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What you need to know: Why Asia?

Emerging economies, of which China and India are among the most significant, are slated to reach a

staggering 42% of global GDP by 2020.

Understanding trends, differences & risk factors

Governmental and culture differences can make it difficult to achieve a clear understanding of economic position, and intention.

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Aberdeen Closed-End Funds
Before we make any investment, we always meet with the management of prospective companies for our portfolios. Most companies we see do not pass our rigorous due diligence process, on grounds of quality or price. Today, Aberdeen manages 11 closed-end funds listed on the New York Stock Exchange. These funds investment strategies range from regional to country-specific investments. If you would like to know more about our closed-end funds, contact our Closed-End Fund Investor Relations Team at 800-522-5465 or visit www.aberdeen-asset.us/cef. Receive updates on our funds directly to your computer by registering for our e-mail services through our website or by e-mailing InvestorRelations@aberdeen-asset.com. Aberdeens Asia-Pacific, global and emerging markets closed-end funds: Aberdeen Asia-Pacific Income Fund, Inc. (FAX) Aberdeen Australia Equity Fund, Inc. (IAF) Aberdeen Chile Fund, Inc. (CH) Aberdeen Emerging Markets Telecommunications and Infrastructure Fund, Inc. (ETF) Aberdeen Global Income Fund, Inc. (FCO) Aberdeen Indonesia Fund, Inc. (IF) Aberdeen Israel Fund, Inc. (ISL) Aberdeen Latin America Equity Fund, Inc. (LAQ) The Asia Tigers Fund, Inc. (GRR) The India Fund, Inc. (IFN) The Singapore Fund, Inc. (SGF)

www.aberdeen-asset.us/cef
Closed-end funds have a one-time initial public offering and then are subsequently traded on the secondary market through one of the stock exchanges. The investment return and principal value will fluctuate so that an investors shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the funds portfolio. Past performance does not guarantee future results. Foreign securities are more volatile, harder to price and less liquid than U.S. securities. These risks may be enhanced in emerging market countries. Concentrating investments in a single country, region or industry may subject a fund to greater price volatility and risk of loss than more diverse funds. Investors should consider a funds investment objectives, risks, charges and expenses carefully before investing. A copy of the prospectus for Aberdeen Australia Equity Fund, Inc., Aberdeen Chile Fund, Inc. and Aberdeen Global Income Fund, Inc. that contains this and other information about the fund may be obtained by calling 866-839-5205. Please read the prospectus carefully before investing. Investing in funds involves risk, including possible loss of principal. Aberdeen Asset Management Inc., 1735 Market Street, 32nd Floor, Philadelphia, PA 19103. NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE
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Welcome
Marketviews provides free, unbiased information for consumers who want to make better-informed financial decisions. Written by prominent financial journalists, our range of free guides and reports provide original, high quality financial content focused on actionable investing ideas. Each publication is commissioned in response to your requests, so please do let us know what other financial topic or sector youd like us to cover by emailing us at editor@marketviews.com or by visiting our website www.marketviews.com and voting. You choose. Our team of experts will do the rest.

Sponsored by
Aberdeen Asset Management Inc. is a wholly-owned U.S. subsidiary of Aberdeen Asset Management PLC, one of the worlds largest asset managers, investing more than US$270 billion for both institutions and private individuals around the world as of December 31, 2011. Aberdeen knows global markets from the local level upwards, drawing on more than 1,800 staff, across 30 offices in 23 countries. Asset management is our primary business and we believe this independence allows our investment teams to focus exclusively on what they do best: identify quality investment opportunities. Aberdeen has been active in Asia since 1985 with an on-the-ground presence in the region for over two decades. We have a large pan-Asian presence, with 80 investment professionals in six centers located in Singapore, Bangkok, Hong Kong, Kuala Lumpur, Sydney and Tokyo. This experienced, local Asian perspective places Aberdeen in an ideal position to observe and understand the dramatic growth and transformation of the Asia-Pacific region. Learn more about how Aberdeen invests in Asia through our suite of Asia-Pacific closed-end funds, by visiting www.aberdeen-asset.us/cef

Contributors
MErry ShEIlS is an award-winning journalist with 30 years of experience in the financial services industry, specializing in portfolio management and business development for private clients. She founded First New York Equity in 1978, joined PriceWaterhouseCoopers in 1996, and has since held executive positions at Mellon Bank, Wilmington Trust Company and Bank of New York. Merry has a regular financial column on WomanAroundTown. com. She has consulted with asset management companies on a variety of projects, most recently, J.P. MorganChase.

Closed-end funds have a one-time initial public offering and then are subsequently traded on the secondary market through one of the stock exchanges. The investment return and principal value will fluctuate so that an investors shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the funds portfolio. There is no assurance that a fund will achieve its investment objective. Past performance does not guarantee future results. International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and differences in accounting methods; these risks are generally heightened for emerging market investments. Aberdeen Asset Management Inc. is an Investment Adviser registered with the US Securities and Exchange Commission under the Investment Advisers Act of 1940. Member of the Aberdeen Asset Management Group of Companies. Aberdeen is a U.S. registered service mark of Aberdeen Asset Management PLC.

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Disclaimer
The analyses and opinions expressed in this material are intended to be general in nature and for informational purposes only, and do not constitute legal, tax, investment, financial, or other advice. Nothing in this material should be construed as a solicitation, recommendation, representation of suitability or endorsement of any security, investment product or market sector, or a prediction of future performance. Please determine whether any investment security, product, service or strategy, including those mentioned in this guide is right for you based solely on your investment objectives, risk tolerance, and financial situation. The analyses and opinions in this guide were prepared based upon information available at the time it was written. Additional information and changes in economic or market conditions since that time could cause such analyses and opinions to change. The author, publisher and sponsor of this guide accept no liability whatsoever for any loss arising from any decision you make based on information, analyses, opinions or views expressed herein.

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MarketViews | A GUIDE TO INVESTING IN ASIA

Why INVEST IN ASIA?

The story of explosive growth in emerging markets, led by Asia, is well known, and for several years, Asia has played a leadership role. Lower trade barriers have created global demand for Asian products and services. Globalization, industrialization, urbanization and automation have made their manufacture and delivery more feasible.
Asias four billion population now accounts for 57% of the worlds inhabitants and represents 28% of global GDP. Emerging economies, of which China and India are among the most significant, are slated to reach a staggering 42% of global GDP by 2020. China, arguably the Asian leader, has annual GDP of $5.9 trillion, and grew 11% at its peak in 2010. Although it has slowed to around 8.6%, suggesting it faces some difficult headwinds, it still is nearly three times the growth rate of the US. This growth puts it on track, according to some estimates, to become the worlds largest economy by 2027. Further, all of Asia will represent more than half of the global economy by 2050.1 Asia also leads in global capital formation, with $20 trillion of capitalization. Its regional stock exchanges rival those in the US, Toronto and Germany and have experienced heady compound annual growth rates (CAGR): The Shanghai Stock Exchange leads, with 57%; The Bombay Stock Exchange and the National Stock Exchange of India are next, with 25% and 24%, respectively, followed by The Hong Kong Exchange, with 21%. The Asia-Pacific region in total boasts the highest percentage of savers - 61% versus an average of 46% elsewhere across the globe. A high savings figure is positive for exporters of large-ticket items and accounts for the growth in capitalization.

Asias four billion population now accounts for 57% of the worlds inhabitants and represents 28% of global GDP.
1

BBC News Business, August 2, 2011 - http://www.bbc.co.uk/news/business-14368324.

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The growth story.

What are the underlying components of the growth story in Asia, and, given recent global developments, is it sustainable? If so, where do the opportunities lie? As we analyze the key economies in the region, we begin with China, Asias most significant economy. We believe there are four key drivers that are the linchpins of its phenomenal economic position on the world stage.

Urbanization. There has been an enormous shift from an agrarian economy in China to a more industrialized one. Former farm inhabitants have since migrated to the cities where jobs in factories are plentiful and the quality of life is improved. At least 300 million have done so over the past 25 years, and another 300 million will make the move over the next 25 years. This movement creates an ongoing a need for upscale housing, better food and additional household products required to support living in an urban environment. In China, the heaviest population is concentrated primarily in coastal cities. As the migration from farms to cities has occurred, less crowded inland cities are expanding, creating critical need for investments in infrastructure. Roads, sewers, railroads, airports and transportation are required to support this ongoing growth.

GrowinG Middle Class. A growing middle class means there is more disposable income to spend on consumer goods, many of them high priced. Certainly an improved diet has positive implications as these people gravitate toward eating more protein, for example. Chinas $1.3 billion population includes 1% who are considered rich. These 13 million people are demanding luxury goods. Notably, the top three Mercedes-Benz dealerships in the world are in Beijing, Shanghai and Hong Kong.

ManUfaCtUrinG and environMental iMproveMents. Chinas current environment is a challenge. Smog is thick in the cities, and air and water pollution are among the highest of any country. The Chinese auto industry is taking strong steps to enforce tough emission standards, even more stringent than those in the state of California, arguably the strictest in the US. Companies engaged in manufacturing products and services designed

to clean up the environment can capitalize on this demand. This is especially true since there are few, if any, state-owned companies providing these services, a good thing, given Chinas propensity for protectionism.

aUtoMation. Not unlike the productivity economics witnessed in the US since the wide-spread use of the Internet, Asian economies are increasing profits through use of automation. Research indicates that for every 2% in increased GDP growth, automation spending has a multiplier effect of 3. Therefore, automation could experience a 12% CAGR by the end of 2017. Companies that produce those technology goods and services are poised to enjoy dramatic profits.

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Different Economies Comprise Asia

India
Although China is the dominant story in Asia, India also deserves a strong mention for a couple of reasons. India has the second-highest population in the world 1.21 billion, as of the 2011 census, and it is expected to surpass Chinas by 2025. Its population is relatively young 50% of its inhabitants are 25 or younger. It has the second-highest population growth rate in the world, with one obvious explanation being that India is not tied to the one child policy that exists in China. The Indian economy is the 9th largest in the world, with $1.73 trillion in GDP, and is expected to grow by 8.2% in 2012. According to the Export-Import Bank of India, its external debt of $305 billion was just 17.3% of total GDP in 2011. (It is no secret that, by contrast, US debt now is equal to our $14.6 trillion GDP, or 100%). Although total external Indian debt has risen recently to $336 billion, it still represents a modest proportion of GDP2. India also has the second highest labor force of any global economy 190 million people are working in India. Those workers now have higher incomes to spend on more expensively priced goods. Even though salaries do not begin to equal those of the more developed world, Indians are highly motivated to upgrade their lifestyle. A recent measure of global consumer confidence showed India had the highest reading of the 56 countries surveyed, registering a figure of 1213. (By contrast, the most-recent reading for the US market is 61.1). The service sector represents nearly 58% of total Indian GDP, as many global corporations have outsourced customer-service functions to Indias much less expensive labor force. Although the trend has flattened recently, it still remains strong. Technology is another opportunity for investment in India. In fact, India has the second-largest mobile phone usage of any country, 894 million. It ranks among the top three countries in internet penetration, 121 million. Even with high usage of both phones and Internet, however, its vast population suggests a strong market for purveyors of technology. The Association of Southeast Asian Nations (ASEAN) is an important region in global commerce. It is a geopolitical and economic organization of ten countries in Southeast Asia. Originally formed in 1967, it comprises Indonesia, Malaysia, the Philippines, Singapore and Thailand. We examine some of these countries next.

Indonesia
This country, while not as heavily populated as either China or India, has witnessed significant growth in recent years. Indonesia has 237.6 million people, 58% of whom reside on the island of Java. It is the fourth most populous country in the world, after China, India and the US. Indonesias $1 trillion economy is the 16th largest in the world, and the largest economy in Southeast Asia, and is growing in excess of 6% annually. Nearly half of Indonesias total GDP comprises the industrial sector - 47% , and 38% is focused on services. The balance comes from agriculture. Because it has only 11% of arable land, Indonesia must import a great deal of its food, creating opportunities for other countries to export those products. Because Indonesia has vastly neglected investments in its infrastructure, dropping in 2011 from 8% to only 2%, there is significant demand for building, energy and transportation projects. For example, some of its airports currently are operating at more than twice the capacity for which they were built originally4. The implications for foreign investment in such a densely populated country are obvious. Japans Sumitomo Corp. is considering investing up to $10 billion in energy projects over the next four years. This is in addition to its having already invested $5 billion in the country over the past few years.

Indonesias economy is growning in excess of 6% annually.

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References
2 3 4 5 6 7

Export-Import Bank of India - LINK Reuters, October 30, 2011 Consumers Confidence Highest in India-Nielsen- LINK Financial Times, December 16, 2011 Indonesia Regains Investment Grade Status- LINK Investment U, October 19, 2010, Investing in Malaysia: Five Reasons To Add This Strong Emerging Market To Your Global Portfolio, by Carl Delfield.- LINK Department of Statistics, Singapore - LINK Investment U, October 6, 2010, Investing in Singapore: Why Your Portfolio Needs This Hot Emerging Market by Carl Delfield.- LINK

Malaysia
This country has a population of 28.1 million, 58% of whom are under the age of 30, suggesting a firm foundation for future growth.5 Malaysias GDP of $414.4 billion grew at a 7% rate from 2010-2011. International trade is important to its economy, and it is the largest Islamic banking and financial center. Its economy is based on services and manufacturing, and it is noted for its export of semiconductor components, electrical products and information and communication technology. It also exports some commodities, including rubber, petroleum and palm oil. In turn, it imports machinery, electronics, petroleum products, vehicles, iron and steel products, chemicals and food. Real estate investments have surged in Malaysia, particularly in the rental market, as tourism and a relatively low cost of living offer attractive incentives.

Singapore
With a surface size just one-third that of the of Rhode Island, Singapore has 5.2 million in population. However, it is home to 100 commercial banks and enjoys leadership in global trading, finance and services. According to the Department of Statistics, Singapore, the most-recent figure for GDP (2010) shows $222.7 billion6. That same year, Singapores economy grew by a staggering 17.9%, while much of the rest of the globe struggled to stay afloat. Its growth rate has dropped to a much more modest 3%, as it weathers the effects of the Euro Zones debt crisis. Singapore has a young labor force, suggesting that there is ample room for additional expenditures on household goods, technology, communications and similar products. The demographic makeup of Singapore is surprising it has twice as many Internet users as television sets. There is little, if any, corruption or drug use. Most of us can recall the caning incident in 1994, when an American, Michael Fay, pled guilty to vandalism and was punished accordingly. Once part of Malaysia, from which it separated in 1965, Singapore now maintains smoother ties with it concerning tax issues, water supply and transportation arrangements. Singapores major manufacturing is in electronics - 40%, but it contributes only 5% of its labor force to that industry. It gradually is transitioning to a service and research-based economy. Rising demand for communications, technology and transportation services, coupled with increased consumer spending and tourism, are primary economic drivers. Because Singapore has strict intellectual property protection, manufacturers are moving there from China7.

The Philippines
This area of Asia has a population of 93.3 million and is the third-largest Englishspeaking country in the world. With a literacy rate of 95%, it ranks among the highest in the world in terms of an educated, skilled labor force. Interestingly, wages are around one-fifth of that of the US. It is easy to understand why that foreign companies that now outsource programming and business processes enjoy 30% - 40% in annual cost savings. The Philippines has a $200 billion GDP, and it grew 7.6% in 2010, the latest year for which that statistic is available. The private sector contributes 70% to total GDP, and electronics is its primary export. In turn, it imports electronic parts (to assemble into finished electronics goods for export), food and commodities.

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Industries and sectors: Meeting the demand from other countries

Whenever there is a young, skilled, and relatively low-cost labor force, opportunities abound to capitalize on it. Foreign companies can benefit consider the proliferation of call centers outsourced to Asia by US companies. An educated labor force adds to the allure in Asia. Asians currently lead in hard sciences, math and engineering. In fact, more Asians are enrolled in these disciplines than are American students. The demand in other countries for these skills cannot be underestimated. Indeed, the late Steve Jobs of Apple, Inc. commented that the company was forced to employ workers overseas because of the shortage of workers with these skills in the US8. With a total Asian middle class of 500 million to 600 million spending between $2.0 trillion and $2.5 trillion, Asian inhabitants will continue to seek to improve their lives, raise their standard of living and enjoy the consumption levels similar to those of the West. Food, household goods and commodities are obvious opportunities for foreign companies to profit. In addition, banks and financial institutions represent attractive opportunities in Asia. As global interest rates are expected to rise, the Asian financial sector is poised to benefit.
8

RIsk FActoRs
As in any investment strategy, there are risks associated with Asia investments. 01 UNEASY TRADE RELATIONSHIPS For example, China has a long-running dispute with Taiwan, and at times has had strained relations with its trading partners (including the US).

02 COMPROMISE IN INNOVATION Chinas communist leadership is another issue to consider. A government that exercises so much control raises questions relating to innovation, for example. In a country where The Party reigns supreme, decisions often are made to keep the leaders in power, rather than for the good of the countrys economy. These kinds of political risks can put downward pressure on share prices.

The New York Times, January 21, 2012, How the US Lost Out on iPhone Work http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?

03 DIFFERING REPORTING STANDARDS Obtaining the accurate information necessary for investment decision-making can be a challenge in Asia. Some Asian countries (with the exception of Singapore) may have creative ways of presenting the numbers that are inconsistent with how the US mandates its reporting. Particularly in China, governed by communist leadership, there are poor accounting and corporate governance standards. Information is controlled tightly by the government, making it difficult to obtain the level of dependable data we are used to seeing in the US.

Capitalization
Opportunities to invest in Asia exist across the equity capital structure. Large capitalization growth and income generally seeks capital appreciation and current income by focusing on Asian companies that pay dividends on common stock, preferred stock and convertible securities. These companies are considered relatively stable, and since they provide some downside protection in terms of the income component, are deemed to be less risky than other equities. However, dividends are not guaranteed, and some may be sensitive to changes in interest rates. Large capitalization, long-term growth companies generally focus on capital appreciation, rather than on the combination of growth and income noted above. Although these Asian companies are considered large, they may not always compare in size with large US companies. Thus, they may be somewhat less liquid and have higher volatility. Small capitalization companies in Asia generally are below $3 billion in market value. Because of their smaller size and, therefore, lower levels of liquidity, these securities may not trade as readily, and prices can be more volatile than the large capitalization companies noted above. Although this short-term volatility can smooth out over time, because of their size, these companies may have limited financial resources and/ or products, and information may not be as readily accessible as for larger companies.

04 DIFFERING ECONOMIC FOCUS Also, there tends to be a focus on expanding market share rather than on profitability, as US investors are used to doing. Growing market share at the expense of the bottom line means that both short- and longterm debt may be out of balance when compared to the typical US company valuations that constitute a reasonable option for investment.

05 INFLATION & CURRENCY Inflation, the bane of any investment, is a concern

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in some Asian countries. China in particular is experiencing higher-than-expected levels of inflation (over 4%) as it tries to balance monetary policy with growth expectations. The Central Bank responds to such pressures by tightening monetary policy, and stock prices can suffer. Nor can currency risks be ignored. If an Asian currency weakens against the dollar, foreign investments can be affected adversely.

Investment vehicles
There are many means to access the Asian market. Several financial institutions offer portfolios with primary exposure to Asia. As noted previously, these can have a capitalization, industry or geographic focus.
Closed-end funds are one avenue for reaching the Asia market. The fund raises capital and then invests that capital according to the funds objectives. Only a fixed number of shares are issued, and the shares trade on a stock exchange. Because the number of shares are constant, many investors believe that closed-end funds free-up portfolio managers to focus on their investment objectives and avoid the distractions of daily in-flows and redemption requests. For this reason, closed-end funds are often deemed at an advantage for investing in thinly traded emerging markets such as Asia. Separately managed accounts are another route, whereby the investment manager selects individual securities exclusively in the Asian market. Depending upon the strategy involved, the securities are held for varying lengths of time before sale. The types of securities purchased (stocks, bonds, etc.) depend upon the objective of the account holder and may be tailored specifically to meet goals of income, capital appreciation, etc. Exchange Traded Funds (ETFs) are a popular and rapidly growing investment mode, and Asia has seen tremendous increase in these avenues. ETFs can be sliced and diced in various ways i.e., agriculture, metals, technology, etc., to name just a few. Because fees are lower than those for managed accounts, investor demand has been rampant. Although the investor gives up alpha (performance above the index), it is also true that the majority of managers do not outperform their benchmark. Another obvious way to access the Asia market is to buy the securities of US companies who do substantial business there. Doing so means an investor may avoid some of the political risk mentioned above, since company control is outside Asia. Alternative assets, primarily hedge funds, private equity and real estate are additional vehicles for investing in Asia. Hedge funds generally invest in securities listed on a stock exchange, and often use leverage to enhance returns. Private equity involves investing either in venture capital, buy-outs or special situations, holding for several years while costs are streamlined and the company is restructured to maximize profit, and then sold. Real estate funds take positions in industrial or residential properties, often in the form of real estate investment trusts (REITS) and hold the investments until market conditions are appropriate for a sale at a higher price. Finally, commodities are another method for accessing the Asia market. Because of the rapid growth these countries have experienced, coupled with the changing demographics, for example, the move from an agrarian to an industrialized economy, the demand for commodities in Asia has rocketed upward. Commodities are based on supply and demand. There can be no question about increased demand. Oil is an obvious example more automobile owners consume more oil. Coal is another, as the demand for heating and manufacturing increases. Copper, used in construction, electrical grids, appliances, phones and vehicles has experienced significant demand increase. Precious metals, such as gold, platinum and palladium all have experienced increased demand, as a growing middle class buys jewelry, for example. What is not so obvious is that these commodities are driven by supply characteristics, as well. When a commodity is scarce, the price goes up. Focusing on commodities where there are supply constraints creates profit opportunities. For example, Russia and Africa control most of the mining supply for gold and precious metals.

06 HIGH LEVELS OF DEBT China also has another risk. Because its rapid growth has been driven, in part, by investment in projects that turned out not to be viable i.e., ghost cities9, high levels of debt have ensued. Servicing the debt means that households represent a lower contribution to GDP. For GDP growth that is driven by consumption, that balance must change, and the government will need to transfer wealth back from the state to households. Either policy makers must make direct transfers to households or shift the debt burden to the state. Both solutions have a downside, either political ramifications or a high debt burden.

07 DEPENDENCY ON OTHER ECONOMIES Finally, because Asian economies depend upon exports, when their trading partners experience difficulties, those difficulties tend to reverberate up the food chain. China and other parts of Asia already are feeling the pushback from the Euro Zones fiscal crisis. The Euro Zone is Chinas largest trading partner.

Ghost cities are a result of the governments overbuilding to keep growing the economy, similar to Keynesian stimulus packages in the US.

Some Asian countries may have creative ways of presenting the numbers that are inconsistent with how the US mandates its reporting.

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CONClUSION
AlThOUGh ThE ASIAN ECONOMy rEMAINS STrONG, IT DEfINITEly hAS COOlED IN rECENT MONThS
China has seen a marked decline in manufacturing. As in the US, the purchasing managers index in China remains a primary business barometer. Its recent reading of 50.5, reflecting a modest increase from the 49.5 registered in December 2011, is interpreted as a signal of cooling economic growth. Coupled with a continuing drop-off in payrolls, the government may face the decision to enact more aggressive easing measures in its attempt to prop up growth. Chinas stock market needs both exports and domestic consumption to flourish. With the Euro Zones issues being a strong headwind for exports, tightening monetary policy impacts consumption. Bank loans are restricted and reserve requirements are higher. It is hard for domestic consumption to have meaningful growth in this environment. Further proof lies in property prices they have been falling in recent months, with land prices down 60% year-over-year as of September 2011. Once the most important sector, it accounted for 13% of the economy, and close to 20% if constructionrelated industries are included. Governments public works projects, financed with loans from state-owned banks, helped drive investment as a share of GDP to 48.5% in 2010 (not surprisingly, that was the peak of GDP growth, as well). Chinas ghost cities have empty apartments, public works projects are winding down, and unemployment is rising10. There are eerie similarities to the US. Yet, China, in particular, does have additional fuel for its economic engine, since the Euro Zone is its largest export market. The troubles in the Zone are well known, and as recently as February 6, 2012, Chinese Premier Wein Jubao commented in the February 6, 2012 edition of The Wall Street Journal, Now that Europe is facing a debt crisis, we must consider our relations with Europe strategically and preserve our national interests. While the double-digit growth rates experienced in recent years are likely not to be replicated in the near future, there is no question that Asia is a vast market for US investments. Staying aware of the political and economic issues is vital for successful investors. Finding expert trustworthy investment managers is always important, and will continue to be so, especially in Asia.

Chinas ghost cities have empty apartments, public works projects are winding down, and unemployment is rising10.
9

The Wall Street Journal, December 3-4, 2011, Editorial.

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The

Market View
Reasons to consider Asia now
By Aberdeen Asia Equities Team
the Asian economies in the future, as we see a secular trend away from export dependence towards domestic demand. Healthy and less indebted economies - Asian economies are in far better shape than their heavily indebted G7 counterparts. Fundamentals are strong and the economies are more stable as reflected in balance of payments (which are generally in surplus) and substantial foreign exchange reserves. We believe that the fiscal stance of Asian countries has markedly improved leading to a decrease in the sovereign default rates. Tradition of fiscal and monetary prudence Asias tradition of prudent fiscal and monetary policies meant, ahead of the global downturn, fundamentals were stronger in many Asian economies than in many developed countries. This record of fiscal discipline gave Asian governments the ability to cope with the global downturn while only reducing fiscal balances slightly, leaving them in good shape for future growth. Strong balance sheets Not only are balance sheets strong at the country level, they are also strong at the corporate and household level. Asian consumers have low levels of debt and a high level of savings. Favorable demographics Asian nations are characterized by a young, growing population with rising incomes. A strong rise in the working age population is predicted through 2050in sharp contrast to Europe, where working age population is expected to record a secular decline. The emergence of an Asian middle class will help drive the trend to domestic consumption and intra-regional trade. Growing sophistication and liquidity of Asian markets Domestic financial markets are still young but growing fast. In 2010 Asia accounted for almost two-thirds of the IPO market in dollar terms12. This sophistication and liquidity provides investors with the opportunity to diversify away from the escalating sovereign credit risk in the developed markets. Attractive valuations We believe that equity valuations in the region are reasonable, given company quality and balance sheet strength. Additionally, spreads are reasonably attractive given the low default risk of emerging market sovereigns. Positive prospects Investing in Asia can be challenging; however, we believe there are excellent opportunities available for firms with the research capabilities to accurately assess investment opportunities. As an active fund manager, we trust our own rather than third party research. Company visits provide deeper insights and our investment process is driven by in-person meetings, which continue throughout the lifetime of our investment.

Asia is getting plenty of attention but it is the speed of its transformation that truly astonishes us.
With over two decades of on-the-ground experience investing in Asia, we have a long historical perspective to formulate our views on investing in this dynamic region. Consider: Continued economic growth Emerging Asia10 is driving world growth. According to the International Monetary Fund, Asia is projected to grow most rapidly at 7.5% on average in 2012-2013, compared to the global growth rate of 3.3%11. We believe that Asia-Pacific markets offer strong growth prospects, reflecting high savings and investment rates and a tradition of fiscal prudence. Positive long term outlook In our opinion, Emerging Asian markets are supported by strong fundamentals compared to developed markets. Debt levels in Asian economies are lower than the developed world, where unprecedented fiscal deterioration took place in recent years. Also, we expect a growing middle-class to increasingly drive

With 80 investment professionals on the ground in Aberdeens Asian offices, we believe we can offer investors unique access to the strong and growing potential of the Asia-Pacific region. To learn more about Aberdeens Asian-focused closed-end funds, please visit www.aberdeen-asset.us/cef. Please see important disclaimer information on page 3.
10

Emerging Asia comprises: China, Hong Kong SAR, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam. International Monetary Fund, January 24, 2012. Ernst & Young, December 2010.

11 12

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Our fund managers most useful tool No. 5: A shared cup of tea.

Before ever investing in Asia we prefer to interview face-to-face.

Aberdeen Closed-End Funds.
In Asian markets, you have to do your own due diligence and discovery. Not just take someone elses word for it. Thats why its important to have people locally, on the ground, researching markets and companies first hand. We believe Asia represents one of the worlds strongest and growing economic regions and the prospects for income and appreciation have never looked better. At Aberdeen, we only do our own research and our fund managers are based in the regions where we invest. But it takes more than an understanding of the big picture to appreciate the diverse range of investment opportunities in Asia, as weve discovered over many cups of tea. Aberdeens Asia-Pacific and global closed-end funds listed in the U.S. are: Aberdeen Asia-Pacific Income Fund, Inc. (FAX) Aberdeen Australia Equity Fund, Inc. (IAF) Aberdeen Emerging Markets Telecommunications and Infrastructure Fund, Inc. (ETF) Aberdeen Global Income Fund, Inc. (FCO) Aberdeen Indonesia Fund, Inc. (IF) The Asia Tigers Fund, Inc. (GRR) The India Fund, Inc. (IFN) The Singapore Fund, Inc. (SGF) For more information, contact our Investor Relations Team at 800-522-5465 or e-mail InvestorRelations@aberdeen-asset.com.

www.aberdeen-asset.us/cef
Closed-end funds have a one-time initial public offering and then are subsequently traded on the secondary market through one of the stock exchanges. The investment return and principal value will fluctuate so that an investors shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the funds portfolio. Past performance does not guarantee future results. Foreign securities are more volatile, harder to price and less liquid than U.S. securities. These risks may be enhanced in emerging market countries. Concentrating investments in a single country, region or industry may subject a fund to greater price volatility and risk of loss than more diverse funds. Investors should consider a funds investment objectives, risks, charges and expenses carefully before investing. A copy of the prospectus for Aberdeen Australia Equity Fund, Inc. and Aberdeen Global Income Fund, Inc. that contains this and other information about the fund may be obtained by calling 866-839-5205. Please read the prospectus carefully before investing. Investing in funds involves risk, including possible loss of principal. Aberdeen Asset Management Inc., 1735 Market Street, 32nd Floor, Philadelphia, PA 19103. NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE