Greater China Fund

Slide 1: 

The Greater China Fund, Inc. CEF Conference w w w . g r e a t e r c h i n a f u n d . c o m October 2009

China Market Outlook : 

Equity market recovered from crisis level. Earnings will become the key driver for share prices. Property investment Real estate investment will continue to register better-than-expected growth. Export recovery Restocking activity in US and Europe will boost Chinese export in the 2H09. Policy Trend Current fine tuning monetary policy doesn’t mean credit tightening. Pricing hikes may trigger a policy shift. China Market Outlook

Confirmation of a sustainable recovery : 

Confirmation of a sustainable recovery Source: CITIC Secs as at August 2009 PMI above 50 for 5 consecutive months PMI New orders up faster than PMI finished good inventory, showing sign of economic recovery

Strong property sales lead to more investment : 

Housing starts shot up in June Strong property sales lead to more investment Property Primary Market Sales Volume: Substantial improvement Property Sales vol show stabilizing – Source: Goldman Sachs as at July 2009 (Primary market — Beijing, Tianjin, Shanghai, Hangzhou, Guangzhou, Shenzhen, Chengdu, Chongqing, Wuhan and Nanjing) Housing starts shot up in June – Source: CEIC, UBS (8/2009)

More positive data points expected… : 

More positive data points expected… Power Output shows sign of recovery – Source: China Electricity Council and Citi Investment Research as at July 2009) Retails Sales yoy Growth vs Consumer confidence Index--Source: Bloomberg, National Bureau of Statistics as at Oct 2009 Power Output: Recovering (YoY % change) Retails Sales yoy Growth vs Consumer confidence Index

Direction of Monetary Policy Key monitors : 

Direction of Monetary Policy Key monitors Source: JP Morgan China Consumer Prix Index (9/2009) JP Morgan China Import & Export Growth (7/2009) China Inflation Still in deflationary zone China Import & Export Growth: Bottoming out, but still weak PBOC unlikely to tighten aggressively, until annual inflation exceeds 4% and export growth becomes positive

Earnings upgrades will become key driver of the stock market : 

Earnings upgrades will become key driver of the stock market Source: IBES Aggregate and Citi Investment Research and Analysis as at August 2009 China — Earnings Revision Index

StrategyFocus on policy sensitive sectors and earnings momentum : 

StrategyFocus on policy sensitive sectors and earnings momentum Prefer China to Hong Kong Look for beneficiaries of resumption of property investment demand – cement and other building materials Prefer insurance to banks on reflation angle and therefore stronger investment income Prefer mid-cap banks to large banks on higher leverage of NIM rebound Quality property stocks trading at a discount to NAV Selective technology stocks on a product specific angle Leading exporters playing a industry consolidator role Earnings delivery and policy direction will dictate stock selection criteria

ImportantInformation – Regulatory Disclosure : 

ImportantInformation – Regulatory Disclosure Compliance (Boston): October 19, 2009 This document is provided as a service to professional investors/advisers. It is issued in the United Kingdom by Baring Asset Management Limited and/or by its investment adviser affiliates in other jurisdictions. The affiliate serving as the Greater China Fund’s investment adviser is Baring Asset Management (Asia) Limited. In the United Kingdom this document is issued only to persons falling within a permitted category under (i) the FSA’s rules made under section 238(5) of the Financial Services and Markets Act 2000 and (ii) the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001. This is not an offer nor a solicitation to buy or sell any investment referred to in this document. Baring Asset Management group companies, their affiliates and/or their directors, officers and employees may own or have positions in any investment mentioned herein or any investment related thereto and from time to time add to or dispose of any such investment. The contents of this document are based upon sources of information from third party sources which are believed to be reliable but no guarantee, warranty or representation, express or implied, is given as to their accuracy or completeness. This document may include forward-looking statements, which are based upon our current opinions, expectations and projections as of the date on the cover hereof. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. The value of any investments and any income generated may go down as well as up and is not guaranteed. Past performance will not necessarily be repeated. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. There are additional risks associated with investments (made directly or through investment vehicles which invest) in emerging or developing markets. Compensation arrangements under the Financial Services and Markets Act 2000 of the United Kingdom will not be available. Private investors in the Company referred to herein should obtain their own independent financial advise before making investments. This document must not be relied on for purposes of any investment decisions. Before investing in the Company, we recommend that all relevant documents, such as reports and accounts and prospectus should be read, which specify the particular risks associated with investment in the Company, together with any specific restrictions applying and the basis of dealing. The Company may not be available for investment in all jurisdictions. There may also be prohibitions or restrictions on distribution of this document and other material relating to the Company and accordingly recipients of any such documents are advised to inform themselves about and to observe any such restrictions.