MasterIndex™ of Retail Forecasts Continued Growth

MasterIndex™ of Retail Forecasts Continued Robust Retail Sales Growth Across Asia/Pacific
Indonesia to Lead the Region in Year-on-Year Growth in the First Half of 2005

Singapore, 16 February 2005 – Stellar growth in retail sales across Asia/Pacific is expected to continue, according to the latest MasterIndex™ of Retail forecast released by MasterCard International today.

All 12 Asia/Pacific markets included in the forecast are predicted to see positive expansion, with Indonesia taking the lead with an anticipated 16.9% year-on-year growth for the first half of the year. Double-digit growth is also expected from China (12.75%) and Thailand (12.3%), followed by Malaysia (8.9%), Hong Kong (8.7%) and the Philippines (8.5%).

Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard International, commented, “The consumption revolution in Asia/Pacific continues to unfold in 2005, in spite of the tsunami disaster, the impact of higher world price of oil, and the regional trend of rising interest rates. The outlook of consumer confidence for the first half of this year remains solidly optimistic, and this is entirely consistent with the expected pace of economic expansion across the region in 2005.

“Retail sales will also benefit from the growing trend of traveler-shoppers, a uniquely Asia/Pacific phenomenon. Key tourist destinations such as Hong Kong, Singapore, Bangkok, Kuala Lumpur, Shanghai and Seoul will see higher tourist arrivals, boosting retail sales and the small and medium size businesses that cater to tourists.”

Conducted twice a year in June and December, the MasterIndex of Retail was launched in June 2003 by MasterCard as part of its knowledge leadership initiatives in Asia/Pacific. It is among MasterCard’s MasterIndex suite of research products and provides six-month forecasts of retail sales growth in 12 markets: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand.

The other key MasterIndex research products include the flagship MasterIndex™ of Consumer Confidence - the region’s most comprehensive and longest running consumer sentiment survey, and the MasterIndex™ of Travel, which combines outbound travel forecasts for the region with a survey of Asian travelers’ lifestyle trends.

Other highlights of the MasterIndex of Retail for the first half of 2005 are as follows:

- China takes the number two spot in the retail sales growth forecasts with 12.75% year-on-year growth, followed closely by Thailand at 12.3% year-on-year growth.

- Malaysia, Hong Kong, the Philippines and Singapore are predicted to see optimistic retail sectors, with anticipated 8.9%, 8.7%, 8.5% and 6.5% year-on-year growth respectively.

- Other Asia/Pacific markets, while less bullish, indicate positive year-on-year growth. These include Taiwan (4.8%), Australia (4%), Japan (2.3%) and Korea (1.78%).

Combining 10 years of retail sales data , factoring in the secular trend of growth of the retail industry, and using the MasterIndex of Consumer Confidence as an independent variable , an estimate of retail sales value is obtained for the same six-month horizon covered by the MasterIndex of Consumer Confidence.

INDIVIDUAL MARKET FORECASTS FOR FIRST HALF 2005
(Full report is available at www.mastercard-masterindex.com)

- Retail sales in Australia are expected to grow by 4% on the previous year, reaching A$85.0 billion in value in the first six months. The MasterIndex of Consumer Confidence falls by 2 points, from 63.4 in the previous survey to 61.5, due to weaker sentiment on the outlook for regular income as households became concerned about easing home prices.

- Retail sales in China for the first half of 2005 are forecasted to grow by 12.75% year-on-year, valued at $2.85 trillion Yuan. Consumer confidence in China (81.3) rises from its previous MasterIndex score of 78.9, as confidence in the stock market improves.

- Retail sales in Hong Kong for the first half of the year are expected to rise to 8.7% year-on-year to reach HK$99 billion. Hong Kong’s MasterIndex of Consumer Confidence score of 79.2 is a rebound after it pulled back from 81.1 to 71.2 in the previous survey. Outlook on the economy and employment show the strongest improvements.

- Retail sales in Indonesia for the first half of 2005 are expected to manifest year-on-year growth of 16.9% to reach $166 trillion Rupiah in the first six months. Consumer confidence in Indonesia improves significantly, rising 27 points to 94.7 from 67.3 in the previous survey. Optimism for all variables of the index are above 90, mostly due to strong economic climate and confidence in the new president.

- The forecasted growth in retail sales for Japan is 2.3% on the previous year, valued at ¥56 trillion for the first six months. Japan’s MasterIndex of Consumer Confidence currently stands at 37.7, with outlook on the stock market being the only indicator remaining in the optimistic territory.

- Korea’s retail sales are expected to expand by 1.78% with a total value of $64 trillion won in the first half of the year. The latest MasterIndex of Consumer Confidence for Korea shows an erosion of confidence into pessimism, sliding to 29.6 from 40.7 in the last survey.

- Malaysia’s retail sales are expected to increase year-on-year by 8.9%, to reach an estimated RM$30 billion in the first six months. Malaysia’s consumer confidence score slips backwards 6 points to 78 compared to the last survey.

- For the first half of 2005, retail sales for New Zealand are forecasted to grow by 5.5% year-on-year, reaching NZ$16.2 billion in total sales value. The latest MasterIndex of Consumer Confidence for New Zealand indicates an increase in optimism from the previous score of 56.5 to 68.6, with outlook on employment showing the largest improvement.

- The Philippines’ retail sales are estimated to grow by a healthy 8.5% in the first half of 2005. Total sales value is expected to reach 331 billion Pesos. However, the Philippines’ consumer confidence shows a move backwards to a pessimistic score of 33.7.

- The forecasted retail sales growth for Singapore is expected to be at 6.5% year-on-year, with total sales valued at an estimated S$14.3 billion for the first six months. Though still in positive territory, the MasterIndex of Consumer Confidence for Singapore shows sentiments backpedaling by almost 13 points, moving outlook to 58.7 from 71.9 in the last survey.

- Taiwan’s retail sales are forecasted to grow by 4.8% year-on-year. Total sales value over the first half of the year is estimated to reach NT$1,519 billion. Consumer sentiments have not matched the stable economic fundamentals in Taiwan, and the MasterIndex of Consumer Confidence falls by another 10 points to 48.2, crossing over into pessimism.

- Retail sales in Thailand are poised to expand by 12.3% year-on-year, with sales value reaching an estimated $1059 billion Baht over the next six months. The MasterIndex of Consumer Confidence for Thailand falls by 10 points to 59.4 from the last survey, with outlook on the economy and employment taking the largest hits.

NOTE TO EDITORS: This news release is distributed with the table (below) that shows the MasterIndex of Retail forecast by market.

The full report, as well as the MasterIndex of Consumer Confidence report referenced in the individual market forecasts, can be found at the website www.mastercard-masterindex.com

The MasterIndex of Retail’s forecast for the first half of 2005 period is shown in the table below.

Retail sales in the first half of 2005 Year-on-year growth

Australia* A$85.0 billion 4.0%
China $2.85 trillion yuan 12.75%
Hong Kong* HK$99 billion 8.7%
Indonesia 166 trillion rupiah 16.9%
Japan* 56 trillion yen 2.3%
Korea* 64 trillion won 1.78%
Malaysia 30 billion ringgit 8.9%
New Zealand* NZ$16.2 billion 5.5%
Philippines 331 billion peso 8.5%
Singapore* SG$14.3 billion 6.5%
Taiwan* NT$1,519 billion 4.8%
Thailand* 1059 billion baht 12.3%
* Excludes hospitality, catering and auto sales
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About MasterIndex™ of Retail
MasterIndex of Retail is a short-term forecast of retail sales growth in 12 key Asia/Pacific markets – Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand. The forecasting is done twice a year, in June and December, to provide powerful predictive market intelligence that is highly relevant not only to wholesale and retail industries, but to sectors such as entertainment, food and beverage, the hospitality and leisure industry, as well as consumer goods manufacturing.

The analytical foundation of the MasterIndex of Retail is based on the development of a set of techniques that have successfully linked MasterCard’s MasterIndexTM of Consumer
Confidence with retail sales statistics. The survey findings of the MasterIndex of Consumer
Confidence are used as a leading indicator of how consumers may act in terms of retail spending over the six-month period ahead. Thus, a link is made between consumer sentiment and actual consumer behavior.

The MasterIndex of Retail forecast is one of MasterCard’s MasterIndex suite of research products in Asia/Pacific. The other key MasterIndex research products include:

- The flagship MasterIndex™ of Consumer Confidence - the region’s most comprehensive and longest running consumer sentiment survey. Now in its 13th year, the MasterIndex of Consumer Confidence has demonstrated its predictive precision and has proved to be an excellent barometer of the consumer pulse in this region. Today, the survey is much sought after by analysts, academics and decision-makers in financial institutions, government agencies and multinational organizations.
- The MasterIndex™ of Travel encompasses a six month forecast of outbound travel for 12 markets (Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Thailand) and a survey of business and personal travel trends among the urban middle class across the region.

MasterIndex information relates to retail and consumer economic trends only and does not constitute a projection of the business or financial performance of MasterCard Incorporated or its affiliates.

About MasterCard International
MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members’ credit, deposit access, electronic cash, business-to-business and related payment programs. MasterCard International manages a family of well-known, widely accepted payment cards brands including MasterCard, Maestro and Cirrus and serves financial institutions, consumers and businesses in over 210 countries and territories. The MasterCard award-winning Priceless advertising campaign is now seen in 97 countries and in 47 languages, giving the MasterCard brand a truly global reach and scope. For more information go to www.mastercardinternational.com.

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