EFTA01451031

II December 2013 GEM Equity Strategy Outlook 2014 2) Value spread is more nuanced through the EM non-financial universe. The valuation spread is far more varied across the non-financial sectors (Figure 17). Energy is the most obvious example of a cheap EM sector relative to returns compared with DM, while Consumer Discretionary. IT and Telcos also look better value. In contrast both Healthcare and Consumer Staples look better in DM whilst Industrials and Materials are relatively even, although EM is a little cheaper in both cases. iFigure 17: EM versus DM by sector - (x) and RoE (9'O) Sector EM WHY ix) FM ROE 1%) OM PAW (XI OM ROE (%) Financials 1.48 13.82 1.25 8.16 Energy 0.94 12.97 1.72 12.98 Materials 1.35 7.64 1.93 9.28 Consumer Discretionary 2.24 15.42 2.94 15.46 Consumer Staples 3.82 14.31 3.63 19.33 Industrials 1.47 7.33 2.55 13.51 Utilities 1.06 5.96 1.47 8.05 Telco 2.38 16.75 2.24 11.74 Information Technology 2.08 17.17 3.19 17.32 Healthcare 3.80 12.15 3.54 16.84 AGGREGATE 1.59 12.76 2.10 12.00 Sant Owls** S* pear wry Anna LP 3) DM ROE in non-financials sector is now better than EM as aggregate margins have converged. A straightforward side-by-side comparison of the DuPont decomposition of the non-financial sectors in DM and EM reveals that the marginal shift of ROE in favour of DM which has taken place over recent years (Figure 18) is mainly due to the almost continual convergence of margins with EM (Figure 19). Whilst leverage has made on increasing contribution to EM returns (Figure 20), it remains lower than in DM, whilst asset turnover has been volatile on a gently rising trend (Figure 21). [Figure 18: EM vs DM non financials.- ROE (1.1a) a.E5I Non 11natRaol• ROE -- C44 Sr 4.44465 ROE 20 1 164 'Si 14 12 10 6 4 21, o1 2403 2001 3:05 9000 200E 2034 2633 2010 2011 3312 2013 Sant ONS464 Int Ifloamberg Mew IA Page 14 Figure 19: EM vs DM non-flnancials - Net margin (%) • 1:16 Hon FR4r4414 Nei Mien 4444.41361 Sr F+11•6601 1.4wpn MIN* 16 14 12 10 6 4 2 0 2003 2001 2005 2006 2012 20.31 2010 2011 2012 2013 Sow DNS.* Int 4146.066 Pone IP Deutsche Bank AG/London CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0107148 CONFIDENTIAL SDNY_GM_00253332 EFTA01451031