Asian equities (ex-Japan) MSCI Asia ex-Japan (24 Oct): 518 (last publication: 510) Recommendations UBS view MSCI Asia ex-Japan (6-month target): 545 Tactical (6 months) ¢ China released a set of positive data for September. While the headline 3Q GDP number only met * The Fed's implementation of QE3 provides expectations at +7.4% YoY (consensus +7.4%, prior +7.6%), the higher frequency data was better. SUppeR tO dene Oe lapan Squrties, If Industrial production of +9.2% YoY (consensus +9.0%, prior +8.9%), retail sales of +14.2% YoY conjunction with improving growth ; (consensus +13.2%, prior +13.2%), and fixed asset investment of +20.5% (+20.2% consensus, prior Prespects We SEE good near terra upside. +20.2%) all came in higher. ° Should economic growth surprise to the ¢ Chinese H-Shares are up almost 10% in the last month, while the S&P 500 is within 0.4 index points of upside, more defensive markets such as where it was a month ago. Valuations of MSCI China remain extremely attractive as the market Singapore and Malaysia are likely to continues to price in a hard landing scenario, although sentiment is clearly turning. In India, the underperform. Instead, higher beta, government has proposed several key economic reforms, but there are implementation risks and export-oriented markets like South Korea, consensus GDP forecasts still have downside risk, while Indonesia's economic momentum is on track. Tahwan, Hong Kong and Chir are likely te ¢ We expect 12.8% earnings-per-share growth over 12 months for the MSCI Asia ex-Japan. It trades on take édvantage from a strengthening it 11.0x 12-m forward earnings and 1.6x price-to-book. We expect a stable earnings multiple in the next six global growth. months. Economic growth should stabilize and earnings downgrades come to an end toward the end of Strategic (1 to'2 years) ; ; 2012. ¢ Consider a portfolio mix of high yield stocks largely found in Singapore, Taiwan A Positive scenario MSCI Asia ex-Japan (6-month target): 670 &