Guide to the Markets

MARKET INSIGHTS

Asia | 4Q 2016 | As of September 30, 2016

Americas Europe Asia

Dr. David P. Kelly, CFANew York

Stephanie H. FlandersLondon

Tai HuiHong Kong

Andrew D. GoldbergNew York

Manuel Arroyo Ozores, CFAMadrid

Kerry Craig, CFAMelbourne

Anastasia V. Amoroso, CFAHouston

Tilmann Galler, CFAFrankfurt

Yoshinori ShigemiTokyo

Julio C. CallegariSão Paulo

Lucia Gutierrez-MelladoMadrid

Marcella ChowHong Kong

Samantha M. AzzarelloNew York

Vincent JuvynsLuxembourg

Akira KunikyoTokyo

David M. LebovitzNew York

Dr. David StubbsLondon

Dr. Jasslyn Yeo, CFASingapore

Gabriela D. SantosNew York

Maria Paola ToschiMilan

Ian HuiHong Kong

Abigail B. Dwyer, CFANew York

Michael J. Bell, CFALondon

Ben LukHong Kong

John C. ManleyNew York

Alexander W. Dryden, CFALondon

Ainsley E. WoolridgeNew York

Nandini RamakrishnanLondon

Hannah J. AndersonNew York

Global Market Insights Strategy Team

3

| 3GTM – Asia

Fixed income47. Global fixed income: Yields and returns48. Global fixed income: Valuations49. G3 government bond yields50. Global investment grade bonds51. U.S. high yield bonds52. European high yield bonds53. Emerging markets debt: Market size and fundamentals54. Emerging markets debt: Net flows, return comparison and composition55. Asian government bond yields56. Asian bonds: Return comparison

Other asset classes57. Asset class returns58. Asset class correlations59. Volatility and correlation60. Rate rise impact on different asset classes61. U.S. dollar trend62. Current account balance and currency valuations63. Oil: Short-term market dynamics64. Oil: Long-term fundamentals65. Commodities: Gold and industrial metals66. Alternative sources of income

Investing principles67. Real return on cash and yields68. Global households’ financial asset allocation by region69. Investors’ market timing70. Annual returns and intra-year declines71. The compounding effect72. Portfolio construction, asset class returns and volatility73. The benefits of diversification and long-term investing74. The benefits of saving and investing early

Regional and local economy4. Asia: Economic performance5. Asia: Consumption and investment trends6. China: Economic snapshot7. China: Cyclical and investment indicators8. China: Monetary and fiscal policies 9. China: Exchange rate and foreign reserves10. China: Credit growth and bond market concerns11. India: Economic snapshot12. India: Investment flows and balance of payments13. Japan: Consumption and labor market14. Japan: Abenomics15. Japan: Monetary policy16. Japan: Exchange rate and interest rate differential

Global economy17. Global growth18. Global Purchasing Managers’ Index (PMI): Manufacturing 19. Global productivity and demographics20. Global inflation21. G4 policy rates and market expectations22. Central bank balance sheets and their impact23. Fiscal policy and government debt24. Global debt dynamics25. United States: Cyclical indicators26. United States: Labor market and inflation27. United States: Employment cost and profits28. United States: Monetary policy29. United States: Elections30. Eurozone: Politics31. Eurozone: Economic snapshot32. Eurozone: Monetary policy

Equities33. Global and Asia equity markets: Returns34. Global equity earnings35. Earnings momentum and profitability36. Global equity markets: Valuations37. Global high dividend equities38. United States: Earnings39. Europe: Earnings and profitability40. Developed markets: Cyclically-adjusted price-to-earnings (CAPE)41. Emerging markets: Valuation analysis42. Emerging markets: Price-to-book valuations43. APAC ex-Japan: Valuation analysis44. APAC ex-Japan: Price-to-book valuations45. APAC ex-Japan: Earnings and return performance46. APAC ex-Japan: Sector returns and valuations

Page reference

|GTM – Asia 4

4

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-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Asia: Economic performance

Source: (All charts) CEIC, J.P. Morgan Asset Management. *Consumption includes both private/household and public/government consumption. Aggregate real GDP is weighted by individual country’s GDP. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

EM Asia real GDP growthContribution to growth, year-over-year change

Gross capital formation (investment)Consumption*Net exportsGDP (% y/y)

EM Asia ex-China real GDP growthContribution to growth, year-over-year change

Gross capital formation (investment)Consumption*Net exportsGDP (% y/y)

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

|GTM – Asia 5

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-15%

-5%

5%

15%

25%

7/13 7/14 7/15 7/16

0%

5%

10%

15%

20%

25%

Philippines Vietnam Indonesia India China Malaysia Thailand Singapore Taiwan Korea Hong Kong

Asia: Consumption and investment trends

Source: (Top left and right) CEIC, FactSet, J.P. Morgan Asset Management. (Bottom) FactSet, Oxford Economics, J.P. Morgan Asset Management. *EM Asia ex-China and India includes Indonesia, Korea, Singapore, Taiwan and Thailand. **Forecasts are from Oxford Economics.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

EM Asia ex-China and India* exports and retail salesYear-over-year change, 3-month moving average

Total fixed investmentCompound annual growth rate

2006 – 2010

2016 – 2020**

Passenger car salesYear-over-year change, 3-month moving average

China

India

Hong Kong,Taiwan, Korea

Malaysia, Indonesia, Philippines, Thailand

2011 – 2015

Retail sales Exports

-30%

-15%

0%

15%

30%

45%

-10%

-5%

0%

5%

10%

15%

'04 '06 '08 '10 '12 '14 '16

|GTM – Asia 6

6

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-3%0%3%6%9%

12%15%18%

'11 '12 '13 '14 '15 '16

46

48

50

52

54

56

'11 '12 '13 '14 '15 '16

-8%

-4%

0%

4%

8%

12%

16%

20%

'80 '85 '90 '95 '00 '05 '10 '15

China: Economic snapshot

Source: (Left) FactSet, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Top right) Caixin/Markit, FactSet, J.P. Morgan Asset Management.(Bottom right) CEIC, National Bureau of Statistics of China, J.P. Morgan Asset Management. Guide to the Markets – Asia 4Q 2016.Data reflect most recently available as of 30/9/16.

Contribution to real GDP growth Caixin/Markit Purchasing Managers’ Indices

Manufacturing

Services

Level

Net exports

Gross capital formation (investment) Consumption

GDP (% y/y)

Electricity consumptionYear-over-year change, year-to-date

Secondary

Tertiary

2Q16: 6.7%

9/2016: 50.1

8/2016: 52.1

8/2016: 11.0%

8/2016: 2.0%

Year-over-year change

|GTM – Asia 7

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-10%

0%

10%

20%

30%

40%

'11 '12 '13 '14 '15 '16

1.2 1.4 1.91.1

2.1

5.06.0

7.9

0

2

4

6

8

Singapore Japan Korea Thailand

16%

18%

20%

22%

24%

26%

-10%

0%

10%

20%

30%

40%

50%

6/13 12/13 6/14 12/14 6/15 12/15 6/16

China: Cyclical and investment indicators

Source: (Top left) CEIC, FactSet, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Top right) FactSet, J.P. Morgan Economics, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Bottom left) CEIC, FactSet, National Bureau of Statistics of China, J.P. Morgan Asset Management. (Bottom right) BofA/Merrill Lynch, CEIC, J.P. Morgan Asset Management. *CAGR refers to compound annual growth rate.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Retail sales and industrial productionYear-over-year change, 3-month moving average

Retail sales

Industrial production

Chinese tourists traveling to other Asian countries

20152010

Visitors, millions

Newly started projects and infrastructure investmentYear-over-year change, 3-month moving average

Infrastructure fixed asset investment

Newly started projects (investment amount)

China home prices

Tier-2 cities

Tier-1 cities

Tier-3 cities

Year-over-year change

’10-’15 CAGR*Singapore 12.5%Japan 28.7%Korea 26.1%Thailand 47.9%

4%

8%

12%

16%

20%

24%

'06 '08 '10 '12 '14 '16

|GTM – Asia 8

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10%

20%

30%

40%

50%

60%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

China: Monetary and fiscal policies

Source: (Left) People’s Bank of China, CEIC, J.P. Morgan Asset Management. (Top right) FactSet, People’s Bank of China, J.P. Morgan Asset Management. (Bottom right) CEIC, J.P. Morgan Asset Management. *Fiscal balance is the difference between reported total government revenue and government expenditure. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Total social financing (TSF) breakdownYear-over-year change

Short-term lending rates

8/2016: -3,015bn (-4.4% of GDP)

1-year benchmark interest rate

Fiscal balance*

TSF ex-equity financing

RMB bank lending

TSF ex-equity financing + local gov’t bond

RMB billions, 12-month rolling sum

8/2016TSF ex-equity financing plus local government bond 17.1%

RMB bank lending 13.7%TSF ex-equity financing 12.3%

7-day repo rate

|GTM – Asia 9

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China: Exchange rate and foreign reserves

Source: (Left) FactSet, J.P. Morgan Asset Management. (Right) FactSet, People’s Bank of China, J.P. Morgan Asset Management.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Chinese yuan exchange rate: NEER vs. USDIndex, rebased 2013 = 100

Nominal effective exchange rate (NEER)

Weaker yuan

Stronger yuan

USD / CNY

USD / CNY and change in FX reservesChange in monthly FX reserves (USD billions) USD / CNY

USD / CNY

Change in monthly FX reserves

|GTM – Asia 10

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82%26%

83% 78% 63% 60%

102%135%

70% 69% 106% 98%

34% 60% 90% 105% 96%

246%

0%

100%

200%

300%

400%

Korea China UK U.S. Europe Japan

2.0%

2.2%

2.4%

2.6%

2.8%

3.0%

3.2%

8%

10%

12%

14%

16%

6/12 6/13 6/14 6/15 6/163.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6/15 9/15 12/15 3/16 6/16 9/16

China: Credit growth and bond market concerns

Source: (Top left and top right) J.P. Morgan Asset Management. (Bottom left and bottom right) J.P. Morgan, J.P. Morgan Asset Management. *ChinaBond Inter-bank fixed-rate corporate bond (AA) 5-year used as a proxy for onshore corporate bond yield while J.P. Morgan Corporate Emerging Markets Subindex – China used as a proxy for offshore corporate bond yield. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

China’s bond market: Onshore vs. offshore Corporate bond concentration on Chinese banks’ total investment and assets

% of total bank assets

% of total bank investment

Yield to worst

Onshore corporate bond yield*

Offshore corporate bond yield*

Total non-financial sector debt by countryShare of GDP

Breakdown of corporate bonds by ownershipOwners % of Total

Commercial banks 33%Non-financial legal entities 30%Funds 12%Exchanges 6%Unidentified 5%Cooperative 4%Insurance 4%Policy banks and China Development Bank 4%Brokers 2%

Total 100%

HouseholdCorporateGovernment

9/2016: 3.7%

9/2016: 3.2%

6/2016: 2.23%

6/2016: 8.50%

218% 221%243% 252% 265%

404%

|GTM – Asia 11

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-6%

-2%

2%

6%

10%

14%

18%

'05 '07 '09 '11 '13 '15

India: Economic snapshot

Source: (Top left) J.P. Morgan Economics, Ministry of Statistics and Programme Implementation, J.P. Morgan Asset Management. (Top right) Centre for Monitoring Indian Economy, CLSA, J.P. Morgan Asset Management. (Bottom left) Reserve Bank of India, J.P. Morgan Asset Management. (Bottom right) FactSet, Society of Indian Automobile Manufacturers, J.P. Morgan Asset Management. *Consumer Price Index (CPI) series starts in January 2012 and value shown is year-over-year % change.**Wholesale Price Index (WPI) value shown is year-over-year % change. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Real GDP growth Year-over-year change 15-yr avg. 2Q16

Real GDP growth 7.0% 7.1%

Inflation and repo rate

Repo rate

Wholesale Price Index (WPI)**

Consumer Price Index (CPI)*

LatestRepo rate 6.5%CPI 5.1%WPI 3.8%

Auto salesYear-over-year change, 3-month moving average

Commercial vehicle sales

Passenger vehicle sales

New project announcementsINR billions Latest

Private sector 904bnGovernment 376bn

-5%

0%

5%

10%

15%

20%

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16

-30%

-20%

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30%

'11 '12 '13 '14 '15 '16

0

1,500

3,000

4,500

6,000

7,500

9,000

'02 '04 '06 '08 '10 '12 '14 '16

|GTM – Asia 12

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-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

10/15 12/15 2/16 4/16 6/16 8/16

USD / INR Year-over-year change

India: Investment flows and balance of payments

Source: (Top left and bottom left) Bloomberg, Securities and Exchange Board of India, J.P. Morgan Asset Management. (Top right) Bloomberg, J.P. Morgan Asset Management. (Bottom right) FactSet, Reserve Bank of India, Reuters, J.P. Morgan Asset Management. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Foreign institutional fund flowsUSD billions Foreign institutional investment (equity)

Foreign institutional investment (debt)

Current account balanceShare of GDP

2Q16: -0.8%

Domestic equity fund flowsUSD billions Institutional investment

Mutual fund flowsUSD / INR

USD / INR and change in FX reserves

Change in FX reserves

YTD

-6%

-4%

-2%

0%

2%

4%

'00 '02 '04 '06 '08 '10 '12 '14 '16-20

-10

0

10

20

30

40

'00 '02 '04 '06 '08 '10 '12 '14 '16

|GTM – Asia 13

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Japan: Consumption and labor market

Source: (Top) FactSet, Japanese Cabinet Office, Ministry of Internal Affairs and Communications, J.P. Morgan Asset Management. (Bottom left) FactSet, Japanese Statistics Bureau and Statistics Center, Ministry of Health, Labour and Welfare, J.P. Morgan Asset Management. (Bottom right) FactSet, Ministry of Health, Labour and Welfare, Ministry of Internal Affairs and Communications, J.P. Morgan Asset Management. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Real wage growth and core CPI inflationYear-over-year change

Labor marketRatio of job offers to job applicants %, inverted scale

Consumer spending and sentiment indicatorYear-over-year change, 3-month moving average Diffusion Index

Economy watcher survey, householdReal consumption spending

Total real cash earnings (6MMA)

Core CPI (ex-food and energy)Unemployment rateRatio

|GTM – Asia 14

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-5%

0%

5%

10%

15%

20%

'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

0

4

8

12

16

20

'95 '00 '05 '10 '15

Japan: Abenomics

Source: (Top left) FactSet, Ministry of Finance, Ministry of Internal Affairs & Communications, J.P. Morgan Asset Management. (Top right) Nomura, J.P. Morgan Asset Management. (Bottom) Cabinet Office, J.P. Morgan Economics, Ministry of Finance, J.P. Morgan Asset Management. *Share buyback data are for repurchases of common stock, excluding repurchases from Resolution and Collection Corp and repurchases of preferred stock. FY16 (2016) dividend and share buyback amounts are Nomura estimates. **Fresh-water spending refers to new government expenditures, as opposed to existing spending pledges that are repackaged.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Listed companies’ dividend payout and share buybacksJPY trillions

Capital expenditure (CAPEX) and operating profits

Fiscal packagesShare of GDP, sum of calendar year

JPY trillions (Ministry of Finance Business Survey, ex-financials)

Operating profits (4Q moving average)Nominal CAPEX

2016Fresh-water spending** 1.5%Existing spending pledges 4.1%

2016FShare buybacks* 4.3tnDividends 12.4tn

|GTM – Asia 15

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0%

10%

20%

30%

40%

50%

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16

27 2533

5242 43 47

41 38 36 34

5063

80 80

0

20

40

60

80

100

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Japan: Monetary policy

Source: (Top left) Bank of Japan, FactSet, J.P. Morgan Asset Management. (Top right) Bank of Japan, FactSet, J.P. Morgan Asset Management. (Bottom left) Bank of Japan, J.P. Morgan Asset Management. (Bottom right) Bank of Japan, Bloomberg, Investment Trusts Association of Japan, J.P. Morgan Asset Management. *ETF and J-REITs purchase data as of 30/9/16, ETF holdings data as of 31/8/16 and JGBs data as of 30/6/16. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Bank loans and lending ratesJPY trillions, seasonally adjusted Rate per annum, 3MMA

Bank loans Lending rates on new long-term bank loans

JGB net new issuances vs. BoJ’s purchaseJPY trillions

QQE annual purchase targetJGB net new issuance

Share of holdings in JGB Market

Bank of Japan’s asset purchases

JPY billions

BoJ annual purchases of ETFs, J-REITs and JGBs BoJ total

JGB holdings

BoJ totalJGB holdings

as % of market

BoJ totalETF holdings

as % of marketETFs J-REITs JGBs

2010 28 2 7,827 58,051 8.0% 0.5%

2011 800 64 9,579 67,631 8.9% 30.4%

2012 640 45 23,272 90,902 11.6% 34.9%

2013 1,095 30 52,714 143,616 17.2% 30.9%

2014 1,285 37 63,530 207,146 23.3% 36.2%

2015 3,069 92 81,195 288,342 31.6% 42.7%

2016* 3,151 66 56,527 344,869 34.9% 55.5%

Commercial banks

BoJ

Insurers

Public pensionOverseas

|GTM – Asia 16

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'07 '08 '09 '10 '11 '12 '13 '14 '15 '16-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

70

80

90

100

110

120

130

Japan: Exchange rate and interest rate differential

Source: (All charts) FactSet, J.P. Morgan Asset Management.*Correlation based on the daily change between the currency and the Nikkei 225 index. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Nikkei 225 and Japanese yenIndex USD / JPY

1/16 – 6/16Correlation*: 0.65

1/15 – 12/15Correlation*: 0.78

USD / JPY

Nikkei 225

Real interest rate differential & yen/dollar2-year U.S./Japan treasury bond spread (inflation adjusted) USD / JPY

JPY per USDReal interest rate differentialJPY depreciates

JPY appreciates

7/16 – 9/16Correlation*: 0.13

|GTM – Asia 17

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-4%

-2%

0%

2%

4%

6%

8%

10%

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

DM growth outperforms EM

EM growth outperforms DM

Global growth

Source: IMF, J.P. Morgan Asset Management.*Forecasts are from the IMF’s April 2016 World Economic Outlook. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Year-over-year changeReal GDP growth

Forecast*DM GDP growthEM GDP growth

EM less DM growth

|GTM – Asia 18

18

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Global Purchasing Managers’ Index (PMI): Manufacturing

Source: Australian Industry Group, Markit, National Bureau of Statistics of China (NBS), J.P. Morgan Asset Management.Heatmap colors are based on PMI relative to 50, which indicates contraction (below 50) or expansion (above 50) of the sector.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 4/10/16.

Global Purchasing Managers’ Index for manufacturing

Nov

'14

Dec

'14

Jan'

15

Feb'

15

Mar

'15

Apr

'15

May

'15

Jun'

15

Jul'1

5

Aug

'15

Sep'

15

Oct

'15

Nov

'15

Dec

'15

Jan'

16

Feb'

16

Mar

'16

Apr

'16

May

'16

Jun'

16

Jul'1

6

Aug

'16

Sep'

16

Global 51.7 51.4 51.6 51.8 51.5 50.8 51.0 50.9 50.8 50.5 50.4 51.1 51.0 50.7 50.9 50.0 50.6 50.2 50.0 50.4 51.0 50.8 51.0DM 52.8 52.4 52.5 52.8 53.0 52.1 52.4 52.1 52.5 52.4 52.1 53.0 52.6 52.0 52.3 50.9 50.9 50.4 50.2 50.9 51.5 51.3 51.6U.S. 54.8 53.9 53.9 55.1 55.7 54.1 54.0 53.6 53.8 53.0 53.1 54.1 52.8 51.2 52.4 51.3 51.5 50.8 50.7 51.3 52.9 52.0 51.5Euro area 50.1 50.6 51.0 51.0 52.2 52.0 52.2 52.5 52.4 52.3 52.0 52.3 52.8 53.2 52.3 51.2 51.6 51.7 51.5 52.8 52.0 51.7 52.6Germany 49.5 51.2 50.9 51.1 52.8 52.1 51.1 51.9 51.8 53.3 52.3 52.1 52.9 53.2 52.3 50.5 50.7 51.8 52.1 54.5 53.8 53.6 54.3France 48.4 47.5 49.2 47.6 48.8 48.0 49.4 50.7 49.6 48.3 50.6 50.6 50.6 51.4 50.0 50.2 49.6 48.0 48.4 48.3 48.6 48.3 49.7Italy 49.0 48.4 49.9 51.9 53.3 53.8 54.8 54.1 55.3 53.8 52.7 54.1 54.9 55.6 53.2 52.2 53.5 53.9 52.4 53.5 51.2 49.8 51.0Spain 54.7 53.8 54.7 54.2 54.3 54.2 55.8 54.5 53.6 53.2 51.7 51.3 53.1 53.0 55.4 54.1 53.4 53.5 51.8 52.2 51.0 51.0 52.3Greece 49.1 49.4 48.3 48.4 48.9 46.5 48.0 46.9 30.2 39.1 43.3 47.3 48.1 50.2 50.0 48.4 49.0 49.7 48.4 50.4 48.7 50.4 49.2UK 53.1 52.6 52.9 54.1 53.7 52.2 52.0 51.2 52.3 51.7 51.5 55.1 52.3 51.7 53.0 50.8 51.0 49.5 50.4 52.1 48.2 53.4 55.4Australia 50.1 46.9 49.0 45.4 46.3 48.0 52.3 44.2 50.4 51.7 52.1 50.2 52.5 51.9 51.5 53.5 58.1 53.4 51.0 51.8 56.4 46.9 49.8Japan 52.0 52.0 52.2 51.6 50.3 49.9 50.9 50.1 51.2 51.7 51.0 52.4 52.6 52.6 52.3 50.1 49.1 48.2 47.7 48.1 49.3 49.5 50.4EM 50.6 50.4 50.8 50.9 49.8 49.3 49.4 49.2 48.8 48.3 48.3 48.9 49.0 49.2 49.2 48.8 50.0 49.5 49.5 49.3 50.1 49.8 50.1China 50.0 49.6 49.7 50.7 49.6 48.9 49.2 49.4 47.8 47.3 47.2 48.3 48.6 48.2 48.4 48.0 49.7 49.4 49.2 48.6 50.6 50.0 50.1China (NBS) 50.3 50.1 49.8 49.9 50.1 50.1 50.2 50.2 50.0 49.7 49.8 49.8 49.6 49.7 49.4 49.0 50.2 50.1 50.1 50.0 49.9 50.4 50.4Indonesia 48.0 47.6 48.5 47.5 46.4 46.7 47.1 47.8 47.3 48.4 47.4 47.8 46.9 47.8 48.9 48.7 50.6 50.9 50.6 51.9 48.4 50.4 50.9Korea 49.0 49.9 51.1 51.1 49.2 48.8 47.8 46.1 47.6 47.9 49.2 49.1 49.1 50.7 49.5 48.7 49.5 50.0 50.1 50.5 50.1 48.6 47.6Taiwan 51.4 50.0 51.7 52.1 51.0 49.2 49.3 46.3 47.1 46.1 46.9 47.8 49.5 51.7 50.6 49.4 51.1 49.7 48.5 50.5 51.0 51.8 52.2India 53.3 54.5 52.9 51.2 52.1 51.3 52.6 51.3 52.7 52.3 51.2 50.7 50.3 49.1 51.1 51.1 52.4 50.5 50.7 51.7 51.8 52.6 52.1Brazil 48.7 50.2 50.7 49.6 46.2 46.0 45.9 46.5 47.2 45.8 47.0 44.1 43.8 45.6 47.4 44.5 46.0 42.6 41.6 43.2 46.0 45.7 46.0Mexico 54.3 55.3 56.6 54.4 53.8 53.8 53.3 52.0 52.9 52.4 52.1 53.0 53.0 52.4 52.2 53.1 53.2 52.4 53.6 51.1 50.6 50.9 52.2

|GTM – Asia 19

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Global productivity and demographics

Source: (Left) J.P. Morgan Economics, J.P. Morgan Asset Management. (Right) J.P. Morgan Economics, United Nations, J.P. Morgan Asset Management. Labor productivity is defined as GDP / Employment. *Excludes China and India. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Labor productivityYear-over-year change

Global population and old age shareYear-over-year change Share of population

Forecast

9%

10%

11%

12%

13%

14%

15%

16%

0.5%

1.0%

1.5%

2.0%

2.5%

'60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15 '20

Population

Age 65+

-8%

-6%

-4%

-2%

0%

2%

4%

6%

'02 '04 '06 '08 '10 '12 '14 '16

Emerging*

Developed

|GTM – Asia 20

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Global inflation

Source: FactSet, J.P. Morgan Economics, J.P. Morgan Asset Management.All data shown above are headline CPI inflation. *The arrows and dates in the central bank policy rate column indicate the direction and date of last change, respectively. The central bank’s policy rate for each country includes the one-year benchmark lending rate (China), RBI policy repo rate (India), BI 7-day reverse repo rate (Indonesia), the BoJ will adopt a three-tier system in which a negative interest rate of -0.1% will be applied to the policy rate balance of the aggregate amount of all financial institutions that have current accounts at the BoJ (Japan), BoK base rate (Korea), overnight policy rate (Malaysia), discount rate (Taiwan), one-day repurchase rate (Thailand), fed funds rate (U.S.), eurozone main refinancing operations rate (eurozone) and BoE official bank rate (UK).Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Monthly inflation trendYear-over-year change Rising inflation Unchanged Falling inflation

Country Aug 2015

Sep2015

Oct2015

Nov 2015

Dec2015

Jan2016

Feb2016

Mar2016

Apr2016

May2016

Jun2016

Jul2016

Aug2016

Central bank

target/ forecast

Central bank policy rate*

China 2.0 1.6 1.3 1.5 1.6 1.8 2.3 2.3 2.3 2.0 1.9 1.8 1.3 3.0 4.35 ( 10/2015)

India 3.7 4.4 5.0 5.4 5.6 5.7 5.2 4.8 5.4 5.8 5.8 6.1 5.1 2.0 – 6.0 6.50 ( 4/2016)

Indonesia 7.2 6.8 6.3 4.9 3.4 4.1 4.4 4.5 3.6 3.3 3.5 3.2 2.8 3.0 – 5.0 5.00 ( 9/2016)

Japan 0.2 0.0 0.3 0.3 0.2 0.0 0.3 -0.1 -0.3 -0.4 -0.4 -0.4 -0.5 2.0 -0.10 to 0.00 ( 2/2016)

Korea 0.7 0.6 0.9 1.0 1.3 0.8 1.3 1.0 1.0 0.8 0.8 0.7 0.4 2.0 1.25 ( 6/2016)

Malaysia 3.1 2.6 2.5 2.6 2.7 3.5 4.2 2.6 2.1 2.0 1.6 1.1 1.5 2.0 – 3.0 3.00 ( 7/2016)

Taiwan -0.5 0.3 0.3 0.5 0.1 0.8 2.4 2.0 1.9 1.2 0.9 1.2 0.6 1.2 1.375 ( 6/2016)

Thailand -1.2 -1.1 -0.8 -1.0 -0.9 -0.5 -0.5 -0.5 0.1 0.5 0.4 0.1 0.3 1.0 – 4.0 1.50 ( 4/2015)

U.S. 0.2 0.0 0.2 0.5 0.7 1.4 1.0 0.9 1.1 1.0 1.0 0.8 1.1 2.0 0.25 – 0.5 ( 12/2015)

Eurozone 0.1 -0.1 0.1 0.2 0.2 0.3 -0.2 0.0 -0.2 -0.1 0.1 0.2 0.2 2.0 0.00 ( 3/2016)

UK 0.0 -0.1 -0.1 0.1 0.2 0.3 0.3 0.5 0.3 0.3 0.5 0.6 0.6 2.0 0.25 ( 8/2016)

|GTM – Asia 21

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-0.30% -0.37% -0.37%

-0.03%-0.14% -0.15%

0.34%0.26% 0.30%

0.49%

0.69%0.81%

-0.6%

-0.3%

0.0%

0.3%

0.6%

0.9%

12/16 12/17 12/18

-0.5%

0.5%

1.5%

2.5%

3.5%

'10 '11 '12 '13 '14 '15 '16

G4 policy rates and market expectations

Source: (Left) Bloomberg, FactSet, J.P. Morgan Asset Management. (Top right and bottom right) Bloomberg, J.P. Morgan Asset Management. *Key deposit rates that central banks charge commercial banks on their excess reserves. **The BoJ will adopt a three-tier system in which a negative interest rate of -0.1% will be applied to the policy rate balance of the aggregate amount of all financial institutions that have current accounts at the BoJ. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

'00 '02 '04 '06 '08 '10 '12 '14 '16-1%

0%

1%

2%

3%

4%

5%

6%

7%

Central bank key policy ratesPolicy rate Deposit

rate*Sweden -0.50% -1.25%

Switzerland -0.75% -0.75%

Denmark 0.05% -0.65%

Eurozone 0.00% -0.40%

Japan -0.10 to 0.0% -0.10%

UK 0.25% 0.00%

U.S. 0.25 to 0.50% 0.00%

Federal funds rate (Fed)

BoE official bankrate (BoE)

Eurozone mainrefinancing operationsrate (ECB)

BoJ uncollateralized overnight call rate** (BoJ)

Market expectations for policy ratesU.S.

Japan

Eurozone

UK

Medium-term inflation expectations5-year/5-year breakeven inflation expectation

U.S.

JapanEurozone

2.0%

1.3%

0.1%

|GTM – Asia 22

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '170%

10%

20%

30%

40%

50%

60%

70%

80%

90%

'14 '15 '16

Central bank balance sheets and their impact

Source: (Left) Bank of England, Bank of Japan, European Central Bank, FactSet, Federal Reserve System, J.P. Morgan Economics, J.P. Morgan Asset Management. (Right) Bloomberg, BofA/Merrill Lynch, J.P. Morgan Asset Management. Index shown is the BofA/Merrill Lynch Global Government Bond Index. *Balance sheet forecasts are based on central banks’ stated economic intentions, i.e. assumptions are that the BoJ will expand its balance sheet at an annual rate of JPY 80 trillion, the ECB will expand its balance sheet at a monthly rate of EUR 80 billion, BoE will expand its balance sheet by 70 billion pounds over the next six months and the Fed will keep its balance sheet at its current level. Nominal GDP growth forecasts provided by J.P. Morgan Economics. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Yield on developed market government bonds

% of government bonds below 1%% of government bonds below 0%

9/2016: 38.1%

9/2016: 33.2%

Central bank balance sheetsShare of nominal GDP

Fed

BoE

ECB

BoJ

Projections*

|GTM – Asia 23

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-10%

-8%

-6%

-4%

-2%

0%

2%

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Fiscal policy and government debt

Source: (All charts) IMF, J.P. Morgan Asset Management. Growth and debt data are based on the IMF’s April 2016 World Economic Outlook.Guide to the Markets – Asia 4Q 2016.Data reflect most recently available as of 30/9/16.

Fiscal balanceGeneral government fiscal balance, share of GDP

Gross government debtForecastDebt to GDP ratio

Emerging markets

Developed markets

China

U.S.

Japan

Euro area

0%

20%

40%

60%

80%

100%

120%

140%

1915 1925 1935 1945 1955 1965 1975 1985 1995 2005 2015

2015: 105%

2015: 45%

|GTM – Asia 24

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Global debt dynamics

Source: (Left) BIS, Central Bank of Republic of China, IMF, J.P. Morgan Economics, J.P. Morgan Asset Management. (Right) BIS, CEIC, Haver, UBS, J.P. Morgan Asset Management. *Nominal GDP growth forecasts provided by J.P. Morgan Economics.**Split of household and corporate debt is unavailable for Philippines. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Total non-financial sector debt by countryShare of GDP, 2015*

Change in private sector debt

Cha

nge

in p

rivat

e se

ctor

deb

t sin

ce 2

010

(sha

re o

f GD

P)

Corporate debtGovernment debt

Household debt

Non-financial private sector debt, 2015 (Share of GDP)

EM ex-Asia DM

EM Asia

0% 100% 200% 300% 400%

Indonesia

Mexico

Russia

Philippines**

Turkey

South Africa

India

Brazil

Taiwan

Thailand

Malaysia

Korea

China

UK

U.S.

Europe

Japan 405%

265%

252%

243%

221%

218%

180%

160%

157%

139%

121%

107%

93%

84%

82%

62%

52%

Japan

China

Hong Kong

India

South Korea

Taiwan

Indonesia

MalaysiaThailand

Singapore

Philippines

U.S.Germany

UK

AustraliaFrance

Mexico

Brazil

South Africa

Poland

Turkey

Canada

-40%

-20%

0%

20%

40%

60%

80%

20% 60% 100% 140% 180% 220% 260%

|GTM – Asia 25

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10%

12%

14%

16%

18%

65%

75%

85%

95%

'70 '75 '80 '85 '90 '95 '00 '05 '10 '15

United States: Cyclical indicators

Source: (All charts) Bloomberg, Census Bureau, FactSet, Federal Reserve, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management.*Capital goods orders deflated by producer price index for capital goods.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Millions, seasonally adjusted annualized rateLight vehicle sales

8/2016: 16.9

Average: 15.4

8/2016: 1,142

Housing startsThousands, seasonally adjusted annualized rate

Average: 1,331

Real capital goods orders*Non-defense capital goods orders ex-aircraft, USD billions, seasonally adjusted

Average: 56.4

8/2016: 53.6

Capex share of GDP vs. capacity utilizationShare of total capacity Share of GDP

CapexCapacity utilization

|GTM – Asia 26

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United States: Labor market and inflation

Source: (Left) FactSet, U.S. Bureau of Labor Statistics, J.P. Morgan Asset Management. (Right) FactSet, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management. Average CPI inflation weights from 1986 to 2015 are used to break down the contribution to headline inflation due to data availability. *Core rate is CPI inflation excluding energy, food and beverages.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

CPI inflationContribution to CPI inflation, year-over-year change, seasonally adjusted

'70 '75 '80 '85 '90 '95 '00 '05 '10 '150%

2%

4%

6%

8%

10%

12%

Unemployment rate and average hourly earnings

Average hourly earnings(% y/y)

Unemployment rate

U.S. recession period

8/2016: 4.9%

8/2016: 2.5%

Food, alcohol, tobaccoCore rate*EnergyCPI

Avg. since 1970

Avg. since 2000

8/2016

Headline CPI 4.1% 2.2% 1.1%

Core CPI 4.1% 2.0% 2.3%

-4%

0%

4%

8%

12%

16%

'70 '75 '80 '85 '90 '95 '00 '05 '10 '15

|GTM – Asia 27

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United States: Employment cost and profits

Source: (Left) FactSet, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management. (Right) Bureau of Labor Statistics, Conference Board, FactSet, J.P. Morgan Asset Management. *Employee compensation includes wages, salaries and non-cash benefits such as contributions to pension plans and health insurance.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Employee compensation and profitabilityShare of GDP

Employee compensation*

Corporate profits

Unit labor costs and pricing Year-over-year change, 4-quarter moving average

Unit labor costsBusiness output prices

|GTM – Asia 28

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0%

1%

2%

3%

4%

5%

6%

7%

'93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

0.81%

0.48%0.69%

1.13%

0.63%

0.64%0.47%0.36%

1.88%

United States: Monetary policy

Source: FactSet, Federal Reserve, U.S. Bureau of Labor Statistics, J.P. Morgan Asset Management.*The futures rate is a measure of the market’s prediction for the monthly average effective federal funds rate after allowing for the possibility of a non-zero risk premium. In general, the federal funds futures market is used as an indication of when the market anticipates a change in Fed policy. **Real GDP, unemployment rate and PCE inflation are midpoints of central tendency except for federal funds rate, which is a median estimate.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Federal funds rate expectations*FOMC and market expectations for the fed funds rate

Federal funds rate

Market expectations (as of 30/6/16)

Market expectations (as of 30/9/16)

FOMC median projections (as of 21/9/16)

2.88%

Longer run

FOMC projection (longer run)

Fed’s Sep. 2016 summary of economic projections**

Percent 2016 2017 2018 2019 Longer run

Change in real GDP 1.8 2.0 2.0 1.9 1.8June 2016 forecast 2.0 2.0 2.0 n/a 2.0

Unemployment rate 4.8 4.6 4.5 4.6 4.8June 2016 forecast 4.7 4.6 4.6 n/a 4.8

PCE inflation 1.3 1.9 2.0 2.0 2.0June 2016 forecast 1.4 1.9 2.0 n/a 2.0

Federal funds rate 0.625 1.125 1.875 2.625 2.875June 2016 forecast 0.875 1.625 2.375 n/a 3.000

2.63%

|GTM – Asia 29

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0 20 40 60

Democrat

Republican

United States: Elections

Composition of the Senate

Democrats would need a 5.0%swing in nationwide votes to close this gap

Current: 54 seats

Current: 46 seats*

Democrat

Number of seats held by each party

0 50 100 150 200 250

Democrats would need a 14.5% swing in nationwide votes to close this gap Current: 187 seats

Current: 247 seatsRepublican

Democrat

Composition of the HouseNumber of seats held by each party

Cumulative GDP growth since prior peak

Source: (Top left and bottom left) New York Times, Real Clear Politics, United States House of Representatives, United States Senate, J.P. Morgan Asset Management. (Right) FactSet, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management. *There are 44 registered Democrats in the U.S. Senate and two Independents who caucus with the Democrats. Percentage swing in votes needed to shift party control of each chamber of Congress is calculated as the vote spread in the last election for each individual seat plus the percentage change nationally required so that a new party would attain a majority. One-third of the seats in the United States Senate are up for election and all of the seats in the United States House of Representatives are up for election.Guide to the Markets – Asia 4Q 2016 .Data reflect most recently available as of 30/9/16.

Qua

rter

ly G

DP

grow

th, y

ear-

over

-yea

r cha

nge

Number of quarters since prior peak

-6%

4%

14%

24%

34%

44%

54%

0 8 16 24 32 40

Start of expansion4Q 1948 2Q 19533Q 1957 2Q 19604Q 1969 4Q 19731Q 1980 3Q 19813Q 1990 1Q 20014Q 2007

Republican24 seats

up for election

10 seats up for

election

Current expansion

|GTM – Asia 30

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41.7% 41.5%

7.2%11.6%

27.1%

0%

15%

30%

45%

'16 '17 '18 '19 '20

Eurozone: Politics

Source: (Left) Eurostat, J.P. Morgan Asset Management. (Right) IMF, J.P. Morgan Asset Management. *In 2016, there were/will be elections and/or referendums in Austria, Bulgaria, Hungary, Ireland, Italy, Portugal, Spain and United Kingdom. In 2017, there will be elections in France, Germany, Hungary, Netherlands and Slovenia. In 2018, there will be elections in Czech Republic, Finland, Ireland and Sweden. In 2019, there will be elections in Belgium, Croatia, Denmark, Estonia, Greece, Latvia, Lithuania, Poland, Romania and Slovakia. Guide to the Markets – Asia 4Q 2016.Data reflect most recently available as of 30/9/16.

European general electionsShare of EU GDP

Fiscal balance General government fiscal balance, share of GDP

-9%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Forecast

GermanyEuro area

France

Portugal, Spain, Italy (equal weighted)

Selected countries* Election datesItaly constitutional reform December 2016

Netherlands March 2017France April – May 2017Germany August – October 2017

|GTM – Asia 31

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5%

10%

15%

20%

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

'12 '13 '14 '15 '16

Eurozone: Economic snapshot

Source: (Top left, top right and bottom left) Eurostat, FactSet, J.P. Morgan Asset Management. (Bottom right) ECB, Eurostat, FactSet, J.P. Morgan Asset Management.*Euro area (eurozone) consumer confidence as reported by the European Commission, which measures the level of optimism that consumers have about the economy. **Peripheral European countries include Portugal, Ireland, Italy, Greece and Spain.***Core rate is CPI inflation (HICP) excluding energy, food, alcohol and tobacco.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Eurozone real GDP

Euro area

Quarter-over-quarter changeEurozone consumer confidence* and retail sales

Consumer confidence

Retail sales

Index Year-over-year change, 3-month moving average

Eurozone CPI inflationContribution to headline inflation, year-over-year change

Portugal, Spain, Italy (equal weighted)

Germany

France

Euro area

Europe unemployment rate

Germany and France

Peripheral**

Food, alcohol, tobaccoCore rate***EnergyCPI

-1.5%

0.0%

1.5%

3.0%

'12 '13 '14 '15 '16

-4%

-2%

0%

2%

4%

-40

-30

-20

-10

0

'05 '07 '09 '11 '13 '15

|GTM – Asia 32

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0%

20%

40%

60%

80%

100%

'12 '13 '14 '15 '16

Eurozone: Monetary policy

Source: (Top left) ECB, Eurostat, FactSet, J.P. Morgan Asset Management. (Top right) ECB, J.P. Morgan, J.P. Morgan Asset Management. (Bottom left) ECB, FactSet, J.P. Morgan Asset Management. (Bottom right) Bloomberg, Bofa/Merrill Lynch, J.P. Morgan Asset Management. Index is BofA Merrill Lynch Euro Corporate Index. *Real GDP growth rates for 1Q 2009, 2Q 2009 and 3Q 2009 were -4.9%, -4.7% and -3.8%, respectively, and is cut off to maintain a more reasonable scale.**J.P. Morgan estimates of when issue/issuer limit will be reached under the current Public Sector Purchase Program (PSPP) framework. Issue limit refers to the maximum share of a single PSPP-eligible security that the Eurosystem is prepared to hold. Issuer limit refers to the maximum share of an issuer’s outstanding securities that the ECB is prepared to buy.***Interest on new business lending up to €1 million, on a 1-5 year maturity.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Countries Capital Key Ratio

% of bonds below -0.4%

% of bonds below 0%

Estimated date of reaching issue/

issuer limit**

Germany 18.0% 58.5% 76.7% April 2017

France 14.2% 34.9% 59.6% 2018

Italy 12.3% 0.0% 17.2% 2018

Spain 8.8% 0.0% 29.7% 2018

Netherlands 4.0% 98.5% 99.1% March 2017

Belgium 2.5% 31.1% 47.0% 2018

Sovereign bonds yield comparisonEurozone bank lending and real GDPYear-over-year change

Household

CorporateGDP*

Yield on eurozone corporate bonds

Below 2%Below 1%Below 0%

Proportion of eurozone corporate bonds below specified yieldsCorporate lending rates to smaller companies% interest***, non-financial corporations

Italy

Germany

Spain

France

-4%

-2%

0%

2%

4%

-10%

0%

10%

20%

'04 '06 '08 '10 '12 '14 '16

|GTM – Asia 33

33

Equi

ties

Global and Asia equity markets: Returns

Source: FactSet, MSCI, J.P. Morgan Asset Management.Returns are total (net) returns based on MSCI indices in U.S. dollar terms. 10-yr total (net) return data is used to calculate annualized returns (Ann. Ret.) and 10-yr price return data is used to calculate annualized volatility (Ann. Vol.) and reflect the period 31/12/05 – 31/12/15. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD '16 3Q '16 Ann. Ret. Ann. Vol.

China India Ja pa n India ASEAN U.S . HK U.S . India Ja pa n Ta iwa n China China India

8 2 .9 % 7 3 .1% - 2 9 .2% 10 2 .8% 3 2 .2 % 1.4 % 2 8 .3 % 31.8 % 23 .9 % 9 .6 % 2 1.2 % 13 .9% 10 .1% 31.1%

India China U.S . Ta iwa n Kore a ASEAN India Ja pa n U.S . U.S . Korea HK ASEAN China

51.0 % 66 .2 % - 3 7 .6% 7 9 .2% 2 6 .7 % - 6 .3 % 2 6 .0 % 2 7 .2 % 12 .7 % 0 .7 % 15 .2 % 11.9 % 8 .5 % 27 .8 %

AS EAN HK Europe ASEAN HK Europe China Europe Ta iwa n HK ASEAN Ta iwa n HK Kore a

4 2 .4 % 4 1.2 % - 4 6 .4% 7 4 .6% 2 3 .2 % - 11.1% 2 2 .7 % 2 5 .2 % 9 .4 % - 0 .5 % 12 .9 % 11.7 % 8 .3 % 27 .6 %

Europe Asia e x-JP

Ta iwan Asia e x-JP

Ta iwa n Kore a ASEAN HK China Europe Asia e x-JP

Kore a India Ta iwa n

3 3 .7 % 4 0 .1% - 4 6 .5% 7 2 .1% 2 1.8% - 12 .0 % 2 2 .5 % 11.1% 8 .0 % - 2 .8 % 12 .5 % 11.0 % 7 .2 % 23 .0 %Asia e x-

JP ASEAN AS EAN Korea India Ja pan Asia e x-JP Ta iwa n ASEAN India HK Asia ex-

JP U.S . Asia e x-JP

3 3 .3 % 39 .0 % - 4 7 .7% 7 1.3 % 2 0 .9 % - 14 .3 % 2 2 .4 % 9 .1% 6 .2 % - 6 .1% 12 .3 % 10 .1% 6 .7 % 22 .6 %

HK Kore a China China Asia ex-JP

HK Kore a Kore a HK Kore a China Japa n Asia e x-JP

HK

3 0 .4 % 3 1.9 % - 5 0 .8% 6 2 .3% 19 .6% - 16 .0 % 2 1.2% 3 .9% 5 .1% - 6 .7 % 8 .6 % 8 .6 % 6.2 % 2 1.9%

Ta iwa n Europe HK HK Japa n Asia e x-JP

Europe China Asia e x-JP

China U.S . India Ta iwa n ASEAN

2 0 .0 % 13 .9 % - 5 1.2 % 6 0 .2% 15 .4% - 17 .3 % 19 .1% 3 .6% 4 .8 % - 7 .8 % 7 .3 % 5 .9 % 4.0 % 2 1.2%

U.S . Ta iwa n Asia ex-JP

Europe U.S . China Ta iwa n Asia e x-JP

Ja pa n Asia ex-JP

India Europe Europe Europe

14 .7 % 8 .4 % - 5 2 .4% 3 5 .8% 14 .8% - 18 .4 % 16 .7% 3 .1% - 4 .0 % - 9 .2 % 7 .1% 5 .4 % 3.4 % 20 .3 %

Kore a U.S . Kore a U.S . China Ta iwa n U.S . India Europe Ta iwan Ja pan U.S . Kore a Ja pa n

12 .6 % 5 .4 % - 5 5 .3% 2 6 .3% 4 .6 % - 20 .9 % 15 .3% - 3 .8 % - 6 .2 % - 11.7 % 2 .5 % 3 .9 % 2.9 % 15 .5%

Ja pa n Ja pa n India Ja pan Europe India Japa n AS EAN Kore a AS EAN Europe ASEAN Ja pan U.S .

6 .2% - 4 .2 % - 6 4 .6% 6 .3 % 3 .9 % - 37 .2 % 8 .2 % - 4 .7 % - 11.1% - 18 .5 % 0 .0 % 2.1% 0.9 % 15 .1%

10-yrs ('06 - '15)

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'06 '08 '10 '12 '14 '1620

40

60

80

100

120

140

160

180

Global equity earnings

Source: (All charts) FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Forward earnings per shareIndex, rebased 2006 = 100

Asia ex-Japan

Europe

Japan

U.S.

EM

Forward earnings per shareIndex, rebased 2006 = 100

'06 '08 '10 '12 '14 '1640

60

80

100

120

140

160

180

200

220

EM Asia

EM Latin America

EM

EM EMEA

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Global net margins

Earnings momentum and profitability

Source: (All charts) FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.*Earnings revision is calculated by taking the difference between the number of analyst upgrades and analyst downgrades, divided by the total number of analyst revisions on a monthly basis. Earnings revision above zero would mean that there were more upgrade revisions than downgrade revisions. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Global equities earnings momentumEarnings revision* (upward revision – downward revision / total revision), 3-month moving average

Earnings revision since October 2015Latest 3 observations

Forward return on equity

'07 '08 '09 '10 '11 '12 '13 '14 '15 '160%

4%

8%

12%

16%

20%U.S.

Europe

Japan

Asia ex-Japan

EM

U.S.

Europe

Japan

Asia ex-Japan

EM

-0.4

-0.2

0.0

0.2

S&P 500 TOPIX Europe Asia ex-Japan EM

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Global equity markets: Valuations

Source: (All charts) China Securities Index, FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.P/E and P/B ratios are in local currency terms. China A valuations based on the CSI300 Index and use 10 years of data due to availability. China H valuations based on the MSCI China. 15-year range for P/E and P/B ratios are cut off to maintain a more reasonable scale. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Equity market valuations – Price to earningsForward P/E ratios

15-yr. averageLatest

15-yr. range37.7 36.741.7

Equity market valuations – Price to bookTrailing P/B ratios 15-yr. average

Latest

15-yr. range7.3 5.4

15.013.2

12.314.7

11.113.8 14.2

16.1

11.6

16.115.3

17.4

9.3

14.3

9.7

15.1

9.9

16.9 14.513.0 13.5 12.4

14.7 16.3

13.7 12.3 15.017.6

13.410.0

13.6 13.4

18.4

8.2

0x

10x

20x

30x

S&P 500 Europe ex-UK

Asia ex-Japan

Asia Pacific Emergingmarkets

ASEAN Australia China A(CSI 300)

China Hong Kong India Japan Korea Taiwan Brazil Mexico Turkey

2.61.8 1.7 1.6 1.8 2.0 2.3

2.62.0

1.3

3.0

1.41.2

1.9 1.7

2.6

1.7

2.8

1.6 1.4 1.31.5 1.6 1.8 1.8

1.51.2

3.0

1.21.0

1.71.3

2.5

1.1

0x

1x

2x

3x

4x

5x

S&P 500 Europe ex-UK

Asia ex-Japan

Asia Pacific Emergingmarkets

ASEAN Australia China A(CSI 300)

China Hong Kong India Japan Korea Taiwan Brazil Mexico Turkey

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Global high dividend equities

Source: (Top) CLSA, FactSet, MSCI, J.P. Morgan Asset Management. (Bottom left and bottom right) FactSet, MSCI, J.P. Morgan Asset Management. *Total returns based on MSCI indices in U.S. dollar terms. **Annualized return and volatility based on total monthly return data (USD) between January 2001 and September 2016.***Risk-adjusted return is calculated by annualized return over volatility.Positive yield does not imply positive return. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

MSCI AC Asia Pacific ex-Japan: Performance by dividend yield*USD cumulative total return of tertiles with quarterly rebalancing (Jan. 2000 base = 100)

Top tertile

2nd tertile

Bottom tertile

All stocks

Risk and return profile: High dividend vs. broad index

MSCI indices

Asia Pacific ex-Japan EM DM

HD Broad HD Broad HD Broad

Annualized return** 9.4% 8.9% 13.0% 8.6% 5.8% 4.6%

Annualized volatility** 13.5% 20.8% 16.5% 22.6% 13.1% 15.6%

Risk-adjusted return***

0.70 0.43 0.79 0.66 0.44 0.30

Constituents of MSCI AC World IndexNumber of companies yielding greater than 3% by region

0100200300400500600700

'00 '02 '04 '06 '08 '10 '12 '14 '16

254214

151123

60

0

100

200

300

Asia Pac. ex-Japan

Europe EM ex-Asia U.S. Japan

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-3

-2

-1

0

1

2

3

4

'12 '13 '14 '15 '16-1

3

7

11

15

19

23

27

31

35

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

United States: Earnings

Source: (Left and bottom right) Compustat, FactSet, Standard & Poor’s, J.P. Morgan Asset Management. (Top right) Federal Reserve, S&P 500 individual company 10k filings, S&P Index Alert, J.P. Morgan Asset Management.EPS levels are based on operating earnings per share. *2Q earnings estimates are Standard & Poor’s consensus analyst expectations, based on actual earnings for the 99% of Standard & Poor’s companies that have reported and earnings estimates for the remaining 1% of companies. **Dollar major currencies index includes Australian dollar, British pound, Canadian dollar, euro, Japanese yen, Swedish kroner and Swiss franc. Year-over-year change is calculated using the quarterly average for each period.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

S&P 500 earnings per shareQuarterly operating earnings (USD)

Energy sector earningsEnergy sector contribution to S&P 500 EPS, quarterly (USD)

U.S. dollarYear-over-year change, quarterly, dollar major currencies index**Forecast

Forecast

S&P consensus analyst estimates*2Q 2016 USD25.753Q 2016 USD29.534Q 2016 USD31.33

-2%

2%

6%

10%

14%

18%

'12 '13 '14 '15 '16

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U.S. and European operating profit marginsEarnings / sales for MSCI Europe and S&P 500

Europe: Earnings and profitability

Source: (Top left) FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. (Bottom left) FactSet, MSCI, J.P. Morgan Asset Management. (Right) Eurostat, FactSet, Stoxx, J.P. Morgan Asset Management. Economic breakdown per share of GDP based on growth value added provided by Eurostat. Equity breakdown per share of total profits based on subsector classification within Stoxx 600. Both breakdowns are not representative of the entire economy and equity market and do not sum up to 100%.*Profits for energy and commodities as of 2014.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Europe economy vs. equity marketShare of GDP, share of total profits

U.S.

Europe10/2007:

9.8%

10/2007: 10.0%

3/2011: 8.8%

9/2016: 7.8%

9/2016: 10.7%

Margin expansion over the last 18 monthsEarnings per share / sales per share

EconomyEquities

0.7%0.3% 0.3%

0.0% 0.0%

-0.1%-0.4%

-0.5%

-0.9%-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

Ireland Germany France UK Europeex-UK

Portugal Switz. Italy Spain

6%

56%

16%

3%

28% 29%

57%

16%

0%

10%

20%

30%

40%

50%

60%

Financials Europeanconsumer

Manufacturing Energy &commodities*

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5x

15x

25x

35x

45x

55x

'80 '85 '90 '95 '00 '05 '10 '155x

15x

25x

35x

45x

55x

'80 '85 '90 '95 '00 '05 '10 '15

Developed markets: Cyclically-adjusted price-to-earnings (CAPE)

Source: (All charts) Datastream, MSCI, J.P. Morgan Economics, J.P. Morgan Asset Management.CAPE = Market price / 10-year average earnings.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Cyclically-adjusted price-to-earnings ratio Cyclically-adjusted price-to-earnings ratioMSCI U.S. CAPE MSCI Europe CAPE

-1 SD: 14.3 x

+1 SD: 31.4x

Average: 23.6x

9/2016: 25.7x +1 SD: 26.4x

Average: 20.5x

-1 SD: 11.8x

9/2016: 16.2x

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-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

0.6x 1.0x 1.4x 1.8x 2.2x 2.6x

Current level

Emerging markets: Valuation analysis

Source: (All charts) Bloomberg, FactSet, MSCI, J.P. Morgan Asset Management.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

MSCI emerging markets: Price-to-book and returnsPrice-to-book ratio and next 12 months’ price returns

EM growth & equity outperformance

EM growth & equity underperformance

EM minus DM GDP growth

MSCI EM relative to MSCI DM

EM vs. DM growth and equity performanceMonthly, consensus expectations for GDP growth in 12 months

0

20

40

60

80

100

120

140

160

-1%

0%

1%

2%

3%

4%

5%

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16

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0.2x

0.6x

1.0x

1.4x

'98 '00 '02 '04 '06 '08 '10 '12 '14 '160.8x

1.2x

1.6x

2.0x

2.4x

2.8x

3.2x

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16

Emerging markets: Price-to-book valuations

Source: (All charts) FactSet, I/B/E/S, J.P. Morgan Economics, MSCI, J.P. Morgan Asset Management.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

MSCI emerging markets P/B ratioTrailing P/B ratio

9/2016: 1.5x

+1 SD: 2.0x

-1 SD: 1.3x

Average: 1.6x

Emerging markets vs. developed markets relative P/B Relative MSCI EM / MSCI World P/B

EM relatively more expensive compared to DM

EM relatively cheaper compared to DM

9/2016: 0.72x

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-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

0.80x 1.20x 1.60x 2.00x 2.40x 2.80x

USD appreciation and Asian equity underperformance

APAC ex-Japan: Valuation analysis

Source: (All charts) FactSet, J.P. Morgan Asset Management.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Relative APxJ / DM Equity Performance and USD REERIndex, rebased 1995 = 100

MSCI AC APxJ / MSCI The World (DM)

USD REER (inverted scale)

MSCI APAC ex-JP Index: Price-to-book and returnsPrice-to-book ratio and next 12 months’ price returns

USD depreciation and Asian equity outperformance

Current level80

85

90

95

100

105

110

115

120

125

13020

40

60

80

100

120

140

'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15

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0.2x

0.6x

1.0x

1.4x

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '161.0x

1.5x

2.0x

2.5x

3.0x

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16

APAC ex-Japan: Price-to-book valuations

Source: (All charts) FactSet, MSCI, J.P. Morgan Asset Management.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

MSCI AC Asia Pacific ex-Japan P/B ratioTrailing P/B ratio

9/2016: 1.5x

+1 SD: 2.0x

-1 SD: 1.4x

Average: 1.7x

Asia Pacific ex-JP vs. developed markets relative P/B Relative MSCI AC APxJ / MSCI World P/B

APxJ relatively more expensive compared to DM

APxJ relatively cheaper compared to DM

9/2016: 0.73x

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ties 40

60

80

100

120

140

'11 '12 '13 '14 '15 '16

-60%

-40%

-20%

0%

20%

40%

60%

80%

-0.6

-0.4

-0.2

0.0

0.2

0.4

'04 '06 '08 '10 '12 '14 '16

APAC ex-Japan: Earnings and return performance

Source: (All charts) FactSet, MSCI, J.P. Morgan Asset Management. *Index classifications include consumer, defensives, financials, industrials and commodities. Consumer-related sectors include consumer discretionary, consumer staples, health care and technology. Defensive-related sectors include telecom and utilities. Commodities-related sectors include materials and energy. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Earnings momentum and return performanceEarnings revision, 3-month moving average 6-month/6-month change

Sector performance*Index, rebased 2011 = 100

Financials

CommoditiesIndustrials

DefensivesConsumer

Sector growth comparison*

MSCI AsiaPacific ex-JP

Sectors

Earnings Growth (%)

Dividend Growth (%)

Cash Flow Growth (%)

2016 2017 2016 2017 2016 2017

Consumer 8.8 15.5 5.8 10.3 9.9 11.8

Defensives -5.7 5.3 -0.4 4.7 -0.6 4.6

Financials -1.4 4.1 -2.6 2.4 N/A N/A

Industrials 9.5 15.4 8.7 4.0 19.8 4.0

Commodities 6.3 29.0 -22.0 14.9 -8.6 6.2

APxJ 2.8 10.6 -1.3 5.8 3.1 8.3

MSCI Asia Pacific ex-JapanPrice Index

Earnings Revision

9/2016: -0.10

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APAC ex-Japan: Sector returns and valuations

Source: FactSet, MSCI, J.P. Morgan Asset Management. *“Correlation to interest rates” is calculated using daily sector returns and daily 10-year U.S. Treasury yield over the last 10 years. Returns are total (gross) returns in U.S. dollar terms.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Finan

cials

Real E

state

Health

Care

Cons.

Staples

Cons.

Discr.

Industr

ials

Materia

ls

Energ

y

Telec

om

Utilitie

s

Tech

nolog

y

APAC ex-JP

APAC ex-JP Weights 27.0% 6.8% 3.4% 5.7% 8.1% 7.6% 6.5% 4.2% 5.2% 3.6% 21.9% 100%

Wei

ghts

3Q '16 9.8 9.1 3.5 3.9 11.5 5.3 14.5 6.7 2.2 2.5 16.5 9.8

YTD '16 7.5 15.0 6.4 11.0 9.3 3.7 27.4 16.8 9.9 9.7 24.7 12.5

From peak (October 2007) 4.0 -3.1 110.4 43.3 15.4 -38.5 -36.0 -44.6 6.3 38.0 72.6 1.9

From trough (October 2008) 188.0 172.2 257.4 202.5 212.0 138.9 113.3 81.1 140.1 157.7 316.8 183.3

Beta to APAC ex-JP 1.08x 1.11x 0.50x 0.60x 0.93x 1.07x 1.13x 1.24x 0.80x 0.62x 0.95x 1.00x β

Correl to int rates* 0.14 0.12 0.08 0.10 0.16 0.16 0.12 0.15 0.11 0.11 0.15 0.15 ρ

Forward P/E Ratio 10.3x 12.8x 25.7x 20.7x 14.0x 14.0x 16.1x 14.7x 16.2x 12.6x 15.8x 13.6x

10-yr avg. 11.9x 14.2x 20.7x 17.8x 12.0x 14.3x 12.6x 12.2x 14.0x 14.4x 13.8x 12.7x

Trailing P/B Ratio 1.2x 0.9x 4.9x 2.9x 1.7x 1.3x 1.3x 1.0x 2.0x 1.3x 2.3x 1.5x

10-yr avg. 1.5x 1.1x 4.3x 2.9x 2.0x 1.6x 2.0x 1.9x 2.3x 1.5x 2.1x 1.8x

Dividend Yield 4.2% 3.6% 1.2% 2.3% 1.8% 2.4% 2.5% 2.6% 3.6% 3.8% 1.7% 2.9%

10-yr avg. 3.8% 3.7% 1.6% 2.8% 2.1% 2.5% 3.0% 3.1% 4.0% 2.9% 2.2% 3.1%

Ret

urn

Div

P/E

P/B

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Source: (All charts) Bloomberg, FactSet, J.P. Morgan Asset Management. Based on Bloomberg Barclays U.S. Aggregate Credit - Corporate High Yield Index (U.S. Corporate HY), Bloomberg Barclays U.S. Aggregate Credit – Corporate Investment Grade Index (U.S. Corporate IG), J.P. Morgan Government Bond Index – EM Global (GBI-EM) (Local CCY EMD), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (USD EMD), J.P. Morgan Asia Credit Index (JACI) (USD Asian), Bloomberg Barclays Pan European High Yield (Europe HY), J.P. Morgan Government Bond Index – Global Traded (DM Gov’t), J.P. Morgan Asia Credit Index – Non-investment Grade Corporate (Asia HY), Bloomberg Barclays Global U.S. Treasury – Bills (3-5 years) (U.S. Treasury) and Bloomberg Barclays U.S. Treasury – Bills (1-3 months) (Cash). 5-year data is used to calculate annualized returns (Ann. Ret.). Returns are in USD and reflect the period from 31/12/10 – 31/12/15. (Left) Duration is a measure of the sensitivity of the price (the value of the principal) of a fixed-income investment to a change in interest rates. *Duration is expressed as number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. 10-year data is used to calculate the correlation to the 10-year UST. Positive yield does not imply positive return. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Global fixed income: Yields and returns

USD EMD

Global bond opportunitiesYTM

Local CCY EMD

U.S. Corporate IG

USD Asian Bond

DM Government Bond

Asia Corporate HY

U.S. Treasury

Cash

7.0%

4.2%

5.2%

2.9%

1.3%

6.6%

0.9%

0.2%

Duration*(years)

4.5

7.1

3.7

7.5

6.4

4.1

8.1

0.2

Correl. to10-year

UST0.04

0.18

-0.26

0.44

0.98

-0.25

0.63

0.09

Fixed income sector returns

U.S. Corporate HY

6.5% 3.2 -0.10

Europe HY

3.9% 5.2 0.22

5-yrs ('11 - '15)

2011 2012 2013 2014 2015 YTD '16 3Q '16 Ann. Ret.U.S .

Trea sEurope

HYEurope

HYUSD

Asia nAsia HY Loc a l

EMDU.S . HY Asia HY

9 .8% 30 .5 % 14 .9 % 8 .3 % 5 .8 % 17 .2% 5 .6% 6 .6%USD EMD

Asia HY U.S. HY U.S. IG USD Asian

U.S . HY Europe HY

USD Asian

8 .5% 25 .4 % 7 .4% 7 .5 % 2 .8 % 15 .1% 4 .2% 5 .5%

U.S . IG Loca l EMD

Asia HY Asia HY USD EMD

USD EMD

USD EMD

USD EMD

8 .1% 19 .9 % 4 .3% 5 .5 % 1.2 % 15 .0% 3 .7% 5 .1%

DM Gov't USD EMD

Cash USD EMD

U.S. Tre as

Asia HY Asia HY U.S . HY

7 .2% 18 .5 % 0 .0% 5 .5 % 0 .8 % 11.4 % 3 .2% 5 .0%

U.S . HY U.S . HY USD Asia n

U.S . Trea s

Ca sh DM Gov't USD Asian

U.S . IG

5 .0% 15 .8 % - 1.4 % 5 .1% 0 .0 % 10 .8% 2 .4% 4 .5%USD

Asia nUSD

Asia n U.S . IG U.S . HY U.S . IG U.S . IG Loca l EMD

Europe HY

4 .1% 14 .3 % - 1.5 % 2 .5 % - 0 .7 % 9 .2 % 1.8% 4 .2%

Cash U.S. IG U.S . Trea s DM Gov't DM Gov't USD

Asian U.S . IG U.S . Treas

0 .1% 9 .8% - 2 .7 % 0 .7 % - 2 .6 % 9 .1% 1.4% 2 .9%Europe

HYU.S .

Trea s DM Gov't Cash U.S . HY Europe HY DM Gov't DM Gov't

- 5 .5% 2 .0% - 4 .5 % 0 .0 % - 4 .5 % 7 .8 % 0 .2% 0 .3%

Asia HY DM Gov't Loc a l EMD

Europe HY

Europe HY

U.S. Tre as Ca sh Cash

- 5 .9% 1.3% - 5 .5 % - 6 .0 % - 7 .6 % 5 .1% 0 .1% 0 .0%Loca l EMD Cash USD

EMDLoc a l EMD

Loc a l EMD Ca sh U.S.

Tre asLoca l EMD

- 6 .4% 0 .1% - 6 .6 % - 6 .1% - 18 .0% 0 .2 % - 0 .3% - 4 .0%

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Global fixed income: Valuations

Source: BofA/Merrill Lynch, iBoxx, J.P. Morgan, J.P. Morgan Asset Management.Based on J.P. Morgan Domestic High Yield Index (U.S. High Yield), J.P. Morgan U.S. Liquid Index (JULI) (U.S. Investment Grade), BofA/Merrill Lynch Euro Non-Financial High Yield Constrained (Euro High Yield), iBoxx EUR corporates (Euro Investment Grade), J.P. Morgan Asia Credit Index (JACI) (USD Asia Credit), J.P. Morgan Asia Credit High Yield Index (USD Asia High Yield), J.P. Morgan Asia Credit Index – High Grade Corporate (USD Asia Corp. Investment Grade), J.P. Morgan Asia Credit Index – Non-investment Grade Corporate (USD Asia Corp. High Yield), J.P. Morgan Emerging Markets Global Bond Index – EMBIG (USD EMD),J.P. Morgan Corporate Emerging Markets Bond Index – CEMBI (USD Corp. EMD). Positive yield does not imply positive return.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

5-yr. averageLatest

5-yr. range

Spread to worst across fixed income sub-sectorsBasis points

578

175

506

126

258

493

205

597

364 369

558

168

419

84

191

424

159

423359 325

0

200

400

600

800

1,000

1,200

1,400

U.S. HighYield

U.S.Investment

Grade

Euro HighYield

EuroInvestment

Grade

USD AsiaCredit

USD AsiaHigh Yield

USD AsiaCorp IG

USD AsiaCorp HY

USD EMD USD Corp.EMD

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G3 government bond yields

Source: FactSet, J.P. Morgan Asset Management.*Average since October 1972 for Germany and February 1986 for Japan due to data availability.NIRP stands for negative interest rate policy. QQE stands for quantitative and qualitative monetary easing. QE stands for quantitative easing.Positive yield does not imply positive return. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Fed QE22010

BoE QE2009

Fed QE2008

Oil shock1981

Black Friday1987

Britain leaves ERM1992

Asian currency crisis1997

9/11 attacks2001

Dot com bubbleFeb 2000

Fall of Berlin Wall 1989

Oil crisis1973 Energy crisis

1979

Averagesince 1970* Latest

U.S. 6.6% 1.6%Germany 5.8% -0.1%Japan 2.6% -0.1%

10-year bond yields

BoJ QQE and NIRP,ECB QE and NIRP

2010 - current

Fed QE32012

Fed rate hike2015

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0%

1%

2%

3%

4%

5%

6%

'10 '11 '12 '13 '14 '15 '16

Global investment grade bonds

Source: (All charts) J.P. Morgan, J.P. Morgan Asset Management.*EBITDA stands for earnings before interest, tax, depreciation and amortization. **Interest coverage ratio is EBITDA over interest expense. Positive yield does not imply positive return. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Yield-to-maturityInvestment grade corporate bond yields across regions

U.S. corporates: Interest coverage ratio**

U.S. corporates: EBITDA* growth

U.S.

UK

Eurozone

Last 12-month EBITDA Last 12-month EBITDA (ex-energy, metals/mining)

Year-over-year change

EBITDA / Interest expense

EBITDA / Interest expense (ex-energy, metals/mining)

6x

8x

10x

12x

14x

16x

'00 '02 '04 '06 '08 '10 '12 '14 '16

-20%

-10%

0%

10%

20%

'07 '10 '13 '16

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3.0x

3.5x

4.0x

4.5x

5.0x

'08 '09 '10 '11 '12 '13 '14 '15 '16

0

400

800

1,200

1,600

2,000

0%

4%

8%

12%

16%

20%

'90 '95 '00 '05 '10 '15

U.S. high yield bonds

Source: (All charts) J.P. Morgan, J.P. Morgan Asset Management.*Default rate is defined as the par value percentage of the total market trading at or below 50% of par value and includes any Chapter 11 filing, prepackaged filing or missed interest payments. Spreads indicated are benchmark yield-to-worst less comparable maturity Treasury yields. Positive yield does not imply positive return. **Net leverage is net debt divided by adjusted earnings before interest, tax, depreciation and amortization (EBITDA). ***Interest coverage ratio is EBITDA over interest expense. Positive yield does not imply positive return.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

U.S. high yield spread and default rate*Average Latest

HY spread to worst 586bps 558bpsHY spread to worst (ex-energy) 634bps 543bpsHY spread to worst (energy) 548bps 633bps

HY default rate 3.9% 3.5%

Net leverage** and interest coverage ratio***U.S. high yield leverage measures

Net leverageInterest coverage ratio

Default rateSpread to worst

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500

1,000

1,500

2,000

2,500

0%

5%

10%

15%

20%

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Default rate bps

European high yield bonds

Source: (Top) BofA/Merrill Lynch, Credit Suisse, FactSet, J.P. Morgan Asset Management. Spread to worst is BofA/Merrill Lynch Euro Non-Financial High Yield Constrained. (Bottom left) J.P. Morgan, J.P. Morgan Asset Management. *EBITDA is earnings before interest, tax, depreciation and amortization. (Bottom right) J.P. Morgan, J.P. Morgan Asset Management. U.S. corporate high yield is represented by the J.P. Morgan Domestic High Yield Index. Europe corporate high yield is represented by J.P. Morgan Euro High Yield Index. EM corporate high yield is represented by J.P. Morgan CEMBI NON-IG Index. Asian corporate high yield is represented by J.P. Morgan Asia Credit Corporate High Yield Index. Positive yield does not imply positive return.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Sector breakdown across high yield indices

Commodities

OtherTMT

Health CareReal EstateIndustrial

ConsumerFinancial

Year-over-year changeEuropean high yield revenue and EBITDA growth

EBITDA*

Revenue

European high yield spread and default rateAverage Latest

HY spread to worst 634bps 419bpsHY default rate 4.8% 1.2%

2002 default rate: 34%

Default rate

Spread to worst

-40%

-20%

0%

20%

40%

'03 '05 '07 '09 '11 '13 '15

24% 29%7% 5%

6%14%

26% 30%

11%9%5%4%

7%

29%4%6%

8%

9%22% 8% 27%

15%21% 17%18%

7% 13% 8% 10%

0%

20%

40%

60%

80%

100%

U.S. Europe EM Asia

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0

10

20

30

40

50

60

70

80

90

100

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16

Emerging markets debt: Market size and fundamentals

Source: (Left) BIS, J.P. Morgan Asset Management. Based on an aggregate of the financial accounts of various EM countries. (Right) J.P. Morgan Economics, J.P. Morgan Asset Management. *Latest data as of 31/3/16 based on the BIS September 2016 Quarterly Review.**Latest credit rating breakdown for 2016 as of 30/9/16. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Size of the global bond marketUSD trillions

1995 2005 2016*U.S. 10.9 (53%) 23.8 (42%) 37.4 (40%)DM ex-U.S. 9.0 (44%) 27.7 (49%) 43.4 (44%)EM 0.7 (3%) 5.0 (9%) 15.3 (16%)World 20.6 56.5 96.1

DM ex-U.S.

U.S.

EM

Sovereign USD credit rating breakdownProportion of EMBI Global index

Unrated

BBB

IG

C

0%

20%

40%

60%

80%

100%

'95-'99 '00-'04 '05-'09 '10-'14 '15-'16**

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4%

6%

8%

10%

12%

14%

'06 '08 '10 '12 '14 '16

Emerging markets debt: Net flows, return comparison and composition

Source: (Left and top right) J.P. Morgan, J.P. Morgan Asset Management. (Bottom right) IIF, J.P. Morgan Asset Management. EMD sectors are based on J.P. Morgan GBI-EM Index (EM Sovereigns Local), J.P. Morgan EMBIG Index (EM Sovereigns USD) and J.P. Morgan CEMBI Index (EM Corporates USD).Positive yield does not imply positive return.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

EM debt return compositionYear-to-date performance attribution in USD

EM net flows by asset classUSD billions, monthly Debt

Equities

Total

Average since 1/2006 9/2016

Sovereigns (Local) 6.7% 7.0%Sovereigns (USD) 6.4% 5.2%Corporates (USD) 6.5% 5.1%

EMD yield to maturity

-$30

-$10

$10

$30

$50

'11 '12 '13 '14 '15 '16

Currency returnIncome returnPrice return

Total return

17.2%15.0%

12.6%

0%

4%

8%

12%

16%

20%

EM Sovereigns(Local)

EM Sovereigns(USD)

EM Corporates(USD)

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'09 '10 '11 '12 '13 '14 '15 '160%

2%

4%

6%

8%

10%

12%

14%

16%

Asian government bond yields

Source: (All charts) FactSet, J.P. Morgan Asset Management. Positive yield does not imply positive return. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16

10-year government bond yieldsLatest

India 7.1%China 2.7%Korea 1.4%Hong Kong 0.9%Taiwan 0.7%

LatestIndonesia 7.0%Philippines 3.7%Malaysia 3.6%Thailand 2.1%Singapore 1.8%

10-year government bond yields

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50

100

150

200

250

300

'06 '08 '10 '12 '14 '16

Source: (Left) J.P. Morgan, J.P. Morgan Asset Management. Cash return based on the U.S. 1-month total cash return index in U.S. dollar terms. (Top right and bottom right) FactSet, J.P. Morgan, MSCI, S&P, J.P. Morgan Asset Management.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Asian bonds: Return comparison

Annualized returnsMonthly data from the period Jan 2006 to Sep 2016

Annualized volatilityMonthly data from the period Jan 2006 to Sep 2016

Asian bond cumulative returnIndex, rebased 2006 = 100

Corp IG

Corp HY

Sovereign

Cash

18.7%

14.8%

10.1%

6.4%

0%

5%

10%

15%

20%

MSCI AC Asia ex-Japan

S&P 500 Asian High Yield(USD)

Asian InvestmentGrade (USD)

5.3%5.8%

7.3%

4.9%

0%

2%

4%

6%

8%

MSCI AC Asia ex-Japan

S&P 500 Asian High Yield(USD)

Asian InvestmentGrade (USD)

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Asset class returns

Source: Bloomberg, Dow Jones, FactSet, J.P. Morgan, MSCI, J.P. Morgan Asset Management. The “Diversified” portfolio assumes the following weights: 20% in the MSCI The World Index (DM Equities), 20% in the MSCI AC Asia ex-Japan (Asia ex-Japan), 5% in the average of the MSCI EM Latin America and MSCI EM EMEA Indices (EM ex-Asia), 10% in the J.P. Morgan EMBIG Index (EMD), 10% in the Bloomberg Barclays Aggregate (Global Bonds), 10% in the Bloomberg Barclays Global Corporate High Yield Index (Global Corporate High Yield), 15% in J.P. Morgan Asia Credit Index (Asian Bonds), 5% in MSCI U.S. REITs Index (U.S. REITs) and 5% in Bloomberg Barclays U.S. Treasury – Bills (1-3 months) (Cash). Diversified portfolio assumes annual rebalancing. All data represent total return in U.S. dollar terms for the stated period. 10-year total return data is used to calculate annualized returns (Ann. Ret.) and 10-year price return data is used to calculate annualized volatility (Ann. Vol.) and reflects the period 31/12/05 – 31/12/15. Please see disclosure page at end for index definitions. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD '16 3Q '16 Ann. Ret. Ann. Vol.

U.S . REITs EM e x-Asia

Globa l Bonds

EM e x-Asia

U.S . REITs U.S . REITs Asia e x-Ja pa n

DM Equitie s

U.S . REITs Asian Bonds

EM e x-Asia

Asia e x-Ja pa n

U.S . REITs EM e x-Asia

3 5 .9 % 4 1.1% 4 .8 % 9 1.3 % 2 8 .5 % 8 .7 % 2 2 .7% 2 7 .4 % 30 .4 % 2 .8 % 2 3 .4 % 10 .1% 7 .3 % 27 .0 %EM e x-

AsiaAsia e x-

Ja pa nCash Asia e x-

Ja pa nAsia ex-

Japa nEMD Globa l

Corp HYGloba l

Corp HYAsia n Bonds

U.S . REITs EMD EM e x-Asia

Globa l Corp HY

U.S . REITs

3 5 .1% 4 0 .5% 1.8 % 72 .5 % 19 .9% 8 .5 % 18 .9 % 8 .4 % 8 .3 % 2 .5 % 15 .0 % 5.3% 7 .1% 25 .9 %Asia ex-

Ja pa n Diversifie d Asia n Bonds

Globa l Corp HY

EM ex-Asia

Globa l Bonds EMD Dive rsifie d EMD EMD Globa l

Corp HYGloba l

Corp HY EMD Asia e x-Ja pa n

3 3 .7 % 14 .1% - 9 .8 % 63 .9 % 16 .6% 5 .6 % 18 .5 % 5 .6 % 5 .5 % 1.2 % 13 .4 % 5 .1% 6 .7 % 22 .6 %DM

Equitie sDM

Equitie sEMD Dive rsifie d Globa l

Corp HYAsia n Bonds

U.S . REITs Asia e x-Ja pan

DM Equities

Ca sh Asia ex-Ja pa n

DM Equitie s

Asia n Bonds

DM Equities

2 0 .7 % 9.6% - 10 .9% 40 .8 % 13 .8% 4 .1% 17 .8 % 3 .3 % 5 .5 % 0 .0 % 12 .8 % 4.9% 6 .6 % 16 .4 %

Dive rsifie d Globa l Bonds

Globa l Corp HY

DM Equities

Dive rsified Globa l Corp HY

EM e x-Asia

U.S . REITs Asia e x-Ja pa n

DM Equitie s

U.S . REITs Diversifie d Asia e x-Ja pan

Dive rsifie d

18 .8 % 9 .5% - 2 7 .9 % 30 .8 % 13 .4% 2 .6 % 17 .0 % 2 .5 % 5 .1% - 0 .3% 11.9 % 4 .5% 6 .5 % 12 .1%Globa l

Corp HYEMD Dive rsifie d U.S . REITs DM

Equitie sCa sh DM

Equitie sCash Dive rsifie d Dive rsified Dive rsifie d EMD Dive rsifie d Globa l

Corp HY13 .6 % 6 .3% - 2 8 .1% 28 .6 % 12 .3% 0 .1% 16 .5 % 0 .0 % 4 .5 % - 3 .1% 10 .7 % 3 .7% 5 .7 % 11.2 %

EMD Asia n Bonds U.S . REITs Asia n

Bonds EMD Dive rsifie d Diversifie d Asia n Bonds

Globa l Bonds

Globa l Bonds

Globa l Bonds

Asia n Bonds

DM Equitie s EMD

9 .9 % 5.4% - 3 8 .0 % 28 .3 % 12 .0% - 2 .8 % 15 .9 % - 1.4 % 0 .6 % - 3 .2% 9 .8 % 2.4% 5 .6 % 8 .8 %Asia n Bonds

Ca sh DM Equitie s

EMD Asian Bonds

DM Equitie s

Asia n Bonds

Globa l Bonds

Globa l Corp HY

Globa l Corp HY

Asia n Bonds

Globa l Bonds

Globa l Bonds

Asia n Bonds

7 .3 % 4 .8% - 4 0 .3 % 28 .2 % 10 .6% - 5 .0 % 14 .3 % - 2 .6 % 0 .2 % - 4 .9% 9 .1% 0.8% 3 .7 % 7 .4 %Globa l Bonds

Globa l Corp HY

Asia e x-Ja pan

Globa l Bonds

Globa l Bonds

Asia ex-Ja pa n

Globa l Bonds

EMD Ca sh Asia ex-Japa n

DM Equitie s

Ca sh Cash Globa l Bonds

6 .6 % 2 .6% - 5 2 .2 % 6 .9 % 5 .5 % - 17 .1% 4 .3% - 6 .6 % 0 .0 % - 8 .9% 6 .1% 0 .1% 1.2 % 2 .7 %

Ca sh U.S . REITs EM e x-Asia Ca sh Ca sh EM e x-

Asia Ca sh EM e x-Asia

EM e x-Asia

EM ex-Asia Ca sh U.S . REITs EM e x-

Asia Ca sh

4 .8 % - 16 .8 % - 5 7 .2 % 0 .1% 0.1% - 2 1.2 % 0 .1% - 8 .5 % - 2 0 .2 % - 2 2 .7% 0 .2 % - 1.4% - 0 .6 % 0 .1%

10-yrs ('06 - '15)

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Asset class correlations

Source: Bloomberg, DJ UBS, FactSet, J.P. Morgan Economics, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.Correlations based on MSCI AC Asia ex-Japan (Asia ex-Japan), MSCI Emerging Markets (EM Equities), S&P 500 (U.S. Equities), J.P. Morgan Asia Credit Index (JACI) (USD Asian Bond), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (USD EMD), J.P. Morgan Corporate Emerging Market Bond Index (CEMBI) (EM Corp), Bloomberg Barclays Pan European High Yield Index (European High Yield), Bloomberg Barclays U.S. Corporate High Yield Index (U.S. High Yield), Bloomberg Barclays U.S. Capital Aggregate (U.S. Agg), U.S. Dollar DXY Index (U.S. Dollar), Brent Crude Oil Price (USD/bbl) (Brent Crude Oil), London Gold PM Price Fixing (USD/oz) (Gold) and FTSE EPRA/NAREIT Developed REITs Index (Global REITs). 10-year correlations are based on monthly returns from 30/9/06 – 30/9/16, and 3-year correlations from 30/9/13 – 30/9/16. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Asia ex-Japan equity

EM equity U.S. equity Asian USD bond USD EMD EM corp European

high yieldU.S.

high yield U.S. agg U.S. dollar (DXY)

Brent crude oil Gold REITs

Asia ex-Japan equity 1.00 0.98 0.76 0.65 0.67 0.68 0.69 0.73 0.15 -0.53 0.39 0.19 0.65

EM equity 0.97 1.00 0.78 0.66 0.69 0.70 0.69 0.75 0.14 -0.57 0.43 0.21 0.67

U.S. equity 0.69 0.71 1.00 0.55 0.60 0.60 0.64 0.73 0.03 -0.52 0.34 0.04 0.81

Asian USD bond 0.62 0.65 0.44 1.00 0.93 0.96 0.64 0.73 0.61 -0.50 0.26 0.41 0.65

USD EMD 0.63 0.70 0.55 0.84 1.00 0.92 0.62 0.77 0.58 -0.57 0.31 0.36 0.69

EM corp 0.68 0.75 0.64 0.82 0.92 1.00 0.70 0.78 0.54 -0.52 0.38 0.37 0.62

European high yield 0.53 0.55 0.70 0.44 0.44 0.60 1.00 0.87 0.09 -0.33 0.46 0.10 0.62

U.S. high yield 0.65 0.71 0.69 0.64 0.74 0.87 0.75 1.00 0.23 -0.47 0.44 0.16 0.77

U.S. agg 0.09 0.08 -0.08 0.69 0.38 0.32 0.06 0.22 1.00 -0.25 -0.13 0.39 0.29

U.S. dollar (DXY) -0.25 -0.36 -0.23 -0.11 -0.39 -0.34 0.02 -0.38 0.17 1.00 -0.36 -0.40 -0.51

Brent crude oil 0.28 0.35 0.31 0.09 0.43 0.50 0.33 0.56 -0.27 -0.39 1.00 0.20 0.15

Gold 0.03 0.07 -0.15 0.33 0.30 0.22 -0.15 0.22 0.48 -0.32 -0.01 1.00 0.12

REITs 0.54 0.51 0.50 0.74 0.58 0.54 0.39 0.48 0.64 -0.07 -0.21 0.22 1.00

10-year correlations

3-year correlations

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Volatility and correlation

Source: (Top) Bloomberg, FactSet, J.P. Morgan Asset Management. (Bottom) FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management.*The VIX-CBOE Volatility Index measures market expectations of near-term volatility conveyed by S&P 500 Index (SPX) option prices. **G4 10-year sovereign bond yields based on Germany, Japan, U.S. and UK.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Equity (VIX)*

Dot com bust Post dot com

Global financial crisis

QE era

Post QE eraIndex

Weekly rolling 6-month correlation of equities and sovereign bonds

Stocks and bonds moving in the same direction

Stocks and bonds moving in the opposite direction MSCI World / G4 10-year sovereign bonds**

S&P 500 / U.S. 10-year Treasury

-1.0

-0.5

0.0

0.5

1.0

'99 '01 '03 '05 '07 '09 '11 '13 '15

0

30

60

90

'99 '01 '03 '05 '07 '09 '11 '13 '15

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Asset classes, rolling 3-month average total return (USD), 1994-2016 YTD*Sectors’ relative total return impact in a rising rate environmentRolling 3-month average total return (USD) relative to MSCI AC World broad index, 1994-2016 YTD*

Defensives Cyclicals Financials

MSCI AC World 41.8% 43.8% 14.4%

MSCI World (DM) 46.9% 42.6% 10.5%

MSCI EM 18.1% 40.0% 41.9%

MSCI AC AsiaPacific ex-Japan 25.8% 37.5% 36.7%

Composition of MSCI High Dividend Equity Indices

-3.8%-3.1%

-2.8%-1.9%

-0.4%1.1%

1.5%2.1%

2.6%3.1%

-6% -4% -2% 0% 2% 4%

UtilitiesHealth Care

Con. Stap.Telecom

FinancialsIndustrialsCon. Disc.

EnergyMaterial

I.T.

-3.1%

-0.7%

-0.7%

0.9%

1.3%

1.3%

2.5%

3.3%

4.1%

4.6%

4.9%

6.3%

7.1%

7.8%

8.7%

8.8%

-6% -3% 0% 3% 6% 9%

U.S. 10-year Treasury

U.S. aggregate

IG corporate

EMD (LLC)

EMD (USD)

Asian bonds (USD)

U.S. high yield

U.S. REITs

Convertible bonds

High div. DM equities

DM equities

Asia Pac. equities

Asia Pac. ex-JP equities

High div. Asia Pac. ex-JP equities

EM equities

High div. EM equities

Rate rise impact on different asset classes

Source: (Left) Bloomberg, FactSet, MSCI, J.P, Morgan Asset Management. (Top right and bottom right) MSCI, J.P. Morgan Asset Management. *Periods of rising U.S. yields are defined as rolling 3-month periods when the U.S. 10-year Treasury yields increased more than 25bps from January 1994 to September 2016, data permitting. Returns are total returns in U.S. dollar terms. Asset classes shown above include MSCI Emerging Markets High Dividend Index (data since 2001), MSCI World High Dividend Index (data since 1995), MSCI AC Asia Pacific ex-Japan High Dividend Index (data since 1999), MSCI World Index, MSCI Emerging Market Index, MSCI AC Asia Pacific ex-Japan Index, MSCI AC Asia Pacific Index, MSCI U.S. REIT Index (data since 1996), Bloomberg Barclays U.S. Treasury (10-year) Bellwethers Index, Bloomberg Barclays U.S. Corporate High Yield Index (data since 2002), Bloomberg Barclays U.S. Investment Grade Credit Index, Bloomberg Barclays U.S. Aggregate Index, J.P. Morgan EMBI Global Index, J.P. Morgan GBI-EM Broad Composite Index, J.P. Morgan Asia Credit Index (data since 1999) and BofA/Merrill Lynch U.S. Convertibles Index. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Total return impact in a rising yield environment

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70

80

90

100

110

120

130

'73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15

U.S. dollar trend

Source: (All charts) FactSet, Federal Reserve, Reuters, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management.*The real trade-weighted exchange rate index is the weighted average of a country’s currency relative to a basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country’s currency, with other countries within the basket. **The Dollar Index is a trade-weighted index calculated using 6 major U.S. trade partners’ currencies – Australian dollar, British pound, Canadian dollar, Euro, Japanese yen, Swedish kroner and Swiss franc. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

U.S. dollar performance

7 years: +52.7%

8 years: +34.2%

Average: 91.4

Average: 95.7

U.S. Dollar Index (DXY)**Real trade-weighted exchange rate index (REER)*

4 years: +20.6%

9/2016: 95.4 8/2016: 97.0

Currency performance vs. USDChange since the beginning of the USD uptrend in April 2011

EM Asian countriesOther EM countriesDM countries

-73%

-57% -52% -52% -49%-40% -34% -34% -30% -28% -28% -24% -22% -20% -14% -12% -10% -9% -3% -3%

-80%

-60%

-40%

-20%

0%

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-2.7-2.3

-1.7 -1.4 -1.3 -1.2 -1.2 -1.0 -0.9 -0.5 -0.4 -0.3 -0.2

0.1 0.5 0.7 0.9 0.9 1.0 1.61.8

-4

-2

0

2

4

Current account balance and currency valuations

Source: (Top) FactSet, J.P. Morgan Asset Management. (Bottom) IMF, J.P. Morgan Asset Management.Real effective exchange rate (REER) is a measure of the weighted average of a country’s currency against an inflation-adjusted and trade-weighted index of other currencies.*Data as of 30/4/2013 has been used for pre-taper tantrum period.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Currency deviation from 10-year average in real effective exchange rate terms

Current account balanceShare of GDP

FX above long-term average

FX belowlong-term average

Number of standard deviations away from average

2012

2015

Current valuation

Max

Min

Pre-taper tantrum*

-8%-4%0%4%8%

12%16%20%

|GTM – Asia 63

63

Oth

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Oil: Short-term market dynamics

USD / bbl USD real effective exchange rateBrent crude and dollar exchange rate

Brent crude oil

USD REER(inverted scale)

OPEC crude oil productionMillion barrels

OPEC quota: 32.5M barrels/day

USD depreciation

USD appreciation

Source: (Left) FactSet, J.P. Morgan Asset Management. (Top right and bottom right) Baker Hughes, FactSet, U.S. Department of Energy, J.P. Morgan Asset Management. *Weekly U.S. crude oil and petroleum ending inventory includes strategic petroleum reserve, and active rig count represents both natural gas and oil rigs.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

U.S. oil inventory and rig count* Number of rigs Billion barrels

Rig count U.S. oil inventory80

90

100

11020

40

60

80

100

120

140

'13 '14 '15 '1629

30

31

32

33

'13 '14 '15 '16

|GTM – Asia 64

64

Oth

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asse

t cla

sses

0

40

80

120

0 10 20 30 40 50 60 70 80 90

Oil: Long-term fundamentals

Source: (Top left and top right) IEA, J.P. Morgan Asset Management. (Bottom) Deloitte MarketPoint, IMF, Reuters, J.P. Morgan Asset Management.*Global demand and non-OPEC supply based on IEA forecast, whereas the OPEC supply for 2016 is estimated to be the same as 2015. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Global crude breakeven cost curveProduction cost 2013, USD / bbl

Production capacity, million barrels per day

Middle EastOther

conventionalsRussia

Other offshores

Heavyoils

North Sea

Deep-water

U.S. shale/

light oil

Canadian oil sands

Arctic

Oil supply and demand breakdownMillion barrels per day

World oil supply and demandMillion barrels per day

68

78

88

98

'95 '00 '05 '10 '15

Oil demand

Oil supply

IEA forecast*

91.4 93.7 96.3 96.5

IEA forecast*

Global demand Non-OPEC supply OPEC supply

37.5 37.5 38.7 38.7

53.8 56.3 57.7 57.1

91.9 92.8 94.4 95.6

0

20

40

60

80

100

'13 '14 '15 '16

|GTM – Asia 65

65

Oth

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sses

-1.5%

-0.5%

0.5%

1.5%

2.5%800

1,000

1,200

1,400

1,600

1,800

2,000

'09 '10 '11 '12 '13 '14 '15 '16

Commodities: Gold and industrial metals

Source: (Top left) MSCI, J.P. Morgan Asset Management. (Top right) U.S. Federal Reserve, FactSet, J.P. Morgan Asset Management. (Bottom) J.P. Morgan Securities, J.P. Morgan Asset Management. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Real copper price and major periods of industrialization

USD / oz U.S. 10-year Treasury inflation-protected securityGold and real rates

Share of world total, 2015 averageChina’s consumption of commodities

12%

47% 49% 50%55%

60%

0%

10%

20%

30%

40%

50%

60%

70%

Crude oil Zinc Nickel Copper Aluminium Iron ore

USD / mt, three-year moving average

0

5,000

10,000

15,000

20,000

1773 1803 1833 1863 1893 1923 1953 1983 2013

UK

U.S.Japan and W. Europe China

Gold price TIPS yield (inverted)

|GTM – Asia 66

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Alternative sources of income

Source: Alerian, Bank of America, Bloomberg, Clarkson, Drewry Maritime Consultants, FactSet, Federal Reserve, FTSE, MSCI, NCREIF, Standard & Poor’s, J.P. Morgan Asset Management. Maritime = Unlevered yields for maritime assets are calculated as the difference between charter rates (rental income) and operating expenses as a percentage of current asset value. Yields for each of the sub-vessel types above are calculated and the respective weightings are applied to arrive at the current sub-sector specific yields, which are then weighted to arrive at the current indicative yield for the World Maritime Fleet. Asset classes are based on NCREIF ODCE (Private Real Estate), FTSE NAREIT Global/USA REITs (Global/U.S. REITs), MSCI Global Infrastructure Asset Index (Infrastructure Assets), Bloomberg Barclays U.S Convertibles Composite (Convertibles), J.P. Morgan Government Bond Index EM Global (GBI-EM) (Local EMD), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (USD EMD), J.P. Morgan Asia Credit Index Non-investment Grade Corporate (Asia HY), MSCI Emerging Markets (EM Equity), MSCI The World Index (DM Equity), MSCI Emerging Markets High Dividend Yield Index (EM High Div. Equity), MSCI The World High Dividend Yield Index (DM High Div. Equity), MSCI USA (U.S. Equity). Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Asset class yields

8.4%

7.0%6.5%

5.2% 5.1%

4.0% 3.9% 3.8% 3.7% 3.7% 3.5%

2.6% 2.6%2.1%

1.6%

0%

2%

4%

6%

8%

10%

|GTM – Asia 67

67

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2.7%

-0.1%

3.3%

0.9%1.6%

0.3%0.8% 0.6% 0.6%

0.0%

2.5%

-0.4% -0.3%

1.8% 1.0%0.3%

-2.4%

-0.9%

0.0% 0.1%

-1.4%

-3.5%

2.1%1.1% 0.8% 0.8% 0.4%

0.1% 0.0%

-0.3% -0.4%

-2.1% -2.5%

-6%

-3%

0%

3%

6%

India Thailand Korea Australia Taiwan Singapore U.S. China Japan Malaysia Hong Kong

Real return on cash and yields

Source: (Top) FactSet, IMF, J.P. Morgan Asset Management. (Bottom) FactSet, J.P. Morgan Asset Management. *2015 deposit rate was used for Japan and Australia due to data availability. **Real yield based on the last 12-month average CPI for each respective country. Nominal yields are the 10-year government bond yield for each respective country.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Average annual real deposit rateBased on respective country’s deposit rate less year-over-year inflation

Real and nominal yields**

Nominal yieldReal yield

2000 – 20072008 – 20152016 YTD*

-0.1%

1.0% 0.0% 0.7%0.2%

-0.6%

0.6%1.9% 1.4% 1.6%

2.7%

11.2%

1.2%

9.5%

0.9%

7.1%

2.1%

8.6%7.0%

6.0%

-0.4%-0.4% -0.3% -0.3%

0.1% 0.2% 0.4% 0.5% 0.5% 0.8%0.9% 1.0% 1.2%

1.5% 1.5%1.7% 2.4% 2.7% 2.8% 3.5%

-4%

0%

4%

8%

12%

|GTM – Asia 68

68

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Global households’ financial asset allocation by region

Source: CEIC, Central Bank of the Republic of China (Taiwan), Goldman Sachs Global Investment Research, Hong Kong Securities and Futures Commission, OECD, Statistics Singapore, J.P. Morgan Asset Management. Eurozone includes Austria, Belgium, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Slovakia, Slovenia and Spain due to data availability. Hong Kong data are based on Stock Investor Survey (2006) by the Hong Kong Securities and Futures Commission, insurance is included in Others and pension is not included due to data availability. Equities and fixed income in total made up of 15% of Singapore households’ financial assets, simple 50/50 is taken for illustration purpose. China data are based on OECD, CEIC and Davies et al. (2009) paper, which was provided by Goldman Sachs Global Investment Research. Total may not sum to 100% due to rounding.Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

36%

7%12%7%

28%

11%

TaiwanHong Kong Singapore Korea

JapanUnited States Eurozone AustraliaUnited Kingdom

Cash and deposits Fixed income Equities Mutual funds Insurance and pensions Other

Households’ financial asset class breakdown

14%

9%

31%11%

32%

3%

29%

1%9%

2%

54%

4%

54%

3%

9%4%

26%

4%

22%

17%

1%

57%

2%

45%

1%

30%

7%

0% 16%

45%

9%

17%

23%

5%

36%

8%8%

5%

44% 42%

21%2%

22%

12%

72%7%

2% 11%7%

China

|GTM – Asia 69

69

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ples

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

-100

-80

-60

-40

-20

0

20

40

60

80

100

120

'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15

Investors’ market timing

Source: (Left) FactSet, Investment Company Institute (ICI), Standard & Poor’s, J.P. Morgan Asset Management. (Right) FactSet, Standard & Poor’s, J.P. Morgan Asset Management.*More than 9,000 trading days used to calculate the total cumulative price return of S&P 500 since 1/1/80. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Market timing of retail investorsRolling 3-month U.S. equity flows (USD billions) S&P 500 Index

S&P 500Mutual fund + ETF flows

S&P 500 cumulative price return since 1980*Hypothetical investment of $100,000

Under different scenarios

Actual loss from missing daysImplied compounding loss

2,008,7751,800,287

1,230,461969,320

751,717

11,581

45,465

75,781

101,862

196,908

732,850 963,675

1,155,197

0

400,000

800,000

1,200,000

1,600,000

2,000,000

Stayinvested

Missed top1 day

Missed top5 days

Missed top10 days

Missed top15 days

|GTM – Asia 70

70

Inve

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inci

ples

Annual returns and intra-year declines

Source: FactSet, MSCI, J.P. Morgan Asset Management.Returns are price returns based on MSCI AC Asia Pacific ex-Japan Index in U.S. dollar terms. Intra-year decline is the largest peak to trough decline during the respective year. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

MSCI AC Asia Pacific ex-Japan intra-year declines vs. calendar year returns

Calendar year returnIntra-year decline

Despite average intra-year drops of -18% (median: -13%), annual returns are positive in 18 of 29 years (62%)

YTD

17% 20%

-15%

26%

9%

80%

-19%

5% 7%

-21% -5%

43%

-27%

-2%

-13%

27%

13%20% 23%

27%

-47%

52%

8%

-17%

16%

5%

0%

-12%

10%

-10% -12%

-24%

-8% -10%-3%

-24%

-11% -10%

-32% -35%

-11%

-30% -31%-26%

-12% -13%-8%

-15% -15%

-54%

-15% -13%

-25%

-11% -12% -12%

-27%-22%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

|GTM – Asia 71

71

Inve

stin

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inci

ples

-0.8%2.4%

0.7% 1.8%2.4% 3.8% 5.1% 4.9%

8.0% 7.1%9.8%

-7.1% -6.5% -0.6% -0.8% 1.0%

3.2%

-1.5%1.5%

2.7% 5.0%1.9%

1.8% 4.9% 4.4% 4.5%4.4% 4.2% 4.6%

5.2% 6.1%6.6%

1.6%2.3% 2.6% 3.4% 2.0%

4.1%

3.2%3.1%

4.0%3.3%

-10%

0%

10%

20%

Japan Korea Australia Singapore Taiwan Malaysia China HongKong

Indonesia Thailand Philippines Russia Poland Turkey Brazil Mexico SouthAfrica

Europe EM(EmergingMarkets)

AC AsiaPacific

ex-Japan

U.S.(S&P 500)

The compounding effect

Source: (All charts) FactSet, MSCI, J.P. Morgan Asset Management.*Reinvestment in cash based on the average U.S. 3-month Treasury bill (secondary market) yield since 1970, which is 5.1% per annum. **Returns are total (gross) returns based on MSCI indices in U.S. dollar terms. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

MSCI World Index: Performance under different scenariosIndex 100 = 1970

Annualized return Total return (dividends received and reinvested back into equities) 9.4%Total return (dividends received and reinvested in cash)* 8.6%Total return (dividends received but not reinvested) 7.1%Price return 6.3%

Total return**: Dividends vs. capital appreciationAverage annualized returns over 10 years Capital appreciation

Dividends with compounding

Asia Pacific Other EM Regions

4,738

6,646

2,415

1,6260

2,000

4,000

6,000

'70 '75 '80 '85 '90 '95 '00 '05 '10 '15

|GTM – Asia 72

72

Inve

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inci

ples

Portfolio construction, asset class returns and volatility

Source: Bloomberg, Dow Jones, FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. Hypothetical portfolios were created to illustrate different risk/return profiles and are not meant to represent actual asset allocation. USD total return calculations are based on MSCI Total Return, Bloomberg Barclays and J.P. Morgan indices. AxJ stands for MSCI AC Asia ex-Japan and APxJ stands for MSCI AC Asia Pacific ex-Japan. *Monthly total returns between 30/9/01 and 30/9/16 used for all asset classes, except for quarterly total returns used in private real estate between 30/9/01 and 30/6/16 due to data availability. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Annualized returns and volatilityTotal returns in USD*

Annualized volatility

Annu

aliz

ed re

turn

s

EquitiesBonds and cash

Portfolios

High dividend (HD) equities

Alternatives

Hypothetical portfolio constructionConservative Balanced Aggressive

DM equities 10% 30% 20%EM equities 5% 10% 40%U.S. HY 10% 15% 10%U.S. bonds 25% 10% 5%Cash 35% 10% 0%EMD 10% 15% 5%REITs 5% 10% 20%

DM

EM

U.S. HY

U.S. bonds

Cash

EMD

REITs

Balanced

Aggressive

Conservative

Europe

AxJAPxJ

U.S.Asian bonds

APxJ HD

AxJ HD

DM HD

EM HD

Hedge fund - mkt neutral

Hedge fund - macro

Hedge fund - distressed

Hedge fund - rel val

Private real estate

0%

3%

6%

9%

12%

15%

0% 5% 10% 15% 20% 25%

|GTM – Asia 73

73

Inve

stin

g pr

inci

ples

40

60

80

100

120

140

160

180

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

The benefits of diversification and long-term investing

Source: (Top) Bloomberg, FactSet, U.S. Federal Reserve, Robert Shiller, Strategas/Ibbotson, J.P. Morgan Asset Management. Returns shown are based on calendar year returns from 1950 to 2015. Large cap equity represents the S&P 500 Shiller Composite and bonds represents the Strategas/Ibbotson for periods from 1950 to 1980 and the Bloomberg Barclays Aggregate after index inception in 1980. (Bottom) Bloomberg, FactSet, MSCI, J.P. Morgan Asset Management.Global equities represented by MSCI AC World Index, global bonds represented by Bloomberg Barclays Aggregate Global Bond Index.Guide to the Markets – Asia 4Q 2016.Data reflect most recently available as of 30/9/16.

-39%-8%

-15% -3% -2% 1% -1% 1% 2% 7% 1% 5%

47% 43%33% 28% 23% 21% 19% 16% 16% 17% 12%

14%

-50%

-30%

-10%

10%

30%

50%

Range of U.S. equity, U.S. bond and blended total returnsAnnual total returns, 1950-2015

Large cap equityBonds50/50 portfolio

1-yr rolling 5-yr rolling 10-yr rolling 20-yr rolling

Portfolio returns: Global equities, global bonds vs. equity and fixed income blendTotal returns, rebased 2006 = 100

Portfolio returns since 2006 Annualized return

Annualized volatility

Global equities 5.1% 16.5%Global bonds 4.3% 5.6%

50/50 equity & bond mix 4.7% 9.2%

|GTM – Asia 74

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The benefits of saving and investing early

Source: (Left) National Development Council of Taiwan (NDC), UN, J.P. Morgan Asset Management. (Right) J.P. Morgan Asset Management. For illustrative purposes only, assumes a 5% return on investments and a 2% return on cash. Actual investments may incur higher or lower growth rates and charges. *All data from UN except Taiwan from NDC. Guide to the Markets – Asia 4Q 2016. Data reflect most recently available as of 30/9/16.

Accumulation of investment at 5% growth per yearInvestment return

20252000

2050

Aging populationPopulation over 65

0%

5%

10%

15%

20%

25%

30%

35%

40%

$1,395,216

$2,536,795

$1,232,200

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

25 30 35 40 45 50 55 60 65Age

Blue invests $20,000 annually between the ages of 25 and 65

Orange invests $20,000 annually between the ages of 35 and 65

Green invests $20,000 annually in cash only between the ages of 25 and 65

75

J.P. Morgan Asset Management: Index DefinitionsAll indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. The S&P 500 Index is widely regarded as the best single gauge of the U.S. equities market. This world-renowned index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 Index focuses on the large-cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ideal proxy for the total market. An investor cannot invest directly in an index. The Tokyo Stock Price Index ('TOPIX') is a composite index of all common stocks listed on the First Section of Tokyo Stock Exchange (TSE).The index is basically a measure of the changes in aggregate market value of TSE common stocks. The base for the index is the aggregate market value of its component stocks as of the close on January 4, 1968. The aggregate market value is calculated by multiplying the number of listed shares of each component stock by its price and totaling the products derived there from.The Bombay Exchange Sensitive Index (‘SENSEX), first compiled in 1986, was calculated on a "Market Capitalization-Weighted" methodology of 30 component stocks representing large, well-established and financially sound companies across key sectors. The base year of SENSEX was taken as 1978-79. SENSEX today is widely reported in both domestic and international markets through print as well as electronic media. It is scientifically designed and is based on globally accepted construction and review methodology. Since September 1, 2003, SENSEX is being calculated on a free-float market capitalization methodology.The Korea Composite Stock Price Index (‘KOSPI) is market capitalization based index on all common stocks listed on the Stock Market Division of the Korea Exchange (KRX) and excludes preferred stocks. The stock price index is calculated using the actual price traded on the market and not the “base price” used for market management such as establishment of price change limits. When no market price is available for issues that are not being traded or have halted trading, the latest closing price is used. KOSPI was a assigned a base index of 100 set to January 4, 1980.The China Shenzhen Composite Index is an actual market-cap weighted index that tracks the stock performance of all the A-share and B-share lists on Shenzhen Stock Exchange. The index was developed on April 3, 1991 with a base price of 100. The MSCI® EAFE (Europe, Australia, Far East) Net Index is recognized as the pre-eminent benchmark in the United States to measure international equity performance. It comprises 21 MSCI country indexes, representing the developed markets outside of North America. The MSCI Emerging Markets IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of June 2007, the MSCI Emerging Markets Index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009 the MSCI ACWI consisted of 45 country indices comprising 23 developed and 22 emerging market country indices.The following MSCI Total Return IndicesSM are calculated with gross dividends:This series approximates the maximum possible dividend reinvestment. The amount reinvested is the dividend distributed to individuals resident in the country of the company, but does not include tax credits.The MSCI Europe IndexSM is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe. As of June 2007, the MSCI Europe Index consisted of the following 16 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The MSCI Pacific IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the Pacific region. As of June 2007, the MSCI Pacific Index consisted of the following 5 Developed Market countries: Australia, Hong Kong, Japan, New Zealand, and Singapore.

The MSCI Europe ex UK IndexSM is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe, excluding the United Kingdom. The MSCI Europe ex UK Index consists of the following 15 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, and Switzerland.The MSCI Pacific ex Japan IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the Pacific region, excluding Japan. As of June 2007, the MSCI Pacific Index consisted of the following 4 Developed Market countries: Australia, Hong Kong, New Zealand, and Singapore. The MSCI USA IndexSM is designed to measure the performance of the large and mid cap segments of the U.S. market. With 586 constituents, the index covers approximately 84% of the free float-adjusted market capitalization in the U.S.. The MSCI USA Index was launched on Dec ember 31, 1969.The MSCI China IndexSM captures large and mid cap representation across China H shares, B shares, Red chips and P chips. With 148 constituents, the index covers about 84% of this China equity universe. The MSCI China Index was launched on December 31, 1992.The MSCI Indonesia IndexSM is designed to measure the performance of the large and mid cap segments of the Indonesian market. With 25 constituents, the index covers about 84% of the Indonesian equity universe. The MSCI Indonesia Index was launched on December 31, 1990.The MSCI Korea IndexSM is designed to measure the performance of the large and mid cap segments of the South Korean market. With 105 constituents, the index covers about 84% of the Korean equity universe. The MSCI Korea Index was launched on December 31, 1989.The MSCI India IndexSM is designed to measure the performance of the large and mid cap segments of the Indian market. With 71 constituents, the index covers about 84% of the Indian equity universe. The MSCI India Index was launched on December 31, 1993.The MSCI Japan IndexSM is designed to measure the performance of the large and mid cap segments of the Japan market. With 315 constituents, the index covers approximately 84% of the free float-adjusted market capitalization in Japan. The MSCI Japan Index was launched on December 31, 1969.The MSCI Hong Kong IndexSM is designed to measure the performance of the large and mid cap segments of the Hong Kong market. With 42 constituents, the index covers approximately 84% of the free float-adjusted market capitalization of the Hong Kong equity universe. The MSCI Hong Kong Index was launched on December 31, 1972.The MSCI Taiwan IndexSM is designed to measure the performance of the large and mid cap segments of the Taiwan market. With 113 constituents, the index covers approximately 84% of the free float-adjusted market capitalization in Taiwan. The MSCI Taiwan Index was launched on December 31, 1989.West Texas Intermediate (WTI) is the underlying commodity for the New York Mercantile Exchange's oil futures contracts. The Bloomberg Commodity Index is calculated on an excess return basis and reflects commodity futures price movements. The index rebalances annually weighted 2/3 by trading volume and 1/3 by world production and weight-caps are applied at the commodity, sector and group level for diversification. Roll period typically occurs from 6th-10th business day based on the roll schedule.The Bloomberg Commodity Subindexes represent commodity groups and sectors, as well as single commodities, that make up the Bloomberg Commodity Index. The subindexes track exchange-traded futures of physical commodities, and the commodity groups and sectors, like in the case of the broad index, are weighted to account for economic significance and market liquidity. The various subindexes include Agriculture, Energy, Livestock, Grains, Industrial Metals, Precious Metals and Softs.

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The Euro Stoxx 600 Index represents large, mid and small capitalization companies across 18 European countries.The Bloomberg Barclays High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeroes, step-up coupon structures, and 144-As are also included.The Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value. In addition, the securities must be denominated in U.S. dollars and must be fixed rate and non convertible.The Bloomberg Barclays Corporate Bond Index is the Corporate component of the U.S. Credit index.The Bloomberg Barclays TIPS Index consists of Inflation-Protection securities issued by the U.S. Treasury.The J.P. Morgan EMBI Global Index includes U.S. dollar denominated Brady bonds, Eurobonds, traded loans and local market debt instruments issued by sovereign and quasi-sovereign entities.The J.P. Morgan GBI-EM Global Diversified consists of regularly traded, liquid fixed-rate, domestic currency government bonds to which international investors can gain exposure. The weightings among the countries are more evenly distributed within this index.The J.P. Morgan Corporate Emerging Markets Bond Index (CEMBI): The CEMBI tracks total returns of US dollar-denominated debt instruments issued by corporate entities in Emerging Markets countries, and consists of an investable universe of corporate bonds.The J.P. Morgan Domestic High Yield Index is designed to mirror the investable universe of the U.S. dollar domestic high yield corporate debt market.The VIX-CBOE Volatility Index measures market expectations of near-term volatility conveyed by S&P 500 Index (SPX) option prices. The MOVE-Merrill Lynch Option Volatility Index is a blended implied normal volatility for constant one-month at-the-money options on U.S. Treasuries.

Price to forward earnings is a measure of the price-to-earnings ratio (P/E) using forecasted earnings. Price to book value compares a stock's market value to its book value. Price to cash flow is a measure of the market's expectations of a firm's future financial health. Price to dividends is the ratio of the price of a share on a stock exchange to the dividends per share paid in the previous year, used as a measure of a company's potential as an investment.Bonds are subject to interest rate risks. Bond prices generally fall when interest rates rise.The price of equity securities may rise, or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. These price movements may result from factors affecting individual companies, sectors or industries, or the securities market as a whole, such as changes in economic or political conditions. Equity securities are subject to “stock market risk” meaning that stock prices in general may decline over short or extended periods of time.Small-capitalization investing typically carries more risk than investing in well-established "blue-chip" companies since smaller companies generally have a higher risk of failure. Historically, smaller companies' stock has experienced a greater degree of market volatility than the average stock.Mid-capitalization investing typically carries more risk than investing in well-established "blue-chip" companies. Historically, mid-cap companies' stock has experienced a greater degree of market volatility than the average stock.Real estate investments may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Real estate investments may be subject to risks including, but not limited to, declines in the value of real estate, risks related to general and economic conditions, changes in the value of the underlying property owned by the trust and defaults by borrower.International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies can raise or lower returns. Also, some markets may not be as politically and economically stable as other nations. Investments in emerging markets can be more volatile. The normal risks of international investing are heightened when investing in emerging markets. In addition, the small size of securities markets and the low trading volume may lead to a lack of liquidity, which leads to increased volatility. Also, emerging markets may not provide adequate legal protection for private or foreign investment or private property.Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic or market conditions than other types of investments and could result in losses that significantly exceed the original investment. The use of derivatives may not be successful, resulting in investment losses, and the cost of such strategies may reduce investment returns.There is no guarantee that the use of long and short positions will succeed in limiting an investor's exposure to domestic stock market movements, capitalization, sector swings or other risk factors. Investing using long and short selling strategies may have higher portfolio turnover rates. Short selling involves certain risks, including additional costs associated with covering short positions and a possibility of unlimited loss on certain short sale positions.

J.P. Morgan Asset Management: Index Definitions, Risks and Disclosures

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J.P. Morgan Asset Management: Risks and DisclosuresThe Market Insights program provides comprehensive data and commentary on global markets without reference to products. It is designed to help investors understand the financial markets and support their investment decision making (or process). The program explores the implications of economic data and changing market conditions for the referenced period and should not be taken as advice or recommendation.

The views contained herein are not to be taken as an advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yield may not be a reliable guide to future performance.

J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. This communication is issued by the following entities: in the United Kingdom by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other EU jurisdictions by JPMorgan Asset Management (Europe) S.à r.l.; in Hong Kong by JF Asset Management Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia) Limited; in India by JPMorgan Asset Management India Private Limited; in Singapore by JPMorgan Asset Management (Singapore) Limited, or JPMorgan Asset Management Real Assets (Singapore) Pte Ltd; in Taiwan by JPMorgan Asset Management (Taiwan) Limited; in Japan by JPMorgan Asset Management (Japan) Limited which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Korea by JPMorgan Asset Management (Korea) Company Limited; in Australia to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Cth) by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919); in Brazil by Banco J.P. Morgan S.A.; in Canada for institutional clients’ use only by JPMorgan Asset Management (Canada) Inc., and in the United States by JPMorgan Distribution Services Inc. and J.P. Morgan Institutional Investments, Inc., both members of FINRA/SIPC.; and J.P. Morgan Investment Management Inc.

In APAC, distribution is for Hong Kong, Taiwan, Japan and Singapore. For all other countries in APAC, to intended recipients only.

Copyright 2016 JPMorgan Chase & Co. All rights reserved.

Prepared by: David Kelly, Tai Hui, Kerry Craig, Yoshinori Shigemi, Marcella Chow, Akira Kunikyo, Jasslyn Yeo, Ian Hui and Ben Luk.

Unless otherwise stated, all data are as of September 30 2016 or most recently available.

MI-GTMASIA-E OCTOBER2016

Material ID: e39913f0-8255-11e6-9c26-005056960c63