ab SingaporeMarch 2013

UBS Wealth Insights 2013

5

Dialog with you This conference and this brochure, which aim to provide an insight into which topics are likely to dominate the economic, financial and investment world in 2013, are only part of the journey we take with you. It is our privilege to continue our dialog with you, regularly reviewing the quality of your portfolio and your approach, adjusting the composition of your investments according to the changing market conditions. Upon understanding your needs, we can develop your portfolio into a financial strategy and solution which meets your goals and objectives. We hope you will find this conference interesting, engaging and useful. We look forward to continuing the journey with you and seeing you again at our next UBS Wealth Insights program. Kind regards,

Welcome

Singapore, March 11, 2013

Dear Guest,

Welcome to our inaugural annual UBS Wealth Insights in 2013 in Singapore. This event series was conceived on the back of the need to develop a world-class professional platform for our high net worth clients, bringing together objective insights from global experts and speakers.

UBS Wealth Insights At UBS, we want to bring independent insightful content to our audience. Within the complexity of the world today, whether political, whether in relation to socio-economic or economic issues, we are bombarded with news and information on all fronts. We aim to provide a platform where the best-in-class speakers from around the globe have filtered, consolidated, extracted and analyzed the available information, and where they share their insights in a relevant manner to help you make better informed decisions in context. We aim also to provide our audience with the opportunity to interact with the speakers. We want you to be able to ask questions, take away concrete themes, and extract implications for your own personal investment approach and investment portfolio, so that you can choose to make an impact on your investments and follow this up to optimize returns for your portfolio, based on your risk profile. For this inaugural event, we are honored to have internationally renowned Swiss scientist, Dr. Bertrand Piccard, to share his insights with us as a keynote speaker. Dr. Piccard was the first person to fly around the world in a balloon in 20 days. He will offer a new perspective and inspiring message, “A Pioneering Spirit for Investing in the Future,” thoughts that we do not always get to hear, but his views and principles are useful and relevant to our daily lives, whether in the world of investments, in business or in our personal lives.

Other speakers providing expert views on key markets include Global Economist Paul Donovan, Regional CIO of Emerging Markets, Jorge Mariscal and Head of China Economics Research, Wang Tao. Even though what the future holds is uncertain, these leading market analysts, together with our panelists and workshop speakers from UBS and outside UBS, are all geared towards helping our clients discover investment opportunities in the year ahead.

Peter Kok Regional Market Manager for Singapore and Malaysia

Carlo GrigioniVice Chairman of the Division Wealth Management

Edmund KohCEO UBS Wealth Management Singapore

4

Edmund KohCEO UBS Wealth Management Singapore

In February 2012, Mr. Edmund Koh was appointed Group Managing Director, Singapore Country Head and CEO of UBS Wealth Management Singapore and APAC Hub (UBS Wealth Management onshore operations in Australia, India, Japan, and Taiwan).

Edmund has built a strong track record in leading and building successful businesses, and garnered a deep understanding of Asian markets in his career, which spans more than 20 years in the banking industry.

Peter Kok Regional Market Manager for Singapore and Malaysia

Peter Kok is Managing Director and Regional Market Manager, Singapore and Malaysia in UBS Wealth Management Singapore. He is also in charge of FIM APAC.

Prior to his current role, Peter was responsible for the KeyClient business in Singapore. He was also responsible for the KeyClient Competency Center in Singapore, which provides holistic solutions for all KeyClients booked in Singapore.

Hosts

Carlo GrigioniVice Chairman of the Division Wealth Management

Mr. Grigioni is one of the most senior leaders of UBS Wealth Management & Swiss Bank globally, with more than 30 years of experience in the Wealth Management business. He began his career with UBS in Asia Pacific in 1986 as one of the original architects of the region’s Wealth Management business. His global expertise and extensive experience in international private banking form the firm foundations for his current role of providing senior coverage to Ultra High Net Worth clients in Asia Pacific.

6 7

9:00 a.m. Opening note Edmund Koh

9:10 a.m. Pioneering spirit for investing in the future Bertrand Piccard

10:00 a.m. Where in the world are we going? Paul Donovan

10:40 a.m. Emerging economies look good. Will their asset markets deliver? Jorge Mariscal

11:20 a.m. China’s recovery: How long can the good times last? Wang Tao

12:00 a.m. Panel debate Panel debate moderated by Bloomberg’s Haslinda Amin; with Paul Donovan, Kelvin Tay, Andrew Williamson and Ricardo Beninatto.

1:00 p.m. Buffet lunch

2:00 – 3:00 p.m. Workshops 1. East vs West: Do Asian companies outperform Western companies? 2. Investing in a yield-hungry world: Our high-conviction calls in Asia 3. Investing my money in 2013

Program

8 9

Bertrand Piccard Scientist, adventurer, psychiatrist, aeronaut, humanitarian, renowned inspirational speaker

Dr. Bertrand Piccard is the winner of the first transatlantic balloon race. Always pushing the boundaries, he became the first man to succeed in the record-breaking, first nonstop round-the-world balloon flight (together with Brian Jones) – “Around The World In 20 Days.”

Using his aerial exploits as a backdrop, he illustrates his concept of the psychology of life, human communication, team-work, motivation, pioneering spirit, as well as how to deal with stress, uncertainty and crises. A senior consultant in a psychiatric hospital, Piccard specialized jointly in psychiatry and psychotherapy for adults and children. His doctoral thesis entitled “La Pédagogie de l’Epreuve” was awarded a prize by the Faculty of Medicine at Lausanne in 1996. An expert in hypnotherapy, Piccard is a lecturer and supervisor for the Swiss Medical Hypnosis Society. He is also an Honorary Professor at Guatemala’s Franciso Maroquin University and an Honorary Doctor of Science and Letters.

Born March 1, 1958 in Lausanne (Switzerland), his grandfather, Auguste Piccard, was the first person to explore the stratosphere and invented the bathyscaphe with which his father, Jacques Piccard, dived to the deepest point in the oceans.

A pioneer in hang gliding, he is European champion in hang glider aerobatics (1985). His balloon flight achieved the longest flight in terms of both duration and distance in the history of aviation: 45,755 kilometers in 19 days, 21 hours and 47 minutes (seven world records).

Official decorations: Légion d’Honneur, The Olympic Order, Gold Medal of the French Ministry of Youth and Sport. He was awarded the highest distinctions of the Fédération Aéronautique Internationale, the National Geographic Society, the Explorer’s Club and other aeronautical, scientific and sporting associations.

Founder of the “Winds of Hope” humanitarian foundation, he is also Goodwill Ambassador for the United Nations Population Fund (UNFPA).

Speakers

Main speakers

8

10 11

Paul Donovan UBS Investment BankSenior Global Economist, Managing Director

Based in London, Paul Donovan, Senior Global Economist, UBS Investment Bank, joined UBS in 1992. He currently works with all economists and macro-strategists at UBS to identify the global trends that emerge in the world economy, and to present the bank’s global views to its clients.

Paul has an MA in Philosophy, Politics and Economics from Oxford University. He is an honorary fellow of St Anne’s College, Oxford, sitting on its investment committee and development board, and is a member of the Vice-Chancellor’s Circle of Oxford. He holds an MSc in Financial Economics from the University of London. He is also Economic Advisor to the development charity of East London Business Alliance, and a co-founder of the Peter Culverhouse Memorial Trust, a charitable fund that raises money for cancer research and patient care.

Paul also co-authored “From Red to Green? How the Financial Credit Crunch Could Bankrupt the Environment” and regularly appears on CNN, Bloomberg TV, and CNBC television stations.

Jorge O. Mariscal UBS Wealth ManagementRegional Chief Investment Officer, Emerging Markets

Based in New York, Jorge O. Mariscal leads the development of UBS WM investment views on emerging markets across different asset classes and geographical regions.

Jorge earned a BA in economics from UAM University Mexico City and a PhD in development economics and international finance from New York University. Jorge also teaches emerging financial markets at the SIPA School of Columbia University.

Prior to joining UBS, Jorge was a partner and Chief Investment Strategist at The Rohatyn Group, a multibillion-dollar, New York based asset manager focused exclusively on the global emerging markets. Jorge was a managing director at Goldman Sachs, where he coordinated the firm’s emerging markets investment research products and served as Chief Equity Strategist for Latin America.

Wang Tao UBS Investment BankHead, China Economics Research

Based in Hong Kong, Dr. Tao Wang is Managing Director, Head of China Economics Research at UBS.

Dr. Tao Wang received her PhD in Economics from New York University and her bachelor’s degree from Renmin University, Beijing.

Prior to joining the company, Dr. Tao Wang was Head of Greater China Economics and Strategy at Bank of America, and head of Asian Economics at BP. She led the coverage on China’s macro- economic development, monetary policy and exchange rate trends, and energy market developments in those positions.

Before that, she was a senior economist at the International Monetary Fund (IMF), responsible for studying China’s macroeco-nomic development and structural reforms. During the eight years she spent at the IMF, Dr. Tao Wang was involved in program negotiations and annual consultations with many member countries, and published a number of research papers. She also worked as the chief Asia economist at DRI/McGraw-Hill (currently Global Insight).

Speakers Speakers

Main speakers

12 13

Haslinda Amin (moderator)Bloomberg TelevisionCorrespondent, Anchor

Haslinda Amin is a news correspondent and anchor for Bloomberg Television. Based in Singapore, Haslinda has been at the heart of market makers and stories that have driven the transformation of Southeast Asia.

Haslinda graduated from the National University of Singapore, majoring in international politics and English language. She has reported on financial and political developments including the Asia-Pacific Economic Cooperation forums, the bloody anti- government clashes in Thailand, developments in Pakistan as well as President Barack Obama’s first visit to Asia.

Kelvin Tay UBS Wealth ManagementRegional Chief Investment Officer, Southern APAC

Since April 2012, Kelvin is the Regional Chief Investment Officer, Southern APAC, at UBS, where he is an integral part of the wealth management investment process and the UBS House View. He is also responsible for the Asia ex-Japan equity strategy, analyzing overall market developments in addition to the general market out- look, to effectively deliver investment insights across asset classes.

Kelvin received his MBA from Imperial College, University of London, in 1999. He also holds a Bachelor of Social Science and Bachelor of Arts from National University of Singapore. Prior to joining UBS, Kelvin held numerous responsibilities at Deutsche Bank Private Wealth Management (Asia) and was a regional telecoms analyst in JP Morgan and ABN AMRO Securities. Kelvin is a regular guest host on CNBC Squawbox and appears frequently on Bloomberg TV, ChannelNews Asia and BBC World.

Paul Donovan UBS Investment BankSenior Global Economist, Managing Director

See full biography under “Main speakers”

Ricardo Beninatto UBS Wealth ManagementExecutive Director, Investment Products & Services

Ricardo has been with the UBS Active Portfolio Advisory team since January 2005.

Ricardo holds a Bachelor of Science in Economics from Faculdade Candido Mendes, Rio de Janeiro, and completed his MBA at New York University’s Stern School of Business.

Before joining UBS he was a Director for Emerging Markets at Bank of America in New York, after working for the Bank’s Proprietary Desk in Sao Paulo, Brazil, as a senior equity trader for four years. Prior to this, Ricardo was a proprietary foreign exchange trader at Banco do Brasil in Rio de Janeiro, Brazil.

Speakers Speakers

Panel discussion

Andrew Williamson UBS Wealth ManagementHead, Investment Strategist Asia Pacific Head, Advisory Products Asia Pacific. Investment Products & Services

Andrew and his teams across the APAC region are responsible for linking and positioning appropriate investment solutions alongside the UBS house investment view, and communicating these views to our clients and client advisor base. Andrew is a member of the UBS Wealth Management Global Investment Committee representing the Asia region.

Andrew graduated from Brighton College in 1986 and is a CFA charterholder. He has been a Fellow member of the Securities Institute (UK) and in 1997 was awarded the London Stock Exchange Special Achievement Award by the institute. Prior to working with UBS, Andrew worked for Lloyds Private Banking (1986/87) and Coutts (1987 – 2004).

15

James Thom Aberdeen Asset ManagementInvestment Manager, Asian Equities

James Thom is an investment manager on the Asian equities team. James joined Aberdeen in 2010 from Actis, the emerging markets Private Equity firm, based in Singapore and covering Southeast Asia. James graduated with an MBA from INSEAD, an MA from Johns Hopkins University and a BSc from University College London.

William E. Morgan UBS Global Asset ManagementExecutive Director, Client Portfolio Manager

William is responsible for representing the firm’s growth equity strategies to institutional, wholesale, and third-party prospects as well as investment consultants around the world.

William holds a Bachelor of Science from the University of Wisconsin (US) and an MBA from Northwestern University (US). Prior to joining the firm in 2007, William was in institutional equities for seven years at Morgan Stanley, covering a broad range of top-tier asset managers, including mutual funds, hedge funds, insurance companies, and public funds in the New York, Connecticut and Midwest regions.

Workshop 1 East vs West:Do Asian companies outperform Western companies?

Speakers

14

16 17

Eric Sandlund UBS Wealth ManagementHead, Investment Management APAC, Investment Products & Services

Eric leads the Investment Management team, whose activities include investment content and securities selection, portfolio implementation, product development, marketing and distribution. Eric oversees a regional shelf of discretionary portfolio solutions investing in equity, fixed income, mutual funds and alternative investments.

Eric is a licensed attorney and received his BA at the University of Virginia and his JD at the American University, Washington College of Law. Prior to joining UBS, Eric held a number of senior roles, including Managing Director, Chief Investment Officer, Asia-Pacific at Merrill Lynch, Singapore. He was also Regional Managing Director / CIO at Prudential Portfolio Managers Asia, Hong Kong, Managing Director / CIO at Jupiter Tyndall (Asia) Ltd, Hong Kong, and Investment Manager at Chase Manhattan, Hong Kong.

Hui Hoon Goh UBS Wealth ManagementHead, Fixed Income Portfolio Management, Investment Products & Services

Hui Hoon is responsible for managing fixed income for IM APAC’s Discretionary Mandates. She has been a CFA charterholder since 2002 and holds a Bachelor of Business (major in Financial Analysis, and minor in Economics) from Nanyang Technological University and a Master of Science (Financial Engineering) from National University of Singapore.

Hui Hoon has over 13 years of experience within the financial industry, out of which more than nine years is in the Asian fixed income markets. She started her career in corporate finance at Temasek Holdings in 1999. She then moved on to Fixed Income portfolio management within Temasek / Fullerton Fund Manage-ment, where she launched and managed the Fullerton Short Term Interest Rate Fund. She was headhunted to join HSBC Global Markets, where she headed up the institutional rates sales team, focusing mainly on Asian credits and local currency markets.

Workshop 2 Investing in a yield-hungry world: Our high-conviction calls in Asia

Speakers Speakers

Wei Mei Tan UBS Wealth ManagementHead, Mandate Specialists Singapore, Investment Products & Services

Wei Mei leads a team of mandate specialists who help clients across the region to structure their investment portfolios for UBS to manage. She has extensive experience covering professional clients and sophisticated UHNW investors across 20 countries. She specializes in asset allocation and portfolio construction and leverages on the expertise of more than 900 investment experts globally, led by the CIO. Prior to joining UBS in 2008, Wei Mei was in investment banking at Credit Suisse and JPMorgan Securities in Hong Kong. In addition, Wei Mei has been a fixed income portfolio manager with Fullerton Fund Management Co. and Temasek Holdings in Singapore. Wei Mei is a Chartered Financial Analyst (CFA), Certified Public Accountant (CPA) and Chartered Alternative Investment Analyst (CAIA). She holds a Bachelor of Accountancy from Nanyang Technological University in Singapore.

Yuh Harn TanUBS Wealth ManagementDirector, Asian Equities Portfolio Manager, Investment Management APAC

Harn is a member of the Asian Equities team that decides on country strategy, sector allocation, as well as individual stock selection within the Asian region. He is the lead portfolio manager for Asian fund selections.

Harn graduated from Hawaii Pacific University with an honours degree in B.Sc in Business Administration majoring in Finance. Prior to joining UBS, Harn was with BNP Paribas Wealth Manage- ment Singapore. Over the last 17 years, he has also held portfolio management and advisory roles with Standard Chartered Bank, Phillip Capital Management and SG Asset Management. Yuh Harn is an award-winning fund manager with accolades from S&P Singapore Fund Awards and The Edge-Lipper Singapore Fund Award.

18 19

Rajesh Hathiramani UBS Wealth ManagementHead, Active Portfolio Advisory, APAC

Since 2010 Rajesh has been Head of Active Portfolio Advisory, APAC, which delivers portfolio-based investment advisory services across asset classes to Wealth Management clients.

Rajesh is a CFA charterholder and has a Bachelor of Business in Finance from the HK University of Science & Technology.

Rajesh joined UBS in 1995 on the FX Institutional Sales desk in the Investment Bank. After four years he moved to Wealth Management on the Active Advisory team as an FX specialist. In 2004, he moved to the Structured Products Desk and in 2006, he became Head of the Direct Client Access team in Investment Products, which provids investment advisory services to sophisticated and active trading clients.

Thomas Kaegi UBS Wealth ManagementHead, Investment Advisory Singapore, Investment Products & Services

Thomas Kaegi heads Advisory Products in Singapore. In this function he is responsible for advising UBS client advisors and clients on asset allocation and providing investment ideas in a portfolio context.

Thomas graduated from the University of St. Gallen in Switzerland with a master’s degree in economics. Before joining Investment Advisory, Thomas headed the Macroeconomic Research APAC team at Wealth Management Research in Singapore. Thomas began working for Wealth Management Research in Zurich in 2002, where he conducted primary research on Switzerland and Europe.

Workshop 3 Investing my money in 2013

Aline Pacheco UBS Wealth ManagementExecutive Director, Investment Products & Services

Aline heads the Direct Access Client team in UBS Singapore. She and her team have been providing investment advice to sophisticated and active trading clients for the past eight years.

Aline holds a post-graduate degree in Applied Finance and Invest- ment from the Securities Institute of Australia (Sydney). Previously, Aline was with Credit Suisse as an investment advisor and has experience with various investments such as stocks, bonds, structures, derivatives, funds, alternative investments and FX.

Cherie Wong UBS Wealth ManagementExecutive Director, Investment Products & Services

Cherie has been with the Direct Access Client team since April 2006. She holds a BA in Economics from the National University of Singapore and has an MBA from the AGSM of University of New South Wales whilst incorporating an exchange at The Wharton School of University of Pennsylvania. Prior to this, Cherie was a Portfolio Manager at Credit Suisse Private Bank, focusing on Asian and Special Mandates. Her past experience includes consultancy to government bodies on asset allocation and fund selection as well as in asset management.

Jerome Bernasconi UBS Wealth ManagementDirector, Advisory Products, Investment Products & Services

Jerome manages reference portfolios, advises on asset allocation and provides investment ideas in a portfolio context. Jerome holds a CFA charter.

Prior to relocating to Singapore, Jerome worked for 10 years as an investment advisor for UBS Wealth Management in Geneva, Switzerland. He is experienced with investments and products across asset classes, in particular investment funds, structured products, bonds, alternative investments and discretionary mandates.

Speakers Speakers

20 21

Please note that the research content featured in this booklet at the time of print is updated as of February 2013. Subsequent post-print updates will not be reflected in this version.

22 Economic overview Ignore the noise – rewards await investors with a sharp focus

24 Global economy After the financial crisis: The world in 2013

26 Emerging markets Emerging markets: A strategic component in your portfolio

28 China China in focus

Additional information:30 A look at the funds markets in 201334 Offering the best of both worlds36 The ART of the UBS Advisory Process

20

Focused insights

22 23

Economic overview

Ignore the noise — rewards await investors with a sharp focus

By Hartmut Issel, Head UBS CIO Wealth Management Research APAC

As we had expected when we upgraded our call on equities to moderate overweight at the start of the year, economic indicators have pointed to a gradual global recovery. In the US, the political shenanigans around the fiscal cliff, budget sequestration, and debt ceiling have failed to blow the economy out of its growth path. Europe, while still mired in a crisis, is certainly in better shape than it was two years ago. And in Asia, China’s long-awaited acceleration has finally arrived.

But although growth risks have receded, others have come to the fore, foremost of which is whether Japan’s spectacular weakening of the yen could trigger trade wars. For now, Japan’s major trading partners seem to agree that the answer is no. To put matters in perspective, the yen is still around 15% stronger against the US dollar and 20% against the euro than it was at the onset of the financial crisis. It is therefore hard to argue that the yen’s recent devaluation has been excessive, and so we do not side with the trade-war camp. Amid the growing noise, it has become more important for investors not to lose focus.

US: Housing and energy renaissanceIn spite of concerns that the US government’s attempts to pare down its sizable budget deficit might dampen the economy, two pillars of growth stand out. The revival of housing con- struction has already started in 2012, but new supply has barely caught up with the formation of new households, leaving room for further

construction that would support GDP growth. Further ahead, the domestic “energy revolution” not only creates jobs in direct exploration; more important, its second-round effect of lower energy prices could add half a point to the GDP growth rate over the coming years. The cyclical recovery aided by more-relaxed bank lending also plays a part.

We maintain our preference for the US in our global equity strategy. We like the US IT sector, but we also advocate the idea of being fully exposed to the country’s robust economic back- drop. US mid-caps tend to have a higher sales exposure to the domestic market than do large caps. They also tend to benefit more in a cyclical recovery such as the one we are in now, and, by definition, offer a better long-term growth outlook. This makes US mid-caps a worthy addition to investor portfolios, especially those that already have a broader US equity exposure.

Europe: Climbing out of the woodsAt this point, the European economy is still shrinking and debt is piling up in almost every country. Yet, the situation is not as bleak as it was for most of the past two years. Debt accumulation has slowed and some countries in the periphery have managed to lower their funding costs. Ireland and Portugal have even returned to the bond market. Unemployment is still very high, but this indicator speaks of past trends. Forward-looking indicators are still rather anemic but have reached bottom, which implies that the continent may emerge from

the worst of the crisis, and that the economy may at least stop shrinking towards the end of the year.

A safe play on European investments may thus be in Western “winners’ from emerging markets” growth, a selection of mostly European and some US companies with the most competitive exposure to the world’s fastest-growing regions. These companies combine the pricing power afforded by their strong brands with the growth advantage they get from emerging markets, giving investors the best of both worlds.

Emerging markets: The broader the betterAfter a long and suspenseful wait, China has found its footing and economic activity has been improving since the end of last year. We expect GDP growth to accelerate until it reaches the new trend-growth rate of around 8% in the third quarter of this year. This trajectory suggests that investors should focus on stocks that have taken a beating but have only partially recovered – the premise of our China value focus theme. Beyond Asia, economic improvement in heavyweights such as Brazil and Russia has bolstered our call for emerging-market equities, our other market preference next to the US.

In fact, our call for emerging markets extends to all asset classes. In bonds, we like USD-denominated corporate bonds which continue to offer decent yield pick-up to benchmark bonds. In currencies, we favor a broader emer- ging-market exposure now that Asian currencies have made significant gains against the US dollar. While Asian currencies still have appreciation potential, their emerging-market peers that had lagged behind last year’s rally now offer catch-up potential. Interest rates in Latin America and Eastern Europe now also offer higher rewards. And with inflation coming back in emerging markets, it is worth remem- bering that their central banks historically res- pond to rising prices by allowing some currency appreciation.

Why wait?An environment of broadly improving economies warrants a modest pro-risk investment stance. Our focus areas of US mid-caps, Chinese value stocks, and selected emerging-market exposure are particularly suited to such a stance, even more so now that so-called “safe havens” such as developed market sovereign bonds earn meager returns and may lose out even at the slightest increase in interest rates. Though it cannot be denied that some areas are still in crisis, the major economies are now moving in the right direction, and investors may wish not to wait until everyone in the market agrees that the coast is clear.

2524

Global economy

After the financial crisis: The world in 2013

The world continues to follow a slow recovery path in the wake of the most significant eco- nomic downturn in eighty years. The damage wrought by the global financial crisis has not yet been fully repaired. The United States has yet to post an above-trend growth number in the wake of the crisis, and the global economy has managed only the most fleeting of moments when spare capacity was eroded. This has kept unemployment higher for longer in most of the developed parts of the world.

Politicization of economic matters The lingering damage of the global financial crisis has resulted in an increased politicization of economic matters. Unemployment and sluggish growth are never popular with voters. This rising politicization adds considerable un- certainty to financial markets – political risk is hard to predict, it often has unforeseen conse- quences, and markets are bad at incorporating political risk into asset prices. This year offers specific clear political events that are likely to attract investors’ attention. The Euro area has to deal with the consequences of a bail out of Cyprus, and a likely bail out of Spain. The German elections in September are also a con- cern for markets, as domestic political con- siderations may influence Germany’s approach to Euro-wide issues. In the United States the ongoing debate over fiscal policy is likely to create some concerns. In Japan the politiciza-tion of monetary policy in particular has become overt (and deeply worrying from an economic perspective).

A lot of noise about currency marketsThis politicization has also spilled into some hys- teria about “currency war.” For a politician, focusing on currencies is often desirable. “Cur- rency up, bad; currency down, good” is a simple concept. Politicians can blame their eco- nomic ills on foreigners (who by definition do not get to vote for them), while simultaneously portraying themselves as defenders of the national interest to their own electorate. Perhaps most importantly, it can give instant gratifica- tion: “I promised to weaken the currency, and it is weaker. Vote for me.” However currency movements can create as many economic prob- lems as they solve. Weakening a currency does not necessarily benefit exporters (much depends on how exporters price their goods when selling to their customers). A weaker currency may raise import costs and damage domestic consu- mer confidence. The simplistic idea that weak- ening a currency will always help an economy is out of date. Hopefully the noise about currency markets will die down as the year progresses.

Slow recovery of the United States The global economy is likely to experience diver- gence in 2013. The slow recovery of the United States is supported by several factors. The banking system is once again prepared to offer credit, albeit cautiously. Consumer credit is rising at a normal level. Incomes for those with a job are rising. The stabilization of the housing market, when set against this backdrop, is likely to provide a solid foundation for consumer spending. Slow investment is preventing a

By Paul Donovan, Senior Global Economist, Managing Director, UBS Investment Bank

complete return to trend growth. Banks are still reluctant to lend to small and medium-sized businesses (which have no alternative sources of capital), preventing expansion. This also accounts for the slow recovery of the labor market.

Flat growth in Europe In the Euro area, a very different picture is in evidence. The banking system of the Euro zone is simply not in a position to provide the credit growth that one would associate with a normal level of economic activity. This is significantly reducing the ability of the European Central Bank to influence economic activity (money is printed, but the banks will not do anything with it when they get it). Unemployment is rising in many Euro area economies, creating job insecurity and increasing consumer caution. With fiscal austerity enforced either by market discipline or by inter-governmental agreement, it is hard to see growth in the Euro area being anything other than flat this year. For financial markets the risk of a Euro break-up has receded significantly and removing that risk premium has allowed risk markets to rally – but by now this process has probably concluded. The main incremental positive news is likely to come from exports to

non-Euro European countries and to the United States.

Domestic demand in Asia Asian growth is likely to remain relatively inward-looking. Although global trade levels will improve somewhat with the slow but steady improvement in US consumer spending, it is essentially domestic demand that is driving the Asian region. This limits the read-through of Asian growth to the rest of the world. Asian domestic demand is not a major driver of exports from Europe or the United States (as a lot of the goods that are exported to Asia are then re-exported to satisfy domestic demand in other parts of the world). The exceptions to this trend are the commodity producers that supply Asia’s domestic demand.

The global picture is therefore a more benign continuation of the trends we saw in 2012. A slow growth recovery continues for much of the world. The Euro zone remains mired in its financial system problems which will keep its growth essentially flat. Political noise, although perhaps less extreme than last year, will continue to add an element of uncertainty.

2726

Emerging markets

Emerging markets: A strategic component in your portfolio

By Jorge Mariscal, Regional CIO Emerging Markets, UBS WM

Many investment managers focus on developed regions at the expense of those with greater potential for growth. The main reason for this is that emerging markets (EM) have historically been associated with instability and uncertainty regarding economic and political developments. Investors based in developed economies also tend to underweight EM due to a general human tendency to invest in what is familiar.

This instinct to favor the familiar over the un- known, however, can lead to investors missing out on growth opportunities elsewhere, and to overvalue domestic assets over international ones. This is especially so in an environment where fundamentals of emerging economies today have improved vis-à-vis developed economies, with lower levels of debt, moderate inflation and better fiscal accounts. Against the backdrop of low interest rates, abundant liquidity from major central banks, and superior growth prospects in EM economies, we believe EM currencies, equities, and corporate bonds remain relatively attractive asset classes. These assets are also underrepresented in most clients’ portfolios.

Currencies an underappreciated asset classIn recent times, we have witnessed a great deal of activity among the central banks of the main developed economies. The European Central Bank, the Federal Reserve, and the Bank of Japan have all announced or expanded quanti- tative easing programs intended to support asset prices. We expect these interventions to

eventually weaken their currencies against those of certain EM economies. Faced with abundant supply from central banks, major currencies such as the US dollar, the euro, and the yen, face downward pressure over the medium to long term. These major currencies are likely to depre- ciate against currencies of countries that do not face the need for deleveraging, and thus do not have to print as much money. Emerging economies largely fall into this category, and their currencies should appreciate against the majors as sovereign balance sheets rebalance.

That said, while we are positive about the out- look for EM currencies over the medium to long term, they face two short-term headwinds. The first is that in a world prone to acute bouts of risk aversion, the flight to safety favors liquid currencies, not necessarily those with the best fundamentals. The second is that many export- oriented emerging countries fear that stronger currencies will compound already weak external demand, with central banks intervening to prevent appreciation. As a result, the trend of appreciation could be interrupted by periods of volatility. While investors should take these short-term considerations into account when structuring their exposure to different EM currencies, we believe that over time, long-term appreciation trends will emerge for most of them.

Equities riding on superior economic growthHigher average EM growth prospects should also translate into higher average corporate

earnings growth. This, in turn, should support equity market performance in the medium term, as we expect EM equities, on average, to outperform developed market equities. In the near term, however, uncertainty about growth can increase volatility. The IMF forecasts real GDP growth in EM accelerating to 5.5% in 2013 from 5.1% in 2012. The growth differential between emerging and advanced economies is also forecast to widen in favor of EM, to 4.1% in 2013 from 3.8% in 2012. Currently, we believe EM equity valuations are attractive on a price-to-earnings ratio of 10.5x 12-month-forward consensus earnings, compared with equivalent multiples of 13.2x and 13.6x for the world and the US stock markets, respectively.

Over a longer-term horizon, we think that EM will have the edge over industrialized nations with regard to equity investments. Rapidly rising incomes in the emerging markets are catapult-ing around a hundred million people each year out of poverty and into the emerging middle class. This has resulted in impressive economic growth and fast-growing markets for consumer goods. Western consumer goods manufacturers that already have a large market share in the emerging markets are one group that will profit from this growth. However, local consumer goods and service providers will also benefit from the extremely rapid growth of the middle class in these markets.

Corporate bonds a growing marketAnother asset class for investors to tap into the EM growth story is EM corporate bonds. We believe EM corporate bonds’ valuations are not in line with their attractive fundamentals. EM growth is on an improving trend this year and should benefit EM corporate bonds which are of a relatively cyclical nature. Furthermore, given improved economic prospects and lower trending financing costs, EM corporates have registered lower credit default rates over the past five years compared to US corporates. We expect this trend to continue as emerging economies undergo a cyclical rebound. At the same time, EM corporate bonds’ relatively short duration offers some protection against rising US Treasury yields. In fact, we are not fundamentally concerned about the outlook for EM corporate debt, as we do not expect policy rates in the US to be raised over the next 6 – 12 months. We expect a base case return of 4.5% in USD terms over the next six months.

EM corporates have overtaken sovereigns as the main issuers of new USD-denominated EM debt since 2003. While increasing leverage can become a risk concern at some point, we believe the asset class is still in a healthy growth mode. As EM corporates have markedly improved their balance sheets in recent years, they have gained better access to capital markets, which has improved the liquidity profile of the asset class. Yet, EM corporate bonds trade at a discount to developed market corporate bonds of equivalent credit fundamentals.

28 29

China

China in focus

By Wang Tao, Head, China Economics Research, UBS Investment Bank

China’s economy has been recovering. Real GDP grew by 7.9% y/y in Q4 2012, bringing the annual average growth to 7.8%. Our estimates show that the sequential momentum accelerat-ed further to 8.6% q/q in Q4, helped by the strong credit impulse in Q3, and robust rebound in property construction and exports.

Our baseline forecast is for real GDP growth to recover modestly to about 8% in 2013We believe that the government will pursue a neutral monetary and credit policy in 2013, with RMB loans growing by about 8.5 trillion. We also believe the government will maintain the current home purchase restrictions in large cities and reiterate its intention to keep property prices under control. On the above basis and assumptions, we forecast a moderate recovery in the property sector and sustained strength in infrastructure investment, which can help to offset the continued weakness in corporate manufacturing investment. In H1, we expect the strong credit impulse, the recovery in the property sector, and local governments’ drive for accelerating investment under the “urbanization” theme to sustain the overall economic recovery, even though exports may remain lackluster during this time. Later in the year, as the government gets more concerned about rising housing prices and recovering inflation, liquidity is likely to be tightened, with shadow banking activity more tightly supervised, and growth momentum is expected to slow.

Booming credit expansion now brings upside risks to growth in the short term China’s credit impulse picked up further in January after a brief slowdown in Q4, with net new total social financing (TSF) reaching a record high of 2.54 trillion RMB. Growth in overall bank credit picked up further, and seasonally adjusted new credit flows resumed their upward trend as a percentage of GDP after falling briefly in Q4. If the strong momentum continues in the next 1 – 2 months, we will see clear upside risks to investment and growth in H1 2013.

“Urbanization” may also bring upside risks to property and investmentAlthough still a vague theme, the central government may wish to “accelerate” the human aspect by providing more public services to migrants and rural populations, in order to change economic structure and boost services and consumption. However, the local govern-ments would mainly want to expand their urban premises and do more investment, funded by land acquisition and sales. Therefore, the end result is likely to be more investment and another property boom, which is positive for commodity-intensive sectors in the short run.

On balance, we see more upside risks to invest- ment and GDP growth in H1 2013 from the credit impulse and a strong property recovery, supported by local governments’ drive to speed up urbanization. As a result, there will be more visible risks of credit and property policy

tightening later in the year. Although the earliest possible opportunity for reining in credit will likely be April, we think the more likely time would be in H2 2013.

On the reform front: Price reforms and more social spending While the government will likely formulate plans rather than implementing far-reaching reforms in 2013, we expect it to make progress this year with energy and utility price reforms, to expand the coverage of health care insurance, to spend

more on social and public infrastructure, to further develop the bond market and open up the capital market, and to expand the business-for-VAT tax reform. We do not expect a wide-spread property tax, an obvious change in the one-child policy, or any significant progress in Hukou reform, land reform, or public finance reform in the coming year. These policies are generally more positive for consump- tion and the services sector.

3130

Additional information

A look at the funds markets in 2013

With Paul Stefansson, Head of Investment Funds and Hedge Funds, Singapore, and Ernest Chan, Head of Investment Funds and Hedge Funds, Hong Kong.

Asia is one of the fastest growing regions in the world and offers tremendous potential for wealth creation. In this environment, how may investors approach their investment decisions?

Paul Stefansson: At UBS we use a core satellite investment framework. The core investment funds have shown a reasonable return on investment. Satellite funds normally offer relatively more exciting returns, but are riskier.

For example, Asian investors should consider building their core funds with diversified investment-grade corporate bonds and blue chip, high-quality companies. Once the core is in place, satellite funds can be added to focus on individual countries such as China, high-yield bonds, smaller companies, hedge funds, property and private equity.

Unfortunately, many investors only invest in a few individual bonds. While this is adequate with investment-grade bonds, if you only have a few high-yield bonds or stocks then you are playing Russian roulette with your money. Most investors know that investment-grade bonds have very low default rates (i.e. 0.09% per year according to Moody’s Investor Service from 1983 to 2011) and that high-yield bonds offer great yields, but few investors know the default

rate on high-yield bonds is 51-times higher (i.e. 4.67%). If you own a high-yield bond, there is almost a one in 20 chance that you will lose 100%. Getting exposure to high-yield bonds through a bond fund is one way to actively manage the risk and generate higher returns, as a bond fund will usually hold more than 100 different bonds. Stop playing Russian roulette!

Given the higher growth rates in emerging mar- kets, especially in Asia, investors should consider investing more in emerging market bond and equity funds. The easiest way to achieve this is to invest in Asian or emerging market asset income funds that are split between bonds and stocks and yield over 5%. The bonds will protect on the downside, while the stocks will provide upside. The protection will keep you invested in bear markets. You need to stay committed to your core funds in difficult times to reap the benefits of a healthy relationship and a potential yield of over 5%! What should investors who have bought into fixed income funds do if interest rate cycles change and rates go up?

Ernest Chan: There is a high chance that investors could be potentially deterred from their fixed income portfolios in 2013, due to the danger of taking a hit in value should interest rates rise. However,

at UBS we have an open fund architecture and provide access to UBS and third-party funds. The elaborate selection process includes quanti- tative screening and qualitative assessment (e.g. via a fund manager interview). We then further select core funds that can be kept during multiple economic scenarios. Our selected core bond funds are designed to weather an increase in interest rates by either being very short in duration or having the flexibility to generate alpha through currencies. Last but not least, they are not benchmark oriented and can in- crease their allocation to high-yield bonds, which tend to benefit from an increase in rates through spread compression.

Fixed income funds will most likely still perform in 2013, as few governments will increase interest rates, though market expectations may well drive interest rates higher. I also expect equities to have an initially higher relative per- formance, but we do not believe the economy can support equities in the long-term. Prudent investors can move from fixed income funds into a balance of bonds and equities. The strength of a more balanced fund is that your assets are allocated into bonds and equities based on the return potential of the respective

asset class. Volatility can cause equity perfor- mance to swing from being the best asset class in one quarter to being the worst in the next. Balanced funds or multi-asset income funds offer great diversification benefits, contribute to the income stream and provide greater protection compared to equity funds in a down- trend, without compromising return potential in the long term.

In the current global climate, how should Asian investors look to grow their wealth?

Paul Stefansson: In the developed world, the global financial crisis and the subsequent fiscal deficits have raised the debt-to-GDP ratio to about 90%. In the book, “This Time is Different” by Kenneth Rogoff and Carmen Reinhart, when the debt-to-GDP ratio reaches above 90%, growth slows down by -1% per year. The developed world will have slower growth. On the monetary policy front, the US Federal Reserve and many other central banks have lowered interest rates to 0% and printed money to stimulate growth. The slower growth and 0% interest rates make investing challenging. If investors stay in cash, then they will have negative real returns.

In a complex political and global financial environment, Paul Stefansson and Ernest Chan discuss how Asian investors can better manage their funds in 2013.

32 33

Additional information

For example, a fixed deposit investor in Singapore earning 0.5% will have a negative real yield of -4.7% (i.e. return of 0.5% – inflation of 5.2%). That is, the investor has lost -4.7% in purchasing power. Therefore, investors who want to beat inflation may need to take on additional risk by investing in corporate bonds, high-yield bonds and equities.

“If you have five high-yield bonds in the core of your portfolio, you’re playing Russian roulette with your money.”

Are there any particular sectors or regions that Asian investors should look to access?

Ernest Chan: The high growth figures being posted by Asian emerging markets are being driven by the consumer sector, particularly domestic consump- tion. This should be a sector of interest for investors looking to participate in Asia’s growth story. A sector that has been out of favor for a while is the financial sector – often a leading indicator for economic recovery in Asia – but perhaps a more speculative approach would be to look at the mining and metals sectors. Due to inflationary pressures, there’s been a sub- stantial improvement in the economic conditions of these sectors and they could pick up further in 2013.

Country-wise, Taiwan has a lot of exposure to technology, particularly when it comes to US research and development. Developments in technology have a chain effect and both Taiwan and Korea could see their tech sectors picking up off the back of R&D breakthroughs in the US.

In Southeast Asia, countries like Vietnam and Indonesia could be beneficiaries of the current tensions between China and Japan. Foreign direct investment likes stability, and that is some- thing these markets can offer. Is there a common mistake that many investors make?

Ernest Chan: I believe that the ‘home bias’ that many Asian investors show – focussing mainly on their home country – constrains their ability to take advantage of opportunities. Making the safe, comfortable choice by going for investments that you know more about is a natural response, but it often means you forego other opportunities.

Unlike many Asia-based investors, I prefer to take a global approach. Currently, I think that invest- ment opportunities in the US or Europe look at least as attractive as Asia. Limiting yourself to Asia might mean higher regional risk and forgone investment opportunities in relatively inexpensive developed markets. Investors may thus wish to at least look globally.

How will you personally position your portfolio in 2013?

Paul Stefansson: In my portfolio, I have a core fund position in investment-grade bonds, high-yield bonds and US mortgage-backed securities. The majority of my long-term core equity positions are in private equity and blue-chip companies (I have held these equity positions for more than 10 years). Finally, I have satellite funds in US property and European banks. In my opinion, that’s a healthy combination.

Notes

34 35

Additional information

Offering the best of both worlds

Discretionary portfolios are well established in the US and Europe. What is the growing attraction of discretionary solutions in Asia? There are many good reasons why clients choose a discretionary solution, but mostly they want more time to enjoy life! While every client would like their portfolio to be actively managed, they also realize that this can be extremely time consuming. In Asia alone, there are over 17,000 companies listed on the region’s stock markets. By choosing a discretionary solution, it is possi- ble to get the best of both worlds, meaning active management of the portfolio and more time to spend on the finer things in life.

How do discretionary portfolios fit into UBS’s core-satellite approach when constructing wealth management solutions? A discretionary portfolio is ideal as a core invest- ment. Remember, the core component of a portfolio is to satisfy long-term financial goals. Over the long run, portfolio returns are determined by strategic asset allocation; in other words, how much exposure an investor chooses to have in stocks and how much in bonds. However, all portfolios drift over time and clients may not rebalance their assets as frequently as they should.

At UBS, disciplined rebalancing is integral to the way we manage discretionary portfolios.

Could you further explain the investment process by which discretionary portfolios are managed?Our investment process has been developed from our long and broad experience in managing discretionary portfolios. We make adjustments to the process from time to time but it has always been structured and disciplined.

The process starts at the UBS Chief Investment Office (CIO) which formulates macro views of the investment environment and identifies opportunities, themes and risks. The next step is to apply these views to every client. For example, if the CIO is positive on the “riskier” asset classes, what would it mean for a client with a conservative risk profile holding a portfolio with investments in fixed income only? In many instances, this would more than likely mean tilting the client’s portfolio towards the sectors within fixed income that typically perform well when risk appetite in the market is strong.

The actual selection of securities is of course also critical. What exactly do we buy for our clients’ portfolios? We have specialized invest- ment teams for this. The teams are made up of

Eric Sandlund, Head Investment Management, UBS Wealth Management Asia-Pacific

professionals who bring with them a great deal of experience in the financial markets. Another key feature of our investment process is risk management. We want to deliver the best possible returns to our clients but we do not believe in taking excessive risk to achieve this.

For clients in Asia, how do UBS’s discretionary solutions differ from other approaches in the UBS portfolio shelf? From our conversations with clients, we realized that clients in Asia want to invest in Asia. More than that, they want to put Asia at the core of their portfolios. Part of this is simply a ‘home bias,’ but the investment story for Asia also happens to be a compelling one. The emergence of the middle class in Asia means that the region has now entered the era of mass con- sumption and this provides the region with a powerful new engine of growth.

And we now have discretionary strategies that offer clients significant exposure to Asia.

Are the portfolio managers for discretionary solutions located here in Asia?Yes, we have portfolio managers located in both our Singapore and Hong Kong offices. The team is a highly experienced one, led by professionals who have significant experience investing in Asian markets. Our portfolio managers are fluent in both English and Chinese.

Even where portfolios are managed in Asia, there is strong leverage from our global platform. Our tactical asset-allocation calls are in line with the Chief Investment Office and we work closely with our global offices.

What is a discretionary portfolio? When building a UBS Discretionary Solution, the UBS client advisor first assesses your risk profile and takes the time to understand your needs and goals. From this, a strategic asset allocation is agreed upon. This is your long-term investment strategy. The key question here is how much exposure you wish to have to stocks and how much to bonds. Once this is decided, you leave the rest to the experts at UBS.

To construct your portfolio, the portfolio manager takes the agreed strategic asset allo- cation as a starting point and makes tactical shifts into areas where there are perceived to be more opportunities. The portfolio manager will monitor your portfolio and carry out all the day-to-day investment decisions. You will receive monthly updates of your portfolio and all the transactions will be reflected in your statement.

Although you place the full management of your portfolio in the hands of UBS, there is a lot of flexibility in discretionary portfolios. There is a comprehensive range of strategies available and you can change your strategy at any time.

Finding the time to properly manage an investment portfolio can be difficult. Eric Sandlund discusses the possible advantages of a discretionary portfolio and the benefits it brings to Asia-based investors.

36 37

Additional information

The ART of the UBS Advisory Process

In today’s challenging financial markets, UBS makes it a priority to provide you with up-to-date information on the quality of your investment portfolio, across all your assets and positions. To ensure that your financial exposure and investment decisions remain transparent and reflect an appropriate level of risk, UBS has introduced a market-leading Advice Review Tool (ART), available exclusively to UBS Wealth Management client advisors.

Alexander Kobler, Head of Investment Products & Services Asia Pacific

What is ART?ART is an innovative platform that consolidates relevant information from across all your invest- ments, including your personal asset allocation and potential risk exposure, as well as currency-, sector- and geographical breakdown. With this data, ART is able to conduct an in-depth and timely analysis on your current positions and levels of exposure, highlighting to your client advisor any specific risks or opportunities in your portfolio.

How does ART benefit you?

u Enables tailor-made proposals for portfolio adjustments ART integrates UBS’s “Research-based Advice” content, directly linking our CIO’s opinions on current market opportunities with a wide range of suitable products. Based on the detailed analyses and opportunities identified through ART, your client advisor is better equipped to provide targeted, bespoke solutions to meet your financial goals.

u Offers full transparency across all your investments Using this detailed analysis and reporting tool enables your client advisor to present you with substantiated data and accurate benchmarking, which in turn supports you in making fully informed decisions about if, how, when and where you want to make your next investment.

ART can provide a comprehensive overview of your consolidated positions in terms of asset classes and currencies across your different accounts. UBS recognizes that you have diverse and global interests, and therefore the ART reports are customizable to include equity sector, region, fixed-income duration, income projection, and credit-rating distribution according to your specific needs.

u Checks the quality of your investment portfolioIt is paramount that you make a conscious deci- sion on the desired risk exposures, particularly in volatile markets. ART allows UBS to bench- mark your actual asset allocation and holdings against the UBS reference portfolios as well as most recent research calls. Your client advisors can spot, for example, concentration of an

issuer or of certain market risk, or if a portfolio lacks diversification. Similarly, if there are other potential quality issues in a portfolio, such as holdings in equities that are on the UBS sell list or holdings of unrated or below investment-grade fixed-income positions, ART gives you the transparency needed to rebalance your portfolio.

In summary, ART provides the depth and breadth of information needed for you to stay on top of your risks and embark on targeted investments. It allows your client advisor to present you with an investment proposal that is well-diversified and bench- marked against the UBS global reference portfolio that best suits your needs and out- look. Essentially, via ART, we are putting the health, the dynamics and opportunities of your portfolio at the center of attention of our UBS Advisory Process.

For illustration purposes only.

Asset summery (unbundled) Friday, February 22, 2013

38 39

Please note that UBS Investment Bank has its own wholly independent research and views which at times may vary from the views of UBS Wealth Management.

The contents of this document have not been reviewed by any regulatory authority in Singapore. Investors are advised to exercise caution in relation to any offer. If an Investor is in any doubt about any of the contents of this document, the Investor should obtain independent professional advice.

This document is communicated by UBS AG and/or its affiliates (“UBS”) for the exclusive use of the party to whom UBS delivers this document. UBS may from time to time, as principal or agent, have positions in, or may buy or sell, or make a market in any securities, currencies, financial instruments or other assets underlying the transaction to which any term sheet, Information Memorandum, Prospectus, confirmation or other documentation for the issue of the product or for which the transaction relates (collectively, the “Documentation”). UBS may provide investment banking and other services to and/or have officers who serve as directors of the companies referred to in the Documentation. UBS may pay or receive fees in connection with transactions of securities to or from third parties. Further information on any discount to the issue price provided by UBS Investment Bank division to UBS Wealth Management division is available in the sales related information disclosure or other similar document for the securities, which may be provided by UBS Wealth Management division from time to time. UBS has policies and procedures designed to minimise the risk that officers and employees are influenced by any conflicting interest or duty and that confidential information is improperly disclosed or made available. The investor acknowledges that UBS may retain all or part of such fees.

UBS generally hedges its exposure under structured transactions, although it may elect not to hedge or to partially hedge any transaction. UBS’ hedging activity may be conducted through transactions in the underlying asset, index or instrument or in options, futures or other derivatives related to the underlying asset, index or instrument on publicly traded markets or otherwise, and may have an impact on the price of the underlying asset. If a transaction is cash settled, UBS will generally unwind or offset any hedge it has for such transaction in close proximity to the relevant valuation time or period. In some cases, this activity may affect the value of the transaction.

Structured transactions are complex and may involve a high risk of loss. Prior to entering into a transaction you should consult with your own independent legal, regulatory, tax, financial and accounting advisors to the extent you consider it necessary, and make your own investment, hedging and trading decisions (including decisions regarding the suitability of this transaction) based upon your own judgment and advice from those advisers you consider necessary. Save as otherwise expressly agreed, UBS is not acting as your financial adviser or fiduciary in any transaction.

This document is for information purposes only and has no regard to the specific investment objectives, financial situations or particular needs of any specific recipient. Any charts and scenarios set out in this document are for illustrative purposes only. No representation or warranty, either express or implied is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the developments referred to in this document.

The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. The information and any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of UBS as a result of using different assumptions and criteria. UBS is under no obligation to update or keep current the information contained in this document.

This document does not constitute and should not be construed as an offer, recommendation or solicitation to conclude a transaction nor should it be treated as giving investment advice. The terms of the transaction will be exclusively subject to the detailed provisions, including any risk considerations, contained in the Documentation. Any investment or any other decisions should not be made based solely on this material. Neither UBS AG nor any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material.

UBS specifically prohibits the redistribution or reproduction of this document and any of the material in this document in whole or in part without the prior written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect.

No action has been or will be taken in any jurisdiction that would permit a public offering of the securities described in this document, save where explicitly stated in the Documentation. Where applicable, the securities must be sold in accordance with all applicable selling restrictions in the jurisdictions in which they are sold.

Not for distribution in the United States or to U.S. persons

© UBS 2013. All rights reserved.

SingaporeOne Raffles Quay#50-01 North TowerSingapore 048583Tel. +65 6495 8000

www.ubs.com/singapore WM

SG_E

2B_W

I201

3_EN

_031

3_V

1

Notes Disclaimer

© UBS 2013. All rights reserved.

We will not rest

Asian growth. Portfolio growth.

Who can help you connect the two?

At UBS, we have dedicated teams of wealth management specialists around the region, tapping into our in-depth research and

global resources to give you the financial insights you need to take advantage of investment opportunities in the market.

To learn more, watch 100 seconds on understanding what wealth management can do for you,

with Kathryn Shih, CEO UBS Wealth Management, Asia-Pacific.

Go to www.ubs.com/apac-insights-en or scan the QR code with your smartphone.