This material has been produced by RBS sales and trading staff and should not be considered independent.

The Round Up
8 December 2009
Issue No. 234
The Round Up is a comprehensive daily note produced by the RBS Warrants
team providing an overview of market movements along with quality ideas for
warrant traders and investors.

In today’s issue
Global Market Action Scoreboard, commentary
Aussie Market Action SPI Comment, Events & Dividends
NWS (NWSKZJ) MINI Trading Buy USD rebound, more value in TV
BXB (BXBKZG) MINI Trading Buy – Recovery Story
ASX (ASXKZI) MINI Trading Buy – Strong November trading
Round Up Corner Banks Update – ANZ,CBA,NAB,WBC

Equities

Move Last % Move Range Volume

ASX 200 -25.7 4676.5 -0.5% -51 to +21 $2.6 bn(L)

SPI - yesterday -33.0 4673.0 -0.7% -52 to +41 27,375(A)
Dow Jones +1.2 10390.1 +0.0% -29 to +54 Very High
S&P 500 -2.7 1103.3 -0.2% -5 to +5 High
Nasdaq -4.7 2189.6 -0.2% -11 to +7 Avg
FTSE -11.7 5310.7 -0.2% -71 to +6 Avg

Commodities

Move Last % Today % Past Month

Oil-WTI spot -1.52 73.95 -2.0% -4.6%
Gold Spot -6.50 1154.90 -0.6% +5.5%
Nickel (LME) -0.32 722.08 -0.0% -7.9%
Aluminium (LME) +0.34 96.34 +0.4% +13.1%
Copper (LME) -2.02 315.73 -0.6% +7.6%
Zinc (LME) -2.94 103.08 -2.8% +5.8%
Silver -0.35 18.17 -1.9% +4.7%
Sugar -0.07 21.88 -0.3% +0.2%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) +0.29 +2.0% 14.58 15.99 +27.0 c
RIO (UK) +44.5 p +1.4% £31.70 57.16 -1443.4 c
BLT (BHP UK) +20.0 p +1.1% £19.105 34.45 -615.8 c
BXB (UK) -3.3 p -0.9% £3.485 6.28 -10.5 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) -0.41 -0.5% 74.86 41.05 +44.1 c
AWC (US) +0.14 +2.4% 5.86 1.61 +2.7 c
TLS (US) +0.09 +0.6% 15.77 3.46 +0.9 c
ANZ (US) -0.27 -1.3% 20.07 22.01 +6.1 c
WBC (US) -2.41 -2.2% 108.65 23.83 -5.8 c
NAB (US) -0.47 -1.8% 25.38 27.84 -16.5 c
LGL (US) -0.70 -2.2% 30.94 3.39 +3.3 c
RMD (US) -0.04 -0.1% 52.21 5.73 -3.4 c
JHX (US) -0.31 -0.8% 37.51 8.23 -7.2 c
PDN (CAN) -0.05 -1.3% 3.92 4.08 +1.4 c

Overnight Commentary
United States Commentary
US markets looked set for modest gains, before a late sell off with two hours to play. Led lower by the financials and in
particular the investment banks, heading into the last 30mins, the Dow is struggling to push back into postiive territory
down 5pts, the S&P and Nasdaq 0.4% lower.
Eco - Hosing down any residual expectations for a V-shaped recovery, Bernanke said the US economy faces "formidable
headwinds" including a weak labour market and tight credit, which will likely mean a "moderate" pace for expansion. As
part of a speech to the Economic Club of Washington(midday), Bernanke went on to say inflation remains subdued and
reiterated that rates are likely to stay low for an "extended period".
Financials - A key contributor toward the Dow's sell off, financials and investment banks gave back most of Friday's gain.
BofA down nearly 2%, JP's 1.3%, Well Fargo 2.3%, US Bancorp down 2.3% and Morgan Stanley 2.1% lower.
Telcos - One of few real standouts overnight, Sprint Nextel topped the S&P100 up 11% post a bullish Barrons article,
Verizon and AT&T trading 2% and 1.4% higher respectively, separated only by Boeing on the Dow dais.
Homebuilders - The sector struggled from the opening bell although the pace of the sell-off picked up in the pm. Lennar
the worst of the group down nearly 4%, KB home down 3% and Dr Horton down 2%, not helped by news the Chairman
and CFO have lifted their compensation by 56% despite reporting a FY net los of $545.3mln.
Eco - Consumer Credit for October -$3.5bln vs - $9.4bln expected, a small sign the financial crisis and the impact its
having on the household is abating(that said, significantly less important than where unemployment goes in 2010).

United Kingdom & Europe Commentary

The FTSE edged 0.2% or 12pts lower as concerns over increased taxes for banks and banker's bonuses cast doubts on
the sector. The FTSE Eurofirst 300 was off 0.5% with further worries about Greek banks weighing. The DAX fell 0.6% with
the CAC ending 0.2% lower.

UK Banks - Further rumours of extra taxes to bankers' bonuses hit the sector. RBS, down 4.7%, was the worst on the
FTSE100 with Lloyds not far behind off 4.1%. HSBC dropped 1.5%, Standard Chartered was off 1.4% and Barclays
ended 2.1% lower.

Euro Banks - Concern over Greece's economy and banks weighed on Euro bourses. EFG Eurobank sank 6% and
National Bank of Greece was off 5.6%. Among the majors Deutsche Bank fell 0.7%, Commerzbank dropped 1%, SocGen
was off 0.2% but BNP eked out a gain of 0.3%.
Employment - Randstad, up 1.4%, had another good day post the US jobs numbers, with the world's 2nd largest
temporary staffing firm being upgraded to buy.

Commodites Commentary
Miners - A fall in the $US saw some miners bounce back a touch despite a mixed night on the LME. BHP climbed 1.1%,
Rio was up 1.4%, Anglo added 0.5%, Xstrata climbed 0.6% and Antofagasta was the best on the FTSE100 up 2.2% but
Fresnillo, off 1.8%, and ENRC, down 2.1%, couldn't recover from earlier falls.

SPI Commentary
The SPI traded down 28pts or 0.5% to 4673. Open at 4701 with a high of 4786 and a low of 4654. Volume 28,619. Overnight the SPI
traded up 28 to 4729.

SPI Intraday SPI Daily

*SPI report taken from the 9:50am open to the 4:30pm close on the previous trading day. Charts taken from IRESS

Upcoming Economic Events for the Week

Monday AUS Aus ANZ job ads

US
Tuesday AUS Aus NAB business confidence, Aus current account balance
US US consumer credit
Wednesday AUS Aus trade balance, Aus housing finance
US
Thursday AUS Aus unemployment rate
US US wholesale inventories
NZ NZ RBNZ cash rate decision
Friday AUS
US US trade balance, US retail sales
*Dates are indicative only and may change
MINI Trading Buy:

News Corp (NWSKZJ) – USD rebound, more value in TV

The NWS share price has been weighted down on the falling USD index of late, currently trading now at low $15 where it
was in early August. The stock looks well supported at this level so we feel that with a stabilising/rising USD, NWS can
bounce strongly from this level. RBS Research believes that the introduction of retransmission fees will add a substantial
uplift to the TV revenues and valuation. RBS Research has a $19.92 Target Price on NWS which represents a healthy
31.4% upside. Get Long NWS with NWSKZJ.

Source: IRESS

Retransmission fees could be a share-price catalyst

News Corp has indicated that it intends to try to start charging the cable, satellite and IPTV operators for the right to
retransmit the Fox Network to their pay TV customers. We estimate potential additional revenue and operating profit for
News Corp of US$500m+ over a threeto four-year time-frame, which could help drive News Corp’s TV operating profit
back up to US$1bn by FY14F (from only US$174m in FY09). etransmission revenues will take time to ramp up as
agreements come up for renewal, but the announcement of an initial deal could be a catalyst for an overall re-assessment
of the valuation of News Corp’s TV assets.

Retransmission fees could add US$3.2bn+ to TV valuation

We currently value News Corp’s TV operations at US$3.8bn (8.5x FY11F EBITDA). We estimate that retransmission
revenues of cUS$500m per annum would add US$3.2bn to our TV DCF valuation (equivalent to US$1.25 or A$1.40 per
share), with further upside if News Corp is able to achieve a rate per subscriber above that of CBS.

Buy rating and A$19.92 price target retained

We believe guidance for FY10 operating profit growth of ‘high single to low double digit’ is conservative and see potential
for ongoing upgrades as the year progresses (we forecast growth of 16%). The stock looks cheap on both peer multiple
and a sum-of-the-parts basis, with possible catalysts around retransmission deals and eventual capital management.

RBS MINIs over UGL

Security ExPrc Stop Loss CP ConvFac Delta Description

NWSKZJ 1157.22 1272 Long 1 1 MINI Long
NWSKZI 783.16 861 Long 1 1 MINI Long
MINI Trading Buy:

Brambles (BXBKZG) – Recovery Story

BXB’s AGM trading update last week conmtained few surprises and highlighted that conditions remain soft in BXB's key
markets. While conditions may remain tough in the short term, RBS Research maintain a long-term Buy on the back of
BXB's leverage to economic recovery. Last week’s pullback to the previous key resitance level at $6.50 is a buying
opportunity. Buy BXBKZG

Source: IRESS

BXB’s AGM trading update showed underlying group revenue down 3% on the pcp, with CHEP and Recall both recording
3% declines. Given the weak economic conditions through the period to October we think this was not a bad outcome.
Outlook commentary suggests conditions remain weak with BXB yet to see a pickup in activity in its key US and
European markets.

CHEP
With a 5% decline in revenue, the CHEP Americas business was slightly weaker than expected. A soft US market was
the primary driver, with management now estimating pallet issues in the US will be 3% below FY09. CHEP EMEA
declined 1% (+1% ex-autos), while CHEP Asia Pacific increased 2% (+4% exautos) reflecting the better economic
environment in the region.

Buy at the bottom for longer-term upside

RBS retain long-term Buy rating. We think the BXB business will prove itself over time and see sentiment returning as a
pickup in the economic environment feeds through to earnings growth. Executing on the US will be key. Target price
$7.51.

RBS MINIs over BXB

Security ExPrc Stop Loss CP ConvFac Delta Description

BXBKZG 382.1 Long 1 1 MINI Long
BXBKZP 981.09 Short 1 1 MINI Short
BXBKZR 911.27 Short 1 1 MINI Short
MINI Trading Buy:

Aust Securities Exchange (ASXKZI) – Strong November trading

RBS Research have a Buy recommendation on ASX with a 12mth Target Price of $40. Yesterday ASX released
November trading activity showing a surprisingly strong rebound to trading volumes in cash and deriviative
products. Cash equity volumes were in line with RBS Research’s forecast at 541k/day (up 31% on the pcp), while
futures & options volumes were up a sizeable 47% on an average daily basis. Furthermore, both primary and
secondary issuances remained healthy.

Get long ASX with ASXKZI for a valuation uplift to Target Price of $40.

Source: IRESS

Cash equities – value traded up 19% on the pcp at A$5.1bn

Total average daily volume traded was 541k in November, up 31% on the pcp. The daily average value traded was up
19% on the pcp to A$5.1bn (although this is down on the A$5.4bn in October). Overall we view these as strong numbers
and remain confident that our forecast of A$6.0bn in average value traded for FY10 remains intact.

Futures & options – November volumes up 47% on the pcp

November was an exceptionally strong month for futures & options with average daily volumes up 47% on the pcp.
Management attributed this strength to strong trading in 3-year treasury bond futures, as the contract has become the
focal point of liquidity across the yield curve. The uncertainty around future cash rates contributed to the volumes, as did
the high level of Commonwealth Government bond issuance (A$4.8bn).

ASX last traded $33.33, BUY ASXKZI for 1-for-1 upside towards RBS Target Price of $40.00

RBS SFIs over ASX

Security ExPrc Stop Loss CP ConvFac Delta Description

ASXKZI 2101.11 2415 Call 1 1 MINI Long
RBS Round Up Corner:

Banks Sector Update – ANZ,CBA,NAB,WBC

Post the bank reporting season, CBA trading update and ANZ, NAB and WBC going ex dividend, the banks have
underperformed. RBS Research believe banks will wait until they understand how businesses are performing post
Christmas before poviding further upbeat commentary. This is likely to weigh on relative share price performance in the
short term, however the BDD cycle seems to be peaking and any pullbacks in the banks into the end of the year should
be used as a buying opportunity.

Sector performance
Banks' PE relative (to All Ords) is back down to 86%, having underperformed the market over the last month. While this is
above the long-run average, given short-term structural advantages, we believe the sector can trade at a premium. The
banks are now trading at an average PE of 13.5x FY10F on IBES consensus.

Investment view – RBS Research prefer ANZ and NAB to WBC and CBA
As a result of a normalising earnings cycle, we believe relative valuation will again play a significant role in the relative
performance of stocks in the sector. RBS believe ANZ and NAB still have the greater share price upside potential over
the next six to 12 months, given their 1-2 PE point discounts.
For further information please do not hesitate to contact us on the details below

Contact
Equities Structured Products & Warrants
Toll free 1800 450 005 www.rbs.com.au/warrants
Trading Products Team
Ben Smoker 02 8259 2085 ben.smoker@rbs.com
Ryan Corrigan 02 8259 2425 ryan.corrigan@rbs.com
Investment Products Team
Elizabeth Tian 02 8259 2017 elizabeth.tian@rbs.com
Tania Smyth 02 8259 2023 tania.smyth@rbs.com
Robert Deutsch 02 8259 2065 robert.deutsch@rbs.com
Mark Tisdell 02 8259 6951 mark.tisdell@rbs.com

Disclaimer:
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240530) (“RBS Equities”) and has been taken from sources believed to be reliable. RBS Equities does not make representations that the information is
accurate or complete and it should not be relied on as such. Any opinions, forecasts and estimates contained in this report are the views of RBS
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© Copyright 2009. RBS Equities. A Participant of the ASX Group.

Explanation of Warrant Tables:

Security – refers to the code ascribed to the warrant, ExDate – refers to the date on which the warrant expires or is reset, ExPrc – refers to the
exercise price, or second instalment payment, CP – tells you whether the warrant is a call or a put, ConvFac – the conversion factor of the warrant
which tells you how many warrants you need to exercise in order to take possession of 1 share, Delta – tells you how much the warrant will move for a
1c move in the underlying security, Description – Tells you the type of warrant.
All charts taken from IRESS unless indicated otherwise