HONG KONG INVESTORS SHOW HIGHER RISK APPETITE THIS YEAR AS MORE PLAN ON MOVE TOWARD EQUITIES

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1 Franklin Templeton Investments (Asia) Limited 富蘭克林鄧普頓投資 ( 亞洲 ) 有限公司 17/F, Chater House 8 Connaught Road Central Hong Kong t f FROM: Franklin Templeton Investments Corporate Communications: Loretta Lui ( ) FOR IMMEDIATE RELEASE HONG KONG INVESTORS SHOW HIGHER RISK APPETITE THIS YEAR AS MORE PLAN ON MOVE TOWARD EQUITIES Investors in Hong Kong favor short-term evaluation on the success of their investments Stocks and property are expected to perform best in 2015 and over the next decade, despite being recognized as the riskiest asset classes for this year Hong Kong is seen to offer the best equity and fixed income this year while Asia is considered the most compelling investment opportunity in the long run Hong Kong investors are more aggressive in their investment strategies compared to their neighboring counterparts in Asia Pacific, based on the 2015 Franklin Templeton Global Investor Sentiment Survey released today. As many as 43 per cent of Hong Kong investors evaluate their investment success in less than a year, making the City home to some of the most short-sighted investors in the world. The majority of investors believe Hong Kong will offer better equities returns than other parts of the world in 2015 (38 per cent) than in last wave (32 per cent). In the next decade, Asia remains the favorite region for equity and fixed income investments. Respondents also reflected concern about the state of the global economy in 2015 (36 per cent), followed closely by the Eurozone crisis, and the slowing growth in China. Despite this sentiment, investors are largely optimistic about reaching their financial goals in 2015 with many aiming to purchase a new home (26 per cent) as their top investment goal, followed by investing in or starting a business (19 per cent). One of the largest surveys of its kind, the 2015 Franklin Templeton Global Investor Sentiment Survey polled 11,508 investors in 23 countries across Asia Pacific, the Americas, Europe, UAE and Africa on their attitudes towards investing and their expectations for 2015 and the decade ahead. EQUITIES AND FIXED INCOME INVESTMENTS Hong Kong investors think that the best equity and fixed income investment opportunities in 2015 are in Hong Kong, up significantly from last year. In the past year, the greatest equity and fixed income returns were perceived to be in Asia at 37 per cent and 31 per cent respectively. This year Hong Kong equities take top place at 38 per cent; Hong Kong and Asia fixed income are both tied first place (25 per cent). The forecasting trend over the next decade has remained the same, where Asia continues to promise better equity and fixed income investment returns.

2 Survey also revealed Hong Kong investors plan to increase their equities allocation in Four in ten of our survey respondents (40 per cent) expect that they will increase allocations in equities, about a third will increase allocations to fixed income (32 per cent) and less than a third to cash (30 per cent). The results suggest a strong case of home-bias in Hong Kong, but to ensure portfolio growth it is important for investors to diversify their portfolio across different markets. Diversification of funds enables investors to reach their long-term financial goals while minimizing risk, says Simon Wong, Deputy Head of Sales from Franklin Templeton Investments Hong Kong. INVESTMENT EXPECTATIONS Hong Kong investors (43per cent) feel that it is important to beat the market when it is up, while a third feel losing less when market is down is important; a significant change compared to the previous year. This has placed Hong Kong investors second in the Asia Pacific region in terms of aggressive investment strategies in Most investors evaluate the success of their investments within a period of between six months and two years. In terms of top investment concerns in 2015, 36 per cent of Hong Kong investors worry about the state of global economy, followed closely by the Eurozone debt crisis (34 per cent) and slow growth in China (33 per cent). Despite general concerns about Europe, European stocks continue to look attractive on most valuation metrics. Economic reforms are being initiated, credit conditions are improving and an earnings recovery from depressed levels could be powerful. In view of these, we have positioned our portfolios well for opportunities in line with our long-term investment horizon, commented Joanne Wong, Executive Vice President and Portfolio Manager of Templeton Global Equity Group. DIVIDEND YIELDS A PREFERRED CHOICE While mutual fund performance and track record are important to Hong Kong investors, dividend yields emerged as the top priority when making an investment decision (91 per cent).. According to our survey findings, about two-thirds feel that less than 50 per cent of dividends are paid out capital for dividend paying and reinvested mutual funds, displaying a lack of knowledge in capital dividend payouts. Addressing the global investor survey findings, Simon Wong, Deputy Head of Retail for Greater China at Franklin Templeton Investments Hong Kong commented, Dividend-paying stocks are attractive because they provide a stable income stream. There is also the potential of sizable capital gains when held over a long period of time. Everyone is chasing yield in mutual funds, but not everyone is aware that

3 dividend payouts could be paid from their capital investment - which is a worrying trend. When asked how much to allocate to RMB-denominated Investments, more than half (54 per cent) of Hong Kong investors forestall allocating 10 per cent or less to this asset class Banks savings, fixed deposit and money market accounts are most likely to be considered if investing or increasing current allocation in RMB-denominated investments. We believe that we are in a longer term bull market in Hong Kong and China. Of course in such bull markets there will be corrections along the way and we need to prepare for potential short-lived corrections. In addition, volatility of the RMB and the recent money inflow from the Mainland has raised a positive sentiment in the stock market. In spite of this, investors should remain cautious and avoid following popular market trends when investing, commented Tom Wu, Senior Managing Director and Portfolio Manager of Templeton Emerging Markets Group. INVESTMENT EXPECTATIONS IN THE LONG-TERM From a longer term perspective, investors anticipate the performance of stocks and real estate will continue to outperform all other asset classes in 2015 and over the next decade. Stocks were selected by 80 per cent of investors as a top performer in 2015, followed by property (56 per cent) and currencies (33 per cent). Albeit, stocks and property has been regarded highly to perform well, they are considered the riskiest asset classes in It is no surprise that Hong Kong investors perceive stocks and properties to be top performers in 2015 and over the next decade. There has been a heightened interest in Hong Kong, after China allowed mutual funds to buy shares in Hong Kong using the Stock Connect. This has led to a sharp rally in the city s bourse with Hong Kong stocks recently reaching a seven-year high. However, investors need to be cautious of the market volatility and the importance of diversification across asset classes and different markets, says Simon Wong, Deputy Head of Sales from Franklin Templeton Investments Hong Kong. Investors are shying away from precious metals such as gold and silver. Expectations on returns for this asset class has significantly declined compared to the last survey, as investors are reacting to cues regarding tapering of the Federal Reserve s Quantitative Easing program. Overall, Hong Kong investors remain positive toward equity markets in 2015 and in the longer term, and are largely optimistic about reaching their investment goals in the current year.

4 This annual survey, commissioned by Franklin Templeton Investments, was conducted by ORC International, an independent market research company, from 12th February to 2nd March 2015 across a sample of 502 Hong Kong investors. The respondents were between 25 and 65 years old and have a minimum level of investable assets of HK$ 200,000 as well as owned investments outside of real estate. Notes to the Editor Individual markets mentioned in the survey, such as Australia, China, Singapore, Korea and Malaysia, will be disseminating country-specific results in respective press releases across their markets. Should you wish to obtain individual country releases, as well as a release with APAC-focused results, please reach out to the Corp Comms contacts indicated above. Methodology The Franklin Templeton Global Investor Sentiment Survey, conducted by ORC International, included responses from 11,508 individuals in 23 countries: Brazil, Chile and Mexico in Latin America; Australia, China, Hong Kong, India, Japan, Korea, Malaysia and Singapore in Asia Pacific; France, Germany, Greece, Italy, Poland, Spain, Sweden and the UK in Europe, Canada and the United States in North America, as well as UAE and South Africa. Survey respondents were between the ages of 25 and 65 in Latin America, Asia Pacific ex Japan, and South Africa, and 25 and older in Japan, UAE, Europe and North America. Respondents were required to own investable assets, such as stocks, bonds, mutual funds, etc, and have investments outside of real estate. In addition, a minimum investable asset threshold was set for each country to ensure that the respondent had sufficient investments, providing a knowledge base from which to answer the survey questions. Surveys were completed from February 12 to March 2, 2015, in all countries. About Franklin Templeton Franklin Resources, Inc. [NYSE: BEN] is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 150 countries. Through specialized teams, the company has expertise across all asset classes including equity, fixed income, alternative and custom solutions. The company s more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California based company has more than 65 years of investment experience and over $880.6 billion in assets under management as of March 31, For more information, please visit This material does not constitute investment advice or an invitation to apply for securities. Investors should seek professional financial advice and obtain a full explanation of any proposed investment before making a decision to invest. Investments involve risks. The value of investments can go down as well as up, and investors may not get back the full amount invested. Distribution of this material may be restricted in certain jurisdictions. This material does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such

5 distribution or offer is not authorized or to any person to whom it is unlawful to distribute such a report or make such an offer or solicitation. # # # Copyright Franklin Templeton Investments. All rights reserved. Franklin Templeton Investments (Asia) Limited is the issuer of this press release. The press release, which is for informational purposes only, sets forth our views as of the date published. The underlying assumptions and these views are subject to change. There is no guarantee that any forecasts expressed will be realized. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this press release or any information, opinion or estimate herein. This press release has not been reviewed by the Securities and Futures Commission of Hong Kong.