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1 © 2016 Matthews International Capital Management, LLC G.PT208_Council

Surviving

Chinese Volatility

Matthews Asia I April 2016

Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country and sector strategies may be subject to a higher degree of market risk than diversified strategies because of concentration in a specific industry, sector or geographic location. Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies.

The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of this information. Matthews International Capital Management, LLC (“Matthews Asia”) does not accept any liability for losses either direct or consequential caused by the use of this information.

The views and information discussed in this presentation are as of the date of presentation, are subject to change and may not reflect the presenter’s current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles.


Predictions of China’s Imminent Collapse are not New

1998 2001


Recent Noise in the Markets on China


How Many Pundits Understand the Dominant Role of the Private Sector?

Source: CEIC Data

Millions

0

50

100

150

200

250

300

350

400

450

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

State-controlled urban employment Private urban employment


Or That Chinese Students Aspire to be Entrepreneurs?

40.8%

6.1%

3.8%

China

Korea

Japan

COLLEGE AND GRADUATE STUDENTS INTERESTED IN BUILDING THEIR OWN BUSINESS

Source: Korea International Trade Association


Or that Most Bank Loans go to Private Firms?

STOCK OF BANK LOANS

Sources: People’s Bank of China, CEIC, Matthews Asia estimates

Share

0%

10%

20%

30%

40%

50%

2006 2007 2008 2009 2010 2011 2012 2013

Private Sector

State-Owned Enterprises

Government and Public Institutions

Consumer and Mortgage Loans


China has Been the U.S.’ Fastest Growing Export Market…by Far Growth rates of U.S. exports to its 10 biggest markets, since China joined the WTO in 2001

Source: CEIC; data for period 2000 to 2015

-4%

36%

56%

57%

70%

81%

86%

92%

112%

145%

155%

618%

Japan

U.K.

South Korea

Canada

Germany

Total U.S. Exports ex China

Netherlands

Total U.S. Exports

Mexico

Belgium

Hong Kong

China

Growth Rate


32 BEAR MARKETS, WHERE THE SHCOMP INDEX WAS DOWN 20% OR MORE

-40%

-30%

-20%

-10%

0%

Jan

94

to

Mar

94

Mar

94

to

Ap

r 9

4

Ap

r 9

4 t

o J

un

94

Jun

94

to

Ju

l 94

Sep

94

to

Oct

94

Oct

94

to

De

c 9

4

De

c 9

4 t

o F

eb

95

May

95

to

May

95

Au

g 9

6 t

o J

an 9

6

De

c 9

6 t

o D

ec

96

May

97

to

Ju

l 97

Jun

98

to

Au

g 9

8

Jun

99

to

De

c 9

9

Jun

01

to

Oct

01

De

c 0

1 t

o J

an 0

2

Jul 0

2 t

o D

ec 0

2

Ap

r 0

4 t

o J

un

04

Sep

04

to

Ju

n 0

5

Oct

07

to

No

v 0

7

Jan

08

to

Fe

b 0

8

Feb

08

to

Mar

08

May

08

to

Ju

n 0

8

Jun

08

to

Au

g 0

8

Au

g 0

8 t

o S

ep

08

Sep

08

to

Oct

08

Au

g 0

9 t

o A

ug

09

De

c 0

9 t

o M

ay 1

0

No

v 1

0 t

o A

ug

11

Au

g 1

1 t

o S

ep

12

Jun

15

to

Ju

l 15

Jul 1

5 t

o S

ep 1

5

De

c 1

5 t

o J

an 1

6

Chinese Equities have Always Been Ridiculously Volatile Since 1994, there have been 32 bear markets in A-shares, vs. two in the S&P 500

SHANGHAI STOCK EXCHANGE COMPOSITE (SHCOMP) INDEX SINCE YEAR 1994

Sources: CEIC; Bloomberg

Despite this volatility, over last 20 years, SHCOMP up 537% vs. S&P 500 up 382%

Past performance is no guarantee of future results. It is not possible to invest directly in an index.

0

1,500

3,000

4,500

6,000

7,500

Jan-94 Mar-97 May-00 Jul-03 Sep-06 Nov-09 Jan-13 Mar-16


Causes of Extreme Volatility

The A-share market is immature: only open since late 1990

Retail driven: 85% of turnover from retail investors compared to 25% in Hong Kong

The SHCOMP Index is unrepresentative of the Chinese economy:

— Overweights state-owned enterprises (SOEs), not the privately-owned firms that employ 80% of the workforce and create all of the new jobs and wealth

— Overweights the old economy, underweighting the biggest and fastest growing part of the economy—services and consumption

Government bungling: inept interventions and reluctance to give up control, compounded by terrible communication of policy objectives

Since 1994, there have been 32 bear markets in A-shares vs. two in the S&P 500


2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16

Real retail sales rose 10.7% in 2H15

New home sales rose 4.5% YoY

Real retail sales rose 10.5% YoY in 1H15

New home sales rose 8.5% YOY

The A-share Market Does Not Reflect the Economy, is Not Widely Held

It is not possible to invest directly in an index. Source: CEIC

SHCOMP Index

50m active investors in China = 7% of the urban population

73% of active accounts have less than US$15,000; less than 1% have more than US$1MN


Assessing Exchange Rate Volatility—1 Devaluation of RMB reflects U.S. dollar strength, not RMB weakness

It is not possible to invest directly in an index. Source: St. Louis Federal Reserve Bank

Index January 1997 = 100

105

110

115

120

125

130

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

Trade Weighted U.S. Dollar Index: Broad


Assessing Exchange Rate Volatility—2 RMB stronger than most other emerging markets currencies

50

60

70

80

90

100

110

120

Jan-00 Sep-02 May-05 Jan-08 Oct-10 Jun-13 Feb-16

China Asia ex-China EM ex-China

Depreciation

0

30

60

90

120

150

180

Jan-00 Sep-02 May-05 Jan-08 Sep-10 May-13 Jan-16

China Asia ex-China EM ex-China

Depreciation

REGIONAL SPOT EXCHANGE RATE INDEX, AGAINST USD REGIONAL REAL EFFECTIVE EXCHANGE RATE

Source: Bloomberg

(mid-weighted, Jan 2010=100) (mid-weighted, Jan 2005=100)


Assessing Exchange Rate Volatility—3 Loss of control of the exchange rate, or a failure to communicate central bank policy objectives?

Note: The light blue bars represent exchange rate changes for the 1st Quarter 2016. The CFETS (China Foreign Exchange Trade System) RMB Index measures the yuan’s performance against a basket of 13 currencies, published by CFETS.

Sources: Bloomberg, China Foreign Exchange Trading Center

EXCHANGE RATE CHANGE OF THE MAJOR CURRENCIES AGAINST USD IN 2015 AND 1Q16

-40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15%

Brazilian Real

Euro

Indonesian Rupiah

Thai Baht

Singapore Dollar

South Korean Won

British Pound

Indian Rupee

Chinese RMB

Swiss Franc

Japanese Yen

Hong Kong Dollar

CFETS RMB index

U.S. Dollar Index


Assessing Exchange Rate Volatility—4 No need for currency wars; China’s exports remain competitive

Over the last decade, the RMB appreciated by 49% in real effective terms, yet the Chinese share of total U.S. imports rose to 21.5% from 14.5%

Sources: CEIC, International Monetary Fund, Datastream

0%

5%

10%

15%

20%

25%

80

100

120

140

Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

Real Effective Exchange Rate Nominal Effective Exchange Rate China's Market Share in U.S. Imports of Goods (RHS)

CHINA’S SHARE OF GLOBAL EXPORTS

0%

5%

10%

15%

1990 1995 2000 2005 2010 2015


No Longer an Export-led Economy

*Estimates Sources: CEIC, Matthews Asia estimates

Percentage Points

Final Consumption Gross Capital Formation Net Exports of Goods and Services GDP Growth Rate, YoY (RHS)

0%

2%

4%

6%

8%

10%

12%

14%

16%

-6

-4

-2

0

2

4

6

8

10

12

14

16


Capital Outflow vs. Capital Flight FX reserves US$3.2TN (next highest is Japan, US$1.2TN).

Increase of US$10BN in March after declines of US$28.6BN in Feb., US$99.5BN in Jan., and US$108BN in Dec.

US$ Billion

Source: CEIC

6.0

6.5

7.0

7.5

8.0

8.5$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Forex reserves Rmb/USD (RHS)

Mar-16


Capital Outflow vs. Capital Flight Capital flows in China, like everywhere else, are ultimately driven by expected marginal return on investment

Source: Bloomberg

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

China Deposit Rate U.S. Deposit Rate

Deposit rate in China has fallen, while U.S. deposit rates are inching up


0%

1%

2%

3%

4%

5%

6%

3,000

3,500

4,000

Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16

Forex reserves (LHS) Shanghai Interbank Offered Rate (SHIBOR): 1 Week

Stable domestic financing costs

Domestic Liquidity Still Stable FX reserve decline hasn’t resulted in tighter domestic liquidity

Source: CEIC

US$ Billion


China is Growing More Slowly, but no Sign of a Hard Landing

Demographics: workforce has begun to shrink

Big Numbers: after three decades of 10% GDP growth, deceleration was inevitable

Past the Peak in Construction: still building public infrastructure and housing, but at a much slower growth rate

Rebalancing the Economy: continued fast growth in consumption and services (now the biggest part of the economy) mitigates much slower growth in manufacturing and construction, but cannot take GDP growth back to 7%

All Positive for the Long Term: but all contribute to gradually slower growth and more volatility

Reasons for the deceleration


GDP Growth Rate has Been Decelerating Gradually for Many Years

Sources: CEIC, Matthews Asia estimates

RMB BN

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

GDP GDP growth rate (RHS)

YoY


Rebalancing Means Slower Growth is Inevitable, but Remember the Base

*2020 Matthews Asia Estimate Source: CEIC

11.3%

6.9%

5.0%

0%

2%

4%

6%

8%

10%

12%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2005 2015 2020E

Incremental Increase in Nominal GDP Real GDP Growth Rate (RHS)

RMB BN


Steady Wage Growth Signals a Healthy Job Market

*Surveys for the 4Q11 and 1Q12 time periods were not conducted. Sources: CLSA

YoY

WAGE GROWTH OF UNSKILLED FACTORY WORKERS AND SKILLED MANAGERIAL WORKERS

-5%

0%

5%

10%

15%

20%

2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15

Unskilled factory workers Skilled/managerial workers


12% 15%

9%

-11% -13%

-41%

Copper Soybean Crude oil

Volume Value

China’s Imports: Volume vs. Value Year-on-Year growth rate of China’s key commodity imports, 2015

Source: CEIC


Regional Variations in China’s Growth Story

Avg. GDP growth 5% Avg. VAI growth 0.5%

Avg. GDP growth 8.5% Avg. VAI growth 7.5%

GROWTH RATES BY PROVINCE FOR GDP AND VALUE-ADDED OF INDUSTRY (VAI) IN 2015

Resource extraction and heavy industry concentrated in the northeast

Source: CEIC


No Sign of Significant Stimulus Growth in total credit outstanding decelerating in line with slower nominal GDP growth

TSF=Total Social Financing Sources: CEIC, Matthews Asia estimates

YoY

0%

5%

10%

15%

20%

25%

30%

35%

40%

2002 2004 2006 2008 2010 2012 2014 YTDFeb16

Outstanding TSF RMB Loans Outstanding Nominal GDP M2


Rebalancing of the Chinese Economy Well Underway

Source: CEIC

Primary industry refers to agriculture, forestry, animal husbandry and fishery and services in support of these industries Secondary industry refers to mining and quarrying, manufacturing, production and supply of electricity, water and gas, and construction Tertiary industry refers to all other economic activities not included in the primary or secondary industries, including real estate, finance, wholesale and retail, transportation and other service industries

SHARE OF GDP BY PRODUCTION APPROACH

0%

10%

20%

30%

40%

50%

60%

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Services and consumption now bigger than manufacturing and construction


China is the World’s Best Consumer Story

Sources: World Bank, International Monetary Fund (IMF) estimates

Real compound annual growth rate of final consumption from 2009 to 2014

8.7%

1.1%

1.0%

7.2%

1.3%

2.7%

5.0%

3.0%

1.6%

China

Germany

United Kingdom

India

Japan

Korea, Rep.

HK

Thailand

United States


The World’s Best Consumption Story Year-on-Year changes in some consumer categories

66% Chinese visitor arrivals in Japan January-February 2016

65% Movie box office revenue January-February 2016

55% SUV sales January-February 2016

50% Express parcel deliveries January-February 2016

43% Mercedes vehicle sales in China January-February 2016

33% Nike shoe sales in Greater China Three months ending Feb 2016

30% New home sales January-February 2016

18% Ford vehicle sales in China January-February 2016

16% Furniture sales January-February 2016

15% Gasoline consumption January-February 2016

14% Apple’s Greater China revenue Three months ending Dec 2015

13% Airline passenger traffic January-February 2016

12% Electricity demand, services & consumer sector January-February 2016

As of December 31, 2015, no accounts managed by Matthews Asia held positions in Mercedes, Ford, Nike and Apple.

Sources: Japan National Tourist Office; Company Data; CEIC; National Bureau of Statistics of China


-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Averagefrom2006to 2015

U.S. China Hong Kong

Strong Consumer Spending Driven by Strong Income Growth

Sources: CEIC, St. Louis Fed

YoY

Real income rose more than 130% over the last decade in China, vs. about 11% in the U.S.

REAL GROWTH RATE OF PER CAPITA HOUSEHOLD INCOME


$0 $5,000 $10,000 $15,000 $20,000 $25,000

GDP

China's Bank Depositsin 2015

Deposits of Non-Banking FI*

Government Deposits

Consumer Spending Backed by Big Savings, not Debt Household savings roughly equal to combined GDP of Brazil, India, Russia and Italy

*FI=Financial Institutions Sources: CEIC, World Bank

Italy Russia Russian Federation

US$ BN

Brazil India

Deposits on Non- Financial Enterprises

Household Deposits


Consumer Confidence Remains Healthy

Source: McKinsey 2016 China Consumer Report

57% 55%

2012 2015

CHINA

Q: MY HOUSEHOLD INCOME WILL SIGNIFICANTLY INCREASE IN THE NEXT 5 YEARS

Percent of respondents who strongly agree or agree

32% 30%

2011 2011

U.S. U.K.


Misunderstanding China’s Property Market 90% of new home buyers are owner-occupiers, who use a lot of cash

Source: CLSA

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar-08 2Q10 Jan-11 Jun-11 Dec-11 May-12 Oct-12 Mar-13 Aug-13 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16

First-time buyers Upgraders Investors


27.5

20.3 18.9

25.6

33.4

24.8

11.8

26.5

-15.5

45.4

8.3

3.4 2

17.5

-9.1

6.9

30.4

22.9

10.4

3.9

-20%

-10%

0%

10%

20%

30%

40%

50%

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

YTD

Feb

16

01

-07

*

08

-10

*

11

-15

*

New Home Sales Past Peak but Still Healthy

*CAGR = Compound Annual Growth Rate Sources: CEIC, CLSA, Matthews Asia estimates

NEW HOME SALES BY SQM YoY

Growth Rate of Residential Floor Space Sold Compound Annual Growth Rate


New Home Prices Softer, but Far From Collapse

Tier 1 cities: include Beijing, Shanghai, Guangzhou and Shenzhen Tier 2 cities: include provincial capital cities, plus Dalian, Qingdao, Ningbo and Xiamen

Tier 3 cities: all other cities not included in Tier 1 and Tier 2 Source: CLSA

CLSA NEW HOME PRICES, MoM

CLSA NEW HOME PRICES, YoY

-2%

0%

2%

4%

Nov-07 Mar-09 Aug-10 Dec-11 May-13 Sep-14 Feb-16

Overall Tier-2 Tier-3

-10%

0%

10%

20%

30%

40%

Nov-07 Jul-09 Feb-11 Oct-12 Jun-14 Feb-16

Overall Tier-2 Tier-3


More than 150 Cities with a Population of One Million Plus Last year, more new homes sold in Hefei than in Beijing. More in Chengdu than in Shanghai

Source: CLSA


Ghostly, or a Different Business Model?

Photos on left from cbsnews.com. Photos on right by Matthews Asia. Upper right photo taken in same location as upper left. Lower right photo is not the same location as lower left, but is illustrative of traffic conditions observed in Zhengdong in February 2015.

http://matthewsasia.com/perspectives-on-asia/video-detail.fs?artID=922





Debt is Concentrated Among State-Owned Enterprises (SOEs)

Source: Hong Kong Institute for Monetary Research

40%

45%

50%

55%

60%

65%

70%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

SOEs

Private Firms

DEBT-TO-ASSET RATIO BY OWNERSHIP


First Steps Towards Another Round of SOE Restructuring

Source: CEIC

JOB REDUCTION BY INDUSTRY IN 2015

-281,000

-282,000

-282,000

-306,000

-307,000

-339,000

-415,000

-419,000

-429,000

-460,000

-5.8 Million

Electrical Machinery & Equipment

Automobile Manufacturing

Garment & Apparel

General Equipment

Food Processing

Computer and Communication Equipment

Textile

Ferrous Metal Smelting & Pressing

Shipbuilding

Coal Mining

Overall Industrial Enterprise


Downstream Industry Very Weak, Upstream Far Better Profit growth of larger industrial firms by sector

Source: CEIC

-80% -60% -40% -20% 0% 20% 40%

Medical & Pharmaceutical Product

Electrical Machinery & Equipment

Food Manufacturing

Wine, Beverage & Refined Tea Manufacturing

Chemical Material & Product

Agricultural Food Processing

Ferrous Metal Mining & Dressing

Coal Mining & Dressing

Petroleum & Natural Gas Acquisition

2015

2014

2013

2012

Profit Growth of Industry


Beijing’s More Serious Mistakes

Putting the Party above the law

Lack of trusted institutions, and inhibiting the development of civil society

Blocking freedom of expression and political dissent

Slow to fix China’s environmental disaster

Overly aggressive approach to neighbors in the South and East China seas


China Will Continue to Drive Global Growth

Sources: IMF, World Economic Outlook (April 2014); IMF staff calculations

CONTRIBUTION TO GLOBAL GROWTH (PERCENTAGE POINTS)

-2.000

-1.000

0.000

1.000

2.000

3.000

4.000

5.000

6.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China United States Japan European Union Rest of World World


End of China’s One-Child Policy Politically important, but no change to demographic trends

Source: World Bank

0

1

2

3

4

5

6

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

China Japan Indonesia South Korea Thailand

Births per Woman

1980: Enforcement of China’s one-child policy


Modest Consumer Price Inflation; PPI Follows Global Commodity Prices Deflation is not a concern

Prev Year=100 YoY

Sources: CEIC, World Bank

85

90

95

100

105

110

115

120

125

130

Jan-06 Sep-07 May-09 Jan-11 Oct-12 Jun-14 Feb-16

CPI FoodCore CPIProducer Price Index Raw Materials, Fuel and Power

-10%

-5%

0%

5%

10%

15%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Jan-02 Jul-05 Jan-09 Jul-12 Feb-16

World Bank Commodity Index PPI (RHS)


Active vs. Passive for China Market cap of MSCI China by sector and ownership

The MSCI China Index is a free float–adjusted market capitalization–weighted index of Chinese equities that include China-affiliated corporations and H shares listed on the Hong Kong exchange, and B shares listed on the Shanghai and Shenzhen exchanges. It is not possible to invest directly in an index.

Source: CLSA; data as of November 26, 2014

BY SECTOR BY OWNERSHIP

Other 28%

Private Firms 29%

SOEs 71%

Financials, Telecom Services,

Capital Goods, Energy, Utilities and Materials

67%

Food, Beverage and Tobacco 3%

Consumer Durables and Apparel 1%

Consumer Staples 1%


Today’s Speaker

ANDY ROTHMAN Investment Strategist

Andy Rothman is an Investment Strategist at Matthews Asia. He is principally responsible for developing research focused on China’s ongoing economic and political developments while also complementing the broader investment team with in-depth analysis on Asia. In addition, Andy plays a key role in communicating to clients and the media the firm’s perspectives and latest insights into China and the greater Asia region. Prior to joining Matthews in 2014, Andy spent 14 years as CLSA’s China macroeconomic strategist where he conducted analysis into China and delivered his insights to their clients. Previously, Andy spent 17 years in the U.S. Foreign Service, with a diplomatic career focused on China, including as head of the macroeconomics and domestic policy office of the U.S. embassy in Beijing. In total, Andy has lived and worked in China for more than 20 years. He earned an M.A. in public administration from the Lyndon B. Johnson School of Public Affairs and a B.A. from Colgate University. He is a proficient Mandarin speaker.


Index Definitions

The MSCI China Index is a free float–adjusted market capitalization–weighted index of Chinese equities that include China-affiliated corporations and H shares listed on the Hong Kong exchange, and B shares listed on the Shanghai and Shenzhen exchanges.

The MSCI Japan Index is a free float–adjusted market capitalization–weighted index of Japanese equities listed in Japan.

The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

The S&P Bombay Stock Exchange 100 (S&P BSE 100) Index is a free float–adjusted market capitalization–weighted index of 100 stocks listed on the Bombay Stock Exchange.

The S&P 500 Index is a broad market-weighted index dominated by blue-chip stocks in the U.S.

The NASDAQ Composite Index is a market-capitalization weighted index of the more than 3,000 common equities listed on the Nasdaq stock exchange.

The FTSE 250 Index is a capitalization weighted index consisting of the 101st to the 350th largest companies listed on the London Stock Exchange.

The Shanghai Composite Index (SHCOMP) is a capitalization-weighted index that tracks the daily performance of all A-shares and B-shares listed on the Shanghai Stock Exchange.

The U.S. Dollar Index is a measure of the value of the U.S. dollar relative to majority of its most significant trading partners.

It is not possible to invest directly in an index.


Glossary CAGR (Compound Annual Growth Rate) is the year-over-year growth rate of an investment over a specified period of time.

DCF (Discounted Cash Flow) is a valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free cash flow projections and discounts them to arrive at a present value estimate, which is used to evaluate the potential for investment.

EBIT Margin (Earnings Before Interest and Taxation Margin) is a profitability measure equal to EBIT divided by net revenue. This value is useful when comparing multiple companies, especially within a given industry, and also helps evaluate how a company has grown over time.

EBITDA (Earnings Before Interest and Taxation, Depreciation and Amortization) is a measure of a company’s earnings before considering the financing of that company (the share of equity capital and debt employed), and disregarding potential depreciation and amortization policies, which can be very different. EBITDA allows like-for-like comparisons between different companies’ performance.

EPS (Earnings per Share) is the amount of annual profit (after tax and all other expenses) attributable to each share in a company. EPS is calculated by dividing profit by the average number of shares on issue.

EVA (Economic Value Added) is a measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit (adjusted for taxes on a cash basis).

EV/EBITDA (Enterprise Multiple) is a ratio used to determine the value of a company. The enterprise multiple looks at a firm as a potential acquirer would, because it takes debt into account - an item which other multiples like the P/E ratio do not include.

EV (Enterprise Value) is a measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

FCF (Free Cash Flow) is a measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base.

Forward P/E (Forward Price to Earnings) is a measure of the price-to-earnings ratio (P/E) using forecasted earnings for the P/E calculation. While the earnings used are just an estimate and are not as reliable as current earnings data, there still may be benefit in estimated P/E analysis. The forecasted earnings used in the formula can either be for the next 12 months or for the next full-year fiscal period.

Gross Margin is a company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company.

Net Margin is the ratio of net profits to revenues for a company or business segment—typically expressed as a percentage—that shows how much of each dollar earned by the company is translated into profits. It is calculated by dividing net profit by revenue.

Operating Margin is a ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production.

P/E Ratio (Price-to-Earnings Ratio) is a valuation ratio of a company’s current share price compared to its per-share earnings, calculated as marketing value per share divided by earnings per share (EPS).

P/B Ratio (Price-to-Book Ratio) is used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. A lower P/B ratio could mean that the stock is undervalued.

PPP (Purchasing Power Parity) is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.

ROE (Return on Equity) is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested, and is calculated as net income divided by shareholder’s equity.

ROIC (Return on Invested Capital) is a calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. The return on invested capital measure gives a sense of how well a company is using its money to generate returns.

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