Credit Suisse / London Business School Global Investment Returns Yearbook, 2010

Many Investors are Mistaken in the Belief That Investing in the Stock Markets of Countries That Have Achieved Higher Rates of Economic Growth Will Generate Superior Returns

LONDON and ZURICH, February 9 - Prompted by the robust performance of emerging markets following the
global financial crisis, the 2010 Yearbook focuses on what role emerging
markets should have within global equity portfolios and what returns can be
expected from them. It also examines the closely related questions of whether
economic growth is a reliable indicator of future equity returns, and whether
equity markets reliably anticipate future growth.

Marking a decade since its launch and drawing upon its unprecedented
database of 110 years of investment returns across all major asset
categories, the 2010 Yearbook begins by examining the long run performance of
emerging markets. Although the opening years of the 21st century have been a
lost decade for equity investors, with the MSCI world index giving a return
close to zero, emerging markets have been a bright spot with an annualized
return of 10%. Despite these excellent returns, their longer run performance
has been less impressive. Over the longest interval that it is possible to
examine, namely the 34 years from 1976-2009, they underperformed the MSCI
world index by 1% per annum.

The authors show that emerging markets are still appreciably riskier than
developed markets, both individually and as a group. The risk gap has
narrowed, however, and is likely to decline further. Their research shows
that emerging markets are a geared play on developed markets, and because of
this, investors should expect modestly higher returns from emerging markets
of around 11/2% per year as compensation for this higher risk. The
diversification benefits afforded by emerging markets have diminished over
time, but they remain important and worthwhile.

The authors state that, "Emerging markets are now mainstream and will and
should play an increasingly important role in global portfolios. Investors
should not, however, neglect, or write off the prospects for, developed
markets."

The Yearbook goes on to examine the two closely related questions of
whether economic growth is a useful indicator of future equity returns, and
whether equity markets reliably anticipate future growth. It shows that,
historically, the link between GDP growth and equity market returns has been
much weaker than might be expected, and that there is no positive link
between a country's per capita GDP growth and returns from its stock market.

Furthermore, the Yearbook challenges the widely held view that investing
in countries that are achieving strong economic growth will lead to higher
investment returns. Markets anticipate economic growth, and historically, a
strategy of investing in countries that have achieved higher economic growth
has underperformed one of investing in countries where growth has been lower,
or has disappointed. The authors argue that this may be akin to the value
effect within stock markets, whereby, historically, value stocks have
outperformed growth stocks. Economic growth does, of course, matter, and the
authors show that clairvoyance about future economic growth would have been
very valuable. They also show that, while one cannot predict stock returns
from past economic growth, stock market returns are useful in forecasting
future economic growth.

In addition to the articles by Dimson, Marsh and Staunton, the 2010
Yearbook features Jonathan Wilmot, Chief Global Strategist for Investment
Banking at Credit Suisse, who examines the outlook for the USA. His analysis
is informed by a very long run series stretching back in some cases to more
than 200 years. He notes that US trend productivity and real earnings growth
appear remarkably persistent at about 2 per cent per annum for 100 years or
more. US equities are not over valued if you expect these macro trends to
continue in the future. Moreover, US growth is strongly linked to emerging
growth and vice versa. He concludes that: "If you believe in the potential
benefits of technological change and the dramatic rise of the emerging world,
then the next decade for US equities is likely to be a bright one."

Giles Keating, Head of Global Research for Private Banking at Credit
Suisse, said: "We are delighted to be associated with the Global Investment
Returns Yearbook and the London Business School. This year's analysis is both
timely and insightful given the wide attention that emerging markets are
receiving, and we hope that the Yearbook proves to be a valuable resource for
global investors."

Stefano Natella, Head of Global Equity Research for Investment Banking at
Credit Suisse, added: "The issues examined in this year's analysis further
underline the unrivalled depth of the Yearbook's database. By examining ideas
that are at the forefront of investor thinking within a broader, long-term
context, the Yearbook has again demonstrated why it is the global authority
on long run asset returns."

The Credit Suisse Global Investment Returns Sourcebook 2010 which is also
published today contains a more extensive summary of long run capital market
history than is possible within the Yearbook, with detailed tables, charts,
listings, background, sources and references for every country. The
Sourcebook provides extensive evidence on issues such as the importance of
dividends in historical returns, the historical and prospective risk premium,
and long run evidence on style effects such as size, value/growth and
momentum.

Obtaining the Yearbook

Credit Suisse distributes the Yearbook and Sourcebook to clients. The
Yearbook is also available as a free download from:

emagazine.creditsuisse.com/app/shop/index.cfm?fuseaction=OpenShopCategory&coid=254070&lang=EN

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have impact. The School is ranked number one in the world for both full-time
MBA* and Executive MBA** programmes. In research, the School is ranked within
the global top ten and holds the highest average research score of any UK
academic institution***.

The School's faculty, from over 30 countries, is grouped into seven
subject areas - Accounting; Economics; Finance; Management Science and
Operations; Marketing; Organisational Behaviour; and Strategic and
International Management.

Studying at the School provides access to an unmatched diversity of
thought. With a presence in four international cities - London, New York,
Hong Kong and Dubai - the School is well positioned to equip students from
more than 130 countries with the capabilities needed to operate in today's
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provide a wealth of knowledge, business experience and worldwide networking
opportunities.

The School awards 1,000 degrees every year, across MBA, Executive MBA,
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added Masters in Management to its portfolio. The Executive Education team
offers a portfolio of over 30 open programmes as well as custom-designed
programmes developed to meet the specific needs of individuals and their
organisation. Annually, over 8,000 participants attend executive programmes
that are led by many of the world's leading business thinkers.

www.london.edu

* Financial Times MBA 2010 Rankings

** Financial Times Executive Education 2009 Rankings / Financial Times
EMBA 2009 Rankings

*** Research Assessment Exercise (RAE) 2008

Credit Suisse Global Investment Returns Yearbook 2010

The Global Investment Returns Yearbook was launched in 2000 by London
Business School experts, Elroy Dimson, Paul Marsh and Mike Staunton, who have
produced it annually since then. The study now covers 110 years of investment
in all the main asset categories in Australia, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, South Africa, Spain, Sweden, Switzerland, the UK, the US,
and three continental and worldwide indexes. Format: A4 full color, 51 pages,
4 chapters, 93 charts and tables. ISBN 978-3-9523513-2-1.

The Credit Suisse Global Investment Returns Sourcebook 2010 is an
accompanying volume that contains a more extensive summary of long run
capital market history than is possible within the Yearbook. The Sourcebook
provides detailed tables, charts, listings, background, sources and
references for every country. Format: A4 color, perfect bound, 194 pages, 27
chapters, 213 charts and tables. ISBN 978-3-9523513-3-8.

Copies of the Sourcebook and Yearbook can be purchased from London Business School (contact Patricia Rowham, email: prowham at london.edu). Journalist should contact Sofia Rehman, email: sofia.rehman at credit-suisse.com. Press Contacts: Sofia Rehman Credit Suisse, telephone +44-(0)20-7883-7373, email : sofia.rehman at credit-suisse.com. Zina Al-Abbasi, London Business School, telephone +44-(0)20-7000-7254, email :zalabbasi at london.edu