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

The Round Up
8 October 2009
Issue No. 192
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
BSL (BSLKZI) MINI Trading Buy – Poised for recovery
ASX (ASXKZI) MINI Trading Buy– September Update
AGK (AGKKZE) MINI Investment Buy – Value in contract wins
Round Up Corner New MINIs listing today

Equities

Move Last % Move Range Volume

ASX 200 +104.1 4695.7 +2.3% +21 to +117 $4.9 bn(A)
SPI - yesterday +115.0 4716.0 +2.5% +53 to +119 27,526(A)
Dow Jones -5.7 9725.6 -0.1% -56 to +9 Avg
S&P 500 +2.9 1057.6 +0.3% -5 to +3 Avg
Nasdaq +6.8 2110.3 +0.3% -8 to +7 Avg
FTSE -29.1 5108.9 -0.6% -33 to +18 Avg

Commodities

Move Last % Today % Past Month

Oil-WTI spot -1.1 69.8 -1.5% +2.3%
Gold Spot +1.4 1043.5 +0.1% +4.8%
Nickel (LME) +23.9 842.3 +2.9% +5.0%
Aluminium (LME) +0.9 82.0 +1.1% -1.4%
Copper (LME) -0.9 275.5 -0.3% -3.8%
Zinc (LME) +0.6 86.6 +0.7% +1.4%
Silver +0.2 17.5 +1.0% +7.5%
Sugar -1.1 22.6 -3.8% +4.4%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) 0.08 0.01 +13.7 c 15.36 +8.6 c
RIO (UK) -2.00 0.00 +27.4 c 49.06 -1169.0 c
BLT (BHP UK) 4.50 0.00 +17.4 c 31.17 -663.8 c
BXB (UK) -25.75 -0.06 +4.0 c 7.10 +6.3 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) 0.95 0.01 +67.1 c 37.67 -13.9 c
AWC (US) 0.19 0.03 +6.5 c 1.83 -1.4 c
TLS (US) -0.21 -0.01 +14.4 c 3.24 -1.8 c
ANZ (US) 0.07 0.00 +21.1 c 23.69 -15.9 c
WBC (US) 4.00 0.04 +113.5 c 25.49 -1.9 c
NAB (US) 0.39 0.01 +26.5 c 29.76 -26.3 c
LGL (US) 0.32 0.01 +27.8 c 3.12 -1.7 c
RMD (US) -0.43 -0.01 +43.5 c 4.89 -11.3 c
JHX (US) -1.23 -0.04 +32.7 c 7.35 -5.3 c
PDN (CAN) 0.30 0.07 +4.3 c 4.59 +10.9 c

Overnight Commentary
United States Commentary
Consolidation ahead of reporting season and a big couple of days. The Dow finished fractionally lower(-6pts) on weakness from the
heavyweight telcos and a breather from some of the cyclical/growth names. Elsewhere, S&P 0.3% despite pain amongst the
homebuilders and the Nasdaq 0.3% higher.
Resources - First pass, the perennial disappointer in Alcoa looks to have snapped the losing streak. Post the close, reporting 3Q eps
ex-items of 4cps vs consensus expecting a 9cps loss. The stock up 2.2% in normal trade and for the 3rd consecutive session finished
at the top of the Dow leaderboard.
Homebuilders - The sector down 3% and constituents featuring heavily amongst the S&P's worst on speculation Congress wont
extend tax breaks for first time homebuyers. Hardest hit were Pulte down nearly 4%, Lennar 3.7% and Dr Horton finished 2.7% lower.
Telcos - Weighing heavily on the Dow, AT&T down 3.6% and Verizon 2.6% lower, the worst performers and among the bigget pt
takers. AT&T lower on a policy reversal that will allow iphone users access to cheaper phone calls .
Financials - Investment banks continued to track higher, BofA and GS up another 2%, JP's 1.8% and Morgan Stanley finished 1.2%
higher post a couple of upgrades and an upbeat broker report.
Eco - A slow night on the economic front, Mortgage Applications up 16.4% in October following a 2.4% fall in September. Consumer
Credit -$12.0bln vs. -$10.0bln expected.

United Kingdom & Europe Commentary

The FTSE dropped 0.6% or 29pts as the oil majors gave back some of yesterdays gains and a weak result from Sainsbury saw the
food retailers lower. The FTSE Eurofirst 300 was off 0.4%, the DAX fell 0.3% and the CAC ended 0.4% lower.

UK Banks - HSBC, up 0.6%, rose despite saying it may delay raising its dividend if new capital rules were applied too heavily or
quickly. Barclays was up 0.1% but RBS, Lloyds and Standard Chartered were off between 0.9% and 2%.

Eco - In the UK, Nationwide Consumer Confidence for Sep was 71 coming in ahead of the forecast 68 and up from 63 prior. On the
continent Europe’s economy contracted more than estimated in 2Q as consumer spending, investment and exports were weaker than
earlier reported. GDP in the 16-nation euro region fell 0.2% from 1Q, when it dropped 2.5%.

Retail - Sainsbury fell 3.3% after releasing its second-quarter trading update, which met forecasts with a slight slowdown in quarterly
sales growth. Peers WM Morrison lost 0.8%, while Tesco , which posted its first-half results on Tuesday, shed 2.3%. In Germany,
Metro fell 3.2% after co-founder Otto Beisheim placed a 5.2% stake in the company.

Insurers - Aviva, up 3.8%, was higher after announcing plans for a secondary listing on the New York Stock Exchange on October 20.
Continued M & A speculation helped the sector with Standard Life, Prudential and Old Mutual up between 1.4% and 2%.
Commodiites Commentary
Miners - Generally stronger base metal prices helped but the sector was mixed. BHP added 0.3%, Rio edged down 0.1%, Anglo was
also off 0.1%, Xstrata fell 0.75% but Vedanta climbed 0.9%.

Energy - US crude inventories fell but gasoline inventories rose more than expected seeing the crude price come back a touch and the
sector moved lower on profit taking. BP was off 1.7%, Shell fell 1.25% and Tullow dropped 3.2%. In Europe Total was 0.8% lower,
Statoil fell 1.4% and Repsol ended down 0.4%.

SPI Commentary
The SPI traded up 114pts or 2.48% to 4715. Open at 4660 with a low of 4655 and a high of 4720. Volume 30,441. The SPI traded
down 6pts to 4710 in overnight trading

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

th
Monday AUS (Daylight saving begins Sunday 4 ), NSW Public Holiday, AIG/CBA services PSI, ANZ job ads
US
Tuesday AUS Trade balance, RBA Cash Rate Decision
US Non-manufacturing ISM
Wednesday AUS AIG/HIA construction PCI, investor housing finance, owner occ housing finance
US
Thursday AUS Employment, unemployment rate
US Consumer credit
Friday AUS
US Wholesale inventories, traqde balance
*Dates are indicative only and may change
Trading Buy:

Bluescope Steel (BSLKZI) – Poised for recovery

The announced return to full utilisation at Port Kembla has pulled forward the recovery leverage timeline. BSL has
material outer year recovery leverage starting FY2011, a reduced cost base, and low PB valuation appeal compared to
regional its peers. RBS Research have a Buy recommendation with a $3.75 target price. Buy BSLKZI

Source: IRESS

Recovery leverage
Increasing demand both domestically and internationally has lifted Port Kembla to 100%, well in excess of the 75% BSL
forecast at its FY09 result. The benefits from domestic restocking activity and strong export demand have pulled forward
the recovery leverage story. With full utilisation likely to continue through 2Q10, we now expect BSL to return to positive
NPAT in 1H10.

Underlying valuation appealing

RBS Research believe the improved earning outlook and increased steelmaking capacity utilisation enhance BSL’s
appealing 0.92x P/B valuation compared to regional peers of between 1.4x to 1.7x. As the steel cycle normalises, we
believe these P/B multiples may begin to converge, which is more reflective of the long-term trading history.

Greatest recovery leverage

With A$132m in permanent costs removed from the business, the greatest earnings leverage in the sector, and upside
risks to a demand recovery appearing earlier than anticipated, BSL remains RBS Research preferred pick in the sector.

RBS MINIs over BSL

Security ExPrc Stop Loss CP ConvFac Delta Description

BSLKZI 162.43 187 Long 1 1 MINI Long
BSLKZS 472.88 401 Short 1 1 MINI Short
MINI Trading Buy:

ASX Limited (ASXKZI) – September Update

ASX released their September update yesterday. Cash equities continued to climb steadily as expected with an average
of A$6bln traded per day. RBS Research has moved to a trading buy on ASX on the belief that the company will generate
significant EPS growth from FY11 as current high volumes flow thorugh to earnings. Play the earnings uplift story on ASX
thorugh ASXKZI. Look for a move to $37. RBS Research target price $40 with a buy recommendation

Source: IRESS

September Stats
• Cash equities – value traded down 3% but still strong at A$6.0bn
• September was definitely a weaker month for futures with relatively light interest rate futures activity. Total futures
and options were down 25% on the pcp to 312k/day. On the positive year-to-date figures are down only 16% and,
at 262k/day, are already tracking well ahead of the FY09 average of 250k/day.
• A$1.9bn was raised in September which is the most for a month since December 2007. Secondary raisings also
remained healthy at A$6.7bn and the September quarter (A$27.9bn) was almost as strong as the record June
quarter (A$28.4bn). The level of IPO activity seems set to remain robust with a large number of high profile IPOs in
the pipeline.

RBS MINIs over

Security ExPrc Stop Loss CP ConvFac Delta Description

ASXKZI 2067.05 Long 1 1 MINI Long
ASXKZS 4117.44 Short 1 1 MINI Short
MINI Investment Buy:

AGL Energy (AGKKZE) – Value in contract wins

RBS Research have upgraded AGK to buy recommendation with a $15.70 price target after updating the wind model for
1360GWh of desalination contracts, an expanded project pipeline and weaker near-term REC prices. The net changes
have pushed up valuation to $15.70. AGK is at the bottom end of its trading range. Buy AGKKZE

Source: IRESS

AGK has recently won 1360GWh worth of desal contracts in VIC and SA. While pricing hasn’t been released, RBS
Research estimate the group has locked in roughly A$120/MWh with CPI escalation. This ensures that economics will
remain robust on a large portion of AGK’s wind farm projects and also means new projects will be accelerated.

NSW remains a big opportunity

It appears that the NSW Government is inching towards a sell-down of its merchant energy assets in early CY10. We
think ORG’s large balance sheet leave it well placed to land the assets that it wants (likely EA), but we would argue AGK
is the clear runner up and this means it should still be able to land some accretive assets. A successful potential bid may
require an equity raising, but we have faith in AGK’s management that any deal would represent a very compelling
opportunity for investors.

Rating bumped back up to Buy

AGK’s share price has underperformed the market by almost 20% over the last 2 months, reflecting a shift away from
more defensive names. We believe the wind opportunity is not yet priced in by the market and expect this to occur
gradually over the next 12 months. The New South Wales opportunity can only deliver upside for shareholders.

RBS MINIs over AGK

Security ExPrc Stop Loss CP ConvFac Delta Description

AGKKZC 1063.09 Long 1 1 MINI Long
AGKKZE 1074.58 Long 1 1 MINI Long
AGKKZP 1772.7 Short 1 1 MINI Short
AGKKZQ 1915.68 Short 1 1 MINI Short
RBS Round Up Corner:

New MINIs Listing

Security ExPrc Stop Loss CP ConvFac Delta Description

BSLKZJ $ 2.15 $ 2.58 Long 1 1 MINI Long
BXBSZW $ 4.50 $ 5.18 Long 1 1 MINI Long
CBAKZQ $ 63.00 $ 56.70 Short 1 1 MINI Short
CPUSZX $ 6.00 $ 6.90 Long 1 1 MINI Long
LLCSZV $ 6.00 $ 6.90 Long 1 1 MINI Long
MQGKZZ $ 68.00 $ 57.80 Short 1 1 MINI Short
NABKZR $ 36.70 $ 33.03 Short 1 1 MINI Short
SUNKZR $ 11.50 $ 9.78 Short 1 1 MINI Short
TCLSZX $ 2.10 $ 2.42 Long 1 1 MINI Long
TOLSZW $ 4.20 $ 4.83 Long 1 1 MINI Long
WBCKZY $ 33.80 $ 30.42 Short 1 1 MINI Short
WPLKZP $ 68.50 $ 61.65 Short 1 1 MINI Short

MINIs approaching stop loss

Approx. MINI Share:

Underlying MINI Code MINI Type Strike Stop Loss Share Price
Value Stop Loss

XJO XJOKZW Short $5,082.98 $4,833.00 $ 4,612.80 $ 4.70 4.8%

ANZ ANZKZW Short $27.90 $25.12 $ 23.77 $ 4.13 5.7%
CBA CBAKZP Short $58.11 $52.32 $ 49.50 $ 8.61 5.7%
IAG IAGKZP Short $4.63 $3.94 $ 3.69 $ 0.94 6.8%
OSH OSHKZS Short $7.49 $6.74 $ 6.31 $ 1.18 6.8%

SFI’s approaching stop loss

Approx. MINI Share:

Underlying MINI Code MINI Type Strike Stop Loss Share Price
Value Stop Loss

TTS TTSSZX Long $1.38 $1.64 $ 2.47 $ 1.09 33.6%

AGK AGKSZX Long $7.99 $9.06 $ 13.85 $ 5.86 34.6%
BSL BSLSZW Long $1.77 $1.94 $ 3.04 $ 1.27 36.2%
CSR CSRSZX Long $1.01 $1.16 $ 1.83 $ 0.82 36.4%
LEI LEISZV Long $20.55 $23.10 $ 36.67 $ 16.12 37.0%
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 [email protected]
Robbie Taylor 02 8259 2018 [email protected]
Ryan Corrigan 02 8259 2425 [email protected]
Investment Products Team
Elizabeth Tian 02 8259 2017 [email protected]
Tania Smyth 02 8259 2023 [email protected]
Robert Deutsch 02 8259 2065 [email protected]
Mark Tisdell 02 8259 6951 [email protected]

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