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					                                 Clywd Pension Fund

                                 Economic and Financial Market Update

Mark Fitzgerald
Managing Director,               4 November 2011
Global Market Strategies Group




                                       For use with institutional and professional investors only — proprietary and confidential
Market Turmoil




                 For use with institutional and professional investors only — proprietary and confidential   1
Table of contents




I.     Economic Overview

II.    Eurozone

III.   China

IV.    Markets Overview

Appendix




                           For use with institutional and professional investors only — proprietary and confidential   2
  Economic Overview
  GDP growth forecasts


           Consensus Forecasts: DM_2011 GDP growth                                          Consensus Forecasts: EM_2011 GDP growth

 4.0%                                                                           10.0%

 3.0%                                                                            9.0%

 2.0%                                                                            8.0%

 1.0%                                                                            7.0%

 0.0%                                                                            6.0%

-1.0%                                                                            5.0%

-2.0%                                                                            4.0%

-3.0%                                                                            3.0%

-4.0%                                                                            2.0%

-5.0%                                                                            1.0%

-6.0%                                                                            0.0%
          GER        US       UK        IRE       SPA   ITA   POR   GRE                    CHN        IND       TRY       IDO       CHI       TAI      RUS       BRZ




Source: Consensus Economics, BlackRock research
Data as of October 2011


                                                                          For use with institutional and professional investors only — proprietary and confidential   3
  Economic Overview
  Gross government debt


                                              Gross government debt (% of GDP)

      250%



      200%



      150%



      100%



        50%



         0%
                      Japan       Greece   Italy         US               Ireland            Germany                 UK                 Spain




Source: IMF, BlackRock research
Data as of October 2011


                                                              For use with institutional and professional investors only — proprietary and confidential   4
  Economic Overview
  Budget balances


                                   Government Net lending/Borrowing – Actual & Forecast - as % GDP*

   35%


   30%


   25%


   20%


   15%


   10%


     5%


     0%
                   IRE             GRE          US           UK                SPA                 POR                  ITA                 GER
                                                              2010           2011




Source: *IMF, BlackRock research
Data as of October 2011


                                                                     For use with institutional and professional investors only — proprietary and confidential   5
     Economic Overview
     PMI: Manufacturing indices



                                                      Manufacturing Indices: (Jun 08 – Oct 11)

  65

  60

  55

  50

  45

  40

  35

  30

  25
       Jun-08         Oct-08            Feb-09    Jun-09        Oct-09     Feb-10          Jun-10           Oct-10           Feb-11           Jun-11          Oct-11
                                         US ISM        UK PMI            Eurozone PMI               Japan PMI                German PMI




Source: Bloomberg, BlackRock research


                                                                               For use with institutional and professional investors only — proprietary and confidential   6
     Economic Overview
     PMI: Services indices



                                                                   Services Indices: (Jun 08 – Oct 11)
       65



       60



       55



       50



       45



       40



       35
            Jun-08         Oct-08       Feb-09            Jun-09       Oct-09      Feb-10         Jun-10          Oct-10           Feb-11          Jun-11          Oct-11


                                                 US ISM                 UK PMI               Eurozone PMI                    German PMI




Source: Bloomberg, BlackRock research


                                                                                   For use with institutional and professional investors only — proprietary and confidential   7
Economic Overview
US employment data

                                               US unemployment & non-farm payrolls: (Dec 07 – Sep 11)

  600                                                                                                                                                              4


  400                                                                                                                                                              5

  200
                                                                                                                                                                   6

     0
                                                                                                                                                                   7
 -200
                                                                                                                                                                   8
 -400

                                                                                                                                                                   9
 -600


 -800                                                                                                                                                              10


-1000                                                                                                                                                              11
     Dec-07                 Jun-08                Dec-08           Jun-09       Dec-09                Jun-10               Dec-10                Jun-11

                                                             US_NFP(LHS)                    US_Un Rate % (RHS)




Source: Department of Labor, Bloomberg, BlackRock research


                                                                            For use with institutional and professional investors only — proprietary and confidential   8
Economic Overview
US employment data

                                              US employment to population ratio & U-6: (Jan 00 – Sep 11)

     66                                                                                                                                                                    20

                                                                                                                                                                           18

     64                                                                                                                                                                    16

                                                                                                                                                                           14

     62                                                                                                                                                                    12

                                                                                                                                                                           10

     60                                                                                                                                                                    8

                                                                                                                                                                           6

     58                                                                                                                                                                    4

                                                                                                                                                                           2

     56                                                                                                                                                                    0
      Jan-00        Jan-01        Jan-02       Jan-03        Jan-04       Jan-05       Jan-06        Jan-07       Jan-08        Jan-09        Jan-10        Jan-11

                                                   US Employment to Population Ratio (LHS)                                        U-6 (RHS)




Source: Department of Labor, Bloomberg, BlackRock research


                                                                                       For use with institutional and professional investors only — proprietary and confidential   9
The Eurozone…?




                 For use with institutional and professional investors only — proprietary and confidential   10
  Europe Rescue Plan
  Act I: Greece bail-out




Bail-out Oct 11       €130bn




                                          50% face value
                                          ‘haircut’ on Greek
Bail-out Jul 11       €109bn              gov bonds




Collateral            €30bn
                                                                 Source: EBA, FT Research, BlackRock research, BloomBerg


                               For use with institutional and professional investors only — proprietary and confidential   11
  Europe Rescue Plan
  Act II: Bank recapitalisations


                                                                 EU Bank Recpitalisations (€bn)




                                                                                                            Tier 1 Ratio Target: 9%




Source: EBA, FT Research, BlackRock research Sovereign exposures were marked to market at 3Q2011


                                                                                       For use with institutional and professional investors only — proprietary and confidential   12
 Europe Rescue Plan
 Act III: Bail-out fund: European Financial Stability Facility(EFSF)




Leveraged size of EFSF         €1,000bn




Original size of EFSF           €440bn



Residual amount in EFSF        €250bn
                                                                                 Source: EBA, FT Research, BlackRock research, BloomBerg


                                               For use with institutional and professional investors only — proprietary and confidential   13
  Europe Rescue Plan
  Sovereign default: not so uncommon?


                                    Share of years in default or rescheduling (%) (since independence or 1800)




Source: Carmen Reinhart & Kenneth Rogoff: “This Time is Different”


                                                                        For use with institutional and professional investors only — proprietary and confidential   14
        China
        Monetary tools


                                         China RRR (%)                                                                                China: PBoC 1Y Lending Rate (%)
22                                                                                                           6.75

21
                                                                                                             6.50

20
                                                                                                             6.25
19
                                                                                                             6.00
18

                                                                                                             5.75
17

                                                                                                             5.50
16


15                                                                                                           5.25


14                                                                                                           5.00
                                Jun-10




                                                                                      Jun-11
                                                  Oct-10
                       Apr-10




                                                                             Apr-11
     Dec-09




                                                           Dec-10
                                         Aug-10




                                                                                               Aug-11
              Feb-10




                                                                    Feb-11




                                                                                                                                                Jun-10




                                                                                                                                                                                                      Jun-11
                                                                                                                                                                  Oct-10
                                                                                                                                       Apr-10




                                                                                                                                                                                             Apr-11




                                                                                                                                                                                                               Aug-11
                                                                                                                    Dec-09




                                                                                                                                                                           Dec-10
                                                                                                                                                         Aug-10
                                                                                                                             Feb-10




                                                                                                                                                                                    Feb-11
       Source: Bloomberg, BlackRock research


                                                                                                        For use with institutional and professional investors only — proprietary and confidential                 15
China
Leading economic indicator

                                                GMSG China LEI (Jan 00 – Nov 11)
2.00


1.50


1.00


0.50


0.00


-0.50


-1.00


-1.50


-2.00
    Jan-00       Jan-01      Jan-02   Jan-03   Jan-04   Jan-05   Jan-06       Jan-07        Jan-08        Jan-09        Jan-10        Jan-11




Source: BlackRock research


                                                                 For use with institutional and professional investors only — proprietary and confidential   16
 Markets Overview
 Developed and emerging market equities

                                     MSCI World & Emerging Market Equity Indices ( 2 Jun 08 – 1 Nov 11)
                                                                                  (Rebased to 100)
120



100



 80



 60



 40



 20
  Jun-08                  Dec-08                    Jun-09               Dec-09                Jun-10                  Dec-10                   Jun-11
                                                             MSCI World_Local                         MSCI EM_Local




Source: Datastream, Bloomberg, BlackRock research


                                                                                     For use with institutional and professional investors only — proprietary and confidential   17
Markets Overview
FTSE100 Index returns

                                              FTSE100 Index(Price): Daily Returns (3 Jan 11 - 1 Nov 11)

    5%

    4%

    3%

    2%

    1%

    0%

   -1%

   -2%

   -3%

   -4%

   -5%
     Jan-11            Feb-11            Mar-11     Apr-11     May-11     Jun-11          Jul-11          Aug-11           Sep-11          Oct-11




Source: Datastream, BlackRock research


                                                                          For use with institutional and professional investors only — proprietary and confidential   18
  Markets Overview
  Government bond yields

                                        Government 10 year nominal yields (%): (1 Mar 10 – 1 Nov 11)

  16


  14


  12


  10


   8


   6


   4


   2


   0
   Mar-10                 May-10           Aug-10          Nov-10            Jan-11                 Apr-11                  Jul-11                 Oct-11
                                              Ireland     Spain      Italy          Germany             UK             US




Source: Bloomberg, BlackRock research


                                                                     For use with institutional and professional investors only — proprietary and confidential   19
Markets Overview
Commodities

                                          CRB Commodity Index ( 2 Jun 08 – 1 Nov 11)
500


450


400


350


300


250


200


150
  Jun-08                   Dec-08       Jun-09         Dec-09             Jun-10                  Dec-10                   Jun-11




Source: Bloomberg, BlackRock research


                                                                For use with institutional and professional investors only — proprietary and confidential   20
       Markets Overview
       Commodities
                                   Copper ($ / tonne)                                                                    Gold ($ / oz)
 500                                                                               2,000

 450                                                                               1,800

 400                                                                               1,600

 350                                                                               1,400

 300                                                                               1,200

 250                                                                               1,000

 200                                                                                 800

 150                                                                                 600
   Jun-08       Dec-08      Jun-09      Dec-09   Jun-10   Dec-10     Jun-11            Jun-08       Dec-08      Jun-09      Dec-09       Jun-10      Dec-10      Jun-11

                             Brent Crude Oil ($ / barrel)                                                              Corn ($ / bushel)
 160                                                                                9

 140                                                                                8

 120                                                                                7

 100                                                                                6

  80                                                                                5

  60                                                                                4

  40                                                                                3

  20                                                                                2
   Jun-08       Dec-08       Jun-09     Dec-09   Jun-10     Dec-10    Jun-11        Jun-08       Dec-08       Jun-09      Dec-09       Jun-10       Dec-10       Jun-11
Source: Bloomberg, BlackRock research
                                                                               For use with institutional and professional investors only — proprietary and confidential   21
Summary and Outlook




                      For use with institutional and professional investors only — proprietary and confidential   22
The following notes should be read in conjunction with the attached document

 1. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Services Authority. Registered office:
    12 Throgmorton Avenue, London, EC2N 2DL. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection telephone calls are usually
    recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited.
 2. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. All financial
    investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount
    cannot be guaranteed. Changes in the rates of exchange between currencies may cause the value of investments to go up and down. Fluctuation may
    be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of
    taxation may change from time to time.
 3. Mandates we manage may be exposed to finance sector companies, as a service provider or as counterparty for financial contracts. In recent months,
    liquidity in the financial markets has become severely restricted, causing a number of firms to withdrawn from the market, or in some extreme cases,
    becoming insolvent. This may have an adverse affect on the mandates we manage.
 4. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are
    being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not
    necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.
 5. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not
    been prepared in connection with any such offer.
 6. This material is for distribution to Professional Clients (as defined by the FSA Rules) and should not be relied upon by any other persons.
 7. Subject to the express requirements of any client-specific investment management agreement or provisions relating to the management of a fund, we
    will not provide notice of any changes to our personnel, structure, policies, process, objectives or, without limitation, any other matter contained in this
    document.
 8. No part of this material may be reproduced, stored in retrieval system or transmitted in any form or by any means, electronic, mechanical, recording or
    otherwise, without the prior written consent of BlackRock.
 9. UNLESS OTHERWISE SPECIFIED, ALL INFORMATION CONTAINED IN THIS DOCUMENT IS CURRENT AS AT 11 NOVEMBER 2011.




                                                                    For Pension Fund - 11 November 2011
                                                          Bedfordshireuse with institutional and professional investors only — proprietary and confidential        23

				
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