amundi citywire emerging internal demand - oct 2013

10 -11 October 2013

Mickaël TRICOT, CFAEmerging Markets Fund Manager

Emerging Internal Demand

- Citywire Asia 2013 -

Citywire – October 2013 - page 2

Amundi, one of the world largest asset managers

Mutual fund ManagementOpen-ended funds

Institutional Assetsunder Management

$1,000 Bn in Assetsunder Management1

No.13 No.2 4

No.12

No.2 5

No.9 2

No.5 6

1.Amundi Group figures as at 30 June 2013. 2. Total net assets - Source : IPE «Top 400 global asset managers active in the European marketplace » published in June 2013, data as at December 2012. 3. Source Europerformance NMO – June 2013– French domiciled funds. 4.Source Lipper FMI – June 2013 - funds domiciled in Europe and in related offshore territories. 5. in Europe- Open-ended funds, dedicated funds, mandates- Source Top 120 IPE European Institutional Managers published in June 2013, data as at December 2012.


Global capabilities

� Located in some 30 countries across 5 continents, Amundi covers the main markets and investment regions throughout the world.

� With a strong local presence, Amundi is committed to offering its clients a relationship defined by both proximity and a long term view.

.Amundi Group figures as at 30 June 2013


Amundi, a major player in Emerging Markets

� $24 bn in emerging market assets and a presence in all major emerging

economies.

� An extensive research capacity with 125 analysts covering all aspects of

investment research with prime access to companies.

� 40% of research resources are based in Asia.

� Emerging Market Equities are close to the market:

– With investment teams based in Paris and in Hong Kong

– Over $10 bn AUM in emerging equities

– 6 portfolio managers backed by 5 analysts

– An average of 14 years experience in the industry

Amundi Group figures as at 30 June 2013

Internal Demand in Emerging countries


Investment philosophy

We believe that economic cycles and equity market volatility

provide investment opportunities through mispricing

of long term prospects, valuation or risk“ “


Take-off

March towards technology maturity

Mass consumption

1780 1800 1820 1840 1900 19201860 1880 1940 1960

Historical overview of economic development

� Countries reaching development status is not a new phenomenon� Emerging countries are entering mass consumption or high investment phase

Analysis of Rostow Our vision

United KingdomUnited StatesFranceGermanySwedenJapanRussiaItalyCanadaAustraliaTaiwanSouth KoreaMexicoArgentinaBrazilTurkeyChinaThailandIndiaIndonesiaPhilippinesVietnam

2020 20401980 2000

Source : Rostow in 1960 (updated in 1990), « The Stages of Economic Growth », economica,3e édition


Internal demand in Emerging countries

� An economic concept

� An opportunity for investors

A long term trend : strong fundamentals supportive of a stable growth

– Low product penetration rates and high investment requirements

– Low credit penetration and high savings rate

– Healthy banking sector

– Supportive demographics

A sizeable contributor to world growth

Household consumption

Corporate investments

Government spending= + +

DOMESTIC DEMAND

Citywire – October 2013 - page 9Source : Datastream, AmundiCalculation : 2005-2012

World GDP breakdown (2012 - $)

A growing contributor to world growth

� Internal Demand of Emerging Markets: 30% of world GDP

� Internal Demand of Emerging Markets: 51% of world growth

51% of historical global economic growth (25% x 5.5% = 1.4% = 51% x 2.7%)

Household consumption

Corporate investments

Government spending

+

DOMESTIC DEMAND

5% historical growth rate



=

+

5.5% historical growth rate

Citywire – October 2013 - page 10Source : Datastream, Amundi

Emerging markets :

1. Sales growing faster before 2008

2. Interruption in growth has been short lived

3. Current monthly sales are already 20%

above 2008 level

Developed markets :

1. A sharp drop during 2008 crisis

2. Recovery helped by government incentives

3. Sales still 20% below pre-crisis level

Past 10 years economic growth

Example of the auto industry

Monthly car sales

Japan, Europe and US


A “true” emerging markets exposure

� Significant discrepancy between benchmark primary listing and geographical exposure

– MSCI launches new economic exposure module

� A way to avoid confusion between global equity, global emerging and commodity funds

Company MSCI Index Sales % coming from its index country

Sales % coming from Emerging countries

SAB Miller MSCI UK 2% 71%

Fanuc MSCI Japan 23% 52%

Ericsson MSCI Sweden 1.7% 50%

Unilever MSCI Netherlands <5% 53%

Colgate MSCI USA 18% 48%

General Motors (*) MSCI USA 28% 56%

CFAO MSCI France 0% 100%

Samsung Electronic MSCI Korea 16% 47%

Infosys MSCI India 2% 2%

Hon Hai MSCI Taiwan 4% 19%

Gazprom MSCI Russia 38% 48%

In the

developed

indexes

In the emerging

indexes

Source: Amundi April 2013 - Given for illustrative purpose only


A strong focus on domestic sectors

Source: Amundi front office data Sept 2013 - Given for illustrative purpose onlyAllocations are as of date shown and are subject to change

A way to avoid cyclical bias of Emerging equity uni verseGLOBALLY DRIVEN SECTORS 36,8%

Global cyclicals 16,5%

Semi & emi eqpt 8,1%

Tech hardware 3,3%

Machinery 1,0%

IT services 1,2%

Marine 0,2%

Airlines 0,3%Industrial conglomerates 2,5%

Commodity cyclicals 20,3%

Energy 12,0%Chemical 2,6%

Metals, mining & paper 5,7%

DOMESTIC FOCUS SECTORS 63,2%

Domestic cyclicals 16,1%

Cement 1,5%

Auto 3,8%

Retailing 4,1%

Consumer durables 0,8%

Consumer services 2,3%

Software 2,3%

Construction & engineering 0,9%

Electrical eqpt 0,2%

Defensives 19,8%Roads, rail & ports 1,1%

Food beverage & tobacco 5,3%Household & personal products 1,1%

Telecommunication services 7,5%

Utilities 3,2%

Health care 1,5%

Rate sensitive sectors 22,3%

Banks 19,1%

Insurance 3,2%

Asset sensitive financials 5,0%

Real estate 2,3%

Diversified financials 2,7%


� A long-term investment horizon

� Combined top-down and bottom-up approach

� Emphasis on liquidity control

Investment approach

Judgmental decisions based on fundamental analysis are core


Investment process

Outlook

Valuation Risks

One common disciplined approach

Combining top-down and bottom-up approach


Final portfolio

~250 stocks

Large caps > 5bn$, Small caps <1bn$

Major characteristic: 23% of the portfolio are invested outside the benchmark and 27% are invested in mid and small caps

� Min 60% of revenue derived from Emerging markets

� Out of benchmark: min 200m$ market cap and 2m$ daily volume

� Company meetings

� Consensus valuation multiples/quant

screens

� Stock performances

� Top down ideas

� Sell side research

� A qualitative assesment of the

investment case

� A comprehensive financial analysis

How we deal with stock picking

� Interactive decision making

process

� Efficient implementation and

rigourous portfolio monitoring

1. Monitor universe 2. Build investment cases 3. Decid e, implement & monitor

60%

F

ilter

GE

M

proc

essEmerging Internal

Demand Universe ~1000 stocks

Equity Universe

~19000 stocks


Stock selection

Source: AmundiGiven for illustrative purpose only

Investment case

Valuation toolQualitative assessment of the investment cases

Comprehensive financial analysis

Emerging Internal Demand expertise



Performances

Source : Amundi August 2013, net performance in USD of a representative portfolio . The performance of the representative portfolio does not represent actual trading and therefore the performance results may not compensate for the impact, if any, of the lack of liquidity, money flow, tax implications and other market risk factors.

Past performances and simulations based on these, do not guarantee future results, nor are they reliable indicators of futures performances. Given for indicative purpose only.

Representative Portfolio 1 year 3 years Since inception

Net Performance 1,09% 0,16% -2,63%

Spread +0,26 -0,92 +0,30

Information Ratio 0,06 -0,25 0,07

Benchmark is MSCI EM ( Emerging Markets) Inception date - October , 2007

Annualized Performance Calendar year performance

20,27%

-19,38%

17,51%

-9,27%

18,88%

-18,42%

18,22%

-10,19%

-30%

-15%

0%

15%

30%

2010 2011 2012 2013

� Representative Portfolio � MSCI EM

GIPS Composite1 year 3 years 10 years

Gross Performance 0,53% 0,40% 15,20%

Spread -0,10 -0,84 2,77Benchmark is MSCI EM ( Emerging Markets) Composite asset USD 2 BnInception date - October , 2007


Performance Attribution

Source: Amundi August 2013. Representative portfolio gross relative performance (ex transaction fees) . The performance of the representative portfolio does not represent actual trading and therefore the performance results may not compensate for the impact, if any, of the lack of liquidity, money flow, tax implications and other market risk factors.

Past performance does not prejudge future results, nor is it a guarantee of future returns.

0.2%

5.0%

-2.0%

0.9%-0.9% -1.0%

0,3%-2,1%

0.3%-0.2%

0.5% 0,4%

-0.9%

8.7%

6.0%

0.6% 3.3% 3.0%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2008 2009 2010 2011 2012 YTD 08/2013Country allocation Sector allocation Stock picking

-0.4% 11.6% 4.9% 1.3% 2.9% 2.6%

Gross relative performance



An experienced investment team

� Mickael Tricot, leader portfolio manager since the launch of the

strategy in Oct.07, 14-years experience in the industry

� $ 350 million AUM in the strategy

Competitive ranking over 5 years

� 1st quartile - Lipper

� 1st quartile - Morningstar

� Upper quartile - Emerging Markets Equity universe Mercer

Data Source - ©[2013] Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. 3 Lipper is not responsible for the accuracy, reliability or completeness of the information that you obtain. In addition, Lipper will not be liable for any loss or damage resulting from information obtained from Lipper or any of its affiliates. © Thomson Reuters 2013. All rights reserved.

What about the ‘Internal Demand’ now?


� Situation very different from EM crisis of 97/98

– Current account balances and net foreign debts are in much better shape

– Most EM countries have flexible exchange rates today

� Higher bond yields and monetary tightening should lead to lower economic growth

– Impact to be softened by exports picking up and regain of competitiveness

� Very positive medium as balance of payment deterioration has stopped

EM equities confronting QE tapering

Source: Oxford, Amundi

Net FX debt at much lower levels


Economic growth for GEM to be lower but should stay higher

� A mix of cyclical and structural slowdown– Lower growth in exports to US and EU

– Less dynamic commodity and energy prices

– Governments reacting less to current slowdown vs 2008

– Less room for big cuts in interest rates than before

– Fewer under-valued currencies limit room for domestic demand boost

– Banking sectors have less excess deposits

� But higher GDP growth vs DM to stay– Better relative demographic trends

– Better fiscal situation and external position

– Lower overall debt burden

– Higher productivity growth potential

– Financial leveraging potential

– Lower labor costs & competitive currencies

– Beneficiary of global corporate capital expenditure

– Improving education level/GDP per capita convergence

– WTO rules favoring lower social and environmental standards

Real GDP growth (yoy )

Source : Factset, AmundiDeveloped countries : GDP weighted of US, EU & Japan

We favor countries able to maintain a balance between economic growth and financial stability

Appendices


Private consumption of Emerging Countries represent s more than 40% of Developed Economies consumption, compared to just 19% ten years ago

Source: EIU, MSCI, AMUNDI

Private consumption of Emerging Countries as % of priv ate consumption of developed economies

A growing contributor to world growth


Stock picking

� How do we build our own opinions on stocks?

1. In-depth qualitative analysis

– Company specific : activity, competition, risks, corporate governance, shareholding structure, industry and regulation etc.

1. In-depth qualitative analysis

– Company specific : activity, competition, risks, corporate governance, shareholding structure, industry and regulation etc.

Formulate investment cases

2. Comprehensive financial analysis

– Understand the company business model : ability to deliver growth and return (cash flow generation and investment)

– Valuation : EVA models and valuation multiples

2. Comprehensive financial analysis

– Understand the company business model : ability to deliver growth and return (cash flow generation and investment)

– Valuation : EVA models and valuation multiples

Company meetings

Top sell-side research

Annual and quarterly reports

Top down inputs

InformationEach Analyst/PM responsible for a comprehensive ana lysis of companies under its coverage

Discussed with lead/co lead PM


Comparison with the Emerging Markets Equity universe

� Emerging Internal Demand expertise at Amundi versus EM Universe

Citywire – October 2013 - page 28Amundi Funds Equity Emerging Internal Demand - page 28


Disclaimer

Amundi, French joint stock company (“Société Anonyme”) with a registered capital of € 584 710 755 and approved by the French Securities Regulator (Autorité des Marchés Financiers-AMF) under number GP 04000036 as a portfolio management company, 90 boulevard Pasteur -75015 Paris-France - 437 574 452 RCS Paris.

www.amundi.com - www.amundi-funds.com

This document is only for the attention of “Professional” investor as defined in Directive 2004/39/EC dated 21 April 2004 onmarkets in financial instruments (“MIFID”), to investment services providers and any other professional of the financial industry,and as the case may be in each local regulations and, as far as the offering in Switzerland is concerned, a “Qualified Investor”within the meaning of the provisions of the Swiss Collective Investment Schemes Act of 23 June 2006 (CISA), the Swiss CollectiveInvestment Schemes Ordinance of 22 November 2006 (CISO) and the FINMA’s Circular 08/8 on Public Advertising under theCollective Investment Schemes legislation of 20 November 2008. In no event may this material be distributed in the EuropeanUnion to non “Professional” investors as defined in the MIFID or in each local regulation, or in Switzerland to investors who do notcomply with the definition of “qualified investors” as defined in the applicable legislation and regulation.

This document neither constitutes an offer to buy nor a solicitation to sell a product and shall not be considered as an unlawfulsolicitation or an investment advice. Amundi accepts no liability whatsoever, whether direct or indirect, that may arise from the useof information contained in this material. Amundi can in no way be held responsible for any decision or investment made on thebasis of information contained in this material.

The information contained in this document is disclosed to you on a confidential basis and shall not be copied, reproduced,modified, translated or distributed without the prior written approval of Amundi, to any third person or entity in any country orjurisdiction which would subject Amundi or any of “the Funds”, to any registration requirements within these jurisdictions or where itmight be considered as unlawful. Accordingly, this material is for distribution solely in jurisdictions where permitted and to personswho may receive it without breaching applicable legal or regulatory requirements. The information contained in this document isdeemed accurate as at September. Data, opinions and estimates may be changed without notice.

amundi citywire emerging internal demand - oct 2013

Economy & Finance

global emerging

emerging equities

emerging market assets

emerging market equities

stages of economic growth

historical growth rate51

major emerging economies

main markets