Chart 38: YTD equity inflows into EM Asia are at the highest levels since Chart 39: Similar to that of global markets, Asian volatility is at its most 2004 depressed levels post-GFC 40 35% 28 30 24 22 23 30% 17 17 20 4 15 4 4 14 4 44 25% 10 4 20% . 15% “10 10% -20 ~oe SSPPtetItTszseeeesesesees 24 SBSEP BERBER RERBET -30 . > EBON? BOF ESE OPS OFS HOS = ike) ico) med foe) Lez) Q wrt N oO s+ Ww ico) aed ZSSkSSSRRRRRRRR ; ; ; === Average 3M ATM Vol of HSI/KOSPI2/NKY === Current (13.2%) m YTD Foreign Equity Inflow into EM (US$bn) Source: BofA Merrill Lynch Global Research, Bloomberg. Data as of 2-Jun-17 Source: BofA Merrill Lynch Global Research. Data from 2-Jan-12 to 2-Jun-17 Foreign inflows into Korea, Taiwan, India, Indonesia, the Philippines, and Malaysia Notable trends and dislocations (Asia) Asian equity markets saw modest gains last week, led by Japan’s NKY index, which increased 2.5% week-over-week. In fact, the index breached the 20,000 mark last Friday for the first time since December 2015. Gains were driven by foreign inflows from investors attracted to very strong corporate profits. Additionally, economic data from last week indicated that Japan’s unemployment rate held at a two-decade low, and capital spending during Q1 beat analyst estimates. The biggest contributor to last weeks’ return was Fast Retailing Co Ltd (9983 JT), which added 3.9% week-over-week. The company reported that same-store-sales for its Uniqlo stores rose 2.4% year-over- year in May due to successful strategies during the Golden Week and Mother’s Day holidays. After the NKY, last week’s second biggest gainer was Hong Kong’s HSI, which added 1.1%. The leading name in the index was Geely Automobile Holdings (175 Hk), which jumped 19.8% week-over-week in response to optimism over its recent acquisition of a 49.9% stake in Proton Holdings. Hong Kong’s HSCEI saw a similar return as the index added 0.8% last week. Next we turn to India, where the NIFTY gained 0.6% last week. The leading name