>CORPORATE SECURITIES STRATEGY (CITI)

And the Consensus Is…

■ Asia ex: Developed world is toast, let's toast the future, Asia and GEMS — Investors are very downbeat on the prospects for the developed markets. Asia ex based on 2010E data will generate ROE equal to the average seen in the last 10 years. For this, investors will pay 10-year average P/BV. Japan and the USA will do the same in terms of ROE, but their P/BV is 30% below mean. Asia’s saving grace is EPS growth forecast outperformance. If it dips, beware. Page 3

■ Fun With Flows: Resumption of inflows to emerging markets, but not too exciting for Asian funds — New money intake by all dedicated emerging market equity funds last week recouped earlier outflows, totaling US$2.5b as per EPFR. Comparing to $1.5b received by GEM funds, Asian fund inflows were not even half of that, at US$627m only. In terms of flows relative to asset size, they are behind those to Latin America equity funds, but similar to the magnitude of EMEA fund inflows. Page 15

■ Market Sentiment — Market sentiment has turned a bit cautious with MXASJ hovering around 400 in the last two months. Our sentiment indicator for the region has rolled over from its peak recorded in mid-September to +0.35 standard deviation above mean last week. Market wise, investor appetite has weakened the most in India and Taiwan, whereas sentiment in Singapore, which lagged other markets earlier, has just started picking up recently.

To read the full report: CORPORATE SECURITIES STRATEGY