Credit Suisse GEM Strategy - Could 2011 be like 2005?

● 2010 is not over yet, so why are we thinking of 2011? With limited upside left to our year-end targets (5% for the MXASJ or the MSCI Asia ex. Japan), we believe it is time to introduce our 2011 targets. With the MXASJ (the MSCI Asia ex. Japan) in 2010 tracking 2004 performance, the question is whether 2011 could look like 2005. We believe the key similarity between 2004/05 and 2010/11 is that they are both mid-cycle slowdowns. 2004 and 2010 were associated with a peaking of global leading indicators and 2005 and (we believe) 2011 are associated with a trough in leading indicators.

● Introducing our 2011 year-end targets for MXASJ and MXEF. The MXASJ and the MXEF were up 19% and 30%, respectively, in 2005. But our year-end 2011 targets imply a more modest 15% upside to 625 for the MXASJ and to 1325 for the MXEF from our end-2010 targets of 550 and 1150, respectively. The main reason for the more modest targets is the poor state of developed world sovereign balance sheets and the accompanying fiscal contraction.