The Big Ugly Experiment
Tracking the data - Report 1
Asia Pacific Equity Strategy
Adrian MowatAC
(852) 2800-8599
adrian.mowat@jpmorgan.com
J.P. Morgan Securities (Asia Pacific) Limited
Rajiv Batra
(91-22) 6695 3224
rajiv.j.batra@jpmorgan.com
J.P. Morgan India Private Limited
Rohan Ghalla
(91-22) 6719-8289
rohan.d.ghalla@jpmorgan.com
J.P. Morgan India Private Limited
Head of Research
Sunil Garg
(852) 2800-8518
sunil.garg@jpmorgan.com
J.P. Morgan Securities (Asia Pacific) Limited
See page 36 for analyst certification and important disclosures, including non-US analyst disclosures.
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Asia relative to world
90
110
130
150
170
2004 2005 2006 2007 2008
APx J / World
EM Asia / World
Source: Datastream, MSCI. 2 March 2009.
• This is the first of a series of reports tracking the impact of the global
recession on Asia. In our report The Big Ugly Experiment; a roadmap
for Asia in this recession, J. P. Morgan’s country and sector heads
describe their expectations and the data they are tracking. The Big Ugly
Experiment; tracking the data monitors how Asian countries, sectors
and companies are performing. It is intended to compliment J.P.
Morgan’s economics team’s weekly Global Data Watch, Kasman, et al.
• The global economy suffered a collapse in end-demand in 4Q08. The
second order impact has been a rapid contraction in industrial production
and very poor trade data. Our advice is to focus on actual end-demand.
We are monitoring retail sales globally and new order PMI surveys. The
key positive data points are: (1) US and UK retail sales +1%MoM in
January. (2) Recovering auto sales in China and India. (3) Trade surplus
in Korea of $3.3 billion in February, vs. $3.4 billion deficit in January.
(4) Chinese retail sales tracking +10%oya in real terms. (5) China’s new
orders PMI above 50. (6) Property transaction volumes in China, India,
Hong Kong and Singapore above expectations (see page 5).
• The intensity of the global business sector adjustment is producing
negative feedback to household fundamentals through declining income
and equity prices in developed economies. The balance of risks is
another down-leg in export demand, in our view. With the exception of
the items listed above, demand in Asia continues to weaken.
• Feedback from clients suggests that they have little faith in EM growth
when the G3 economies are in a deep recession. Better-than-expected
consumption data in China is viewed with skepticism and surprise (see
page 18). Our medium-term outlook remains positive, driven by our view
that aggressive monetary and fiscal actions will result in EM Asian
economies being first out of this recession. As noted above, there are
signs that this view is tracking the margin; China and India, which have
the most pro-growth policies, are showing the earliest recovery in
demand.
• The strategy team is often asked, “Will EM consumer demand offset the
developed consumer recession?” We think the answer is ‘no’ globally,
but policy makers in EM are trying to stimulate domestic consumption
and investment to offset severe external weakness. In our view, investors
should continue to position to take advantage of these policies rather than
worry about the overall rate of GDP growth.

Table of Contents
Regional Strategy Team: It is all about end-demand ............3
Banks.........................................................................................4
Real Estate ................................................................................5
Technology ...............................................................................6
Autos .........................................................................................7
Consumer..................................................................................8
Utilities ......................................................................................9
Oil and Gas .............................................................................11
Telecom...................................................................................12
Transportation ........................................................................14
Australia ..................................................................................16
China .......................................................................................18
Korea .......................................................................................20
Taiwan .....................................................................................21
India .........................................................................................23
Singapore................................................................................25
Malaysia ..................................................................................27
Indonesia.................................................................................29
Thailand...................................................................................30
Philippines ..............................................................................31
Our extended markers ...........................................................33
J.P. Morgan Equity Strategy and Asia Pacific Macro Team44