2. We are in a super-cycle, again

3. Section 1: Current Situation

4. The world is growing
Nominal world GDP since 1990
USD billions
World GDP (Nominal)
308,285
300,000
260,000
220,000
180,000
133,676
140,000
100,000
62,346
60,000
32,061
22,856
20,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Sources: IMF, Standard Chartered Research 4

5. The world is growing (2)
Nominal world GDP since 1990 World nominal GDP current cycle
USD trn USd trn
World nominal GDP World nominal GDP (USD trn)
65 70
64.7
61.1
60
60 57.7
55
50
50
45 40
32.1
40
30
35
20
30
10
25
20 0
1990 1995 2000 2005 2010 2000 2008 2009 2011
Sources: IMF, Standard Chartered Research 5

6. State, 2010
70% of global growth this year is coming from EMs
(% of world total)
US EU
18% 8%
Japan
4%
CIS RoW
4% 7%
Latam
11%
MENA
4%
Africa
2%
Asia
42%
Sources: IMF, Standard Chartered Research 6

7. Asian trade has already recovered past pre-
Export volumes
(indexed to pre-crisis peak, April 2008)
World exports Asian exports Advanced economies exports
120
110
Indexed, April 2008 = 100
100
90
80
70
Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Jul-10
Sources: IMF, Standard Chartered Research 7

8. Appreciating currencies
Strong appreciations: Thai baht, Indonesian rupiah, Brazilian real, South African rand
THB IDR BRL ZAR
115
105
95
Sep-09 Oct-09 Nov-09 Jan-10 Feb-10 Apr-10 May-10 Jul-10 Aug-10 Sep-10
Sources: Bloomberg, Standard Chartered Research 8

9. Section 2: The super-cycle

10. The third super-cycle
Real world GDP growth since 1820
%
Actual world GDP growth Average world GDP growth
10%
1946-1973: 5.0%
8%
6%
1870-1913: 2.7%
2000-2030: 3.6%
4%
1820-1870: 1.7%
2%
0%
1973-1999: 2.8%
-2%
-4%
1913-1946: 1.7%
-6%
-8%
-10%
1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
Sources: Maddison, IMF, Standard Chartered Research 10

11. The shift in the balance of power
Nominal GDP 2010, USD 62trn Nominal GDP 2030, USD 308trn
% of global % of global
ROW China Japan ROW
6% 10% 3% 5%
Japan India
10% 3% China
Asia ex CIJ EU-27
23%
6% 14%
SSA
2%
MENA
3%
Latam US
EU-27 6% 12% India
27% CIS
10%
3%
CIS
5% Asia ex CIJ
8%
US Latam SSA
24% 9% MENA 5%
6%
Sources: IMF, Standard Chartered Research 11

12. The New World Order
1990 USD trn 2000 USD trn 2010 USD trn 2020 USD trn 2030 USD trn
1 US 5.8 US 10.0 US 14.6 China 24.6 China 73.5
2 Japan 3.0 Japan 4.7 China 5.9 US 23.3 US 38.2
3 Germany 1.5 Germany 1.9 Japan 5.6 India 9.6 India 30.3
4 France 1.2 UK 1.5 Germany 3.3 Japan 6.0 Brazil 12.2
5 Italy 1.1 France 1.3 France 2.6 Brazil 5.1 Indonesia 9.3
6 UK 1.0 China 1.2 UK 2.3 Germany 5.0 Japan 8.4
7 Canada 0.6 Italy 1.1 Italy 2.0 France 3.9 Germany 8.2
8 Spain 0.5 Canada 0.7 Brazil 2.0 Russia 3.5 Mexico 6.6
9 Brazil 0.5 Brazil 0.6 Canada 1.6 UK 3.4 France 6.4
10 China 0.4 Mexico 0.6 Russia 1.5 Indonesia 3.2 UK 5.6
Source: Standard Chartered Research

13. Export to GDP ratio
%
35
30
25
20
%
15
10
5
0
1820 1870 1913 1929 1950 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2030
Sources: Madisson, IMF WEO, Standard Chartered Research 13

14. -South trade likely to continue booming
Major trade corridors 2009 - 2030
EU-27
United States
China
MENA India
Asia ex CIJ
LATAM
Sub-Saharan
Africa
USD trn
6
13
0
2008
2030
Sources: Madisson, IMF WEO, Standard Chartered Research 14

15. Population in 2009 and prediction for 2030
Sources: UN, Standard Chartered Research 15

16. Urbanisation in 2010 and prediction for 2030
Sources: UN, Standard Chartered Research 16

17. Real GDP/capita 2000 2030 at market exchange rates
USD
Sources: OECD, Standard Chartered Research 17

18. Middle class now and in 2030
Size of the middle class in 2009 and prediction for 2030
Sources: Mckinsey, World Economic Forum 18

19. A Chinese luxury wedding
Source: OMG 19

20. Creativity is key
Distribution of tertiary educated population Number of patents filed by country
by 2030 (%)
Japan US Europe (incl UK)
Latam China South Korea
India
9%
16% 600,000
Africa
7%
500,000
China
400,000
13%
Developed
economies
13% 300,000
United 200,000
States
EM Europe 9%
+ ME 100,000
Japan
10%
5%
EM Asia 0
18% 1995 1997 1999 2001 2003 2005 2007
Sources: WDI, WIPO, Standard Chartered Research 20

21. What does the world want?

22. What does the world want next?
Spending habits at different per-capita income levels
35,000
30,000
25,000
Per capita income
20,000
15,000
10,000
5,000
0
TV Motor-­cycle Cell phone Car Tourism University Financial
education services
Source: IAFM (International Academy of Financial Management)

23. Commodities: Winners and Losers
Norway
Net oil exporter with sizeable reserves Net oil exporter Relies heavily on coal & oil
Russia & CIS imports, despite significant
investment in nuclear and
Currently largest oil producer. Holds renewable energy
Expected to remain net
importer of coal and oil 9.2% of global oil reserves and 19% of
Canada global coal reserves. Well placed to Holds 14% global coal reserves, but
export to both China and Europe imports are preserving future domestic
EU-­27 supply. Fourth-­largest crude oil
producer, but imports 55% of oil needs.
Holds 7% of global coal
Investment in nuclear and renewables
reserves but infrastructure
United States is curbing future needs, but likely to
must improve to reduce
remain dependent on fossil fuels
dependence on imports.
Holds 30% of global coal High dependency on crude
reserves. Third-­largest oil
producer, but dependent on Holds 60% of global oil imports China Japan
imports for over 60% of proven oil reserves, MENA
equivalent to 78 years of
crude oil demand India
current production Rest of Asia (ex Japan)
Sub-­Saharan
Africa
Vietnam and Indonesia
Net oil-­exporting region. Brazil is South Africa a large exporter of coal. dominate thermal coal
one of the most prospective non-­ Region expected to remain a net oil export market, although
OPEC countries and on the cusp exporter domestic demand growth is
LATAM Australia
of becoming a significant net
crude oil exporter. Region holds exportable surplus
9% of global coal reserves
2% of global coal reserves
Colombia is key exporter
Source: Standard Chartered Research

24. Commodities: Winners and Losers
Large metal consumer.
Limited domestic mine
Will need to import raw production exposes it to high
materials to feed strong Russia & CIS prices
domestic demand for
base metals Kazakhstan produces an
excess of copper. Ample
reserves China has a structural deficit
EU-­27 in copper with local reserves
being poor quality. Strong
Copper deficit demand will make it reliant
on imports
United States
China
Japan*
MENA
India
Rest of Asia (ex Japan)
Sub-­Saharan India is a large consumer of
Africa metals due to a rapid expansion
Chile and Peru are dominant in manufacturing. Relies heavily
producers of copper, and low on imported copper raw
Zambia is currently the dominant copper
consumption levels allow them LATAM producer, with the DRC another potentially
materials
to be major winners in a super-­ important supplier. Timely mine development
cycle. While some mines are will be required to allow the region to benefit
reaching end of natural life, the
from the super-­cycle Australia
region will continue to be a
dominant supplier
No effect
Source: Standard Chartered Research

25. Commodities: Winners and Losers
Wheat harvests likely to
increase, albeit moderately, from Despite persistent weather
current production. Exports of shocks can increase acreage Japan continues to
wheat will remain strong over and FAO forecasts Russia alone register a sizeable
long term, particularly to MENA accounts for 9% of global wheat net trade deficit for
Currently top exporter of importers. Region likely to suffer output over next 10 years Imports 30% of all cotton. wheat and coarse
wheat and cotton and from higher textile prices as compared with 7% now Structural deficit in cotton will grains. Current
will remain an cotton prices rise worsen given that per-­capita wheat output covers
established and cost-­ consumption outpaces per-­ less than 15% of
effective exporter of Russia & CIS capita output. Meanwhile, a consumption
both commodities drop in per-­capita
globally, despite some
EU-­27
consumption of wheat vs. a
loss of market share rise in per-­capita output will
boost exportable surpluses
United States
Wheat consumption far
outstrips output in the
China Japan
MENA region;; deep deficits
are likely to remain in place MENA
long-­term given that region India Rest of Asia (ex-­Japan)
also has a water deficit
Potential to increase wheat
Global acreage domination with acreage and output by up to 5mt
Sub-­Saharan cotton. Cotton output has by 2020. However, output is
Africa increased around 10% over the vulnerable to weather shocks
last 10 years, compared with the
LATAM A large net importer. Current global average of 1%. Significant
wheat output covers only 30% of upside potential exists on the
current consumption and is likely back of better farming
to stagnate at this level over the techniques. Proximity to China
forecast period in the absence of will boost overall market share. Australia
significant investment in Population growth to pressure
agriculture wheat balances into a deficit by
2018
Wheat
No effect
Cotton
Source: Standard Chartered Research

26. Where next to invest?
Global equity-market capitalisation, 2009 Global equity-market capitalisation, 2030
USD trn, % of USD 45.4trn total USD trn, % of USD 322.1trn total
China , 79.8,
ROW , 85.7, 25%
China , 3.3, 7% India , 1.3, 3%
ROW , 8, 18% 26%
Asia ex CIJ , 4.5,
10%
Japan , 3.5, 8%
Japan , 6, 2%
India , 27.8, 9%
EU-­27 , 34.6,
11%
EU-­27 , 10.1,
23% US , 13.7, 31% Asia ex CIJ ,
US , 45.7, 14% 42.5, 13%
Sources: IMF, Standard Chartered Research Source: Standard Chartered Research

27. Section 4: Risks

28. Known unknowns - policy mistakes in the west
Financial Markets Symposium Dinner - 21st September 2010 29

29. Known unknowns political instability
70
Population (m illion)
60
50
40
30
20
10
0
Yemen
Financial Markets Symposium Dinner - 21st September 2010 30

30. Known unknowns - the environment
Physical Water Scarcity Little or No Water Scarcity
Economic Water Scarcity Not Estimated
Sources: International Water Management Institute 31

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