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Alliance Trust PLC Economic update

Alliance Trust PLC Economic update. Shona Dobbie Chief Economist 3 May 2013. Source: INKCINCT Cartoons. US – housing and labour markets. Housing Market. Full-time/Part-time Employment. Index. Ratio. 80. 5.1. 70. NAHB Index. 4.9. 60. 4.7. 50. 40. 4.5. Prospective Buyers. 30.

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Alliance Trust PLC Economic update

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  1. Alliance Trust PLCEconomic update Shona DobbieChief Economist 3 May 2013

  2. Source: INKCINCT Cartoons

  3. US – housing and labour markets Housing Market Full-time/Part-time Employment Index Ratio 80 5.1 70 NAHB Index 4.9 60 4.7 50 40 4.5 ProspectiveBuyers 30 4.3 20 4.1 10 3.9 0 98 00 02 04 06 08 10 12 03 04 05 06 07 08 09 10 11 12 Source: Reuters EcoWin

  4. US – corporate profitability Corporate profits and GDP US Corporate profits as % GDP Index % Rebased Jan 2000 = 100 14 250 225 12 200 Corporate Profits 175 10 150 GDP 125 8 100 75 6 00 02 04 06 08 10 12 50 60 70 80 90 00 10 Source: Reuters EcoWin

  5. US – weak fiscal position Outlays and receipts Federal debt USD (billions) USD (thousand billions) 17 325 Current Debt Ceiling 300 15 Federal Outlays 275 13 250 GDP 11 225 200 9 Federal DebtOutstanding 175 Federal Receipts 7 150 5 125 02 03 04 05 06 07 08 09 10 11 12 00 02 04 06 08 10 12 Source: Reuters EcoWin

  6. US government debt and financing Government bond yield (10 year) Quantitative easing % USD (thousand billions) GBP (billions) 6.0 3.50 400 350 UK 3.00 5.0 Fed TotalAssets (LHS) 300 2.50 250 4.0 200 2.00 3.0 150 US 1.50 BoE GiltPurchases (RHS) 100 2.0 50 1.00 1.0 0 08 09 10 11 12 13 07 08 09 10 11 12 13 Source: Reuters EcoWin

  7. Japan – poor economic performance Household spending and investment Government spending and exports Index Index 115 190 Exports GDP 110 170 105 150 Households 100 130 95 Investment 110 90 GDP Government Spending 85 90 02 03 04 05 06 07 08 09 10 11 12 02 04 06 08 10 12 Source: Reuters EcoWin

  8. Japan – ‘Abenomics’ Monetary base Confidence and asset prices JPY (thousand billions) Index (diffusion) Index 275 65 1600 250 Confidence (LHS) 55 1400 225 200 45 1200 175 150 35 1000 125 100 25 800 Topix (RHS) 75 15 50 600 06 07 08 09 10 11 12 96 98 00 02 04 06 08 10 12 14 Source: Reuters EcoWin

  9. Japan – the end of deflation? Yoy % change Yoy % change 3.0 1.50 Labour Force (RHS) Target CPI 1.5 0.75 Core CPI ( LHS) 0.0 0.00 5yr smoothing -1.5 -0.75 88 90 92 94 96 98 00 02 04 06 08 10 12 Source: Reuters EcoWin

  10. Abenomics – impact on currency Rebase end June 2012 = 100 Index 110 Euro 105 Dollar 100 95 Sterling 90 85 Yen 80 75 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 12 13 Source: Reuters EcoWin

  11. Europe – unemployment rates Periphery economies Core economies % % 12 27.5 11 Spain Eurozone 10 20.0 Greece 9 France 12.5 8 Germany 7 Eurozone 5.0 6 07 08 09 10 11 12 07 08 09 10 11 12 13 Source: Reuters EcoWin

  12. Europe – key policy rates % 6 UK 5 4 3 Euro-Zone 2 1 0 03 04 05 06 07 08 09 10 11 12 13 Source: Reuters EcoWin

  13. China – exports and investment Exports Fixed asset investment (FAI) USD (billions) % change yoy (3mma) 100 40.0 Asia 80 Manufacturing 35.0 60 30.0 25.0 40 Europe Total 20.0 US 20 15.0 07 08 09 10 11 12 07 08 09 10 11 12 13 Source: Reuters EcoWin Source: NBS, In-house analysis

  14. China – structural change? GDP growth Breakdown of GDP % change yoy % of GDP 13 50.0 Household Spending 12 45.0 11 40.0 10 35.0 9 8 30.0 Investment 7 25.0 6 08 09 10 11 12 90 92 94 96 98 00 02 04 06 08 10 Source: Reuters EcoWin

  15. A busy year

  16. Important information • Whilst considerable care has been taken in compiling the content of this presentation, no representation or warranty, expressed or implied, is made by Alliance Trust PLC as to its accuracy or completeness. • The value of investments and the income from them may go down as well as up and are not guaranteed. The original amount invested may not be returned. • Any examples are for illustration purposes only, the figures are not guaranteed and should not be relied on. • Past performance is not a guide to future performance. • Further information is available on our website www.alliancetrust.co.uk • All figures and graphs are sourced at Alliance Trust PLC unless otherwise stated. • Nothing said or covered by the presentation today should be construed as being an inducement or invitation in investment activity. No advice is given by Alliance Trust PLC.

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