the equity hitchhiker’s guide to the global galaxy...refer to important disclosur es on page 23 to...

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BofA Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 23 to 25. Link to Definitions on page 22. 11192702

Global Strategy

The Equity Hitchhiker’s Guide to the Global Galaxy

The global equity universe The 3rd edition of our guide to composition, performance, valuation and earnings of the regions, countries and sectors of the MSCI All-Country World Index1

, We present 20 different metrics to view the world of equities, as well as plenty of investment ideas for contrarian, income, value & growth investors.

The basics The free-float market cap of the MSCI ACWI is currently $26.9tn. By comparison, global GDP $70.0tn; global debt market face value2

$43.0tn; global FX reserves $10.4tn; and full-float global equity market cap of $47.6tn.

The MSCI ACWI is today 27% from its all-time high, up 92% from its Mar’09 low, trades on an 11.1X fwd PE ratio and a 1.8X PB ratio, a dividend yield of 2.9%, rate of return on equity of 12.3%, is forecast to generate sales growth of 9.1% in 2012 & 2013 combined and earnings of 21.1% over the same 2-year period.

Trades for Contrarian investors The US tech sector is now larger than the entire Eurozone equity market, BRIC banks are bigger than Japanese banks and both the global healthcare & staples sectors recently traded at all-time highs. US telcos and Singapore banks are the most overbought sectors. In contrast, Eurozone telcos/utilities, Brazilian resources & Canadian materials are currently very oversold.

Trades for Value investors There are two stock markets: the US/Eurozone/Japan financials which trade at 0.9X book; and everything else, which trades at 1.8X book. Value investors should note Eurozone & Chinese financials, European resources and Japanese cyclicals are very cheap, while US consumer & telco stocks, EM staples, Mexico & the ASEAN region are expensive relative to the past decade.

Trades for Income investors Investors seeking big dividend yields will find them in Eurozone telcos, Brazilian materials, Australia financials and Taiwan tech. Countries/sectors with big yields & dividend growth: banks in EMEA, China & Swiss financials, UK energy, Russia.

Trades for Growth investors Consensus predicts strong +15% sales growth in 2012/13 in tech, EM Asia, LatAm, South Africa, Turkey, Singapore and Hong Kong. In contrast, low sales growth expected in DM telcos, US energy, Germany, France, Spain, UK and Russia. Discretionary stocks are predicted to increase EPS a stunning 60% over the two-year period, whereas the EPS for Energy is forecast to contract. Sales & EPS metrics also allow macro bears to isolate who is vulnerable to recession.

Equity Strategy

Equity Strategy | Global 06 August 2012

Michael Hartnett Chief Global Equity Strategist MLPF&S .Kate Moore Global Equity Strategist MLPF&S .Brian Leung Global Equity Strategist MLPF&S Swathi Putcha Global Equity Strategist MLPF&S .

Table of Contents World Equity Market Capitalization 2 % Away from All-Time High 3 Sectors as Share of Country/Region 4 Regional Contributions to Sectors 5 2012 YTD Price Returns (%) 6 Overbought versus Oversold 7 Forward Price-to-Earnings Ratios 8 Trailing Price-to-Earnings Ratios 9 Price-to-Earnings Ratios by Z-Score 10 Price-to-Book Ratios 11 Price-to-Book Ratios by Z-Score 12 Dividend Yields 13 Dividend Growth 14 Return on Equity 15 2012 EPS Growth 16 2013 EPS Growth 17 2012-13 Compounded EPS Growth 18 2012 Sales Growth 19 2013 Sales Growth 20 2012-13 Compounded Sales Growth 21

Note: all performance and calculations presented are as of 8/2/12

1 MSCI ACWI is the industry benchmark for global equities, comprising 45 countries and 10 sectors. 2 Total market value of BofAML index-qualifying fixed income securities (GFIM)

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World Equity Market Capitalization Table 1: World equity free-float3 market cap ($bn)

Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 26,945 2,975 1,968 2,775 2,795 2,947 2,582 5,201 3,424 1,291 987 DEVELOPED 23,548 2,543 1,560 2,545 2,524 2,658 2,543 4,350 2,966 1,005 856 N. America 13,958 1,740 651 1,348 1,524 1,473 1,540 2,186 2,541 470 485 US 12,804 1,424 443 1,277 1,481 1,434 1,518 1,797 2,530 429 471 Canada 1,154 316 208 71 43 39 22 389 11 41 13 Europe 6,098 716 568 657 530 950 783 1,070 181 384 258 UK 2,249 440 238 143 139 402 203 396 18 174 95 Switzerland 826 17 57 79 44 214 272 135 - 9 - Eurozone 2,503 206 239 324 302 316 230 432 131 159 163 France 855 110 62 130 112 102 113 111 26 50 38 Germany 762 - 121 103 138 33 100 113 66 31 57 Netherlands 233 6 20 36 13 92 - 35 23 8 - Spain 222 12 1 14 22 3 4 91 7 44 25 Italy 187 69 - 17 12 - - 47 - 11 30 Asia Pacific 3,435 87 333 539 470 234 181 1,088 241 149 113 Japan 2,035 30 130 418 401 141 147 378 235 101 56 Australia 898 57 200 40 16 82 34 433 4 18 14 Hong Kong 297 - - 31 36 - - 184 3 2 42 Singapore 192 - - 48 16 11 - 93 - 25 - EMERGING 3,398 433 408 230 271 290 40 851 459 286 131 EM Asia 2,038 182 180 169 187 130 23 521 442 149 56 China 606 107 26 40 30 34 5 225 38 84 16 Korea 523 15 59 69 95 27 4 68 178 4 7 Taiwan 365 3 51 14 15 10 - 56 194 21 - India 215 27 19 12 17 21 12 60 32 5 10 Malaysia 126 5 7 18 13 16 - 38 - 15 14 Indonesia 95 7 8 5 15 12 2 31 - 11 4 EMEA 615 154 82 22 50 38 13 167 1 68 19 South Africa 274 26 51 13 46 19 10 73 - 36 - Russia 203 117 23 - - 9 - 31 - 16 8 Turkey 58 3 2 5 2 8 - 31 - 6 - LATAM 745 96 146 39 34 122 4 162 16 70 56 Brazil 444 81 84 19 16 59 4 112 16 16 36 Mexico 171 - 30 8 13 52 - 16 - 52 - Chile 65 - 12 13 5 8 - 10 - 2 16 Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows the free-float market capitalization in US$ billions of the MSCI All-Country World Index (ACWI). Global equity market cap is currently $26.9tn, 27% below its all-time high of $33.7tn in Oct’07, but well above the recent Mar’09 low of $14.0tn.

The US is by far the largest equity market ($12.8trn), Financials the largest global sector ($5.2trn) & US Tech the largest country-sector (at $2.5trn it now exceeds the entire Eurozone equity market capitalization).

The financial sectors market caps show that the BRIC banking sector is larger than Japan’s, and Australian banks are larger than Eurozone banks (Chart).

EM consumer theme remains notably undercapitalized: consumer-related sectors (discretionary, staples, health care) in Emerging Markets have a market cap of $600bn versus $7,700bn in Developed Markets.

3 Only includes shares freely available to international investors. It is significantly smaller than full-float mkt cap

Chart 1: EZ vs. Aussie Financials Mkt Cap ($tn)

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Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream


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% Away from All-Time High Table 2: % each country/sector is currently away from its all-time high* Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI (27.0) (34.8) (40.1) (30.3) (12.0) (1.1) (1.3) (54.9) (57.5) (57.6) (40.4) DEVELOPED (26.6) (31.6) (39.3) (27.8) (13.6) (1.2) (1.4) (58.3) (59.3) (63.9) (41.8) N. America (13.1) (27.8) (27.2) (18.1) (6.5) (1.6) (2.1) (55.1) (53.7) (55.2) (16.8) US (12.9) (24.1) (26.5) (19.2) (6.5) (1.6) (2.1) (59.8) (51.2) (60.7) (17.0) Canada (27.6) (42.4) (37.6) (7.4) (38.0) (3.5) (65.5) (28.6) (97.2) (13.4) (18.6) Europe (44.5) (39.8) (48.0) (42.4) (31.6) (2.2) (7.4) (72.7) (82.6) (71.4) (62.6) UK (37.5) (31.8) (53.9) (28.7) (37.7) (2.4) (19.2) (70.7) (92.7) (61.4) (26.4) Switzerland (18.6) (43.9) (17.0) (29.5) (21.1) (6.0) (7.0) (68.2) - (18.9) - Eurozone (56.2) (49.3) (48.4) (51.3) (37.8) (15.0) (20.6) (78.7) (79.4) (81.3) (71.8) France (50.4) (47.4) (64.6) (48.4) (40.4) (36.0) (13.6) (73.8) (90.7) (89.1) (74.7) Germany (45.2) - (35.2) (49.2) (35.4) (17.6) (17.4) (68.8) (48.0) (89.0) (73.0) Netherlands (44.6) (52.3) (33.4) (55.0) (70.0) (11.0) - (81.5) (30.2) (88.8) - Spain (68.1) (65.8) - (70.7) (6.7) - - (75.2) (46.8) (69.0) (72.8) Italy (71.6) (45.1) - (66.6) (65.8) - - (87.5) - (87.4) (70.7) Asia Pacific (32.3) (41.9) (44.0) (32.3) (35.8) (0.4) (13.3) (41.0) (74.5) (69.4) (49.8) Japan (51.7) (51.6) (56.3) (31.6) (37.1) (4.4) (20.0) (77.6) (74.8) (78.1) (69.3) Australia (27.8) (39.2) (39.8) (51.5) (56.8) (0.8) (3.1) (31.0) - (27.1) (0.9) Hong Kong (26.5) - - (41.8) (43.3) - - (26.1) - - (2.6) Singapore (14.0) - - (17.2) (20.9) (43.7) - (16.4) - (0.9) - EMERGING (29.4) (49.0) (43.2) (53.0) (17.7) (4.6) (12.7) (34.6) (22.4) (30.0) (25.0) EM Asia (30.8) (38.2) (43.3) (59.6) (20.5) (5.4) (16.2) (37.7) (17.7) (34.7) (33.3) China (60.7) (37.2) (76.6) (72.2) (53.0) (25.8) (69.9) (49.5) (58.7) (44.2) (49.0) Korea (22.3) (42.0) (42.2) (61.1) (20.4) (9.4) - (57.6) (9.7) - (56.6) Taiwan (53.7) - (29.5) (62.4) (27.4) (5.8) - (66.9) (58.6) (5.4) - India (46.8) (61.7) (57.5) (68.5) (21.6) (0.7) (14.1) (53.3) (48.3) - (69.7) Malaysia (5.0) - (12.4) (43.6) (21.9) (8.9) - (9.7) - (0.7) (0.5) Indonesia (15.8) (75.4) (44.7) - (16.4) (5.9) - (51.2) - (31.8) - EMEA (32.8) (54.8) (49.2) (36.0) (4.0) (1.2) (0.9) (32.9) - (40.0) (62.2) South Africa (14.6) (38.0) (45.9) (39.1) (4.2) (4.2) (0.9) (5.1) - (16.8) - Russia (55.4) (58.7) (54.3) - - (9.3) - (47.5) - (67.7) (99.2) Turkey (35.5) - - - - (0.7) - (41.5) - (47.5) - LATAM (32.1) (65.0) (49.6) (24.2) (41.1) (9.3) - (31.1) (91.2) (18.2) (15.6) Brazil (45.6) (69.6) (60.6) (51.1) (87.0) (16.2) - (37.1) (91.2) (55.9) (16.7) Mexico (5.0) - (38.9) (5.0) (33.9) (4.3) - (7.0) - (20.7) - Chile (21.7) - (24.3) (30.6) - (25.2) - (23.3) - - (20.5) * with respect to price return in USD terms Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows how far country-sector indices within MSCI ACWI are away from their all-time high. ACWI is currently 27% below its Oct’07 peak.

Contrarians should note both the global staples and global healthcare sectors are at all-time highs. In contrast, global tech and telcos are almost 60% below their all-time highs (Chart).

Eurozone, Japan & BRIC equities are 40-60% below all-time highs, but Mexico & Malaysia are close to all-time highs & US is only 10% away.

European tech stocks are currently trading 83% below their all-time high, the most oversold of all country-sectors with a market cap in excess of $100bn.

Chart 2: % away from highs by sector

Global Sectors

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Sectors as Share of Country/Region Table 3: Sector weights as % of region Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 100 11.0 7.3 10.3 10.4 10.9 9.6 19.3 12.7 4.8 3.7 DEVELOPED 100 10.8 6.6 10.8 10.7 11.3 10.8 18.5 12.6 4.3 3.6 N. America 100 12.5 4.7 9.7 10.9 10.6 11.0 15.7 18.2 3.4 3.5 US 100 11.1 3.5 10.0 11.6 11.2 11.9 14.0 19.8 3.4 3.7 Canada 100 27.4 18.0 6.2 3.7 3.4 1.9 33.7 1.0 3.5 1.2 Europe 100 11.7 9.3 10.8 8.7 15.6 12.8 17.5 3.0 6.3 4.2 UK 100 19.6 10.6 6.3 6.2 17.9 9.0 17.6 0.8 7.8 4.2 Switzerland 100 2.0 6.9 9.5 5.3 25.9 32.9 16.3 - 1.1 - Eurozone 100 8.2 9.5 12.9 12.1 12.6 9.2 17.3 5.2 6.4 6.5 France 100 12.9 7.3 15.2 13.1 12.0 13.2 12.9 3.1 5.9 4.5 Germany 100 - 15.9 13.6 18.1 4.3 13.2 14.8 8.7 4.0 7.4 Netherlands 100 2.7 8.5 15.3 5.6 39.5 - 15.0 10.0 3.3 - Spain 100 5.3 0.4 6.5 9.7 1.3 1.9 41.1 3.0 19.6 11.2 Italy 100 37.0 - 9.0 6.6 - - 25.2 - 6.0 16.2 Asia Pacific 100 2.5 9.7 15.7 13.7 6.8 5.3 31.7 7.0 4.3 3.3 Japan 100 1.5 6.4 20.5 19.7 6.9 7.2 18.6 11.5 4.9 2.8 Australia 100 6.3 22.3 4.5 1.7 9.2 3.8 48.2 0.4 2.0 1.6 Hong Kong 100 - - 10.4 12.2 - - 61.8 1.0 0.5 14.0 Singapore 100 - - 24.8 8.1 5.8 - 48.5 - 12.8 - EMERGING 100 12.7 12.0 6.8 8.0 8.5 1.2 25.0 13.5 8.4 3.9 EM Asia 100 9.0 8.8 8.3 9.2 6.4 1.1 25.6 21.7 7.3 2.8 China 100 17.7 4.3 6.6 5.0 5.6 0.9 37.1 6.2 13.9 2.7 Korea 100 2.8 11.3 13.1 18.1 5.1 0.7 12.9 34.0 0.7 1.3 Taiwan 100 0.9 14.0 3.9 4.2 2.9 - 15.5 53.0 5.7 - India 100 12.4 9.0 5.6 7.7 9.9 5.6 28.1 14.9 2.1 4.7 Malaysia 100 3.9 5.5 14.6 10.1 12.7 - 30.2 - 12.0 10.9 Indonesia 100 7.1 8.0 5.1 15.7 12.9 1.9 32.9 - 11.8 4.6 EMEA 100 25.1 13.4 3.6 8.1 6.2 2.1 27.2 0.2 11.0 3.1 South Africa 100 9.4 18.6 4.7 16.8 7.1 3.8 26.7 - 13.0 - Russia 100 57.7 11.1 - - 4.3 - 15.2 - 8.1 3.7 Turkey 100 4.7 3.0 9.1 4.2 14.6 - 53.5 - 10.9 - LATAM 100 12.8 19.6 5.3 4.6 16.4 0.5 21.8 2.2 9.4 7.5 Brazil 100 18.3 19.0 4.2 3.7 13.2 0.9 25.3 3.7 3.5 8.1 Mexico 100 - 17.7 4.5 7.7 30.5 - 9.2 - 30.4 - Chile 100 - 18.3 19.4 7.0 11.8 - 15.7 - 3.5 24.3 Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows which sectors contribute the most to the market cap of each region and country.

The US index is dominated by tech (same for Korea & Taiwan). In contrast, the weight of the financials in the US is relatively small.

Despite a massive de-rating, financials remains Europe’s largest sector. Many markets still have at least 1/3 of their weight in financials: Canada, Spain, Australia, Hong Kong, Singapore, China, Indonesia and Turkey.

Japanese equities do well when manufacturing cyclicals are doing well (industrials + discretionary = 40% of Japan vs. 21% of ACWI).

Resources and financials combined make up a hefty 50-80% of equity indices in Canada, Australia and the UK.

Relative to Developed Markets, Emerging Markets are more heavily weighted toward materials, financials and telcos. However, while healthcare is virtually non-existent in EM, it is almost 11% in DM (Chart)

Chart 3: Sector as % of total market cap for DM and EM

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Regional Contributions to Sectors Table 4: Regional weights as % of sector Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 DEVELOPED 87.4 85.5 79.3 91.7 90.3 90.2 98.5 83.6 86.6 77.8 86.7 N. America 51.8 58.5 33.1 48.6 54.5 50.0 59.7 42.0 74.2 36.4 49.1 US 47.5 47.9 22.5 46.0 53.0 48.7 58.8 34.6 73.9 33.2 47.7 Canada 4.3 10.6 10.6 2.6 1.5 1.3 0.9 7.5 0.3 3.2 1.4 Europe 22.6 24.1 28.9 23.7 19.0 32.2 30.3 20.6 5.3 29.7 26.2 UK 8.3 14.8 12.1 5.1 5.0 13.6 7.8 7.6 0.5 13.5 9.6 Switzerland 3.1 0.6 2.9 2.8 1.6 7.3 10.5 2.6 - 0.7 - Eurozone 9.3 6.9 12.1 11.7 10.8 10.7 8.9 8.3 3.8 12.4 16.5 France 3.2 3.7 3.2 4.7 4.0 3.5 4.4 2.1 0.8 3.9 3.9 Germany 2.8 - 6.1 3.7 4.9 1.1 3.9 2.2 1.9 2.4 5.7 Netherlands 0.9 0.2 1.0 1.3 0.5 3.1 - 0.7 0.7 0.6 - Spain 0.8 0.4 0.0 0.5 0.8 0.1 0.2 1.8 0.2 3.4 2.5 Italy 0.7 2.3 - 0.6 0.4 - - 0.9 - 0.9 3.1 Asia Pacific 12.7 2.9 16.9 19.4 16.8 7.9 7.0 20.9 7.0 11.5 11.5 Japan 7.6 1.0 6.6 15.1 14.3 4.8 5.7 7.3 6.9 7.8 5.7 Australia 3.3 1.9 10.2 1.4 0.6 2.8 1.3 8.3 0.1 1.4 1.4 Hong Kong 1.1 - - 1.1 1.3 - - 3.5 0.1 0.1 4.2 Singapore 0.7 - - 1.7 0.6 0.4 - 1.8 - 1.9 - EMERGING 12.6 14.5 20.7 8.3 9.7 9.8 1.5 16.4 13.4 22.2 13.3 EM Asia 7.6 6.1 9.1 6.1 6.7 4.4 0.9 10.0 12.9 11.5 5.7 China 2.2 3.6 1.3 1.4 1.1 1.1 0.2 4.3 1.1 6.5 1.7 Korea 1.9 0.5 3.0 2.5 3.4 0.9 0.1 1.3 5.2 0.3 0.7 Taiwan 1.4 0.1 2.6 0.5 0.5 0.4 - 1.1 5.7 1.6 - India 0.8 0.9 1.0 0.4 0.6 0.7 0.5 1.2 0.9 0.4 1.0 Malaysia 0.5 0.2 0.4 0.7 0.5 0.5 - 0.7 - 1.2 1.4 Indonesia 0.4 0.2 0.4 0.2 0.5 0.4 0.1 0.6 - 0.9 0.4 EMEA 2.3 5.2 4.2 0.8 1.8 1.3 0.5 3.2 0.0 5.3 1.9 South Africa 1.0 0.9 2.6 0.5 1.7 0.7 0.4 1.4 - 2.8 - Russia 0.8 3.9 1.1 - - 0.3 - 0.6 - 1.3 0.8 Turkey 0.2 0.1 0.1 0.2 0.1 0.3 - 0.6 - 0.5 - LATAM 2.8 3.2 7.4 1.4 1.2 4.1 0.1 3.1 0.5 5.4 5.6 Brazil 1.6 2.7 4.3 0.7 0.6 2.0 0.1 2.2 0.5 1.2 3.7 Mexico 0.6 - 1.5 0.3 0.5 1.8 - 0.3 - 4.0 - Chile 0.2 - 0.6 0.5 0.2 0.3 - 0.2 - 0.2 1.6 Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows the country weightings within the 10 GICS sectors (Global Industry Classification Standards).

The US equity market is dominant at 48% of ACWI (Chart). The next largest market is Europe ex-UK (14%), followed by EM (13%), UK (8%), Japan (8%), Asia ex-Japan (5%) and Canada (4%).

Both global tech and global healthcare are dominated by US companies. North American companies also dominate global energy.

On the other hand, global telcos and global materials have large representation from EM companies.

Note Japan’s market cap of just 7.6% of ACWI is close to 20-year low and an epic decline from its 45% peak in 1990.

Chart 4: US market cap as % of world

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2012 YTD Price Returns (%) Table 5: YTD Price Return (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 4.3 (4.0) (5.0) 2.7 7.9 7.9 8.5 6.7 9.1 4.6 (3.0) DEVELOPED 4.4 (3.6) (5.1) 2.4 8.4 7.9 8.4 6.9 9.3 3.9 (3.8) N. America 7.4 (1.7) (3.3) 5.4 10.8 8.4 9.9 9.5 12.3 17.2 3.7 US 8.4 (1.1) 2.8 5.4 10.9 8.4 10.0 11.2 12.5 18.7 4.0 Canada (2.6) (4.4) (14.1) 5.2 8.0 10.4 (0.2) 2.5 (20.1) 4.1 (3.5) Europe (1.1) (7.5) (4.3) (0.3) 8.0 6.7 5.9 (4.4) 1.6 (10.3) (11.2) UK 1.7 (7.2) (10.0) 9.4 10.3 7.3 (0.1) 7.9 (4.3) 6.0 8.6 Switzerland 1.7 22.9 9.8 (2.3) 6.9 5.7 2.6 (9.4) - 3.9 - Eurozone (6.0) (11.3) (1.8) (4.4) 6.1 6.1 10.1 (15.7) 4.5 (24.7) (20.2) France (3.2) (9.1) (3.9) (3.2) 3.7 0.8 9.5 (6.4) 4.6 (15.7) (17.7) Germany 1.7 - (1.0) (7.1) 8.3 13.0 11.5 (6.5) 12.9 (4.6) (1.4) Netherlands (0.7) (16.4) 7.0 6.4 (2.0) 0.4 - (10.4) 32.0 (35.4) - Spain (30.5) (51.9) (24.3) (25.3) 20.3 4.0 68.5 (32.2) 18.9 (38.9) (38.3) Italy (16.6) (1.3) - 1.2 (1.6) - - (30.6) - (27.6) (28.3) Asia Pacific 3.1 (7.0) (9.9) (1.2) 2.2 9.0 9.4 14.8 (10.6) 11.6 (13.7) Japan (1.1) (18.7) (14.0) (3.6) 1.8 9.1 6.2 11.2 (10.7) 7.1 (27.8) Australia 8.1 0.9 (7.1) (2.9) 11.1 14.0 25.0 16.0 (1.9) 22.4 11.9 Hong Kong 9.3 - - 5.8 4.1 - - 12.6 (14.6) 18.1 5.7 Singapore 20.5 - - 22.2 (0.5) (18.0) - 31.5 - 20.8 - EMERGING 3.1 (6.3) (4.8) 5.4 3.0 8.6 16.7 6.0 8.2 7.0 2.6 EM Asia 4.6 (1.7) (2.1) 1.6 0.9 6.4 13.4 6.6 7.9 7.6 12.7 China 2.1 (1.3) (12.0) 0.2 (11.8) (3.3) 13.6 3.1 25.0 6.8 15.2 Korea 6.8 9.8 (3.3) 1.1 5.1 7.1 15.0 (1.0) 18.2 (1.2) 4.0 Taiwan 2.2 (6.5) (0.2) 0.7 14.4 11.3 - 4.1 1.4 0.2 - India 6.4 3.5 9.0 7.5 9.3 19.0 13.6 18.9 (15.0) (15.9) 4.3 Malaysia 6.3 13.4 9.2 (0.4) (8.1) 1.6 - 6.6 - 18.7 22.3 Indonesia (1.4) (29.4) 1.7 (22.0) (9.4) 7.2 8.5 3.1 - 18.1 13.9 EMEA 5.0 (5.5) (9.3) 26.4 27.4 19.4 37.9 16.2 (5.3) 4.8 (16.2) South Africa 5.6 (12.8) (16.5) 19.0 28.7 6.6 43.2 17.5 - 3.5 - Russia (0.6) (4.9) 3.3 - - 55.1 - 7.0 - 5.9 (21.5) Turkey 28.8 2.8 9.5 39.4 25.0 33.8 - 35.1 - 13.2 - LATAM (2.1) (15.0) (5.2) 12.8 (9.7) 8.0 (11.8) (4.5) 19.3 8.1 1.0 Brazil (9.0) (20.1) (13.0) 12.3 (6.5) 1.5 (11.8) (10.3) 19.3 (11.1) (0.1) Mexico 14.9 - 15.6 38.3 (16.1) 17.2 - 46.2 - 16.0 - Chile 1.5 - 1.6 1.5 21.2 (4.2) - 0.4 - 2.2 2.2 Note: price return in USD terms Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows the 2012 year-to-date price returns across the MSCI ACWI.

ACWI is up 4.3% YTD or 7.1% annualized, in-line with its since-inception annualized total return of 7.2%

The worst performing country/sector YTD is Spanish financials (down 32.2%) and the best performing is Turkish financials (up 35.1% - Chart).

Potential long trades for contrarians: big underperformers such as Spanish and Italian financials, Eurozone telcos & utilities, Brazilian energy and South African materials.

Potential short trades for contrarians: big outperformers such as Mexican staples & telcos, US telcos, Korean tech, Singaporean financials, Turkish financials, Indian financials and South African financials.

Note the 2012 dispersion of returns is much larger in financials, telcos and within EM discretionary, compared with other sectors.

Chart 5: YTD price returns (%)

50

6070

80

90100

110

120130

140

1/12 3/12 5/12 7/12

Spanish financialsTurkish financials

Note: indexed to 100 on 12/30/11 Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream


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Overbought versus Oversold Table 6: % deviation from 200-day moving average Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI (0.1) (4.2) (9.2) (1.6) 0.2 5.1 5.4 (0.3) 0.5 4.3 (2.4) DEVELOPED 0.4 (2.9) (8.9) (1.5) 0.5 5.4 5.4 (0.1) 0.7 4.5 (2.5) N. America 2.2 (1.4) (6.9) 0.8 2.3 5.8 5.3 1.4 2.1 12.6 5.1 US 2.8 (0.9) (2.6) 0.7 2.4 5.8 5.4 2.0 2.3 13.2 5.3 Canada (4.0) (3.3) (16.3) 4.0 (0.3) 6.2 (4.4) (1.4) (25.7) 5.5 (3.0) Europe (3.4) (5.7) (9.3) (4.2) (1.2) 4.5 5.3 (9.5) (3.2) (7.1) (11.1) UK (0.6) (4.7) (15.1) 3.3 3.5 5.8 2.5 (1.6) (0.3) 5.3 2.9 Switzerland 0.1 1.5 3.1 (4.3) (3.7) 3.8 4.8 (13.7) - 2.8 - Eurozone (8.4) (9.3) (7.4) (7.8) (4.6) 3.0 6.6 (19.5) (4.2) (22.3) (19.8) France (5.6) (6.8) (5.9) (9.6) (4.7) (2.7) 7.8 (12.1) (6.2) (8.1) (14.3) Germany (5.7) - (8.4) (8.6) (6.0) 4.8 5.8 (15.7) (1.4) (4.0) (6.3) Netherlands (0.9) (16.1) (0.1) 6.2 (1.2) 2.3 - (17.2) 17.2 (35.7) - Spain (29.9) (57.7) (26.4) (25.0) 9.2 2.8 26.2 (31.2) 7.9 (46.9) (43.3) Italy (18.7) (4.3) - (6.4) (11.6) - - (36.7) - (33.6) (28.3) Asia Pacific (0.5) (9.6) (12.2) (3.9) (3.4) 6.1 8.6 6.4 (12.0) 10.4 (14.1) Japan (3.5) (18.8) (16.3) (5.2) (3.3) 6.2 7.2 2.7 (12.0) 8.5 (33.5) Australia 3.9 (4.7) (9.7) (6.1) 4.9 9.6 14.8 9.7 (2.0) 15.7 7.4 Hong Kong 1.8 - - (1.1) (8.0) - - 3.9 (21.0) 8.7 4.4 Singapore 7.3 - - 7.0 (4.8) (20.7) - 11.4 - 13.2 - EMERGING (3.1) (12.2) (10.5) (3.3) (2.8) 3.0 6.7 (1.3) (0.9) 3.7 (2.2) EM Asia (1.9) (8.1) (7.6) (5.8) (3.7) 2.1 5.1 (0.8) (1.0) 5.2 5.7 China (3.9) (7.3) (20.0) (6.0) (17.4) (6.1) 6.9 (3.6) 3.6 4.8 9.4 Korea (0.1) (3.2) (7.2) (6.7) 0.2 4.3 8.6 (7.9) 6.7 5.3 6.2 Taiwan (3.3) (3.4) (3.8) (3.2) 6.0 9.6 - 1.2 (6.4) 1.6 - India (5.5) (7.7) (7.9) (11.8) (7.8) 8.6 3.6 (0.5) (17.3) (23.2) (6.9) Malaysia 3.1 7.6 2.4 (2.5) (7.6) (0.2) - 4.2 - 11.2 11.1 Indonesia (1.1) (36.9) 3.5 (28.1) (5.0) 3.7 2.9 3.7 - 11.6 4.7 EMEA (2.1) (10.9) (12.3) 8.7 8.9 9.6 16.8 2.9 (9.7) 2.3 (20.9) South Africa 1.1 (11.8) (16.1) 6.3 9.5 4.5 19.7 5.9 - 5.4 - Russia (8.8) (11.5) (4.7) - - 20.3 - (8.2) - (0.5) (35.0) Turkey 9.6 (1.0) (6.7) 12.7 6.1 13.4 - 11.1 - 5.8 - LATAM (7.4) (21.8) (13.0) 0.8 (12.7) 1.9 (16.8) (7.4) 3.9 2.2 (4.0) Brazil (14.0) (26.9) (22.0) 1.7 (19.3) (3.5) (16.8) (11.3) 3.9 (14.5) (3.8) Mexico 6.5 - 3.4 14.4 (7.8) 8.6 - 15.4 - 7.4 - Chile (5.8) - (4.7) (9.0) 3.4 (7.7) - (6.1) - (0.8) (5.5) Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows the most overbought and oversold markets via the deviation from their 200-day moving average. Our view is that a market is overbought or oversold if it is trading at ± 15-20% of its 200dma.

Currently a net 31% of global equity markets (14 out of 45) trade above their 200dma and 50dma, the highest proportion since April 2012 (Chart).

ACWI is trading at a mere 0.1% below its 200dma, but this masks the great dispersion within global equity markets.

Potential long trades for contrarians: oversold sector/regions such as Eurozone telcos/utilities, Brazilian energy/materials and Canadian materials.

Potential short trades for contrarians: overbought sector/regions such as US telcos, Singaporean financials and Australian financials.

Chart 6: Net % of global equity markets trading above both their 200dma and 50dma

-100%-80%-60%-40%-20%

0%20%40%60%80%

100%

1/11 7/11 1/12 7/12

Latest1m av g



8

Forward Price-to-Earnings Ratios Table 7: 12-month forward Price-to-Earnings ratio Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 11.1 9.4 9.8 11.2 11.9 15.4 12.4 9.4 11.7 12.3 14.4 DEVELOPED 11.4 10.2 10.1 11.2 12.2 15.0 12.3 9.6 11.8 12.4 14.9 N. America 12.3 11.5 11.1 12.0 14.0 15.3 12.2 10.5 11.6 19.0 15.2 US 12.3 10.8 11.6 12.0 14.1 15.3 12.2 10.6 11.5 19.8 15.1 Canada 12.0 15.7 10.1 13.3 11.3 13.7 27.5 10.3 44.5 13.4 17.2 Europe 9.8 8.0 9.3 11.1 9.8 14.9 11.8 7.2 15.8 9.2 9.0 UK 9.7 8.1 7.5 11.5 11.5 13.8 10.4 8.4 20.8 10.8 11.9 Switzerland 12.0 - 14.1 13.0 12.8 17.7 11.4 7.6 - 10.9 - Eurozone 8.9 7.4 10.7 10.6 8.3 14.5 11.8 5.8 16.2 7.7 7.9 France 9.1 7.1 11.3 10.3 10.2 14.9 11.1 5.5 12.8 7.6 10.0 Germany 8.9 - 10.4 10.4 6.7 14.3 11.6 5.9 14.8 12.8 8.1 Netherlands 9.6 7.4 11.5 12.5 8.8 14.1 - 4.3 14.2 7.1 - Spain 7.6 6.9 13.3 11.4 19.7 - 20.6 6.8 12.3 6.4 6.4 Italy 6.8 8.0 - 7.9 7.3 - - 5.8 - 4.6 6.9 Asia Pacific 11.6 11.3 9.8 9.7 10.9 14.4 16.6 11.2 12.1 10.1 - Japan 11.1 7.9 9.9 8.9 10.5 14.4 16.3 9.8 12.0 9.0 - Australia 11.7 14.8 9.6 15.0 13.9 15.2 17.8 11.3 13.6 13.2 14.6 Hong Kong 13.8 - - 12.7 13.6 - - 13.8 16.9 10.9 15.5 Singapore 13.1 - - 13.1 14.0 10.6 - 13.0 - 14.5 - EMERGING 9.6 6.3 9.0 11.1 10.0 19.6 18.2 8.5 11.2 12.1 11.9 EM Asia 10.1 8.9 10.3 10.5 8.8 18.8 19.4 8.2 11.1 13.2 13.5 China 8.5 8.5 7.5 9.3 10.1 19.1 17.9 6.4 17.7 11.7 11.8 Korea 8.5 7.7 8.8 9.3 7.4 15.7 18.7 6.7 9.0 8.5 24.4 Taiwan 13.8 30.2 17.2 14.5 14.7 19.9 - 13.0 12.6 17.3 - India 12.7 11.1 9.0 12.5 8.9 28.1 20.5 12.7 14.1 15.3 12.2 Malaysia 14.5 19.1 13.7 14.3 12.2 17.1 - 12.7 - 20.6 14.6 Indonesia 12.9 8.4 14.5 12.8 13.3 17.7 - 12.3 - 13.3 12.7 EMEA 7.4 4.2 8.7 10.3 15.0 18.3 16.5 8.5 9.3 10.2 9.6 South Africa 11.1 7.4 9.0 11.2 15.8 18.1 17.1 10.8 - 11.4 - Russia 4.5 3.7 9.2 - - - - 5.1 - 8.9 11.1 Turkey 9.3 8.0 7.0 9.0 8.0 23.8 - 8.3 - 10.0 - LATAM 10.6 7.6 8.0 18.0 14.1 21.1 - 9.7 15.9 11.8 11.5 Brazil 9.0 7.7 5.9 18.8 10.6 19.7 - 8.9 15.9 13.0 10.3 Mexico 16.5 - 17.7 15.6 18.8 23.6 - 15.4 - 12.2 - Chile 14.6 - 17.5 19.7 19.8 16.2 - 11.4 - 10.4 13.1 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the current 12-month forward Price-to-Earnings ratio by sector and country for the MSCI ACWI based on IBES EPS consensus forecasts.

Chart shows that ACWI is currently trading at 11.1x forward earnings, 1.5 standard deviations below its 12-year average.

Potential long positions for value-investors: sectors trading at a +20% discount to their global sector peer group and less than 8 times forward earnings such as UK materials, EM energy, French energy, Eurozone financials, Chinese financials, Korean financials, Russia and Italy.

Potential short positions for value-investors: sectors trading at a +20% premium to their global sector peer group and above 20 times forward earnings such as LatAm staples and US telcos.

Chart 7: MSCI ACWI trailing P/E ratio

11.1x

Av g

+1stdev

-1stdev

7

911

13

1517

19

2123

25

'90 '94 '98 '02 '06 '10 '14



9

Trailing Price-to-Earnings Ratios Table 8: 12-month trailing Price-to-Earnings ratio Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 13.4 9.1 11.4 13.9 15.6 18.3 16.1 11.5 15.2 15.6 19.9 DEVELOPED 13.8 9.7 11.6 13.8 16.2 17.8 16.0 11.9 14.9 16.3 20.9 N. America 14.4 10.8 13.9 14.3 14.8 17.6 16.2 12.9 14.6 46.9 15.4 US 14.4 10.3 13.7 14.3 14.7 17.6 16.1 12.8 14.6 59.2 15.3 Canada 14.4 13.9 14.4 14.8 22.5 15.7 77.8 13.1 25.3 14.7 18.9 Europe 11.6 7.7 10.0 14.8 10.8 18.2 14.9 10.1 15.6 10.1 11.3 UK 10.2 7.0 6.9 13.2 13.2 15.2 10.2 12.3 29.7 11.8 13.0 Switzerland 16.2 - 25.9 15.6 15.5 21.1 15.8 9.8 - 29.2 - Eurozone 11.5 8.5 14.0 15.8 8.9 21.7 18.1 8.5 14.2 8.2 10.6 France 11.1 7.5 15.8 13.0 11.6 43.9 15.8 6.6 9.6 7.4 12.1 Germany 11.7 - 13.4 13.8 6.9 18.6 18.6 9.0 17.8 11.3 24.7 Netherlands 16.0 - 13.9 - 15.6 16.5 - 7.2 15.6 7.2 - Spain 8.3 6.6 55.9 6.6 24.6 23.7 89.5 7.2 15.9 8.7 6.7 Italy 9.8 9.6 - - 6.6 - - 15.7 - 4.3 6.8 Asia Pacific 16.2 11.3 11.2 11.8 - 17.2 22.6 12.2 17.8 11.2 - Japan 19.7 6.9 18.4 11.6 - 17.9 22.5 11.0 17.8 10.3 - Australia 13.0 16.8 8.9 28.5 19.7 18.3 22.9 13.1 17.7 14.1 22.3 Hong Kong 12.5 - - 6.5 18.6 - - 12.7 14.7 13.6 17.8 Singapore 13.2 - - 14.0 15.8 8.6 - 12.9 - 14.5 - EMERGING 11.4 6.6 10.5 15.2 11.7 24.9 23.7 9.8 17.1 13.7 15.3 EM Asia 12.3 9.3 12.7 14.0 9.9 22.2 25.3 9.1 17.0 14.7 33.7 China 9.6 8.9 7.7 11.7 11.7 24.3 20.6 7.3 21.0 12.7 17.7 Korea 10.7 6.5 10.8 11.8 8.1 17.8 23.0 6.4 14.6 10.9 - Taiwan 19.6 76.7 21.1 - 18.7 23.9 - 14.7 19.4 18.8 - India 14.7 11.9 12.1 15.3 8.4 34.5 29.6 14.2 16.4 24.8 15.2 Malaysia 17.1 24.0 20.3 18.3 14.2 19.0 - 14.0 - 21.5 20.8 Indonesia 15.1 9.2 17.9 14.4 15.6 21.8 23.0 14.1 - 16.0 14.4 EMEA 8.2 4.3 8.8 14.5 21.6 26.5 20.0 10.4 8.6 13.5 7.4 South Africa 14.6 8.3 11.9 15.1 23.4 25.1 22.8 14.9 - 14.3 - Russia 4.9 3.7 9.3 - - 30.5 - 6.2 - 11.0 6.9 Turkey 10.5 8.0 7.7 11.3 9.0 34.5 - 9.1 - 11.2 - LATAM 13.0 10.0 9.6 25.0 19.0 27.9 31.9 11.6 18.9 12.2 12.9 Brazil 10.7 9.7 6.8 29.7 15.6 28.7 31.9 10.3 18.9 7.9 11.3 Mexico 22.5 - 70.4 19.5 22.5 28.7 - 19.8 - 14.6 - Chile 17.4 - 17.1 23.5 27.3 19.0 - 13.4 - 12.0 16.2 Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows the current 12-month trailing price-to-earnings ratio by sector and country for the MSCI ACWI.

Chart shows that ACWI is currently trading at a trailing P/E of 13.4X, more than 1 standard deviation below its 10-year average.

Sectors trading at a 20% discount or more to their global peer group and less than 9.0 times trailing earnings: French financials & energy, UK energy & materials, Australian materials, Brazilian materials, Chinese financials, Korean financials and Russian energy.

Sectors trading at a 20% premium to their global peer group and more than 20 times earnings: global utilities, US telcos, French staples, EM staples, Mexico and Japan.

Chart 8: MSCI ACWI forward P/E ratio

13.4x

Av g

+1stdev

-1stdev

8

12

16

20

24

28

32

36

'96 '99 '02 '05 '08 '11 '14



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Price-to-Earnings Ratios by Z-Score Table 9: 12-month trailing Price-to-Earnings ratio by Z-Score (relative to 10-year average) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI (1.1) (1.4) (1.0) (1.1) (0.7) 0.1 (0.8) (0.1) 0.1 (0.0) 1.9 DEVELOPED (1.0) (1.3) (1.0) (1.1) (0.6) (0.1) (0.8) 0.2 0.2 0.1 2.0 N. America (1.2) (1.0) (0.9) (1.1) (1.1) (0.0) (0.7) 0.2 (0.1) 2.5 0.3 US (1.2) (1.0) (0.9) (1.1) (1.1) (0.0) (0.7) 0.1 (0.5) 3.1 0.3 Canada (1.0) (0.5) (0.2) (0.5) 0.1 (1.0) 0.2 (0.8) 0.2 (0.5) (0.1) Europe (1.0) (1.5) (1.1) (0.7) (1.0) 0.5 (0.8) (0.7) (0.1) 0.0 (0.7) UK (1.2) (1.2) (1.7) (0.4) (0.5) (0.2) (1.3) (0.1) 0.9 (0.3) 0.1 Switzerland (0.7) neg 0.7 (0.2) (0.6) 0.5 (0.9) (0.2) - 2.8 - Eurozone (0.9) (1.3) (0.3) (0.5) (0.6) 1.2 (0.2) (1.0) (0.2) 0.0 (0.8) France (0.7) (1.5) (0.0) (0.3) 0.1 3.9 (0.2) (1.1) 0.2 (0.3) (0.2) Germany (0.7) - (0.2) (0.2) (0.3) (0.3) (0.5) (0.1) (0.2) (0.5) 2.9 Netherlands (0.1) neg (0.2) neg 0.0 0.1 - 0.1 0.1 (0.1) - Spain (1.4) (1.0) 1.0 (1.5) 0.1 0.2 0.4 (1.2) (0.3) (1.1) (1.9) Italy (1.0) (0.6) - neg 0.1 - - (0.3) - (1.1) (1.4) Asia Pacific (0.1) 0.2 (0.3) (0.6) 3.3 (1.0) 0.0 (0.0) (0.2) 0.1 neg Japan 0.2 (0.3) 0.2 0.1 - (0.9) (0.0) 0.1 (0.2) (0.1) neg Australia (1.3) (0.6) (1.7) 0.1 (0.4) (0.7) 0.2 (0.7) (0.5) 0.1 0.1 Hong Kong (1.3) - - (1.7) (0.9) - - (1.0) (0.5) (0.2) 1.6 Singapore (0.7) - - (0.2) (0.3) (0.7) - (0.7) - 0.1 - EMERGING (1.0) (1.4) (0.7) (0.3) (1.0) 1.8 0.1 (1.8) (0.2) (0.5) 0.2 EM Asia (0.8) (1.0) 0.2 (0.4) (1.0) 1.3 0.2 (1.5) (0.2) 0.4 0.3 China (1.3) (1.1) (0.5) (0.7) (1.0) 0.8 0.2 (0.4) (0.3) (0.4) (0.1) Korea (0.5) (0.4) 0.4 (0.2) (1.0) 0.6 1.1 (0.3) 0.1 0.2 neg Taiwan (0.3) 1.3 (0.1) neg 0.3 0.4 - (0.2) (0.0) 1.8 - India (0.8) (0.8) 0.1 (1.0) (1.9) 1.8 0.2 (0.7) (1.3) 1.2 0.0 Malaysia 0.3 1.0 0.0 (0.1) (0.6) 0.4 - (0.8) - 0.8 0.6 Indonesia 0.3 (0.5) 0.5 (0.1) 0.8 0.7 1.4 (0.0) - 0.5 (0.9) EMEA (1.6) (1.6) (1.0) (0.1) 0.3 2.9 (0.4) (0.6) (0.3) (0.6) (1.3) South Africa (0.0) (0.9) (0.7) 1.0 0.5 2.3 0.8 1.5 - (0.2) - Russia (1.4) (1.4) (0.1) - - (0.1) - (0.3) - (0.5) 0.2 Turkey 0.0 (0.3) (0.1) (0.1) (0.5) 0.7 - (0.1) - (0.2) - LATAM (0.4) 0.1 (0.8) 0.2 (0.4) 1.4 0.3 (0.4) 0.9 (1.0) (0.1) Brazil (0.5) 0.1 (1.1) (0.1) (0.4) 0.1 0.3 (0.5) 0.9 (0.3) 0.1 Mexico 1.7 - 0.2 0.3 0.6 2.1 - 1.7 - (0.2) - Chile (0.9) - (0.7) 0.5 0.0 (1.0) - (0.6) - (0.5) (0.2) Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

The table shows the number of standard deviations each index is trading away from its 10-year price-to-earnings average. The larger the number, the more expensive the market is relative to history, and vice-versa, e.g. ACWI is currently trading 1.1 standard deviations cheap relative to the past 10 years.

Potential long positions for value-investors are French energy, UK materials, Australian materials and EM financials (Chart). All are trading at least 1.5stdev below its own 10-year average.

Potential short positions for value-investors are DM utilities, EM staples, French staples and Mexico. All are trading at least 1.5stdev above its own 10-year average.

Chart 9: P/E ratio by z-score (higher = more expensive; lower = less expensive)

P/E (z-score)

-3

-2

-1

0

1

2

3

'06 '07 '08 '09 '10 '11 '12 '13

Eurozone staples

EM financials



11

Price-to-Book Ratios Table 10: 12-month trailing Price-to-Book ratio Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 1.7 1.5 1.5 1.9 2.0 3.2 2.7 1.0 2.6 1.8 1.2 DEVELOPED 1.7 1.6 1.6 1.9 2.0 3.2 2.7 0.9 2.7 1.7 1.3 N. America 2.1 1.8 2.0 2.7 3.1 3.7 2.8 1.1 3.3 2.3 1.6 US 2.2 1.8 2.4 2.7 3.2 3.8 2.7 1.0 3.3 2.3 1.6 Canada 1.7 1.7 1.5 3.4 1.7 2.1 4.5 1.6 0.9 3.0 1.7 Europe 1.4 1.3 1.4 2.1 1.8 3.2 3.2 0.6 2.2 1.4 1.1 UK 1.6 1.4 1.4 3.1 2.5 3.6 4.8 0.8 4.3 1.4 2.9 Switzerland 2.1 1.1 2.4 3.1 2.7 3.4 3.5 0.8 - 4.7 - Eurozone 1.1 1.2 1.2 1.6 1.4 2.7 2.0 0.5 2.3 1.2 0.8 France 1.1 1.3 1.0 1.5 1.3 2.3 1.7 0.5 1.3 1.0 0.7 Germany 1.3 - 1.6 1.7 1.2 2.4 2.2 0.6 3.9 1.1 0.9 Netherlands 1.3 2.1 1.1 1.5 3.8 3.3 - 0.4 5.3 3.0 - Spain 0.8 0.6 1.0 1.3 6.9 22.7 4.5 0.5 5.3 1.8 0.6 Italy 0.6 1.4 - 1.5 1.0 - - 0.3 - 0.5 0.7 Asia Pacific 1.1 1.0 1.2 1.0 1.1 1.6 1.6 1.0 1.0 1.4 0.9 Japan 0.9 0.6 0.7 1.0 1.0 1.4 1.4 0.7 1.0 1.1 0.6 Australia 1.7 1.5 2.2 1.7 1.1 2.3 4.6 1.5 3.8 4.3 1.4 Hong Kong 1.3 - - 0.9 3.3 - - 1.1 2.0 3.6 2.4 Singapore 1.5 - - 1.6 2.4 1.1 - 1.3 - 2.6 - EMERGING 1.6 1.0 1.4 1.5 2.1 3.8 3.3 1.4 2.0 2.1 1.1 EM Asia 1.6 1.6 1.3 1.3 1.8 3.6 3.3 1.3 2.0 2.1 1.2 China 1.5 1.6 1.2 1.1 2.1 3.3 2.3 1.3 4.2 1.9 1.6 Korea 1.2 1.1 1.0 1.1 1.5 2.2 2.8 0.7 1.7 0.8 0.3 Taiwan 1.7 3.6 1.6 1.4 2.1 3.8 - 1.1 1.8 2.5 - India 2.4 1.6 1.4 2.3 2.8 10.6 4.0 2.2 4.3 1.3 1.6 Malaysia 2.2 3.2 2.6 1.7 1.8 3.1 - 2.1 - 4.5 1.6 Indonesia 3.6 2.7 3.9 3.1 4.4 5.1 5.4 3.1 - 3.2 5.0 EMEA 1.3 0.7 1.8 2.0 3.5 5.7 3.5 1.5 0.7 2.5 0.6 South Africa 2.4 1.9 1.9 2.2 3.8 6.8 5.2 1.8 - 3.5 - Russia 0.8 0.6 2.0 - - 6.0 - 1.3 - 2.1 0.4 Turkey 1.6 2.1 1.3 1.4 1.6 5.4 - 1.3 - 2.4 - LATAM 1.7 1.0 1.4 3.0 2.6 3.7 2.7 1.7 14.9 1.7 1.3 Brazil 1.3 0.9 1.2 3.6 2.1 3.8 2.7 1.6 14.9 0.5 1.2 Mexico 3.1 - 1.8 2.3 3.2 4.1 - 2.4 - 4.7 - Chile 2.3 - 2.1 2.7 3.9 2.2 - 2.9 - 2.7 1.7 Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows price-to-book ratios by sector & country. ACWI is currently trading at 1.7X P/B, a 33% discount to its long-term average of 2.5X.

Potential long positions for value-investors: Eurozone financials & utilities, Brazilian energy, Russian energy, Japan industrials, discretionary & materials, Spain and Italy. All are trading 20% discount to its global sector benchmark and below book value.

Potential short positions for value-investors: US discretionary, Mexican telcos & staples, UK industrials and Indonesia. All are trading 20% premium to its global sector benchmark and more than 3X book value.

Chart 10: P/B ratio - EM staples vs Eurozone energy

P/B

0.50.91.31.72.12.52.93.33.74.14.5

'95 '98 '01 '04 '07 '10 '13

EM staples

Eurozone energy



12

Price-to-Book Ratios by Z-Score Table 11: 12-month trailing Price-to-Book ratio by Z-Score (relative to 10-year average) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI (1.3) (1.5) (1.3) (1.0) 0.1 (0.5) (0.9) (1.4) (1.1) (0.2) (1.2) DEVELOPED (1.2) (1.4) (1.3) (1.0) 0.1 (0.6) (0.9) (1.4) (1.1) (0.1) (1.2) N. America (1.0) (1.3) (1.2) (0.4) 1.9 (0.5) (0.8) (1.2) (1.0) 0.9 (0.4) US (0.9) (1.4) (0.7) (0.5) 1.9 (0.5) (0.9) (1.2) (0.9) 0.7 (0.3) Canada (1.1) (1.0) (1.3) 1.8 (0.0) (0.9) 2.3 (1.2) (1.6) 0.7 (0.6) Europe (1.3) (1.6) (1.1) (0.4) (0.4) (0.4) (0.8) (1.6) (1.1) (0.6) (1.7) UK (1.1) (1.5) (1.4) 0.2 0.2 0.0 (1.1) (1.5) 0.7 1.4 0.3 Switzerland (1.1) 0.5 1.0 (0.9) 0.1 (0.3) (0.5) (1.6) - 1.2 - Eurozone (1.5) (1.7) (1.0) (0.7) (0.8) (0.8) (0.6) (1.6) (1.2) (2.2) (1.9) France (1.5) (1.6) (1.4) (0.6) (0.8) (1.1) (0.6) (1.6) (0.8) (1.1) (1.6) Germany (1.0) - (0.3) (0.8) (0.3) (0.6) (0.7) (1.6) (0.6) (0.7) (1.7) Netherlands (1.7) (0.9) (0.9) (0.7) 0.6 (1.1) - (1.7) 1.3 (0.8) - Spain (1.9) (2.0) (2.0) (1.6) 1.3 0.4 (0.5) (1.8) 0.4 (2.0) (1.8) Italy (1.6) (1.5) - (0.4) (1.4) - - (1.6) - (1.0) (2.0) Asia Pacific (1.4) (1.4) (1.5) (1.4) (1.3) (0.8) (1.1) (1.2) (1.8) (1.0) (2.2) Japan (1.5) (1.5) (1.6) (1.4) (1.4) (0.8) (1.3) (1.2) (1.8) (1.1) (2.6) Australia (1.1) (1.3) (1.2) (0.9) (1.2) (0.7) 0.9 (1.0) (0.5) 1.3 (0.3) Hong Kong (0.9) - - (1.2) (0.5) - - (0.8) (1.0) 0.2 (0.3) Singapore (0.7) - - (0.8) (0.4) (0.6) - (0.6) - 0.9 - EMERGING (1.1) (1.5) (1.2) (0.6) (0.0) 1.5 (0.6) (1.1) (0.8) (0.8) (0.0) EM Asia (1.0) (1.0) (0.9) (0.7) (0.1) 0.9 (1.1) (1.3) (0.9) (0.4) 0.1 China (1.0) (0.9) (0.9) (0.9) (0.3) 0.5 (0.1) (0.9) 0.3 (0.8) (0.5) Korea (1.2) (0.9) (0.8) (0.5) (0.1) (0.1) 0.8 (1.6) (0.6) (1.4) (1.4) Taiwan (0.9) 0.0 (0.6) 0.5 0.8 1.7 - (1.4) (1.0) 1.5 - India (1.1) (1.1) (1.2) (1.0) (0.9) 1.1 (1.5) (0.8) (1.2) (0.3) (0.7) Malaysia 0.6 1.4 1.9 (0.9) (0.7) 0.4 - 0.6 - 2.5 (0.7) Indonesia 0.1 (0.6) 0.7 0.0 1.1 0.9 1.3 0.4 - (0.5) (0.8) EMEA (1.2) (1.4) (1.0) (0.2) 1.4 1.6 (0.0) (0.7) (1.6) (0.3) (1.1) South Africa (0.1) (1.0) (1.0) (0.2) 1.2 1.2 0.1 (0.1) - 0.3 - Russia (1.2) (1.3) (0.2) - - 0.6 - (0.9) - (0.6) (1.2) Turkey (0.5) 0.1 0.4 (0.3) 0.2 1.0 - (0.8) - (0.6) - LATAM (0.9) (1.5) (1.2) 1.5 (0.4) 1.9 (1.4) (0.9) 0.1 (1.6) 1.5 Brazil (1.1) (1.7) (1.6) 0.1 (0.3) 0.8 (1.5) (1.0) 0.1 (2.8) 1.9 Mexico 0.8 - 0.5 2.5 0.2 1.9 - 0.1 - 0.0 - Chile 0.5 - 0.5 0.7 0.3 (0.4) - 0.1 - 1.2 (0.0) Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

The table shows the number of standard deviations each country/sector is trading away from its 10 year price-to-book average. The larger the number, the more expensive the market is relative to history, and vice versa. ACWI is currently trading 1.3 standard deviations below its 10-year average

Potential long positions for value-investors: Eurozone financials & utilities, Japanese materials, Brazilian energy and Korean financials. All are trading at least 1.5stdev below its own 10-year average.

Potential short positions for value-investors: US discretionary (Chart), EM staples and UK telcos. All are trading at least 1stdev above its own 10-year average.

Chart 11: P/B ratio by z-score (higher = more expensive; lower = less expensive)

P/B (z-score)

-3

-2

-1

0

1

2

3

'06 '07 '08 '09 '10 '11 '12 '13

US discretionary

French financials



13

Dividend Yields Table 12: 12-month trailing dividend yield (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 2.9 3.1 3.1 2.8 2.0 2.8 2.7 3.6 1.5 5.3 4.6 DEVELOPED 2.9 3.0 2.7 2.8 2.1 2.9 2.7 3.6 1.3 5.7 4.8 N. America 2.3 2.4 2.2 2.4 1.6 2.8 2.2 2.7 1.1 4.4 3.9 US 2.2 2.2 2.5 2.4 1.6 2.9 2.2 2.4 1.2 4.4 3.9 Canada 3.1 3.3 1.5 1.9 3.1 1.8 - 4.3 - 4.5 4.3 Europe 4.1 4.5 3.2 3.5 3.2 3.0 3.5 4.8 2.4 7.9 6.9 UK 3.9 4.0 3.1 2.8 3.2 3.4 4.7 4.4 1.7 4.9 5.5 Switzerland 3.5 5.0 2.2 3.3 1.2 3.2 3.9 4.4 - 8.0 - Eurozone 4.6 5.5 3.5 3.9 3.4 2.5 2.9 5.5 2.2 11.6 7.7 France 4.3 5.6 3.1 3.6 2.9 2.5 3.7 4.7 2.1 9.5 8.2 Germany 3.8 - 3.4 4.1 3.8 2.0 2.1 4.9 1.6 7.9 6.2 Netherlands 3.1 2.0 3.5 3.7 4.9 3.2 - 1.6 1.0 11.0 - Spain 10.4 9.3 4.4 6.7 1.9 2.9 - 11.5 2.2 18.4 7.5 Italy 4.6 5.0 - 3.3 2.3 - - 1.0 - 8.0 9.8 Asia Pacific 3.3 3.3 3.0 2.9 2.2 3.1 3.3 4.3 2.6 3.8 4.0 Japan 2.7 3.2 2.5 2.7 2.0 2.3 3.4 3.0 2.5 2.8 4.5 Australia 4.9 3.3 3.3 3.9 5.7 4.6 2.6 6.1 3.7 7.1 5.1 Hong Kong 3.1 - - 3.3 2.9 - - 3.0 2.0 5.3 3.2 Singapore 3.3 - - 3.3 2.5 2.3 - 3.2 - 4.5 - EMERGING 3.0 3.7 4.4 2.2 1.6 1.9 1.1 3.3 2.2 3.9 3.3 EM Asia 2.6 3.4 3.0 2.1 1.6 1.9 0.9 3.2 2.2 3.8 1.7 China 3.4 3.9 3.4 3.1 2.1 1.6 1.2 4.2 0.9 3.4 1.7 Korea 1.3 2.4 1.8 1.2 0.9 1.5 0.4 3.0 0.5 4.7 0.2 Taiwan 3.8 2.3 4.6 3.2 2.9 2.3 - 2.2 4.1 5.5 - India 1.5 1.5 1.5 1.4 2.1 1.5 0.8 1.4 1.5 0.3 1.8 Malaysia 3.0 0.8 2.7 3.1 2.0 2.9 - 3.5 - 4.5 1.4 Indonesia 2.6 5.1 2.5 2.7 2.8 2.4 2.5 1.8 - 3.3 3.6 EMEA 3.6 4.1 4.4 3.0 1.9 1.6 1.6 3.5 4.9 5.2 3.4 South Africa 3.2 2.0 2.9 3.0 1.7 2.4 1.6 4.4 - 5.2 - Russia 3.8 4.6 3.5 - - 0.1 - 2.4 - 4.0 0.4 Turkey 2.7 10.1 3.7 1.6 5.8 1.6 - 2.2 - 2.5 - LATAM 3.7 3.9 6.1 1.9 1.5 1.9 0.7 3.6 4.3 2.8 5.0 Brazil 4.8 3.2 9.1 2.1 2.5 2.3 0.7 4.2 4.3 8.2 6.0 Mexico 1.3 - 1.6 1.9 0.6 1.4 - 0.9 - 1.1 - Chile 2.3 - 1.5 1.6 0.5 1.6 - 4.5 - 2.5 2.9 Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows dividend yields of the MSCI ACWI by sector and country. ACWI currently has a 2.9% dividend yield, close to a 3-year high, and 35% above its long-term average.

The highest global dividend yields are in the telco (5.3%), utility (4.6%) and financial (3.6%) sectors. Dividend yields are lowest in the tech (1.5%) and consumer discretionary (2.0%) sectors (Chart).

Potential long positions for income-investors: sector/regions with dividend yields that exceed Moody’s A-rated corporate bond yield (3.89%) and are expected to grow dividends over the next 12 months such as global telcos & utilities, Europe, Australia, Brazil, German industrials, Taiwanese tech and Chinese financials.

Chart 12: Dividend yield by global sector

0% 1% 2% 3% 4% 5% 6%

TechDiscr

PharmaIndusStap

ACWIMat

EnerFinan

UtilTelco



14

Dividend Growth Table 13: 12m fwd dividend growth forecast (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 6.7 6.2 6.4 7.8 12.9 9.5 6.9 3.3 20.5 0.4 1.8 DEVELOPED 6.6 6.5 9.0 7.8 12.8 9.0 6.8 1.9 24.2 -0.3 1.5 N. America 10.9 7.4 12.0 9.6 11.1 9.0 7.3 12.6 31.6 1.6 3.8 US 11.7 9.3 10.7 9.6 11.5 9.0 7.3 15.6 31.6 1.1 3.9 Canada 5.2 1.7 16.9 8.5 5.1 5.9 0.0 5.1 0.0 6.4 2.9 Europe 6.5 5.7 6.9 5.9 12.3 8.9 6.8 11.5 -1.9 -2.4 0.9 UK 7.5 8.8 6.5 8.4 10.1 7.2 5.3 9.9 11.1 4.0 6.0 Switzerland 7.9 -37.5 11.8 7.6 16.0 7.3 6.7 13.6 - 2.2 - Eurozone 5.1 3.5 6.5 5.8 13.8 13.3 7.0 12.0 -7.8 -8.7 -1.2 France 6.6 3.1 8.7 8.8 13.4 9.9 6.3 19.4 4.6 -9.4 0.7 Germany 5.9 - 7.0 6.9 11.6 9.6 8.9 3.9 -2.8 -1.0 3.6 Netherlands 15.7 41.5 4.8 5.2 19.3 9.0 - 89.5 6.4 -15.3 - Spain -4.9 -5.6 - -16.9 17.1 - - -1.6 15.0 -13.8 1.4 Italy 8.8 3.4 - 18.9 35.5 - - 46.9 - 5.5 -13.2 Asia Pacific -3.7 3.8 9.2 7.0 17.4 9.4 4.3 -17.1 7.6 3.7 -5.7 Japan -12.4 0.0 9.2 6.0 20.8 10.1 3.3 -50.2 7.4 5.2 -14.1 Australia 6.3 5.7 9.3 17.1 -8.4 9.1 10.1 5.2 - -0.3 5.0 Hong Kong 5.0 - - 3.1 16.3 - - 3.3 - - 2.5 Singapore 5.0 - - 7.3 6.2 5.1 - 2.9 - 6.3 - EMERGING 7.1 4.6 -0.7 7.6 13.9 16.5 16.4 11.8 6.6 4.0 4.1 EM Asia 7.9 6.2 5.0 4.3 14.4 15.1 3.1 8.9 5.9 6.4 16.2 China 7.5 5.1 7.9 4.9 8.0 20.4 -7.5 8.0 11.8 4.5 26.0 Korea 6.0 2.2 0.8 -0.3 7.8 4.0 - 4.0 20.7 - 123.0 Taiwan 4.9 - 3.4 12.3 12.3 12.1 - 6.7 4.0 3.4 - India 11.1 6.1 8.4 6.9 11.7 21.0 7.8 18.5 2.1 - 6.5 Malaysia 8.4 - 11.6 3.2 5.5 10.3 - 7.8 - 9.8 13.9 Indonesia 18.2 1.4 8.4 - 53.0 17.7 - 17.4 - 17.7 - EMEA 13.3 4.8 18.2 12.9 19.0 21.1 14.7 19.7 - 16.5 -6.0 South Africa 16.1 4.7 25.9 16.0 18.4 18.4 17.5 10.5 - 23.8 - Russia 11.8 2.8 42.4 - - 0.0 - 58.0 - 10.3 -5.6 Turkey 13.2 - - - - 21.5 - 17.5 - 15.6 - LATAM 0.3 1.6 -11.3 19.9 2.1 16.7 - 12.7 15.5 -16.0 1.4 Brazil 3.6 -5.0 -10.3 29.9 9.2 23.6 - 12.5 15.5 35.2 -0.5 Mexico -23.6 - -19.2 8.7 -11.1 6.5 - 27.7 - -47.5 - Chile 2.8 - -21.1 5.4 - 2.5 - 2.1 - - 7.2 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the 12m forward dividend growth forecast of the MSCI ACWI by sector and country. Consensus currently projects 6.7% global dividend growth over the next 12 months, slightly above the 15-year average growth rate of 5.7%.

Dividend growth is projected to be the strongest in Emerging Europe, the US and EM Asia. Asia Pacific is the only region projected to experience dividend contraction (Chart).

Potential long positions for income-investors: EMEA financials, Chinese financials, Swiss financials, UK energy and Russia. All have dividend yields of +3.5% and expected to grow more than 8% over the next 12 months.

Potential short positions for income-investors: sector/regions that boast high trailing dividend yields but are expected to see sharp declines over the next 12 months: Eurozone telcos, Brazilian materials, Japanese utilities and Spain.

Chart 13: Dividend growth by region

-5% 0% 5% 10% 15%

APAC

LatAm

Eurozone

ACWI

UK

EM Asia

US

EMEA

Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream


15

Return on Equity Table 14: Return on equity (%)* Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 12.3 16.1 13.4 13.3 13.1 17.6 16.9 8.3 17.0 11.5 6.2 DEVELOPED 12.1 16.3 13.4 13.8 12.6 17.8 16.9 7.6 18.1 10.6 6.1 N. America 14.7 16.3 14.8 18.9 20.9 21.2 17.0 8.2 22.3 5.0 10.5 US 15.0 17.4 17.7 18.7 21.6 21.6 17.1 7.7 22.6 3.9 10.5 Canada 11.9 12.0 10.8 22.7 7.5 13.3 5.7 12.0 3.7 20.3 8.9 Europe 12.0 17.6 13.9 13.8 16.4 17.4 21.6 6.3 14.0 13.8 9.3 UK 15.9 19.9 21.1 23.3 19.1 23.8 47.5 6.5 14.4 12.1 22.3 Switzerland 13.1 (2.7) 9.1 19.8 17.2 16.2 21.9 8.3 - 16.0 - Eurozone 9.4 14.4 8.7 10.3 15.4 12.3 10.9 5.6 16.4 14.7 7.3 France 9.7 17.1 6.3 11.5 11.5 5.3 10.8 7.0 13.5 14.0 5.5 Germany 10.8 - 11.8 12.4 17.3 13.0 12.0 6.8 22.2 9.7 3.9 Netherlands 8.0 (5.7) 7.9 (2.2) 24.7 19.8 - 4.9 33.8 41.4 - Spain 9.9 8.8 1.9 19.8 28.0 95.8 5.0 7.5 33.4 20.9 9.7 Italy 6.6 14.0 - (1.0) 14.7 - - 2.0 - 11.6 10.4 Asia Pacific 6.8 8.8 11.0 8.9 1.0 9.5 7.2 8.2 5.8 12.8 (10.3) Japan 4.6 8.5 4.0 8.5 0.1 8.0 6.3 6.2 5.7 11.0 (16.2) Australia 13.3 9.1 24.4 5.9 5.4 12.8 20.0 11.3 21.2 30.8 6.4 Hong Kong 10.1 - - 13.5 17.8 - - 8.5 13.7 26.3 13.5 Singapore 11.4 - - 11.6 15.5 12.5 - 9.9 - 18.0 - EMERGING 13.7 15.2 13.5 9.6 17.8 15.3 13.8 14.4 11.8 15.1 7.0 EM Asia 13.1 17.2 10.4 9.0 18.5 16.0 13.0 14.3 11.5 14.5 3.4 China 16.0 17.7 15.0 9.1 18.3 13.7 11.3 17.4 19.9 14.8 9.3 Korea 11.2 17.1 9.3 9.2 18.1 12.6 12.1 11.2 11.9 7.1 (5.4) Taiwan 8.4 4.7 7.6 (0.0) 11.1 16.1 - 7.3 9.3 13.4 - India 16.2 13.8 11.8 15.0 33.6 30.9 13.4 15.6 26.5 5.1 10.7 Malaysia 12.8 13.3 12.7 9.3 12.4 16.1 - 15.1 - 20.8 7.5 Indonesia 23.6 28.8 21.8 21.3 28.1 23.5 23.7 21.8 - 20.0 34.4 EMEA 16.0 16.6 20.5 14.1 16.4 21.7 17.4 14.5 8.3 18.5 8.2 South Africa 16.5 22.8 15.8 14.9 16.4 27.2 22.6 12.2 - 24.1 - Russia 16.5 16.6 21.3 - - 19.6 - 21.0 - 19.6 5.8 Turkey 15.6 26.3 17.4 12.2 17.5 15.5 - 14.7 - 21.1 - LATAM 13.0 9.7 14.6 11.9 13.8 13.1 8.4 14.9 78.7 13.7 10.2 Brazil 12.6 8.8 17.4 12.2 13.4 13.2 8.4 15.5 78.7 6.7 10.2 Mexico 13.8 - 2.5 11.9 14.4 14.3 - 12.3 - 31.9 - Chile 13.1 - 12.3 11.4 14.3 11.6 - 21.3 - 22.4 10.6 * net income / shareholders' equity Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream

This table shows the return on equity of the MSCI ACWI by sector and country. It measures the rate at which companies are able to generate earnings given each unit of shareholders’ equity.

ACWI currently has a 12.3% ROE, which is slightly below its long-term average of 12.9%. But ROE looks to have peaked (at 12.7% in Oct’11) in the current profit cycle and is now on the decline.

Chart shows that BRIC countries, along with the UK and US have above-average ROE. On the other hand, countries in the Eurozone and Japan have not been as profitable or efficient with their use of capital (Chart).

Relative to Developed Markets, Emerging Markets have significantly higher ROE in telcos, financials and discretionary, but significantly lower ROE in industrials, staples and tech.

Chart 14: ROE by country

0% 3% 6% 9% 12% 15% 18%

JapIta

FraGer

ACWIBraUSUK

ChinaIndiaRus



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2012 EPS Growth Table 15: Consensus 2012 EPS growth forecast (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 7.7 (7.7) (6.0) 11.7 37.6 6.3 2.8 11.4 14.3 2.2 18.2 DEVELOPED 7.5 (8.2) (5.6) 11.0 37.4 6.0 2.7 12.1 10.7 (0.2) 16.7 N. America 6.0 (10.5) (2.0) 10.4 10.5 3.6 3.0 20.7 11.1 2.3 (6.6) US 6.7 (9.7) (2.7) 10.2 10.8 3.5 2.9 22.6 12.7 2.3 (6.7) Canada (0.9) (15.7) (0.8) 15.3 3.8 7.2 42.3 13.2 (98.5) 2.2 (0.2) Europe 0.2 (3.9) (14.9) 5.9 9.9 7.7 (1.8) 6.7 (29.6) (5.2) 3.3 UK (3.6) (9.7) (20.1) 5.6 6.8 3.7 (6.1) 5.7 0.2 6.6 7.2 Switzerland 8.6 91.2 27.1 (1.3) 16.1 12.2 0.2 15.2 - (4.1) - Eurozone 0.0 5.5 (12.9) 10.6 9.5 10.5 (2.8) 2.0 (35.9) (14.1) 1.8 France (1.3) 6.3 (3.8) 5.1 (4.1) 11.1 (9.1) (2.2) (16.9) (14.0) 3.3 Germany 8.3 - (21.9) (13.5) 16.2 11.9 5.3 55.4 (2.7) (1.3) 13.7 Netherlands 10.8 (9.1) 1.1 131.4 7.8 14.9 - 11.2 (20.1) (28.5) - Spain (28.9) (31.6) 39.4 (35.5) 19.1 6.3 69.9 (44.2) 10.5 (19.0) (3.5) Italy 12.8 13.7 - - 44.9 - - (7.4) - (7.4) (11.0) Asia Pacific 34.7 (10.9) 8.4 17.9 - 14.7 35.0 4.2 44.8 12.1 - Japan 31.9 1.3 39.4 14.5 - 13.9 17.0 4.1 27.8 10.3 - Australia 2.2 11.4 (2.1) 14.7 (19.8) 7.2 10.5 2.8 2.7 7.1 8.6 Hong Kong (12.0) - - (50.6) 26.8 - - (8.3) 12.1 19.5 7.4 Singapore 8.7 - - 17.6 2.1 (2.1) - 7.7 - 7.3 - EMERGING 9.0 (5.8) (7.2) 21.2 38.4 11.2 16.8 8.1 42.5 11.3 26.8 EM Asia 17.6 (1.0) (4.2) 22.0 46.6 15.0 18.0 9.6 44.1 5.3 143.0 China 6.3 1.1 (14.6) 2.6 8.1 14.4 20.8 10.0 10.4 3.7 43.4 Korea 39.0 (29.7) 0.4 29.0 84.3 22.7 19.1 5.2 71.9 (4.8) - Taiwan 16.0 (4.4) (22.0) - 30.3 19.4 - 6.5 26.2 (0.9) - India 13.0 1.9 21.6 17.7 1.0 21.6 17.1 15.1 15.8 47.9 15.8 Malaysia 11.9 14.7 22.0 19.0 5.5 (6.7) - 5.6 - 1.9 81.8 Indonesia 10.2 16.3 10.9 4.1 8.0 13.3 13.4 6.6 - 17.6 13.2 EMEA (2.5) (10.1) (2.8) 19.6 16.4 19.3 14.1 5.1 (8.9) 14.7 (15.0) South Africa 19.8 37.4 23.3 16.5 17.3 15.0 19.4 12.8 - 16.6 - Russia (11.9) (13.9) (9.0) - - - - (1.2) - 21.6 (36.9) Turkey 8.3 (9.1) (2.7) 30.9 (2.0) 43.9 - 1.4 - 52.5 - LATAM 1.1 1.3 (11.7) 15.9 5.0 4.9 19.8 5.9 4.2 21.3 8.6 Brazil (6.4) (1.2) (20.5) 21.2 (1.4) (0.8) 19.8 3.0 4.2 1.0 3.7 Mexico 39.6 - - 31.4 14.8 12.2 - 24.4 - 28.3 - Chile 10.0 - 0.4 (10.3) 15.6 7.0 - 11.5 - 11.8 22.3 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the current IBES consensus 2012 earnings growth forecast by sector and country for the MSCI ACWI.

ACWI is projected to grow earnings by 7.7% in 2012, below the long-term average of 10.3% per annum. Consensus is clearly not forecasting a recession (chart). Macro bears would use the above table to see where earnings are most vulnerable in a recession.

Potential long positions for growth-investors: global discretionary, Mexico, EM industrials, US financials, German financials, Korean tech, Taiwanese tech. All are projected to grow earnings by consensus by more than 20% in 2012 and at least 10% in 2013.

Potential short positions for growth-investors: US staples, UK staples & industrials, Eurozone energy, and Asia Pacific financials. All are projected to grow by consensus by less than 6% in 2012 and less than 10% in 2013.

Chart 15: MSCI ACWI 2012 EPS growth (historical and forecast)

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'00 '02 '04 '06 '08 '10 '12

Historical2012 forecast

Note: grey area = recession shading Source: BofA Merrill Lynch Global Equity Strategy, MSCI, Datastream


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2013 EPS Growth Table 16: Consensus 2013 EPS growth forecast (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 12.4 7.5 18.9 12.7 16.5 9.8 8.2 12.0 16.7 8.6 14.9 DEVELOPED 12.5 8.5 19.6 12.3 16.8 9.2 8.1 12.4 15.6 8.6 15.3 N. America 12.3 9.7 21.1 12.6 17.0 9.0 8.5 12.1 13.9 17.7 3.8 US 12.1 8.4 21.2 12.4 17.3 9.1 8.4 12.9 13.7 19.6 3.7 Canada 14.2 18.7 20.9 16.2 9.3 8.7 58.1 8.5 - 5.4 6.3 Europe 12.1 6.7 19.0 13.1 13.3 9.2 7.2 18.2 39.2 3.7 2.7 UK 9.7 5.8 16.4 8.4 10.2 8.7 5.1 15.8 15.6 5.2 3.7 Switzerland 11.6 59.6 15.4 13.7 11.4 8.7 7.1 16.7 - (1.7) - Eurozone 14.1 6.2 24.7 15.6 14.5 9.9 7.7 21.3 43.8 1.8 2.3 France 10.4 4.0 31.2 13.0 18.7 10.4 3.9 11.3 26.0 (2.2) 7.9 Germany 12.1 - 24.0 15.3 12.0 8.6 10.7 10.3 14.2 4.2 0.0 Netherlands 12.8 18.9 16.3 22.0 4.4 9.6 - 12.0 23.9 2.4 - Spain 31.3 10.5 65.8 29.3 10.7 20.9 28.0 71.2 9.9 4.4 2.5 Italy 13.8 7.2 - 23.2 36.5 - - 26.5 - 1.1 2.7 Asia Pacific 14.1 8.5 18.0 10.9 20.7 10.5 9.6 4.9 22.3 8.3 - Japan 14.0 4.6 15.3 6.7 16.1 8.7 6.2 5.8 14.8 6.9 - Australia 8.1 10.8 10.5 25.3 (4.1) 8.1 12.6 6.0 18.1 4.0 10.2 Hong Kong 11.0 - - 16.4 21.8 - - 8.7 33.4 9.7 6.4 Singapore 8.3 - - 7.3 14.5 16.1 - 7.1 - 6.7 - EMERGING 12.3 3.9 16.5 18.1 14.1 17.8 17.2 10.3 23.4 8.5 12.8 EM Asia 14.5 9.2 20.4 18.0 12.7 15.9 16.7 9.0 23.8 8.7 26.2 China 11.3 8.3 23.2 17.7 17.8 24.4 22.2 9.2 26.3 6.3 16.8 Korea 15.3 14.3 17.8 18.1 11.8 12.1 35.2 0.6 21.0 28.2 - Taiwan 24.0 49.4 31.1 38.3 6.0 12.2 - 5.2 29.7 8.0 - India 13.6 6.6 14.4 13.9 13.6 18.4 8.6 18.3 9.6 39.9 7.7 Malaysia 11.0 19.1 7.6 12.0 10.5 8.7 - 11.5 - 14.6 7.8 Indonesia 13.2 2.9 16.6 17.3 15.4 14.6 16.6 16.0 - 7.6 11.9 EMEA 5.8 (3.0) 21.5 19.6 18.5 17.7 15.6 11.5 5.1 9.1 (4.9) South Africa 15.9 0.0 31.1 20.7 19.4 18.1 18.5 14.3 - 8.2 - Russia (0.8) (4.3) 22.9 - - - - 6.9 - 10.5 3.4 Turkey 12.2 10.6 12.8 13.7 13.2 18.5 - 12.8 - 4.2 - LATAM 13.6 16.9 10.3 17.4 23.5 20.2 25.8 14.4 10.4 7.5 10.0 Brazil 13.1 13.7 9.8 27.3 24.6 20.9 25.8 14.1 10.4 9.3 9.1 Mexico 15.4 - 29.5 3.8 20.9 19.4 - 22.2 - 7.4 - Chile 12.6 - 1.7 16.4 24.9 18.9 - 12.3 - 7.9 14.7 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the current IBES consensus 2013 earnings growth forecast by sector and country for the MSCI ACWI.

ACWI is projected to grow earnings by 12.4% in 2013, more than 200bps above the average of 10.3% per annum. Chart shows that analysts have aggressively revised down their expectations for 2012 (from peak of 15% down to 8% today). Worryingly, 2013 estimates remain elevated.

Chart 16: MSCI ACWI 2012 and 2013 EPS growth forecast

8%

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7

89

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1112

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1415

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2/11 6/11 10/11 2/12 6/12 10/12

20122013



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2012-13 Compounded EPS Growth Table 17: Consensus 2012-13 compounded EPS growth forecast (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 21.1 (0.7) 11.8 25.9 60.3 16.8 11.2 24.8 33.4 11.0 35.8 DEVELOPED 20.9 (0.3) 12.9 24.6 60.6 15.7 11.0 26.1 28.0 8.5 34.6 N. America 19.0 (1.9) 18.6 24.3 29.3 13.0 11.7 35.3 26.5 20.3 (3.0) US 19.6 (2.1) 18.0 23.8 29.9 12.9 11.5 38.4 28.1 22.3 (3.2) Canada 13.1 0.1 19.9 33.9 13.5 16.5 125.1 22.9 - 7.6 6.1 Europe 12.2 2.5 1.3 19.7 24.6 17.6 5.2 26.1 (2.0) (1.6) 6.0 UK 5.8 (4.4) (7.0) 14.5 17.7 12.7 (1.3) 22.4 15.9 12.1 11.1 Switzerland 21.2 205.1 46.6 12.3 29.3 21.9 7.3 34.4 - (5.7) - Eurozone 14.2 12.0 8.6 27.9 25.4 21.4 4.7 23.7 (7.9) (12.5) 4.1 France 9.0 10.6 26.2 18.7 13.9 22.7 (5.5) 8.9 4.8 (15.9) 11.4 Germany 21.4 - (3.2) (0.3) 30.2 21.5 16.6 71.5 11.1 2.8 13.7 Netherlands 25.0 8.2 17.6 182.3 12.5 25.8 - 24.6 (1.0) (26.7) - Spain (6.7) (24.5) 131.2 (16.6) 31.9 28.4 117.4 (4.4) 21.4 (15.4) (1.1) Italy 28.4 21.9 - - 97.8 - - 17.2 - (6.4) (8.6) Asia Pacific 53.7 (3.3) 28.0 30.7 - 26.7 47.9 9.3 77.0 21.5 - Japan 50.3 6.0 60.8 22.1 - 23.8 24.3 10.1 46.6 17.9 - Australia 10.5 23.4 8.1 43.7 (23.1) 15.9 24.4 9.0 21.3 11.4 19.7 Hong Kong (2.3) - - (42.5) 54.4 - - (0.3) 49.6 31.1 14.3 Singapore 17.7 - - 26.2 16.9 13.7 - 15.3 - 14.5 - EMERGING 22.4 (2.1) 8.1 43.2 58.0 30.9 36.9 19.3 75.8 20.8 43.1 EM Asia 34.6 8.2 15.3 44.0 65.2 33.2 37.7 19.5 78.4 14.5 206.6 China 18.3 9.5 5.3 20.8 27.3 42.3 47.5 20.1 39.4 10.2 67.6 Korea 60.3 (19.6) 18.4 52.3 106.1 37.6 61.0 5.9 108.0 22.1 - Taiwan 43.8 42.8 2.3 - 38.2 33.9 - 12.0 63.7 7.1 - India 28.4 8.6 39.1 34.0 14.8 44.1 27.1 36.2 26.9 106.9 24.8 Malaysia 24.2 36.5 31.3 33.2 16.6 1.4 - 17.7 - 16.8 96.0 Indonesia 24.8 19.7 29.4 22.1 24.6 29.8 32.2 23.6 - 26.5 26.7 EMEA 3.1 (12.8) 18.1 43.0 38.0 40.4 31.9 17.2 (4.2) 25.1 (19.2) South Africa 38.8 37.4 61.6 40.6 40.1 35.9 41.4 28.8 - 26.2 - Russia (12.6) (17.6) 11.8 - - - - 5.7 - 34.4 (34.7) Turkey 21.5 0.6 9.8 48.8 11.0 70.5 - 14.4 - 59.0 - LATAM 14.8 18.4 (2.6) 36.1 29.6 26.1 50.7 21.2 15.1 30.4 19.4 Brazil 5.9 12.3 (12.7) 54.3 22.9 19.9 50.7 17.5 15.1 10.4 13.1 Mexico 61.1 - - 36.3 38.8 34.0 - 52.0 - 37.8 - Chile 23.8 - 2.1 4.4 44.4 27.2 - 25.3 - 20.6 40.3 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the current IBES consensus 2012-13 compounded earnings growth forecast by sector and country for the MSCI ACWI.

ACWI is projected to grow earnings by 21.1% in 2012-13 compounded. Energy is the conspicuous laggard among global sectors, projected to decline by 0.7% (see chart for ranking by sector).

Potential long positions for growth-investors: global discretionary & tech, EM Asia, Mexico, South Africa and Netherlands. All are expecting growth of 25% or more.

Potential short positions for growth-investors: global energy, Spain, Hong Kong, Russia, Brazil and UK. All are expecting sub-7% growth or even contraction.

Chart 17: 2012-13 compounded EPS growth by sector

-5% 10% 25% 40% 55%

EnerTelco

PharmaMat

StapACWIFinanIndusTech

UtilDiscr



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2012 Sales Growth Table 18: Consensus 2012 sales growth forecast (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 4.0 -3.2 2.3 5.6 8.1 6.8 6.3 4.5 6.6 2.9 2.9 DEVELOPED 3.0 -5.9 2.0 4.9 7.5 5.8 6.0 2.3 4.4 1.3 2.7 N. America 2.8 -10.0 4.4 5.3 5.2 6.4 7.6 2.2 6.9 3.9 6.1 US 2.8 -11.2 4.2 5.2 5.2 5.8 7.2 3.2 7.8 4.1 6.2 Canada 2.5 1.6 5.7 5.8 4.6 14.2 - -2.7 -32.3 1.9 1.8 Europe 2.1 -2.0 0.6 5.5 7.6 5.2 2.6 2.9 -5.0 -1.4 -0.6 UK -0.5 -4.8 0.0 4.3 3.9 3.2 -4.9 5.3 4.9 -3.4 0.0 Switzerland 5.5 9.1 6.0 5.5 12.4 8.7 2.5 4.9 - -0.9 - Eurozone 3.1 3.0 1.2 6.1 8.4 6.0 5.9 1.6 -7.3 -1.0 -0.7 France 2.5 1.2 -0.1 5.3 2.5 6.1 5.4 1.1 1.9 -2.5 2.5 Germany 1.6 - -0.9 5.0 7.0 2.8 5.9 -3.5 8.3 -1.1 -3.0 Netherlands 4.5 21.2 3.7 6.7 7.7 8.0 - 0.3 -13.2 -3.8 - Spain 2.4 -10.3 - 16.2 14.2 - - 4.8 4.8 -0.2 1.8 Italy 10.1 12.0 - 3.5 30.5 - - 9.9 - 0.7 -1.7 Asia Pacific 4.4 1.5 1.5 4.4 10.7 5.0 2.7 1.1 1.8 2.0 5.0 Japan 4.0 -0.5 2.8 3.7 10.6 5.0 2.4 -2.2 1.7 2.6 5.0 Australia 7.4 22.1 4.0 10.3 5.7 3.9 8.0 12.3 - 1.1 2.9 Hong Kong 10.9 - - 5.1 15.5 - - 13.2 - - 6.0 Singapore 10.8 - - 13.5 11.7 6.9 - 8.2 - 1.1 - EMERGING 9.6 3.8 3.8 10.4 15.3 20.5 20.6 17.4 14.3 10.0 4.6 EM Asia 10.2 3.3 4.3 10.1 15.2 29.8 22.5 16.5 14.3 11.2 11.5 China 7.7 3.0 3.2 6.4 15.1 16.7 23.4 16.1 18.0 12.0 12.1 Korea 17.5 5.4 7.3 22.5 15.9 - - 7.2 21.1 - 13.0 Taiwan 8.6 - -26.7 -5.4 41.5 10.0 - 28.0 10.6 7.0 - India 13.4 -1.1 47.3 11.5 10.1 14.3 18.2 14.9 19.4 - 6.5 Malaysia 16.1 - 11.6 15.0 2.6 4.6 - 51.2 - 6.1 6.2 Indonesia 11.8 11.1 13.1 - 12.3 11.4 - 14.5 - 5.1 - EMEA 5.3 2.1 4.6 13.7 20.7 18.0 14.6 6.1 - 5.9 -3.4 South Africa 11.7 17.7 6.7 13.1 23.3 12.8 17.2 2.2 - 9.9 - Russia 0.2 0.0 1.7 - - 0.0 - 13.4 - 5.5 -9.1 Turkey 11.0 - - - - 25.4 - 7.5 - 1.2 - LATAM 10.9 10.4 2.2 10.9 10.3 14.1 - 31.8 15.4 10.2 -1.8 Brazil 10.8 11.0 1.0 14.3 8.0 11.6 - 34.3 15.4 1.6 -3.0 Mexico 12.8 - 5.6 12.4 11.6 15.7 - 12.6 - 14.1 - Chile 7.5 - 2.4 5.7 - 17.4 - 6.1 - - 2.9 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the current IBES consensus 2012 sales growth forecast by sector and country for the MSCI ACWI.

ACWI is projected to grow a mere 4.0% in 2012 (down from peak of 6.7% in Jun’11). Chart shows that this is the most pessimistic/conservative analyst forecast on record – primarily reflecting a slowdown in the UK, Eurozone and North America.

Potential long positions for growth-investors: EM industrials, discretionary, staples, financials, tech & telcos. All are expecting growth of 10% or more in 2012. Outside of EM, US tech, Eurozone discretionary and Swiss staples also expect growth of 8% or more.

Potential short positions for growth-investors: US financials & telcos, UK staples & discretionary, Australian materials, Japanese Industrials and the Eurozone. All are expecting growth of less than 5% in both 2012 and 2013.

Chart 18: MSCI ACWI 2012 sales growth forecast

4.0%3.5

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2/11 6/11 10/11 2/12 6/12 10/12

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2013 Sales Growth Table 19: Consensus 2013 sales growth forecast (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 4.9 1.5 6.8 5.4 5.9 5.2 4.7 5.3 8.5 2.4 3.7 DEVELOPED 4.2 -0.1 6.4 4.8 5.5 4.7 4.4 4.2 7.4 1.2 3.1 N. America 4.8 -0.3 7.2 5.8 6.0 4.5 4.8 5.2 9.4 2.1 4.9 US 4.5 -1.0 6.1 5.7 6.0 4.5 4.4 4.2 9.5 2.1 4.8 Canada 8.3 6.8 13.1 8.0 4.6 3.6 50.0 10.6 -0.6 2.4 8.3 Europe 3.6 0.3 6.4 4.4 5.8 5.4 3.6 3.8 4.2 0.0 2.6 UK 3.2 -0.2 9.3 5.1 4.9 5.0 1.2 4.7 7.0 0.6 4.4 Switzerland 5.6 10.2 6.0 6.4 9.1 6.1 3.0 5.9 - -0.3 - Eurozone 3.6 1.3 4.5 3.9 5.9 5.6 4.6 3.1 3.9 -0.3 2.2 France 3.4 0.3 4.9 3.8 5.4 7.1 3.8 2.4 4.1 -0.3 2.4 Germany 3.9 - 4.5 4.0 5.8 2.9 4.7 3.1 9.3 -1.4 1.7 Netherlands 4.3 5.8 3.9 4.2 2.6 5.3 - 3.4 16.6 -1.7 - Spain 3.8 5.6 - 3.1 10.3 - - 4.7 5.5 0.2 3.8 Italy 3.0 1.1 - 4.4 5.9 - - 3.5 - 0.5 1.7 Asia Pacific 3.8 -0.6 5.7 4.2 4.7 3.9 3.4 2.7 4.0 1.7 1.7 Japan 3.1 -2.0 3.9 3.8 4.6 2.3 3.1 0.9 3.9 1.9 0.9 Australia 4.2 7.2 1.8 6.5 -12.8 5.4 8.2 5.5 - 1.1 14.9 Hong Kong 9.5 - - 7.6 13.4 - - 8.9 - - 6.5 Singapore 10.6 - - 10.6 16.3 13.0 - 8.7 - 1.5 - EMERGING 8.7 5.4 8.6 9.5 9.8 11.9 17.9 11.2 11.7 7.2 7.9 EM Asia 9.4 6.3 7.9 9.6 9.4 14.1 19.8 11.5 11.7 8.8 9.1 China 10.0 7.3 10.2 9.4 14.3 20.0 21.3 12.9 15.3 10.0 10.7 Korea 7.4 -0.3 5.0 9.9 7.0 8.4 - 5.7 10.5 - 6.6 Taiwan 10.4 - 6.2 8.3 6.6 11.0 - 1.7 11.8 4.8 - India 8.5 -0.3 9.2 12.9 9.2 15.0 9.5 18.0 10.7 - 13.3 Malaysia 6.9 - 4.3 8.3 7.0 4.6 - 10.1 - 5.5 4.7 Indonesia 11.8 6.1 14.1 - 14.9 10.8 - 15.1 - 5.7 - EMEA 6.0 1.8 11.9 9.4 12.1 13.2 10.6 11.2 - 4.5 7.9 South Africa 11.1 3.2 16.1 8.6 12.8 12.9 11.7 13.1 - 6.1 - Russia 3.6 2.1 8.7 - - 0.0 - 14.3 - 4.9 10.7 Turkey 9.3 - - - - 17.2 - 11.3 - 6.0 - LATAM 8.0 6.2 8.8 8.2 10.5 9.7 - 10.0 9.8 5.7 5.9 Brazil 7.8 5.7 8.9 13.6 9.8 10.6 - 9.3 9.8 4.4 6.1 Mexico 7.8 - 8.6 5.7 10.0 8.7 - 13.9 - 5.9 - Chile 8.1 - 6.3 5.5 - 11.1 - 12.4 - - 5.4 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the current IBES consensus 2013 sales growth forecast by sector and country for the MSCI ACWI.

ACWI is projected to grow sales by 4.9% in 2013, only 90bps higher than 2012 estimates. Unlike the same chart for earnings, this chart shows that analysts have already begun to revise down 2013 sales.

Chart 19: Chart 1: MSCI ACWI 2012 and 2013 sales growth forecast

4.0%

4.9%

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

2/11 6/11 10/11 2/12 6/12 10/12

20122013



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2012-13 Compounded Sales Growth Table 20: Consensus 2012-13 compounded sales growth forecast (%) Total Energy Materials Industrials Cons. Disc. Staples Healthcare Financials IT Telecom Utilities ACWI 9.1 -1.7 9.3 11.3 14.4 12.4 11.3 10.0 15.6 5.3 6.8 DEVELOPED 7.3 -6.0 8.5 10.0 13.4 10.8 10.7 6.5 12.2 2.5 5.9 N. America 7.7 -10.2 11.9 11.3 11.4 11.1 12.8 7.5 17.0 6.1 11.2 US 7.4 -12.0 10.6 11.2 11.5 10.6 11.9 7.5 18.0 6.3 11.2 Canada 11.1 8.4 19.6 14.3 9.5 18.3 - 7.6 -32.7 4.4 10.2 Europe 5.9 -1.7 7.0 10.2 13.8 10.9 6.2 6.8 -1.0 -1.4 2.0 UK 2.7 -5.0 9.3 9.6 9.0 8.3 -3.7 10.3 12.2 -2.9 4.4 Switzerland 11.4 20.1 12.4 12.2 22.6 15.3 5.7 11.0 - -1.3 - Eurozone 6.8 4.3 5.8 10.3 14.8 11.9 10.7 4.7 -3.7 -1.3 1.4 France 6.0 1.5 4.9 9.3 8.1 13.6 9.4 3.5 6.0 -2.7 5.0 Germany 5.6 - 3.5 9.2 13.2 5.8 10.9 -0.5 18.3 -2.5 -1.3 Netherlands 9.0 28.2 7.8 11.1 10.6 13.7 - 3.7 1.2 -5.5 - Spain 6.3 -5.2 - 19.8 26.0 - - 9.8 10.5 -0.1 5.6 Italy 13.5 13.2 - 8.1 38.3 - - 13.7 - 1.2 -0.1 Asia Pacific 8.4 1.0 7.3 8.8 15.9 9.1 6.3 3.9 5.9 3.8 6.8 Japan 7.3 -2.5 6.8 7.6 15.7 7.4 5.5 -1.3 5.7 4.6 6.0 Australia 11.9 30.9 5.9 17.5 -7.9 9.5 16.9 18.5 - 2.2 18.2 Hong Kong 21.4 - - 13.1 31.0 - - 23.3 - - 12.9 Singapore 22.6 - - 25.5 29.9 20.8 - 17.6 - 2.6 - EMERGING 19.2 9.4 12.7 20.9 26.6 34.9 42.2 30.6 27.6 17.8 12.9 EM Asia 20.5 9.8 12.6 20.6 26.0 48.1 46.8 29.9 27.7 21.0 21.6 China 18.5 10.4 13.7 16.4 31.5 40.0 49.7 31.1 36.1 23.2 24.1 Korea 26.2 5.2 12.7 34.6 24.0 - - 13.2 33.8 - 20.4 Taiwan 20.0 - -22.2 2.5 50.9 22.1 - 30.1 23.7 12.1 - India 23.0 -1.4 60.9 25.9 20.3 31.4 29.4 35.6 32.1 - 20.7 Malaysia 24.1 - 16.4 24.5 9.8 9.5 - 66.5 - 11.9 11.1 Indonesia 25.0 17.8 29.0 - 28.9 23.4 - 31.8 - 11.1 - EMEA 11.5 4.0 17.1 24.3 35.3 33.6 26.7 18.0 - 10.6 4.2 South Africa 24.1 21.4 23.9 22.8 39.0 27.3 30.9 15.6 - 16.6 - Russia 3.7 2.1 10.5 - - 0.0 - 29.6 - 10.6 0.6 Turkey 21.3 - - - - 46.9 - 19.7 - 7.2 - LATAM 19.8 17.3 11.2 20.0 21.8 25.2 - 44.9 26.7 16.5 4.0 Brazil 19.4 17.4 9.9 29.8 18.5 23.3 - 46.8 26.7 6.1 2.9 Mexico 21.6 - 14.8 18.8 22.7 25.8 - 28.3 - 20.8 - Chile 16.2 - 8.8 11.5 - 30.5 - 19.3 - - 8.5 Source: BofA Merrill Lynch Global Equity Strategy, IBES, MSCI, Datastream

This table shows the current IBES consensus 2012-13 compounded sales growth forecast by sector and country for the MSCI ACWI.

ACWI is projected to grow sales by 9.1% in 2012-13 compounded. As with earnings, analysts believe global energy won’t be able to achieve any top-line growth (Chart). However, note the disparity between DM energy (-6.0%) and EM energy (+9.4%).

Potential long positions for growth-investors: global tech, EM Asia, LatAm, South Africa, Turkey, Singapore and Hong Kong. All are expecting growth of 15% or more.

Potential short positions for growth-investors: DM telcos, US energy, Germany, France, Spain, UK and Russia. All are expecting sub-7% growth or even contraction.

Chart 20: 2012-13 compounded sales growth by sector

-2% 1% 4% 7% 10% 13% 16%

EnerTelcUtil

ACWMat

FinaIndusPharStap

DiscrTech



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Link to Definitions Macro Click here for definitions of commonly used terms.


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