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

The Round Up
18 November 2009
Issue No. 220
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
Aussie Market Action
CBA (CBAVZG/CBAWZX)
NWS (NWSKZI)
QBE (QBESZX)
Round Up Corner
Scoreboard, commentary
SPI Comment, Events & Dividends
Trading Update – 1Q10 Update
MINI Investment Buy – Leverage to growth
SFI Investment Buy – Investor Update
RBS Model Portfolio – Recovery Bias

Equities

Move Last % Move Range Volume

ASX 200 -25.8 4729.4 -0.5% -26 to -26.u.c $0.0 bn(L)
SPI - yesterday -23.0 4748.0 -0.5% -28 to +49 26,019(A)
Dow Jones +30.5 10437.4 +0.3% -45 to +31 Avg
S&P 500 +1.0 1110.3 +0.1% -7 to +1 Avg
Nasdaq +5.9 2203.8 +0.3% -12 to +6 Avg
FTSE -36.7 5345.9 -0.7% -46 to u.c Low

Commodities

Move Last % Today % Past Month

Oil-WTI spot +0.2 79.1 +0.3% +0.9%
Gold Spot +0.8 1140.0 +0.1% +8.3%
Nickel (LME) +4.5 763.9 +0.6% -9.6%
Aluminium (LME) +0.7 91.2 +0.7% +7.6%
Copper (LME) -1.2 308.7 -0.4% +9.6%
Zinc (LME) -0.8 101.4 -0.7% +10.4%
Silver +0.0 18.4 +0.1% +5.4%
Sugar -0.1 22.5 -0.4% -3.5%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) -0.14 -0.01 +15.0 c 16.06 +13.1 c
RIO (UK) -72.50 -0.02 +32.3 c 58.39 -1500.8 c
BLT (BHP UK) -17.00 -0.01 +18.5 c 33.40 -710.0 c
BXB (UK) -6.75 -0.02 +3.8 c 6.93 +4.8 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) 0.01 0.00 +76.1 c 40.89 +39.0 c
AWC (US) 0.12 0.02 +6.3 c 1.70 +1.2 c
TLS (US) -0.43 -0.03 +15.4 c 3.31 +1.3 c
ANZ (US) -0.71 -0.03 +20.4 c 21.86 -2.7 c
WBC (US) -4.72 -0.04 +115.4 c 24.79 +8.7 c
NAB (US) -0.51 -0.02 +26.5 c 28.42 -8.4 c
LGL (US) -0.61 -0.02 +32.7 c 3.52 +4.6 c
RMD (US) -0.26 -0.01 +50.9 c 5.47 -0.9 c
JHX (US) -0.66 -0.02 +36.0 c 7.74 -2.5 c
PDN (CAN) -0.03 -0.01 +4.3 c 4.40 -2.4 c

Overnight Commentary
United States Commentary
The Dow in and out of positive territory all day, both volumes and conviction continue to track lower. Heading into to the bell, some
residual buying in the growth and energy names just offsetting weakness across the retail space and a disappointing IP number. The
Dow up 14pts, the S&P flat and the Nasdaq 0.1% higher.

Eco - Producer Price Index for October +0.3% vs +0.5% expected(-0.6% month prior), Ex Food&Energy a much more benign -0.6% vs
consensus at +0.1%. Industrial Production falling short at +0.1% vs +0.4%.

Growth - Despite on balance flat to slightly disappointing economic data, yesterday's dovish commentary from Bernanke seems to
have left room for some ongoing, albeit small, buying across some of the growth names. Microsoft, HP, United, Cisco and DuPont all
hanging on to small gains and together with Exxon accounting for the days gains.

Retail - Aside from the IP miss, retailers were a key area of disappointment overnight. HomeDepot down 3% and the worst of the Dow
components after posting an 8.9% fall in 3Q profits, Lowe's Cos down 1.5% after cutting its FY profit forecast yesterday and Target
down 3.2%(S&P100's worst) after flagging expectations for a drop in same store sales in Q4.

Energy - Exxon tracking 0.7% higher and for the minute, one of the Dow top pts adder on yesterdays news that Warren Buffet had
added to his collection.

Retail - PacSun down 23% on nearly 20 times average daily volume after yesterdays wide than expected 3Q loss and slumping sales
expectations. Adding to woes, a handful of broker downgrades.

FX - By no means an equities exodus, but moves in FX markets point to a flight to safety or at the very least indecision amongst
investors. The DXY index making up half a penny and the AUD giving back 0.7c, back below 93c.

United Kingdom & Europe Commentary

The FTSE fell 0.7% or 37pts, retreating from 14 month highs as banks and miners, thanks to US dollar strength, gave up recent gains.
The FTSE Eurofirst 300 dropped 0.4%, the DAX was off 0.5% and the CAC sank 0.9%.

UK Banks - Bearish comments from an influential analyst weighed on the sector. HSBC fell 2.1%, Barclays was off 2.8% and Standard
Chartered ended 1.6% lower. Part nationalised banks Lloyds and RBS however managed gains of 0.6% and 0.9% respectively.

Euro Banks - Irish banks continued to weigh as 3Q results from Irish Life & Permanent, off 12.8%, showed an increase in loan losses.
Allied Irish Banks slumped 6% and Bank of Ireland dropped 6.8%. Among the majors Deutsche Bank was off 0.7%, Commerzbank fell
0.9%, BNP dropped 1.2% and SocGen ended 3.1% lower.
Eco - British CPI came in just ahead of expectations. Year on Year it was 1.5% vs 1.4% up from 1.1% previously as the sharp fall in
transport costs was not repeated. Month on Month it was 0.2% vs 0.1% expected.

Real Estate - British Land fell 2.7% after reporting its 2Q results which were lower than expected. Net Asset Value climbed 3.1% to
372p per share but that was lower than forecast by analysts. Hammerson was off 0.8%, Liberty International dropped 1%, Barratt fell
3% and Land Securities ended down 1.6%.

Commodiites Commentary
Miners - Metal prices fell with the US dollar recovering. BHP fell 0.9%, Rio gave back 2.2%, Anglo dropped 1.6%, Xstrata was off
1.7%, Vedanta fell 0.1% and Lonmin sank 3.3%.

Energy - Crude was lower for much of the European session . BP edged 0.1% lower, Shell fell 0.6%, Tullow dropped 0.5% but BG
Group was up 0.4%. In Europe Total fell 0.6%, Statoil dropped 0.1% and Repsol ended down 0.2%.

SPI Commentary
The SPI traded down 23pts or 0.5% to 4748. Volume 26,019. Overnight the SPI traded up 28pts to 4776.

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
US
Tuesday AUS
US Retail sales, NY Fed Empire PMI, Business Inventories
Wednesday AUS RBA Governor Debelle speaks, Wage price index
US PPI, Industrial production, NAHB survey
Thursday AUS AWOTE, RBA Bulletin, RBA Governor Debelle speaks
US CPI, Housing starts
Friday AUS
US Philadelphia Fed Survey
*Dates are indicative only and may change
Trading Update:

Commonwealth Bank (CBAVZG/CBAWZX) – 1Q10 update

CBA reported its 1Q10 trading update last week after the other banks reported results. 1Q10 benefited from lower BDDs
and strong revenue growth. Revenue growth is unlikely to be as strong for the remainder of FY10, but CBA will still be a
key beneficiary of falling BDDs. RBS Research have a hold recommendation with $55.65 target price. Technically CBA is
consolidating the past 10 months rally with resistance at $56. Trade upside via CBAVZG or downside via CBAWZX.

Source: IRESS

1Q10 update
For the September quarter, CBA reported t unaudited cash earnings of ~A$1.4bn. The BDD charge was A$700m, lower than RBS
Research full-year run rate of A$2.9bn, and compares to a cA$800m charge in 4Q09. The Tier-1 ratio is now 8.7% following the Pearls
V hybrid issue, putting CBA ahead of WBC but behind ANZ and NAB. The outlook statement mirrored the cautious optimism of the
other banks. The only area of concern is the pick-up in CBA housing arrears, which we believe stems from aggressive market share
gains driven by first home owners in late 2008 and early 2009.

RBS Trading Warrants over CBA

Security ExDate ExPrc CP ConvFac Delta Description

CBAVZF 26-Nov-09 5300 Call 5 0.1452 Trading Call Warrant
CBAVZG 26-Nov-09 5500 Call 5 0.0822 Trading Call Warrant
CBAVZH 17-Dec-09 4600 Call 5 0.1975 Trading Call Warrant
CBAVZI 17-Dec-09 5200 Call 5 0.1486 Trading Call Warrant
CBAVZJ 28-Jan-10 5000 Call 5 0.1609 Trading Call Warrant
CBAWZU 26-Nov-09 3600 Put 5 0 Trading Put Warrant
CBAWZV 26-Nov-09 4200 Put 5 0 Trading Put Warrant
CBAWZW 17-Dec-09 4500 Put 5 -0.0014 Trading Put Warrant
CBAWZX 17-Dec-09 5000 Put 5 -0.0259 Trading Put Warrant
CBAWZY 28-Jan-10 5500 Put 5 -0.0976 Trading Put Warrant

RBS MINIs over CBA

Security ExDate ExPrc CP ConvFac Delta Description

CBAKZA 4008.49 Long 1 1 MINI Long
CBAKZK 1862.95 Long 1 1 MINI Long
CBAKZN 4501.59 Long 1 1 MINI Long
CBAKZO 3544.92 Long 1 1 MINI Long
CBAKZQ 6283.82 Short 1 1 MINI Short
CBAKZR 6818.8 Short 1 1 MINI Short
MINI Investment Buy:

News Corporation (NWSKZJ) – Strong leverage to growth

NWS raised guidance for FY10 operating profit growth of 'high single to low double digit' which RBS research still believe
is conservative. RBS Research have a +16% forecast which is underpinned by strong ongoing cable growth and an
improving outlook in NWS’s key advertising markets. The stock remains cheap on an SOTP and peer multiple basis. Buy
NWSKZJ

Source: IRESS

RBS forecast 16% operating profit growth in FY10

1Q10 operating profit was up 9% on the pcp and EPS of US$0.22 was ahead of Bloomberg consensus of US$0.18. The
company raised its FY10 operating profit growth guidance from ‘high single digit’ to ‘high single to low double digit’. RBS
Research still see the guidance as conservative and raise FY10F operating income growth to +16% (previously +11%)
and EPS by 5% to US$0.85.

Cable continues to outperform, TV imporving

The cable division was again the standout in the period, with operating profit up 41%. We now forecast cable operating
profit will grow 23% to US$2.05bn in FY10. Cable makes up half of operating income and underpins overall group
earnings growth in FY10 and FY11.

TV is showing encouraging signs, with NWS saying October pacings are flat on last year and November up ‘mid teens’.
Newspapers were weak in the quarter, but the company said Australian newspaper trends are improving and newspaper
operating profit should be down only marginally for the full year. Sky Italia and FIM were both weak, but should not detract
significantly in the full year.

Stock remains cheap

News Corp trades on an EV/EBITDA of 6.0x CY2010F, below both US peers (Disney on 7.8x, Viacom 7.6x on Reuters
estimates) and Australian domestic media stocks (TEN on 9.5x). RBSprice target of $19.92

RBS MINIs over NWS

Security ExPrc Stop Loss CP ConvFac Delta Description

NWSKZI 778.45 Long 1 1 MINI Long
NWSKZJ 1150.28 Long 1 1 MINI Long
NWSKZR 1981.63 Short 1 1 MINI Short
SFI Investment Buy:

QBE Insurance Group (QBESZX) – Investor Update

We believe the recent pullback in QBE is a buying opportunity. QBE has reiterated its FY09 guidance for an insurance
margin of 17-18%. Management has also said it has additional debt capacity for cA$1bn in acquisitions. RBS Research
have a target price of $26.11. Buy QBESZX

Source: IRESS

• QBE reaffirmed its full-year FY09 guidance for an insurance margin of 17-18%.
• QBE says it has cA$1bn in debt capacity available for acquisitions with gearing currently only c30%. Bolt-on
acquisitions appear to remain the most attractive, while management has not ruled out further agency purchases.
• QBE has said US and UK insurance markets remain soft, although they expect rates to harden in 2H10
• QBE’s track record in underwriting and acquisition execution remains excellent. The company has reconfirmed its
FY09 guidance and has a strong balance sheet with cA$1bn of debt capacity available for acquisitions. At A$22.15
the stock continues to trade at a discount to RBS price target of A$26.11. We see value in QBE at these levels
• Use the pullback to buy through QBESZX

RBS SFIs over QBE

Security ExDate ExPrc CP ConvFac Delta Description

QBESZX 4-Feb-19 1140.01 Call 1 1 Self Funding Instalment

RBS MINIs over QBE

Security ExPrc Stop Loss CP ConvFac Delta Description

QBEKZF 1219 Long 1 1 MINI Long
QBEKZK 1124.7 Long 1 1 MINI Long
QBEKZL 1792.43 Long 1 1 MINI Long
QBEKZR 3147.08 Short 1 1 MINI Short
QBEKZS 3376.24 Short 1 1 MINI Short
RBS Round Up Corner:

RBS Model Portfolio – Recovery bias

October saw the A$ rally, bond yields move higher, the RBA hike rakes and the equity rally abate toward month-end on
the back of mixed economic data. Since then the market has recovered in November while the $A has remained strong.
RBS Research believe the recovery story remains intact, although it won't be without its setbacks. RBS model portfolio
retains a cyclical bias

Portfolio positioning
Full market valuations mean that any bad news will see a significant market reaction, as was evidenced towards the end
of October. A 12-month forward PE of 16.6x for the market is pushing towards a standard deviation of 1.5 above its long-
run mean. Other valuation metrics also look full, which means we need earnings growth to sustain the market rally. Given
modest expectations for 2010, the market may increasingly look to 2011 for guidance.

Key portfolio positions

• RBS Research key portfolio Overweight positions are Consumer Discretionary and Mining & Services, which
reflect our recovery bias. We trim our overweight Banks call in the short term, but will be looking to re-establish that
over the medium term.
• Key Underweight positions are in defensive sectors such as Consumer Staples, Financials and Property.

MINIs approaching stop loss

Approx. MINI Share:

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

WES WESKZU Short $32.21 $29.01 $ 28.55 $ 3.66 1.6%

LGL LGLKZP Short $3.96 $3.56 $ 3.50 $ 0.46 1.7%
BHP BHPKZR Short $45.67 $41.15 $ 40.10 $ 5.57 2.6%
DJS DJSKZP Short $6.78 $6.10 $ 5.91 $ 0.87 3.2%
CBA CBAKZQ Short $62.83 $56.60 $ 53.96 $ 8.87 4.9%
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
Robbie Taylor 02 8259 2018 robbie.taylor@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:
The information contained in this report has been prepared by RBS Equities (Australia) Limited (“RBS”) (ABN 84 002 768 701) (AFS Licence No
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
Equities at the date of issue and are subject to change without notice. RBS Equities and its affiliated companies may make markets in the securities
discussed. RBS Equities, its affiliated companies and their employees from time to time may hold shares, options, rights and warrants on any issue
contained in this report and may, as principal or agent, sell such securities. RBS Equities may have acted as manager or co-manager of a public
offering of any such securities in the past three years. RBS Equities’ affiliates may provide, or have provided banking services or corporate finance to
the companies referred to in this report. The knowledge of affiliates concerning such services may not be reflected in this report. This report does not
constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment. RBS Equities,
in preparing this report, has not taken into account an individual client’s investment objectives, financial situation or particular needs. Before a client
makes an investment decision, a client should, with or without RBS Equities’ assistance, consider whether any advice contained in this report is
appropriate in light of their particular investment needs, objectives and financial circumstances. It is unreasonable to rely on any recommendation
without first having consulted with your adviser for a personal securities recommendation. This information contained in this report is general advice
only. RBS Equities, its officers, directors, employees and agents accept no liability for any loss or damage arising out of the use of all or any part of the
information contained in this report. This Information is not intended for distribution to, or use by any person or entity in any jurisdiction or country where
such distribution or use would be contrary to local law or regulation. If you are located outside Australia and use this Information, you are responsible
for compliance with applicable local laws and regulation. This report may not be taken or distributed, directly or indirectly into the United States, or to
any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1993, as amended.
The warrants contained in this report are issued by RBS Group (Australia) Pty Limited (ABN 78 000 862 797, AFS Licence No. 247013). The Product
Disclosure Statements relating to these warrants are available upon request from RBS Equities or on our website www.rbs.com.au/warrants

© 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