Investment flows in commodities markets and the relationship with prices

COMMODITIES RESEARCH 22 March 2012 Investment flows in commodities markets and the relationship with prices Roxana Mohammadian-Molina +44 (0) 20777 32117 roxana.mohammadian-molina@barcap.com PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 29 1

Agenda The who, how and why of commodity investments Commodity investment flows: recent trends Investment flows: impact on prices Regulation and the outlook for investment 2

The who, how and why of commodity investments 60% 50% How do you expect to change your commodities exposure over the next three years? 40% 30% Survey responses in: 2012 2011 20% 10% 0% Rem ain uninvested Cut to zero Scale back Maintain at current level Initiate or increase Results from Barclays Capital s Annual European Commodity Investor Survey 3

Market participants Participants in commodity markets can be classified into two groups: the first includes those such as producers, consumer or merchants with physical risks to hedge. The second comprises investors without physical risks, ie, hedge funds, pension funds or any other type of investor seeking to gain a return from commodity exposure by adding unhedged market risk to their portfolios. Physical risk hedgers Producers, consumers, merchants Non-physical risk hedgers Institutional investors Retail investors Hedge funds, pension funds, insurance companies, investors 4

The who and how of commodity investment There has been unprecedented interest in commodity investments over the past couple of years. Investor funds have flowed into the commodities space at the fastest-ever rate as the sector has moved to the top of the list of investors favoured alternative investment exposures. Investment activity in commodities is currently attracting a lot of attention with a particular focus on the new institutional inflows linked to commodity indices. Retail investors Institutional investors Insurance companies Pension funds Sovereign wealth funds Hedge funds Exchange Traded Products Trade like regular stock market shares. Indices Baskets of different commodity futures. Long only. Medium Term Notes Form of corporate debt issuance often made from a pre-packaged investment strategy otherwise known as a structured product. Mutual Funds Futures Pool of funds used to invest in securities. 5

The why of commodity investment: inflation hedge Commodity futures are positively correlated with inflation, unexpected inflation, and changes in expected inflation. Commodities perform better in periods of unexpected inflation, when stock and bond returns generally disappoint. Facts and Fantasies about Commodities Futures, Gorton Rouwenhorst, 2004 Commodity indices Commodity sub-indices Equity indices Other asset classes CPI S&PGSCI DJ- UBS CRB Energy Ind Metals Prec Metals Agriculture S&P500 Whilshire 5000 Russell 3000 Gov Bond Gains over the next 12 months Jun-72 104% 45% n/ a 35% n/ a n/ a n/ a 76% n/ a -6% n/ a 1% Apr-78 55% 17% n/ a 22% n/ a 52% 41% 6% n/ a 14% n/ a 2% Jan - 87 204% 1% n/ a 11% -6% 82% 16% 14% n/ a -9% n/ a -4% Oct-89 37% 30% n/ a -1% 63% 0% 3% -14% -6% -10% n/ a -1% Mar-99 87% 47% 27% -2% 87% 33% 7% -1% 10% 17% 14% 1% Feb-04 75% 22% 2% -1% 35% 9% 5% -20% 5% 6% 5% 2% Oct-06 111% 23% 12% 20% 25% -2% 21% 39% 12% 12% 12% 6% Average 96% 26% 13% 12% 41% 29% 16% 14% 5% 3% 10% 1% Source: Ecowin, Barclays Capital Energy & Industrial metals tend to do well in inflationary environments 6

Commodities are amongst the best inflation hedges Commodity assets usually outperform when growth is low and inflation high Commodities are more closely correlated with CPI inflation than most other assets 30% 25% 20% 15% 10% 5% 0% -5% -10% Asset class returns under different growth & inflation scenarios Equities Bonds T-bills S&PGSCI Low GDP, Low CPI High GDP, Low CPI Source: Ecowin, Barclays Capital High GDP, High CPI Low GDP, High CPI Instrument Correlation with US CPI (Y/ Y) 1-3y BEI 81% GSCI 76% CRB 75% Oil 69% BEI Index 46% TIPS 34% Gold 32% Global Linkers 30% S&P 500 29% AUDCADNZDNOK 27% Short TSY 9% Source: Ecowin, Barclays Capital 7

Investors value commodities for portfolio diversification Portfolio diversification & absolute returns are cited as the main reasons for investing Most investors are currently a long way below their target commodities allocations 60% 50% 40% 30% What is the main reason you invest in commodities? Survey responses in: 2012 2011 2006 40% 35% 30% 25% 20% What is your current position in commods as a proportion of your target allocation? 2012 2011 20% 15% 10% 0% Portfolio d'fication Absolute return Inflation hedge E. m arket growth Currency dbs'ment Ot her 10% 5% 0% 75% or above 50-74% 25-49% Less than 25% Results from Barclays Capital s Annual European Commodity Investor Survey Results from Barclays Capital s Annual European Commodity Investor Survey 8

Commodities provide equity-like returns Commodity index returns have matched equities over the past 40 years and have outperformed over the last 10 Relative performance of commodity assets Annualised returns over the past 10 years 10,000 8,000 6,000 4,000 US JPM Govt. Bond TR Index S&P 500 Composite TR Index S&P GSCI Composite Index TR Rogers International DJ-UBS EuroSTOXX Food Producers S&PGSCI JPM Govt Bond Index 2,000 0 70 74 79 83 88 92 97 01 06 11 Source: Ecowin, Barclays Capital S&P 500 EuroSTOXX Oil & Gas 0% 2% 4% 6% 8% 10% 12% Source: Ecowin, Barclays Capital 9

..but with a different risk profile Commodities have traditionally been a good portfolio diversifier due to a lack of consistent correlations with other assets like equities. But from late 2008 onward correlations with other assets, especially equities have been highly positive. We believe that this period of unusually high correlation is a function of extreme economic & financial events. Correlations are returning to neutral again & we believe that over the long term commodities will continue to show no consistent correlation with other assets. 120% Moving average correlations between commodity indices and 80% 40% 0% -40% -80% GSCI Composite Index TR (6 month) -120% GSCI Composite Index TR (1 yr) Feb-72 Feb-82 Feb-92 Feb-02 Feb-12 Source: Ecowin, Barclays Capital 10

The why of commodity investment: EM demand Despite the recent market turmoil, emerging economies are still growing very rapidly on an absolute level. These are also countries/ regions that still have a long way to catch up in terms of their per capita commodity demand. In addition, our analysis of price and income elasticities show that countries such as China tend to have a much higher income elasticity of demand and a smaller price responsiveness. 10 Oil consumption (barrels per person per year) 30 Oil consumption (barrels per person per year) 8 6 Brazil Iran China India 25 20 15 1990 2000 2011 4 Indonesia Egypt 10 2 Malaysia Thailand 5 0 GDP per capita (000' 2000$ PPP) 0 2,000 4,000 6,000 8,000 - US Germany Brazil China India Source: BP statistical review of world energy, Barclays Capital Source: BP statistical review of world energy, Barclays Capital 11

while supply has not kept up with demand As a result, there s not currently much less slack in the system At just ten days of consumption, pipeline stocks of copper are at an all-time low Oil inventories are a long way below seasonal norms 225 OECD inventories relative to 5 year average (mb) 1100 Reported global pipeline stocks of copper 26 150 1000 24 22 900 20 800 18 16 700 14 600 12 10 500 ICSG cons, merch, prod stocks ('000t, LHS) Stocks as days of consumption (RHS) 8 400 6 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Source: Brook Hunt, EIA, USDA, Barclays Capital -75 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Soybean and wheat stocks look ample but corn still very low 25 20 15 10 5 75 0 Stocks as weeks of consumption Wheat Soybean Corn 0 66/ 67 75/ 76 84/ 85 93/ 94 02/ 03 11/ 12E 12

Commodity investment flows: recent trends 450 400 350 300 250 Institutional and retail commodity AUM ($bn) Commodity medium term note issuance Exchange traded commodity products Commodity index swaps 200 150 100 50 0 Q4 05 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Source: Bloomberg, MTN-I website, various ETP issuer data, Barclays Capital 13

Commodity flows and Assets Under Management (AUM): a roller coaster story Assets under management in commodities have increased almost 40-fold over the past 10 years. Inflows increased particularly over the past 5 years, and reached $77bn in 2009 an all-time high. 2011 was the weakest year for commodity investment flows since 2002, with only $15bn fresh flows. We expect this year to see a rebound in flows, but not reach the levels of 2009-10. 500 Institutional and retail commodity AUM ($bn) 100 Inflows into commodities ($bn) 450 400 350 300 Medium term notes Exchange traded products Commodity index swaps 80 60 Commodity medium term notes issuance Exchange traded commodity products Commodity index swaps 250 40 200 150 20 100 50 0 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12-20 2001 2003 2005 2007 2009 2011 Source: Bloomberg, MTN-I website, various ETP issuer data, Barclays Capital Source: Bloomberg, MTN-I website, various ETP issuer data, Barclays Capital 14

2011 was the most volatile year ever for flows 2011 was the most volatile year ever for flows. Some months saw the largest ever monthly outflows from commodities. Last year volatility was widespread across products and sectors. Even precious metals saw some months of large outflows. 15 Monthly inflows into commodities (Indices, ETP, MTNs, $bn) 17 Monthly inflows into commodity by sector ($bn) 10 12 5 7 0 2-5 -3 Precious Energy -10 May-09 Jan-10 Sep-10 May-11 Jan-12-8 Base Ags Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Source: Bloomberg, MTN-I website, various ETP issuer data, Barclays Capital Source: Bloomberg, MTN-I website, various ETP issuer data, Barclays Capital 15

Gold used to be seen as a financial hedge Traditionally, periods of high uncertainty attracted large inflows into precious metal ETPs because these are viewed as a financial hedge. But this changed in 2011 as the need for liquidity drove liquidation. Investors remain divided on gold. In our latest survey of investor sentiment, gold was voted by respondents as likely to be the second best performer and the third worst performer in 2012. Post Lehman May 10 (first Greek rescue plan) 8 Inflows into precious metal ETPs ($bn) 6 4 2 0-2 -4 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Source: Various ETP issuer data, Barclays Capital Which commodity will perform best in 2012? Crude oil Gold Copper Silver Grains PGM s Iron ore Aluminium US Nat. gas Soybeans US gasoline Sugar Cotton Carbon Steam coal 0% 5% 10% 15% 20% 25% Results from Barclays Capital s Annual European Commodity Investor Survey 16

Investment flows: impact on prices 17

An extended literature exists on flows vs fundamentals Over the past few years, there has been a vast amount of research into the links between investment flows and commodities prices. None has found strong evidence of any causal and systematic relationship. Here are some example of this research : Speculation in the oil market. Research Division, Federal Reserve Bank of St. Louis. October 2011 Speculative influences on commodity futures prices 2006-08. United Nations Conference on Trade and Development. October 2009 Do financial investors destabilize the oil price? European Central Bank. June 2011 The impact of index and swap funds on commodity futures markets. OECD. 2010 The role of speculators in the crude oil futures markets. US Commodity Futures Trading Commission. 2009 Speculation and financial fund activity, draft report. Trade and agriculture directorate committee for agriculture, OECD. April 2010 18

Swap dealer positions are a small part of the market Net position of index swap dealers in most major commodity markets remains small More importantly, as a % of open interest, these positions have fallen sharply recently Soybean Oil Cotton Live Cattle Copper Wheat Soybeans Corn Lumber Coffee Sugar Heating Oil Palladium Natural Gas Feeder Silver Wheat Cocoa Gasoline Gold WTI Platinum Net positions of index swap dealers in US futures markets percent of total futures and options in open interest -30% -20% -10% 0% 10% 20% 30% 40% Source: CFTC, Barclays Capital 10000 9000 8000 7000 6000 5000 4000 Open Interest ('000 lots) Percentage of open interest 10-20% Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Source: CFTC, Barclays Capital 22% 20% 18% 16% 14% 12% 10% 19

Hedge fund positions are also small Managed money positions remain volatile as ever, but overall are small except in some precious metals markets and they can influence the direction of short-term prices Platinum Palladium Feeder Cattle Gold Gasoline Soybeans Wheat Live Cattle Lumber Corn Silver Sugar Heating Oil WTI Wheat Copper WTI Soybean Oil Cotton Cocoa Coffee Wheat Natural Gas Net positions of managed money in US futures markets percent of total futures and options in open interest -20% 0% 20% 40% 60% Source: CFTC, Barclays Capital 1000 800 600 400 200 0-200 -400 Net futures positions - Managed Money ('000 lots) Grains Prec. metals Ind. Metals Energy Softs Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Source: CFTC, Barclays Capital 20

Our estimates correspond very closely to the CFTC s To provide greater data transparency, the CFTC started to publish a few years ago quarterly index investment data. Our own estimates correspond extremely closely with those of the CFTC, despite being estimated differently, using information from market sources. Both approaches are far more accurate than back calculating the total commodities held by indices using CFTC s CIT data. 300 CFTC and Barclays Capital estimates of index AUM ($bn) 250 200 150 Barclays capital CFTC 100 50 0 Sep-04 Jul-06 May-08 Mar-10 Jan-12 Source: CFTC, Barclays Capital 21

Investment flows: impact on prices? ETP inflows remain heavily biased towards physically backed precious metals ETP inflows remain heavily biased towards physically backed precious metals 250 Commodity-linked ETP AUM by sectors ($bn) 3 160 140 200 2 120 150 Energy Others 1 100 Precious 80 100 0 60 50 0 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Source: Various ETP issuer data, Barclays Capital 40-1 Inflows into energy ETPs, LHS, $bn 20-2 Monthly average WTI price, RHS, $/ bbl 0 Jan-07 Jan-08 Jan-09 Jan-10 Source: Various ETP issuer data, Ecowin, Barclays Capital 22

and a tiny proportion of open interest Index positions are less than 20% of open interest in most futures markets, and their share in the physical market is even smaller never exceeding more than 8% Market Share of index in Volume Share of index in Open Interest Share of index in physical market Silver 0.5% 6% 8.0% Coffee 3.2% 14% 7.3% Zinc 0.1% 14% 7.0% Corn 2.4% 14% 6.9% Nickel 1.7% 14% 5.7% Aluminium 1.0% 11% 5.3% Copper 0.5% 11% 4.4% Soybean 1.5% 11% 4.4% Gold 0.4% 6% 3.9% Sugar 3.8% 15% 3.4% Cotton 5.7% 20% 3.1% Wheat CBOT 5.0% 29% 2.9% Lead 0.7% 7% 2.1% Cocoa 1.5% 6% 2.1% Natural Gas 2.0% 21% 1.5% WTI - Crude 1.8% 14% 1.4% Gasoil 1.4% 21% 1.0% Unleaded Gasoline 1.7% 13% 0.9% Heating Oil 1.4% 15% 0.8% Brent Crude 1.3% 38% 0.8% Lean Hogs CME 7.9% 22% 0.7% Wheat (KBOT) 2.9% 17% 0.5% Feeder Cattle CME 3.7% 10% 0.3% Live Cattle CME 6.1% 19% 0.3% Tin 0.0% 0% 0.0% Source: Various exchanges, Bloomberg, Barclays Capital 23

Index holdings are very small relative to market size Institutional and retail holdings of commodity futures are extremely small when considered as a percentage of the total physical market. Indeed, when placed into context, these investments are nowhere near big enough to distort the relationship between prices and market fundamentals. 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Share of index in physical market Silver Coffee Zinc Corn Nickel Aluminium Copper Soybean Gold Sugar Cotton Wheat CBOT Lead Cocoa Natural Gas WTI - Crude Gasoil Unleaded Gasoline Heating Oil Brent Crude Lean Hogs CME Wheat (KBOT) Feeder Cattle CME Live Cattle CME Tin Source: Various exchanges, Bloomberg, Barclays Capital By way of illustrating this point, see the accompanying chart, which shows the scale of index positions in different markets relative to the size of the physical market. For example, our estimate of value of index positions in NYMEX oil futures market at the end of February is $42bn, equivalent to around 2% of the value of annual physical oil supply. These numbers are slightly higher in agriculture markets because the physical size of these markets is smaller. For instance, our estimates suggest that the value of index positions in CBOT wheat and corn futures market at the end of October is $6.2bn and $9.4bn, which is equivalent to around 4% and 9% of the value of annual physical wheat and corn supply. 24

Regulation and the outlook for investment 25

Regulatory measures: what more is in store? The CFTC has proposed to set position limits for futures and option contracts in the major energy markets. In addition, the proposal establishes consistent, uniform exemptions for certain swap dealer risk management transactions while maintaining exemptions for bona fide hedging. Essentially the measures are directed towards limiting concentration in any single contract in energy markets. OTC regulation More data transparency 26

Impact on investment flows limited? So far, limited impact on prices Migration towards non-us exchanges (WTI NYMEX vs ICE open interest) But volatility may rise if liquidity is hampered Resulting in even higher prices 27

Regulations are injecting some uncertainty One of the main wildcards over the next few years is likely to be the effect of regulation on commodity markets. We are concerned that new regulations will increase costs of risk management, reduce liquidity in US commodity futures markets and cut the capacity of commodity market participants to warehouse the large, long-term risks that are an intrinsic element of commodity trading. Change in index positions Vs. price change in major US commodity markets, Dec 2007-Dec 2010 Change in index positions KBT w heat 60% HO WTI crude Gasoline CBT w heat 10% F. Cattle L. cattle Soy oil Corn Soybeans Gold L. hogs Cotton -50% 0% 50% 100% 150% 200% N. gas Silver Coffee Cocoa -40% Price change Sugar Source: Barclays Capital 28

Analyst Certifications and Important Disclosures Analyst Certification(s) I, Roxana Mohammadian-Molina, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report. Important Disclosures For current important disclosures regarding companies that are the subject of this research report, please send a written request to: Barclays Capital Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barcap.com or call 212-526-1072. Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that Barclays Capital may have a conflict of interest that could affect the objectivity of this report. Any reference to Barclays Capital includes its affiliates. Barclays Capital and/or an affiliate thereof (the "firm") regularly trades, generally deals as principal and generally provides liquidity (as market maker or otherwise) in the debt securities that are the subject of this research report (and related derivatives thereof). The firm's proprietary trading accounts may have either a long and / or short position in such securities and / or derivative instruments, which may pose a conflict with the interests of investing customers. Where permitted and subject to appropriate information barrier restrictions, the firm's fixed income research analysts regularly interact with its trading desk personnel to determine current prices of fixed income securities. The firm's fixed income research analyst(s) receive compensation based on various factors including, but not limited to, the quality of their work, the overall performance of the firm (including the profitability of the investment banking department), the profitability and revenues of the Fixed Income Division and the outstanding principal amount and trading value of, the profitability of, and the potential interest of the firms investing clients in research with respect to, the asset class covered by the analyst. To the extent that any historical pricing information was obtained from Barclays Capital trading desks, the firm makes no representation that it is accurate or complete. All levels, prices and spreads are historical and do not represent current market levels, prices or spreads, some or all of which may have changed since the publication of this document. Barclays Capital produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. In order to access Barclays Capital's Statement regarding Research Dissemination Policies and Procedures, please refer to https://live.barcap.com/publiccp/rsr/nyfipubs/disclaimer/disclaimer-researchdissemination.html. 29

Disclaimer This publication has been prepared by Barclays Capital, the investment banking division of Barclays Bank PLC, and/or one or more of its affiliates as provided below. It is provided to our clients for information purposes only, and Barclays Capital makes no express or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this publication. Barclays Capital will not treat unauthorized recipients of this report as its clients. Prices shown are indicative and Barclays Capital is not offering to buy or sell or soliciting offers to buy or sell any financial instrument. Without limiting any of the foregoing and to the extent permitted by law, in no event shall Barclays Capital, nor any affiliate, nor any of their respective officers, directors, partners, or employees have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this publication or its contents. Other than disclosures relating to Barclays Capital, the information contained in this publication has been obtained from sources that Barclays Capital believes to be reliable, but Barclays Capital does not represent or warrant that it is accurate or complete. The views in this publication are those of Barclays Capital and are subject to change, and Barclays Capital has no obligation to update its opinions or the information in this publication. The analyst recommendations in this publication reflect solely and exclusively those of the author(s), and such opinions were prepared independently of any other interests, including those of Barclays Capital and/or its affiliates. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities discussed herein may not be suitable for all investors. Barclays Capital recommends that investors independently evaluate each issuer, security or instrument discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results. This communication is being made available in the UK and Europe primarily to persons who are investment professionals as that term is defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2005. It is directed at, and therefore should only be relied upon by, persons who have professional experience in matters relating to investments. The investments to which it relates are available only to such persons and will be entered into only with such persons. Barclays Capital is authorized and regulated by the Financial Services Authority ('FSA') and member of the London Stock Exchange. Barclays Capital Inc., U.S. registered broker/dealer and member of FINRA (www.finra.org), is distributing this material in the United States and, in connection therewith accepts responsibility for its contents. Any U.S. person wishing to effect a transaction in any security discussed herein should do so only by contacting a representative of Barclays Capital Inc. in the U.S. at 745 Seventh Avenue, New York, New York 10019. Non-U.S. persons should contact and execute transactions through a Barclays Bank PLC branch or affiliate in their home jurisdiction unless local regulations permit otherwise. Barclays Bank PLC, Paris Branch (registered in France under Paris RCS number 381 066 281) is regulated by the Autorité des marchés financiers and the Autorité de contrôle prudentiel. Registered office 34/36 Avenue de Friedland 75008 Paris. This material is distributed in Canada by Barclays Capital Canada Inc., a registered investment dealer and member of IIROC (www.iiroc.ca). Subject to the conditions of this publication as set out above, Absa Capital, the Investment Banking Division of Absa Bank Limited, an authorised financial services provider (Registration No.: 1986/004794/06), is distributing this material in South Africa. Absa Bank Limited is regulated by the South African Reserve Bank. This publication is not, nor is it intended to be, advice as defined and/or contemplated in the (South African) Financial Advisory and Intermediary Services Act, 37 of 2002, or any other financial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever. Any South African person or entity wishing to effect a transaction in any security discussed herein should do so only by contacting a representative of Absa Capital in South Africa, 15 Alice Lane, Sandton, Johannesburg, Gauteng 2196. Absa Capital is an affiliate of Barclays Capital. In Japan, foreign exchange research reports are prepared and distributed by Barclays Bank PLC Tokyo Branch. Other research reports are distributed to institutional investors in Japan by Barclays Capital Japan Limited. Barclays Capital Japan Limited is a joint-stock company incorporated in Japan with registered office of 6-10-1 Roppongi, Minato-ku, Tokyo 106-6131, Japan. It is a subsidiary of Barclays Bank PLC and a registered financial instruments firm regulated by the Financial Services Agency of Japan. Registered Number: Kanto Zaimukyokucho (kinsho) No. 143. Barclays Bank PLC, Hong Kong Branch is distributing this material in Hong Kong as an authorised institution regulated by the Hong Kong Monetary Authority. Registered Office: 41/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong. 30

Disclaimer (continued) This material is issued in Taiwan by Barclays Capital Securities Taiwan Limited. This material on securities not traded in Taiwan is not to be construed as 'recommendation' in Taiwan. Barclays Capital Securities Taiwan Limited does not accept orders from clients to trade in such securities. This material may not be distributed to the public media or used by the public media without prior written consent of Barclays Capital. This material is distributed in South Korea by Barclays Capital Securities Limited, Seoul Branch. All equity research material is distributed in India by Barclays Securities (India) Private Limited (SEBI Registration No: INB/INF 231292732 (NSE), INB/INF 011292738 (BSE), Registered Office: 208 Ceejay House Dr. Annie Besant Road Shivsagar Estate Worli Mumbai - 400 018 India, Phone: + 91 22 67196363). Other research reports are distributed in India by Barclays Bank PLC, India Branch. Barclays Bank PLC Frankfurt Branch distributes this material in Germany under the supervision of Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). This material is distributed in Malaysia by Barclays Capital Markets Malaysia Sdn Bhd. This material is distributed in Brazil by Banco Barclays S.A. This material is distributed in Mexico by Barclays Bank Mexico, S.A. Barclays Bank PLC in the Dubai International Financial Centre (Registered No. 0060) is regulated by the Dubai Financial Services Authority (DFSA). Principal place of business in the Dubai International Financial Centre: The Gate Village, Building 4, Level 4, PO Box 506504, Dubai, United Arab Emirates. Barclays Bank PLC-DIFC Branch, may only undertake the financial services activities that fall within the scope of its existing DFSA licence. Related financial products or services are only available to Professional Clients, as defined by the Dubai Financial Services Authority. Barclays Bank PLC in the UAE is regulated by the Central Bank of the UAE and is licensed to conduct business activities as a branch of a commercial bank incorporated outside the UAE in Dubai (Licence No.: 13/1844/2008, Registered Office: Building No. 6, Burj Dubai Business Hub, Sheikh Zayed Road, Dubai City) and Abu Dhabi (Licence No.: 13/952/2008, Registered Office: Al Jazira Towers, Hamdan Street, PO Box 2734, Abu Dhabi). Barclays Bank PLC in the Qatar Financial Centre (Registered No. 00018) is authorised by the Qatar Financial Centre Regulatory Authority (QFCRA). Barclays Bank PLC-QFC Branch may only undertake the regulated activities that fall within the scope of its existing QFCRA licence. Principal place of business in Qatar: Qatar Financial Centre, Office 1002, 10th Floor, QFC Tower, Diplomatic Area, West Bay, PO Box 15891, Doha, Qatar. Related financial products or services are only available to Business Customers as defined by the Qatar Financial Centre Regulatory Authority. This material is distributed in the UAE (including the Dubai International Financial Centre) and Qatar by Barclays Bank PLC. This material is distributed in Saudi Arabia by Barclays Saudi Arabia ('BSA'). It is not the intention of the Publication to be used or deemed as recommendation, option or advice for any action (s) that may take place in future. Barclays Saudi Arabia is a Closed Joint Stock Company, (CMA License No. 09141-37). Registered office Al Faisaliah Tower, Level 18, Riyadh 11311, Kingdom of Saudi Arabia. Authorised and regulated by the Capital Market Authority, Commercial Registration Number: 1010283024. This material is distributed in Russia by OOO Barclays Capital, affiliated company of Barclays Bank PLC, registered and regulated in Russia by the FSFM. Broker License #177-11850-100000; Dealer License #177-11855-010000. Registered address in Russia: 125047 Moscow, 1st Tverskaya-Yamskaya str. 21. This material is distributed in Singapore by the Singapore branch of Barclays Bank PLC, a bank licensed in Singapore by the Monetary Authority of Singapore. For matters in connection with this report, recipients in Singapore may contact the Singapore branch of Barclays Bank PLC, whose registered address is One Raffles Quay Level 28, South Tower, Singapore 048583. Barclays Bank PLC, Australia Branch (ARBN 062 449 585, AFSL 246617) is distributing this material in Australia. It is directed at 'wholesale clients' as defined by Australian Corporations Act 2001. IRS Circular 230 Prepared Materials Disclaimer: Barclays Capital and its affiliates do not provide tax advice and nothing contained herein should be construed to be tax advice. Please be advised that any discussion of U.S. tax matters contained herein (including any attachments) (i) is not intended or written to be used, and cannot be used, by you for the purpose of avoiding U.S. tax-related penalties; and (ii) was written to support the promotion or marketing of the transactions or other matters addressed herein. Accordingly, you should seek advice based on your particular circumstances from an independent tax advisor. Barclays Capital is not responsible for, and makes no warranties whatsoever as to, the content of any third-party web site accessed via a hyperlink in this publication and such information is not incorporated by reference. Copyright Barclays Bank PLC (2012). All rights reserved. No part of this publication may be reproduced in any manner without the prior written permission of Barclays Capital or any of its affiliates. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. Additional information regarding this publication will be furnished upon request 31