T. Rowe Price Group, Inc. · NASDAQ:TROW

T. Rowe Price — 2016 Global Market Outlook Press Briefing

15 slides from T. Rowe Price's conference presentation, Jan 25, 2016

  1. Slide 1: Asia ex Japan: Neither Boom nor Doom

    2016 Global Market Outlook Press Briefing ASIA EX JAPAN: NEITHER BOOM NOR DOOM Anh Lu Portfolio Manager (Asia ex Japan Equity Strategy)

  2. Slide 2: The Good News, the Bad News, Our Outlook

    The Good news, the Bad News, Our Outlook The Good News  Not a crisis in the making  Valuations are supportive  Improving earnings outlook  Reforms are happening, albeit slowly  Asia benefits from falling commodity prices The Bad News  Debt levels are high, especially in China  Poor export dem

  3. Slide 3: Unlikely to Repeat 1997

    Unlikely to Repeat 1997  Debt levels have risen sharply, but debt is largely domestically owned and in local currency  Inflation is low  Most of the region runs current account surpluses compared to deficits in 1996/97  Foreign Exchange (FX) is no longer pegged, acting as a release valve, and FX

  4. Slide 4: External Debt/GDP Lower Than During Asian Financial Crisis

    External Debt/GDP Lower Than During Asian Financial Crisis As at 31 December 2014 EXTERNAL DEBT AS % OF GDP 45 AXJ ex-Hong Kong, Singapore and Taiwan AXJ ex-Hong Kong and Singapore 40 35 30 25 20 15 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2

  5. Slide 5: External Vulnerability of EM Asia Has Improved Since 2013

    External Vulnerability of EM Asia Has Improved Since 2013 As at 30 June 2015 EXTERNAL VULNERABILITY OF EMERGING MARKET ASIA HAS IMPROVED SINCE 2013 14.000 12.000 Q2 2013 10.000 Q2 2015 Current Account as a % GDP 8.000 6.000 4.000 2.000 0.000 -2.000 -4.000 -6.000 Taiwan Malaysia Korea Philippines Tha

  6. Slide 6: Valuations Are Attractive

    Price to Earnings ratio (x) Price to Book Ratio (x) 11 13 15 17 19 7 9 1 2 3 1.5 2.5 Sep-03 Sep-03 Source: FactSet. Mar-04 Mar-04 As at 31 October 2015 Sep-04 Sep-04 Mar-05 Mar-05 Sep-05 Sep-05 Mar-06 Mar-06 Sep-06 Mar-07 Sep-06 Sep-07 Mar-07 Mar-08 Sep-07 Sep-08 Mar-08 Mar-09 Sep-08 Sep-09 Mar-10 M

  7. Slide 7: Earnings Delivery is Key to a Rerating

    Earnings Delivery is Key to a Rerating As at 31 October 2015 100% EPS Change 80% 20% Trailing PE Change 18% Total Return 60% 16% 14% EBITDA Margin 40% 12% 10% 20% 8% 6% 0% 4% 2% -20% 0% -40% S&P 500 MSCI Japan MSCI Europe MSCI AC Asia ex Japan Asia has disappointed on earnings relative to developed

  8. Slide 8: Reform Is Key to Boosting Growth in the Region

    Reform Is Key to Boosting Growth in the Region As at 30 September 2015 ASIA EX JAPAN GDP GROWTH (%) 12 10 8 GDP Growth (%) 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E Reforms in key areas such as infrastructure, labour laws, taxation and fiscal poli

  9. Slide 9: Asia ex-Japan Outlook

    Asia ex-Japan Outlook As at 31 October 2015 A BENEFICIARY OF LOWER RESOURCE PRICES RESOURCE STOCKS AS A PERCENTAGE ASIA’S TRADE BALANCE TO IMPROVE OF MARKET CAPITALIZATION ON LOW OIL 3 Energy Materials Resources 2.4 30% 2 25% 1 20% 0 -0.1 % of GDP % of Index -1 15% -2 -1.7 10% -1.9 -3 5% -4 -3.6 -3.

  10. Slide 10: Debt Levels are High

    Debt Levels are High As at 30 June 2015 CHINA DEBT TO GDP BREAKDOWN Central government Local governments Mid/large corporates Small business Consumers 300% 250% 26% 24% 22% 200% 20% 19% 19% 58% 58% 16% 57% 58% 150% 12% 57% 59% 43% 34% 100% 111% 119% 98% 106% 83% 83% 82% 77% 50% 15% 23% 23% 22% 22% 2

  11. Slide 11: Poor Export Demand

    Poor Export Demand As at 30 September 2015 Export Volume, Year on Year% (3 month moving average) 15% China, Korea, and Taiwan 10% 5% 0% -5% Mar-13 Mar-14 Mar-15 Dec-12 Dec-13 Dec-14 Sep-12 Jun-13 Sep-13 Jun-14 Sep-14 Jun-15 Sep-15 Sources: CEIC and Morgan Stanley. 11

  12. Slide 12: ROEs Need to Improve

    Return on Equty (%) 10 12 14 16 18 6 8 Sep-03 Mar-04 Source: FactSet. Sep-04 Mar-05 As at 31 October 2015 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 ROEs Need to Improve Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 MSCI AC Asia ex JP MSCI The World Index Sep-14

  13. Slide 13: Opportunities

    Opportunities China India/SE Asia Developed Asia Technology/Innovation Technology/Innovation Technology/Innovation Consumption/Services Consumption Global Multi-National Corporations (MNCs) Reform beneficiaries Capital Pan-regional operators Expenditure/Investment recovery 13

  14. Slide 14: Important Information

    IMPORTANT INFORMATION This material has been prepared for informational purposes only. The views contained herein are those of the presenter(s) as of the date of the presentation and are subject to change without notice; these views may differ from those of other T. Rowe Price associates. Informatio

  15. Slide 15: Thank You

    T.RowePrice’

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