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1 PRUMarket Watch April 08 Market08 Prudential Hong Kong Limited (A member of Prudential plc group) 8/F, Prudential Tower, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong Customer Service Hotline 8 Corporate Website

2 Market Overview The World in five bullet points In February, many equity market charts resembled that of a rollercoaster: a sharp fall from a high point followed by a recovery, then another drop into the end. The catalyst for the falls in February was US average earnings data which rose 0.% to.9%. This sent investors scurrying for their inflation and interest rate calculators. On the news, and in fear of higher interest rates, equity markets fell sharply at the beginning of the month while bond yields rose to multiyear highs. But is global inflation really back? As Eastspring points out, the wage bill fell but hours worked fell more; that meant average wages rose. Meanwhile, eurozone inflation fell to.% while commodity prices the canary in the coal mine for global inflation also eased. The ECB s monthly meeting minutes caused a stir after they suggested the US may be deliberately devaluing the dollar. US Treasury Secretary Steven Mnuchin in January suggested weak dollar was good for the US although President Trump quickly countered him. But at the ECB at least, suspicion remains. Germany inched closer to having a government when the Social Democrats polled their members on whether to join a coalition government with Angel Merkel s Christian Democratic Union. The result of the poll is due in the first few days of March but even if it is no many expect the SD to join government anyway. South Africa produced its first budget in the postzuma era, which was generally well received by the market. VAT will rise but expenditure will not while debt should stabilise giving rise to a bump in GDP growth expectations. Equities markets endured one of their most volatile months in years with investors accelerating the selling momentum which began at the end of January into a fullscale rout by the end of the first week of February. The fear index the CBOE s VIX index spiked sharply before tapering as the month progressed but still finished well above its starting point on February. By the end of the month, many markets recovered to be back to where they started the year despite a finalday dip but for the calendar month almost all markets fell in February with Developed and Emerging markets performing more or less in line with one another. Europe was a slight underperformer against the US as the euro strengthened while Japan dropped just.%. In the Emerging Market universe, EMEA outperformed although was still down, supported by South Africa (Zuma resigned as president) and Russia (currency movements), while Asia Pac underperformed against Latin America, which again was helped by a relative outperformance from Brazil. Within Asia, North Asia markets underperformed ASEAN and everywhere outperformed India, which fell 6.7%. China (down 6.%) and Korea (down 6.%) were also noticeably weak, especially during the early month sell down. Thailand took the honour of being the only Asia market to show a gain. India fell throughout the month even after other EMs began to recover post the first week after the India government introduced a longterm capital gains tax on stocks in its budget. Banking stocks weighed heavily after an alleged fraud against Punjab National Bank was revealed while a threat of MSCI lowering the weighting in some of its index fleet became a darkening cloud on the horizon MSCI says this is an option after domestic exchanges barred the use of local derivative products for overseas bourses.

3 Fixed Income US year Treasury yields hit the highest levels since the global financial crisis in the final week of the month, while those on the 0year yield reached a fouryear high on release of the Fed minutes, which suggested a quicker path to normalized interest rates. New Fed chief Jerome Powell s congressional testimony debut a few days later only added fuel to this speculative fire, as he shared his personal view that the economy has strengthened since December, and that headwinds once holding back the US economy (export growth and fiscal policy) have transformed into tailwinds. Over in Asia, Asian USDdenominated bonds were not spared from the US Treasuries selloff, as widening spreads only added to the negative effect of rising riskfree benchmarks on performance. Highyield underperformed less than highgrade, supported by higher accrual income. Overall, the representative JPMorgan Asia Credit index fell 0.7% in February. The BoJ also trimmed the amount of superlong government bonds it offered to buy although stressed there was no change to the underlying policy. Currencies The yen hit a month high versus the greenback during the month although most analysts attributed this to dollar weakness rather than yen strength. The US dollar index rose, primarily reflecting the yen strength, but the dollar weakened again against most other currencies. Against the euro, the dollar is now % below the level seen on 0 January 07, President Trump s inauguration day, and 7.% lower against the yen in the same time period. The euro gained for the month although did slip in the final week ahead of the Italian general election and over whether Germany can form a coalition government after months of talks; both results are due in the first few days of March. The South African rand rose to a threeyear high versus the USD after President Jacob Zuma resigned and Cyril Ramaphosa was sworn in as his replacement. His subsequent first budget also provided support. The Australian dollar fell to reverse last month s gains, and to track commodity prices lower through the month. Domestic support this month was limited with GDP and consumer related indices continuing to look weaker rather than stronger. Commodities Commodity prices in general eased after the weak start to the month, led by industrial and precious metals. Oil fell with equities at the beginning of the month but rose steadily thereafter before tipping down again at the final few days on unexpectedly high inventory builds in the US. The International Energy Agency and OPEC again forecasted increased 08 US oil production for 08 but for most of the month, traders focused instead on production cuts including in the US. WTI ended 6% lower at $6.60 per barrel and Brent 7% lower at $6.60. Metal prices also fell with aluminum prices down around % year to date as China factories ramped up production ahead of the expiration of winter/pollutionlinked production curtailments in March. Copper fell into the end of the month despite being higher for much of February as China s ban on importing scrap metal, which began in January, started to bite. Smelters in China now need to increase their feed of refined copper to maintain production levels, which has pushed prices higher. In the first week of February, iron ore prices fell from their peak seen in late January but ticked higher thereafter into the close of the month to finish 8% higher. Coal prices were steady for much of the month before falling in the final week as Chinese factory output data disappointed. The Baltic Dry Index, a key indicator of the health of the commodity market, rose modestly albeit from multimonth lows reached during the month on worries over the health of the Chinese economy.

4 Economics Aside from the wage data that sent the equity markets into a sell off, the US Consumer Price Index surprised to the upside on both headline and core measures, and helped to push 0year Treasury yields to fouryear highs and above.9%. But retail sales also slowed reminding investors that inflation is not the only driver behind interest rates; global equities began their recovery from week one s sell off on the news. Eurozone GDP grew by a healthy.7% yoy with an added cheer given to the breadth of the growth, with almost all countries that share the euro recording GDP growth. The Purchasing Manager s Index came in at 8.8 a measure traditionally associated with GDP growth of above %. The UK held interest rates steady and the BoE upped its GDP forecast for 08 to +.8%, better than many expected last year but still subdued by historical standards. GDP rose just 0.% in Q7. Inflation remains an issue with signals from the bank that it may increase rates sooner rather than later while the market is pricing in May for a bps rate increase. Japan s Q GDP growth came in at 0.% qoq, well below estimates of +%, with exports this time taking a back seat to domestic demand. The BoJ is likely to interpret the subdued figures as reason not to change its rate policy while the reappointment of Governor Kuroda,as well as a monetary policy supporter as his deputy, will likely lead to clarification on monetary policy in coming months. Japan s core consumer inflation data was also steady but industrial output fell 6.6% in January its largest fall since the Tohoku earthquake in 0 mainly due to heavy snowfall delaying parts delivery. China s factory data was also disappointing with growth in China s manufacturing sector in February slowing more than expected due to tough antipollution measures and the timing of the lunar new year holidays. The weak numbers was enough to send Chinese stocks lower on the final day of trading. Investment involves risks. Past performance is not indicative of future performance. Please refer to the offering documents for further information including fees and charges, and risk factors. The above information is for reference only. Any opinion or information contained in this document is made on a general basis and should not to be relied upon by the reader as advice. Individual country or domicile may have restriction on specific investment instruments, reader is recommended to seek independent professional tax and/or legal advice before making any investment decision. Some of the information included in this material have been prepared with the assistance of Eastspring Investments (Hong Kong) Limited, and/or its associates. Prudential Hong Kong Limited reserves the right to make changes and corrections to its opinions expressed in this document at any time, without any notice. Any unauthorized disclosure, use or dissemination of this document, either in whole or in part, is prohibited and this document should not be reproduced, copied, or made available to others. This document is issued by Prudential Hong Kong Limited (A member of Prudential plc group). MKTX/SA00(0/8)

5 Important Notes () The investment choices are available for investmentlinked insurance plans ( Plan ), including PRUlink portfolio investment plan, PRUlink single premium investment plan, PRUlink investment plan (PRUlink investment plan was closed for new business since 0 January 0), PRUlink smart wealth builder (PRUlink smart wealth builder was closed for new business since December 0), PRUlink wealth builder (PRUlink wealth builder was closed for new business since February 00), PRUretirement extra (PRUretirement extra was closed for new business since January 0), PRUkid extra (PRUkid extra was closed for new business since January 0), PRUlink optimiser plus (PRUlink optimiser plus was closed for new business since 0 January 0), PRUlink assurance plus (PRUlink assurance plus was closed for new business since October 0), PRUlink assurance (PRUlink assurance was closed for new business since October 0), PRUlink investlife (PRUlink investlife was closed for new business since January 0), PRUflexilife (PRUflexilife was closed for new business since June 0), Investment Plus (Investment Plus was closed for new business since January 0), PRUlink maxisavings (PRUlink maxisavings was closed for new business since 6 August 007) and PRUlink protector (PRUlink protector was closed for new business since November 00) issued by Prudential Hong Kong Limited ("Prudential") only. Your investments are subject to the credit risk of Prudential () You are not investing in the reference funds of the investment choices. The premiums you pay will become part of the assets of Prudential. You do not have any rights or ownership over these underlying investments. Your recourse is against Prudential only. () The investment choices available under the Plan can have very different features and risk profiles. Some may even be of high risk. Please do not invest solely based on this document only. Please read the offering documents of the Plan and the reference funds involved for details including the risk factors. () Investment involves risks. Past performance is not indicative of future performance. Your return on investment is calculated by Prudential with reference to the performance of the reference funds of the investment choices. Return on investment under the investment linked insurance schemes will be subject to the charges of the scheme and may be lower than the return on the corresponding reference funds. () Early surrender or withdrawal of the Plan/suspension of or reduction in premium may result in a significant loss of principal and/or bonuses awarded. Poor performance of reference funds may further magnify your investment losses, while all charges are still deductible.

6 Performance Summary of Investment Choices Figures as of 0/0/08 The following investment choices are each linked to an SFC authorised fund. The performance information below are those of the reference fund corresponding to the relevant investment choice. The unit price of each investment choice on a valuation date will be the same as the quoted unit price of the corresponding reference fund on the same valuation date. Asset Class Money Market Bonds Global Developed Countries Asia Risk Level () Prudential Investment Choices Name Schroder U.S. Dollar Money Fund AB FCP I American Income Portfolio AB FCP I AB FCP I Global High Yield Portfolio AB FCP I Eastspring Investments Asian Local Bond Fund Eastspring Investments US Investment Grade Bond Fund Fidelity Global Bond Fund Fidelity US High Yield Fund Invesco Global High Income Fund Templeton Global Total Return Fund Eastspring Investments World Value Fund Investec GSF Global Strategic Fund GSF Templeton Global Income Fund Baring Europe Select Trust Eastspring Investments Japan Dynamic Fund Fidelity America Fund Fidelity European Growth Fund Franklin U.S. Opportunities Fund Invesco Pan European Fund Allianz Total Return Asian Fund Eastspring Investments Asian Fund JPMorgan ASEAN Fund Code SUD AAI AHY ALB EIB FBF FHY IHI TTR EWV IGS TGI BET EJD FAF FEG FOF IPE ATR EAE JAS Launch Date dd/mm/yy Reference Fund Name and Share Class Schroder U.S. Dollar Money Fund Acc AB FCP I American Income Portfolio A USD /09/ AB FCP I A AB FCP I Global High Yield Portfolio A USD /09/ AB FCP I A Eastspring Investments Asian Local Bond Fund A 07/0/08 A Eastspring Investments US Investment Grade Bond Fund A /09/ A Fidelity Funds Global Bond Fund A USD 08//0 A Fidelity Funds US High Yield Fund A USD 0/0/07 A Invesco Funds Series Invesco Global High Income Fund A SD USD /0/ A Franklin Templeton Investment Funds Templeton Global Total Return Fund A Acc USD 8/0/ A Eastspring Investments World Value Fund A A Investec Global Strategy Fund Global Strategic Fund F Acc USD 6/07/07 F Franklin Templeton Investment Funds Templeton Global Income Fund A Acc USD 0//0 A Baring Europe Select Trust A Acc USD A Eastspring Investments Japan Dynamic Fund A (hedged) USD A Fidelity Funds America Fund A USD 08//0 A Fidelity Funds European Growth Fund A Acc (USD hedged) A Templeton Investment Funds Franklin U.S. Opportunities Fund A Acc USD A Invesco Funds Invesco Pan European Fund A Acc (USD hedged) A Allianz Global Investors Fund Allianz Total Return Asian AT USD 6/07/07 AT Eastspring Investments Asian Fund A A JPMorgan ASEAN Fund Acc USD 0/0/09 Performance of Reference Fund year Annualised Volatility () Launch Date dd/mm/yy 09/07/9 6/0/98 /0/0 0/09/07 0/0/0 0/0/90 0/09/0 /0/9 9/08/0 09//0 /0/07 7/0/0 6// 09/09/ 0/0/90 0/0/ 0/0/00 /07/ /0/0 6/08/0 Unit Price (USD) () /07/ YTD Cumulative Performance (%) % () months () year years years

7 Sector / Special Topic Greater China / China Emerging Markets Portfolio Fund JPMorgan Korea Fund Templeton Asian Growth Fund Allianz Global Agricultural Trends Fund Baring Global Resources Fund BlackRock New Energy Fund BlackRock World Gold Fund BlackRock World Healthscience Fund BlackRock World Mining Fund Invesco Asia Infrastructure Fund Investec GSF Global Energy Fund GSF Baring Hong Kong China Fund Eastspring Investments China Fund Eastspring Investments Greater China Fund First State China Focus Fund Schroder Hong Kong Fund Value Partners Classic Fund Eastspring Investments India Fund Eastspring Investments Indonesia Fund Fidelity Emerging Europe Middle East and Africa Fund Fidelity Latin America Fund JPM Emerging Markets Fund Schroder BRIC Fund Templeton Emerging Markets Fund Baring Asia Balanced Fund BlackRock Global Allocation Fund JKO TAG AAT BGR BNE BWG BWH BWM IAI IGE BHC ICE EGC FCF SHK VCF EIE IDO FEA FLA JEM SBR TEM BAB BGA 07/0/ 8/0/ 6/07/07 0/0/09 0/0/09 0/0/09 /0/07 8/0/ 6/07/07 0/09/0 0/09/0 8/0/ 07/0/ 07/0/ 07/0/08 0/0/06 0/0/09 0/09/0 0/06/0 /0/07 0/0/09 JPMorgan Korea Fund Acc USD Franklin Templeton Investment Funds Templeton Asian Growth Fund A Acc USD A Allianz Global Investors Fund Allianz Global Agricultural Trends AT USD AT Baring Global Umbrella Fund Baring Global Resources Fund A Inc USD A BlackRock Global Funds New Energy Fund A USD A BlackRock Global Funds World Gold Fund A USD A BlackRock Global Funds World Healthscience Fund A USD A BlackRock Global Funds World Mining Fund A USD A Invesco Funds Invesco Asia Infrastructure Fund A Acc USD A Investec Global Strategic Fund Global Energy Fund A Acc USD A Baring International Umbrella Fund Baring Hong Kong China Fund A Inc USD A Eastspring Investments China Fund A A Eastspring Investments Greater China Fund A A First State Global Umbrella Fund plc First State China Focus Fund I Acc USD I Schroder International Selection Fund Hong Kong A Acc USD A Value Partners Classic Fund C USD C Eastspring Investments India Fund A A Eastspring Investments Indonesia Fund A A Fidelity Funds Emerging Europe Middle East and Africa Fund A Acc USD A Fidelity Funds Latin America Fund A USD A JPMorgan Funds Emerging Markets Fund A Dist USD A Schroder International Selection Fund BRIC (Brazil, Russia, India, China) A Acc USD A Franklin Templeton Investment Funds Templeton Emerging Markets Fund A Acc USD A Baring Global Opportunities Umbrella Fund Baring Asia Balanced Fund A Acc USD A BlackRock Global Funds Global Allocation Fund A USD A // /0/ /0/ // /0/ // /0/ /0/ /0/ // // /07/ /0/ /0/ /0/ 8.0 /0/ /07/07.0 0/07/ /06/ /0/ /0/ /0/0.60 /0/ /0/ /0/ Source of investment choice information: Prudential. Source of reference fund information: Morningstar Asia Limited. Figures are based on NAVNAV 08 0 basis in USD with dividends reinvested as of 0 March 08. () The risk level, in the range of to, is assigned based on the volatility of the related Prudential investment choices and the nature of investments. The () figure is provided by Prudential Hong Kong Limited which will be reviewed at least once per annum and is for reference only. Generally speaking, the higher the number, the greater the risk. () year annualised volatility is represented by the annualised standard deviation based on the monthly rates of return over the past years. The higher the () percentage (i.e. standard deviation), the greater the volatility and the greater the risk. () () Performance of reference funds with no historical data of the specified period will not be shown. () 6 () Performance of reference funds established for less than 6 months are not displayed. () Unit price refers to Net Asset Value per unit/bid or Offer price. () /

8 Asset Class Prudential Investment Choices Name Calendar Year Performance (%) Code % () Asset Class Prudential Investment Choices Name Code Calendar Year Performance (%) % () Money Market Bonds Global Developed Countries Asia Sector / Special Topic Schroder U.S. Dollar Money Fund AB FCP I American Income Portfolio AB FCP I AB FCP I Global High Yield Portfolio AB FCP I Eastspring Investments Asian Local Bond Fund Eastspring Investments US Investment Grade Bond Fund Fidelity Global Bond Fund Fidelity US High Yield Fund Invesco Global High Income Fund Templeton Global Total Return Fund Eastspring Investments World Value Fund Investec GSF Global Strategic Fund GSF Templeton Global Income Fund Baring Europe Select Trust Eastspring Investments Japan Dynamic Fund Fidelity America Fund Fidelity European Growth Fund Franklin U.S. Opportunities Fund Invesco Pan European Fund Allianz Total Return Asian Fund Eastspring Investments Asian Fund JPMorgan ASEAN Fund JPMorgan Korea Fund Templeton Asian Growth Fund Allianz Global Agricultural Trends Fund Baring Global Resources Fund BlackRock New Energy Fund BlackRock World Gold Fund SUD AAI AHY ALB EIB FBF FHY IHI TTR EWV IGS TGI BET EJD FAF FEG FOF IPE ATR EAE JAS JKO TAG AAT BGR BNE BWG # # # # Sector / Special Topic Greater China / China Emerging Markets Portfolio Fund BlackRock World Healthscience Fund BlackRock World Mining Fund Invesco Asia Infrastructure Fund Investec GSF Global Energy Fund GSF Baring Hong Kong China Fund Eastspring Investments China Fund Eastspring Investments Greater China Fund First State China Focus Fund Schroder Hong Kong Fund Value Partners Classic Fund Eastspring Investments India Fund Eastspring Investments Indonesia Fund Fidelity Emerging Europe Middle East and Africa Fund Fidelity Latin America Fund JPM Emerging Markets Fund Schroder BRIC Fund Templeton Emerging Markets Fund Baring Asia Balanced Fund BlackRock Global Allocation Fund BWH BWM IAI IGE BHC ICE EGC FCF SHK VCF EIE IDO FEA FLA JEM SBR TEM BAB BGA Source of investment choice information: Prudential. Source of reference fund information: Morningstar Asia Limited. Figures are based on NAVNAV basis in USD with dividends reinvested as of 0 March 08. If the investment choices have more than years history, the performance of reference funds are identical to the performance of the investment choices. If the investment choices have less than years history, only the performance of reference funds since the launch of investment choices are identical to the performance of the investment choices. () Performance of reference funds with no historical data of the specified period will not be shown. # Performance of reference funds is calculated since launch date of reference funds to the end of the calendar year. Investment involves risks. Past performance is not indicative of future performance. Please refer to the offering documents for further information including fees and charges, and risk factors #