Global Investment Opportunities Group (GIO)

Global Investment Opportunities Group (GIO) Opportunistic Investments April 28, 2011 J.P.Morgan Jeanne Sun 212) 622-2646 RENMINBI REDUX Last week, comments by senior government officials in China strengthened our conviction for a stronger RMB and we believe investors should be positioned to take advantage of this. Both Premier Wen Jiabao and the PBOC Governor Zhou Xiaochuan have recently talked about using the currency as another tool with which to fight inflation. Since 2009, the PBOC has raised reserve requirements 10 times (500 bp) and hiked policy rates 4 times (100 bp) but inflation has remained undeterred in its ris om 2% to 5.4%. A stronger currency would help curb some of the inflation imported from other countries: according to Morgan's Greater China Economics team, every 1% of appreciation lowers headline inflation by about 10-12 bp per year. As inflation continues to grind higher and expectations of stabilization or moderation get pushed out, we believe there is more pressure to pull on all the inflation levers including the currency which could allow for faster RMB appreciation than previously expected. We are not calling for a one-time revaluation of the RMB as has been speculated in the press but in the face of high and rising inflation, we believe the overall risks for the currency are to the upside. Risks: • Inflation stabilizes or moderates earlier than expected. • Government currency intervention. Implementation: • Please call your M. Morgan representative for options on trading the RMB. thine 2% Source: . n vs. FX A . . retied • Ar . 00 '02 '04 '06 '08 —Chinese CPI —YoY%Chg in CNY '10 China Economic Information Network. Bloomberg. Data as of 3/31/11. Investment Products: Not FDIC Insured • No Bank Guarantee • May Lose Value EFTA00595565 GIO Opportunistic Investments J.P.Morgan IMPORTANT INFORMATION This presentation and the material contained herein is not a product of the M. Morgan Research Department and is not a research report although it may refer to a research report or research analyst. This presentation should be reviewed in conjunction with U.S. research published by Morgan Securities, LLC to the extent that such research exists. The opinions and ideas expressed herein do not take into account individual client circumstances. objectives and needs. Transactions in any securities that may be referenced herein may not be suitable for all investors. This press ion has been prepared for information purposes only. Nothing in this material is intended to be a solicitation for any product or service offered by . Morgan's Private Bank or any of its affiliates. Information contained herein has been obtained from sources believed to be reliable but we do not guarantee its accuracy or completeness and accept no responsibility for any direct or consequential losses arising from its use. The views and strategies described herein may not be suitable for all investors. This information is not intended as an offer or solicitation for the purchase or sale of any financial instrument and is being provided merely to illustrate a particular investment strategy. Past performance Is no guarantee of future results. Investment Products: Not FDIC Insured - No Bank Guarantee - May Lose Value 2 EFTA00595566