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EM Advisors

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ARFI - Accessing finance in Asia

15 July 2014

…but has anybody informed the Chinese?

www.em-comms.com

These days in Russia it’s all about China...

The Great Game revived

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Asian investors in Russia

* Data supplied by CMi2i. Other data sources: Sovereign Wealth Fund Institute, Investment Management Association of Singapore, EM research 4

Institutional Investor Type Style Turnover City Country

Templeton Asset Management Ltd. (Hong Kong)

Mutual Fund Manager Value Very Low Hong KongHong Kong

GIC Pte Ltd. (Investment Management)Sovereign Wealth

ManagerGeneralist NA Singapore Singapore

Eastspring Investments (Singapore) Ltd. Investment Adviser NA Low Singapore Singapore

State Administration of Foreign Exchange (Invt Mgmt)

Sovereign Wealth Manager

NA NA Beijing China

Lazard Japan Asset Management KK Investment Adviser Value Very Low Tokyo Japan

HSBC Global Asset Management (Japan) KK Investment Adviser GARP Low Tokyo Japan

Lloyd George Management Hong Kong Ltd. (India)

Investment Adviser NA Medium Mumbai India

Korea Investment Corp. (Investment Management)

Sovereign Wealth Manager

NA Low SeoulSouth Korea

Mitsubishi UFJ Asset Management Co., Ltd. Investment Adviser Value Very Low Tokyo Japan

Nikko Asset Management Co., Ltd. Investment Adviser Growth Very Low Tokyo Japan

China media landscape

CE Weekly (中国经济周刊)Global Business & Finance (环球财经)Money Monthly (理财周刊)China Financial and

Economic News (中国财经报 )China Business Times (中华工商时报)

Chinese Securities Journal (大众证券报)China Business Herald(中国商报)

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Russia’s current perspective on China

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China’s current perspective on Russia

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Recent Chinese observations on Russia

“Russian companies seem to want us to see them as Western

companies. When in fact we tend to see Russia as the ‘wild West’.”

Chinese portfolio manager

“Most Chinese financial investors are not really ready for Russia yet.”

Chinese private equity investor

“When I want to invest in a Chinese company, all I have to do is make five phone calls

and I will know everything I need to do. I don’t have that possibility in Russia.”

Chinese private equity investor

“Of course we realize that there is a lot of risk in China as well. But it’s

familiar risk, we know what we are dealing with and how to price it in.”

Chinese ECM banker

“Most Chinese companies believe that at least until recently, Russia wasn’t open to Chinese investment. If

that is now changing, companies will look at opportunities, but will likely tread carefully.”

Chinese financial journalist 8

And this is the problem…

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…so where is the opportunity...?

• 1.3 bln population

• World’s second largest economy

• Market continually growing at pace

• Favourable geographic proximity with Russia

• Historical political proximity with Russia

• A genuine, albeit gradual, shift in global economic power to the East

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Building trust and seizing opportunities

• Align with trusted Chinese institutions, e.g. by bringing in a recognisedanchor investor (and publicizing this fact well)

• Gain traction in the Chinese media to present a more human / local face, by reinforcing Chinese dimension to the story, or finding events to appear alongside recognised Chinese corporate brands

• Find ways to publicize China relationships (in China)

• Be prepared for things to take time; the opportunity is a long-term one, the process can be the same

• But always be ready to be a little bit cynical and opportunistic, open to short-term opportunities that could arise given the current political climate

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