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Macroeconomic Prospects for Coffee Exporters John H. Welch john.welch@macquarie.com +1 212 2312 0059 Macquarie Capital (USA) Ltd 125 W. 55th Street, New York, NY 10019 USA September 2011

Macquarie Research is a division of Macquarie Group Limited, an affiliate and parent company of Macquarie Capital (USA) Inc., a registered broker - dealer and member of The Financial Industry Regulatory Authority (“FINRA�). All transactions by U.S. investors involving securities discussed in this report must be effected through Macquarie Capital (USA) Inc., which assumes responsibility in the U.S. for the contents of this report. This research report has been prepared in whole or part by foreign research analysts. These research analysts are not registered/qualified as a research analyst with FINRA, but instead have satisfied the registration/qualification requirements or other research-related standards of a foreign jurisdiction that have been recognized for these purposes by FINRA.

Please read Disclaimer on Pages 62-64. Page 1


World Economic Environment STILL GOOD FOR COFFEE

Page 2


Base Case GLOBAL ECONOMIC FORECASTS

2009

2010(F)

2011(F)

2012(F)

World GDP (Real % change)

-0.2

4.0

3.9

20.9

United States

-2.6

-1.8

2.0

2.9

Euro Zone

-3.6

1.7

2.5

2.3

Japan

-5.2

3.9

-0.6

1.7

Asia Ex-Japan

8.9

9.3

7.8

7.6

China

8.5

9.8

8.5

8.5

India

6.7

8.6

7.8

8.0

Latin America

-1.9

6.4

4.4

3.9

Brazil World Inflation (CPI)

-0.6 3.4

7.5 3.6

3.8 4.5

3.5 3.8

FED Funds target %

0.25

0.25

0.25

0.25

Euro Area Target interest rate

1.00

1.00

1.75

3.00

Japan Target interest rate

0.10

0.10

0.10

0.10

Oil Prices (Dated Brent - End of Year

68.3

87.5

124.0

117.0

EUR/USD (Avg.)

1.43

1.34

1.43

1.45

USD/JPY (Avg)

93

81

85

95

Exchange Rates

Source: OECD, Bloomberg, Macquarie Capital (USA), September 2011 Page 3


The macro environment supports Ag investing %

Low interest rates

7 6

Ag Index 1200

5

Crude oil 160 140

1000

4

120

800

100

3

Commodity + equities boom

2 1

80

600

60

400

40

200 Jul-11

0

Ag index Do llar index

120 110 100 90

Hedge against inflation

80 70

07/11

07/10

07/09

07/08

18 16 14 12 10 8 6 4 2 0 -2 -4

Ju l-0 0 Ju l-0 1 Ju l-0 2 Ju l-0 3 Ju l-0 4 Ju l-0 5 Ju l-0 6 Ju l-0 7 Ju l-0 8 Ju l-0 9 Ju l-1 0 Ju l-1 1

Jul-11

Jul-10

Jul-09

Jul-08

Jul-07

Jul-06

Jul-05

Jul-04

Jul-03

Jul-02

Jul-01

Jul-00

60

Source: Bloomberg, Macquarie Research, July 2011

Crude oil

%

Weaker US dollar

130

07/07

07/06

07/05

07/04

07/03

UK base rate

07/02

0 07/01

Jul-10

Jul-09

Jul-08

Jul-07

Euro interest rate

20 07/00

US fed fund target

Jul-06

Jul-05

Jul-04

Jul-03

Jul-02

Jul-01

Jul-00

0

US

Page 4

India

UK

China


Agri commodities outperformed in 2010 Jan-Jun 2011

Jan-Dec 2010 Natural Gas

Wheat

co co a

Lean Ho gs

Zinc

Sugar

Lead

Zinc

Crude Oil

Wheat

A luminum

Co pper

Heating Oil

Co co a

B rent Crude

Live Cattle

Lean Ho gs

So ybeans

Gas Oil

Feed Cattle

Feed Cattle

Lead

RB OB Gaso line

Kansas Wheat

Wheat

Natural Gas

Go ld

Crude Oil

Co pper

Co tto n

Live Cattle

A luminum

Nickel

Go ld

Sugar

Co ffee

So ybeans

Silver

Co rn

Heating Oil

Kansas Wheat

Co rn

Co ffee

RB OB Gaso line

Silver

B rent Crude

Co tto n

Gas Oil

-40

10

60

-40

110

60 % re t urns

% re t urns

Source: Bloomberg, Macquarie Research, June 2011

10

Page 5

110


As fertiliser & energy prices rise again, cost pressures should start creeping up too US/t

Fertilisers

1000 900 800

US$ /planted 600 acres

700

A mmo nia nitrate

600

Urea

500 400

500

300

400

200

300

0

100

200 US$ /barrel

100

160

0

140

2005

2006

2007

2008

2009

2010

Seed

Fertilizer

Chemicals

Custo m o peratio ns

Fuel, lube, and electricity

Repairs

2011f

120 100 80 60 40

A llo cated o verhead

20 0

Source: USDA, Bloomberg, Macquarie Research, July 2011 Page 6

Crude oil


Longer-term supply trends remain supportive too Mn ha 700

Global harvested area

World water shortage

600 500 400 300

Limited expansion in global arable land

200 100 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 Barley Corn Cotton Rapeseed Soybean Sorghum Wheat

Arable area per person

Increased productivity would be best way forward

Ha/perso n 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 1970

Source: USDA, UNEP, WRI, Macquarie Research, June 2011

Page 7

1980

1990

2000

2020


Coffee

Page 8


Coffee futures hit 34-year highs due to extremely tight inventories Global arabica in deficit this season

NY arabica reached historical highs US c/lb

S/D Arabica (Oct/Sep)

300

Market Balance 6 5 4 3 2 1 0 -1 -2 -3 -4

84 82 80 78 76 74 72 70

250

200

150

Balance Source: Bloomberg, Macquarie Research, June 2011 Page 9

Production

2f

20

11

/1

1f /1 10

20

09

/1

0f

9 20

20

08

/0

8

20

07

/0

7 /0 06

20

20

05

/0

6

100

Consumption


Cash prices have risen even more than futures - signalling tight physical availability Premium of mild arabica coffee is up

Physical cash prices have been soaring 180

US c/lb 350

160 140

300

120

250

100 80

200

60

150

40

100

20 0

Ja n0 M 9 ar -0 M 9 ay -0 9 Ju l-0 Se 9 p0 N 9 ov -0 Ja 9 n1 M 0 ar -1 M 0 ay -1 0 Ju l-1 Se 0 p1 N 0 ov -1 Ja 0 n11

50

Colombian milds Other milds

01/11

07/10

01/10

07/09

01/09

07/08

01/08

07/07

01/07

07/06

01/06

07/05

01/05

0

Robustas Brazilian naturals

Co lo mb M ilds/Other M ilds

Co lo mb M ilds/B raz Naturals

Co lo mb M ilds/NY futures

Oth M ilds/Ro bustas

B raz Naturals/Ro bustas

NY futures/Lo ndo n futures

M n bags 30 25 20

The major producers of quality arabica are struggling to expand supply

15 10 5

Central A merica

Source: ICO, Macquarie Research, July 2011

Page 10

Co lo mbia


Relative scarcity of quality coffee has led to sharp drawdowns in stocks globally World origin and consumer stocks

Main coffee producers: there is a lack of premium arabicas

%

M n 60kg bags

120 100

60

70

50

60 50

40

60

30

40

20

20

10

10

0

0

0

40 30

98 19 99 /0 0 20 01 /0 2 20 03 /0 4 20 05 /0 6 20 07 /0 8 20 09 /1 0f 20 11 /1 2f

20

19 97 /

19 95 /

96

80

Brazil*

Mexico & C America

Colombia

Vietnam

Indonesia*

Sto cks at impo rting co untries

Sto cks at expo rting co untries

Sto ck ratio (%)

'000 bags 6000 5000 4000

Certified Arabica stocks also down

3000 2000 1000

Source: ICE, ICO, Macquarie Research, April 2011

Page 11


Brazil’s rising internal demand, appreciating currency and the 2011/12 “off year” = bullish

Strengthening BRL currency means higher coffee price required

A huge Brazilian crop due, but next year is an “off” year M n bags 60

US$ /bag

B RL index 3.0

450

50

400

40

2.5

350

2.0

300

30

250

1.5

200

20

1.0

150

10

100

0.5

50

0

0

A rabica pro d

Ro busta pro d

0.0

B M F arabica

To t co nsumptio n

Source: ICO, trade data, Macquarie Research, July 2011 Page 12

NY arabica

B RL index


The robusta market also tight on rising demand & low Vietnam/Indonesian supplies, but EU stocks are high Global demand for robusta growing rapidly

Robustas are still at a significant discount to arabicas

M n bags

US c/lb

90 300

80 70

250

60 200

50 40

150

30 20

100

10 50

0

spread

NY arabica futures

Lo ndo n ro busta futures

S/D Ro busta (Oct/Sep

45000

M arket B alance

60

40000

4

35000

3 55

2 1

50

0

Potential for robusta to tighten next season

-1

45

30000 25000 20000 15000

-2

10000

-3

40

5000

-4

0

-5

35 2005/06

2006/07 2007/08

B alance

2008/09 2009/10f

P ro ductio n

2010/11f

2011/12f

Co nsumptio n

Source: Trade sources, ICO, Macquarie Research, March 2011

Page 13

A rabica

Ro busta

Certified LIFFE robusta stocks


Coffee demand remains highly inelastic: if anything we see growth in emerging markets

Stable coffee demand growth Mn bags 140

Per capita consumption of coffee % grow th 7 6 5 4 3 2 1 0 -1 -2 -3

120 100 80 60 40 20

12 10 8 6 4 2 0

19 95 /9 6 19 97 /9 8 19 99 /2 00 0 20 01 /0 2 20 03 /0 4 20 05 /0 6 20 07 /0 8 20 09 /1 0f

0

14

Consumption

% change

Source: ICO, Macquarie Research, July 2011 Page 14


Coffee fundamentals and price outlook 2008/09 2009/10f 2010/11f 2011/12f 127.6 134.1 132.3 140.8 75.6 80.1 79.1 84.4 52.0 53.4 52.8 56.4

2005/06 116.9 76.6 40.3

2006/07 125.5 76.1 49.4

2007/08 132.8 80.7 52.1

4.6%

7.3%

5.9%

-3.9%

5.1%

-1.3%

6.4%

118.5 74.0 44.5

121.5 74.7 46.8

124.6 75.9 48.8

130.2 79.0 51.2

133.6 80.6 53.0

136.0 81.0 55.0

137.4 81.4 56.0

Growth

0.2%

2.5%

2.6%

4.5%

2.6%

1.8%

1.0%

Balance Arabica Robusta c Stocks Stock ratio (%)

-1.6 2.6 -4.2 49.6 41.9

4.0 1.4 2.6 41.8 34.4

8.2 4.9 3.3 39.3 31.5

-2.6 -3.4 0.8 32.6 25.1

0.6 -0.4 0.4 33.7 25.2

-3.7 -1.9 -2.2 30.0 22.1

3.4 3.0 0.4 33.4 24.3

2011 255.6 271.0 250.0 260.0 259.2

2012 240.0 220.0 210.0 175.0 211.3

(m 60-kg bags) b Production Arabica Robusta

Growth

Consumption Arabica Robusta

a Oct-Sep. b For Southern Hemisphere producers, volumes adjusted from Apr-Mar crop years to fit in with Oct-Sep. c Gross stocks in exporting countries and estimated inventories in importing countries on September 30th.

Prices NY Arabica (Coffee C) 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year

2006 112.3 102.2 102.1 114.4 107.7

2007 115.4 109.7 116.4 127.7 117.3

Source: ICO, NKG Stats, Macquarie Research, July 2011 Page 15

2008 143.2 135.6 137.8 111.9 121.5

2009 113.5 123.6 124.8 139.0 125.2

2010 134.5 139.4 174.2 204.7 163.2


Brazil: The Present Has Arrived BUT WHAT ABOUT THE FUTURE?

Page 16


Brazil’s Future is bright no matter what mix of policies of the next administration ÎPresident Dilma will follow a mix from two sets of policies. ÎThe difference is degree of one set over the other. ÎThe Brazilian polity and the political elite have shown good judgment and prudence when making policy choices. ÎIf monetary policy does most of the work, expect continued nominal and real appreciation of the BRL, higher interest rates and slower growth. ÎIf fiscal policy does more of the work, expect a less strong real, lower interest rates, and higher growth.

Page 17


BRAZIL: REAL GDP GROWTH VERSUS REAL INTEREST RATES F o re ca s t

8.0%

3

3

Re a l G DP G rowth

2 6.0% 2

2 4.0% 1

1

2.0% 8

4 Re a l S EL IC in te re st ra te 0.0% 13

12 Q

3

20

20 4 Q

Q

1

20

20 Q

2

20 3 Q

12

11

10

09 20 4 Q

1 Q

2 Q

20

20

09

08

07 3 Q

4 Q

20

20

06

06 Q

1

20 2 Q

20

05

04 20 3 Q

Q

4

20

20 Q

1

20 2 Q

03

03

02

01 20 3 Q

4 Q

1 Q

20

20

00

00

99 19 2 Q

3 Q

Q

4

19

19

98

97

0

-

-2.0%

-

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 18


Economic Growth Recovers Rapidly BUT DEMAND GROWTH IS OUTSTRIPPING SUPPLY BY A WIDE MARGIN 10%

4 qtr s / 4 q tr s

D o m e s tic D e m a n d (A b s o rp tio n )

8%

F o re c a s t

`

6%

4%

2%

R eal GD P

V a lu e A d d e d

0%

-2%

N e t E x p o rts

-4%

Q

4

19

97 Q

2

19

99 Q

4

20

00 Q

2

20

02 Q

4

20

03 Q

2

20

05

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 19

Q

4

20

06 Q

2

20

08 Q

4

20

09 Q

2

20

11 Q

4

20

12


To grow above 4%, Brazil needs investment rates greater than 20%. 22%

4.0%

L o n g T e rm G D P G ro w th R a te (R H S )

20%

3.5%

3.0% 18% 2.5%

16%

2.0%

G ro s s In v e s tm e n t R a te G ro s s S a v in g s R a te (L H S )

14%

1.5%

1.0% 12% 0.5%

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 20

I 20

11

I . II 09 20

20

08

. II

.I

20

20

05

07

. IV

I 20

04

. II

. II 03 20

02

.I

0.0% 20

20

00

. IV

10%


Economic Growth Recovers Rapidly BUT DEMAND GROWTH IS OUTSTRIPPING SUPPLY BY A WIDE MARGIN

9% 8%

Inflation Gap

7% 6% 5% 4%

Output Gap 3% 2% 1%

-2% -3% -4% -5%

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 21

1 ep -1 S

1 b1 Fe

l-1 0 Ju

09 ec D

M

ay

-0 9

-0 8 O

ct

8 -0 ar M

ug -0 7 A

n07 Ja

6 Ju

n0

05 ov N

pr -0 5 A

4 ep -0 S

4 b0 Fe

l-0 3 Ju

02 ec D

M

ay

-0 2

-0 1 O

ct

1 -0 ar M

ug -0 0

Ja

-1%

A

n00

0%


BRAZIL: COMBINED IPCA/IPCA-15 AND CORE INFLATION (% YoY) 9.0%

Trim m ed-Means & S m oo th ed C ore

7.10%

E xclusio n C ore

7.5%

6.0%

4.5% Ta rge t

H eadlin e IP C A/IP C A-15

3.0%

1.5%

Page 22

1 /2 15 9/

4/

15

/2

01

01

1

10 /1 5

/2 0

01 /2 15 6/

1/

15

/2

01

0

0

9 00 8/

15

/2

00 /2 15 3/

11

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011

9

08 10

5/

15

/1 5

/2

/2 0

00

8

07 12

/1 5

/2 0

00 /2 15 7/

2/

15

/2

00

7

7

6 00 9/

15

/2

00 /2 15 4/

/2 0 /1 5 11

6

05

5 00 /2 15 6/

1/

15

/2

00

5

0.0%


THE SELIC TARGET RATE IS STILL TOO LOW EVEN UNDER OPTIMISTIC TAYLOR RULES,BCB STILL NEEDS TO TIGHTEN 30%

25%

F o re c a s t fro m B C F o c u s A c tua l S E L IC Ta rg e t 20%

M a x Ta ylo r R ule (r*=1 1 % )

15%

10%

M in Ta ylo r R ule (r*=5 % )

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 23

3 l-1 Ju

N

ov -

12

2 b1 Fe

Ju

n1

1

0 p1 Se

n10 Ja

09 pr A

08 ug A

N

ov -

07

7 -0 ar M

Ju

n0

6

5 p0 Se

n05 Ja

04 pr A

03 ug A

N

ov -

02

2 -0 ar M

Ju

n0

1

0 -0 ct O

Ja

n00

5%


HIGH MONEY GROWTH IN LOCKSTEP WITH CREDIT GROWTH 45%

B razil: Money and C re dit G rowth ( % y-o-y) 40%

35%

Nondire cte d Cre dit

30%

25% Tota l Cre dit

20%

15%

10% M1

5%

M one ta ry Ba se Grow th

-5%

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 24

1 n1 Ju

pr -1 0 A

9 b0 Fe

07 ec D

-0 6 ct O

ug -0 5 A

4 n0 Ju

pr -0 3 A

Fe

b0

2

0%


THE AVERAGE BASE RATE IS TOO LOW: THE BCB OR THE BNDES NEED TO RAISE RATES 30%

Forecast from BC Focus

25%

20%

Taylor Rule Max

15%

10%

Average Base Rate

Taylor Rule Min 5% 0 -0 n Ja

0 -0 ct O

1 -0 n Ju

M

2 -0 ar

2 -0 v No

gAu

03 M

4 -0 y a

5 -0 n Ja

5 -0 ct O

6 -0 n Ju

M

7 -0 ar

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 25

7 -0 v No

gAu

08 M

9 -0 y a

0 -1 n Ja

0 -1 ct O

1 -1 n Ju

M

2 -1 ar

2 -1 v No

gAu

13


FISCAL POLICY HAS EASED…HIGHER PRIMARY SURPLUSES, LOWER REAL INTEREST RATES 6 .0 %

30 %

Pr im a ry S u rp lu s (% G D P , L H S ) fo r e c a s t

4 .0 % 2 .0 %

20 %

10 %

R e a l In te r e s t R a te (R H S)

0 .0 %

0%

-2 .0 %

-10 %

-4 .0 %

-20 %

-6 .0 %

-30 %

-8 .0 %

-40 %

-1 0 .0 %

-50 %

N o m in a l Fis c a l B a la n c e (% G D P, LH S)

-1 2 .0 %

-60 %

-1 4 .0 %

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 26

3 r-1

Ap

12 n-

11

Ju

g-

0

Au

-1 ct

O

c09

09

De

b-

8

Fe

r-0

07

Ap

Ju

n-

06 g-

Au

-0 5 ct

O

c04

De

04 b-

3

Fe

r-0

Ap

02 n-

01

Ju

g-

0

Au

-0

O

ct

99 c-

99

De

b-

8

Fe

r-9

97

Ap

Ju

n-

96 g-

Au

O

ct

-9

5

-70 %


Economic Growth Recovers Rapidly AND PERHAPS OVERVALUED 4.0

E q u ilib riu m N o m in al E xch an g e R ate

E xch an g e R ate U S D /B R L

3.5

3.0 Ju n e 1.73

2.5

2.0

1.5 1.63

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 27

l-1 1 Ju

0 ep -1 S

09 ov N

n09

ar M

Ja

8 -0

7 -0 ay M

l-0 6 Ju

5 ep -0 S

04 ov N

n04

ar M

Ja

3 -0

2 -0 ay M

l-0 1 Ju

S

ep -0

0

1.0


BRAZIL’S TERMS OF TRADE HAS SHOT UPWARD MASSIVELY Brazil: Exp ort Prices , Im po rt Prices , a nd the Te rm s o f Trad e ( T OT)

Exp o rt P rices U SD (2 006=100 )

160

140

Im p o rt P rices US D (2006 =100)

120

TOT

100 Avg . T OT (1978-2010)

80

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 28

1 M

ay

-1

09 pSe

Ja

n-

08

6 M

ay

-0

4 ep -0 S

Ja

n-

03

1 M

ay

-0

9 ep -9 S

98 n-

ay M

Ja

-9 6

4 -9 ep S

Ja

n-

93

1 M

ay

-9

-8 ep S

Ja

n8

8

9

60


PUSHING THE REAL EXCHANGE RATE STRONGER

3.6

U S D /B R L

3.2

2.8

2.4

2.0

1.6

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 29

1 n1 Ju

N

ov -

09

08 A

pr -

6 ep -0 S

Fe

b0

5

3 l-0 Ju

01 D

-0 ay M

ec -

0

8 O

ct

-9

7 M

ar

-9

95 ug A

Ja

n-

94

1.2


WE EXPECT A SLOW RISE IN USD/BRL 4.0

USD/BRL

3.5

3.0

2.5 Forecast

2.0

Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 30

O

ct

-1

3

13 Ja

n-

2 A

pr

-1

1 l-1 Ju

O

ct

-1

0

0 n1 Ja

A

pr -0

9

8 l- 0 Ju

O

ct

-0

7

07 Ja

n-

6 A

pr

-0

5 Ju

l-0

4 -0 ct O

n04 Ja

A

pr -0

3

2 l- 0 Ju

1 ct -0 O

Ja

n-

01

1.5


BRAZIL’S POLICYMAKERS FACE SIGNIFICANT CHALLENGES: ÎReal appreciation with further monetization by the United States and Japan and perhaps Europe. ÎExpanding current account deficits. ÎFiscal numbers weaker despite creative accounting and one-off revenue flows. ÎImproved but still poor social security and other indicators. ÎLow savings rates. ÎLow although increasing private investment rates. ÎLow public investment rates.

Page 31


Colombia: Good Start for Santos Why doesn’t Colombia grow more?

Page 32


Colombia: President Santos’ Good Start ÎPresident Juan Manuel Santos’ first year was very productive despite sending a barrage of reform initiatives to congress. ÎCongress is on its way to passing constitutional amendments on royalties and fiscal sustainability. ÎThe Colombian economy is rebounding strongly with growth ending 2010 at 4.5% and forecast to accelerate to above 5% in 2011. ÎInflation has rebounded along with this growth reaching 3.24% YoY in June 2011and should peak at 3.6% in 4Q 2011. ÎBANREP has tightened monetary policy but has now paused the intervention rate at 4.5%. We expect the rate to end 2011 at 5%. ÎThe US Congress finally looks like it will ratify the free trade agreement with Colombia. ÎProspects for Colombia's future look good.

Page 33


Colombia: Economy Rebounds 8% 4 -qtrs/4-qrts % 7%

Fore cast

6%

5%

4%

3%

2%

1%

Source: Bloomberg, Macquarie Capital (USA), September 2011 Page 34

20

12

IV

III 20 11

II 20

10

I 09 20

IV 20

07

I II 06 20

20

05

II

I 20 04

IV 02 20

01 20

20

00

II

III

0%


Colombia: Economy Rebounds BUT DEMAND GROWTH IS FASTER THAN SUPPLY 10% 4 -q trs /4 -q rts %

D o m e s tic D e m a n d (A b s o rp tio n )

8%

6%

D o m e s tic V a lu e -A d d e d

4%

2%

-2 % Source: Bloomberg, Macquarie Capital (USA), September 2011 Page 35

I 11 20

II I 20

10

I 10 20

II I 20

09

I 09 20

II I 20

08

I 08 20

II I 20

07

I 07 20

II I 20

06

I 06 20

II I 20

05

I 05 20

II I 20

04

I 04 20

II I 20

03

I 03 20

02 20

20

02

I

II I

0%


INFLATION IS ALSO REBOUNDING BUT AT A MODERATE PACE 10% B AN R E P Intervention R ate

9% 8%

Forecast 7% 6% 5% 4% 3% C ore 20 C P I Inflation

2%

H eadline C P I Inflation 1%

Source: Bloomberg, Macquarie Capital (USA), September 2011 Page 36

13 ov N

n13 Ja

2 M

ar

-1

-1 1 ay M

l-1 0 Ju

9 p0 Se

08 ov N

n08 Ja

7 M

ar

-0

-0 6 ay M

l-0 5 Ju

4 p0 Se

03 ov N

Ja

n03

0%


Colombia: Numbers and Forecasts

Colombia 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F

USD GDP 93,167 91,780 114,138 144,680 162,615 208,513 244,825 233,140 268,945 314,091 328,355

Real GDP 205,591,281 215,073,655 225,104,157 237,982,297 254,505,598 273,710,257 280,369,033 281,800,345 293,917,760 308,907,566 323,735,129

Real GDP growth

Primary Bal. (%/GDP)

2.46% 4.61% 4.66% 5.72% 0.00% 7.55% 2.43% 0.51% 4.30% 5.10% 4.80%

Source: INDEC, Bloomberg, Macquarie Capital (USA), September 2011 Page 37

0.80% 1.80% 3.30% 2.90% 0.00% 3.40% 3.60% 1.00% -1.10% 0.90% 0.70%

Nom. Bal (%/GDP) -3.10% -2.30% -0.50% -0.40% -0.40% -0.40% 0.50% -2.20% -3.80% -3.70% -2.50%

Public Sec Debt Cur. Acct. (%/GDP) (%/GDP) 52.3% 54.3% 49.7% 46.4% 44.4% 40.9% 38.6% 41.3% 40.5% 40.9% 41.3%

-1.40% -1.10% -0.80% -1.30% -1.80% -2.90% -2.80% -3.60% -3.30% -3.10% -2.69%


Colombia: Numbers and Forecasts con’t

Colombia 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F

Curr. Acct. (USD mm) -1,296 -979 -911 -1,886 -2,988 -6,018 -6,901 -5,157 -9,032 -11,400 -11,400

Exports 11,976 13,129 16,731 21,191 23,930 29,381 37,095 32,563 39,546 46,600 51,260

Imports

Trade Bal.

12,699 13,890 16,748 21,204 23,975 30,088 36,320 30,510 37,508 42,009 44,949

-723 -761 -17 -14 -45 -707 775 2,053 2,038 4,591 6,311

Source: INDEC, Bloomberg, Macquarie Capital (USA), September 2011 Page 38

FX Reserves 10,537 10,602 13,216 14,625 15,104 20,601 23,660 24,983 28,451 32,000 33,000

Inflation 7.0% 6.5% 5.5% 4.9% 4.5% 5.7% 7.5% 2.0% 3.2% 3.5% 3.4%

Policy Rate USDCOP Repo Rate 2867 2780 2355 2287 2240 2017 2249 2044 1907 1776 1841

5.25% 7.25% 6.50% 6.00% 7.50% 9.50% 9.50% 3.50% 4.00% 5.00% 4.75%


Mexico: Coming Out of the Malaise Worries from the northern neighbor

Page 39


Mexico: Beat Up But Better ÎThe Mexican economy was hit very hard by the US into recession falling 6.5% in 2009. ÎThe recovery is slowly moving from one based upon manufacturing and exports to services and internal demand. ÎMexican GDP is recovering and we expect growth at 3.8% for both 2011 and 2012. ÎThe well capitalized banking system helped Mexico weather the massive negative shock of the US financial collapse. ÎThe government allowed the fiscal deficit to widen but should have it back under 1% of GDP by 2012. ÎBanxico should keep monetary policy on hold until 4Q 2011 and will start despite the US Fed keeping interest rates near 0%.

Page 40


Mexican industry is recovering with the US 12%

M e xic a n v s . U S In d u s tria l P ro d u c tio n (1 2 m o , % c h a n g e )

9%

6%

F o re c a s

M ex. Ind. P rod .

3%

-6 %

-9 %

U S In d . P ro d .

Source: INEGI, Bloomberg, Macquarie Capital (USA), September 2011 Page 41

12 nJu

l- 1 Ju

ug A

1

0 -1

9 S

ep

-0 ct O

-3 %

-1 2 %

-0

8

7 -0 ov N

D

ec

-0

6

06 nJa

Fe

b-

05

4 M

A

pr

ar

-0

-0

3

2 M

ay

-0

01 nJu

l- 0 Ju

-9 ug A

0

9

8 S

ep

-9

97 ct O

-9 ov N

D

ec

-9

5

6

0%


-4%

-6%

-12% Jan-90 O c t- 9 0 J u l-9 1 A p r -9 2 Jan-93 O c t- 9 3 J u l-9 4 A p r -9 5 Jan-96 O c t- 9 6 J u l-9 7 A p r -9 8 Jan-99 O c t- 9 9 J u l-0 0 A p r -0 1 Jan-02 O c t- 0 2 J u l-0 3 A p r -0 4 Jan-05 O c t- 0 5 J u l-0 6 A p r -0 7 Jan-08 O c t- 0 8 J u l-0 9 A p r -1 0 Jan-11 O c t- 1 1 J u l-1 2

And Mexican GDP has now a corresponding common cycle with US GDP GDP Cycles Mexico x USA

8%

6%

4%

2%

0%

-2%

-8%

-10%

Mexico US

Source: INEGI, Raul Feliz, Bloomberg, Macquarie Capital (USA), September 2011

Page 42


We expect reasonable and steady economic growth for Mexico 1 0%

(4 q t r/ 4 q t r % ) F o re ca st

8%

6%

4%

2%

0%

-2 %

-4 %

-6 %

-8 %

Source: INEGI, Macquarie Capital (USA), September 2011 Page 43

IV 12 20

20

12

I

II 20 11

III 10 20

20

09

IV

I 09 20

20

08

II

III 07 20

20

06

IV

I 06 20

20

05

II

III 20

04

IV 03 20

20

03

I

II 02 20

01 20

20

00

IV

III

-1 0 %


The Real MXN has recovered but still above the levels of before the financial crisis. 21

Real M XN (June 2010)

19

17

15

13

11

Source: Banxico, Bloomberg, Macquarie Capital (USA), September 2011 Page 44

l-1 1 Ju

0 n1 Ju

M

ay

-0

9

08 A

pr -

7 M

ar

-0

6 b0 Fe

Ja

n-

05

03 D

ec -

02

N

ov -

-0 1 O

ct

0 ep -0 S

99 ug A

l-9 8 Ju

7 n9 Ju

M

ay

-9

6

95 pr -

4 A

ar

-9

3 M

b9 Fe

Ja

n-

92

9


The output gap is closing but more slowly in the last few months 8%

6%

4%

Forecast

2%

0%

-2%

-4%

-6%

-8%

-10%

Source: Raul Feliz, Banxico, Bloomberg, Macquarie Capital (USA), September 2011 Page 45

p12 Se

b12 Fe

-1 1 Ju l

c10 De

M

ay

-1 0

-0 9 O

ct

9 ar -0 M

08 gAu

8 n0 Ja

n07 Ju

v06 No

06 rAp

p05 Se

b05 Fe

-0 4 Ju l

c03 De

M

ay

-0 3

-0 2 O

ct

2 ar -0 M

01 gAu

Ja

n0

1

-12%


A Taylor rule has Banxico raising the fondeo rate now but expect only in 2012 Fondeo Rate and T aylor Rule (% per year) 8.6 8.1 7.6 7.1 6.6 6.1 5.6 5.1 4.6 4.1

Ta ylor Rule Pre dic iton

Actual

Page 46

2 -1 ct

O

l- 1

2

2 Ju

A

pr

-1

12 n-

1 Ja

-1 ct

O

l- 1

1

1 Ju

pr

-1

11 n-

Ja

Source: Raul Feliz, Banxico, Bloomberg, Macquarie Capital (USA), September 2011

A

0 -1 ct

O

l- 1

0

0 Ju

A

pr

-1

10 n-

9 Ja

-0 ct

O

l- 0

9

9 Ju

pr

-0

09 A

nJa

ct

-0

8

8 O

l- 0 Ju

-0 pr

A

Ja

n-

08

8

3.6


Inflation remains well behaved and monetary policy on hold until 2012 20

16

18

15

U SD /MXN (R H S)

16

14

Fore cast

14

13

12

12

10

11

8

6

4

10

C PI Inflation (y-o-y% , LH S)

9

Fondeo R ate Target Range

8

2

7 C ore Inflation (y-o-y% , LH S)

Page 47

12 ov N

Se

p1

1

0 l- 1 Ju

9 ay -0

ar M

Source: Raul Feliz, Banxico, Bloomberg, Macquarie Capital (USA), September 2011

M

-0 8

07 nJa

05 ov N

Se

p0

4

3 l- 0 Ju

ay -0 M

M

ar

00 nJa

2

6 -0 1

0


Mexico: Getting Better ÎMexico grew more than 5% in 2010 and will slow down to a reasonable 3.8% in 2011. ÎInflation is well behaved but a closing output gap and maize price shocks will lead Banxico to start raising the fondeo rate in 1Q 2012. ÎThe recovery along with continued loose US monetary will put continuous downward pressure on USD/MXN. ÎFiscal policy is slowly tightening from a mild expansion. ÎPolitical jockeying around the 2012 presidential election has already started, with the possibility of strange coalitions forming over the next 12 months.

Page 48


Mexico Numbers and Forecasts

Mexico 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F

USD GDP 649,212 700,344 759,596 849,744 952,456 1,025,806 1,099,729 877,195 904,793 999,709 1,159,185

Real GDP 7,455,365 7,555,803 7,862,072 8,114,085 8,531,973 8,810,136 8,915,030 8,369,087 8,820,038 9,126,736 9,467,310

Real GDP growth

Primary Bal. (%/GDP)

0.09% 1.35% 4.05% 3.21% 0.00% 3.26% 1.19% -6.12% 5.39% 3.48% 3.73%

Source: Banxico, INEGI, Bloomberg, Macquarie Capital (USA), September 2011 Page 49

1.60% 1.90% 2.20% 2.20% 2.50% 2.20% 1.80% -0.10% 0.20% 1.10% 1.80%

Nom. Bal (%/GDP) -1.10% -0.60% -0.20% -0.10% 0.10% 0.00% -0.10% -2.30% -2.10% -1.90% -1.50%

Public Sec Debt Cur. Acct. (%/GDP) (%/GDP) 22.1% 22.9% 21.3% 20.2% 18.5% 17.5% 21.4% 30.1% 29.2% 29.2% 29.0%

-2.00% -1.00% -0.80% -0.70% -0.60% -1.10% -2.00% -1.74% -0.65% -0.52% -0.89%


Mexico Numbers and Forecasts, con’t

Mexico 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F

Curr. Acct. (USD mm) -14,155 -7,259 -5,236 -4,871 -4,776 -8,660 -16,174 -16.349 -6.289 -5.775 -11.236

Exports 161,046 164,766 187,999 214,233 249,925 271,875 291,343 229,783 229,704 298,473 346,210

Imports 168,679 170,546 196,810 221,820 256,058 281,949 308,603 234,385 234,385 301,482 350,886

Trade Bal. -7,633 -5,779 -8,811 -7,587 -6,133 -10,074 -17,261 -4,602 -4,681 -3,009 -4,676

Source: Banxico, INEGI, Bloomberg, Macquarie Capital (USA), September 2011 Page 50

FX Reserves 47,984 57,435 61,496 68,669 67,680 77,991 85,441 90,838 113,597 125,500 121,000

Inflation 5.7% 4.0% 5.2% 3.3% 4.1% 3.8% 6.5% 3.6% 5.4% 4.1% 3.5%

Policy Rate USDMXN Fondeo Rate 10.37 11.23 11.15 10.62 10.81 10.85 13.43 12.86 12.39 11.82 12.28

8.25% 6.12% 8.75% 8.25% 7.00% 7.50% 8.25% 4.50% 4.50% 4.50% 5.50%


Central America: Growing But Vulnerable Inflation in Costa Rica, Elections in El Salvador, and Guatemala

Page 51


Costa Rica: Vulnerable Stability Î With Central American growth at 4%, Costa Rica is set to grow at 4.2% in 2011 and 4.1% in 2012. Î Inflation remains relatively high at just above 6% annualized. We expect the current monetary tightening to continue through 2012, which should continue to exert downward pressure on the USD/CDC, at least in real terms. Î The government’s fiscal stance continues loose and the government faces significant opposition implementing a fiscal reform any time soon. Î The current account deficit is set to expand with the expansion of the economy and the strengthening of the currency. Tourism has recovered and traditional exports (e.g. coffee) are currently growing at 11%, mostly because of the continued rise in prices with coffee the most important. Î The twin deficits represent the main sources of vulnerability to the Costa Rican economy.

Page 52


Costa Rica Numbers and Forecasts

Costa Rica 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F

USD GDP 16,825 17,499 18,566 19,919 22,464 26,218 29,684 29,060 35,131 38,278 42,033

Real GDP 1,480,435 1,575,249 1,642,346 1,739,021 1,891,701 2,042,033 2,099,560 2,077,107 2,149,806 2,240,097 2,331,941

Real GDP growth

Primary Bal. (%/GDP)

2.90% 6.40% 4.26% 5.89% 0.00% 7.95% 2.82% -1.07% 3.50% 4.20% 4.10%

Nom. Bal (%/GDP)

0.30% 1.20% 1.60% 2.50% 3.10% 3.70% 2.40% -0.80% -3.10% 3.10% 2.80%

Source: Global Source, Banco Central de Costa Rica, Bloomberg, Macquarie Capital (USA), September 2011 Page 53

-4.00% -3.10% -2.50% -1.60% -0.70% 0.60% 0.20% -3.40% -5.20% -5.40% -5.60%

Public Sec Debt Cur. Acct. (%/GDP) (%/GDP) 59.0% 59.8% 59.2% 55.1% 50.7% 45.3% 39.4% 42.4% 43.7% 45.4% 46.8%

-5.1% -5.0% -4.3% -4.9% -4.6% -6.3% -9.3% -1.8% -3.7% -5.4% -5.6%


Costa Rica Numbers and Forecasts, con’t

Costa Rica 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F

Curr. Acct. (USD mm) -857 -880 -792 -981 -1,023 -1,646 -2,752 -537 -1,299 -2,072 -2,350

Exports 5,264 6,102 6,302 7,027 8,200 9,337 9,504 8,788 9,385 10,058 11,288

Imports

Trade Bal.

7,188 7,663 8,268 9,824 11,548 12,952 15,372 11,395 13,616 15,749 17,905

-1,924 -1,561 -1,967 -2,797 -3,348 -3,615 -5,868 -2,606 -4,231 -5,691 -6,617

FX Reserves 1,500 1,839 1,922 2,313 3,115 4,114 3,799 4,066 4,627 4,827 4,927

Source: Global Source, Banco Central de Costa Rica, Bloomberg, Macquarie Capital (USA), September 2011 Page 54

Inflation 9.7% 9.9% 13.1% 14.1% 9.4% 10.8% 13.9% 4.0% 5.8% 6.2% 6.5%

Policy Rate USDCRC Base Rate 378.60 418.67 458.60 496.65 517.25 498.12 555.12 565.24 512.00 520.00 525.00

17.50% 13.75% 14.25% 15.25% 8.97% 5.52% 10.00% 9.00% 8.00% 8.50% 10.50%


El Salvador: Overdone Negativity ÎMost Wall Street analysts continue with a negative outlook for El Salvador. We are not quite so negative. Some of this negativity comes from El Salvador's slow growth rate. ÎWith Central American growth at 4%, El Salvador will once again underperform the region with growth at 1.7%. ÎInflation is running above 6% annualized and should end the year close to 7% as electricity prices are poised to increase. ÎThe government is currently pushing to bring down the fiscal deficit under the auspices of an IMF program. So far the government has outperformed its IMF targets and has not yet drawn on the SBA credit line and intends to keep it as precautionary. ÎExports have rebounded sharply, running at a rate of 25% (May). The current account deficit is expanding, mainly financed by remittances.

Page 55


Guatemala: Elections and good export performance ÎPresidential elections on 11 September 2011 and retired general Otto Pérez Molina looks to win. ÎWith Central American growth at 4%, Guatemala is currently growing at just above 3% annualized and should end 2011 just below that. ÎExports are currently the main source of growth, increasing 27% YoY in May. ÎThe current account deficit is expanding, mainly financed by remittances. ÎThe government’s fiscal stance is improving based mainly on 19% growth in revenues. The fiscal deficit should end 2011 at 3% of GDP. The government completed an agreement with the IMF and might renew it after the election. ÎInflation is currently running at 6.4%, above the 4%-6% target range of the Banco Central de Guatemala (Banguat).

Page 56


Indonesia and Vietnam: Strong Growth and Inflation

Page 57


Vietnam: in a tight spot between inflation and growth ÎInflation remains strongly elevated, at over 23% YoY, with much of this supply-driven. This trend should continue for the remainder of 2011 with key hard and soft commodity prices remaining elevated. ÎThe slowdown in global trade (particularly manufacturing) will also adversely impact the Vietnamese economy. We expect ~6% growth in 2011, compared to 6.8% in 2010. ÎThe combination of higher interest rates in 1H11 and higher inflation will likely weigh on private consumption and investment. ÎBut policymakers remain focused on growth, with the State Bank of Vietnam announcing a surprise 100bp repo rate cut in July following aggressive rate hikes in 1H11.

Page 58


Indonesia: robust growth, and inflation concerns are manageable for now ÎRobust domestic consumption and ongoing fixed investment should remain the key drivers of above-trend (~6.5%) growth in 2011. ÎHeadline inflation has dipped below 5% due to food and fuel subsidies, and tolerance of a significant appreciation in the rupiah. However, core inflation remains elevated. ÎBank Indonesia has lagged global peers in tightening monetary policy, but will likely leave rates on hold until year-end. ÎIn a nod to ongoing investor support, Indonesian asset markets continue to perform strongly. While the key stock index fell ~8% in August following global jitters, it is still averaging 22% higher than 2010. ÎStructural economic reform remains a long-term challenge Page 59

Inflation YoY% 14

Headline Core

12 10 8 6 4 2 0 Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Source: Datastream, Macquarie Research, September 2011


The numbers Vietnam

Indonesia 2009

2010

2011F

2012F

GDP

4.6

6.1

6.4

6.4

Household consumption

4.9

4.6

5.1

Gross fixed investment

3.3

8.5

Industrial production

2.2

CPI Policy rate (yr end) USD/IDR (yr avg)

2009

2010

2011F

2012F

GDP

5.3

6.8

6.1

6.5

5.3

Household consumption

3.7

7.0

2.8

5.4

9.3

10.4

Gross fixed investment

8.7

8.5

5.1

7.2

4.5

4.9

4.8

Industrial production

7.6

14.0

14.0

15.5

4.8

5.1

5.7

5.9

CPI

7.0

8.9

17.4

10.1

6.50

6.50

6.75

7.25

USD/VND

17941

19498

21043

21586

10357

9101

8600

8400

Source: Datastream, Macquarie Capital (USA), September 2011 Page 60

(yr end)


COFFEE EXPORTERS PERFORMING SIMILARLY ÎPrice increase in primary commodities, especially coffee, continues to power terms of trade improvement, higher economic growth, and strong capital inflows. ÎStronger currencies and expanding current account deficits have accompanied this growth. ÎCapital flows to these countries. ÎPolicy makers are struggling to tighten fiscal and monetary policies to soften the appreciation and the inflation impact of these favorable winds. Improved but still poor social security and other indicators.

Page 61


Important disclosures: Volatility index definition*

Recommendation definitions Macquarie - Australia/New Zealand

This is calculated from the volatility of historic price movements.

Outperform – return > 3% in excess of benchmark return Neutral – return within 3% of benchmark return Underperform – return > 3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie – Asia/Europe Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected <-10%

Very high–highest risk – Stock should be expected to move up or down 60-100% in a year – investors should be aware this stock is highly speculative. High – stock should be expected to move up or down at least 40-60% in a year – investors should be aware this stock could be speculative. Medium – stock should be expected to move up or down at least 30-40% in a year.

Macquarie First South - South Africa

Low–medium – stock should be expected to move up or down at least 25-30% in a year.

Outperform – return > 10% in excess of benchmark return Neutral – return within 10% of benchmark return Underperform – return > 10% below benchmark return

Low – stock should be expected to move up or down at least 15-25% in a year.

Macquarie - Canada Outperform – return > 5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return > 5% below benchmark return

•Applicable to Australian/NZ stocks only

Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit /efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards).

Recommendation – 12 months

Macquarie - USA

Note: Quant recommendations may differ from Fundamental Analyst recommendations

Outperform – return > 5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return > 5% below benchmark return

Recommendation proportions – For quarter ending 30 June 2011 Outperform Neutral Underperform

AU/NZ 50.37% 36.86% 12.77%

Asia 64.60% 21.22% 14.18%

RSA 64.62% 29.23% 6.15%

USA 45.63% 51.30% 3.07%

CA 67.74% 28.50% 3.76%

EUR 48.02% (for US coverage by MCUSA, 12.44% of stocks covered are investment banking clients) 38.42% (for US coverage by MCUSA, 12.95% of stocks covered are investment banking clients) 13.56% (for US coverage by MCUSA, 0.00% of stocks covered are investment banking clients)

Page 62


Company Specific Disclosures: Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures. Analyst Certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN 94 122 169 279 (AFSL No. 318062) (MGL) and its related entities (the Macquarie Group) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General Disclaimers: Macquarie Securities (Australia) Ltd; Macquarie Capital (Europe) Ltd; Macquarie Capital Markets Canada Ltd; Macquarie Capital Markets North America Ltd; Macquarie Capital (USA) Inc; Macquarie Capital Securities Ltd and its Taiwan branch; Macquarie Capital Securities (Singapore) Pte Ltd; Macquarie Securities (NZ) Ltd; and Macquarie First South Securities (Pty) Limited; Macquarie Capital Securities (India) Pvt Ltd; Macquarie Capital Securities (Malaysia) Sdn Bhd; Macquarie Securities Korea Limited and Macquarie Securities (Thailand) Ltd are not authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL) or MGL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of any of the above mentioned entities. MGL provides a guarantee to the Monetary Authority of Singapore in respect of the obligations and liabilities of Macquarie Capital Securities (Singapore) Pte Ltd for up to SGD 35 million. This research has been prepared for the general use of the wholesale clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient you must not use or disclose the information in this research in any way. If you received it in error, please tell us immediately by return e-mail and delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person. MGL has established and implemented a conflicts policy at group level (which may be revised and updated from time to time) (the "Conflicts Policy") pursuant to regulatory requirements (including the FSA Rules) which sets out how we must seek to identify and manage all material conflicts of interest. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. In preparing this research, we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this research, you need to consider, with or without the assistance of an adviser, whether the advice is appropriate in light of your particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. This research is based on information obtained from sources believed to be reliable but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. No member of the Macquarie Group accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Clients should contact analysts at, and execute transactions through, a Macquarie Group entity in their home jurisdiction unless governing law permits otherwise. Country-Specific Disclaimers: Australia: In Australia, research is issued and distributed by Macquarie Securities (Australia) Ltd (AFSL No. 238947), a participating organisation of the Australian Securities Exchange. New Zealand: In New Zealand, research is issued and distributed by Macquarie Securities (NZ) Ltd, a NZX Firm. Canada: In Canada, research is prepared, approved and distributed by Macquarie Capital Markets Canada Ltd, a participating organisation of the Toronto Stock Exchange, TSX Venture Exchange & MontrĂŠal Exchange. Macquarie Capital Markets North America Ltd., which is a registered broker-dealer and member of FINRA, accepts responsibility for the contents of reports issued by Macquarie Capital Markets Canada Ltd in the United States and sent to US persons. Any person wishing to effect transactions in the securities described in the reports issued by Macquarie Capital Markets Canada Ltd should do so with Macquarie Capital Markets North America Ltd. The Research Distribution Policy of Macquarie

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Capital Markets Canada Ltd is to allow all clients that are entitled to have equal access to our research. United Kingdom: In the United Kingdom, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated by the Financial Services Authority (No. 193905). Germany: In Germany, research is issued and distributed by Macquarie Capital (Europe) Ltd, Niederlassung Deutschland, which is authorised and regulated in the United Kingdom by the Financial Services Authority (No. 193905). France: In France, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated in the United Kingdom by the Financial Services Authority (No. 193905). Hong Kong & Mainland China: In Hong Kong, research is issued and distributed by Macquarie Capital Securities Ltd, which is licensed and regulated by the Securities and Futures Commission. In Mainland China, Macquarie Securities (Australia) Limited Shanghai Representative Office only engages in non-business operational activities excluding issuing and distributing research. Only non-A share research is distributed into Mainland China by Macquarie Capital Securities Ltd. Japan: In Japan, research is Issued and distributed by Macquarie Capital Securities (Japan) Limited, a member of the Tokyo Stock Exchange, Inc., Osaka Securities Exchange Co. Ltd. (Financial Instruments Firm, Kanto Financial Bureau (kin-sho) No. 231, a member of Japan Securities Dealers Association and Financial Futures Association of Japan and Japan Securities Investment Advisers Association). India: In India, research is issued and distributed by Macquarie Capital Securities (India) Pty Ltd., 92, Level 9, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051, India, which is a SEBI registered Stock Broker having membership with National Stock Exchange of India Limited (INB231246738) and Bombay Stock Exchange Limited (INB011246734). Malaysia: In Malaysia, research is issued and distributed by Macquarie Capital Securities (Malaysia) Sdn. Bhd. (Company registration number: 463469-W) which is a Participating Organisation of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission. Taiwan: Information on securities/instruments that are traded in Taiwan is distributed by Macquarie Capital Securities Ltd, Taiwan Branch, which is licensed and regulated by the Financial Supervisory Commission. No portion of the report may be reproduced or quoted by the press or any other person without authorisation from Macquarie. Nothing in this research shall be construed as a solicitation to buy or sell any security or product. Thailand: In Thailand, research is issued and distributed by Macquarie Securities (Thailand) Ltd, a licensed securities company that is authorized by the Ministry of Finance, regulated by the Securities and Exchange Commission of Thailand and is an exchange member no. 28 of the Stock Exchange of Thailand. The Thai Institute of Directors Association has disclosed the Corporate Governance Report of Thai Listed Companies made pursuant to the policy of the Securities and Exchange Commission of Thailand. Macquarie Securities (Thailand) Ltd does not endorse the result of the Corporate Governance Report of Thai Listed Companies but this Report can be accessed at: http://www.thai-iod.com/en/publications.asp?type=4. South Korea: In South Korea, unless otherwise stated, research is prepared, issued and distributed by Macquarie Securities Korea Limited , which is regulated by the Financial Supervisory Services. Information on analysts in MSKL is disclosed at http://dis.kofia.or.kr/fs/dis2/fundMgr/DISFundMgrAnalystPop.jsp?companyCd2=A03053&pageDiv=02. South Africa: In South Africa, research is issued and distributed by Macquarie First South Securities (Pty) Limited, a member of the JSE Limited. Singapore: In Singapore, research is issued and distributed by Macquarie Capital Securities (Singapore) Pte Ltd (Company Registration Number: 198702912C), a Capital Markets Services license holder under the Securities and Futures Act to deal in securities and provide custodial services in Singapore. Pursuant to the Financial Advisers (Amendment) Regulations 2005, Macquarie Capital Securities (Singapore) Pte Ltd is exempt from complying with sections 25, 27 and 36 of the Financial Advisers Act. All Singapore-based recipients of research produced by Macquarie Capital (Europe) Limited, Macquarie Capital Markets Canada Ltd, Macquarie First South Securities (Pty) Limited and Macquarie Capital (USA) Inc. represent and warrant that they are institutional investors as defined in the Securities and Futures Act. United States: In the United States, research is issued and distributed by Macquarie Capital (USA) Inc., which is a registered broker-dealer and member of FINRA. Macquarie Capital (USA) Inc, accepts responsibility for the content of each research report prepared by one of its non-US affiliates when the research report is distributed in the United States by Macquarie Capital (USA) Inc. Macquarie Capital (USA) Inc.’s affiliate’s analysts are not registered as research analysts with FINRA, may not be associated persons of Macquarie Capital (USA) Inc., and therefore may not be subject to FINRA rule restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Any persons receiving this report directly from Macquarie Capital (USA) Inc. and wishing to effect a transaction in any security described herein should do so with Macquarie Capital (USA) Inc. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures, or contact your registered representative at 1-888-MAC-STOCK, or write to the Supervisory Analysts, Research Department, Macquarie Securities, 125 W.55th Street, New York, NY 10019. © Macquarie Group

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Contact Macquarie Capital (USA) Inc. SALES US Karen Acierno (303) 952 2730 Karen Blando (212) 231 2515 Larry Busnardo (303) 952 2750 Michael Cagney (312) 660 9144 Will Cape (312) 660 9051 David Chambers (212) 231 2505 Brian Cohen (212) 231 8002 Wes Dalton (415) 762 5007 Michael Dâ&#x20AC;&#x2122;Arcangelo (212) 231 2573 Peter Doerr (312) 660 9052 John Donaldson (212) 231 8026 Eddie Friedmann (212) 231 8011 Roni Gudell (617) 598 2504 Greg Jannetta (617) 598 2507 Jay Kreske (312) 660 9041 Heidi Muccifori (212) 231 2466 Bruce Murdock (212) 231 8025 Todd Pigott (212) 231 8007 Susan Reid (416) 848 3558 Jack Rose (415) 762 5002 Richard Sears (212) 231 2489 Blair Smith (212) 231 8004 Mark Swank (212) 231 2415 Ben Taylor (415) 762 5025 Ingrid Willinge (212) 231 8017 Email Addresses firstname.surname@macquarie.com eg karen.acierno@macquarie.com

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International Chris Reale Guy Devereux Ed Eng James Henry Kai Keller Adam Ritter Marc Rosa

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Apresentação John Welch