We can see the light at the end of the tunnel,

but we’re still in the tunnel…David Shapiro

We can see the light at the end of the

tunnel, but we’re still in the tunnel…

Lehman collapse

brings end to bull

market fueled by low

interest rates, excess

liquidity and booming

housing prices

Bail outs, stimulus

measures, bond

purchases calm

nerves inspiring

turnaround, but

markets faltering on

worries about weak

recovery

JSE peaks on views

housing collapse

confined to US

JSE All Share Index

Uncertainties in developed economies

persist

United States• Recovery faltering – further QE probable

• Consumers working down debt – confidence lowest in 7 months – gas prices, job security,

fall in house and equity markets keeping anxiety levels high

• Unemployment rate unacceptably high

• Housing still casting a gloomy shadow – price rebound losing momentum

• Credit markets remain tight

• Corporations in good shape – cash flush, but shy to hire

• President Obama popularity plunging on jobs, high health insurance costs and anti-business

rhetoric

• Trade war with China possible if contentious currency bill passed by both houses

Europe• German growth strong on booming exports

• Rest of euro zone tepid, especially countries like Greece and Spain

• Debt issues not fully resolved – Ireland currently in the spotlight

• Consumer demand languid

• Austerity measures could weigh on growth

• UK – housing market drooping – calls for further stimulus measures

GDP growth rates Advanced markets

ACTUAL FORECAST

2006 2007 2008 2009 2010 2011

World 5.1 5.2 3.2 -1.4 4.6 4.3

Advanced Economies 3.0 2.8 0.5 -3.2 2.6 2.4

USA 2.8 2.0 0.4 -2.4 3.3 2.9

Euro Area 2.8 2.6 0.6 -4.1 1.0 1.3

UK 2.8 3.0 0.5 -4.9 1.2 2.1

Germany 2.9 2.4 1.2 -4.9 1.4 1.6

France 2.0 1.9 0.1 -2.5 1.4 1.6

Japan 2.4 2.4 -1.2 -5.2 2.4 1.8

Canada 2.8 2.5 0.5 -2.5 3.6 2.8

Money flows to safe havens

GOLD USD / YEN

US Govt 2 Yr BondUS Govt 10 Yr Bond

Global gold holdings

GDP growth rates Emerging markets

ACTUAL FORECAST

2006 2007 2008 2009 2010 2011

World 5.1 5.2 3.2 -1.4 4.6 4.3

Emerging Economies 6.9 6.6 6.1 2.5 6.8 6.4

Russia 6.7 7.0 5.6 -7.9 4.3 4.1

India 9.7 8.9 6.4 5.7 9.4 8.4

Brazil 3.7 4.4 5.1 -0.2 7.1 4.2

Mexico 4.8 2.9 1.5 -6.5 4.5 4.4

China 11.6 13.0 9.6 8.7 10.5 9.6

RSA 5.4 5.1 3.7 -1.8 2.8 3.7

Metal prices remain firm

Concerns about deflation

or “double dip” not

evident in metal prices

Back home

ZAR / USD

JSE – Foreign Flows

-80.00

-60.00

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

ZAR'

bn

Foreign Transactions Equities - Net R'bn Foreign Transactions Besa - Net R'bn

South African economyForeign perspective

South Africa is a compelling growth opportunity – Wal Mart

Market a proxy for investing in Africa

Low debt to GDP – 6% versus US 11%

EZA quoted ETF up 13% in 2010 versus S&P500 3%

Valuations attractive relative to other emerging markets

First world financial markets – with high corporate governance

standards

Crime, corruption, politics and unemployment a worry but

considered a normal risk of investing in emerging markets

Recent deals a vote of confidence – HSBC/Nedbank, NTT/Didata

South African economyLocal perspective

Recovery stammering:

• Consumers remain under pressure

• Mining and manufacturing poised to slow

• Tough times ahead for construction

Strong Rand hurting competition

Future power and water supply uncertain

Labour demands continue to be excessive – restricting practises

Unemployment unacceptably high – lead to increased social spending

Expansion inhibited by bureaucratic incompetence, corruption, ideology

Tenure of property rights unclear – nationalisation still on the ANC agenda

Questions over education, healthcare and high crime levels

Inevitably lead to:

• Higher borrowing

• Increased taxes

Investment ideas for difficult markets

Local stock selection

Equity Preference High Yield EMFin

Strength

Commo-

dities

Pricing

Power

Anglo American

BHP Billiton

Sasol

SABMiller

Richemont

British American Tobacco

Naspers

Shoprite

Clicks

ABIL

Standard Bank

High yield opportunitiesOnshore

Issuer Investment Currency RatingRunning

Yield

Nedbank Perpetual Pref ZAR AA- 6.87%

Investec Bank Perpetual Pref ZAR AA- 7.39%

Investec Perpetual Pref ZAR A+ 7.30%

Standard Bank Perpetual Pref ZAR AA+ 6.66%

FirstRand Perpetual Pref ZAR AA 6.65%

ABSA Bank Perpetual Pref ZAR AAA 6.96%

Sasfin Holdings Perpetual Pref ZAR n/a 7.72%

African Bank Perpetual Pref ZAR A1 7.47%

Capitec Bank Perpetual Pref ZAR A2 8.27%

Global stock selection

Equity Preference High Yield EMFin

Strength

Cons.

Staple

Pricing

Power

Nestle

Coca-Cola Co

H&M

LVMH

YUM! Brands Inc

Colgate

Goldman Sachs

Google

Johnson & Johnson

ABB

Royal Dutch Shell

High yield opportunitiesOffshore

Issuer Investment Currency RatingRunning

Yield

Old Mutual PlcPerpetual

PrefUSD BBB- 8.04%

Prudential PlcPerpetual

PrefUSD A- 9.71%

Barclays PlcPerpetual

PrefUSD A- 7.18%

Standard Bank PlcPerpetual

PrefUSD BBB+ 8.26%

Investec Plc 2016 GBP BB+ 7.53%

Investec Plc Tier 1Perpetual

PrefEUR B1 8.04%

PE Paper (Sappi) 2014 USD BB 6.89%

Company details

Company 5 Yr Chart Company Description

Nestle is the world’s leading nutrition, health and wellness company.

The Group employs 280,000 people and have factories and

operations in almost every country around the world.

The Coca-Cola Company is the world’s largest beverage company,

largest manufacturer, distributor and marketer of non-alcoholic

beverage concentrates and syrups in the world.

Hennes & Mauritz is a Swedish clothing company, known for its fast

fashion clothing offerings for women, men, teenagers and children.

The Group has 2,000 stores in 37 different countries.

LVMH is one of the world’s largest luxury goods conglomerate. It is

the parent of around 60 sub-companies that each manage a small

number of prestigious brands.

Yum! is the world’s largest fast food restaurant company, over

36,000 restaurants in more than 110 countries. Yum! operates or

licenses Taco Bell, KFC, Pizza Hut worldwide.

Company details

Company 5 Yr Chart Company Description

Colgate is an American diversified corporation focused on the production,

distribution and provision of household, health care and personal products.

Goldman Sachs is a global investment banking and securities firm which

engages in investment banking, securities, investment management and

other financial services.

Google is a multinational public cloud computing, internet search and

advertising technologies corporation. Google processes over one billion

search requests every day.

J&J is a global pharmaceutical, medical devices and consumer packaged

goods manufacturer. J&J includes 250 subsidiary companies with

operations in over 57 countries.

ABB is one of the largest engineering companies in the world, operating in

around 100 countries. The Group’s focus is power and automation

technology areas.

Shell is a multinational petroleum company operating in over 140

countries. Shell was listed as the world’s eighth largest corporation for

2010 by Forbes.

Thank youDave Shapiro