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RREEF Infrastructure
RESEARCH REPORT
www.rreef.comwww.rreef.com
RREEF Infrastructure
Australian Infrastructure Market Update
First Quarter 2012
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 1
Table of Contents
1. Executive Summary .................................................................... 12. Global economy .......................................................................... 33. Austral ian economy .................................................................... 64. Austral ian dr ivers and challenges ............................................. 85. Infrastructure investment trends ............................................. 156. Scenarios ................................................................................... 167. Important Notes ......................................................................... 18
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ManagingDirector
Head of RREEF InfrastructureAsia Pacific
+ 61 (2) 8258 2012
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Director
Chief Operating Officer
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Simon Durkin
Director
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 1
1. Executive Summary
Global
Cautious optimism returned to the global economic outlook in Q1 2012.1 The world
economy is set to expand at a below-trend pace in 2012 as it regains momentum.2
The global economys positive turn in the first quarter is not without obstacles in the
months ahead. Labour and housing markets still face structural adjustments in many
countries, and governments and households continue struggling to rebalance their
budgets.3
The European economy remains vulnerable. 4 IHS/Global Insight forecasts the
overall Eurozones economy to contract by 0.4 per cent in 2012, a slightly better
outlook than had been expected three months earlier.5 The continents two-speed
path continues, with economic growth in the core European countries forecast to be
relatively flat in 2012 even as most peripheral economies are now mired in recession. 6
European banks and peripheral sovereigns face daunting challenges that require
long-term solutions.7 Though it is indirectly impacted, Australias direct exposure to
the Eurozone crisis is limited.8
Upbeat indicators in the US provide hopeful signals for the year ahead.
9
IHS/GlobalInsight forecasts U.S. economic growth of 2.1 per cent in 2012, with momentum
continuing to build through 2014.10
Chinas economic growth has decelerated in recent months amid weaker external
demand and a slowdown in the property sector.11
Commodity prices have stabilised at relatively high levels.12 The Reserve Bank of
Australia (RBA) index for commodity prices has held near or above 100 since early
2011.13
Aust ral ia
The Australian economy was on track for 3.6 per cent year-over-year (y-o-y) growth in
Q1 2012 according to private sector consensus forecasts for the period.14 Australian
economic growth will continue this year at close to trend according to the RBA.15
Despite encouraging headline indicators, deeper worries persist of two-tier Australian
economy split across industries and geography.16
The RBA expects inflation to hold within the 2-3 per cent target range over the next
two years.17 A lower headline inflation rate in the first half of 2012 will rise in the
latter half of the year as a new carbon tax is implemented.18
1 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p. 1.2 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April 2012.3 Monthly Bulletin, European Central Bank, 7 March 2012, p. 7.
4 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April 2012.5 IHS Global Insight, Current Forecast, 16 March 2012.6 IHS Global Insight, Current Forecast, 16 March 2012.7 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April 2012.8 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 91-98.9 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p. 1.10 IHS Global Insight, Current Forecast, 16 March 2012.11 Monthly Bulletin, European Central Bank, 7 March 2012, p. 12.12 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.13 Reserve Bank of Australia, Index of Commodity Prices (Table G5), 2 April 2012.14 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 4-5.15
Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.16 National Australia Bank, Global & Australian Forecasts, 13 March 2012, pp. 8-19.17 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.18 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 37.
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High levels of household debt continue to impact savings and spending patterns.19
Uncertainty regarding interest rates for variable-rate home mortgages has reduced
Australian consumers motivation to spend.20
Australias industry sectors continue to undergo structural change.21 As recently as
2005, mining accounted for less than 20 per cent of private sector investment, but by
Q4 2011, the mining sector alone accounted for just over half of all new capital
expenditures. 22 New capital expenditures in other sectors of the economy have
remained relatively stagnant in recent years.23 Declining employment in the retail
sector has been attributed to the high value of the Australian dollar (AUD), which has
driven Australian consumers online to find better prices from foreign retailers.24
A favourable interest rate differential and strong terms of trade have been among the
factors pushing up the value of the AUD. 25 A modest easing of both of these
factorsthe value of the AUD and the terms of tradeis anticipated over the next two
years.26
The Australian housing market has stabilised but remains relatively soft. 27
Australias population growth carries significant upside economic implications.28 In
the short term, this includes a boost to domestic demand, including the housing
sector.29 Longer term, foreign immigrants can help ease anticipated skill shortages in
the labour market as aging workers retire.30
19 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 31.20 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 5.21 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.22 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.23 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.24 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 79-84.25 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 39-40.26 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012; IHS Global Insight, Australia:Country Intelligence Report, 22 March 2012, p. 31.27
Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.28 Westpac, Market Insights, March 2012, p. 12.29 Westpac, Market Insights, March 2012, p. 12.30 Westpac, Market Insights, March 2012, p. 12.
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2. Global economy
Overview: Cautious optimism returned to the global economic outlook in Q1 2012. 31
Following a period of uncertainty and downgraded forecasts in the latter half of 2011,
hopeful signs emerged in the early months of 2012, including upbeat indicators in the US
and progress toward more predictable fiscal governance in Europe. 32 Business and
consumer sentiment have improved broadly across advanced economies in recentmonths.33 The global edition of the Purchasing Managers Index (PMI) signalled first-
quarter improvements in all-industry output and new orders.34
These positive developments will still not be enough to stave off a mild recession in the
Eurozone. IHS/Global Insight forecasts the overall Eurozones economy to contract by
0.4 per cent in 2012, a slightly better outlook than had been expected three months
earlier.35 Elsewhere in Europe, the UKs economy will continue to sputter in 2012, as
austerity measures undertaken by the British government delay a full-blown recovery until
later in 2013.
Exhibi t 1: Real GDP growth
Outlook for selected countries
Sources: IHS Global Insight, forecast series GDPR_A
p = preliminary; f = forecast
As of March 2012
Outside of Europe, many advanced economies will experience improving momentum
during the year ahead. IHS/Global Insight forecasts Japan, the US, New Zealand, andAustralia to experience a solid uptick in economic momentum in 2012. 36 Of these
countries, however, Australia is the only one expected to surpass global economic growth
in 2012. Many emerging markets will continue to outpace world economic growth,
although the momentum in early 2012 has begun to soften in China, Hong Kong, and
Singapore.37
31 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p.1.32 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p.1.33 Monthly Bulletin, European Central Bank, 7 March 2012, p. 7.34 Monthly Bulletin, European Central Bank, 7 March 2012, p. 7.35 IHS Global Insight, Current Forecast, 16 March 2012.36 IHS Global Insight, Current Forecast, 16 March 2012.37 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012.
-2
-1
0
1
2
3
4
5
6
7
8
9
10
Eurozone
Germany
UnitedKingdom
Japan
Canada
UnitedStates
NewZealand
World
SouthAfrica
Australia
Brazil
Russia
Indonesia
India
China
Real GDP % growth 2011p 2012f 2013f
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The global economys positive turn in the first quarter is not without obstacles in the
months ahead. Labour and housing markets still face structural adjustments in many
countries, and governments and households continue struggling to rebalance their
budgets.38
Exhibit 2: Current fiscal balance vs. long-term growth
Outlook for selected countries
Notes: f = forecast
Sources: IHS Global Insight, forecast series GDPR_A and GBAL%GDP_A
As of March 2012
Europe: Economic growth in the core European countries is forecast to be relatively flat in
2012, with most peripheral economies now in recession.39
The Eurozone crisischallenged policymakers in 2011 with its unprecedented complexity and diversity of
stakeholders. 40 Long-term policy measures unveiled by the European Central Bank
(ECB) in late 2011 met with initial success in the first months of 2012.41 Sporadic but
gradual progress toward a workable solution continues, with financial markets slowly
gaining confidence in the process as it moves forward.42 Still, the overall risks to success
remain high, with peripheral countries like Greece, Portugal, and Spain facing daunting
challenges in the months ahead.43
US: The US economy exhibited signs of improvement in recent months across a range of
indicators, including consumer spending, income growth, and employment.44 Lingering
impediments to economic growth include rising petrol prices and a sluggish recovery in
the housing market.
45
In January, the US Federal Reserve announced baseline plans tohold interest rates at very low levels until late 2014.46 IHS/Global Insight forecasts U.S.
38 Monthly Bulletin, European Central Bank, 7 March 2012, p. 7.39 IHS Global Insight, Current Forecast, 16 March 2012.40 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.41 Monthly Bulletin, European Central Bank, 7 March 2012, pp. 5-6.42 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.43 Westpac, Market Insights, March 2012, p. 14; and ANZ, Research Quarterly: Economics, Commodities, and
Markets, Issue 7, Q1 2012, 21 March 2012, pp. 8-9.44 Monthly Bulletin, European Central Bank, 7 March 2012, pp. 8-9.45 ANZ, Research Quarterly: Economics, Commodities, and Markets, Issue 7, Q1 2012, 21 March 2012, pp. 6-7.46 Deutsche Bank, Global Economic Perspectives, 14 March 2012.
United StatesCanada
Germany
United Kingdo m
Russia
Australia
China
India
Indonesia
Japan
New Zealand
Brazil
South Africa
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
FiscalBalance
(average
2011-2013F)
Long-term economic growth (average 2015F-2040F)
world average long-term GDP growth 3.6%
Eurozone 3% deficit limit
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economic growth of 2.1 per cent in 2012, with momentum continuing to build through
2014.47
China: Weaker external demand and a slowdown in the property sector have pushed
Chinas economic growth into a path of deceleration in recent months.48 During Q1 2012,
China announced plans to lower its official target growth rate to 7.5 per cent, the lowest
level since 2005.49 The move signalled a tacit acknowledgement by the government that
the rapid pace of growth in recent years is not expected to continue.50 Slower growth inChina in the first half of 2012 is expected to remove some pressure from global
commodity prices, at least in the short term.51 Longer term, Chinas economic growth
should stabilise as the global outlook improves and as recent monetary easingincluding
looser reserve requirementstake hold.52
Japan: The Great Tohuku Earthquake in March 2011 pushed Japan into recession for the
rest of the year. While economic growth is expected to return in 2012, any initial signs of
turnaround in the first quarter were faint. 53 Prices remain relatively flat, leaving the
country on the cusp of deflation despite rising oil and electricity prices.54 At its February
meeting the Bank of Japan (BOJ) set a target rate for inflation of 1%.55 Negative or
mixed signals in the first quarter could also be seen in household spending, industrial
production, exports, and the labour market.56 Stimulative spending on reconstruction isexpected to provide a much needed boost to the economy in 2012.57 The BOJ also
announced plans in February to expand its bond purchasing program by an additional
JPY 10 trillion.58
India: Elevated consumer prices and interest rates squeezed y-o-y economic growth in
India in Q4 2011 to 6.1 per cent, the lowest level in three years. 59 Caught in a tough
position, the Reserve Bank of India (RBI) faces a choice between a stimulative rate cut or
an inflation-hedging wait-and-see policy.60 As of March, the RBI opted for the latter.61 A
few signs began emerging in the first quarter that the countrys economic deceleration
was easing and that business sentiment was improving.62
47
IHS Global Insight, Current Forecast, 16 March 2012.48 Monthly Bulletin, European Central Bank, 7 March 2012, p. 12.49 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 6-7.50 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 6-7.51 Westpac, Market Insights, March 2012, p. 14.52 ANZ, Research Quarterly: Economics, Commodities, and Markets, Issue 7, Q1 2012, 21 March 2012, pp.12-13.53 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 14-15.54 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 14-15.55 Monthly Bulletin, European Central Bank, 7 March 2012, pp. 9-10.56 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 14-15.57 Monthly Bulletin, European Central Bank, 7 March 2012, pp. 9-10.58 Monthly Bulletin, European Central Bank, 7 March 2012, pp. 9-10.59 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 10-11.60 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, pp. 10-11.61 Levine, Glenn, Rates on Hold in India, Moodys Analytics, 15 March 2012.62 Deutsche Bank, Global Economic Perspectives, 14 March 2012.
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3. Australian economy
Q1 2012 performance: Natural disasters put a dent in Australias export capacity in early
2011.63 A year later in Q1 2012 the economy was on track for 3.6 per cent y-o-y growth
according to private sector consensus forecasts for the period.64 Headline indicators for
business investment, industrial production, and exports have risen in recent months,
providing hopeful signs for the year ahead.
65
Yet less sanguine indicators have alsoemerged. The most recent Westpac-Melbourne Institute index of leading indicators rose
at a sub-trend rate of 2.6 per cent.66 Outside the mining industry, many other sectors of
the economy remained weak, including residential real estate, tourism-related activities,
and retail trade.67
Other downside risks loom large. External threats include the Eurozone crisis and
economic deceleration in China.68 Australia is also experiencing structural changes in
household spending and the housing market.69 In evaluating these developments, the
RBA, chose to leave interest rates unchanged at its April 3 meeting.70
Outlook: All things considered, IHS/Global Insight forecasts GDP growth of 3.1 per cent
in Australia for 2012, up from 2.0 per cent in 2011.71 The improving growth is attributed
largely to Australian coal exports and to the base effects of post-disaster reconstruction. 72
IHS/Global Insight also points out that the forecast would have been even stronger had
external global conditions been more robust.73
Exhibit 3: Consensus forecast for Aust ralian economic growth
Per cent change over same quarter of previous year
Notes: f = forecast
Sources: Consensus Economics,Asia Pacific Consensus Forecasts.
As of March 2012
In its March report, the global staffing firm Manpower reported that 24 per cent of
Australian employers plan to hire workers in the second quarter of 2012 compared to just
11 per cent that plan to downsize.
74
The seasonally adjusted net balance of +13 per centwas unchanged from the Q1 2012, but it is lower than levels reported in previous quarters
63 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 34.64 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, p. 4-5.65 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012, p. 4-5.66 Westpac, Bulletin, Leading Index points to lacklustre growth, 21 March 2012.67 National Australia Bank, Global & Australian Forecasts, 13 March 2012, pp. 8-19.68 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.69 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.70 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.71 IHS Global Insight, Current Forecast, 16 March 2012.72 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 31.73 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 31.74 Manpower, Employment Outlook Survey: Australia, Q2 2012
0.0
0.5
1.0
1.52.0
2.5
3.0
3.5
4.0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010 2011 2012f 2013f
Real GDP % growth
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of 2011.75 Recent business confidence surveys and job advertisement volumes have also
pointed to weak labour conditions in the first half of 2012.76
Exhibit 4: Outlook for hiring by Australian employers
Net balance of employers planning to increase hiring versus those planning to decrease
Net Balance
Period Increase Decrease ActualSeasonally
Adj ust ed
2012 Q2 24% 11% +13 +13
Q1 23% 10% +13 +13
2011 Q4 25% 9% +16 +15
Q3 26% 9% +17 +18
Q2 29% 6% +23 +22
Notes: Seasonally adjusted and based on a representative national sample of 2,251 employers in the most recent quarter.
Sources: Manpower Employment Outlook Survey: Australia, Q2 2012
As of March 2012
75 Manpower, Employment Outlook Survey: Australia, Q2 201276 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 36.
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4. Australian drivers and challenges
Inflation: Australias consumer prices have decelerated in recent quarters following a
spike in food prices in early 2011.77 The base effect of this spike is likely to bring the
headline inflation rate lower in the first half of 2012, but the introduction of a carbon tax in
mid-2012 will boost the rate again in the latter half of the year. 78 The RBA expects
inflation to hold within the 2-3 per cent target range over the next two years.
79
Accordingto the RBA, a key aspect of Australias consumer inflation is the difference between
tradables and non-tradables.80 The price of non-traded goods and services has risen
briskly while the price of traded items has held more constant due to exchange rates. 81
Any depreciation of the Australian dollar could thus add pressure to consumer prices.82
Credit and lending: Australian banks are in a relatively strong position, with limited direct
exposure to the Eurozone crisis.83 Banks are well capitalised with generally conservative
lending practices.84 With global funding conditions improving in early 2012, Australias
larger banks have recently issued significantly more bonds.85 Banks have been eager to
compete for deposits.86 Deposit growth has recently outpaced credit growth.87
Non-performing business loans remain a problem for some banks, and this is due largely
to struggling sectors of the Australian economy that have benefited less from the resource
boom.88 As Australian households have pulled back on spending, they have been quick
to repay loans and increase their savings rate.89 An unexpected hike in lending rates in
February impacted variable-rate home mortgages. 90 Any uncertainty with regard to
interest rates is likely to exacerbate consumers recent hesitation to spend.91
Resources demand: In August 2011, the RBAs index of commodity prices reached its
highest level since late 2008.92 The index then receded through the next six months
before turning upward again in March 2012.93 The index has held near or above 100
since early 2011.94
77 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.78 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 37.79 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.80 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.81 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.82 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 85-90.83 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p. 2.84 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 32.85 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p. 2.86 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 37-43.87 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p. 2.88 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p. 2.89 Reserve Bank of Australia, Financial Stability Review, 27 March 2012, p. 2.90 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 5.91 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 5.92 Reserve Bank of Australia, Index of Commodity Prices (Table G5), 2 April 2012.93 Reserve Bank of Australia, Index of Commodity Prices (Table G5), 2 April 2012.94 Reserve Bank of Australia, Index of Commodity Prices (Table G5), 2 April 2012.
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Exhibit 5: RBA index of commodity pr ices
Notes: index based on monthly averages; 2008/09 = 100
Sources: Reserve Bank of Australia (Table G5)
As of March 2012
Rising prices and demand for commodities has driven investment in Australias mining
sector. New capital expenditures for mining have been rising as a share of total privatesector business investment for years.95 As recently as 2005, mining accounted for less
than 20 per cent of private sector investment, but by the Q4 2011, the mining sector alone
accounted for just over half of all new capital expenditures.96
Exhibit 6: Actual private new capital expenditures, mining as a share of total
Notes: Based on seasonally adjusted current prices.
Sources: Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition
As of December 2011
Since 2007, new private capital expenditures in the mining sector have nearly tripled.97
New capital expenditures in other sectors have remained relatively stagnant. 98
Businesses outside the mining sector have become increasingly reluctant to invest due to
recent uncertainty about global economic conditions.99 The value of the Australian dollar
has also put many of the trade-exposed non-mining industriesespecially manufacturing
and tourismin a defensive position.100
95 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.96
Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.97 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.98 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.99 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 32.100 Hume, Neil, Boom in mineral wealth exploitation fails to mask Australias problems, Financial Times, 22
0
20
40
60
80
100
120
140
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Indexed to2008/2009
= 100
2008
Commodityprices spike,then collapseas the global
economyfalters
2010-2012
Commodityprices recover in
2010 butplateau in 2011
as globaleconomicoutlook
moderates
0%
10%
20%
30%
40%
50%
60%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2005 2006 2007 2008 2009 2010 2011
Percent of total (%)
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Exhibi t 7: Actual pri vate new capital expenditure, 2007 = 100
Notes: index based on seasonally adjusted current prices indexed to 2007.
Sources: Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition
As of December 2011
Geographic divergence: The tilt toward mining investment at the expense of other
industries also has a geographic aspect. Australia added 22,300 jobs over the 12 months
ending in February 2012, according to the Australian Bureau of Statistics.101 This net
gain masked a stark difference across states.102 Resource-rich Western Australia and
Queensland added 53,400 and 25,500 jobs, respectively. 103 New South Wales and
Victoria together shed more than 64,000 jobs over the same period.104
Exhibit 8: Australian employment by indust ry
Seasonally adjusted employment level as of February 2012
Change in the past 12 months
Total (000s) Net (000s) Per cent (%)
New South Wales 3,598.4 -31.2 -0.9%
Victoria 2,848.0 -33.6 -1.2%
Queensland 2,340.7 +25.5 +1.1%
Western Australia 1,266.9 +53.4 +4.4%
South Australia 819.0 +4.5 +0.6%
Other states & territories 571.0 +3.7 +0.7%
Aust ral ia 11,444.0 +22.3 +0.2%
Notes: Seasonally adjusted
Sources: Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition
As of February 2012
Foreign exchange: In Q1 2012, the AUD traded well above its historical rate for all major
currencies. 105 This pattern has been consistent for some time across all major
currencies except the Japanese yen.106 A favourable interest rate differential and strong
terms of trade have been among the factors pushing up the value of the AUD.107
March 2012, p. 6.101 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.102 ANZ, Research Quarterly: Economics, Commodities, and Markets, Issue 7, Q1 2012, 21 March 2012, pp.10-11.103 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.104 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.105 Reserve Bank of Australia, Exchange Rates, (Table F11), 30 March 2012.106 Reserve Bank of Australia, Exchange Rates, (Table F11), 30 March 2012.107 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 39-40.
0
50
100
150
200
250
300
350
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2005 2006 2007 2008 2009 2010 2011
Indexed to2007 = 100 Mining industry All industries except mining
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Exhibit 9: Comparative exchange rates
Units of foreign currency per A$
Notes: AUD (A$); USD (US$); JPY (); EUR (); GBP (), CNY (renminbi).
Sources: Reserve Bank of Australia (Table F11)
As of March 2012
The mining sector accounts for about two-thirds of Australian exports. 108 While demand
from Asia encourages investment in Australias resource sector, it also contributes to askewed exchange rate which holds back much of the rest of the economy.109 The value
of the AUD has proven especially sensitive to demand from China. In March, when BHP
Billiton announced an anticipated slowdown in Chinese demand for iron ore, the AUD fell
by 1 per cent in a single day against the US dollar and the euro. 110 A gradual
depreciation of the AUD is widely expected over the short to medium term.111
Monetary policy: Uncertainty about interest rates in recent months has rattled Australian
mortgage holders. Global economic conditions in late 2011 compelled the RBA to cut
policy rates by a total of 50 basis points in November and December, but major banks
were initially slow to pass this cut along to customers.112 Another cut in the policy rate
was widely expected in February, but the RBA held steady at 4.25 per cent as global
conditions improved. This time major banks, squeezed by wholesale funding costs anddeposit competition, lifted interest rates a few basis points on variable-rate mortgages,
even as the RBA left its policy rate unchanged.113 The RBA again left rates unchanged at
its meeting in early April.114 IHS/Global Insight forecasts that the RBA will wait until the
latter half of 2013 before starting a series of incremental hikes to adjust to a changing
economic environment.115
108 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 50.109 Hume, Neil, Boom in mineral wealth exploitation fails to mask Australias problems, Financial Times, 22March 2012, p. 6.110 Keohane, David, Aussie comes under pressure, Financial Times, 21 March 2012, p. 22.111 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 38-39.112
IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 41-42.113 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 41-42.114 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.115 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 40-41.
average monthly exchange rate since January 2011
long-term average since January 2000
USD / AUD CNY / AUD JPY / AUD EUR / AUD GBP / AUD
0.00
0.20
0.40
0.60
0.80
1.00
1.20
Jan-2011
Apr-2011
Jul-2011
Oct-2011
Jan-2012
0
1
2
3
4
5
6
7
8
Jan-2011
Apr-2011
Jul-2011
Oct-2011
Jan-2012
65
70
75
80
85
90
Jan-2011
Apr-2011
Jul-2011
Oct-2011
Jan-2012
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
Jan-2011
Apr-2011
Jul-2011
Oct-2011
Jan-2012
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
Jan-2011
Apr-2011
Jul-2011
Oct-2011
Jan-2012
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 12
Exhibit 10: Policy rates and inflation
Outlook for selected countries
Sources: IHS Global Insight, forecast series RMP_A and CPI_A
f = forecastAs of March 2012
Retail trade: The Australian labour market displayed marked differences across sectors
for the 12 months ending in February 2012.116 The mining sector added nearly as many
jobs as the healthcare sector during this period, despite being less than one-fifth as large
in terms of total employment.117 Other sectors experienced outright declines.118 One of
these was retail, which lost 23,800 jobs during the period. 119 The RBA recently
acknowledged that structural changes are underway across labour market sectors, and
retail trade is clearly an area where this is occurring.120
Exhibit 11: Australian employment by industry
Seasonally adjusted employment level as of February 2012Change in the past 12 months
Total (000s) Net (000s) Per cent (%)
Health Care & Social Assistance 1,349.5 +49.1 +3.8%
Retail Trade 1,208.6 -35.4 -2.8%
Construction 1,019.9 -1.4 -0.1%
Manufacturing 971.2 -23.8 -2.4%
Professional, Scientific & Technical Services 888.4 +1.9 +0.2%
Education & Training 863.9 +19.3 +2.3%
Accommodation & Food Services 745.7 -59.2 -7.4%
Public Administration & Safety 742.1 +34.6 +4.9%
Transport, Postal & Warehousing 549.9 -46.1 -7.7%
Other Services 474.8 +28.6 +6.4%
Financial & Insurance Services 423.1 +14.0 +3.4%
Administrative & Support Services 404.4 -5.1 -1.2%Wholesale Trade 397.5 -30.0 -7.0%
Agriculture, Forestry & Fishing 334.3 +7.8 +2.4%
Mining 249.7 +44.6 +21.7%
Rental, Hiring & Real Estate Services 225.0 +23.2 +11.5%
Information Media & Telecommunications 224.0 +7.1 +3.3%
Arts & Recreation Services 200.0 -8.1 -3.9%
Electricity, Gas, Water & Waste Services 153.8 +1.5 +1.0%Notes: Seasonally adjusted
Sources: Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition
As of February 2012
116 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.117
Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.118 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.119 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.120 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012; and Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 79-84.
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2011
2012F
2013F
2014F
2011
2012F
2013F
2014F
2011
2012F
2013F
2014F
2011
2012F
2013F
2014F
2011
2012F
2013F
2014F
US Eurozone UK Japan Australia
Bank rates Inflation, % yoy
BanksRates
Inflation% yoy
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 13
At the surface, part of the decline in retail jobs seems to be broad changes in consumer
behaviour, as high household debt burdens have encouraged consumers to save more
and spend less.121 And in fact, the Westpac-Melbourne Institutes consumer sentiment
index did fall sharply in March 2012 to a level below its long-term average.122 Looking at
retail spending patterns over a longer period of time, however, a more complex picture
emerges. Total retail sales volumes have actually risen steadily since 2009, but a few
retail formats like department stores and clothing and footwear stores have fared poorly
during this period.123 The RBA attributes the format-specific declines to the internet.124
At current exchange rates, Australian consumers can find better prices online from foreign
retailers.125
Exhibit 12: Retail sales trends compared with foreign exchange trends
Monthly retail turnover by format (2009 = 100) vs. the USD / AUD exchange rate
Notes: Exchange rate expressed as US dollars per A$; retail sales index based on monthly trend data
Sources: Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition; Reserve Bank of Australia, Exchange Rates (Table F11)
As of January 2012
Population & labour force trends: Since 2006, the natural increase of Australias
populationthis is essentially the net difference between birth certificates and death
certificateshas lagged immigration in total volume.126 For the year ending in June 2011,
Australia added about 150,000 new residents through natural increase and another
170,000 through immigration.127 This trend carries significant economic implications.128
In the short term, it gives the countrys domestic demand an added boost, especially in the
housing sector.129 There are long term implications as well. Foreign students have
contributed heavily to the surge in immigration over the past decade. 130 Meanwhile,
structural shifts in Australias labour market have led to surplus labour in industrial sectors
with labour deficits in high-skilled service occupations.
131
Matching changing employerrequirements with skilled foreign immigrants has potential to boost the economy in the
long run. 132 This will be important since population projections indicate that aging
121 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 35.122 Westpac, Bulletin, Consumer sentiment tumbles, 14 March 2012.123 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition; Reserve Bank of
Australia, Exchange Rates (Table F11), 30 March 2012.124 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 79-84.125 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 79-84.126 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.127 Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition.128 Westpac, Market Insights, March 2012, p. 12.129 Westpac, Market Insights, March 2012, p. 12.130 Westpac, Market Insights, March 2012, p. 12.131 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 46-47.132 Westpac, Market Insights, March 2012, p. 12.
0.450.500.550.600.650.700.750.800.850.900.951.001.051.101.15
949596979899
100101102103104105106107108
Jan-2009
Mar-2009
May-2009
Jul-2009
Sep-2009
Nov-2009
Jan-2010
Mar-2010
May-2010
Jul-2010
Sep-2010
Nov-2010
Jan-2011
Mar-2011
May-2011
Jul-2011
Sep-2011
Nov-2011
Jan-2012
USD / AUD
2009 retailturnoverindex = 100
USD / AUD (RHS)
Clothing, f ootwear, &personal accessoryretailing (LHS)
Department stores(LHS)
Total retail turnover(LHS)
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 14
Australian workers will need to be replaced by an ample supply of skilled labour in the
years ahead.133
Exhibit 13: Annual components of population change
Notes: Based on summary of the four quarters ending in June of the stated year
Sources: Australian Bureau of Statistics, Australian Economic Indicators, April 2012 edition
As of June 2011
133 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 46-47.
+0
+50
+100
+150
+200
+250
+300
+350
+400
+450+500
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Net annualpopulation change
Natural increase (birthsminus deaths)
Net immigration
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 15
5. Infrastructure investment trends
For the year ending in Q1 2012, the total transaction volume for Australian infrastructure
rose significantly over the same period ending in Q1 2012. 134 According to Infrastructure
Journals transaction database, closed transactions rose from a total of AUD 23.6 billion in
the year ending Q1 2011 to a preliminary total of AUD 32.0 billion for the year ending Q1
2012.
135
On a sector level, the deal market continued to be dominated by the transportand mining sectors. As of Q1 2012, these sectorseither alone or in combination
accounted for 56.4 per cent of the infrastructure market, down from 66.2 per cent in the
previous year.136
Exhibit 14: Distribution of c losed infrastructure transactions by sector
Summary for the years ending 31 March 2012 and 2011.
Notes: Infrastructure-related transactions attributed to Australia with status of financial close as of the dates shown; transactions include both project and non-
project finance
Sources: Infrastructure Journal, transaction database
As of 31 March 2012
134 Infrastructure Journal, transaction database as of 31 March 2011.135 Infrastructure Journal, transaction database as of 31 March 2011.136 Infrastructure Journal, transaction database as of 31 March 2011.
Transport /Mining13%
Transport31%
Social &Defence
1%
Oil & Gas7%Renewables
3%
Power15%
Mining
23%
Telecoms1%
Other6%
Year toQ1 2011
Transport /Mining29%
Transport24%
Social &Defence
19%
Oil & Gas11%
Renewables6%
Power4%
Mining3%
Other4%
Year toQ1 2012
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 16
6. Scenarios
Baseline
The global economy grows at a below-trend pace in 2012 but continues to improve.137
The European economy remains vulnerable in 2012.138
The US economy steadily improves in 2012.139
The Chinese economy moderates to a more sustainable growth rate in 2012 and
beyond.140
Commodity prices stabilise at relatively high levels.141
European banks and peripheral sovereigns present challenges that require long-term
solutions.142 Australias direct exposure is limited.143
Australian economic growth continues at close to trend.144
The AUD value weakens gradually and incrementally through 2013.145
Australias terms of trade ease modestly from relatively high levels.146
The Australian inflation rate stabilises in the target 2-3 per cent range through
2013.147
Interest rates for Australian borrowers hold steady.148
Australias industry sectors continue to undergo structural change.
149
Australias unemployment rate remains stable, despite underlying changes in the
labour market.150
Australias high levels of household debt continue to impact savings and spending
patterns.151
The Australian housing market stabilises but remains relatively soft. 152
137 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.138 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.139 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.140 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.141 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.142 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.143 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 91-98.144 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.145 Consensus Economics, Asia Pacific Consensus Forecasts, 12 March 2012.146 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 31.147 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.148 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.149 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.150
Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012; and IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 31.151 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 31.152 Reserve Bank of Australia, Statement by Glenn Stevens, Governor: Monetary Policy Decision, 3 April2012.
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RREEF Infrastructure Australian Infrastructure Market Update | First Quarter 2012 17
Downside
A worsening of the Eurozone crisis impacts Australian banks by increasing the cost of
funding in global markets.153
Weaker external demand for Australias commodity exports reduces the short-term
economic outlook.154
High levels of household debt along with uncertainty about interest rates for variable-
rate mortgages further dampens Australias consumer spending.155 Over the long term, the Australian economy lacks the skilled labour it needs to sustain
trend economic growth.156
Increasing frequency of natural disasters becomes a concern for business
investors.157
Upside
Inflation remains well under control, giving the RBA considerable flexibility with
monetary policy.158
A boost in labour productivity offsets age-related turnover in the workforce and also
counters the high value of the AUD.159
Labour force participation gets a boost from creative government policies toencourage more workers and to reduce structural unemployment.160
Substantive education reforms pave the way for a higher skilled labour force over the
longer term.161
Greater market competition for infrastructure services raises economic growth
prospects.162
Ongoing tax reforms bring the corporate tax rate more in line with peers in advanced
countries, thus encouraging greater foreign investment across economic sectors.163
Ongoing tax reforms include tax incentives to boost household savings, adding a
degree of permanence to recent shifts in saving and spending patterns. 164
Ongoing tax reforms focus heavily on the financial sector, with aims to (1) reduce
bank funding costs; (2) phase out withholding taxes for foreign banks; and (3) simplify
cross-border transactions.165 As a result, Australia emerges as a more competitivefinancial hub for Asia.166
Interest rates abroad surge, reducing Australias differential advantage. The AUD
loses value somewhat faster than expected, allowing other sectors of the Australian
economy to rebalance and become more competitive.167
A looming capacity shortage in the power sectors of some states is met by creative
investments in renewable energy.168
Australia strengthens and deepens its integration with emerging Asia.169
153 Reserve Bank of Australia, 2012 Q1 Bulletin, 15 March 2012, pp. 91-98.154 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 2.155 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 5 and 51-52.156 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 36.157 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 10.158 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp.13 and 51.159 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 52.160 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 52.161 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 52.162 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 52.163 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, pp. 9 and 54.164 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 43.165 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 43.166 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 43.167 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 13.168 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 49.169 IHS Global Insight, Australia: Country Intelligence Report, 22 March 2012, p. 51.
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7. Important Notes
2012. All rights reserved. RREEF Infrastructure is part of RREEF Alternatives, the alternative
investments business of Deutsche Asset Management, the asset management division of Deutsche Bank
AG offers a range of real estate investment strategies, including: core and value-added and opportunistic
real estate, real estate debt, and real estate and infrastructure securities.
In the United States RREEF Infrastructure relates to the asset management activities of RREEF America
L.L.C., and Deutsche Investment Management Americas Inc.; in Germany: RREEF Investment GmbH,
RREEF Management GmbH and RREEF Spezial Invest GmbH; in Australia: Deutsche Asset Management
(Australia) Limited (ABN 63 116 232 154) an Australian financial services license holder; in Japan:
Deutsche Securities Inc. (For DSI, financial advisory (not investment advisory) and distribution services
only); in Hong Kong: Deutsche Bank Aktiengesellschaft, Hong Kong Branch (for RREEF Real Estates
direct real estate business), and Deutsche Asset Management (Hong Kong) Limited (for RREEF Real
Estates real estate securities business); in Singapore: Deutsche Asset Management (Asia) Limited
(Company Reg. No. 198701485N); in the United Kingdom: Deutsche Alternative Asset Management (UK)
Limited, Deutsche Alternative Asset Management (Global) Limited and Deutsche Asset Management (UK)
Limited; in Italy: RREEF Fondimmobiliari SGR S.p.A.; and in Denmark, Finland, Norway and Sweden:
Deutsche Alternative Asset Management (UK) Limited and Deutsche Alternative Asset Management
(Global) Limited; in addition to other regional entities in the Deutsche Bank Group.
Issued and approved in the United Kingdom by Deutsche Alternative Asset Management (UK) Limited,
Deutsche Alternative Asset Management (Global) Limited, and Deutsche Asset Management (UK) Limitedof One Appold Street, London, EC2A 2UU. Authorised and regulated by the Financial Services Authority.
Key RREEF research personnel are voting members of various RREEF Infrastructure investment
committees. Members of the investment committees vote with respect to underlying investments and/or
transactions and certain other matters subjected to a vote of such investment committee. Additionally,
research personnel receive, and may in the future receive incentive compensation based on the
performance of a certain investment accounts and investment vehicles managed by RREEF Infrastructure
and its affiliates.
This material was prepared without regard to the specific objectives, financial situation or needs of any
particular person who may receive it. It is intended for informational purposes only. It does not constitute
investment advice, a recommendation, an offer, solicitation, the basis for any contract to purchase or sell
any security or other instrument, or for Deutsche Bank AG or its affiliates to enter into or arrange any type
of transaction as a consequence of any information contained herein. Neither Deutsche Bank AG nor any
of its affiliates gives any warranty as to the accuracy, reliability or completeness of information which iscontained in this document. Except insofar as liability under any statute cannot be excluded, no member of
the Deutsche Bank Group, the Issuer or any officer, employee or associate of them accepts any liability
(whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or
for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the
recipient of this document or any other person.
The views expressed in this document constitute Deutsche Bank AG or its affiliates judgment at the time
of issue and are subject to change. This document is only for professional investors. This document was
prepared without regard to the specific objectives, financial situation or needs of any particular person who
may receive it. No further distribution is allowed without prior written consent of the Issuer.
An investment in infrastructure involves a high degree of risk, including possible loss of principal amount
invested, and is suitable only for sophisticated investors who can bear such losses. The value of shares/
units and their derived income may fall or rise. Any forecasts provided herein are based upon RREEFs
opinion of the market at this date and are subject to change dependent on the market. Past performance orany prediction, projection or forecast on the economy or markets is not indicative of future performance.
The forecasts provided are based upon our opinion of the market as at this date and are subject to change,
dependent on future changes in the market. Any prediction, projection or forecast on the economy, stock
market, bond market or the economic trends of the markets is not necessarily indicative of the future or
likely performance.
Certain RREEF investment strategies may not be available in every region or country for legal or other
reasons, and information about these strategies is not directed to those investors residing or located in any
such region or country.