Quarterly Press Conference

1. Quarterly Press Conference 2009 OUTLOOK:INVESTING IN ASLOW-GROWTH WORLD 27 January 2009

2. Peter BrookeHead of Macro Strategy Investments“What do you do when bonds are junk and cash is trash?”

3. Cash is trash Bonds are junk What does that leave? Property Equity Agenda

4. Asset Class ReturnsFor the 12 Months to 31.12.08 US Dollars Returns Rand Returns SA Equities SWIX SA Listed Property SA Bonds SA Cash Int’l Returns MSCI AC World Emerging Market Bonds Cash -21.7 -4.5 17.0 11.4 -21.3 -36.7 51.5 31.5 18.7 26.5 4.3 9.4 6.2 35.5 7.4 1.0 -42.1 -29.4 -13.5 -17.7 -41.9 -53.2 12.0 -2.8 Source: Macro Strategy Investments (OMIGSA)

5. UK BoE Official Bank Rate Lowest rate since 1694!! Source Data: Bloomberg

6. US 3mth Treasury Bills -4bps in December!! Source Data: Bloomberg

7. ZIRP

8. South Africa: Lots of cuts to come Source: Macro Strategy Investments (OMIGSA)

9. bonds

10. US 30 year bond yield Lowest level for 50 years 10-yr bond = 2.4% nominal return Source: Macro Strategy Investments (OMIGSA)

11. Global bond yields 16.0 16.0 UK Govt 10 year bond (3.69) Germany Govt 10 year bond (3.25) 14.0 14.0 USA Govt 10 year bond (2.618) Japan Govt 10 year bond (1.23) 12.0 12.0 10.0 10.0 8.0 8.0 6.0 6.0 4.0 4.0 2.0 2.0 Weighted bond yield = 2.7% 0.0 0.0 1974 1979 1984 1989 1994 1999 2004 2009 Source Data: IRIS

12. Inflation expectations Deflation in Japan, no inflation in US Source Data: Bloomberg

13. Credit is already pricing in the Great Depression Source: Moody’s, The Yield Book, NBER, Morgan Stanley Research

14. SA 10 year bond yield (%) Lowest level for 40 years Source: Macro Strategy Investments (OMIGSA)

15. property

16. Will be the best yielding investment in SA by endof 2009 Cyclical outlook poorbut better than equity Longer-term a freeoption on growth Building plans passed down 11% SA listed property Source: Macro Strategy Investments (OMIGSA)

17. equity

18. 2008 was a bad year Second worst year since 1925 Source Data: IRIS

19. Leading to a de-rating Price Earnings Ratio All Share Total Ret. Earning Per Share Forward Div. Yield All Share Index Dec 2006 24915 2573 3.0% 1440 17.3x Dec 2007 28958 3067 3.2% 1994 14.5x Dec 2008 21509 2354 4.6% 2275 9.5x Ann. Change -25.7% -23.2% +14% -34% Source: Macro Strategy Investments (OMIGSA)

20. Value has returned Dividend yield also the best for 18 years

21. Earnings base still the major risk

22. The world has entered one of the worst recessions in 100 years The extent of the deterioration has been dramatic The limited precedent makes timing unknown When the recovery comes market re-action will be extremely fast When does the economy stop free-falling? US ISM New Orders 90 80 70 60 50 40 30 20 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 US Non Farm Payrolls – Monthly change 800 600 400 200 0 -200 -400 -600 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

23. Equities cheap relative to bonds

24. Long-term perspective: Real Equities Source: Macro Strategy Investments (OMIGSA)

25. Greed: Conviction of a New Era Capitulation and Contempt Caution Enthusiasm Denial Fear The Art – Investor’s Psychology Distribution of Returns Extremes more likely than most investors think

26. Dividend, Bond & Cash Yields DIVIDEND YIELD (%) BOND YIELD(%) CASH YIELD (3 MONTH NCD)(%) COUNTRY INDEX U.S. S&P 500 3.2 2.4 0.1 EUROPE DJ STOXX 50 6.6 3.0 2.3 JAPAN NIKKEI 225 2.6 1.2 0.6 U.K. FTSE 100 5.7 3.5 1.1 S.A. JSE ALL SHARE 5.4 7.9 11.5 First time in 50 years that US Dividend yields > Bond yields Source Data: Bloomberg, 10-year bond yield, NB Dividend yields are probably optimistic

27. Global cash and bond returns will be pitifully low Corporate bonds look interesting Equity returns look attractive in the medium term Bad macro & earnings vs. sentiment & valuation MSI Strategy Underweight: Government bonds, offshore cash Overweight: Offshore equity, SA property, SA cash Conclusion

28. Asset Allocation View Real Return View Comment N SA Good long-term real return. Concerned about real earnings growth. N Equity 7.5% High yield of 9% with growth but cyclical fear. High barriers to entry = electricity & costs. Property 7.0% Looking interesting in the next year, but longer-term concerns about inflation. Bonds 2.5% Attractive in the short-term but rates will fall. Re-investment risk high. Cash 3.0% N Offshore Cheap compared to history but negative earnings momentum. Equity 8.0% No inflation risk in short-term but low nominal returns. Bonds 1.0% Cash 0.0% Downgraded as rates fall sharply. NB: These are long-term, real returns expected over the next five years

29. Don’t chase last year’s winners We do not expect bonds to give the same level of return Offshore investments should be focused on equity Low interest rates are here for a while Now is a good time for “investors” to add to equity Good long-term real return from here Don’t downgrade your solution unless your risk profile has changed NOTE: This is a general view, for more information, please contact your financial adviser or broker The man in the street

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