation indicates that upside or downside is less than 10%. A 'Reduce' recommendation indicates that downside is between 10% and 20%. A 'Sell' recommendation indicates that downside is more than 20%. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.

Price targets
A Target Price, if discussed, reflect in part the analyst's estimates for the company's earnings. The achievement of any target price may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.

Nomura International (Hong Kong) Limited

44

DISCLAIMERS:
This publication contains material that has been prepared by the Nomura entity identified at the top or bottom of page 1 herein, if any, and/or, with the sole or joint contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or elsewhere identified in the publication. Affiliates and subsidiaries of Nomura Holdings, Inc. (collectively, the 'Nomura Group'), include: Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura International plc ('NIplc'), United Kingdom; Nomura Securities International, Inc. ('NSI'), New York, NY; Nomura International (Hong Kong) Ltd. (NIHK), Hong Kong; Nomura Financial Investment (Korea) Co., Ltd. (NFIK), Korea (Information on Nomura analysts registered with the Korea Financial Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis.kofia.or.kr ); Nomura Singapore Ltd. (NSL), Singapore (Registration number 197201440E, regulated by the Monetary Authority of Singapore); Capital Nomura Securities Public Company Limited (CNS), Thailand; Nomura Australia Ltd. (NAL), Australia (ABN 48 003 032 513), regulated by the Australian Securities and Investment Commission ('ASIC') and holder of an Australian financial services licence number 246412; P.T. Nomura Indonesia (PTNI), Indonesia; Nomura Securities Malaysia Sdn. Bhd. (NSM), Malaysia; Nomura International (Hong Kong) Ltd., Taipei Branch (NITB), Taiwan; Nomura Financial Advisory and Securities (India) Private Limited (NFASL), Mumbai, India (Registered Address: Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India; SEBI Registration No: BSE INB011299030, NSE INB231299034, INF231299034, INE 231299034). THIS MATERIAL IS: (I) FOR YOUR PRIVATE INFORMATION, AND WE ARE NOT SOLICITING ANY ACTION BASED UPON IT; (II) NOT TO BE CONSTRUED AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE ILLEGAL; AND (III) BASED UPON INFORMATION THAT WE CONSIDER RELIABLE. NOMURA GROUP DOES NOT WARRANT OR REPRESENT THAT THE PUBLICATION IS ACCURATE, COMPLETE, RELIABLE, FIT FOR ANY PARTICULAR PURPOSE OR MERCHANTABLE AND DOES NOT ACCEPT LIABILITY FOR ANY ACT (OR DECISION NOT TO ACT) RESULTING FROM USE OF THIS PUBLICATION AND RELATED DATA. TO THE MAXIMUM EXTENT PERMISSIBLE ALL WARRANTIES AND OTHER ASSURANCES BY NOMURA GROUP ARE HEREBY EXCLUDED AND NOMURA GROUP SHALL HAVE NO LIABILITY FOR THE USE, MISUSE, OR DISTRIBUTION OF THIS INFORMATION. Opinions expressed are current opinions as of the original publication date appearing on this material only and the information, including the opinions contained herein, are subject to change without notice. Nomura is under no duty to update this publication. If and as applicable, NSI's investment banking relationships, investment banking and non-investment banking compensation and securities ownership (identified in this report as 'Disclosures Required in the United States'), if any, are specified in disclaimers and related disclosures in this report. In addition, other members of the Nomura Group may from time to time perform investment banking or other services (including acting as advisor, manager or lender) for, or solicit investment banking or other business from, companies mentioned herein. Furthermore, the Nomura Group, and/or its officers, directors and employees, including persons, without limitation, involved in the preparation or issuance of this material may, to the extent permitted by applicable law and/or regulation, have long or short positions in, and buy or sell, the securities (including ownership by NSI, referenced above), or derivatives (including options) thereof, of companies mentioned herein, or related securities or derivatives. For financial instruments admitted to trading on an EU regulated market, Nomura Holdings Inc's affiliate or its subsidiary companies may act as market maker or liquidity provider (in accordance with the interpretation of these definitions under FSA rules in the UK) in the financial instruments of the issuer. Where the activity of liquidity provider is carried out in accordance with the definition given to it by specific laws and regulations of other EU jurisdictions, this will be separately disclosed within this report. Furthermore, the Nomura Group may buy and sell certain of the securities of companies mentioned herein, as agent for its clients. Investors should consider this report as only a single factor in making their investment decision and, as such, the report should not be viewed as identifying or suggesting all risks, direct or indirect, that may be associated with any investment decision. Please see the further disclaimers in the disclosure information on companies covered by Nomura analysts available at www.nomura.com/research under the 'Disclosure' tab. Nomura Group produces a number of different types of research product including, among others, fundamental analysis, quantitative analysis and short term trading ideas; recommendations contained in one type of research product may differ from recommendations contained in other types of research product, whether as a result of differing time horizons, methodologies or otherwise; it is possible that individual employees of Nomura may have different perspectives to this publication. NSC and other non-US members of the Nomura Group (i.e. excluding NSI), their officers, directors and employees may, to the extent it relates to non-US issuers and is permitted by applicable law, have acted upon or used this material prior to, or immediately following, its publication. Foreign-currency-denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derived from, the investment. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies, effectively assume currency risk. The securities described herein may not have been registered under the US Securities Act of 1933, and, in such case, may not be offered or sold in the United States or to US persons unless they have been registered under such Act, or except in compliance with an exemption from the registration requirements of such Act. Unless governing law permits otherwise, you must contact a Nomura entity in your home jurisdiction if you want to use our services in effecting a transaction in the securities mentioned in this material. Nomura International (Hong Kong) Limited 45

This publication has been approved for distribution in the United Kingdom and European Union as investment research by NIplc, which is authorized and regulated by the UK Financial Services Authority ('FSA') and is a member of the London Stock Exchange. It does not constitute a personal recommendation, as defined by the FSA, or take into account the particular investment objectives, financial situations, or needs of individual investors. It is intended only for investors who are 'eligible counterparties' or 'professional clients' as defined by the FSA, and may not, therefore, be redistributed to retail clients as defined by the FSA. This publication may be distributed in Germany via Nomura Bank (Deutschland) GmbH, which is authorized and regulated in Germany by the Federal Financial Supervisory Authority ('BaFin'). This publication has been approved by NIHK, which is regulated by the Hong Kong Securities and Futures Commission, for distribution in Hong Kong by NIHK. This publication has been approved for distribution in Australia by NAL, which is authorized and regulated in Australia by the ASIC. This publication has also been approved for distribution in Malaysia by NSM. In Singapore, this publication has been distributed by NSL. NSL accepts legal responsibility for the content of this publication, where it concerns securities, futures and foreign exchange, issued by their foreign affiliates in respect of recipients who are not accredited, expert or institutional investors as defined by the Securities and Futures Act (Chapter 289). Recipients of this publication should contact NSL in respect of matters arising from, or in connection with, this publication. Unless prohibited by the provisions of Regulation S of the U.S. Securities Act of 1933, this material is distributed in the United States, by NSI, a US-registered broker-dealer, which accepts responsibility for its contents in accordance with the provisions of Rule 15a-6, under the US Securities Exchange Act of 1934. This publication has not been approved for distribution in the Kingdom of Saudi Arabia or to clients other than 'professional clients' in the United Arab Emirates by Nomura Saudi Arabia, NIplc or any other member of the Nomura Group, as the case may be. Neither this publication nor any copy thereof may be taken or transmitted or distributed, directly or indirectly, by any person other than those authorised to do so into the Kingdom of Saudi Arabia or in the United Arab Emirates or to any person located in the Kingdom of Saudi Arabia or to clients other than 'professional clients' in the United Arab Emirates. By accepting to receive this publication, you represent that you are not located in the Kingdom of Saudi Arabia or that you are a 'professional client' in the United Arab Emirates and agree to comply with these restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the Kingdom of Saudi Arabia or the United Arab Emirates. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means; or (ii) redistributed without the prior written consent of the Nomura Group member identified in the banner on page 1 of this report. Further information on any of the securities mentioned herein may be obtained upon request. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this publication, which may arise as a result of electronic transmission. If verification is required, please request a hardcopy version.

Additional information available upon request

NIPlc and other Nomura Group entities manage conflicts identified through the following: their Chinese Wall, confidentiality and independence policies, maintenance of a Restricted List and a Watch List, personal account dealing rules, policies and procedures for managing conflicts of interest arising from the allocation and pricing of securities and impartial investment research and disclosure to clients via client documentation.

Disclosure information is available at the Nomura Disclosure web page:

http://www.nomura.com/research/pages/disclosures/disclosures.aspx
Nomura International (Hong Kong) Limited 46

Asian Equity Research Group

HONG KONG Nomura International (Hong Kong) Limited 30/F Two International Finance Centre 8 Finance Street, Central, Hong Kong Tel: +852 2536 1111 Fax: +852 2536 1820 SINGAPORE Nomura Singapore Limited 10 Marina Boulevard Marina Bay Financial Centre Tower 2, #36-01, Singapore 018983, Singapore Tel: +65 6433 6288 Fax: +65 6433 6169 TAIPEI Nomura International (Hong Kong) Limited, Taipei Branch 17th Floor, Walsin Lihwa Xinyi Building No.1, Songzhi Road, Taipei 11047, Taiwan, R.O.C. Tel: +886 2 2176 9999 Fax: +886 2 2176 9900 SEOUL Nomura Financial Investment (Korea) Co., Ltd. 17th floor, Seoul Finance Center 84 Taepyeongno 1-ga, Jung-gu Seoul 100-768, Korea Tel: +82 2 3783 2000 Fax: +82 2 3783 2500 KUALA LUMPUR Nomura Securities Malaysia Sdn. Bhd. Suite No 16.5, Level 16, Menara IMC 8 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: +60 3 2027 6811 Fax: +60 3 2027 6888 SYDNEY Nomura Australia Ltd. Level 25, Governor Phillip Tower 1 Farrer Place, Sydney NSW 2000 Tel: +61 2 8062 8000 Fax: +61 2 8062 8362 INDIA Nomura Financial Advisory and Securities (India) Private Limited Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India Tel: +91 22 4037 4037 Fax: +91 22 4037 4111 INDONESIA PT. Nomura Indonesia Suite 209A, 9th Floor, Sentral Senayan II Building, Jl. Asia Afrika No. 8, Gelora Bung Karno, Jakarta 10270, Indonesia Tel: +62 21 2991 3300 Fax: +62 21 2991 3333
47

TOKYO Financial & Economic Research Center Nomura Securities Co., Ltd. 17/F Urbannet Building, 2-2, Otemachi 2-chome Chiyoda-ku, Tokyo 100-8130, Japan Equity Research Department// Tel: +81 3 5255 1658 Fax: +81 3 5255 1718 Investment Strategy Department Tel: +81 3 5255 1735 Fax: +81 3 5255 1655 Economic Research Department Tel: +81 3 5203 0445 Fax: +81 3 5203 0498

Nomura International (Hong Kong) Limited

www.nomura.com