Nomura Securities Co Ltd, Tokyo

Fixed Income Research, Commodity

Oil & commodities monthly –February 2011

La Niña and grain prices

Grain prices likely to rise further if anomalous weather persists
Major grain prices have recently risen sharply to post-2008 highs on concerns of production
shortfalls stemming from anomalous weather around the world. If adverse weather persists, grain
prices are likely to rise further, but if the weather improves, grain prices may decline to mid-2010
levels as supply concerns subside. The weather during the March–June timeframe, which 1 Mar. 2011
encompasses the wheat growing season and soybean and corn planting seasons in the northern
(Translated from original
hemisphere, bears close monitoring. Near-term grain price movements will inevitably be driven
Japanese issued on 25 February)
largely by weather factors. Over the medium term, however, we anticipate that grain prices will
rise amid production cost inflation, growth in grain demand for biofuel production, and structural
growth in grain demand driven by dietary change in developing countries. In sum, grain prices are
likely to consolidate over the near term but we expect their trading ranges to progressively shift Author:
upward over the medium to long term. Economists
Tatufumi Okoshi
z Major grain prices have recently risen sharply to levels not seen since 2008. Their rise has been okoshi-0fh1@jp.nomura.com
fueled by production concerns stemming from anomalous weather. In June 2010, the El Niño/La
Niña cycle abruptly entered a La Niña phase, which tends to give rise to anomalous weather Eli Owaki
across all climates. Such anomalous weather tends to be more extreme when the onset of La owaki-2ztc@jp.nomura.com
Niña is precipitous and extreme weather has in fact ensued.

z Drought in Russia, heavy rainfall in Australia, and dry weather in the US and Brazil have cast a
pall over the grain production outlook. Demand is growing steadily but not accelerating. Grain
prices' recent rise is attributable to weather-induced supply concerns, not actual shortages.
Accordingly, if the weather improves and grain production is projected to recover, grain prices
may return to the levels from which they began to rise last year.

z Grain crops in the northern hemisphere therefore bear close monitoring in coming months.
Specifically, US and European wheat crops' growth status from March onward and the success
of US corn and soybean plantings from April through June are key focal points. If the weather
turns inclement again during this timeframe, grain prices are highly likely to remain elevated and
could even rise further. Conversely, favorable weather would likely lead to a decline in grain
prices.

z While weather conditions are difficult to forecast, the US National Oceanic and Atmospheric
Administration expects La Niña conditions to weaken through June, but it warned that they also
may persist. Given the possibility of continued anomalous weather, prices could rise further.

z Near term, grains are likely to trade choppily in response to weather factors. More specifically,
grain prices could correct from their recent highs. From a medium- to long-term perspective,
however, we expect grain prices to trend upward, lifted by growth in grain demand for biofuel
production, rising production costs, and growth in grain demand for livestock feed rooted in
dietary changes in developing countries. While grain prices may consolidate over the near term,
their trading range is very likely to steadily shift upward over the medium to long term.

Please read the important disclosures and analyst certifications appearing on pp. 12-13 gl

1
Nomura Fixed Income Research, Commodity

La Niña and grain prices

Grain prices likely to rise further if anomalous weather persists

Grain prices have risen sharply on weather-induced supply concerns

Major grain prices have recently risen sharply to levels unseen since 2008. Their gains have been driven by
mounting concerns of poor harvests due to adverse weather in grain-growing regions.

(Figure 1) Major grain prices

Note: Prices are CBOT benchmark futures prices.

Source: Thomson Reuters Datastream

Occurrence of El Niño and La Niña events tends to give rise to anomalous weather patterns. In June 2010, the El
Niño/La Niña cycle abruptly entered a La Niña phase. When the cycle changes phases precipitously, especially
anomalous weather tends to ensue. The relationship between the El Niño/La Niña cycle and weather anomalies is
not fully understood, but anomalous weather events have been occurring in rapid succession around the world
since mid-2010. For example, weather events that have sparked concerns about wheat production shortfalls
include drought in Russia, torrential rains in Australia, and unusually cold temperatures in North America.
Meanwhile, unseasonably dry weather in Brazil has sparked concerns about corn and soybean production
shortfalls.

Recent price gains may prove to be transitory

Given that grains' recent price gains have been driven by weather-induced supply concerns, grain prices could
revert to their previous levels if production recovers due to improvement in the weather. The USDA is projecting
that wheat, corn, and soybeans' supply-demand balances will tighten as a result of y-y declines in production of all
three in the 2010/11 marketing year (MY10/11) coupled with ongoing demand growth (Figures 2–4). However, the
USDA is projecting continued stable demand growth. It is not anticipating acute supply strains resulting from a
sharp pickup in demand growth. The USDA is also projecting reduced production in light of recent adverse
weather. If such adverse weather had not occurred and production remained normal, grain prices may not have
risen as high as they have on expectations of tighter supplies. Weather factors that influence production therefore
remain a key short-term determinant of price movements.

2
Nomura Fixed Income Research, Commodity

(Figure 2) Global corn supply and demand

Note: MY10/11 data are USDA forecasts.

Source: USDA, Bloomberg

(Figure 3) Global wheat supply and demand

Note: MY10/11 data are USDA forecasts.

Source: USDA, Bloomberg

3
Nomura Fixed Income Research, Commodity

(Figure 4) Global soybean supply and demand

Note: MY10/11 data are USDA forecasts.

Source: USDA, Bloomberg

The northern hemisphere planting and growing seasons are key

In 2010, upward pressure on wheat prices began to build from around mid-year, when Russia was struck by
drought during its wheat growing season. The drought gave rise to concerns of reduced wheat harvests (Figure 5).
Wheat prices subsequently leveled off into a consolidation phase before rising sharply from December into 2011 in
response to crop damage from heavy rainfall in Australia, which was then in its wheat harvest season. Additionally,
unusually cold weather in North America sparked concerns of damage to the winter wheat crop.

(Figure 5) Major grains production calendar

Note: The above calendar is a generalization. Planting and harvest seasons differ by region, even within a single country. Double-cropping
practices also differ.
Source: Nomura, based on various information sources

Corn prices likewise started to rise from mid-2010. They rose partly in tandem with wheat prices' rise in response
to Russia's drought, but their rise was driven largely by the emergence of concerns of reduced harvests as a
result of continued dry weather in the US during the local corn growing season. Once the US harvest season

4
Nomura Fixed Income Research, Commodity

began from October, harvests were indeed somewhat diminished. Meanwhile, dry weather in Brazil, which was
then in its corn planting season, imparted even more upside impetus to corn prices. Corn plantings in Brazil were
delayed by unusually dry weather.

Soybean prices began to gain upside momentum from last September, somewhat later than wheat and corn
prices. Their price rise was also driven by concerns of reduced harvests amid continued dry weather in the US
during the soybean growing season. Although reductions in US harvests were ultimately minor, soybean prices,
like corn prices, derived further upside momentum from Brazilian planting delays due to dry weather.

In sum, adverse weather from the planting season through the growing season last year has had a strong impact
on wheat, corn, and soybean prices. Another source of upward pressure on grain prices is that the USDA has
lowered its grain ending-stock estimates in response to continued adverse weather (Figures 6–8).

(Figure 6) Global corn supply and demand

Note: Corn marketing year is from September through August.

Source: USDA

(Figure 7) Global wheat supply and demand

Note: Wheat marketing year is from June through May.

Source: USDA

(Figure 8) Global soybean supply and demand

Note: Soybean marketing year is from September through August.

Source: USDA

Further price gains are likely if adverse weather persists

In light of the relationship between the weather and the grain production calendar, northern hemisphere weather
from March through June, a time period that encompasses the winter wheat growing season and corn and
soybean planting seasons in the northern hemisphere, bear close monitoring. If grain production is projected to
recover by virtue of favorable weather during this timeframe, grain prices could return to their levels prior to mid-
2010. Conversely, if the weather remains adverse and concerns about poor harvests in the northern hemisphere
persist, grain prices would likely remain high or, depending on weather conditions, rise further.

5
Nomura Fixed Income Research, Commodity

(Figure 9) Oceanic Niño Index (ONI) and Southern Oscillation Index (SOI)

Note: Major upturn in ONI coinciding with major downturn in SOI signals El Niño conditions.
Major downturn in ONI coinciding with major upturn in SOI signals La Niña conditions.
Source: US National Oceanic and Atmospheric Administration, Australian Bureau of Meteorology

Figure 9 plots two indices of the strength of El Niño and La Niña conditions said to be conducive to anomalous
weather. The Oceanic Niño Index (ONI) is calculated based on water temperatures in designated regions of the
southern Pacific Ocean. The Southern Oscillation Index (SOI) is calculated based on atmospheric pressure. Both
were signaling strong La Niña conditions at the end of last year. On 10 February, the US National Oceanic and
Atmospheric Administration (NOAA) announced that La Niña conditions may have peaked in terms of strength.
While the NOAA believes that La Niña conditions may weaken going forward, it is forecasting that La Niña will
linger through mid-year. The prospects of favorable weather in March–June accordingly appear to be improving,
but anomalous weather may still persist.

Prices prone to short-term volatility but medium/long-term outlook points upward

Near term, grain prices are likely to fluctuate in response to the weather, among other factors. In particular, if
expectations of recovery in production emerge at some point, grain prices could return to their levels preceding
their gains since mid-2010. From a medium- to long-term perspective, however, we see a high probability of grain
prices rising, albeit with repeated short-term fluctuations along the way.

While grain demand is currently growing stably as noted above, production also has been growing in line with
demand. Supply and demand fundamentals are consequently not conducive to grain prices continuing to rise
indefinitely. Rapid population growth and dietary changes in developing countries are often cited as factors that
could lead to sustained grain price gains driven by sharp demand growth, but these trends do not appear to have
reached critical mass yet. Although the global population is indeed growing, this growth does not necessarily
involve populations with adequate purchasing power. Meanwhile, in developed countries with sufficient purchasing
power, populations have started to shrink in certain countries. Such demographic trends partly explain why
population growth has yet to translate to grain demand growth.

In developing countries, the prerequisites for dietary change may not be in place yet despite such countries'
ongoing economic development. Dietary change is generally defined as growth in consumption of meat and dairy
products. Mass dietary change requires widespread ownership of refrigerators capable of preserving such
products. Figure 10 plots China and Japan's electric power supplies per capita. China's per-capita power supply is
only around one-third that of economically mature Japan, where refrigerators are ubiquitous. China does not yet
have the electric power infrastructure required to support widespread refrigerator ownership. Based on simple
extrapolation, we estimate that China will reach parity with Japan in terms of per capita power supply around 2016.
In sum, dietary change does not yet appear to be happening in earnest in China but major change is possible over
the medium term. In such an event, demand for grains for livestock feed would increase in addition to growth in
demand for human consumption. Hitherto stable demand growth may accelerate under such a scenario.
Additionally, demand for grains as a biofuel feedstock is very likely to grow. Demand for grain-derived fuels
considered to be environmentally friendlier than petroleum fuels has been steadily growing globally amid efforts to
address environmental problems. This trend also may accelerate growth in grain demand over the medium term.

6
Nomura Fixed Income Research, Commodity

(Figure 10) Electric power supply per capita

Source: Federation of Electric Power Companies of Japan, Chinese National Bureau of Statistics, Thomson Reuters Datastream

(Figure 11) Major grains' US production costs

Note: Production costs exclude imputed rent and imputed wages for farmers and their family members.
Forecasts are USDA forecasts.
Source: USDA

On the supply side, costs required to increase production to meet growing demand are rising. Figure 11 plots
major grains' US production costs. Production costs have been rising since the early 2000s. This trend is largely
attributable to rising soil improvement (eg, fertilizer) costs and increases in the cost of fuel used in farm machinery.
With crude oil prices rising, fuel costs also have been rising. This factor is consequently unlikely to detract from
production costs. In terms of soil improvement costs, farmers must continue to treat their cropland yearly with
growing doses of soil nutrients to maintain or increase yields. Production costs are accordingly likely to continue
increasing at a moderate pace.

In conclusion, we look for grain prices to continue to fluctuate in response to weather and other factors over the
near term. From a medium-term perspective, grain prices have the potential to embark on a sustained uptrend,

7
Nomura Fixed Income Research, Commodity

given the probability of acceleration of demand growth and production cost increases. We expect grain prices'
near-term trading ranges to gradually shift upward over time.

<Crude oil price outlook>

Unrest in Africa and Middle East push prices higher
Crude oil prices have been rising in response to social unrest in Africa and the Middle East. Pro-democracy
demonstrations that initially spread from Tunisia to Egypt have now spread to Libya, a major oil exporting country,
triggering a steep rise in crude oil prices (Figure 12).

(Figure 12) Benchmark crude oil prices

Note: WTI (West Texas Intermediate crude oil) and North Sea Brent prices are respectively NYMEX-and
ICE Futures-listed front-month futures prices. Dubai price is a spot price.
Source: Thomson Reuters Datastream

(Figure 13) Crude oil production by country (2009)

Source: US Department of Energy (DOE)

8
Nomura Fixed Income Research, Commodity

(Figure 14) Crude oil exports by country (2009)

Source: US Department of Energy (DOE)

(Figure 15) Recoverable oil reserves (1 Jan 2010)

Note: Canada includes oil sand

Source: Oil & Gas Journal

(Figure 16) Consuming countries/regions' shares of major African and Middle Eastern oil exporters' crude oil exports

Note: Percentages below country/region names are shares of the exporter's total exports.
Source: Nomura, based on US DOE data

9
Nomura Fixed Income Research, Commodity

Most of Libya's crude oil exports are supplied to Europe (Figure 16). North Sea Brent consequently continues to
trade at a premium to WTI, although WTI prices also have risen in response to escalation of tensions in Libya.
However, WTI prices have notably risen substantially, unlike when unrest erupted in Egypt, which exports little
crude oil. Much of major African and Middle Eastern crude oil exporting countries' oil is exported to Europe and
Asia (Figure 16). It therefore makes sense for Brent and Dubai crude oil prices to rise in response to turmoil in
Africa and the Middle East. Among African and Middle Eastern oil exporters, Saudi Arabia, Kuwait, Nigeria, and
Algeria supply a large share of their oil exports to the US. Unrest has spread to all of these countries to varying
degrees. While the future course of events is largely unpredictable, the oil market has started to discount the
possibility of unrest in these countries, as evidenced by WTI prices' delayed rise.

If the market's concerns are realized and social unrest worsens in these countries, Brent, Dubai, and WTI prices
could all climb much higher. The magnitude of such a prospective price rise is difficult to quantify, but in light of
WTI, Brent, and Dubai prices' respective 2008 highs of $147.27/bbl, $147.50/bbl and $141.33/bbl, the market is
psychologically primed to bid up prices of to the vicinity of their 2008 highs. Unlike terrorism, the current wave of
social unrest is unlikely to lead to sabotage of oil-related infrastructure. Although such a possibility cannot be
completely ruled out, crude oil prices are likely to decline relatively rapidly to their pre-upheaval levels if the social
unrest rapidly dissipates.

In sum, crude oil prices' next move could be either up or down. However, the ongoing social unrest looks unlikely
to rapidly subside. Such being the case, upward pressure on crude oil prices could very well persist for a while.
However, price movements due to such special factors are currently difficult to factor into our price forecasts
through 2012. We accordingly intend to refrain from revising our forecast unless the unrest persists and crude oil
prices remain high for a relatively prolonged period.

(Figure 17) Crude oil market outlook

Note: Crude oil prices are annual/quarterly averages. Historical prices are Thomson Reuters Datastream data. Historical supply and demand data
are IEA data. 2011 supply and demand forecasts are by IEA. Price forecasts and 2012 supply and demand forecasts are by Nomura.
OECD: Organization for Economic Co-operation and Development; OPEC: Organization of Petroleum Exporting Countries; NGLs: natural gas
liquids; WTI: West Texas Intermediate crude oil
Source: IEA, Thomson Reuters Datastream

<Gold price outlook>

Rally on Middle East concerns

Gold recently underwent a minor price correction in response to global economic improvement and expectations
of further normalization, but it has continued to trade near its recent highs in the $1,300−1,400/oz range. We
chiefly attribute gold's buoyancy to safe-haven demand fueled by spreading civil unrest in Africa and the Middle
East. Until the unrest erupted, managed money appeared to be flowing from the gold market back to the equity
market in anticipation of continued economic recovery. Gold ETFs' bullion holdings are still high but have recently
ceased growing and appear to be gradually rolling over into a decline (Figure 18). Other factors that detracted
from gold's luster in investors' eyes include strong confidence that European fiscal problems will be adequately
addressed and resurgent equity market rallies driven by economic recovery expectations.

10
Nomura Fixed Income Research, Commodity

(Figure 18) SPDR Gold Trust ETF's bullion holdings

Source: Exchange Traded Gold

Against such a backdrop, gold resumed rallying on 21 February on renewed safe-haven investment inflows in
response to media reports of worsening disorder in Libya, which triggered concerns about crude oil supply
disruptions together with a sharp rise in crude oil prices. Near term, crude oil prices look likely to remain high. If
civil unrest persists for a while, high oil prices may have a psychological impact on gold market participants also.
Amid such an environment, gold could very well temporarily rally to new highs.

The gold investment environment is currently marked by a confluence of price-supportive factors, including rising
energy prices, prolonged dollar depreciation, inflation fears, and geopolitical concerns. However, if the ongoing
unrest subsides and financial markets normalize, we believe that a gold price correction would most likely ensue.
If economic recovery remains on track and the markets normalize, funds would likely diversify away from gold in
favor of other risk assets. Such an asset reallocation would likely trigger a gold price correction.

In light of such, we expect gold to continue to trade buoyantly over the near term, but investors must be cognizant
of the risk of a subsequent price correction. However, even if the global economy and financial markets normalize,
the gold market is likely to retain a portion of its previous safe-haven investment inflows, given the course of post-
Lehman market events. Accordingly, while we see a high probability of a gold price correction once markets begin
to normalize, we expect gold to continue to trade above $1,000/oz even amid the correction. If markets return to
normal, exchange-rate movements, inflation trends, and other economic fundamentals are likely to become gold's
primary price drivers. With jewelry demand for gold likely to increase in the wake of economic recovery, we look
for gold to ultimately re-embark on a gradual uptrend.

(Figure 19) World gold supply & demand and gold price

Note:
1) Sources of historical supply and demand data are World Gold Council and GFMS.
2) Source of historical gold price data is Thomson Reuters Datastream. Price forecast is by Nomura
Source: World Gold Council, Thomson Reuters Datastream, Nomura

11
Nomura Fixed Income Research, Commodity

NEW YORK TOKYO LONDON

Nomura Securities International Nomura Securities Co Ltd Nomura International PLC
2 World Financial Center, Building B 2-2-2, Otemachi, Chiyoda-Ku Nomura House
New York, NY 10281 Tokyo, Japan 100-8130 1 St Martin's-le-grand
(212) 667-9300 81 3 3211 1811 London EC1A 4NP
44 207 521 2000

Online availability of research and additional conflict-of-interest disclosures:

Nomura Japanese Equity Research is available electronically for clients in the US on NOMURA.COM, REUTERS, BLOOMBERG and THOMSON
ONE ANALYTICS. For clients in Europe, Japan and elsewhere in Asia it is available on NOMURA.COM, REUTERS and BLOOMBERG.
Important disclosures may be accessed through the left hand side of the Nomura Disclosure web page http://www.nomura.com/research or requested
from Nomura Securities International, Inc., on 1-877-865-5752. If you have any difficulties with the website, please email
researchchannelsupport@nomura.co.uk for technical assistance.

DISCLAIMERS
This publication contains material that has been prepared by the Nomura entity identified on the banner at the top or the bottom of page 1 herein and,
if applicable, with the contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or
elsewhere identified in the publication. Affiliates and subsidiaries of Nomura Holdings, Inc. (collectively, the "Nomura Group"), include: Nomura
Securities Co., Ltd. ("NSC") Tokyo, Japan; Nomura International plc, United Kingdom; Nomura Securities International, Inc. ("NSI"), New York, NY;
Nomura International (Hong Kong) Ltd., Hong Kong; Nomura Singapore Ltd., Singapore; Nomura Australia Ltd., Australia; P.T. Nomura Indonesia,
Indonesia; Nomura Malaysia Sdn. Bhd., Malaysia; Nomura International (Hong Kong) Ltd., Taipei Branch, Taiwan; Nomura International (Hong Kong)
Ltd., Seoul Branch, Korea; Nomura Financial Advisory and Securities (India) Private Limited, Mumbai, India (Registered Address: 2nd Floor, Ballard
House, Adi Marzban Path, Ballard Pier, Fort, Mumbai, 400 001; SEBI Registration No:- BSE INB011299030, NSE INB231299034, INF231299034).
This material is: (i) for your private information, and we are not soliciting any action based upon it; (ii) not to be construed as an offer to sell or a
solicitation of an offer to buy any security in any jurisdiction where such offer or solicitation would be illegal; and (iii) based upon information that we
consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.
Opinions expressed are current opinions as of the original publication date appearing on this material only and the information, including the opinions
contained herein, are subject to change without notice. If and as applicable, NSI's investment banking relationships, investment banking and
noninvestment
banking compensation and securities ownership (identified in this report as "Disclosures Required in the United States"), if any, are
specified in disclaimers and related disclosures in this report. In addition, other members of the Nomura Group may from time to time perform
investment banking or other services (including acting as advisor, manager or lender) for, or solicit investment banking or other business from,
companies mentioned herein. Further, the Nomura Group, and/or its officers, directors and employees, including persons, without limitation, involved
in the preparation or issuance of this material may, to the extent permitted by applicable law and/or regulation, have long or short positions in, and buy
or sell, the securities (including ownership by NSI, referenced above), or derivatives (including options) thereof, of companies mentioned herein, or
related securities or derivatives. In addition, the Nomura Group, excluding NSI, may act as a market maker and principal, willing to buy and sell
certain of the securities of companies mentioned herein. Further, the Nomura Group may buy and sell certain of the securities of companies
mentioned herein, as agent for its clients.
Investors should consider this report as only a single factor in making their investment decision and, as such, the report should not be viewed as
identifying or suggesting all risks, direct or indirect, that may be associated with any investment decision.
NSC and other non-US members of the Nomura Group (i.e., excluding NSI), their officers, directors and employees may, to the extent it relates to
non-US issuers and is permitted by applicable law, have acted upon or used this material prior to, or immediately following, its publication.
Foreign currency-denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or
income derived from, the investment. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies,
effectively assume currency risk.
The securities described herein may not have been registered under the U.S. Securities Act of 1933, and, in such case, may not be offered or sold in
the United States or to U.S. persons unless they have been registered under such Act, or except in compliance with an exemption from the
registration requirements of such Act. Unless governing law permits otherwise, you must contact a Nomura entity in your home jurisdiction if you want
to use our services in effecting a transaction in the securities mentioned in this material.
This publication has been approved for distribution in the United Kingdom and European Union as investment research by Nomura International plc
("NIPlc"), which is authorised and regulated by the U.K. Financial Services Authority ("FSA") and is a member of the London Stock Exchange. It does
not constitute a personal recommendation, as defined by the FSA, or take into account the particular investment objectives, financial situations, or
needs of individual investors. It is intended only for investors who are "eligible counterparties" or "professional clients" as defined by the FSA, and
may not, therefore, be redistributed to retail clients as defined by the FSA. This publication may be distributed in Germany via Nomura Bank
(Deutschland) GmbH, which is authorised and regulated in Germany by the Federal Financial Supervisory Authority ("BaFin"). This publication has
been approved by Nomura International (Hong Kong) Ltd. ("NIHK"), which is regulated by the Hong Kong Securities and Futures Commission, for
distribution in Hong Kong by NIHK. Neither NIPlc nor NIHK hold an Australian financial services licence as both are exempt from the requirement to
hold this license in respect of the financial services either provides. This publication has also been approved for distribution in Singapore by Nomura
Singapore Limited. NSI accepts responsibility for the contents of this material when distributed in the United States.
No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent
of the Nomura Group member identified in the banner on page 1 of this report. Further information on any of the securities mentioned herein may be
obtained upon request. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be
guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The
sender therefore does not accept liability for any errors or omissions in the contents of this publication, which may arise as a result of electronic
transmission. If verification is required, please request a hard-copy version.

12
Nomura Fixed Income Research, Commodity

Disclaimers required in Japan

Investors in the financial products offered by Nomura Securities may incur fees and commissions specific to those products (for example, transactions
involving Japanese equities are subject to a sales commission of up to 1.365% (tax included) of the transaction amount or a commission of ¥2,730
(tax included) for transactions of ¥200,000 or less, while transactions involving investment trusts are subject to various fees, such as sales
commissions and trust fees, specific to each investment trust). In addition, all products carry the risk of losses owing to price fluctuations or other
factors. Fees and risks vary by product. Please thoroughly read the written materials provided, such as documents delivered before making a contract,
listed securities documents, or prospectuses.
Transactions involving Japanese equities (including Japanese REITs and Japanese ETFs) are subject to a sales commission of up to 1.365% (tax
included) of the transaction amount (or a commission of ¥2,730 (tax included) for transactions of ¥200,000 or less). When Japanese equities are
purchased via subscriptions or other offerings, only the purchase price shall be paid, with no sales commission charged. However, Nomura Securities
may charge a separate fee for OTC transactions, as agreed with the customer. Japanese equities carry the risk of losses owing to price fluctuations.
Japanese REITS carry the risk of losses owing to fluctuations in price and/or earnings of underlying real estate. Japanese ETFs carry the risk of
losses owing to fluctuations in equity indexes or other benchmarks.
Transactions involving foreign equities are subject to a domestic sales commission of up to 0.9975% (tax included) of the transaction amount (which
equals the local transaction amount plus local fees and taxes in the case of a purchase or the local transaction amount minus local fees and taxes in
the case of a sale). Local fees and taxes in foreign financial markets vary by country/territory. When foreign equities are purchased via OTC
transactions (including offerings), only the purchase price shall be paid, with no sales commission charged. However, Nomura Securities may charge
a separate fee for OTC transactions, as agreed with the customer. Foreign equities carry the risk of losses owing to factors such as price fluctuations
and foreign exchange rate fluctuations.
Transactions involving convertible bonds are subject to a sales commission of up to 1.05% (tax included) of the transaction amount (or a commission
of ¥4,200 (tax included) if this would be less than ¥4,200). When convertible bonds are purchased via offerings, only the purchase price shall be paid,
with no sales commission charged. However, Nomura Securities may charge a separate fee for OTC transactions, as agreed with the customer.
Convertible bonds carry the risk of losses owing to factors such as interest rate fluctuations and price fluctuations in the underlying stock. In addition,
convertible bonds denominated in foreign currencies also carry the risk of losses owing to factors such as foreign exchange rate fluctuations.
When bonds are purchased via offerings, distributions, or other OTC transactions with Nomura Securities, only the purchase price shall be paid, with
no sales commission charged. Bonds carry the risk of losses, as prices fluctuate in line with changes in market interest rates. In addition, foreign
currency-denominated bonds also carry the risk of losses owing to factors such as foreign exchange rate fluctuations.
When Japanese government bonds (JGBs) for individual investors are purchased via offerings, only the purchase price shall be paid, with no sales
commission charged. When JGBs for individual investors are sold before maturity, an amount calculated via the following formula will be subtracted
from the par value of the bond plus accrued interest: for 10-year variable rate bonds, an amount equal to the two preceding coupon payments (before
tax) x 0.8; for 5-year fixed rate bonds, an amount equal to the four preceding coupon payments (before tax) x 0.8.
Purchases of investment trusts (and sales of some investment trusts) are subject to a fee of up to 5.25% (tax included). Also, a direct cost that may
be incurred when selling investment trusts is a redemption fee of up to 2.0% of the unit price at the time of redemption. Indirect costs that may be
incurred during the course of holding investment trusts include, for domestic investment trusts, a trust fee of up to 5.25% (tax included, annualized
basis) of the net assets in trust, as well as fees based on investment performance. Other indirect costs may also be incurred. For foreign investment
trusts, indirect fees may be incurred during the course of holding such as investment company compensation.
Investment trusts invest mainly in securities such as Japanese and foreign equities and bonds, whose prices fluctuate. Investment trust unit prices
fluctuate owing to price fluctuations in the underlying assets and to foreign exchange rate fluctuations. As such, investment trusts carry the risk of
losses. Fees and risks vary by investment trust. Maximum applicable fees are subject to change; please thoroughly read the written materials
provided, such as prospectuses or documents delivered before making a contract (as of 25 March 2008.)
An annual account maintenance fee of ¥1,575 (tax included) is charged for any account held with Nomura Securities containing equities or other
securities. An additional annual account maintenance fee of ¥3,150 (tax included) is charged for any account containing foreign securities. Some
discounts may apply depending on the details of your agreement with Nomura Securities.
No account fee will be charged for other marketable securities or monies deposited.
Transfers of equities to another securities company via the Japan Securities Depository Center are subject to a transfer fee of up to ¥10,500 (tax
included) depending on the volume of securities transferred.
Margin transactions are subject to a sales commission of up to 1.365% (tax included) of the transaction amount (or a commission of ¥2,730 (tax
included) for transactions of ¥200,000 or less), as well as management fees and rights handling fees. In addition, long margin transactions are subject
to interest on the purchase amount, while short margin transactions are subject to fees for the lending of the shares borrowed. A margin equal to at
least 30% of the transaction amount and at least ¥300,000 is required. With margin transactions, an amount up to roughly 3.3x the margin may be
traded. Margin transactions therefore carry the risk of losses in excess of the margin owing to share price fluctuations. For details, please thoroughly
read the written materials provided, such as listed securities documents or documents delivered before making a contract.

Nomura Securities Co., Ltd.

Financial instruments firm registered with the Kanto Local Finance Bureau (registration No. 142)
Member associations: Japan Securities Dealers Association; Japan Securities Investment Advisers Association; and The Financial Futures
Association of Japan.

Additional information available upon request.

NIPlc and other Nomura Group entities manage conflicts identified through the following: their Chinese Wall, confidentiality and independence policies,
maintenance of a Stop List and a Watch List, personal account dealing rules, policies and procedures for managing conflicts of interest arising from
the allocation and pricing of securities and impartial investment research and disclosure to clients via client documentation.

Disclosure information is available at the Nomura Disclosure web page:

http://www.nomura.com/research

13