EFTA01449260

28 February 2013 Exchange Rate Perspectives Deutsche Bank Figure 13: Top Ten Change In Cross-Border Bank Lending 200% 180% 160% 140% 120% 100% 80' 60% 40% 20% change in foreign claims on borrowers since 200901 tb = t s ci = "8 a 2 a Figure 14: Bottom Ten Change In Cross-Border Lending 0% -10% -20% -30% -40% -50% • -60% -70% -80% change in foreign claims on borrowers since 200901 5>ox• arischo Sen. GIS 00uutp Nil den% INWelorid CAntrK.I6 en. b I I I • 5 • 0 • A • 7 2 0. -44 excess liquidity. The investment rate in China has grown annually since 2008, and is currently the second highest in the world, after the tiny African island nation of Sao Tome and Principe. This investment has been funded by non-traditional credit expansion (see Figure 11. Moreover, when looking at cross-border bank lending since 2008, the most rapid growth in the world has been to Chinese borrowers (see Figure 12). After that, other Asian countries and Brazil have seen the biggest increase in borrowing (see Figure 13). The biggest drops have been seen to European borrowers (see Figure 14). Other markets that have benefited from easy G3 liquidity and Chinese growth has been EM local bonds, "safe-haven" markets such as Japan (see Figure 15) and property in prime locations around the world, like central London (see Figure 161. A new market regime would therefore likely see a reversal of many of these trends or at the very least a moderation in their pace. From a currency perspective, it adds to the case that Asia-Pac currencies, such as SGD and AUD, have likely seen their peak against the dollar, with risks skewed to the downside. Figure 15: Surge In Foreign Buying Of Japanese Funds 60 70 80 90 100 110 120 ISO 140 —USID/JPYlinverteAlhs) —Money market fund inflows L1PY till, cumulative, ms) 96 97 9899 00 01 02 03 04 05 06 07 08 0910 11 12 13 sw“ orvroi.: ark. • 60 50 ao 30 20 10 o - -10 -20 Figure 16: Prime London Has Benefited From Post-2008 Regime 64,500,000 1 overage price of detached house in £4,000,000 1 prime London (Kensington and Chelsea) £3,500,000 4 £3,000,000 £2,500,000 I £2,000,000 j £1,500,000 £1.000.000 £500,000 1 959697%990001020304050606091011 12 soi,:c,c,...n.crposva. LI( Lama Roster Deutsche Bank AG/London Page 9 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0104597 CONFIDENTIAL SDNY_GM_00250781 EFTA01449260