Latin America Strategy Chartbook - Rede Globocolunas.cbn.globoradio.globo.com/.../2008/10/LatinAmericaChartBook.pdf · Vale, Datasul, Rossi, CSN, Irsa, Petrobras, Gerdau, VCP, Antofagasta

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Citigroup Global Markets Equity Research

Citi Latin America Equity Research Recommendations

Sector Recommendation Market Recommendation

Materials Overweight Mexico OverweightFinancials Overweight Brazil OverweightTelecom Overweight Colombia NeutralCons. Staples Overweight Chile UnderweightConsumer Discr. Underweight Peru UnderweightEnergy Underweight Argentina UnderweightIndustrials UnderweightUtilities Underweight

Source: Citi Investment Research

Latin America Equity Strategy (Citi)

Strategy Focus

10 September 2008 60 pages

Latin America Strategy Chartbook September 2008

A Question of Timing — We are definitely buyers for the medium- and long-term given attractive valuations and expectations for improving fundamentals globally (fundamentals within the region remain supportive). However, negative market momentum and sentiment complicate the process of choosing an entry point.

Valuations: "Buy" — Although we acknowledge that valuations themselves are rarely a catalyst, the region is now becoming very attractive: Latin America is trading below its historical average on both a forward P/E (9.9x) and EV/EBITDA (5.1x).

Momentum and Sentiment: "Wait" — Investors are skittish given negative share price momentum and poor sentiment. Both of these, however, can be viewed as contrarian indicators. We focus on the percentage of stocks trading above their 200-day moving averages (down to 17%), regional redemptions of US$4.3bn, the "low" percentage of Buys (57%), and our collapsing advance-decline monitor.

Catalysts — We see many potential catalysts for a new, sustainable rally: (1) US dollar stabilization, (2) a rebound in commodity prices, (3) better-than-expected US macro/labor market data, (4) improving fundamentals also in Europe/China, and (5) reduced worries about global inflation—all are exogenous.

Stock Screens — Growth: Buy-rated stocks with the highest 3-year earnings CAGR: Rodobens, Vivo, GP Investments, Gafisa, PDG, CTEEP, Marfrig. Laggards: Buy-rated stocks that have fallen the most since the May 19 regional peak: Usiminas, Vale, Datasul, Rossi, CSN, Irsa, Petrobras, Gerdau, VCP, Antofagasta.

Geoffrey Dennis

Jason Press

See Appendix A-1 for Analyst Certification and important disclosures.

Latin America Strategy Chartbook

10 September 2008

Citigroup Global Markets Equity Research 2

Contents Chartbook Round-Up 3

Citi Latin America Model Portfolio 4 Citi Latin America Focus List 6

Regional Performance and Valuations 7 Market Performance 9 Equity Markets 10 Earnings Growth Forecasts and Valuations 11 Sector Valuations 12 Enterprise Value / EBITDA 13 Implied Cost of Equity Model 14 Earnings Momentum 15 Dividend Screen 16 Growth Stock Screen 17

Fund Flows, Volumes and Sentiment 18 Breadth of Gains/Losses 20

Macro Analysis 21 Global Drivers 22 Fixed Income 23 Currencies 24 Commodities 25

Country Pages 26 Brazil 27 Mexico 31 Chile 34 Argentina 37 Peru 39 Colombia 41

Sector Pages 43 Energy 44 Materials 45 Industrials 46 Financials 47 Consumer Discretionary 48 Consumer Staples 49 Telecom Services 50 Utilities 51

MSCI Disclosure 52 Appendix A-1 56

Analyst Certification 56


10 September 2008


This is the toughest investment environment that we have seen in six years.

MSCI Latin America is down 35.2% from the May 19 peak—the biggest decline since the bull market began in September 2002. Whether this is another, more painful, correction in a series of corrections endured over the past six years or a "new" bear market is only partly a question of semantics. It is also a question of longevity. We are definitely buyers for the medium- and long-term given attractive valuations and expectations for improving fundamentals globally (fundamentals within the region remain supportive). However, negative market momentum and sentiment complicate the process of choosing an entry point.

Valuations: "Buy". Although we acknowledge that valuations themselves are rarely a catalyst, the region is now becoming very attractive on this basis:

– The regional forward P/E of 9.9x is 0.8 standard deviations below the historical average of 11.3x, despite a still-low cost of capital. Mexico and Chile appear most attractive, but all markets except Peru are now trading below their own P/E averages. Further, regional earnings momentum surprisingly remains positive (18.7% forward EPS growth, up from 16.6% last month), driven by Brazil;

– The forward EV/EBITDA of 5.1x is 0.5 standard deviations below the historical average of 5.3x. On this metric, Brazil (4.9x) is more attractive than Mexico (6.4x) in both absolute terms and relative to their averages;

– On a P/B basis, while Latin America trades at 2.43x, still a 17% premium to the historical average, this ratio is down 26% from its May peak of 3.30x. Mexico and Colombia are most attractive; Peru remains expensive.

Momentum and Sentiment: "Wait". Despite a strong rally on September 10, investors are skittish given negative share price momentum and poor sentiment. Both of these, however, can be viewed as contrarian indicators.

– The percentage of stocks trading above their 200-day moving averages for the region has declined to 17%, down from 72% in early June. Brazil (7%) and Argentina (0%) have seen the broadest market declines, while more defensive Chile (48%) and Mexico (31%) are doing better.

– Fund flows for Latin America have seen an unprecedented 13 successive weeks of outflows, totaling US$4.3bn of redemptions (7.5% of assets).

– Volumes are down across the region, the percentage of sell-side "Buys" is down to 57%—probably still too high but the lowest we have seen since we started tracking the data in 2006, and our advance-decline monitor has halved since the beginning of 2008.

We see many potential catalysts for a new, sustainable rally: (1) US dollar stabilization, (2) a rebound in commodity prices, (3) better-than-expected US macro/labor market data, (4) improving fundamentals also in Europe/China, and (5) reduced worries about global inflation—all of these are exogenous.

High Growth: "Buy" rated stocks with the highest 3-year earnings CAGR: Rodobens, Vivo, GP Investments, Gafisa, PDG, CTEEP, Marfrig.

Biggest Laggards: "Buy" rated stocks that have fallen the most since May 19: Usiminas, Vale, Datasul, Rossi, CSN, Irsa, Petrobras, Gerdau, VCP, Antofagasta.

Chartbook Round-Up

Latin America is trading below its

historical average on both a forward P/E

and EV/EBITDA basis.

Figure 1. Targets and Expected Total Return

Target Currency ETR

Brazil 66,000 1.60 52.1%Mexico 32,000 10.25 29.6%Chile 3,000 500 17.0%Argentina 2,100 3.15 28.3%Peru 14,000 2.70 28.6%Colombia 10,500 1,750 30.7%Region 43.8%

Local index and currency targets for end-2008


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Citi Latin America Model Portfolio

Figure 2. Citi Model Portfolio: MSCI Latin America Weights and Citi Recommendations by Market and Sector

Brazil Mexico Chile Argentina Peru Colombia Total [a]Weights MSCI CIR (+)/(-) MSCI CIR (+)/(-) MSCI CIR (+)/(-) MSCI CIR (+)/(-) MSCI CIR (+)/(-) MSCI CIR (+)/(-) MSCI CIR (+)/(-)

Consumer Disc. 2.3% 2.3% 0.0% 3.0% 3.7% 0.7% 0.2% 0.1% 0.0% n/a n/a n/a n/a n/a n/a n/a n/a n/a 5.5% 6.1% 0.6%Cons. Staples 3.4% 3.9% 0.6% 4.9% 5.1% 0.2% 0.6% 0.6% 0.0% n/a n/a n/a n/a n/a n/a n/a n/a n/a 8.9% 9.6% 0.7%Energy 16.2% 15.8% -0.4% n/a n/a n/a n/a n/a n/a 1.8% 0.0% -1.8% n/a n/a n/a 0.8% 2.4% 1.6% 18.8% 18.2% -0.6%Financials 13.5% 16.2% 2.7% 1.5% 1.1% -0.4% 0.5% 0.4% -0.1% 0.2% 0.3% 0.2% 0.8% 0.4% -0.4% 0.9% 0.0% -0.9% 17.4% 18.4% 1.0%Industrials 2.3% 1.3% -1.0% 1.2% 1.3% 0.1% 1.0% 0.8% -0.2% n/a n/a n/a n/a n/a n/a 0.0% n/a n/a 4.4% 3.3% -1.2%Technology 0.68% 0.3% -0.4% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0.0% n/a n/a 0.7% 0.3% -0.4%Materials 18.7% 20.9% 2.2% 3.3% 4.5% 1.2% 1.3% 0.8% -0.4% 0.2% 0.0% -0.1% 1.8% 0.8% -1.0% 0.4% 0.0% -0.4% 25.6% 27.0% 1.4%Telecom 2.9% 3.1% 0.2% 9.7% 10.6% 0.9% 0.4% 0.2% -0.1% 0.2% 0.0% -0.1% n/a n/a n/a 0.0% n/a n/a 13.1% 13.9% 0.8%Utilities 3.6% 2.3% -1.3% n/a n/a n/a 1.7% 1.3% -0.4% n/a n/a n/a n/a n/a n/a 0.2% 0.0% -0.2% 5.5% 3.6% -2.0%Total 63.6% 65.8% 2.4% 23.6% 26.3% 2.6% 5.5% 4.2% -1.3% 2.3% 0.4% -1.9% 2.6% 1.2% -1.4% 2.4% 2.4% 0.0% 100% 100% 0%

Source: MSCI, FactSet and Citi Investment Research

Figure 3. Citi Recommended Market Weight Relative to MSCI Benchmark Figure 4. Citi Recommended Sector Weight Relative to MSCI Benchmark

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

Mexico Brazil Colombia Chile Peru Argentina

Neutral

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

Materials Financials Telecom Cons.Staples

ConsumerDiscr.

LatinAmerica

Energy Industrials Utilities

Source: MSCI, FactSet and Citi Investment Research Source: MSCI, FactSet and Citi Investment Research


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Figure 5. MSCI Latin America Constituents and Citi Focus List

Brazil Mexico Chile Argentina Peru Colombia CIR Focus List

Consumer CYRELA BRAZIL REALTY GRUPO TELEVISA CPO FALABELLA Homex

Discretionary ULTRAPAR PART PN GRUPO ELEKTRA

LOJAS RENNER DESARROLLADORA HOMEX

B2W CORPORACION GEO B

NET SERV DE COM PN URBI DESARROLLOS URBANOS

LOJAS AMERICANAS PN

GAFISA

MRV ENGENHARIA

Consumer AMBEV PN WALMART MEXICO V CENCOSUD AmBev

Staples PERDIGAO ON FEMSA UNIT UBD D & S DISTRIBUCION SERV Walmex

SADIA PN GRUPO MODELO C CERVEZAS Comerci

SOUZA CRUZ ON KIMBERLY-CLARK MEXICO A Femsa

PAO DE ACUCAR PN GRUPO BIMBO A

JBS COCA-COLA FEMSA L

NATURA COSMETICOS ON CONTROLADORA COM MEX UBC

COSAN ON

Energy PETROBRAS PN TENARIS ECOPETROL Lupatech

PETROBRAS ON PETROBRAS ENERGIA PART B

OGX PETROLEO

Financials BANCO BRADESCO PN GRUPO FIN BANORTE O BCO SANTANDER CHILE (NEW CREDICORP (USD) BANCOLOMBIA PREF Itau

BANCO ITAU HLDG FIN. PN GRUPO FIN INBURSA O BANCO DE CREDITO E INV. BANCOLOMBIA ORD Unibanco

UNIBANCO UNIT BANCO COMPARTAMOS SURAMERICANA INVERSIONES Credicorp

ITAUSA PN

BANCO BRASIL

BRADESPAR PN

BOVESPA HOLDING

BOLSA DE MERCADORIAS

BANRISUL PNB

Health Care

Industrials ALL AMER LAT UNIT GRUPO CARSO EMPRESAS COPEC ALL

EMBRAER EMPRESAS ICA LAN AIRLINES ASUR

CCR RODOVIAS ON ALFA

TAM PN GRUPO AEROP PACIFICO B

DURATEX PN

LOCALIZA RENT A CAR

GOL PN

LLX LOGISTICA ON

Info Technology

Materials VALE DO RIO DOCE PNA CEMEX CPO CMPC (EMPRESAS) SIDERAR A SOUTHERN COPPER C(USD INVERSIONES ARGOS Usiminas

VALE DO RIO DOCE ON GRUPO MEXICO B SOQUIMICH B BUENAVENTURA (MINAS) CEMENTOS ARGOS (NEW) Cemex

CSN SIDERURGICA NAC'L ON CAP CIA MINERA MILPO Aracruz

GERDAU PN MASISA (NEW) MINSUR I CMPC

USIMINAS PNA VOLCAN COMPANIA MINERA B Ternium

GERDAU METALURGICA PN Vale

ARACRUZ CELULOSE PNB

GERDAU ON

VOTORANTIM CELULOSE PN

USIMINAS ON

IRONX MINERACAO ON

SUZANO PAPEL E CELUL PNA

FOSFERTIL PN

BRASKEM PNA

KLABIN PN

MMX MINERACAO METALICOS

Telecom VIVO PART. PN AMERICA MOVIL L ENTEL TELECOM ARGENTINA B

Services GVT HOLDING TELEFONOS MEXICO L CTC TELECOM. CHILE(CIA)A

TIM PART. PN TELMEX INTERNACIONAL L

CARSO GLOBAL TELECOM A1

AXTEL CPO

Utilities CEMIG PN ENDESA (CHILE) EDB

ELETROBRAS ON ENERSIS

ELETROBRAS PNB

CESP PNB

SABESP ON

CPFL ENERGIA ON

ELETROPAULO METROPOL.PNB

COPEL PNB

TRACTEBEL ENERGIA ON

EDP ENERGIAS DO BRASIL

Total 63.6% 23.6% 5.5% 2.3% 2.6% 2.4% 100.0%

Note: Not all Focus List companies are necessarily in the MSCI Latin America index, although most are constituents.


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MSCI Price 52-wk 52-wk Price ETR EPS/EPADR P/E EV/EBITDA P/BV Div. Mkt CapIndustry Company NASD Rating 10-Sep Low High Target (%) 07x 08(E)x 09(E)x 07x 08(E)x 09(E)x 07x 08(E)x 09(E)x 07 07 Yld. US$ MN

BrazilCons. Staples Ambev ABV 1M $57.01 $56.26 $88.77 $88.00 61% $2.31 $2.90 $3.08 24.6 19.7 18.5 8.8 7.2 6.7 3.58 $2.5 6.9% $34,987Energy Lupatech LUPA3 1H R$53.00 R$42.93 R$64.99 R$84.00 58% ($0.36) R$1.98 R$3.25 N/A 26.7 16.3 27.5 11.2 8.7 9.44 R$0.1 0.0% $1,369Financials Itau ITAU4 1M R$30.10 R$29.33 R$52.37 R$44.00 50% R$2.39 R$2.82 R$3.17 12.6 10.7 9.5 N/A N/A N/A 3.11 $0.8 3.8% $50,398Financials Unibanco UBBR11 1M R$18.29 R$18.00 R$28.00 R$24.50 38% R$2.34 R$2.08 R$2.32 7.8 8.8 7.9 N/A N/A N/A 2.16 R$0.9 4.4% $14,422Industrials ALL ALLL11 1M R$16.57 R$15.86 R$28.39 R$32.00 94% R$0.37 R$0.79 R$0.77 45.1 21.0 21.4 10.7 7.9 6.6 3.76 R$0.1 0.8% $5,396Materials Vale RIO_p 1M $18.76 $18.55 $35.96 $39.00 113% $2.39 $2.99 $4.07 7.8 6.3 4.6 7.1 4.5 2.9 2.72 $0.6 5.3% $90,656Materials Usiminas USIM5 1H R$43.20 R$43.00 R$95.80 R$99.00 134% R$6.43 R$7.83 R$8.89 6.7 5.5 4.9 3.9 2.9 2.5 1.72 $2.0 4.6% $12,040Materials Aracruz ARA 1M R$51.08 R$49.75 R$92.22 R$92.00 86% R$4.09 R$4.07 R$4.33 12.5 12.6 11.8 7.7 8.4 7.9 2.97 R$2.3 5.8% $5,266Utilities EDB ENBR 1M $24.75 $21.82 $35.50 $41.10 73% $2.67 $3.53 $3.69 9.3 7.0 6.7 4.8 4.7 4.5 1.04 $0.8 7.3% $2,306MexicoConsumer Disc Homex HOMEX 1M P$86.70 P$81.00 P$122.00 P$135.00 56% P$6.53 P$8.38 P$9.17 13.3 10.3 9.5 N/A N/A N/A 3.04 P$0.0 0.0% $2,756Cons. Staples Comerci COMEUBC 1M P$24.40 P$23.90 P$35.20 P$36.50 50% P$2.35 P$1.92 P$2.13 10.4 12.7 11.5 6.8 6.6 6.2 1.19 P$0.2 0.7% $2,508Cons. Staples Walmex WALMEXV 1L P$38.46 P$34.26 P$47.19 P$50.00 32% P$1.68 P$1.83 P$2.22 22.9 21.0 17.4 14.0 12.9 10.8 4.89 P$0.5 1.8% $30,751Cons. Staples Femsa FMX 1M $45.85 $29.40 $49.83 $60.00 32% $2.83 $2.65 $2.72 16.2 17.3 16.8 8.4 7.1 6.6 2.77 $0.4 1.1% $16,406Materials Cemex CX 1H $20.42 $19.45 $33.40 $37.00 88% $3.22 $2.88 $3.05 6.3 7.1 6.7 3.8 3.2 2.4 1.03 $0.7 7% $15,874Industrials ASUR ASURB 1H $49.50 $43.57 $63.54 $75.00 55% $1.60 $3.30 $3.74 31.0 15.0 13.2 5.4 4.7 4.5 1.12 $0.7 3% $1,485ChileMaterials CMPC CAR 1M C$15,001 C$15,000 C$20,800 C$22,000 49% C$1,211 C$1,049 C$1,500 12.4 14.3 10.0 8.6 8.8 6.7 1.10 C$343 2.8% $5,669PeruFinancials Credicorp BAP 1M $72.65 $58.65 $86.91 $110.00 55% 4.40NS$ 5.75NS$ 6.89NS$ 16.5 12.6 10.5 N/A N/A N/A 3.46 1.54NS$ 3.3% $5,795ArgentinaMaterials Ternium TX 1H $25.08 $25.00 $45.99 $47.00 89% $3.89 $5.92 $5.96 6.4 4.2 4.2 3.9 3.3 2.4 1.13 N/A 2.0% $5,028Portfolio (Market-Cap Weighted) 41% 13.5 11.8 10.4 5.5 4.8 4.1 2.11 2.5%

Return MSCI RelativeIndustry Company NASD Added US$ LatAm Perform. Investment Thesis

Cons. Staples Ambev ABV 2/11/08 -25.8% -19.4% -6.4% Good operating momentum and hedged protection against grain price/FX fluctuation; strong balance sheet; Macro risk; diluted EM exposure.Energy Lupatech LUPA3 5/19/08 -20.8% -35.2% 14.3% Strong organic growth, acquisitions and exposure to E&P spending; aggressive growth program does entail risk.Financials Itau ITAU4 12/1/06 3.2% 21.2% -17.9% Compelling volume growth at attractive margins; synergies from BankBoston acquisition; Risk in loan growth/asset quality sensitive to economy.Financials Unibanco UBBR11 8/26/08 -10.8% -13.1% 2.3% High loan growth should prove sustainable, untapped residential mortgage market, sustainable ROEs; Interest rate risk, asset quality.Industrials ALL ALLL11 5/30/08 -37.2% -34.6% -2.6% Value investment with growth prospects; monopoly rights; quality advantage over trucking; Regulatory risk, commodity price risk.Materials Vale RIO_p 10/1/07 -38.8% -21.3% -17.5% We see further upside on rising iron ore prices, near-term earnings growth and underappreciated long-term value; Risk in global economy.Materials Usiminas USIM5 5/19/08 -57.4% -35.2% -22.3% Steel prices likely to rise again in 2H; valuations are logcal assuming earnngs are sustainable; Macro and commodity price risk.Materials Aracruz ARA 5/30/08 -43.7% -34.6% -9.1% Outlook for 2009-10 remains positive, limited market pulp capacity additions, attractive valuation; Risk in cyclical nature of pulp prices. Utilities EDB ENBR 7/14/08 -31.9% -23.2% -8.6% Compelling valuations, new management / strategy, expected compelling dividend policy, strong cash generation; Risk in low rainfall and rationing.Consumer Disc Homex HOMEX 1/28/08 -10% -16.0% 6.1% Homex should balance strong growth rates with profitability though 2012, and, at the same time, maintain a solid financial situation; Risk in sentiment.Cons. Staples Comerci COMEUBC 4/18/08 -17.7% -29.1% 11.4% Attractive valuation, consistent results (although comps will become difficult), sunergies in sales floor expansion; Macro and execution risk.Cons. Staples Walmex WALMEXV 6/8/07 -2.9% -6.4% 3.5% Expectations of improving consumption at yearend; consolidating its leadership position while expanding; Macro risks and banking rollout risk.Cons. Staples Femsa FMX 7/25/08 5.1% -19.2% 24.3% Double digit EBITDA growth, rational competition, strong balance sheet and financial disciplinet, attractive valuation; Risk in raw material prices.Materials Cemex CX 4/1/05 16.8% 121.6% -104.9% Low double-digit FCF growth; Pent-up demand in Mexican housing industry; U.S. cement market is poised to grow.Industrials ASUR ASURB 10/25/07 -17.5% -23.2% 5.7% Most attractive valuation among Mexican airports, good profits, hurricane season turns to holiday season; Risks in global economy, secondary airport.Materials CMPC CAR 2/25/08 -28.0% -25.9% -2.1% Outlook for pulp prices remains supportive; attractive valuations; Risk in commodity prices and lack of liquidityFinancials Credicorp BAP 5/19/08 -11.1% -35.2% 24.1% Peruvian banking sector offers stellar loan growth and superior profitability, strong in consumer/retail sector; macro and execution risk.Materials Ternium TX 12/14/07 -36.2% -22.2% -14.0% Strong fundamental outlook for regional steel, competitors focused on Brazil, attractive valuation; Venezuela political risk, macro slowdown.



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Regional Performance and Valuations


10 September 2008


Figure 6. Performance of Latin American and Global Equity Indices

Market Data Performance (Local Currency, %) Performance (USD, %)

Ticker Index 52w High 52w Low 1Wk 1Mo 3Mo YTD 1Yr 1Wk 1Mo 3Mo YTD 1Yr

Global Indices

MSCI AC World MXWD 316 428 316 (4.3) (5.2) (12.6) (19.8) (18.1) (5.0) (7.4) (16.3) (21.5) (18.3) S&P 500 Index SPX 1,225 1,576 1,200 (4.2) (5.5) (10.1) (16.6) (15.8) (4.2) (5.5) (10.1) (16.6) (15.8) DJ Euro Stoxx 50 SX5E 3,261 4,503 3,090 (4.5) (4.3) (9.3) (25.9) (21.7) (7.1) (10.0) (18.5) (28.3) (19.5) Japan Nikkei 225 NKY 12,401 17,489 11,691 (1.7) (5.8) (12.6) (19.0) (23.1) (0.4) (3.4) (13.7) (15.8) (18.8) MSCI Emrg Mkts MXEF 869 1,338 869 (5.3) (8.6) (22.4) (27.6) (19.8) (6.5) (12.3) (25.6) (30.3) (20.2) MSCI Latin America MXLA 3,369 5,195 3,369 (8.6) (10.7) (27.6) (24.6) (15.4) (12.5) (16.5) (32.1) (23.4) (8.4) MSCI EM EMEA MXEE 325 474 325 (8.3) (8.6) (23.5) (26.1) (16.2) (9.8) (11.4) (26.1) (29.2) (15.8) MSCI EM Asia MXMS 343 572 335 (2.2) (7.7) (19.2) (29.3) (22.7) (1.8) (10.7) (22.2) (33.3) (26.2) MSCI Indices - Asia

Korea MXKR 289 491 271 3.5 (6.6) (19.2) (22.2) (21.2) 6.6 (12.8) (24.4) (33.9) (32.8) Taiwan MSEUSTW 223 339 218 (3.0) (10.9) (24.4) (25.5) (28.6) (3.2) (12.9) (28.2) (24.2) (26.0) China MXCN 54 104 53 (5.9) (9.3) (22.8) (36.8) (27.8) (5.8) (9.1) (22.7) (36.8) (27.9) India MEEUSIA 408 694 361 (1.6) (2.0) (3.4) (30.6) (5.6) (2.5) (8.0) (7.6) (38.9) (14.3) Malaysia MXMY 284 438 283 (1.6) (4.5) (13.2) (27.6) (20.0) (2.2) (8.6) (17.9) (30.5) (18.7) Indonesia 475 737 475 (11.4) (12.5) (22.3) (30.4) (11.0) (12.5) (13.9) (22.4) (29.9) (10.2) Thailand MSEUTHF 200 293 193 0.7 (3.9) (16.8) (23.4) (15.3) 0.6 (6.2) (19.9) (25.3) (15.9) Philippines MSEUSPHF 241 377 208 0.6 1.5 0.7 (24.9) (21.1) 0.1 (3.9) (5.0) (33.8) (21.6) MSCI Indices - CEEMEA

South Africa MSEUSSA 397 578 392 (3.3) (2.4) (14.7) (9.4) (6.6) (5.1) (5.1) (14.9) (21.8) (14.5) Russia MSELTRUS 881 1,642 881 (17.4) (18.3) (41.3) (41.9) (25.8) (18.0) (19.5) (42.5) (42.6) (26.1) Poland MSEUSPO 1,132 1,672 1,129 (4.2) (2.2) (8.3) (25.0) (27.2) (9.7) (13.0) (19.4) (24.6) (17.5) Hungary MSELTHG 882 1,221 850 (3.0) (3.6) (7.3) (24.1) (25.5) (5.9) (10.3) (14.0) (22.4) (17.9) Czech Republic MSEUSCZ 701 929 658 (6.6) (5.1) (12.4) (18.4) (7.8) (9.5) (12.3) (22.0) (15.5) 5.3 Turkey MSEUSTK 498 790 414 (0.8) (2.2) 1.7 (30.4) (21.2) (3.9) (5.7) 2.5 (33.7) (16.6) Israel MSEUSIS 243 284 234 (2.8) (3.1) (7.3) (13.5) (9.2) (2.9) (3.8) (13.8) (8.0) 3.0 Egypt MSILEG 1,042 1,469 955 0.2 (6.6) (19.5) (20.3) 3.5 (0.2) (8.3) (20.6) (18.8) 7.9 MSCI Indices - Latin America

Brazil MXBR 2,785 4,728 2,779 (10.9) (13.5) (32.5) (29.0) (13.4) (15.9) (20.4) (37.5) (28.0) (3.7) Mexico MXMX 5,217 6,742 5,217 (3.0) (3.6) (15.5) (16.2) (18.6) (4.2) (7.1) (16.7) (12.9) (13.7) Chile MXCL 1,549 2,058 1,549 (5.0) (8.3) (9.0) (8.4) (11.2) (7.8) (10.8) (17.4) (14.1) (12.8) Argentina MXAR 2,514 4,188 2,482 (13.6) (18.9) (34.6) (16.4) (17.7) (14.4) (19.0) (34.6) (13.9) (14.8) Peru MXPE 892 1,488 892 (10.2) (8.6) (33.7) (28.9) (22.9) (10.3) (10.2) (34.9) (28.6) (21.1) Colombia MXCO 603 734 520 (0.5) 9.1 1.2 0.1 0.6 (5.3) (4.7) (17.8) (2.7) 6.4 Local Indices - Latin America

Brazil Bovespa IBOV 48,435 73,920 48,419 (11.0) (14.4) (30.1) (24.2) (11.2) (16.0) (21.3) (35.3) (23.1) (1.3) Mexico IPC/Bolsa MEXBOL 25,630 32,851 25,299 (3.4) (5.5) (17.1) (13.2) (15.3) (4.6) (8.9) (18.3) (9.8) (10.2) Chile IPSA IGPA 2,734 3,496 2,525 (4.7) (7.8) (9.4) (10.4) (14.6) (7.5) (10.3) (17.7) (16.0) (16.1) Argentina Merval MERVAL 1,595 2,355 1,591 (8.8) (10.2) (26.2) (25.9) (21.9) (9.6) (10.4) (26.2) (23.6) (19.1) Peru BVL General IGBVL 12,144 22,684 11,716 (8.7) (4.5) (28.1) (30.7) (38.2) (9.1) (8.9) (31.7) (30.2) (34.3) Colombia IBB Gen IGBC 9,559 11,439 8,561 (0.9) 7.0 (3.1) (10.6) (10.9) (5.7) (6.5) (21.3) (13.1) (5.8) Sectors - Latin America

Consumer Discretion MXLA0CD 493 657 493 (3.8) (8.5) (16.4) (16.5) (21.7) (6.9) (13.5) (20.1) (14.4) (15.3) Consumer Staples MXLA0CS 317 385 304 (1.9) (5.5) (8.1) (6.9) (6.4) (4.9) (10.5) (12.1) (4.5) 1.1 Energy MXLA0EN 923 1,780 784 (14.9) (16.7) (40.0) (33.9) 3.9 (19.3) (22.9) (44.4) (33.0) 14.2 Financials MXLA0FN 626 900 626 (4.4) (7.2) (19.7) (22.8) (14.2) (9.1) (14.0) (25.5) (21.9) (6.2) Industrials MXLA0IN 214 331 214 (3.9) (5.3) (16.1) (28.1) (29.2) (7.7) (10.8) (21.4) (28.0) (24.8) Materials MXLA0MT 768 1,415 768 (12.1) (13.5) (37.2) (28.9) (22.1) (16.1) (19.4) (41.3) (28.1) (15.4) Telecom Services MXLA0TC 337 450 337 (5.4) (4.3) (14.0) (20.0) (20.7) (7.6) (8.7) (16.6) (17.6) (15.5) Utilities MXLA0UT 223 293 212 (7.9) (13.3) (15.1) (6.4) (11.1) (12.4) (19.1) (22.2) (7.5) (5.1)



10 September 2008


Market Performance

Figure 7. MSCI Index Performance (U.S. Dollar, 1 Month) Figure 8. MSCI Index Performance (U.S. Dollar, YTD)

(25)

(20)

(15)

(10)

(5)

-

5

Colombia Mexico Peru Chile MSCI LatinAmerica

Argentina Brazil

%

(35)

(30)

(25)

(20)

(15)

(10)

(5)

-

5

Colombia Mexico Argentina Chile MSCI LatinAmerica

Brazil Peru

%

Source: MSCI, Factset and Citi Investment Research Source: MSCI, Factset and Citi Investment Research

Figure 9. MSCI Sector Performance (U.S. Dollar, 1 Month) Figure 10. MSCI Sector Performance (U.S. Dollar, YTD)

(25)

(20)

(15)

(10)

(5)

-

5

Telecom Cons.Staples

Industrials ConsumerDiscr.

Financials MSCI LatinAmerica

Utilities Materials Energy

%

(35)

(30)

(25)

(20)

(15)

(10)

(5)

-

5

Cons.Staples

Utilities ConsumerDiscr.

Telecom Financials MSCI LatinAmerica

Industrials Materials Energy

%



10 September 2008


Equity Markets

Figure 11. MSCI Index Performance (Index, 50- and 200-day MA) Figure 12. Brazilian Bovespa (Index, 50- and 200-day MA and Relative Perf.)

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

Sep-06 Mar-07 Sep-07 Mar-08 Sep-08

MSCI Latin America 50-day Moving Average 200-day

Correction:Nov 2007-Jan 2008

Correction:July/Aug 2007

Pullback

Current Correction:May 2008-??

20,000

30,000

40,000

50,000

60,000

70,000

80,000


75

100

125

150

175

200

225

Brazilian Bovespa 50-day Moving Average 200-day MSCI Rel to LatAm

Outperformance Underperformance

Source: MSCI, Factset and Citi Investment Research Source: Datastream and Citi Investment Research

Figure 13. Mexican Bolsa (Index, 50- and 200-day MA and Relative Perf.) Figure 14. Chilean IPSA (Index, 50- and 200-day MA and Relative Perf.)

15,000

17,000

19,000

21,000

23,000

25,000

27,000

29,000

31,000

33,000

35,000


60

100

140

180

220

260

Bolsa 50-day Moving Average 200-day MSCI Rel to LatAm

Underperformance

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


40

60

80

100

120

140

160

180

200

IPSA 50-day Moving Average 200-day MSCI Rel to LatAm

Underperformance

Source: Datastream and Citi Investment Research Source: Datastream and Citi Investment Research


10 September 2008


Earnings Growth Forecasts and Valuations

Figure 15. Latin America Growth Forecasts and Valuations by Market

EPS Growth P/E Consensus EPS Growth Consensus P/E

07A 08E 09E 07A 08E 09E 08E 09E 08E 09E

Brazil 38.2% 32.2% 19.7% 11.7x 8.8x 7.4x 16.1% 18.3% 10.7x 9.1xMexico 20.4% -0.3% 16.0% 12.8x 12.9x 11.1x 8.1% 14.1% 11.1x 9.8xChile 21.2% 17.7% 16.9% 18.9x 16.1x 13.8x 17.3% 21.1% 16.5x 13.6xArgentina 40.6% 26.7% 5.4% 9.7x 7.6x 7.2x 9.1% 3.8% 13.6x 13.1xPeru 18.9% -0.2% 31.0% 9.6x 9.7x 7.4x -7.3% 15.5% 14.4x 12.5xColombia n/a 25.7% 18.3% 35.6x 28.3x 24.0x 23.3% 14.8% 13.3x 11.6xLatin America 29.6% 23.2% 18.5% 12.3x 10.0x 8.5x 14.2% 17.0% 11.2x 9.6x

EBITDA Growth FV/EBITDA Div

07A 08E 09E 07A 08E 09E ROE P/BV Yld

Brazil 29.3% 40.9% 18.3% 5.0x 3.7x 2.9x 18.9% 2.33x 2.7%Mexico 13.2% 15.8% 13.8% 9.1x 7.8x 6.9x 20.7% 2.77x 2.2%Chile 12.7% 8.7% 16.3% 6.0x 5.5x 4.7x 10.6% 2.20x 2.3%Argentina 5.8% 17.7% 11.6% 5.7x 4.8x 4.3x 25.7% 2.68x 1.5%Peru 16.0% -6.5% 32.5% 8.2x 5.7x 5.6x 35.0% 4.42x 4.3%Colombia 35.9% 8.2% 32.2% 16.6x 15.4x 11.6x 8.9% 1.82x 2.0%Latin America 23.5% 32.0% 17.6% 5.6x 4.2x 3.4x 18.9% 2.43x 2.5%


Figure 16. MSCI Latin American Forward P/E and Performance Figure 17. Latin American Trailing Price-to-Book

6X

8X

10X

12X

14X

16X

18X

95 96 97 98 99 00 01 02 03 04 05 06 07 08

-60%

-40%

-20%

0%

20%

40%

60%

80%

12-mth MSCI Return P/E +1 S.D. P/E -1 S.D. P/E

Average since '99

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2001 2002 2003 2004 2005 2006 2007 2008

Latin America Historical Average

(x)

+1 St Dev

-1 St Dev

Source: IBES consensus, MSCI, Datastream, Factset and Citi Investment Research Source: MSCI, Factset and Citi Investment Research


10 September 2008


Sector Valuations

Figure 18. Latin America: Consensus Forward P/E (Current vs. Month Ago) Figure 19. Latin America: Consensus Forward P/E over Time

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Energy Materials Industrials ConsumerDisc.

Cons.Staples

Financials Tech Telecom Utilities

Aug-08 Sep-08

(x)

Energy

Materials

Industrials

Consumer Disc.

Cons. Staples

Financials

Telecom

Utilities

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

2004 2005 2006 2007 2008


Figure 20. Latin America: Trailing P/B (Current vs. Month Ago) Figure 21. Latin America: Trailing P/B over Time

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Energy Materials Industrials ConsumerDiscr

Staples Financials Telecom Utilities

Aug-08 Sep-08

(x)

Energy

MaterialsIndustrials

Consumer Discr

Staples

Financials

Telecom

Utilities

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2004 2005 2006 2007 2008

(x)



10 September 2008


Enterprise Value / EBITDA

Figure 22. Brazil: Forward EV/EBITDA Figure 23. Mexico: Forward EV/EBITDA

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2002 2003 2004 2005 2006 2007 2008

+1 St Dev

-1 St Dev

(x)

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

2002 2003 2004 2005 2006 2007 2008

+1 St Dev

-1 St Dev

(x)

Source: dataCentral Source: dataCentral

Figure 24. Latin America: Forward EV/EBITDA

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

2002 2003 2004 2005 2006 2007 2008

+1 St Dev

-1 St Dev

(x)



10 September 2008


Implied Cost of Equity Model

Figure 25. Current Implied Cost of Equity compared with Citi Fair Value Cost of Equity

Citigroup Fair Value Cost of Equity (%) Implied Current Cost of Equity (%) Upside/(Downside) ifNominal

COE LT InflationFair Value Real COE

Risk Free (Local Cy) ERP

Nominal COE

Implied Real COE ERP

Current Real COE Reverts to Fair Value COE (%)

Brazil Bovespa 15.0 3.8 11.2 7.7 7.3 14.2 10.4 6.5 -6Mexico IPC (Bolsa) 13.6 3.1 10.5 6.5 7.1 12.8 9.7 6.3 -6Chile IPSA 10.8 3.0 7.8 4.8 6.0 10.4 7.4 5.6 -3Peru General 15.2 3.0 12.2 6.6 8.6 11.3 8.3 4.7 -24Latin America 14.2 3.5 10.7 7.0 7.1 13.3 9.8 6.3 -6


Figure 26. Latin American Equity Risk Premia Figure 27. Latin American Cost of Equity and Implied Total Return

4.7

6.5 6.3 6.3

5.6

8.6

7.3 7.1 7.1

6.0

-

1

2

3

4

5

6

7

8

9

10

Peru Brazil LatAm Mexico Chile

Implied Current ERP Fair Value (Appropriate) ERP

%

10

11

12

13

14

15

Current Appropriate

-7

-6

-5

-4

-3

-2

-1

0

Current Implied Cost of Equity Implied USD Return (R.H. Scale)

COE (%)



10 September 2008


Earnings Momentum

Figure 28. Latin America: Evolution of CIR Annual Earnings Figure 29. Latin America: Rolling Forward 12m IBES EPS Growth Forecast

-10%

0%

10%

20%

30%

40%

50%

60%

Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

20042005

2006 2007

2008

2009

-

4

8

12

16

20

24

28

32

36

40

44

48

2000 2001 2002 2003 2004 2005 2006 2007 2008

Avg. 12m Forward EPS GrowthF

Positive earnings

momentum, still

(%)

Note: Companies under coverage; Source: Citi Investment Research Note: IBES, 3m average; Source: MSCI, Datastream and Citi Investment Research

Figure 30. Stocks with Positive IBES Earnings Momentum Figure 31. Stocks with Negative IBES Earnings Momentum

Positive Momentum

EPS Growth Change in Price

Company Sector '09/'08 [1] Estimate [2] Perf [3]Brazil

1 MMX MINER MATERIALS 116% 23% -4%

2 EMBRAER ON INDUSTRIALS 32% 22% 25%

3 LOJAS AMER CONSUMER DISCRETI 102% 21% -6%

4 TAM PN - F INDUSTRIALS 60% 15% 41%

5 TELEMAR NR TELECOMMUNICATION 12% 14% -5%

6 BRADESPAR FINANCIALS 52% 13% -28%

7 VIVO PN - TELECOMMUNICATION 119% 12% -22%

8 ITAUSA PN FINANCIALS 54% 12% -5%

9 B2W VAREJO CONSUMER DISCRETI 95% 11% -5%

10 MRV ON - F CONSUMER DISCRETI 72% 8% -8%

Mexico

1 ICA - FUR INDUSTRIALS 72% 16% -28%

2 CEMEX 'CPO MATERIALS 11% 6% -12%

3 GMEXICO 'B MATERIALS 19% 4% -39%

4 TELMEX 'L' TELECOMMUNICATION 9% 1% 4%

5 TLEVISA 'C CONSUMER DISCRETI 17% 1% 5%

Chile

1 COPEC - FU INDUSTRIALS 33% 6% -9%

2 ENDESA - F UTILITIES 14% 3% 9%

3 ENERSIS - UTILITIES 11% 2% 9%

4 D & S - FU CONSUMER STAPLES 26% 2% -3%

5 FALABELLA CONSUMER DISCRETI 26% 1% -5%

Negative Momentum

EPS Growth Change in Price

Company Sector '09/'08 [1] Estimate [2] Perf [3]Brazil

1 PERDIGAO O CONSUMER STAPLES 28% -17% 3%

2 VCP PN - F MATERIALS 46% -16% -18%

3 ELETROPAUL UTILITIES -8% -13% -29%

4 BRASKEM PN MATERIALS -103% -8% -12%

5 KLABIN SA MATERIALS -20% -8% -18%

6 METALURGIC MATERIALS -4% -7% -30%

7 ELETROBRAS UTILITIES 19% -6% -6%

8 SABESP ON UTILITIES 1% -6% -17%

9 SUZANO PAP MATERIALS 14% -5% -22%

10 ULTRAPAR P CONSUMER DISCRETI 31% -5% 2%

Mexico

1 AXTEL 'CPO TELECOMMUNICATION 24% -37% -23%

2 GFINBUR 'O FINANCIALS 10% -7% 4%

3 GAP 'B' - INDUSTRIALS 8% -4% -7%

4 HOMEX - FU CONSUMER DISCRETI 17% -3% -15%

5 URBI - FUR CONSUMER DISCRETI 23% -2% -25%

Chile

1 ENTEL - FU TELECOMMUNICATION -6% -5% -3%

2 CENCOSUD - CONSUMER STAPLES 25% -2% -4%

3 CMPC - FUR MATERIALS 42% -1% -7%

[1] Latest IBES growth estimate for MSCI LatAm constituent securities

[2] 2-month average month-on-month percentage change

[3] 2-month stock price performance

Source: IBES, MSCI, Datastream and Citi Investment Research

[1] Latest IBES growth estimate for MSCI LatAm constituent securities

[2] 2-month average month-on-month percentage change

[3] 2-month stock price performance

Source: IBES, MSCI, Datastream and Citi Investment Research


10 September 2008


Dividend Screen

Figure 32. Top 40 Dividend Yielding Stocks under Coverage

Tickers 10-Sep Price ETR EPS Growth EPS Growth P/BV (x) DivCompany Country NASD Rating Price Target (%) 08E 09E 08E 09E 07 Yld

1 CTEEP Brazil TRPL4 1M R$40.00 R$57.00 59% -5% -4% 7.3 7.6 1.51 16.45%2 Eletropaulo Brazil ELPL6 2M R$25.75 R$42.00 76% -18% 16% 7.4 6.3 1.30 12.93%3 Terna Brazil TRNA11 2M R$24.00 R$35.20 58% 17% 4% 8.4 8.1 1.53 11.46%4 AES Tietê Brazil GETI4 1M R$14.85 R$22.70 64% 6% 13% 8.8 7.8 11.30 10.98%5 Southern Copper Peru PCU 3H $20.42 $19.00 3% -8% 38% 8.8 6.3 4.68 9.79%6 Tractebel Brazil TBLE3 2M R$18.45 R$26.70 54% 14% 0% 10.1 10.1 4.28 9.49%7 Grupo Continental Mexico CONTAL 2M P$25.00 P$28.50 23% 5% 7% 11.1 10.4 2.25 8.52%8 CPFL Brazil CPFE3 2M R$30.80 R$40.40 40% -20% 4% 11.2 10.7 2.98 8.51%9 Cemig Brazil CMIG4 1M R$31.40 R$49.60 66% -1% 4% 8.9 8.6 1.82 7.93%10 Embotelladora Andina Chile AKOa 2M $15.23 $19.00 32% 4% 18% 11.3 9.6 3.42 7.29%11 EDP Brazil ENBR3 1M R$24.75 R$41.10 73% 32% 5% 7.0 6.7 1.04 7.27%12 Ecopetrol Colombia ECO 1H CP$2,600 CP$3,200 30% 120% 25% 9.2 7.4 3.93 7.08%13 Cemex Mexico CX 1H $20.59 $37.00 86% -10% 6% 7.1 6.8 1.03 6.80%14 AmBev Brazil ABV 1M $58.15 $88.00 58% 25% 6% 20.1 18.9 3.66 6.72%15 Embotelladoras Arca Mexico ARCA 1M P$35.50 P$48.00 42% 12% 9% 10.2 9.4 2.28 6.70%16 Sabesp Brazil SBSP3 2H R$32.89 R$53.50 69% 39% -12% 5.2 5.8 0.77 6.15%17 Natura Cosmeticos Brazil NATU3 2H R$16.77 R$23.00 43% 3% 15% 15.1 13.1 10.60 5.96%18 Copel Brazil CPLE6 2M R$24.60 R$35.00 48% -18% -8% 7.5 8.1 0.93 5.77%19 OMA (Centro Norte) Mexico OMAB 1S $14.14 $22.00 61% n/m 4% 11.7 11.2 1.03 5.66%20 Aracruz Celulose Brazil ARA 1M $52.79 $92.00 80% -1% 6% 13.0 12.2 3.07 5.61%21 Gerdau Brazil GGBR4 1H R$23.11 R$39.00 74% 40% -5% 6.2 6.5 2.41 5.41%22 Vale Brazil RIO_p 1M $19.31 $39.00 107% 25% 36% 6.5 4.7 2.80 5.18%23 Antofagasta Chile ANTO 1M 4.91£ 8.00£ 68% 7% 29% 5.8 4.5 2.10 5.09%24 GAP (Pacifico) Mexico PAC 3S $27.46 $30.00 14% -11% -17% 13.4 16.2 nm 5.03%25 Nossa Caixa Brazil BNCA3 2S R$35.20 R$48.00 41% n/m n/m 120.2 15.6 1.36 5.00%26 Suzano Papel Brazil SUZB5 1H R$19.38 R$37.00 96% 12% -13% 10.1 11.6 1.39 4.85%27 CSN Brazil CSNA3 1H R$42.70 R$92.00 120% 42% 24% 8.0 6.4 4.37 4.68%28 Usiminas Brazil USIM5 1H R$43.20 R$99.00 134% 22% 14% 5.5 4.9 1.72 4.63%29 Cementos Lima Peru CEL 2H $11.94 $18.05 56% 10% 8% 12.5 11.6 2.94 4.58%30 Klabin Brazil KLBN4 3H R$4.38 R$6.50 53% -33% -14% 9.6 11.1 1.47 4.57%31 CCR Brazil CCRO3 2M R$27.57 R$36.00 35% 29% 21% 14.7 12.1 6.87 4.50%32 Grupo Modelo Mexico GMODELOC 2L $4.57 $5.30 20% -1% 15% 17.2 14.9 2.56 4.38%33 Unibanco Brazil UBBR11 1M R$18.29 R$24.50 38% -11% 11% 8.8 7.9 2.16 4.37%34 Duratex Brazil DURA4 1H R$25.00 R$51.00 108% 32% 13% 7.2 6.4 2.11 4.36%35 Petroleo Brasileiro Brazil PETR4 1M R$32.55 R$50.00 58% 66% 29% 7.0 5.4 2.18 4.30%36 Banco do Brasil Brazil BBAS3 1M R$21.49 R$28.00 34% 10% 12% 8.5 7.5 2.19 4.14%37 CCU (Co. Cervec) Chile CU 2L $33.77 $38.00 17% 9% -9% 12.4 13.6 2.67 4.09%38 Braskem Brazil BAK 2H $12.01 $16.00 37% -31% n/m NA NA 0.81 3.97%39 Unipar Brazil UNIP6 3S R$1.32 R$1.55 21% 127% n/m 3.3 NA 0.90 3.79%40 Corp Moctezuma Mexico CMOCTEZ 1M P$25.50 P$30.00 21% 4% 8% 12.5 11.7 2.54 3.79%



10 September 2008


Growth Stock Screen

Figure 33. Top 40 Earnings Growth Stocks under Coverage

Tickers 10-Sep Price ETR P/E (x) EPS Growth 3yr EV/EBITDA (x) EBITDA GrowthCompany Country NASD Rating Price Target (%) 08E 09E 08E 09E CAGR 08E 09E 08E 09E

1 Rodobens Brazil RDNI3 1S R$18.80 R$30.00 62% 11.3 8.8 115% 29% 278% 11.1 9.5 265% 60%2 Vivo ON Brazil VIVO3 1M R$8.89 R$11.60 31% 41.7 23.5 n/m 77% 245% 3.6 2.8 45% 15%3 Vivo PN Brazil VIVO4 1M R$7.66 R$11.00 44% 35.9 20.3 n/m 77% 245% 3.1 2.4 45% 15%4 GP Investments Brazil GPIV11 1H R$14.30 R$15.00 5% 14.9 3.9 -56% 279% 143% n/m n/m n/m n/m5 Gafisa Brazil GFSA3 1H R$23.26 R$57.00 145% 13.6 8.7 49% 57% 110% 12.4 8.5 63% 53%6 G. Pão De Acucar (CBD)Brazil PCAR4 2M R$33.20 R$45.00 37% 18.6 12.3 93% 52% 109% 6.9 5.8 42% 14%7 PDG Brazil PDGR3 1S R$17.00 R$40.00 136% 14.4 8.1 103% 78% 106% 7.2 4.5 114% 70%8 CTEEP Brazil TRPL4 1M R$40.00 R$57.00 59% 7.3 7.6 -5% -4% 102% 5.0 4.8 58% 3%9 Marfrig Brazil MRFG3 1H R$15.35 R$27.00 77% 14.9 9.5 147% 57% 99% 6.0 5.2 102% 33%10 Promotora Ambiental Mexico PASAB 2S P$21.60 P$32.00 48% 23.0 9.7 35% 138% 97% 7.1 4.5 3% 60%11 All Americana Latina Brazil ALLL11 1M R$16.57 R$32.00 94% 21.0 21.4 115% -2% 95% 8.5 7.0 57% 15%12 Irsa Argentina IRS 1M $8.36 $26.00 211% 19.4 2.2 -28% n/m 91% 5.7 4.3 25% 14%13 Cosan Brazil CSAN3 2H R$18.39 R$28.00 52% 59.2 NA -89% n/m 90% 34.7 16.2 -78% 146%14 Lupatech Brazil LUPA3 1H R$53.00 R$84.00 58% 26.7 16.3 n/m 64% 83% 11.2 8.7 196% 27%15 Perdigao Brazil PRGA3 2H R$39.40 R$59.00 51% 19.9 14.8 14% 35% 79% 7.8 6.4 62% 20%16 Totvs Brazil TOTS3 1H R$51.00 R$74.00 47% 29.1 18.7 26% 56% 76% 10.3 8.1 36% 17%17 CSN Brazil CSNA3 1H R$42.70 R$92.00 120% 8.0 6.4 42% 24% 76% 5.2 4.0 69% 24%18 Ecopetrol Colombia ECO 1H CP$2,600 CP$3,200 30% 9.2 7.4 120% 25% 68% 4.0 3.7 94% 1%19 Mexichem Mexico MEXCHEM 1S P$23.50 P$42.33 81% 12.1 7.5 46% 61% 67% 6.4 4.7 81% 48%20 Cementos Lima Peru CEL 2H $11.94 $18.05 56% 12.5 11.6 10% 8% 66% 5.9 5.6 19% 5%21 JBS Brazil JBSS3 1H R$5.23 R$12.00 131% 16.4 11.4 n/m 44% 64% 6.0 3.9 162% 41%22 Gigante Mexico GIGANTE 2S P$15.00 P$20.50 37% 6.2 14.1 -50% -56% 60% 8.3 5.2 0% 17%23 Eletrobrás Brazil ELET6 2H R$22.56 R$29.10 32% 9.1 7.0 81% 29% 56% 8.0 7.0 32% 16%24 Rossi Brazil RSID3 1S R$7.45 R$23.00 212% 6.1 4.3 46% 42% 53% 7.5 5.0 57% 55%25 Cementos Argos Colombia CCB 2H CP$8,010 CP$9,200 15% 31.1 20.2 40% 54% 50% 6.8 5.2 8% 32%26 Cyrela Brazil CYRE3 1M R$18.84 R$35.00 87% 16.1 10.3 -1% 56% 49% 12.9 8.6 23% 46%27 Dufry Brazil DUFB11 1H R$26.98 R$54.00 101% 10.9 9.2 37% 18% 47% 6.7 5.1 32% 18%28 Lojas Renner Brazil LREN3 1H R$26.78 R$42.00 60% 17.2 13.1 22% 31% 45% 8.6 7.0 41% 17%29 B2W Brazil BTOW3 2S R$52.01 R$76.00 46% 56.8 29.0 64% 96% 44% 13.2 10.4 71% 34%30 Masisa Chile MSS 1H C$82 C$130 60% 12.7 9.9 67% 28% 44% 7.4 6.5 17% 11%31 BR Malls Brazil BRML3 1S R$12.70 R$22.00 73% 40.2 28.3 n/m 42% 43% 11.1 8.8 94% 37%32 Duratex Brazil DURA4 1H R$25.00 R$51.00 108% 7.2 6.4 32% 13% 40% 4.5 4.0 49% 9%33 Empresas CMPC Chile CAR 1M C$15,001 C$22,000 49% 14.3 10.0 -13% 43% 40% 9.0 6.9 2% 17%34 Datasul Brazil DSUL3 1H R$8.05 R$11.40 42% 5.2 4.7 22% 10% 39% 1.1 0.6 56% 2%35 Banco Itaú Brazil ITAU4 1M R$30.10 R$44.00 50% 10.7 9.5 18% 13% 39% NA NA n/m n/m36 Ultrapar Partic Brazil UGP 1M $30.50 $91.00 201% 15.3 12.3 84% 24% 37% 8.1 6.2 51% 34%37 Intergroup Peru IFS 2M $18.90 $21.19 15% 14.8 12.2 18% 21% 35% n/a n/a n/m n/m38 Lojas Americanas Brazil LAME4 1S R$9.25 R$16.00 74% 59.7 27.9 10% 114% 34% 9.1 7.3 53% 33%39 Credicorp Peru BAP 1M $73.50 $110.00 53% 12.8 10.7 31% 20% 34% n/a n/a n/m n/m40 Unibanco Brazil UBBR11 1M R$18.29 R$24.50 38% 8.8 7.9 -11% 11% 33% NA NA n/m n/m



10 September 2008


Fund Flows, Volumes and Sentiment

Figure 34. Emerging Market Fund Flows by Region (weekly) Figure 35. Emerging Market Annual and Weekly Fund Flows (US$, mn)

(12)

(10)

(8)

(6)

(4)

(2)

-

2

4

6

8

Jun-07 Aug-07 Nov-07 Feb-08 May-08 Jul-08

Wee

kly F

lows

(US$

bn)

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

% o

f ass

ets

GEMS Latam EMEA Asia ex Total (RHS)

GEMS Latam EMEA Asia ex Total2005 2,037 4,022 5,821 8,390 20,270 2006 4,209 3,319 (1,877) 16,790 22,441 2007 15,223 10,153 (953) 16,405 40,827 YTD 2008 (10,739) (2,427) (103) (13,115) (26,384) % of assets -4.4% -5.0% -0.2% -6.3% -4.7%

Aug-13 (925) (520) (444) 23 (1,866) Aug-20 (758) (509) (198) (451) (1,916) Aug-27 (441) (198) (290) (359) (1,288) Sep-3 (130) (89) (330) 56 (493)

% of assetsAug-13 -0.5% -1.1% -0.8% 0.0% -0.43%Aug-20 -0.4% -1.1% -0.4% -0.3% -0.42%Aug-27 -0.2% -0.4% -0.5% -0.2% -0.29%Sep-3 -0.1% -0.2% -0.6% 0.0% -0.11%

Source: Emerging Portfolio.com Fund Research and Citi Investment Research Source: Emerging Portfolio.com Fund Research and Citi Investment Research

Figure 36. Volumes – Mexico (No. of Shares) Figure 37. Volumes – Chile and Argentina (No. of Shares)

300

400

500

600

700

800

900

Sep-05 Feb-06 Jul-06 Dec-06 Jun-07 Nov-07 Apr-08 Sep-08

Mexican Bolsa

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Sep-05 Feb-06 Jul-06 Dec-06 Jun-07 Nov-07 Apr-08 Sep-08-

10

20

30

40

50

60

70

80

90

100

Chilean IPSA Argentine Merval (R.H. Scale)

Source: Bloomberg and Citi Investment Research Note: 4-week moving average number of shares traded on local index

Source: Bloomberg and Citi Investment Research


10 September 2008


Figure 38. Advance-Decline Monitor Figure 39. MSCI LatAm: Percentage of Stocks Trading above 200-day MA

BrazilMexico

Chile

Peru

Latin America

9,800

10,200

10,600

11,000

11,400

11,800

Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08

17%

66%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Note: Weekly stocks advancing (+) or declining (-) on local indices

Source: Bloomberg and Citi Investment Research

Source: MSCI, Datastream and Citi Investment Research

Figure 40. Wall Street Sentiment of Latin America (% of Buys ) Figure 41. Percentage of Buys less Percentage of Sells

52%

54%

56%

58%

60%

62%

64%

66%

68%

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08

30%

35%

40%

45%

50%

55%

60%

65%

Energy ConsumerDiscr.

Materials Industrials Financials Utilities LatinAmerica

Cons.Staples

Telecom

Aug-08 Sep-08

Bottom-up percentage of 'Buy' recommendations for MSCI Latin America

Source: MSCI, Bloomberg and Citi Investment Research

'Buy' minus 'Sell' recommendations

Source: MSCI, Bloomberg and Citi Investment Research


10 September 2008


Breadth of Gains/Losses

Figure 42. MSCI Brazil: Percentage of Stocks Trading above 200-day MA Figure 43. MSCI Mexico: Percentage of Stocks Trading above 200-day MA

7%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008

31%

67%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: MSCI, Datastream and Citi Investment Research Source: MSCI, Datastream and Citi Investment Research

Figure 44. MSCI Chile: Percentage of Stocks Trading above 200-day MA Figure 45. MSCI Argentina: Percentage of Stocks Trading above 200-day MA

46%

61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008

0%

61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: MSCI, Datastream and Citi Investment Research Source: MSCI, Datastream and Citi Investment Research


10 September 2008


Macro Analysis


10 September 2008


Global Drivers

Figure 46. G7 Leading Economic Indicator and MSCI Latin America Figure 47. G7 LEI (Actual and Forecasted) and MSCI GEMs Index

(6)

(4)

(2)

-

2

4

6

8

10

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

400

800

1,200

1,600

2,000

2,400

2,800

3,200

3,600

4,000

4,400

4,800

5,200

G7 LEI (YoY, %) MSCI Latin America (R.H. Scale)

-6%

-4%

-2%

0%

2%

4%

6%

8%

95 96 97 98 99 00 01 02 03 04 05 06 07 08

200

400

600

800

1,000

1,200

1,400

G7 LEI, Actual (Y/Y) G7 LEI, CIR Forecast (Y/Y) MSCI GEMs (R.H. Scale)

Encouraging forecast

Discouraging LEI

Source: Datastream and Citi Investment Research Note: Forecasted G7 LEI using proprietary global monetary growth model.

Source: Datastream and Citi Investment Research

Figure 48. Latin American Economic Forecasts

Real GDP Growth (%) Inflation (%) Fiscal Balance (% of GDP) Current Balance (% of GDP) Exchange Rates

2007 2008E 2009E 2007 2008E 2009E 2007 2008E 2009E 2007E 2008E 2009E 2007A 2008E 2009E

Real GDP Growth (%)

Brazil 5.4 5.2 3.5 4.5 6.6 4.8 (1.7) (1.5) (1.2) 0.1 (1.9) (2.5) 1.77 1.60 1.70 Mexico 3.2 2.2 2.8 3.8 5.5 3.7 - - - (0.5) (0.6) (0.7) 10.85 10.25 10.45 Chile 5.1 4.3 4.4 7.8 7.8 4.4 8.6 6.5 4.8 3.8 (0.3) (3.2) 499 500 550 Argentina 8.7 6.6 2.5 8.5 9.9 12.2 0.2 1.0 (0.5) 2.8 3.0 3.1 3.15 3.15 3.65 Peru 8.5 9.3 6.5 3.9 6.0 3.6 - - - 1.5 (0.8) (1.2) 3.00 2.70 2.50 Colombia 8.2 5.0 4.5 5.7 7.0 5.5 (3.0) (2.8) (2.7) (3.0) (2.6) (2.9) 2,015 1,850 1,950 Latin America 5.3 4.4 3.4 4.8 6.6 5.1 (0.5) (0.4) (0.5) 0.2 (1.0) (1.5) n/a n/a n/a

Source: Citi Economic and Market Analysis


10 September 2008


Fixed Income

Figure 49. MSCI-Weighted EMBI+ Latin America Spread over Treasuries Figure 50. Sovereign Debt Spreads

243

6/1/2007, 122 -

200

400

600

800

1,000

1,200

1,400

2001 2002 2003 2004 2005 2006 2007 2008

Markets

EMBI

Plus

Latin

America Argentina Brazil Colombia Mexico Peru

Rating (S&P) B BBB- BB+ BBB+ BBB-Current spread 329 359 743 268 248 201 231

Widening in Spring Sell-Offs (Bps)

Feb 22-Mar 5, 2007 28 28 38 26 30 19 19 Spring 2006 56 56 75 58 80 40 24 Spring 2005 74 88 580 102 100 58 73 Spring 2004 153 188 53 272 244 86 214

Recent Widening (Contraction)

1 Week 22 26 64 21 18 11 16 1 Month 42 43 74 42 33 36 47 3 months prior 73 91 200 73 75 62 76

Minimum 149 162 185 138 95 71 95 Avg since 2001 332 397 2,521 412 307 163 246

Source: JP Morgan, Datastream and Citi Investment Research Source: JP Morgan, Datastream and Citi Investment Research

Figure 51. Latin America: MSCI Earnings Yield and MSCI Wtd Bond Yield Figure 52. U.S. 10-year Treasury and EMBI+ LatAm Bond Yields

6.09%

7.79%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

2001 2002 2003 2004 2005 2006 2007 2008

MSCI-Weighted LatAm USD Sov Yield MSCI LatAm Earnings Yield

7.34

3.57

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008

(%)

EMBI+ Latin America Blended Yield

US 10-year

Source: MSCI, JP Morgan, Datastream and Citi Investment Research Source: MSCI, JP Morgan, Datastream and Citi Investment Research


10 September 2008


Currencies

Figure 53. Brazilian Real (Spot, 50- and 200-day Moving Average) Figure 54. Mexican Peso (Spot, 50- and 200-day Moving Average)

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20

2.30


BRL Spot 50-day Moving Average 200-day

9.8

10.0

10.2

10.4

10.6

10.8

11.0

11.2

11.4


MXN Spot 50-day Moving Average 200-day


Figure 55. Chilean Peso (Spot, 50- and 200-day Moving Average) Figure 56. Colombian Peso (Spot, 50- and 200-day Moving Average)

410

430

450

470

490

510

530

550

570


CLP Spot 50-day Moving Average 200-day

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500


COP Spot 50-day Moving Average 200-day

Colombia imposes capital controls (May '07)

Colombia removes capital controls (Sept '08)



10 September 2008


Commodities

Figure 57. CRB Index (Spot, 50- and 200-day Moving Average) Figure 58. Oil (Spot, Forecast, 50- and 200-day Moving Average)

240

280

320

360

400

440

480

520

560

600

640

2004 2005 2006 2007 2008CRB Index 50-day Moving Average 200-day

-

20

40

60

80

100

120

140

160

2004 2005 2006 2007 2008

Brent Oil, $/bbl, spot Citi 12m forecast 50-day Moving Average 200-day


Figure 59. Copper (Spot, Forecast, 50- and 200-day Moving Average) Figure 60. Gold (Spot, Forecast, 50- and 200-day Moving Average)

-

1.0

2.0

3.0

4.0

5.0

6.0

2004 2005 2006 2007 2008

Copper, $/lb, spot Citigroup 12m forecast 50-day Moving Average 200-day

300

400

500

600

700

800

900

1,000

2004 2005 2006 2007 2008

Gold, $/oz, spot Citigroup 12m forecast 50-day Moving Average 200-day



10 September 2008


Country Pages


10 September 2008


Brazil

Figure 61. Brazil: Nominal and Real Interest Rates and Inflation Figure 62. Brazil: Private Sector Inflation Expectations

2

6

10

14

18

22

26

30

2000 2001 2002 2003 2004 2005 2006 2007 2008

2

6

10

14

18

22

26

30

Inflation Real Interest Rate Brazil Selic Target Rate

+1

-1

%

3.4

3.8

4.2

4.6

5.0

5.4

5.8

6.2

6.6

7.0

2006 2007 2008

2008 Inflation Expectations 2009 Forecast

%


Figure 63. Brazil: Industrial Production and Retail Sales Figure 64. Brazil: Trade Balance, Imports and Exports

-15%

-10%

-5%

0%

5%

10%

15%

2001 2002 2003 2004 2005 2006 2007 2008

Industrial Production (Y/Y, 3m MA) Retail Sales (Y/Y, 3m MA)

-2000

-1000

0

1000

2000

3000

4000

5000

6000

7000

98 99 00 01 02 03 04 05 06 07 08-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Trade Balance Exports (3mo MA Y/Y) Import Growth (3mo MA Y/Y)

USD mn



10 September 2008


Brazil – Valuations

Figure 65. Forward Price-to-Earnings Figure 66. Trailing Price-to-Book

4x

6x

8x

10x

12x

14x

16x

18x

99 00 01 02 03 04 05 06 07 08-80%

-40%

0%

40%

80%

120%

12mth MSCI Return P/E +1 S.D. -1 S.D.

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2001 2002 2003 2004 2005 2006 2007 2008

Brazil Latin America

(x)

Source: MSCI, Datastream and Citi Investment Research Source: MSCI, FactSet and Citi Investment Research

Figure 67. Local Equity Yield and Bond Yield Compared Figure 68. Equity Yield (USD) and EMBI+ Bond Yield Compared

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2001 2002 2003 2004 2005 2006 2007 2008

Bovespa Trailing Earnings Yield 3yr Swap Pre x DI

Small / Negative Earnings

0%

5%

10%

15%

20%

25%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

EMBI+ Brazil Bond Yield (USD) IFC/S&P Brazil Earnings Yield (USD)

Source: Bloomberg and Citi Investment Research Source: Bloomberg, JP Morgan, Datastream and Citi Investment Research

Latin

Am

eric

a S

trate

gy C

hartb

ook

10 September 2008

Citig

roup G

lobal M

ark

ets

Equity R

ese

arc

h29

Brazil – Stocks

Figure 69. Brazilian Companies' Ratings, Valuations, Performance and Expected Total Returns

Tickers 10-Sep 52-week Total Return Price ETR EPS/EPADR EPS Growth P/E (x) EBITDA Growth EV/EBITDA (x) P/BV (x) Div Mkt CapIndustry Company NASD Rating Price Low High 4 Week YTD Target (%) 07A 08E 07A 08E 07A 08E 07A 08E 07A 08E 07A Yld US$, mnBrazil (77)Energy Petroleo Brasileiro PETR4 1M R$28.35 R$26.69 R$53.68 -20% -36% R$50.00 81% R$2.45 R$4.07 -17% 66% 11.6 7.0 10% 53% 5.4 4.1 2.18 4.3% $140,455

Petroleo Brasileiro PETR3 1M R$34.32 R$31.16 R$63.90 -21% -34% R$59.00 75% R$2.45 R$4.07 -17% 66% 14.0 8.4 10% 53% 6.4 4.9 2.64 3.6% $170,032Lupatech LUPA3 1H R$53.00 R$42.93 R$64.99 -1% -12% R$84.00 58% ($0.36) R$1.98 n/m n/m NA 26.7 84% 196% 27.5 11.2 9.44 0.0% $1,369

Renewable EnergyCosan CSAN3 2H R$18.39 R$18.39 R$34.15 -33% -12% R$28.00 52% R$2.77 R$0.31 n/m -89% 6.6 59.2 90% -78% 6.6 34.7 2.12 0.0% $2,820Sao Martinho SMTO3 2H R$20.01 R$18.62 R$30.29 -21% -1% R$26.00 30% R$0.59 ($0.42) -73% n/m 33.7 NA 15% -37% 10.9 21.5 1.35 0.0% $1,277Ecodiesel ECOD3 2S R$1.95 R$1.55 R$13.15 7% -72% R$4.00 105% ($0.30) ($0.31) n/m n/m nmf NA n/m n/m nmf 23.2 0.80 0.0% $139

Financials Bradesco BBDC4 2M R$29.75 R$28.76 R$41.63 -1% -19% R$33.50 16% R$2.39 R$2.72 12% 14% 12.4 10.9 n/m n/m NA NA 2.97 3.5% $51,569Banco Itaú ITAU4 1M R$30.10 R$29.33 R$52.37 -4% -32% R$44.00 50% R$2.39 R$2.82 9% 18% 12.6 10.7 n/m n/m NA NA 3.11 3.8% $50,398Unibanco UBBR11 1M R$18.29 R$18.00 R$28.00 -4% -23% R$24.50 38% R$2.34 R$2.08 93% -11% 7.8 8.8 n/m n/m NA NA 2.16 4.4% $14,422Banco do Brasil BBAS3 1M R$21.49 R$21.16 R$32.78 -8% -27% R$28.00 34% R$2.30 R$2.54 54% 10% 9.3 8.5 n/m n/m NA NA 2.19 4.1% $30,848Nossa Caixa BNCA3 2S R$35.20 R$20.78 R$46.00 -12% 52% R$48.00 41% ($0.71) R$0.29 n/m n/m NA 120.2 n/m n/m NA NA 1.36 5.0% $2,127GP Investments GBIV11 1H R$14.30 R$12.45 R$21.74 -3% -25% R$15.00 5% R$1.24 R$0.54 307% -56% 6.5 14.9 n/m n/m NA NA 2.12 0.0% $1,468

Cons. Staples AmBev ABV 1M $57.01 $56.26 $88.77 -8% -17% $88.00 61% $2.31 $2.90 16% 25% 24.6 19.7 30% 27% 8.8 7.2 3.58 6.9% $34,987G. Pão De Acucar PCAR4 2M R$33.20 R$26.50 R$41.72 -2% -2% R$45.00 37% R$0.93 R$1.78 23% 93% 35.9 18.6 30% 42% 8.0 6.9 1.51 1.3% $4,282Natura Cosmeticos NATU3 2H R$16.77 R$14.44 R$25.91 -17% 4% R$23.00 43% R$1.08 R$1.11 0% 3% 15.5 15.1 20% 25% 10.3 9.5 10.60 6.0% $4,060Hypermarcas HYPE3 1M R$15.10 R$14.00 R$24.95 -3% n/a R$32.00 112% R$0.48 R$0.06 n/m -87% 31.5 248.4 327% 121% 9.6 2.3 2.68 0.0% $1,048Perdigao PRGA3 2H R$39.40 R$34.02 R$54.98 -2% -9% R$59.00 51% R$1.73 R$1.98 145% 14% 22.8 19.9 170% 62% 11.1 7.8 2.27 1.5% $4,595Sadia SDIA4 1H R$10.24 R$8.48 R$14.39 -4% 3% R$16.00 59% R$1.01 R$1.03 82% 2% 10.1 10.0 87% 32% 8.2 7.6 2.40 3.1% $3,947JBS JBSS3 1H R$5.23 R$4.26 R$10.30 -24% -13% R$12.00 131% ($0.15) R$0.32 n/m n/m NA 16.4 17% 162% 15.0 6.0 1.84 1.5% $3,856Marfrig MRFG3 1H R$15.35 R$12.85 R$24.30 -14% 1% R$27.00 77% R$0.42 R$1.03 30% 147% 36.9 14.9 72% 102% 9.7 6.0 2.44 1.6% $1,768Minerva BEEF3 1H R$6.90 R$6.80 R$19.75 -9% -36% R$14.00 106% R$0.46 R$0.85 -35% 83% 14.9 8.1 11% 64% 6.6 5.0 0.98 2.9% $292

Consumer Disc. Lojas Americanas LAME4 1S R$9.25 R$9.10 R$20.50 -9% -40% R$16.00 74% R$0.14 R$0.15 -16% 10% 65.4 59.7 77% 53% 10.5 9.1 23.28 0.5% $3,800Lojas Renner LREN3 1H R$26.78 R$26.01 R$46.48 -9% -24% R$42.00 60% R$1.28 R$1.56 57% 22% 20.9 17.2 74% 41% 10.6 8.6 5.59 3.4% $1,838Guararapes GUAR3 2H R$30.89 R$30.39 R$94.60 -17% -50% R$62.00 104% R$3.79 R$3.85 7% 2% 8.2 8.0 17% 26% 5.0 4.5 1.54 3.0% $1,088Springs Global SGPS3 2S R$8.00 R$7.47 R$26.00 -13% -64% R$21.70 171% ($3.98) ($0.04) n/m n/m NA NA -48% 165% 14.3 5.5 0.37 0.0% $391Dufry DUFB11 1H R$26.98 R$21.00 R$57.40 12% -40% R$54.00 101% R$1.02 R$1.40 95% 37% 14.9 10.9 86% 32% 9.4 6.7 1.65 0.8% $990

Homebuilding Rodobens RDNI3 1S R$18.80 R$17.50 R$25.35 2% -11% R$30.00 62% R$0.77 R$1.66 n/m 115% 24.3 11.3 336% 265% 31.5 11.1 1.68 2.2% $516Gafisa GFSA3 1H R$23.26 R$21.28 R$42.00 -4% -29% R$57.00 145% R$1.15 R$1.71 149% 49% 20.2 13.6 113% 63% 16.9 12.4 1.95 0.0% $1,690Cyrela CYRE3 1M R$18.84 R$17.40 R$32.00 -13% -22% R$35.00 87% R$1.19 R$1.17 60% -1% 15.8 16.1 123% 23% 13.3 12.9 3.24 1.6% $3,783Rossi RSID3 1S R$7.45 R$7.39 R$30.05 -32% -66% R$23.00 212% R$0.84 R$1.23 15% 46% 8.8 6.1 191% 57% 8.8 7.5 1.10 3.2% $663Brascan BISA3 1S R$6.00 R$5.85 R$14.45 -11% -44% R$19.00 221% R$0.84 R$0.90 210% 8% 7.2 6.6 36% 64% 5.0 4.7 0.94 3.9% $627PDG PDGR3 1S R$17.00 R$16.20 R$28.70 -15% -32% R$40.00 136% R$0.58 R$1.18 0% 103% 29.3 14.4 241% 114% 13.8 7.2 1.84 0.7% $1,401

Bldg Materials Duratex DURA4 1H R$25.00 R$22.07 R$60.99 5% -41% R$51.00 108% R$2.62 R$3.46 18% 32% 9.5 7.2 34% 49% 5.8 4.5 2.11 4.4% $1,831Satipel SATI3 1S R$8.50 R$8.00 R$13.99 -7% -28% R$17.00 101% R$0.52 R$1.12 n/m 116% 16.3 7.6 86% 110% 8.3 4.5 1.93 1.4% $526

Real Estate BR Malls BRML3 1S R$12.70 R$11.15 R$27.20 -5% -47% R$22.00 73% ($0.41) R$0.32 n/m n/m NA 40.2 166% 94% 16.3 11.1 1.22 0.0% $1,228Media Universo Online UOLL4 2S R$6.60 R$6.20 R$14.79 -7% -45% R$11.50 74% R$0.91 R$0.81 18% -11% 7.2 8.1 26% 4% 2.4 2.3 1.24 0.0% $448Internet Retail B2W BTOW3 2S R$52.01 R$49.46 R$94.90 n/a -27% R$76.00 46% R$0.56 R$0.92 -68% 64% 93.2 56.8 n/m 71% 17.1 13.2 18.06 0.0% $3,245Chemicals Braskem BAK 2H $11.60 $11.45 $20.25 -23% -24% $16.00 42% $1.21 $0.84 122% -31% 8.5 NA 60% -10% 3.4 4.6 0.81 4.0% $2,522

Ultrapar Partic UGP 1M $53.69 $52.19 $75.98 -9% -11% $91.00 72% $1.91 $3.51 -45% 84% 28.1 15.3 71% 51% 10.1 8.1 1.59 2.4% $4,124Unipar UNIP6 3S R$1.32 R$1.32 R$2.24 -8% -24% R$1.55 21% R$0.17 R$0.39 60% 127% 7.6 3.3 44% -1% 6.2 10.2 0.90 3.8% $623


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Figure 70. Brazilian Companies' Ratings, Valuations, Performance and Expected Total Returns

Tickers 10-Sep 52-week Total Return Price ETR EPS/EPADR EPS Growth P/E (x) EPS Growth EV/EBITDA (x) P/BV (x) Div Mkt CapIndustry Company NASD Rating Price Low High 4 Week YTD Target (%) 07E 08E 07E 08E 07E 08(E)x 07E 08E 07E 08(E)x 06 Yld US$ MNMetals Vale (Pref) RIO_p 1M $18.76 $18.55 $35.96 -22% -32% $39.00 113% $2.39 $2.99 76% 25% 7.8 6.3 72% 48% 6.9 4.4 2.72 5.3% $90,656

Vale (Ord) RIO 1M $20.96 $20.85 $44.10 -24% -35% $46.00 124% $2.39 $2.99 76% 25% 8.8 7.0 72% 48% 7.6 4.8 3.04 4.8% $101,287Metals Usiminas USIM5 1H R$43.20 R$43.00 R$95.80 -22% -17% R$99.00 134% R$6.43 R$7.83 26% 22% 6.7 5.5 28% 46% 4.0 2.9 1.72 4.6% $12,040

CSN CSNA3 1H R$42.70 R$37.33 R$86.30 -22% -15% R$92.00 120% R$3.78 R$5.36 150% 42% 11.3 8.0 73% 69% 7.8 5.2 4.37 4.7% $19,390Gerdau GGBR4 1H R$23.11 R$20.61 R$42.65 -23% -8% R$39.00 74% R$2.68 R$3.75 23% 40% 8.6 6.2 34% 73% 6.8 4.9 2.41 5.4% $18,535

Paper & Pulp Aracruz Celulose ARA 1M $51.08 $49.75 $92.22 -12% -28% $92.00 86% $4.09 $4.07 -7% -1% 12.5 12.6 8% 5% 7.6 7.6 2.97 5.8% $5,266Klabin KLBN4 3H R$4.38 R$4.28 R$7.75 -9% -30% R$6.50 53% R$0.68 R$0.46 31% -33% 6.5 9.6 17% 36% 7.4 7.2 1.47 4.6% $2,270Suzano Papel SUZB5 1H R$19.38 R$19.01 R$31.00 -12% -33% R$37.00 96% R$1.72 R$1.92 22% 12% 11.3 10.1 24% 45% 8.8 6.9 1.39 4.9% $3,439VCP VCP 1H $19.34 $19.32 $35.06 -11% -35% $41.00 116% $2.44 $1.49 34% -39% 7.9 12.9 -5% 5% 10.7 10.8 1.35 3.5% $3,948

Industrials ALL ALLL11 1M R$16.57 R$15.86 R$28.39 -13% -28% R$32.00 94% R$0.37 R$0.79 179% 115% 45.1 21.0 39% 57% 11.7 8.5 3.76 0.8% $5,396OHL Brasil OHLB3 2S R$24.29 R$16.22 R$38.58 -6% 9% R$31.00 30% R$1.09 R$2.11 -24% 94% 22.3 11.5 54% 43% 5.2 5.3 2.34 2.1% $945CCR CCRO3 2M R$27.57 R$21.70 R$39.90 -5% 6% R$36.00 35% R$1.45 R$1.87 7% 29% 19.0 14.7 35% 35% 8.4 7.1 6.87 4.5% $6,275Embraer ERJ 1S $31.05 $24.32 $50.41 -5% -30% $55.00 81% $2.64 $2.78 26% 5% 11.8 11.2 48% 7% 9.7 8.6 2.56 3.8% $5,694Gol Linhas Aereas GOL 3S $8.13 $7.62 $28.16 -6% -67% $8.50 5% $0.26 ($0.41) -81% n/m 31.5 NA -86% n/m 24.3 n/m 1.21 0.0% $1,643Tam TAM 1H $20.39 $14.75 $30.04 4% -14% $40.00 100% $1.76 $2.19 -30% 24% 11.6 9.3 -40% 62% 11.5 8.1 2.78 3.6% $3,070

Technology Totvs TOTS3 1H R$51.00 R$39.00 R$68.90 -3% -12% R$74.00 47% R$1.40 R$1.75 128% 26% 36.6 29.1 137% 36% 12.7 10.3 3.81 2.2% $769Datasul DSUL3 1H R$8.05 R$7.45 R$24.75 4% -45% R$11.40 42% R$1.27 R$1.54 63% 22% 6.4 5.2 108% 56% 1.5 1.1 1.06 0.0% $132Positivo POSI3 2S R$9.39 R$9.05 R$49.50 -24% -77% R$17.00 84% R$2.89 R$3.01 66% 4% 3.2 3.1 79% 13% 2.7 2.9 1.56 3.4% $463

Telecom TIM Partic. ON TCSL3 1H R$6.05 R$4.80 R$12.05 9% -28% R$8.10 34% R$0.30 R$0.24 120% -17% 20.4 24.7 32% 16% 5.3 5.4 1.82 0.2% $8,007TIM Partic. PN TCSL4 1H R$3.52 R$3.41 R$8.18 -1% -40% R$4.90 40% R$0.30 R$0.24 120% -17% 11.9 14.4 32% 16% 3.3 3.4 1.06 0.3% $4,659Vivo ON VIVO3 1M R$8.89 R$8.31 R$15.50 1% -34% R$11.60 31% ($0.07) R$0.21 n/m n/m NA 41.7 35% 45% 4.9 3.6 1.55 0.3% $7,400Vivo PN VIVO4 1M R$7.66 R$7.40 R$13.20 -2% -19% R$11.00 44% ($0.07) R$0.21 n/m n/m NA 35.9 35% 45% 4.4 3.1 1.33 0.4% $6,376

Utilities Eletrobrás ELET6 2H R$22.56 R$20.65 R$28.10 -7% 5% R$29.10 32% R$1.37 R$2.48 -33% 81% 16.5 9.1 8% 32% 9.6 8.0 0.36 3.2% $14,425Cemig CMIG4 1M R$31.40 R$27.31 R$42.15 -13% 2% R$49.60 66% R$3.57 R$3.52 1% -1% 8.8 8.9 29% 4% 5.9 6.3 1.82 7.9% $8,625Eletropaulo ELPL6 2M R$25.75 R$25.60 R$40.75 -17% -20% R$42.00 76% R$4.28 R$3.50 92% -18% 6.0 7.4 -10% -2% 3.7 4.0 1.30 12.9% $2,433Copel CPLE6 2M R$24.60 R$23.80 R$34.63 -17% -4% R$35.00 48% R$4.04 R$3.30 -11% -18% 6.1 7.5 43% -11% 3.9 4.8 0.93 5.8% $3,801Cesp CESP6 1M R$19.50 R$19.50 R$49.78 -29% -55% R$40.50 108% R$0.55 R$1.03 n/m 90% 35.8 18.8 16% 19% 9.9 9.0 0.62 0.0% $3,606AES Tietê GETI4 1M R$14.85 R$13.26 R$18.84 -7% -3% R$22.70 64% R$1.59 R$1.69 -1% 6% 9.3 8.8 16% 18% 5.5 5.2 11.30 11.0% $3,197CTEEP TRPL4 1M R$40.00 R$35.50 R$55.99 -14% 12% R$57.00 59% R$5.73 R$5.46 n/m -5% 7.0 7.3 56% 58% 6.7 5.0 1.51 16.5% $3,372Tractebel TBLE3 2M R$18.45 R$18.20 R$26.00 -7% -6% R$26.70 54% R$1.60 R$1.83 7% 14% 11.5 10.1 41% 33% 7.2 6.3 4.28 9.5% $6,800EDP ENBR3 1M R$24.75 R$21.82 R$35.50 -19% -10% R$41.10 73% R$2.67 R$3.53 12% 32% 9.3 7.0 27% 12% 4.8 4.7 1.04 7.3% $2,306Terna TRNA11 2M R$24.00 R$23.00 R$37.30 -17% -17% R$35.20 58% R$2.44 R$2.85 47% 17% 9.8 8.4 15% 38% 6.8 5.7 1.53 11.5% $1,189CPFL CPFE3 2M R$30.80 R$28.95 R$42.98 -10% 0% R$40.40 40% R$3.43 R$2.76 17% -20% 9.0 11.2 41% -1% 4.7 5.5 2.98 8.5% $8,344Equatorial EQTL3 1M R$13.25 R$13.24 R$19.70 n/a n/a R$26.80 119% R$2.30 R$2.24 23% -3% 5.8 5.9 45% 14% 4.5 3.8 1.23 16.5% $790

Enviro. Services Sabesp SBSP3 2H R$32.89 R$32.88 R$50.45 -14% -18% R$53.50 69% R$4.60 R$6.38 -83% 39% 7.1 5.2 31% 22% 5.0 4.6 0.77 6.2% $4,231Copasa CSMG3 1H R$21.95 R$21.41 R$34.90 -13% -8% R$40.00 87% R$2.86 R$3.83 -8% 34% 7.7 5.7 8% -25% 3.9 3.4 0.72 4.4% $1,427



10 September 2008


Mexico

Figure 71. Mexico: Retail Sales, Industrial Production and Exports Figure 72. Mexico: U.S. Imports from Mexico, China, Canada and Japan

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Figure 73. Oil Prices: Mexican Crude Mix vs. WTI Figure 74. Mexico: 28-day Cetes Interest Rates and Inflation

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10 September 2008


Mexico – Valuations


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Figure 77. Local Equity Yield and Bond Yield Compared Figure 78. Equity Yield (USD) and EMBI+ Bond Yield Compared

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Mexico – Stocks

Figure 79. Mexican Companies' Ratings, Valuations, Performance and Expected Total Returns

Tickers 10-Sep 52-week Total Return Price ETR EPS/EPADR EPS Growth P/E (x) EBITDA Growth EV/EBITDA (x) P/BV (x) Div Mkt CapIndustry Company NASD Rating Price Low High 4 Week YTD Target (%) 07A 08E 07A 08E 07A 08E 07A 08E 07A 08E 07A Yld US$, mnMexico (35)Financials G. Financiero Banorte GFNORTEO 3M P$40.13 P$39.51 P$52.29 -4% -11% P$47.00 19% P$3.37 P$3.68 14% 9% 11.9 10.9 n/m n/m NA NA 2.44 1.4% $7,666Cons. Staples Alsea SA de CV ALSEA 1H P$11.00 P$10.40 P$18.91 -4% -27% P$16.50 51% P$0.77 P$0.36 -48% -53% 14.3 30.5 17% -2% 6.5 7.4 2.29 0.6% $649

Coca-Cola Femsa KOF 2M $59.04 $38.40 $63.77 -4% 21% $66.00 13% $3.43 $4.39 40% 28% 17.2 13.5 17% 21% 9.2 7.5 2.42 1.1% $10,902Embotelladoras Arca ARCA 1M P$35.50 P$32.50 P$42.75 0% -2% P$48.00 42% P$3.10 P$3.49 12% 12% 11.5 10.2 11% 13% 6.2 5.7 2.28 6.7% $2,708Femsa FMX 1M $45.85 $29.40 $49.83 -3% 21% $60.00 32% $2.83 $2.65 66% -6% 16.2 17.3 9% 20% 8.4 7.1 2.77 1.1% $16,406Gruma GRUMAB 1H $28.19 $24.56 $39.54 -5% -22% $41.00 48% $4.49 $2.67 46% -41% 6.3 10.5 3% 43% 7.6 5.4 0.86 2.7% $1,503Grupo Bimbo BIMBOA 2M P$66.50 P$54.80 P$71.98 -1% 3% P$76.00 15% P$3.23 P$3.92 9% 21% 20.6 17.0 11% 14% 9.3 8.2 2.80 0.7% $7,401Grupo Continental CONTAL 2M P$25.00 P$22.22 P$29.10 -3% 4% P$28.50 23% P$2.14 P$2.24 0% 5% 11.7 11.1 6% 14% 6.3 5.5 2.25 8.5% $1,775G. Industrial Maseca MASECAB 3H P$9.00 P$8.00 P$10.75 1% -13% P$8.50 -2% P$0.61 P$0.64 -3% 4% 14.7 14.2 -3% 5% 7.7 7.4 1.21 3.7% $782Grupo Modelo GMODELOC 2L $4.56 $4.01 $5.69 -5% -2% $5.30 21% $0.27 $0.27 9% -1% 17.0 17.2 25% 2% 9.0 9.0 2.56 4.4% $14,767Industrias Bachoco IBA 3S $27.70 $25.26 $33.50 -4% -11% $30.00 10% $2.46 $0.93 49% -62% 11.2 29.8 8% -38% 5.8 9.9 1.01 1.3% $1,385

Retail Walmex WALMEXV 1L P$38.46 P$34.26 P$47.19 1% n/m P$50.00 32% P$1.68 P$1.83 16% 9% 22.9 21.0 15% 15% 14.0 12.9 4.89 1.8% $30,751Comerci COMEUBC 1M P$24.40 P$23.90 P$35.20 -16% -11% P$36.50 50% P$2.35 P$1.92 38% -18% 10.4 12.7 15% 16% 6.8 6.6 1.19 0.7% $2,508Grupo Famsa GFAMSAA 1H P$27.25 P$25.60 P$50.50 -3% -20% P$51.00 87% P$1.58 P$2.10 1% 33% 17.3 13.0 9% 17% 8.2 7.9 1.39 0.0% $852Soriana SORIANAB 2M P$30.25 P$23.69 P$40.00 -14% 6% P$44.00 46% P$1.74 P$1.64 17% -6% 17.4 18.4 16% 36% 9.6 8.4 1.99 0.6% $5,154Gigante GIGANTE 2S P$15.00 P$15.00 P$32.01 -6% -14% P$20.50 37% P$4.79 P$2.40 n/m -50% 3.1 6.2 -19% 0% 10.7 8.3 0.81 0.0% $1,403Elektra ELEKTRA 3H P$390.00 P$205.2 P$493.7 -3% 19% P$335.0 -14% P$27.08 P$22.98 42% -15% 14.4 17.0 4% 30% 16.6 12.8 4.92 0.5% $9,063

Cement & Const. Consorcio Ara ARA 3S P$7.90 P$7.50 P$16.35 -2% -33% P$10.00 29% P$1.02 P$1.11 0% 9% 7.8 7.1 8% 10% 4.4 4.5 1.21 2.2% $980Corporacion Geo GEOB 1H P$30.26 P$26.40 P$59.99 -3% -4% P$48.00 59% P$2.70 P$3.21 -3% 19% 11.2 9.4 17% 25% 4.5 3.9 2.07 0.0% $1,540Desarrolladora Homex HOMEX 1M P$86.70 P$81.00 P$122.00 1% -4% P$135.0 56% P$6.53 P$8.38 64% 28% 13.3 10.3 29% 24% 7.9 6.9 3.04 0.0% $2,756Sare Holding SAREB 2S P$7.75 P$7.40 P$19.20 -9% -48% P$10.00 29% P$1.27 P$1.41 26% 11% 6.1 5.5 26% 14% 4.8 4.6 0.88 0.0% $280Urbi Des. Urbanos URBI 1M P$25.97 P$25.50 P$43.21 -6% -31% P$40.00 54% P$1.95 P$2.25 26% 15% 13.3 11.5 27% 21% 7.9 6.8 1.90 0.0% $2,400G. Cementos Chihuahua GCC 3H P$44.40 P$41.99 P$72.00 -11% -35% P$46.00 5% P$5.22 P$4.40 117% -16% 8.5 10.1 15% 2% 7.0 7.5 1.39 1.0% $1,376Corporacion Moctezuma CMOCTEZ 1M P$25.50 P$21.39 P$36.00 6% -1% P$30.00 21% P$1.96 P$2.03 8% 4% 13.0 12.5 7% 5% 7.2 6.9 2.54 3.8% $2,134Cemex CX 1H $20.42 $19.45 $33.40 n/a n/a $37.00 88% $3.22 $2.88 -3% -10% 6.3 7.1 11% 12% 8.8 7.2 1.03 6.9% $15,874Empresas ICA ICA 2H $46.00 $45.25 $76.00 -1% -36% $67.00 46% ($1.94) $0.76 n/m n/m NA 60.8 -7% 37% 14.3 11.4 1.58 0.0% $2,167

Media Televisa TV 1M $23.40 $19.57 $28.11 -4% 0% $30.00 30% $1.31 $1.45 -5% 10% 17.8 16.2 7% 18% 8.2 6.7 3.91 2.1% $13,185TV Azteca TVAZTCACPO 2H P$6.70 P$5.64 P$7.00 -1% 2% P$8.0 21% P$0.35 P$0.25 -52% -29% 19.2 27.0 -5% 3% 6.2 6.0 4.56 1.3% $1,863Grupo Radio Centro RC 3S $11.35 $8.57 $14.30 2% -7% $14.00 27% $0.56 $0.32 n/m -43% 22.8 40.2 -36% -24% 8.9 12.2 1.48 3.5% $196

Chemicals Mexichem MEXCHEM 1S P$23.60 P$11.33 P$30.08 11% 63% P$42.3 80% P$1.33 P$1.94 71% 46% 17.7 12.1 83% 81% 9.7 6.4 4.03 1.0% $3,678Industrials Asur (Sureste) ASURB 1H $49.50 $43.57 $63.54 1% -16% $75.00 55% $1.60 $3.30 -2% 107% 31.0 15.0 28% 21% 5.4 4.7 1.12 3.1% $1,485

GAP (Pacifico) PAC 3S $27.30 $24.62 $58.02 -4% -36% $30.00 15% $2.29 $2.05 55% -11% 11.9 13.3 18% 5% 8.5 8.3 nm 5.1% $1,532OMA (Centro Norte) OMAB 1S $14.14 $14.01 $31.45 -12% -40% $22.00 61% $0.06 $1.21 -93% n/m 246.9 11.7 19% 11% 1.0 0.5 1.03 5.7% $700IDEAL (Impulsora del Des IDEAL1 3S P$14.20 P$12.00 P$18.60 5% -1% P$13.00 -8% P$0.32 P$0.25 n/m -23% 44.5 57.9 47% 14% 34.8 35.6 4.29 0.0% $4,032

Enviro. Services Promotora Ambiental PASAB 2S P$21.60 P$20.30 P$38.76 -4% -36% P$32.00 48% P$0.70 P$0.94 131% 35% 31.0 23.0 61% 3% 6.6 7.1 1.72 0.0% $274



10 September 2008


Chile

Figure 80. Chile: Interest Rates and Inflation Figure 81. Chile: Economic Indicators (Y/Y)

-2%

0%

2%

4%

6%

8%

10%

12%

14%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Inflation (YoY % Change) Chile Target O/N Rate Fed Funds Target

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2002 2003 2004 2005 2006 2007 2008

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

IMACEC (Econ. Activity) Retail Sales Exports (R.H. Scale)


Figure 82. Chile: Terms of Trade Proxy: Copper Price / Oil Price Figure 83. Chile: Trade Balance and Current Account Balance

40

60

80

100

120

140

160

180

200

2002 2003 2004 2005 2006 2007 2008Copper Price / Oil Price

(5,000)

-

5,000

10,000

15,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Fiscal Balance (US$, mn) Fiscal Balance (% of GDP)

CIRForecasts

Source: Bloomberg, Datastream and Citi Investment Research Source: Datastream and Citi Investment Research


10 September 2008


Chile – Valuations


6x

10x

14x

18x

22x

26x

95 96 97 98 99 00 01 02 03 04 05 06 07 08-75%

-50%

-25%

0%

25%

50%

75%

100%


-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2001 2002 2003 2004 2005 2006 2007 2008

Chile Latin America

(x)


Figure 86. Dividend Yield Figure 87. Equity Yield (USD) and Bond Yield Compared

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

(%)

0%

2%

4%

6%

8%

10%

12%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

ESBI+ Market Bond Yield (USD) IFC/S&P Market Earnings Yield (USD)

Source: S&P/IFC, FactSet and Citi Investment Research Note: ESBI+ Chile until August 2006, ML USD Chile sovereign yield thereafter

Source: JP Morgan, Merrill Lynch, Datastream and Citi Investment Research

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Chile – Stocks

Figure 88. Chilean Companies' Ratings, Valuations, Performance and Expected Total Returns

Tickers 10-Sep 52-week Total Return Price ETR EPS/EPADR EPS Growth P/E (x) EBITDA Growth EV/EBITDA (x) P/BV (x) Div Mkt CapIndustry Company NASD Rating Price Low High 4 Week YTD Target (%) 07A 08E 07A 08E 07A 08E 07A 08E 07A 08E 07A Yld US$, mnChile (6)Cons. StaplesEmbot. Andina AKOa 2M $15.23 $13.57 $21.25 -7% -3% $19.00 32% $1.29 $1.35 18% 4% 11.8 11.3 24% 13% 6.6 5.5 3.42 7.3% $1,930

CCU CU 2L $34.04 $27.87 $44.93 -1% 0% $38.00 16% $2.50 $2.72 52% 9% 13.6 12.5 29% 19% 7.5 6.3 2.69 4.1% $2,168Materials Masisa MSS 1H C$82 C$79 C$134 2% -17% C$130 60% C$0 C$0 34% 67% 21.3 12.7 15% 17% 8.5 7.4 0.69 1.5% $877Metals & Min Antofagasta ANTO 1M 4.91£ 4.84£ 8.86£ -14% -28% 8.00£ 68% $139.89 $149.56 4% 7% 6.2 5.8 -4% 11% 2.7 2.3 2.10 5.1% $8,529Paper & Pulp Empresas CMPC CAR 1M C$15,001 C$15,000 C$20,800 -1% -17% C$22,000 49% C$1,211 C$1,049 121% -13% 12.4 14.3 61% 2% 8.8 9.0 1.10 2.8% $5,669Industrials Empresas Copec COP 2M C$5,980 C$5,980 C$9,400 -2% -32% C$7,500 28% C$387 C$404 15% 5% 15.5 14.8 20% 5% 10.6 10.3 2.07 2.7% $14,687

LAN Airlines LFL 2H $12.07 $8.71 $17.58 8% -5% $14.25 22% $0.91 $1.17 20% 28% 13.3 10.4 25% 7% 11.4 10.8 4.14 3.7% $4,089



10 September 2008


Argentina


2x

7x

12x

17x

22x

27x

32x

95 96 97 98 99 00 01 02 03 04 05 06 07 08-100%

-50%

0%

50%

100%

150%

200%

250%

12-mth MSCI Retrun P/E Avg. P/E +1 S.D. P/E -1 S.D. P/E

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2001 2002 2003 2004 2005 2006 2007 2008

Argentina Latin America

(x)


Figure 91. Dividend Yield Figure 92. Equity Yield (USD) and EMBI+ Bond Yield Compared

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

(%)

0%

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8%

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


Argentine Default

Source: FactSet and Citi Investment Research Source: Bloomberg, JP Morgan, Datastream and Citi Investment Research

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Argentina – Stocks

Figure 93. Argentina Companies' Ratings, Valuations, Performance and Expected Total Returns

Tickers 10-Sep 52-week Total Return Price ETR EPS/EPADR EPS Growth P/E (x) EBITDA Growth EV/EBITDA (x) P/BV (x) Div Mkt CapIndustry Company NASD Rating Price Low High 4 Week YTD Target (%) 07A 08E 07A 08E 07A 08E 07A 08E 07A 08E 07A Yld US$, mnArgentina (5)Oil & Gas Tenaris TS 1H $41.87 $34.91 $36.96 -23% -5% $69.00 68% $3.26 $4.59 -1% 41% 12.8 9.1 14% 11% 7.7 6.8 3.53 2.7% $24,715

Petrobras Energia PZE 2S $9.71 $9.02 $9.20 -6% -28% $13.00 38% $0.86 $1.55 -47% 80% 11.3 6.2 -17% 23% 5.4 4.4 0.98 3.7% $2,073Materials Ternium TX 1H $25.08 $25.00 $26.55 -28% -36% $47.00 89% $3.89 $5.92 -2% 52% 6.4 4.2 5% 25% 3.9 3.3 1.13 2.0% $5,028Real Estate Irsa IRS 1M $8.11 $7.83 $8.25 -10% -44% $26.00 221% $0.60 $0.43 9% -28% 13.5 18.9 7% 25% 5.8 5.6 0.71 0.0% $469Utilities Edenor EDN 2S $9.45 $8.94 $9.57 -6% -57% $16.90 79% $0.86 $0.67 -59% -22% 11.0 14.1 80% 15% 5.3 4.3 0.68 0.0% $428



10 September 2008


Peru


2x

4x

6x

8x

10x

12x

14x

16x

18x

20x

95 96 97 98 99 00 01 02 03 04 05 06 07 08-130%

-80%

-30%

20%

70%

120%

170%

220%


-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2001 2002 2003 2004 2005 2006 2007 2008

Peru Latin America

(x)


Figure 96. Dividend Yield Figure 97. Equity Yield (USD) and EMBI+ Bond Yield Compared

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

(%)

0%

2%

4%

6%

8%

10%

12%

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


Source: FactSet and Citi Investment Research Source: Bloomberg, JP Morgan, Datastream and Citi Investment Research

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Peru – Stocks

Figure 98. Peruvian Companies' Ratings, Valuations, Performance and Expected Total Returns

Tickers 10-Sep 52-week Total Return Price ETR EPS/EPADR EPS Growth P/E (x) EBITDA Growth EV/EBITDA (x) P/BV (x) Div Mkt CapIndustry Company NASD Rating Price Low High 4 Week YTD Target (%) 07A 08E 07A 08E 07A 08E 07A 08E 07A 08E 07A Yld US$, mnPeru (5)Financials Credicorp BAP 1M $72.65 $58.65 $86.91 5% -3% $110.00 55% $4.40 $5.75 49% 31% 16.5 12.6 n/m n/m n/a n/a 3.46 3.3% $5,795

Intergroup IFS 2M $18.90 $14.80 $23.00 -2% n/a $21.19 15% 3.22NS$ 3.80NS$ 41% 18% 17.4 14.8 n/m n/m n/a n/a 3.91 2.7% $1,741Metals & Mining Southern Copper PCU 3H $19.84 $19.84 $47.75 -25% -39% $19.00 6% $2.52 $2.33 9% -8% 7.9 8.5 15% -10% 4.6 5.1 4.55 10.1% $17,525Cement & Const. Cementos Lima CEL 2H $11.94 $10.87 $17.48 6% -12% $18.05 56% $0.87 $0.96 355% 10% 13.8 12.5 27% 19% 7.4 5.9 2.94 4.6% $1,021

Hochschild HOC 2M 2.19£ 2.01£ 5.12£ -15% -48% 3.00£ 39% $0.29 $0.26 149% -8% 13.4 14.6 43% 74% 7.0 5.5 2.09 1.4% $1,184



10 September 2008


Colombia

Figure 99. Colombia: Economic Activity (3m MA of Y/Y Changes) Figure 100. Colombia: Annual Inflation and Interest Rates

-10%

-5%

0%

5%

10%

15%

20%

2001 2002 2003 2004 2005 2006 2007 2008

-20%

-10%

0%

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20%

30%

40%

50%

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Ind Prod (Y/Y, 3m MA) Retail Sales (Y/Y, 3m MA) Export Growth (Y/Y, 3m MA; RHS)

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

Colombia Interbank O/N Market Rate CPI (YoY % Change) Central Bank Target Rate


Figure 101. Trailing P/E Figure 102. Trailing P/B

-

5

10

15

20

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30

35

2002 2003 2004 2005 2006 2007 2008

Colombia Latin America

(x)

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2001 2002 2003 2004 2005 2006 2007 2008

Colombia Latin America

(x)

Source: MSCI, FactSet and Citi Investment Research Source: MSCI, FactSet and Citi Investment Research

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Pan-Latin America – Stocks

Figure 103. Companies' Ratings, Valuations, Performance and Expected Total Returns

Tickers 10-Sep 52-week Total Return Price ETR EPS/EPADR EPS Growth P/E (x) EBITDA Growth EV/EBITDA (x) P/BV (x) Div Mkt CapIndustry Company NASD Rating Price Low High 4 Week YTD Target (%) 07A 08E 07A 08E 07A 08E 07A 08E 07A 08E 07A Yld US$, mnLatin America (3)Transportation Copa Airlines CPA 1M $37.49 $24.69 $48.50 2% 1% $57.00 53% $3.69 $3.21 19% -13% 10.2 11.7 17% -7% 9.2 10.3 3.07 1.0% $1,629Energy Ecopetrol ECO 1H CP$2,600 CP$1,500 CP$2,980 4% 32% CP$3,200 30% CP$128 CP$282 53% 120% 20.3 9.2 87% 94% 7.5 4.0 3.93 7.1% $50,836


Latin America Strategy Chartbook 10 September 2008


Sector Pages



Energy

Figure 104. Price Performance: Absolute and Relative to Latin America Figure 105. Price Targets: Citi vs. Consensus

0

200

400

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800

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9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

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190

210

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250

MSCI LatAm - Energy (USD) Relative to MSCI LatAm (R.H. Scale)

Energy outperformance

Underperformance

Citigroup I/B/E/S [1] Citi Target vsRating Target ETR Target 1mo Ch Consensus

EnergyEcodiesel 2S R$4.00 105% R$2.50 -44% 60%Lupatech 1H R$84.00 58% R$67.95 -11% 24%Petroleo Brasileiro 1M $59.00 57% $62.23 -26% -5%Tenaris 1H $69.00 67% $73.67 4% -6%Petrobras Energia 2S $13.00 38% $14.20 2% -8%Petroleo Brasileiro (a) 1M $50.00 62% $81.93 -1% -39%

Source: MSCI, FactSet and Citi Investment Research [1] I/B/E/S where available, otherwise Bloomberg

Source: Datastream, Bloomberg and Citi Investment Research

Figure 106. Brazil Gasoline Historical Premium (Discount) vs. U.S. Prices Figure 107. Comparative Valuation - EVDACF/ROCE 2008

-

20

40

60

80

100

120

140

160

2002 2003 2004 2005 2006 2007 2008

US$

/bbl

Gasoline (Brazil) Gasoline (U.S.)

Brazilian Gasoline

Historical Premium (Discount)

to US Gasoline to Brent

2004 (9.81) 2.35

2005 (7.64) 4.86

2006 (5.85) 7.62

2007 (7.71) 8.52

YTD (20.31) (12.71)

13-Aug-08 (16.47) (0.20) Occidental petr.

Hess Corp

Marathon BP

Total

PetroChina

RD Shell ENIRepsol

Petrobras

Lukoil

Statoil

PEPSA

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8.00

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AC

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Global Integrated Oils

Source: Bloomberg and Citi Investment Research Source: Citi Investment Research



Materials


200

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9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

90

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160

MSCI LatAm - Materials (USD) Relative to MSCI LatAm (R.H. Scale)

Underperformance


MaterialsCemex 1H $37.00 88% $31.00 -7% 19%Empresas CMPC 1M C$22,000 49% C$18,742 -3% 17%Aracruz Celulose 1M $92.00 86% $81.46 -10% 13%Votorantim Celulose e Papel 1H $41.00 115% $37.56 -2% 9%Masisa 1H C$130.0 60% C$122 -3% 7%Ultrapar Participacoes 1M R$91.00 208% R$86.59 3% 5%CSN 1H R$92.00 120% R$87.78 -5% 5%Brascan 1S R$19.00 221% R$18.31 2% 4%Moctezuma 1M P$30.00 10% P$29.50 n/m 2%Usiminas 1H R$99.00 134% R$97.44 -4% 2%Suzano Papel 1H R$37.00 96% R$36.80 -1% 1%Duratex 1H R$51.00 108% R$51.21 -14% 0%Ternium 1H $47.00 89% $49.55 3% -5%Klabin 3H R$6.50 53% R$6.91 -4% -6%Satipel 1S R$17.00 101% R$18.50 20% -8%Braskem 2H $16.00 42% $18.16 -4% -12%Vale 1M $39.00 113% $44.60 31% -13%Unipar 3S R$1.55 21% R$1.78 1% -13%Gerdau 1H R$39.00 74% R$48.31 7% -19%GCC 3H P$46.00 -1% P$60.90 -7% -24%

Source: MSCI, FactSet and Citi Investment Research [1] I/B/E/S where available, otherwise Bloomberg; not exhaustive of coverage list.


Figure 110. Chemicals Valuation – Forward EV/EBITDA (2009e) Figure 111. Pulp & Paper Valuation – Forward EV/EBITDA

5.8

6.5 6.67.0

7.5 7.6

8.8

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Ave

rage

Com

mod

ity

Ave

rage

Div

ersi

fied

Ultr

apar

Bra

skem

Bra

zilia

n A

vera

ge

Ave

rage

Spe

cial

ty

Un

ipar

EV/

EB

ITD

A 2

009

E

4.3 4.34.5

4.8

5.85.6

4.3

6.1

4.5

4.8

5.8

3.7

0

1

2

3

4

5

6

7

ARA CMPC VCP Suzano Klabin Copec

20

10

EV/E

BIT

DA

EV/EBITDA (ex Growth Capex) EV/EBITDA

Source: Citi Investment Research Source: Citi Investment Research



Industrials


100

150

200

250

300

350

9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

50

75

100

125

150

175

MSCI LatAm - Industrials (USD) Relative to MSCI LatAm (R.H. Scale)


IndustrialsMexichem 1S P$42.33 19% P$35.30 -68% 20%Embraer 1S $55.00 81% $45.94 -3% 20%Copa Airlines 1M $57.00 53% $48.43 -3% 18%Asur 1H $75.00 55% $67.00 0% 12%OMAB 1S $22.00 61% $21.50 -17% 2%IDEAL 3S $13.00 29% P$12.75 -4% 2%OHL Brasil 2S R$31.00 30% R$31.94 -6% -3%Empresas ICA 2H $67.00 46% $69.34 -6% -3%CCR 2M $36.00 35% R$38.18 -1% -6%LAN Airlines 2H $14.25 22% $15.26 -9% -7%Empresas Copec 2M C$7,500 28% C$8,070 -14% -7%Promotora Ambiental 2S P$32.00 48% P$35.85 -7% -11%Tam 1H $40.00 100% $47.06 -9% -15%GAP 3S $30.00 15% $39.80 -8% -25%All Americana Latina 1M $32.00 94% $44.11 -2% -27%Gol 3S $8.50 5% $12.64 -18% -33%

Source: MSCI, FactSet and Citi Investment Research 1] I/B/E/S where available, otherwise Bloomberg; not exhaustive of coverage list.


Figure 114. Airline Passenger Traffic Growth (RPK's) (Y/Y) Figure 115. Comparative Valuation - Forward P/E (08E)

0%

10%

20%

30%

40%

50%

GOL TAM LAN Airlines Copa Airlines (1)6

7

8

9

10

11

12

13

GOL TAM Copa Airlines LAN Airlines

(1) Including Varig

(2)RPM growth

Source: Company Reports and Citi Investment Research

Source: Datastream and CIR



Financials


200

300

400

500

600

700

800

900

1000

9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

70

80

90

100

110

120

130

140

150

MSCI LatAm - Financials (USD) Relative to MSCI LatAm (R.H. Scale)


FinancialsIrsa (Real Estate) 1M $26.00 221% $16.43 -4% 58%Credicorp 1M $110.00 55% $96.63 -3% 14%Nossa Caixa 2S R$48.00 41% R$45.75 10% 5%Banco Itaú 1M R$44.00 50% R$43.24 1% 2%BR Malls 1S R$22.00 73% R$24.00 -19% -8%Intergroup 2M $21.19 15% $24.06 -3% -12%Unibanco 1M R$24.50 38% R$28.77 -6% -15%Banco do Brasil 1M R$28.00 34% R$34.24 -3% -18%Banorte 3M P$47.00 19% P$58.88 1% -20%Bradesco 2M R$33.50 16% R$45.01 0% -26%



Figure 118. Fundamental Indictors – Brazilian Financial Sector Data Figure 119. Comparative Valuation – Latin American Financials

2007 2008 (E) 2009 (E) 2010 (E)

Annual credit growth * 30.6% 27.2% 21.9% 22.2%

NIM (annual average) ** 7.5% 7.0% 6.9% 7.0%

Annual fee income growth * 13.3% 5.6% 7.7% 8.5%

Annual operating expense growth * 8.3% 10.9% 10.7% 10.5%

NPL ratio ** 3.8% 3.7% 3.9% 3.9%

UnitPrice

(09-09-08)

BVPS

(last reported) *

P/B

Ratio

Brazil Itaú R$ 30.10 10.23 2.9

Bradesco R$ 29.75 10.98 2.7

Banco do Brasil R$ 21.49 10.37 2.1

Unibanco R$ 18.29 9.09 2.0

Nossa Caixa R$ 35.20 29.89 1.2

Mexico Banorte P$ 40.13 18.12 2.2

Peru Credicorp US$ 72.65 22.46 3.2

Intergroup S/. 56.20 14.66 3.8

*Calculated as weighted average of Itaú, Bradesco, Banco do Brasil, Unibanco.

**Calculated as the average of Itaú, Bradesco, Banco do Brasil and Unibanco.


'* Based on last reported book value.




Consumer Discretionary


250

300

350

400

450

500

550

600

650

700

9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

60

70

80

90

100

110

120

130

140

150

MSCI LatAm - Consumer Discretionary (USD) Relative to MSCI LatAm (R.H. Scale)


Consumer DiscretionaryGafisa 1H R$57.00 145% R$36.75 -8% 55%PDG 1S R$40.00 136% R$35.14 -5% 14%Cyrela 1M R$35.00 87% R$32.38 -1% 8%Dufry 1H R$54.00 101% R$50.15 8% 8%Television Azteca 2H P$8.00 21% P$7.46 0% 7%Lojas Americanas 1S R$16.00 74% R$15.39 -3% 4%Desarrolladora Homex 1M P$135.00 56% P$131.02 -2% 3%Totvs 1H R$74.00 47% R$72.67 2% 2%Grupo Televisa 1M $30.00 30% $30.00 -1% 0%Springs Global 2S R$21.70 171% R$21.70 0% 0%Corporacion Geo 1H P$48.00 59% P$48.01 2% 0%Rodobens 1S R$30.00 62% R$30.31 0% -1%Guararapes 2H R$62.00 104% R$64.69 -10% -4%Lojas Renner 1H R$42.00 60% R$46.65 1% -10%Universo Online 2S R$11.50 74% R$13.16 -4% -13%Urbi Desarrollos Urbanos 1M P$40.00 54% P$46.40 -6% -14%B2W 2S R$76.00 46% R$91.44 -1% -17%Consorcio Ara 3S P$10.00 29% P$13.19 -11% -24%Sare Holding 2S P$10.00 29% P$14.11 -11% -29%



Figure 122. Latin America – Total Advertising Expenditures by Market Figure 123. Comparative Valuation – EV/EBITDA and P/E

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E

3yr N

omin

al G

rowt

h in

Ad

Reve

nue

Brazil Mexico

Media/Internet/Tech 2007 2008E 2009E 2007 2008E 2009E

Brazil & Mexico

TOTVS 14.6x 10.3x 8.5x 41.5x 29.0x 19.4xDatasul 1.9x 1.1x 0.6x 7.0x 5.0x 4.7xPositivo 3.0x 2.7x 2.5x 3.5x 3.0x 3.2xUOL 3.0x 2.3x 2.3x 8.1x 7.9x 11.9xB2W 19.2x 12.9x 10.6x 104.3x 55.7x 29.6xTelevisa 8.3x 6.8x 5.8x 18.0x 16.3x 13.5xTV Azteca 6.4x 6.0x 5.4x 20.1x 27.1x 13.7xTotal/Median Latam Software 6.4x 6.0x 5.4x 18.0x 16.3x 13.5x

EVEBITDA PE

Source: Citi Investment Research Source: Datastream and Citi Investment Research



Consumer Staples


50

100

150

200

250

300

350

400

9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

70

80

90

100

110

120

130

140

150

160

MSCI LatAm - Consumer Staples (USD) Relative to MSCI LatAm (R.H. Scale)


Consumer StaplesSoriana 2M P$44.00 46% P$39.12 -1% 12%Gigante 2S P$20.50 37% P$18.48 0% 11%Sadia 1H R$16.00 59% R$14.64 0% 9%JBS 1H R$12.00 131% R$11.00 0% 9%Embotelladoras Arca 1M P$48.00 42% P$44.20 2% 9%Perdigao 2H R$59.00 51% R$55.44 0% 6%Sao Martinho 2H R$26.00 30% R$24.62 0% 6%Grupo Bimbo 1M P$80.00 21% P$75.76 -2% 6%G. Pão De Acucar (CBD) 2M R$45.00 37% R$43.00 1% 5%Grupo Famsa 1H P$51.00 87% P$49.07 1% 4%Elektra 3H P$335.00 -14% P$322.50 0% 4%Minerva 1H R$14.00 106% R$13.72 3% 2%Coca-Cola Femsa 2M $66.00 13% $64.71 4% 2%Hypermarcas 1M R$32.00 112% R$31.45 -3% 2%Gruma 1H P$41.00 48% P$40.55 6% 1%Ambev 1M $88.00 61% $87.13 -5% 1%Industrias Bachoco 3S $30.00 10% $30.00 -19% 0%Walmex 1L P$50.00 32% P$50.04 -2% 0%Comerci 1M P$36.50 50% P$37.17 1% -2%Natura Cosmeticos 2H R$23.00 43% R$23.72 -3% -3%Grupo Continental 2M P$28.50 22% P$29.58 1% -4%Alsea SA de CV 1H P$16.50 51% P$17.28 -10% -5%Marfrig 1H R$27.00 77% R$28.33 3% -5%Femsa 1M $60.00 32% $64.00 12% -6%Grupo Modelo 2L $5.30 20% $5.69 0% -7%Embotelladora Andina 2M $19.00 32% $21.00 2% -10%CCU (Co. Cervec. Unidas) 2L $38.00 16% $45.67 1% -17%Cosan 2H R$28.00 52% R$36.81 2% -24%



Figure 126. Micro Indicator – Beverage Volume Growth Estimates Figure 127. Comparative Valuation – Forward EV/EBITDA

0%

2%

4%

6%

8%

Am

Bev

Bra

zil B

eer

Am

Bev

Tot

al

An

dina

Tot

al

Arc

a T

otal

CC

U B

eer

Ch

ile

Cok

e F

EM

SAM

exic

o

Cok

e F

EMSA

Tot

al

CO

NTA

L T

otal

FEM

SA M

exic

oB

eer

FEM

SA T

otal

Mod

elo

Mex

ico

Bee

r

Mod

elo

Tot

al

2008E 2009E

EV/EBITDA

Company 2007 2008E 2009E 2010E

AmBev 8.2x 7.6x 7.0x 6.5xGrupo Modelo* 9.1x 9.0x 8.2x 7.3xFEMSA 9.6x 8.2x 7.6x 7.1xCCU 8.7x 7.5x 6.7x 6.2xLatin America Average 8.9x 8.1x 7.4x 6.8x

North America Average 11.4x 11.1x 10.5x 8.9xEurope Average 10.1x 8.7x 7.7x 6.9xAsia Average 9.0x 8.9x 7.8x 6.9x

Embotelladora Andina SA 7.1x 6.5x 5.5x 4.8xEmbotelladoras Arca 6.3x 5.7x 5.0x 4.5xGrupo Continental 7.0x 6.1x 5.4x 4.9xCoca-Cola FEMSA 9.3x 7.8x 6.8x 5.9xLatin America Bottler Avg 7.4x 6.5x 5.7x 5.0x

Other Regions Bottler Avg 9.4x 7.5x 6.8x 6.2x

Source: Citi Investment Research *EBITDA uses the sum of each year's four quarters

**Excluding Anheuser-Busch and InBev

Source: Datastream and Citi Investment Research



Telecom Services


50

100

150

200

250

300

350

400

450

500

9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

68

80

93

105

118

130

143

155

168

180

MSCI LatAm - Telecom Services (USD) Relative to MSCI LatAm (R.H. Scale)


TelecomTIM Partic. ON 1H R$8.10 34% R$8.56 n/a -5%Vivo PN 1M R$11.00 44% R$12.77 n/a -14%Vivo ON 1M R$11.60 31% R$14.56 n/a -20%TIM Partic. PN 1H R$4.90 40% R$6.73 n/a -27%



Figure 130. Latin America Telecoms – Mobile Penetrations Figure 131. Comparative Valuation – EV/EBITDA and P/E

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

2002 2003 2004 2005 2006 2007

Argentina Brazil Chile Colombia Mexico Peru

Telecom 2007 2008E 2009E 2007 2008E 2009E

Brazil

TIM Participações SA 5.9x 5.2x 4.2x 22.5x 23.9x 25.4xTIM Participações SA 3.6x 3.3x 2.7x 13.2x 14.1x 14.9xVivo Participações SA 5.5x 3.5x 2.9x N/A 41.4x 24.3xVivo Participações SA 4.7x 3.1x 2.5x N/A 35.1x 20.7xTotal/Median Brazil Telecom 5.1x 3.4x 2.8x N/A 29.5x 22.5x

EVEBITDA PE

Source: MSCI, FactSet and Citi Investment Research Source: Citi Investment Research



Utilities


100

125

150

175

200

225

250

275

300

9/08/2006 1/09/2007 5/09/2007 9/06/2007 1/04/2008 5/05/2008 9/02/2008

70

80

90

100

110

120

130

140

150

MSCI LatAm - Utilities (USD) Relative to MSCI LatAm (R.H. Scale)


UtilitiesEquatorial 1M R$26.80 119% R$23.03 0% 16%Cesp 1M R$40.50 108% R$36.42 0% 11%EDP 1M R$41.10 73% R$38.35 7% 7%Eletropaulo 2M R$42.00 76% R$42.49 0% -1%Cemig 1M R$49.60 66% R$50.37 -1% -2%Sabesp 2H $53.50 69% $55.33 24% -3%CPFL 2M R$40.40 40% R$42.00 -1% -4%Copel 2M R$35.00 48% R$37.57 -1% -7%Tractebel 2M R$26.70 55% R$28.71 -1% -7%AES Tietê 1M R$22.70 64% R$24.60 7% -8%Electrobrás 2H R$29.10 32% R$31.75 2% -8%Terna 2M R$35.20 58% R$39.01 1% -10%Edenor 2S $16.90 79% $19.13 -17% -12%



Figure 134. Electricity Supply and Demand in Argentina Figure 135. Brazilian Utility Companies – EV/EBITDA (2009e)

55,000

65,000

75,000

85,000

95,000

105,000

115,000

1996A 1998A 2000A 2002A 2004A 2006A 2008E 2010E

GW

h

Demand Supply

0

1

2

3

4

5

6

7

Cop

asa

EDB

Eq

uato

rial

Sabe

sp

Cop

el

Ele

trop

aulo

AES

Tie

tê

Avg

. B

razi

l

CT

EEP

Cem

ig

Elet

robr

ás

Tern

a

CP

FL

Tra

cteb

el

Ces

p

Source: Citi Investment Research Source: Citi Investment Research



MSCI Disclosure

Morgan Stanley Capital International Inc.’s (“MSCI”) MSCI Standard Index Series section of the MSCI Web Site

contains documents regarding the MSCI Standard Index Series (collectively, along with any other information on

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LA091318



Appendix A-1 Analyst Certification

Each research analyst(s) principally responsible for the preparation and content of all or any identified portion of this research report hereby certifies that, with respect to each issuer or security or any identified portion of the report with respect to an issuer or security that the research analyst covers in this research report, all of the views expressed in this research report accurately reflect their personal views about those issuer(s) or securities. Each research analyst(s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this research report.

IMPORTANT DISCLOSURES Customers of the Firm in the United States can receive independent third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at http://www.smithbarney.com (for retail clients) or http://www.citigroupgeo.com (for institutional clients) or can call (866) 836-9542 to request a copy of this research.

A director of COCA-COLA FEMSA, S.A. de C.V. is a member of the board of directors of an affilliate of Citigroup Global Markets Inc.

A director of Citi serves as a director of Gruma S.A. de C.V.

A director of FOMENTO ECONOMICO MEXICANO, S.A. de C.V. is a member of the board of directors of an affilliate of Citigroup Global Markets Inc.

A director of GRUPO AEROPORTUARIO DEL PACIFICO, S.A. de C.V. is a member of the board of directors of an affilliate of Citigroup Global Markets Inc.

A director of GRUPO CEMENTOS DE CHIHUAHUA, S.A. de C.V. is a member of the board of directors of an affilliate of Citigroup Global Markets Inc.

A director of Grupo Aeroportuario Del Sureste, S.A. de C.V. is a member of the board of directors of an affilliate of Citigroup Global Markets Inc.

A director of Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. is a member of the board of directors of an affiliate of Citigroup Global Markets Inc.

A director of Grupo Bimbo, S.A. de C.V. is a member of the board of directors of an affiliate of Citigroup Global Markets Inc.

A director of Urbi Desarrollos Urbanos, S.A. C.V. is a member of the board of directors of an affilliate of Citigroup Global Markets Inc.

A seat on the board of directors of Corporacion GEO is held by a director of an affiliate of Citigroup Global Markets Inc.

A seat on the board of directors of Empresas Ica SA is held by one or more members of the board of directors of Citigroup Global Markets Inc. or its affilliates.

An officer or director of Grupo Televisa SA serves as a director on Citi's board.

Citi is acting as financial advisor to Lojas Americanas in the proposed merger with Submarino.

Citigroup Global Markets Inc. acted as the exclusive financial advisor to the Gerdau Group in the proposed merger with Quanex Corporation.

Citigroup Global Markets Inc. is acting as a financial advisor and providing firm financing commitments to the private equity group. Citi is also providing equity commitments.

Citigroup Global Markets Inc. is acting as a financial advisor to Hypermarcas S.A. in its proposed acquisition of Laboratorio Americano de Farmacoterapia S.A. ("Farmasa")

Citigroup Global Markets Inc. is advising the State of São Paolo in the proposed sale of its equity interest in Companhia Energética de São Paulo.

One or more directors of Cemex, S.A. de C.V. is a member of the board of directors of an affilliate of Citigroup Global Markets Inc. A director of Cemex, S.A de C.V. serves as a director on Citi's International Advisory Board. CEMEX, S.A.B. de C.V. Citigroup Global Markets Inc. is acting as a as financial advisor to Cemex, S.A.B. de C.V.

One or more directors of Grupo Modelo, S.A. de C.V. is a member of the board of directors of an affiliate of Citigroup Global Markets Inc.

One or more directors of MEXICHEM, S.A. de C.V. is a member of the board of directors of an affiliate of Citigroup Global Markets Inc.

One or more officers or directors of Gigante are members of the board of directors of an affiliate of Citigroup Global Markets Inc.

Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of Cementos Chihuahua, Cemex, Comercial Mexicana, Corporacion GEO SAB de CV, Gafisa SA, Gruma, Promotora Ambiental SAB de CV, Vale and Vale (Preferred). This position reflects information available as of the prior business day.

Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of Banco do Brasil SA, Banco Nossa Caixa SA, BR Malls Participacoes SA, Brasil Ecodiesel S.A., Braskem S.A., Cemex, Cemig, Cesp, Copasa, CPFL Energia SA, Ecopetrol S.A., Edenor SA, EDP - Energias do Brasil SA, Eletrobras, Eletropaulo, Empresas Ica SAB de CV, Equatorial Energia SA, Gerdau SA, Hypermarcas, Intergroup, Lojas Americanas SA, Lupatech SA, MARFRIG, Mexichem SAB de CV, Minerva SA, Petrobras Energia Participaciones SA, Petróleo Brasileiro - Petrobrás, Sabesp, Soriana, Springs Global, Terna Participacoes SA, Urbi Desarrollos Urbanos, SA de CV, Vale and Vale (Preferred).

Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12 months from , Aes Tiete S/A, AmBev, Banco Bradesco SA, Banco do Brasil SA, Banco Itau Holding Financeira SA, Banco Nossa Caixa SA, Banorte, Bimbo, BR Malls Participacoes SA, Brascan Residential Properties SA, Brasil Ecodiesel S.A., Braskem S.A., Cemex, Cemig, Cesp, Companhia Siderurgica Nacional, Copasa, CPFL Energia SA, Duratex SA, Ecopetrol S.A., Edenor SA, EDP - Energias do Brasil SA, Eletrobras, Embotelladora Andina S.A., Embraer, Empresas Ica SAB de CV, Equatorial Energia SA, Gerdau SA, Gigante, Gol Linhas Aéreas S.A., GP Investments, Grupo Famsa SAB de CV, Grupo Televisa, Hypermarcas, Intergroup, IRSA, JBS SA, Lupatech SA, Mexichem SAB de CV, OHL Brasil, Petróleo Brasileiro - Petrobrás, Soriana, Southern Copper Company, TAM S.A., Tenaris S.A., Terna Participacoes SA, Ternium SA, Tractebel Energia SA, UNIBANCO - Uniao de Bancos Brasileiros S, Urbi Desarrollos Urbanos, SA de CV, Vale, Vale (Preferred) and Votorantim Celulose e Papel S.A.



Citigroup Global Markets Inc. or its affiliates expects to receive or intends to seek, within the next three months, compensation for investment banking services from , Aes Tiete S/A, Aracruz Celulose S.A., Banco do Brasil SA, Banco Nossa Caixa SA, Banorte, Bimbo, Brascan Residential Properties SA, Cemex, Cesp, Copa Airlines, Credicorp, Ecopetrol S.A., Edenor SA, Eletrobras, Embotelladora Andina S.A., Empresas Ica SAB de CV, Equatorial Energia SA, Gigante, GP Investments, Mexichem SAB de CV, Petróleo Brasileiro - Petrobrás, Soriana, Terna Participacoes SA, Tractebel Energia SA and Votorantim Celulose e Papel S.A.

Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from , Aes Tiete S/A, Alsea, AmBev, Antofagasta, Aracruz Celulose S.A., B2W, Bachoco, Banco Bradesco SA, Banco do Brasil SA, Banco Itau Holding Financeira SA, Banorte, Bimbo, BR Malls Participacoes SA, Brascan Residential Properties SA, Brasil Ecodiesel S.A., Braskem S.A., Cementos Chihuahua, Cementos Lima S.A., Cemex, Cemig, Coca-Cola FEMSA, Comercial Mexicana, Companhia Siderurgica Nacional, Consorcio ARA, SAB de CV, Copa Airlines, Copasa, Copel, Corporacion GEO SAB de CV, Corporacion Moctezuma SAB de CV, CPFL Energia SA, Credicorp, CTEEP, Datasul SA, Desarrolladora Homex, S.A.B. de C.V., Duratex SA, Ecopetrol S.A., Edenor SA, EDP - Energias do Brasil SA, Eletrobras, Eletropaulo, Embotelladora Andina S.A., Embotelladoras Arca, Embraer, Empresas CMPC S.A., Empresas Copec SA, Empresas Ica SAB de CV, Equatorial Energia SA, FEMSA, Gafisa SA, Gerdau SA, Gigante, Gol Linhas Aéreas S.A., GP Investments, Gruma, Grupo Aeroportuario del Centro Norte S A, Grupo Aeroportuario del Pacifico SA de C, Grupo Aeroportuario del Sureste,SAB de C, Grupo Continental, Grupo Elektra SA de CV, Grupo Famsa SAB de CV, Grupo Modelo, Grupo Pão De Acucar, Grupo Televisa, Hochschild Mining, Hypermarcas, Impulsora del Desarrollo y el Empleo en, Intergroup, IRSA, JBS SA, Klabin S.A., Lan Airlines, Lojas Americanas SA, Lojas Renner SA, Lupatech SA, MARFRIG, Maseca, Masisa, Mexichem SAB de CV, Minerva SA, OHL Brasil, Perdigao SA, Petróleo Brasileiro - Petrobrás, Positivo Informatica SA, Promotora Ambiental SAB de CV, Radio Centro, Sabesp, Sadia SA, Sao Martinho SA, Sare Holding, SAB de CV, Satipel Industrial SA, Soriana, Southern Copper Company, Springs Global, Suzano Papel e Celulose S.A., TAM S.A., Tenaris S.A., Terna Participacoes SA, Ternium SA, TIM Participações SA, Tractebel Energia SA, TV Azteca SA, Ultrapar Participacoes S.A., UNIBANCO - Uniao de Bancos Brasileiros S, Urbi Desarrollos Urbanos, SA de CV, Usinas Siderurgicas de Minas Gerais SA, Vale, Vale (Preferred), Vivo Participações SA, Votorantim Celulose e Papel S.A. and Walmex in the past 12 months.

Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following company(ies) as investment banking client(s): , Aes Tiete S/A, AmBev, Aracruz Celulose S.A., Banco Bradesco SA, Banco do Brasil SA, Banco Itau Holding Financeira SA, Banco Nossa Caixa SA, Banorte, Bimbo, BR Malls Participacoes SA, Brascan Residential Properties SA, Brasil Ecodiesel S.A., Braskem S.A., Cemex, Cemig, Cesp, Companhia Siderurgica Nacional, Copa Airlines, Copasa, CPFL Energia SA, Credicorp, Desarrolladora Homex, S.A.B. de C.V., Duratex SA, Ecopetrol S.A., Edenor SA, EDP - Energias do Brasil SA, Eletrobras, Embotelladora Andina S.A., Embotelladoras Arca, Embraer, Empresas CMPC S.A., Empresas Copec SA, Empresas Ica SAB de CV, Equatorial Energia SA, FEMSA, Gafisa SA, Gerdau SA, Gigante, Gol Linhas Aéreas S.A., GP Investments, Grupo Aeroportuario del Centro Norte S A, Grupo Famsa SAB de CV, Grupo Televisa, Hypermarcas, Intergroup, IRSA, JBS SA, Lupatech SA, MARFRIG, Mexichem SAB de CV, Minerva SA, OHL Brasil, Petróleo Brasileiro - Petrobrás, Promotora Ambiental SAB de CV, Sao Martinho SA, Sare Holding, SAB de CV, Soriana, Southern Copper Company, Springs Global, Suzano Papel e Celulose S.A., TAM S.A., Tenaris S.A., Terna Participacoes SA, Ternium SA, Tractebel Energia SA, Ultrapar Participacoes S.A., UNIBANCO - Uniao de Bancos Brasileiros S, Urbi Desarrollos Urbanos, SA de CV, Usinas Siderurgicas de Minas Gerais SA, Vale, Vale (Preferred) and Votorantim Celulose e Papel S.A.

Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: , Aes Tiete S/A, Alsea, AmBev, Aracruz Celulose S.A., Bachoco, Banco Bradesco SA, Banco do Brasil SA, Banco Itau Holding Financeira SA, Banorte, Bimbo, BR Malls Participacoes SA, Brascan Residential Properties SA, Brasil Ecodiesel S.A., Braskem S.A., Cementos Chihuahua, Cementos Lima S.A., Cemex, Cemig, Coca-Cola FEMSA, Comercial Mexicana, Companhia Siderurgica Nacional, Consorcio ARA, SAB de CV, Copa Airlines, Copasa, Corporacion GEO SAB de CV, Corporacion Moctezuma SAB de CV, CPFL Energia SA, Credicorp, CTEEP, Datasul SA, Desarrolladora Homex, S.A.B. de C.V., Duratex SA, Ecopetrol S.A., Edenor SA, EDP - Energias do Brasil SA, Eletrobras, Embotelladora Andina S.A., Embotelladoras Arca, Embraer, Empresas CMPC S.A., Empresas Copec SA, Empresas Ica SAB de CV, Equatorial Energia SA, FEMSA, Gerdau SA, Gigante, Gol Linhas Aéreas S.A., GP Investments, Gruma, Grupo Aeroportuario del Centro Norte S A, Grupo Aeroportuario del Pacifico SA de C, Grupo Aeroportuario del Sureste,SAB de C, Grupo Continental, Grupo Elektra SA de CV, Grupo Famsa SAB de CV, Grupo Modelo, Grupo Televisa, Hochschild Mining, Hypermarcas, Impulsora del Desarrollo y el Empleo en, Intergroup, IRSA, JBS SA, Klabin S.A., Lan Airlines, Lupatech SA, MARFRIG, Maseca, Masisa, Mexichem SAB de CV, Minerva SA, OHL Brasil, Perdigao SA, Petróleo Brasileiro - Petrobrás, Positivo Informatica SA, Promotora Ambiental SAB de CV, Radio Centro, Sadia SA, Sao Martinho SA, Sare Holding, SAB de CV, Soriana, Southern Copper Company, Springs Global, Suzano Papel e Celulose S.A., TAM S.A., Tenaris S.A., Terna Participacoes SA, Ternium SA, TIM Participações SA, Tractebel Energia SA, TV Azteca SA, Ultrapar Participacoes S.A., UNIBANCO - Uniao de Bancos Brasileiros S, Urbi Desarrollos Urbanos, SA de CV, Usinas Siderurgicas de Minas Gerais SA, Vale, Vale (Preferred), Vivo Participações SA, Votorantim Celulose e Papel S.A. and Walmex.

Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, non-securities-related: , Aes Tiete S/A, Alsea, AmBev, Antofagasta, Aracruz Celulose S.A., B2W, Bachoco, Banco Bradesco SA, Banco do Brasil SA, Banco Itau Holding Financeira SA, Banorte, Bimbo, BR Malls Participacoes SA, Brascan Residential Properties SA, Brasil Ecodiesel S.A., Braskem S.A., Cementos Chihuahua, Cementos Lima S.A., Cemex, Cemig, Coca-Cola FEMSA, Comercial Mexicana, Companhia Siderurgica Nacional, Consorcio ARA, SAB de CV, Copa Airlines, Copasa, Copel, Corporacion GEO SAB de CV, Corporacion Moctezuma SAB de CV, CPFL Energia SA, Credicorp, CTEEP, Datasul SA, Desarrolladora Homex, S.A.B. de C.V., Duratex SA, Ecopetrol S.A., Edenor SA, EDP - Energias do Brasil SA, Eletrobras, Eletropaulo, Embotelladora Andina S.A., Embotelladoras Arca, Embraer, Empresas CMPC S.A., Empresas Copec SA, Empresas Ica SAB de CV, Equatorial Energia SA, FEMSA, Gafisa SA, Gerdau SA, Gigante, Gol Linhas Aéreas S.A., GP Investments, Gruma, Grupo Aeroportuario del Centro Norte S A, Grupo Aeroportuario del Pacifico SA de C, Grupo Aeroportuario del Sureste,SAB de C, Grupo Continental, Grupo Elektra SA de CV, Grupo Famsa SAB de CV, Grupo Modelo, Grupo Pão De Acucar, Grupo Televisa, Hochschild Mining, Hypermarcas, Impulsora del Desarrollo y el Empleo en, Intergroup, IRSA, JBS SA, Klabin S.A., Lan Airlines, Lojas Americanas SA, Lojas Renner SA, Lupatech SA, MARFRIG, Maseca, Masisa, Mexichem SAB de CV, Minerva SA, OHL Brasil, Perdigao SA, Petróleo Brasileiro - Petrobrás, Positivo Informatica SA, Promotora Ambiental SAB de CV, Radio Centro, Sabesp, Sadia SA, Sao Martinho SA, Sare Holding, SAB de CV, Satipel Industrial SA, Soriana, Southern Copper Company, Springs Global, Suzano Papel e Celulose S.A., TAM S.A., Tenaris S.A., Terna Participacoes SA, Ternium SA, TIM Participações SA, Tractebel Energia SA, TV Azteca SA, Ultrapar Participacoes S.A., UNIBANCO - Uniao de Bancos Brasileiros S, Urbi Desarrollos Urbanos, SA de CV, Usinas Siderurgicas de Minas Gerais SA, Vale, Vale (Preferred), Vivo Participações SA, Votorantim Celulose e Papel S.A. and Walmex.

Citigroup Global Markets Inc. or an affiliate received compensation in the past 12 months from Alsea, Aracruz Celulose S.A., Bimbo, BR Malls Participacoes SA, Brasil Ecodiesel S.A., Braskem S.A., Cementos Chihuahua, Cemex, Comercial Mexicana, Consorcio ARA, SAB de CV, Copa Airlines, Copasa, Corporacion GEO SAB de CV, Desarrolladora Homex, S.A.B. de C.V., Edenor SA, Empresas CMPC S.A., Empresas Copec SA, Empresas Ica SAB de CV, Equatorial Energia SA, Gigante, Gol Linhas Aéreas S.A., GP Investments, Grupo Aeroportuario del Centro Norte S A, Hypermarcas, Klabin S.A., Lupatech SA, MARFRIG, Mexichem SAB de CV, Minerva SA, Petróleo Brasileiro - Petrobrás, Sao Martinho SA, Soriana, Springs Global, Suzano Papel e Celulose S.A., TAM S.A., Tenaris S.A., Ultrapar Participacoes S.A., Urbi Desarrollos Urbanos, SA de CV, Vale, Vale (Preferred), Votorantim Celulose e Papel S.A. and Walmex.

Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the Private Client Division, Institutional Sales and Trading, and Investment Banking.



The Firm is a market maker in the publicly traded equity securities of Companhia Siderurgica Nacional, Eletrobras, Grupo Aeroportuario del Centro Norte S A and Walmex.

For important disclosures (including copies of historical disclosures) regarding the companies that are the subject of this Citi Investment Research product ("the Product"), please contact Citi Investment Research, 388 Greenwich Street, 29th Floor, New York, NY, 10013, Attention: Legal/Compliance. In addition, the same important disclosures, with the exception of the Valuation and Risk assessments and historical disclosures, are contained on the Firm's disclosure website at www.citigroupgeo.com. Private Client Division clients should refer to www.smithbarney.com/research. Valuation and Risk assessments can be found in the text of the most recent research note/report regarding the subject company. Historical disclosures (for up to the past three years) will be provided upon request.

Citi Investment Research Ratings Distribution Data current as of 30 June 2008 Buy Hold SellCiti Investment Research Global Fundamental Coverage (3096) 50% 36% 14%

% of companies in each rating category that are investment banking clients 53% 52% 42%Guide to Fundamental Research Investment Ratings: Citi Investment Research's stock recommendations include a risk rating and an investment rating. Risk ratings, which take into account both price volatility and fundamental criteria, are: Low (L), Medium (M), High (H), and Speculative (S). Investment ratings are a function of Citi Investment Research's expectation of total return (forecast price appreciation and dividend yield within the next 12 months) and risk rating. For securities in developed markets (US, UK, Europe, Japan, and Australia/New Zealand), investment ratings are: Buy (1) (expected total return of 10% or more for Low-Risk stocks, 15% or more for Medium-Risk stocks, 20% or more for High-Risk stocks, and 35% or more for Speculative stocks); Hold (2) (0%-10% for Low-Risk stocks, 0%-15% for Medium-Risk stocks, 0%-20% for High-Risk stocks, and 0%-35% for Speculative stocks); and Sell (3) (negative total return). For securities in emerging markets (Asia Pacific, Emerging Europe/Middle East/Africa, and Latin America), investment ratings are: Buy (1) (expected total return of 15% or more for Low-Risk stocks, 20% or more for Medium-Risk stocks, 30% or more for High-Risk stocks, and 40% or more for Speculative stocks); Hold (2) (5%-15% for Low-Risk stocks, 10%-20% for Medium-Risk stocks, 15%-30% for High-Risk stocks, and 20%-40% for Speculative stocks); and Sell (3) (5% or less for Low-Risk stocks, 10% or less for Medium-Risk stocks, 15% or less for High-Risk stocks, and 20% or less for Speculative stocks). Investment ratings are determined by the ranges described above at the time of initiation of coverage, a change in investment and/or risk rating, or a change in target price (subject to limited management discretion). At other times, the expected total returns may fall outside of these ranges because of market price movements and/or other short-term volatility or trading patterns. Such interim deviations from specified ranges will be permitted but will become subject to review by Research Management. Your decision to buy or sell a security should be based upon your personal investment objectives and should be made only after evaluating the stock's expected performance and risk.

Guide to Corporate Bond Research Credit Opinions and Investment Ratings: Citi Investment Research's corporate bond research issuer publications include a fundamental credit opinion of Improving, Stable or Deteriorating and a complementary risk rating of Low (L), Medium (M), High (H) or Speculative (S) regarding the credit risk of the company featured in the report. The fundamental credit opinion reflects the CIR analyst's opinion of the direction of credit fundamentals of the issuer without respect to securities market vagaries. The fundamental credit opinion is not geared to, but should be viewed in the context of, debt ratings issued by major public debt ratings companies such as Moody's Investors Service, Standard and Poor's, and Fitch Ratings. CBR risk ratings are approximately equivalent to the following matrix: Low Risk -- Triple A to Low Double A; Low to Medium Risk -- High Single A through High Triple B; Medium to High Risk -- Mid Triple B through High Double B; High to Speculative Risk -- Mid Double B and Below. The risk rating element illustrates the analyst's opinion of the relative likelihood of loss of principal when a fixed income security issued by a company is held to maturity, based upon both fundamental and market risk factors. Certain reports published by Citi Investment Research will also include investment ratings on specific issues of companies under coverage which have been assigned fundamental credit opinions and risk ratings. Investment ratings are a function of Citi Investment Research's expectations for total return, relative return (relative to the performance of relevant Citi bond indices), and risk rating. These investment ratings are: Buy/Overweight -- the bond is expected to outperform the relevant Citigroup bond market sector index (Broad Investment Grade, High Yield Market or Emerging Market); Hold/Neutral Weight -- the bond is expected to perform in line with the relevant Citigroup bond market sector index; or Sell/Underweight -- the bond is expected to underperform the relevant Citigroup bond market sector index. Performance data for Citi bond indices are updated monthly, are available upon request and can also be viewed at http://sd.ny.ssmb.com/ using the "Indexes" tab.

OTHER DISCLOSURES Citigroup Global Markets Inc. and/or its affiliates has a significant financial interest in relation to , Banco Bradesco SA, Banco Itau Holding Financeira SA, Bimbo, Braskem S.A., Cementos Lima S.A., Cemex, Coca-Cola FEMSA, Desarrolladora Homex, S.A.B. de C.V., Eletrobras, Gafisa SA, Gerdau SA, Gruma, Grupo Televisa, Hochschild Mining, Petrobras Energia Participaciones SA, Petróleo Brasileiro - Petrobrás, Terna Participacoes SA, Urbi Desarrollos Urbanos, SA de CV, Usinas Siderurgicas de Minas Gerais SA, Vale and Vale (Preferred). (For an explanation of the determination of significant financial interest, please refer to the policy for managing conflicts of interest which can be found at www.citigroupgeo.com.)

Citigroup Global Markets Inc. or its affiliates beneficially owns 2% or more of any class of common equity securities of Cementos Chihuahua, Cemex, Corporacion GEO SAB de CV, Promotora Ambiental SAB de CV, Vale and Vale (Preferred).

Citigroup Global Markets Inc. or its affiliates beneficially owns 5% or more of any class of common equity securities of Comercial Mexicana.

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