From: GIO Group JP Morgan <[email protected]>

From: GIO Group JP Morgan <[email protected]> To: Undisclosed recipients:; Subject: GIO Trade Alert Date: Thu. 28 Apr 2011 22:50:58 +0000 Attachments: GIO_Trade_Alert_2011-04-28_(RMB).pdf Inline-Images: image005.png: irnage006.png Global Investment Opportunities Group (GIO) Opportunistic Investments April 28, 2011 J.P.Morgan 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 Govemor 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 rise from 2% to 5.4%. A stronger currency would help curb some of the inflation imported from other countries: according to J.P. 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 J.P. Morgan representative for options on trading the RMB. Chinese Inflation vs. FX Appreciation 12% 10% II% 6% 4% 2% 0% .2% '00 72 14 —Mims OM Illi la —IbIrlilligs 0011 IS Source: China Economic Information Network. Bloomberg. Data as of 3/31/11. MPORTANT INFORMATION This presentation and the material contained herein is not a product of the J.P. Morgan Research Department and is not a research report. although it may refer to a research eport or research analyst. This presentation should be reviewed in conjunction with U.S. research published by J.P. 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 eferenced here., may not be suitable for all investors. This presentation has been prepared for information purposes only. Nothing in this material is intended to be a solicitation for any product Cf service offered by J.P. Morgan's Private Bank or any of its affiliates. Information contaked 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 al 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 invesbnent strategy. Past performance is no guarantee of future results. EFTA00649219 Investment Products: Not FDIC Insured - No Bank Guarantee - May Lose Value This email is confidential and subject to important disclaimers and conditions including on offers for the purchase or sale of securities, accuracy and completeness of information, viruses, confidentiality, legal privilege, and legal entity disclaimers, available at http://wwwjpmorgan.cornipages/disclosures/email. EFTA00649220