>Introducing five structural themes (BNP PARIBAS)

■ We identify five structural themes to generate significant alpha in the years ahead.

■ The five themes are: Alternative Energy, Rural Asia, Demographic Challenges,

■ Economic Rebalancing and New Emerging Markets.

■ The report drills down to the drivers behind the themes from a macro perspective.

■ We suggest a list of stocks offering direct exposure to each theme.

We identify five structural themes that should critically influence Asia’s economic growth and should have potential to generate signficant alpha in the years ahead. The five themes are: Alternative Energy, Rural Asia, Demographic Challenges, Economic Rebalancing, and New Emerging Markets. This report analyses the drivers behind the themes from a top-down perspective, and includes a list of stocks offering direct exposure to them (page 4). We plan to revisit these themes over the course of the year when there are new developments.

Theme #1: Alternative Energy: Investing for a greener Asia – We believe environmental change, accelerating investment, government support and strong demand from EM will drive the increased use of alternative energy. We suggest investors select low-cost and efficient Asian producers with reasonable valuation that may offer exposure to the theme.

Theme #2: Rural Asia: Policy support to last – The urban consumption theme is well recognised, but the spending power in rural China and India, driven by supportive policies and rising income, is less analysed. We focus on under-penetrated consumer products and select beneficiaries, including farming equipment and agricultural-related industries.

Theme #3: Demographics: Aging challenge – Asia’s elderly population is expected to increase at a 4.0% CAGR over the next decade, far exceeding the 0.6% CAGR for the rest of population. The challenge is most pressing for Singapore, Hong Kong and China. We suggest a list of healthcare stocks for exposure to the theme.

Theme #4: Economic Rebalancing: Producers moving up the value chain – It’s not only about consumption! Our analysis reveals a different angle to this theme: China’s manufacturers need to move up the value chain as the economy rebalances away from low value-added industries. We suggest stocks that fit into this theme.

Theme #5: New Emerging Markets – Korea will likely graduate from the MSCI emerging market to developed market this year; and this may have positive liquidity repercussion among large caps in Korea. UAE and Qatar are most likely to achieve emerging market status in 2010, while Nigeria could be placed on review for upgrade to emerging market.

To read the full report: THEMATIC STRATEGY