outlook and opportunities for investing in asia...

Chou Chong, Investment Director

Aberdeen Asset Management

Outlook and Opportunities for Investing in

Asia Pacific: Attractive fundamentals with

potential long-term opportunities

February 9, 2012

Presentation to

Capital Link

Aberdeen Asset Management is the marketing name in the US for the following affiliated,

registered investment advisers: Aberdeen Asset Management Inc., Aberdeen Asset

Management Investment Services Ltd, Aberdeen Asset Management Ltd and Aberdeen Asset

Management Asia Ltd (collectively, the “Aberdeen Advisers”). Each of the Aberdeen Advisers

is wholly owned by Aberdeen Asset Management PLC. "Aberdeen" is a U.S. registered service

mark of Aberdeen Asset Management PLC

1

Your presenter

Chou Chong, Investment Director

Aberdeen Asset Management Asia

2

The Case for Investing in Asia-Pacific

• Debt levels of developed nations is unsustainable

• Economic woes troubling the West have changed the definition of “safe haven”

• Asian balance sheets are predominately healthy

• Growth increasingly driven by domestic demand affluence

• Not immune to Western downturn but resilient

• Strong Asia-Pacific fundamentals deserve 2nd look

Resilient economic potential, solid structural foundation, growing domestic demand and strong growth potential

3 3 Source: Bloomberg, CLSA Asia-Pacific Markets, end Dec11

A poor year for global stock markets Risk assets shunned amid flight to safety

Past performance is no guarantee of future results. For illustrative purposes only.

4 Source: Bloomberg, end Dec 11

Asia: No escape from risk aversion


5 Source: MSCI, Bloomberg, end Dec 11

Most bourses in the red in 2011 Q4 was particularly turbulent as the West’s fiscal problems worsened


6

Total Risk Index*

0

1

2

3

4

5

6

7

8C

hin

a

Taiw

an

Sin

gapore

Indonesia

Thaila

nd

Phili

ppin

es

Hong K

ong

Mexic

o

Russia

Arg

entina

Chile

Mala

ysia

India

S.A

fric

aB

razil

Japan

Kore

a

Turk

ey

Czech

Cro

atia

Slo

vak

Pola

nd

Austr

alia

Sw

itzerlan

Rom

ania

Germ

any

NZ

Austr

ia

Bulg

aria

Sw

eden

Fin

land

US

Hungary

Norw

ay

Fra

nce

Canada

UK

Neth

erland

Denm

ark

Italy

Belg

ium

Gre

ece

Spain

Port

ugal

Irela

nd

Safe haven no more Most of the risk is now in the “rich world”

Source: UBS, end Dec 2010. *The Total Risk Index assesses countries on the following criteria: credit trends, loan/deposit ratios, debt levels, current account

balances, exports and FX reserves. For illustrative purposes only.

7

Non-financial sector debt as % of GDP

Balance sheets in Asia are healthier

For illustrative purposes only.

Source: “The real effects of debt” Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli – OECD and national data - simple average of data across 18 OECD

countries, Bank for International Settlements, Sept 2011. .

8

Projected government debt

• Dramatic increase in developed country government debt

• Asia’s policymakers have much more flexibility to manage growth vs. Europe, US and

Japan

Less debt increase Most debt increase

0

50

100

150

200

250

300

PK BR ID PH CH IN KR MX ZA VN TH TW MY AdvG-20

US UK JP

Gro

ss D

eb

t a

s %

of

GD

P

2007 (pre crisis) 2009 2015(F)

Projections are offered as strategy goals and are not referenced to past performance. Projections are not guaranteed and actual events or results may differ

materially. For illustrative purposes only.

Source: IMF, World Economic Outlook Database, as of Sep 11

Governments in Asia are solvent – unlike in The West

9

For illustrative purposes only

Source: Bloomberg, Dec 11

Asia’s growth is resilient

Real GDP growth (%)

2010 1Q11 2Q11 3Q11

China 10.4 9.7 9.5 9.1

Hong Kong 7.0 7.5 5.3 4.3

India 8.5 7.8 7.7 6.9

Indonesia 6.1 6.5 6.5 6.5

Japan 4.0 -1.0 -1.1 0.0

Korea 6.2 4.2 3.4 3.4

Malaysia 7.2 5.2 4.3 5.8

Philippines 7.6 4.6 3.4 3.2

Singapore 14.5 9.4 1.0 6.1

Taiwan 10.9 6.2 5.0 3.4

Thailand 7.8 3.2 2.7 3.5

10

Asia is being re-rated

Country S&P Credit rating 2011 S&P Credit rating 2006

Singapore AAA AAA

Hong Kong AAA AA-

Taiwan AA- AA-

China AA- A-

Malaysia A A+

South Korea A+ A+

Thailand A- A

India BBB- BB+

Philippines BB+ BB+

Indonesia BB+ BB


Standard & Poor’s Credit ratings are expressed as letter grades that range from ‘AAA’ to ‘D’ to communicate the agency’s opinion of relative level of credit risk.

Ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

Source: Standard and Poor's, Long Term Local Currency Debt Ratings, Apr 2011.

11

Asia’s central bank reserves are enormous

Central Bank Assets (US$bn)

386

306 285 260 238

165129 110

7547 42

0

100

200

300

400

500

600

700

800

900

1000

China Taiwan South Korea Hong Kong India Singapore Thailand Malaysia Indonesia Philippines USA Australia

Post Asian financial crisis in 1997; strengthening of country fundamentals and increasing foreign reserves

Substantial capacity to provide a stabilising influence on domestic capital markets and to limit volatility in currencies



Source: Bloomberg, data as at end Dec 11, except for US and India (as of 20 Jan 12)

3000

3181

12

GDP (PPP) share of world total, 2011E

Source: IMF, Sep 2011

Contribution to global GDP growth (%)

Source: IMF, Sep 2011

The world’s new growth driver China expected to contribute to approximately one-third of global growth in

2011

China

14%

India

6%

Other emerging

and developing

economies

29%

Advanced

economies

51%

Projections are offered as strategy goals and are not referenced to past performance.

Projections are not guaranteed and actual events or results may differ materially. For illustrative

purposes only.

13

Structural shift underway Asia is rebalancing growth towards domestic demand



Source: CEIC, HSBC, Jan 12

14

Total dependency ratios (%)

Positive demographics…



Source: United Nations, World Population Prospects, 2010.

40

50

60

70

80

90

100

1950 1965 1980 1995 2010 2025 2040 2055 2070 2085 2100

Japan Europe US Asia

15

Rise in Asian middle class Growth in disposable incomes (%)


Source: World Bank, Euromonitor, US Census Bureau, CLSA Asia-Pacific Markets, Oct 2011.

… and rising affluence will underpin its economies

(m)

16


Source: UBS, Soufun, Jan 12

Projections are offered as strategy goals and are not referenced to past

performance. Projections are not guaranteed and actual events or results may

differ materially. For illustrative purposes only.

Source: Deutsche Bank, National Audit Office, Jan 12

China is slowing Property and banking sectors are key concerns

17





Beijing shifts gears Cut in reserve requirements suggest growth is now priority

18

Elsewhere in Asia, governments have policy options

too Cooling growth and inflation has allowed monetary easing; India the

exception





19

Room for fiscal stimulus Unlike the West, governments (ex Japan) are living within their means


Source: CEIC, UBS estimates, Jan 12

20



Source: UBS Quantitative Research, MSCI, IBES, Jan 12

Businesses have understandably turned cautious Earnings estimates suggest soft 2012 with rebound in 2013

21

But corporate fundamentals remain firm

Projections are offered as strategy goals and are not referenced to past

performance. Projections are not guaranteed and actual events or results may

differ materially. For illustrative purposes only.

Source: CLSA Asia-Pacific Markets, Jan 12 Source: Bloomberg, Dec 11

22

Valuations are attractive



Market sell-off is providing opportunities for Aberdeen to add to

quality names at attractive prices

Aberdeen’s Outlook for Asia Pacific

• Asian balance sheets are predominantly healthy

• Growth increasingly driven by domestic demand and rising affluence

• Asia not immune to Western downturn but…

• Asia-Pacific economies possess:

- resilient economic potential

- solid structural foundation

- growing domestic demand

- intra-regional trade

- strong growth potential

• Aberdeen’s strategy is unchanged – we will maintain focus on well-run

companies with sustainable business models, solid finances and regard for

minority shareholders

23

24

Investment philosophy and approach

• We believe that, over the long term, share prices reflect underlying business

fundamentals

• We identify ‘best ideas’ at reasonable valuations via company visits

• Risk is investing in a poor quality company and/or overpaying, and not

benchmark-relative

• Emphasis on collective wisdom of team, not stars

We do not trade, but invest for the long term – and only in companies that

we

understand and can value.

25

Investment process

Risk controls

Quality

Pass or fail?

Potential

revisit

Portfolio

constructio

n

Monitor

Company visit note

Watch list/

review

Aberdeen

universe

Price

Cheap or

expensive?

• Use model

portfolio

• Filter for

mandate

• Refine

weightings

• Compliance

checks

Step 1 Step 2 Step 3

Total

univers

e of

stocks

• Desk research: pre-screen of candidate companies

• No quantitative filters

• Many stocks eliminated over time or self-excluding due to

size/structure

• Regular revisits of key index stocks not held

26

Focus on enhancing value over long term

• Aberdeen disregards short-term market noise

• Being right in long term matters more than buying early

• Buying is only the beginning, not end, of company research

• We continue to monitor stocks and evaluate against market movements

• Portfolio turnover is mainly topping up/top slicing of existing holdings

• Actual company name turnover is kept low

• Instinctively contrarian

We are owners of companies rather than buyers of stocks; we spread risk

not by buying more stocks but by constructing a portfolio that invests in

many different businesses

27

Aberdeen Asia Pacific fund management team

Gerald Ambrose*

Evan Cheah

Mohd Najman Md Isa

Bharat Joshi

Jolynn Kek

Abdul Jalil Rasheed ̂

Andrew San

Head of Asian Equities

Tokyo Singapore Hong Kong Bangkok Kuala Lumpur

Keita Kubota

Kwok Chern Yeh*

Sandy Lim

Flavia Cheong

Chong Yoon-Chou

Kristy Fong

Gan Ai Mee

Andrew Gillan

Mark Gordon-James

Pruksa Iamthongthong

Adrian Lim

Louis Lu

Thomas Reeves

David Smith

James Thom

Christopher Wong

Hugh Young*

Boo Siew Yan, Cheng Hui

Fang, Felicia Lee, Ng Ai Hua,

Emerald Rosasillfiani, Tan

Shuyun, Eunice Toh, Jace

Zeng Mon

Central Dealers:

Rebecca Ang, Richard Ang,

Linda Mangsud, Derek

McCole*

Nicholas Chui

Frank Tian

Kathy Xu

Nicholas Yeo*

Orsen Karnburisudthi

Ratanawan

Saengkitikomol

Adithep Vanabrisksha*

Sutatip Premruthai

Central Dealer:

Jira Vereewattanasak

* Head of desk

^ CEO of Aberdeen Islamic

Asset Management Sdn Bhd

Investment support staff in

italics

Sydney

Mark Daniels

Michelle Lopez

Robert Penaloza*

Andrew Preston

Camille Simeon

Natalie Tam

Chhai Ung

Kenneth Akintewe

Scott Bennett

Marisa Loh

Adam McCabe

Anthony Michael*

Suhaila Suboh

Tan Chew May

Tan Wah Yong

Yueh Ee Leen

Dealers (Currency):

Mark Khoo, Ambrose Tan

Pongtharin Sapayanon*

Supakorn Tulyathan

Ben Brandon-King

Hong Li Min

Kang Puay Ju*

Kok Jing Tai

Glyn Nelson

Vida Tandean

Hugh Young

Includes affiliated

persons operating

under an inter-

company

agreement.

Source: Aberdeen

Asset Management,

16 Jan 12

Nick Bishop

Stuart Dear

Robert Franklin

Garreth Innes

Amy Mangan

Victor Rodriguez*

Gerard Sheehan

Justin Tyler

Dealers:

Michael Moen, Jane Tiftis

Satoshi Hisanaga

Edmund Goh

Jeremy Teng

Property

Asia Pacific Fixed

Income

Asia Pacific Equity

Multi-Asset Peter Elston

28

Aberdeen’s Asia-Pacific Closed-End Funds for US

Investors Fund Investment Objective Website

Aberdeen Asia-Pacific Income

Fund, Inc.

“FAX”

Current income through investments primarily in Asian

and Australian debt securities www.aberdeenfax.com

Aberdeen Australia Equity Fund,

Inc.

“IAF”

Long-term capital appreciation through investments

primarily in equity securities of Australian companies

listed on the Australian Stock Exchange Limited*

www.aberdeeniaf.com

Aberdeen Emerging Markets

Telecommunications and

Infrastructure Fund, Inc.

“ETF”

Long-term capital appreciation by investing primarily in

equity and debt securities of emerging markets

telecommunications and infrastructure companies;

approximately 50% of the fund invested in Asia-Pacific

www.aberdeenetf.com

Aberdeen Global Income Fund,

Inc.

“FCO”

High current income by investing primarily in global fixed

income securities; approximately 40% invested in

Australia and New Zealand*

www.aberdeenfco.com

Aberdeen Indonesia Fund, Inc.

“IF”

Long-term capital appreciation and income as a

secondary objective by investing primarily in Indonesian

securities

www.aberdeenif.com

The Asia Tigers Fund, Inc.

“GRR”

Seeks long-term capital appreciation by investing

primarily in Asian equity securities. www.aberdeengrr.com

The India Fund, Inc.

“IFN”

Seeks long-term capital appreciation by investing

primarily in Indian equity securities www.aberdeenifn.com

The Singapore Fund, Inc.

“SGF”

Capital appreciation through investment in equity

securities issued by Singapore and ASEAN-based

companies

www.aberdeensgf.com

Investors should consider a fund’s investment objectives, risks, charges and expenses carefully before investing. A

copy of the prospectus for Aberdeen Australia Equity Fund, Inc. and Aberdeen Global Income Fund, Inc. that contains

this and other information about the fund may be obtained by calling 866-839-5205. Please read the prospectus

carefully before investing. Investing in funds involves risk, including possible loss of principal.

http://www.aberdeenfax.com/

http://www.aberdeeniaf.com/

http://www.aberdeenetf.com/

http://www.aberdeenfco.com/

http://www.aberdeenif.com/

http://www.aberdeengrr.com/

http://www.aberdeenifn.com/

http://www.aberdeensgf.com/

29

Competitive advantage

• Dedicated investing in Asia since 1985

• Experienced and cohesive team

• Robust investment process

- Disciplined, replicable and consistent

- Always meet and interview a company before investing

• Proprietary research/visit note gives deeper insights, differentiates us from

peers

• Independence: Not compelled to own stocks that fail our screens

• Long track record

• Genuine team effort

Important: Past performance is not indicative of future results.

The above is strictly for private circulation and information purposes only and should not be considered as an offer, or solicitation, to deal in any of

the investments mentioned herein. Aberdeen Asset Management Inc. ("Aberdeen") does not warrant the accuracy, adequacy or completeness of

the information and materials contained in this document and expressly disclaims liability for errors or omissions in such information and materials.

Any research or analysis used in the preparation of this document has been procured by Aberdeen or its affiliates for their own use and may have

been acted on for their own purpose. The results thus obtained are made available only coincidentally and the information is not guaranteed as to

its accuracy. Some of the information in this document may contain projections or other forward looking statements regarding future events or future

financial performance of countries, markets or companies. These statements are only predictions and actual events or results may differ materially.

The reader must make his/her own assessment of the relevance, accuracy and adequacy of the information contained in this document and make

such independent investigations, as he/she may consider necessary or appropriate for the purpose of such assessment.

Closed end funds have a one-time initial public offering and then are subsequently traded on the secondary market through one of the stock

exchanges. The investment return and principal value will fluctuate so that an investor’s shares may be worth more or less than the original cost.

Shares of closed end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the fund’s portfolio. There is no

assurance that a fund will achieve its investment objective.

Aberdeen reserves the right to make changes and corrections to its opinions expressed in this document at any time, without notice. Any

unauthorized disclosure, use or dissemination, either whole or partial, of this document is prohibited and this document is not to be reproduced,

copied, made available to others.

International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and

differences in accounting methods. There are also risks associated with investing in Australia, including the risk of investing in a single country

fund.

The information presented, was prepared and issued by the Fund based on publicly available information, internally developed data and other

sources believed to be reliable. All reasonable care has been taken to ensure accuracy. International investing entails special risk considerations,

including currency fluctuations, lower liquidity, economic and political risks, and differences in accounting methods; these risks are generally

heightened for emerging market investments.

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