China: Market Overview 1st Quarter 2010 Fisher Capital Management Korea

Fisher Capital Management Seoul Korea - April is going to set the tone for the world economy depending on how China is labeled by the US and China’s reaction to it. Our gut feeling is that apart from the rhetoric — which is in the air with respect to the Yuan-dollar rates, China’s current account surplus and internet independence — neither of them will rock the boat.

Already five prominent members of the G20 — South Korea, Canada, France, the US and the UK — have sent a coded warning to China against reneging on economic agreements. Perception of China and the US in international relations is far apart.

According to China, the main issues are Taiwan and the sale of arms to Tibet and

for the US the issues are the Yuan-dollar rate, trade surplus and Internet freedom.

China: Market Overview 1st Quarter 2010 Fisher Capital Management Seoul Korea - Under the Omnibus Trade and Competitiveness Act of 1988, the U.S. government

is to decide whether to label China a “currency manipulator.” This has not been

done since 1994, but if China is named, it will give the US Congress new ammunition

to press for concrete action. China is asserting itself in international relations.

Beijing has emerged from the global recession with a fresh confidence about its

state-led economy, which has delivered stimulus projects from high-speed railways

to highways and bridges with remarkable efficiency. And it is in no mood to be

lectured by Washington about how to support the world economy or to operate her

own economy.

China’s economic growth will be around 10% in 2010 following strong industrial

output growth in coming months. Inflation may rise to 3.5–4% in 2010. The government’s target of inflation is 3%. But, China has hidden debt risk among Chinese local government investment companies. Official estimates of the total outstanding loan balance for such investment entities exceed Rmb 6,000bn — or roughly 20% of GDP — a figure that may be an underestimate.

China: Market Overview 1st Quarter 2010 Fisher Capital Management Korea - Undervaluation of the Yuan is taken for granted and is estimated to be in the range of 30–40%. The US administration believes that the Yuan’s appreciation will not only solve the trade deficit problem between the US and China but also the US unemployment.

Beijing’s position is that China’s currency policy isn’t the cause of the U.S.’s economic problems, and that China wouldn’t adjust its currency rate under outside pressure. “The Chinese government will only make the decision according to the national condition and the country’s development level,” according the Chinese President Wen. China believes that a surge in the Yuan could destabilize the global economy, hitting developing nations especially hard and even perhaps causing the value of the dollar to plunge.

The World Bank forecasts that China’s current-account surplus, the broadest measure

of its trade position, will rise this year to $304 billion, after dropping to $284.1 billion

in 2009 from a record $426.1 billion in 2008.

Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.

Fisher Capital Management South Korea, Brazil’s Economy: 1st Quarter

Fisher Capital Management Seoul Korea, Brazil’s Economy - The brief recession of 2009 has given way to a robust increase in consumer demand and recovery in investment in Brazil in 2010. The economy is likely to grow 5.5%

this year. GDP grew 2% year-on-year in the fourth quarter of 2009 and fell 0.2%

for the whole of 2009 compared with 2008.

Fisher Capital Management South Korea Investing: - The central bank did not raise its target overnight interest rate, the so-called Selic rate, unchanged leaving it at 8.75% a year. This was expected as the presidential

Election is nearing. The rate fell from 13.75% to 8.75% between December 2008

and July 2009. By the year-end, the rate is expected to rise by 250 basis points to

Curb inflation.

Even though the US and Brazil are not as open an economy as one would believe.

Trade accounts for approximately 14% for both the countries. US cotton subsidies had been a bone of contention for the two countries. The US was accused of excessive cotton subsidies by Brazil. After eight years of litigation at the World Trade Organization Brazil has won the case and Brazil’s move to raise tariffs on

a wide range of American goods has a potential of starting a new front in the trade

war with the US over cotton subsidies. Overall, the issue is still not blown out of

proportion as the two countries are engaged on other fronts.

Fisher Capital Management Korea, Brazil’s Economy: 1st Quarter Investment - Brazil’s government announced a R$958.9bn programme of investments in infrastructure for 2011 to 2014. The program is known as the PAC 2 … the

Portuguese acronym for accelerated growth programme, part two … to increase

Brazil’s investment rate and its potential for economic growth during the period

of the next government, which begins on January 1 2011.

Fisher Capital Management South Korea, Investment News: Henrique Meirelles who provided monetary stability to Brazil is all set to stand for election either as a Vice President or a senator. President Lula may choose him to

run for the Vice President office to send a message that macroeconomic stability

will be maintained under Ms Rousseff, presidential nominee of Mr. Lula’s party in the October election.

Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.

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South Korea: Market Overview 2010 Fisher Capital Management Seoul

South Korea:  Fisher Capital Management Seoul  - The South Korean economy is expected to grow by 4–5% in 2010. The government’s efforts were seriously questioned when it clipped the independence of the central bank when the government sent its observers to the central bank’s policy meetings.

However, the central bank will start raising interest rates in the third quarter to prevent inflation and asset bubbles. For the time being inflation is stable. It fell from 3.1% in January to 2.7% in February, but inflation will accelerate in the second half due to higher oil prices and rising imports. This should see policy interest rates

to go up by 25 basis points in the third quarter and another 25 basis points in December.

South Korea: Market Overview 2010 Fisher Capital Management Seoul - The government appointed Mr. Kim, who has served as a presidential economic secretary and is currently South Korea’s ambassador to the Organization for Economic Cooperation and Development. Under the new leadership, the central bank may cooperate even more closely with the government than it has under Governor Lee. The central bank under Mr. Kim may be more willing to risk inflation

in order to ensure that the economic recovery remains on track. The Korean policy

interest rate has been at an all-time low of 2.0% for more than a year now and the bank expects inflation to stay around 2.5% in the near future.

South Korea: Market Overview 2010 Fisher Capital Management Seoul - Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.

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Market Overview December 2009: Fisher Capital Management

Market Overview December 2009: Fisher Capital Management - Stocks closed lower in October for the first time in seven months, as investors questioned whether the huge rally off the March lows had exceeded the economy’s ability to generate growth in output and profits.

Indeed, equities capped off a volatile month (the Dow Jones Industrial Average (DJIA) experienced triple-digit moves in ten trading sessions!) with a volatile week, as the S&P 500 Index experienced its worst five-day span since early July.

For the month, the DJIA eked out a fractional gain, while all the other major equity market indices suffered losses. Small cap stocks, which had been among the performance leaders of the seven-month rally, experienced the worst hit, with the Russell 2000® Index falling by almost 7%. In another sign that the market may be growing skeptical of the “higher risk, higher reward” strategy, the NASDAQ Composite Index, dominated by technology holdings, declined 3.6% for the month.

Market Overview December 2009: Fisher Capital Management - Yet perhaps emblematic of the struggles experienced in the markets recently, growth stocks outperformed value in October, contradicting the idea that the pursuit of “risk” had become out of favor over the past several weeks. Moreover, the weakness in U.S. markets failed to extend beyond our borders last month, as developed markets (MSCI EAFE) experienced just a fractional loss, while the emerging markets (MSCI EM) managed to rise by up to 1%, adding to their impressive year-to-date (YTD) returns.

From a sector perspective, two of the three leading performers off the March lows (financials and materials) declined by the largest amounts in October, as investors appeared to lock in gains of approximately 150% for the financials sector and 75% for the materials sector. Despite the weakness in the technologyladen NASDAQ Composite last month, the higher-quality and larger-cap tech names comprising the S&P 500 Index’s information technology sector simply dropped fractionally. Rising oil prices pushed the energy sector higher by 3%, and the “defensive trade” was still evident within the consumer staples sector, which held on for a 1% gain.

Market Overview December 2009: Fisher Capital Management - In other asset classes, fixed-income was mixed last month. The yield on the 10-year Treasury note backed up by seven basis points, as traders likely moved funds elsewhere as the Federal Reserve concluded its $300 billion Treasury purchase program. The dollar continued to weaken, hovering near 14-month lows, which helped drive up the prices for oil, gold, and most commodities.

Fisher Capital Management Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world. As a full service company Fisher Capital Management Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.

Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010

Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - India is in a sweet spot. The central government budget which set the tone for reducing fiscal deficit and an unexpected increase in the policy rate to rein in inflation has convinced the markets and economists that India is on its way to having a robust economic growth. Industrial output also continued to grow at a fast pace in January as companies produced more cars and cement. In the fiscal year 2011 that ends in March 2011, GDP growth of 8.5% is achievable. Long-term predictions for the southwest monsoons are expected to be normal, giving a boost to agricultural production and domestic demand.

Fisher Capital Management Seoul Korea- Inflation in India has been surging, driven by a low base and high food prices as the weakest monsoon rains in 37 years last year hurt farm output. Inflation running at 8.5% may have peaked and it is expected to ease by April as the winter-sown crop comes to market. The year-on-year inflation rate for food articles was 16.22% in the week ending March 13, far above the comfortable zone for the central bank and the government. In order to manage the inflationary expectations, the central bank increased overnight lending and borrowing rates by 0.25 percentages point each, making it one of the first major central banks to raise rates. The central bank further announced that it would continue to roll back its loose monetary policy to manage prices, as the country can’t have sustained strong growth with high inflation. We expect a 0.25-percentage-point rate hike in mid-April and another increase of one percentage point through March 2011.

Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - The rebound in industrial activity also saw a surge in India’s exports for the third month running in January. Exports in January rose 11.5% from a year earlier to $14.34 billion, after having increased 9.3% to $14.61 billion in December. Imports increased 35.5% in January to $24.70 billion while oil imports rose by 56% to $7.05 billion. Non-oil imports, a barometer of investment activity, grew 28.8% to $17.65 billion.

On the back of robust economic numbers and policy pronouncements, the rating agency Standard & Poor’s raised its rating outlook to stable, expecting the fiscal situation to recover and growth to remain strong in the coming years. The government’s commitment to follow the recommendations of the 13th Finance

Commission, as well as its move to reduce fertilizer subsidies and raise domestic fuel prices were taken as positive indicators. The country’s external position continues to be in a comfortable zone.

Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - It is unlikely that India will benefit from the Google-China spat as the Indian government will not provide the kind of benefits China extends to the manufacturing sector in China. But some relocation is likely to emerge. For example, American companies GoDaddy and Dell have threatened to pull out of China and relocate themselves in India.

Fisher Capital Management: Market Performance – US Economy

Fisher Capital Management Report, Part 1 - Output growth exceeded what were once considered lofty expectations during the third quarter, as real GDP (inflation adjusted Gross Domestic Product) rose by a 3.5% annual pace from the previous quarter. To be sure, this was the first gain in economic activity after four consecutive quarterly declines in GDP. While technically this indicates an end to the recession, we point out that on a year-over-year (YOY) basis, economic activity has still declined 2.3%, yet it represents an improvement from the -3.8% YOY in the second quarter, the worst annual drop in seven decades.  The components of GDP were led by growth in personal consumption, which increased 3.4% as stimulus programs such as “Cash for Clunkers” allowed consumer spending to increase by the largest amount in two years. Home construction surged at an annual rate of 23%, spurred on by the $8,000 tax credit for first-time buyers. Another decline in business inventories also added to output, as did the growth in government spending (2.3%). Though businesses increased spending on equipment and software, fixed investment remained weak.

Market Performance, US Economy: Fisher Capital Management Report - As the positive effects of federal stimuli diminish, we continue to project an economic recovery that is “less spectacular” than in previous experiences. While output growth has improved as government programs spurred consumption relative to housing and autos, our concern rests on the economy¹s ability to sustain these rates of growth as government programs wane. Indeed, personal spending fell 0.5% in September after the “Cash for Clunkers” program concluded in August. Consumer confidence also weakened in October as the unemployment rate approached 10%. Until we experience a sustainable floor in housing and a ceiling on the unemployment rate, we suspect output growth will rely on exports, inventories, and government outlays, areas that we characterize as “cushions” for growth.

Market Performance, US Economy: Fisher Capital Management Report - As the unemployment rate lingers within the range of 10% and Fed policymakers remain committed to keeping interest rates low for an “extended period,” we look for real GDP to expand at an average rate of approximately 2.5% in 2010.

Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.