Economy & Financial Market Outlook

Director of Kanto Local Finance Bureau (Financial instruments firm) No. 351
a member of the Japan Investment Advisors Association, and the Investment Trusts Association, Japanas of July 11, 2024

Economy & Financial Market Outlook: Japan
EconomyStock Market

Expecting Slower Growth

Expecting Market to Seesaw

We expect the Japanese economy will continue tobe supported by loose monetary policy and inboundtourism demand. However, we believe economic
recovery will only be gentle given a prolonged
negative real wage growth and a signal of weakerpersonal consumption.

 Review

Japan’s core CPI (excluding perishables) was up
2.5% YoY in May (April: 2.2%). We believe core
CPI growth will remain around 2.5% for this year
because of an increase in energy prices, while theindex would fluctuate due to the government
subsidies curbing electricity and gas bills.

We expect Japanese equities to seesaw given the
mixture of positive and negative catalysts. On one
hand FY24 corporate profits will likely remainrobust on the back of expectations for
manufacturing industry inventories to bottom out,
domestic real wages to recover, and capitalefficiency to improve given Tokyo Stock Exchange(TSE) pressure.

We expect the BoJ to scale down easing after
normalizing monetary policy. However, further rate
hikes will likely be small given that central banks in
the US and Europe are pivoting towards rate cutsand the BoJ will be cautiously keeping watch theimpact ending easy monetary policy will have on
the Japanese economy.

Bond Market
Expecting Rates to Rise Moderately
 Review

The Japanese equity market was up in June on theback of a decline in US long-term rates, stemmingfrom slowing US inflation.

 OutlookOn the other hand, valuations have become lessundervalued as the market has priced in corporate
earnings growth expectations to a decent extent.
However, it is difficult to envision a large correction
to the market given that there is a lot of demand forstocks driven by expectations for improved capitalefficiency, large-scale share buybacks (following
TSE pressure), and the BoJ’s relatively loose
monetary policy.

10-year JGB yields (as well as prices) nearlyremained flat in June. Yields fell in the first half ofthe month as the BoJ pushed back the decision to
reduce its JGB purchases until the July policy
meeting. However, yields rose and offset the drop
following expectations for rate hikes by the central
bank given JPY depreciation in the second half ofthe month.

 Outlook
We believe interest rates will remain flat or slightly
increase. Japanese interest rates will likely besubject to upward pressure as we believe the BoJ
will attempt to exit easy policy including JGB
purchases. However, growth will likely be moderatebecause rate hikes should be slow given sentimentthat economic growth seems to have hit a peak inJapan and overseas and given recent fiscal
conditions.

■This document has been compiled by Sompo Asset Management Co., Ltd for the purpose of information provision. ■ This document has been created based on informationthat Sompo Asset Management Co., Ltd believes to be reliable, although the firm does not guarantee the accuracy or completeness of such information. The contents, opinions,and forecasts expressed in this report may at any time be changed or withdrawn without prior notice. ■ Performance data used in this report reflects past performance and is
not a guarantee or indicator of future results. ■This document does not constitute a legal disclosure document ■This document is not an invitation or solicitation to buy the
products shown therein, nor does it guarantee an investors ability to enter into a contract with Sompo Asset Management Co., Ltd.

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as of July 11, 2024

Economy & Financial Market Outlook: US
EconomyStock Market

Expecting Economic Slowdown

Expecting Upside Resistance

The US economy is running strong despite tightmonetary policy. However, we expect it to slow as
the consequences of monetary tightening gradually
become more apparent.
Core PCE inflation (excluding perishables andenergy), was up 2.6% YoY in May (up 2.8% in
April). The unemployment rate was 4.1% in June
(May: 4.0%).

 Review
The US equity market rose in June thanks to rising
expectations for rate cuts by the Fed, stemming fromthe lower-than-expected inflation data, and growing
expectations for generative artificial intelligence (AI)related companies given that some of them announced
favorable earnings.

 Outlook

The Fed left its policy rate unchanged at the June
FOMC meeting. However, the central bank madeupward revisions to the projections of inflation in
2024 and 2025 and lowered expected rate cuts thisyear from three times to just one time. The Fed’s
statement after the FOMC meeting and remarks by
Fed Chairman Jerome Powell at the press
conference struck some dovish tones including
their confirmation of decelerated inflation. We will
be watching for when the Fed will start rate cutsand how fast they will do so.

We expect the US equity market to face upside
resistance. US valuations do not appear undervalued
as the market has already priced in expectations forgenerative AI and rate cuts by the Fed. We expect an
outlook recovery stemming from banks being lessreluctant to lend and the ISM Manufacturing Indexbottoming out. However, profit growth momentum of asmall number of large-growth names, which drove
valuation expansion in the market, will likely slow.
Hence, unclear monetary policy will likely hamper
upside potential for valuations over the near term.

Bond Market

Currency Market

Rates Flat in Near Term, Then Down

USD to Fall Slowly vs. JPY

 Review

 Review

10-year US yields fell in June. Yields fell (pricesrose) since the beginning of the month due tolower-than-expected ISM Manufacturing Index.
Yields then temporarily rose (prices fell) given
growing expectations for the Fed to keep rates
unchanged this year following a stronger-thanexpected US job report. However, yields declined
again from mid-June as investors purchased backbonds on moderate inflation data.

USD appreciated versus JPY in June. USD depreciatedversus JPY in the beginning of the month given a fall in
US interest rates due to the deteriorated ISM
Manufacturing Index. USD then appreciated versus
JPY following the robust job report and the Fed’s
hawkish stance at the June FOMC meeting. USD
continued to appreciate versus JPY as outlook for the
BoJ to raise interest rates in July was abated. This was
because the BoJ decided to trim JGB purchases but
postponed to announce how and how much JGB
purchases the central bank would taper until next policy
meeting.

 Outlook
We expect yields to remain flat over the near term
and to then shift downward. The Fed continues tobe cautious to early rate cuts while inflation
decelerates again. We believe that rates willcontinue to be unstable as the timing and pace ofrate cuts by the Fed will likely remain unclear.
However, after stablising, rates will likely turndownward again as the market will price in easing.
The market will do this because of the expected
slowdown in core CPI (Consumer Price Index) toaround 3.0% given the tightening we have seen sofar.

 Outlook
We expect USD to slowly depreciate versus JPY. We
believe there will be downward pressure on USD
versus JPY as the Fed is preparing to cut rates while
the BoJ is normalising monetary policy. Downward
pressure on JPY from real demand is falling as Japan’s
trade deficit is shrinking. However, depreciation will
likely be gentle given the Fed’s cautious stance to earlyrate cuts and the likelihood of a cautious normalisation
approach from the BoJ while it assesses effects ofpolicy changes on the economy.

■This document has been compiled by Sompo Asset Management Co., Ltd for the purpose of information provision. ■ This document has been created based on informationthat Sompo Asset Management Co., Ltd believes to be reliable, although the firm does not guarantee the accuracy or completeness of such information. The contents, opinions,and forecasts expressed in this report may at any time be changed or withdrawn without prior notice. ■ Performance data used in this report reflects past performance and is
not a guarantee or indicator of future results. ■This document does not constitute a legal disclosure document ■This document is not an invitation or solicitation to buy the
products shown therein, nor does it guarantee an investors ability to enter into a contract with Sompo Asset Management Co., Ltd.

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as of July 11, 2024

Economy & Financial Market Outlook: Europe
EconomyStock Market

Expecting Continued Slow Growth

Upside Resistance

We expect European economic growth to continue
slowing as the ECB’s policy rate remains high,whereas the central bank has cut the rates given an
economic downturn in Europe.

 Review

The region’s core CPI (excluding volatile perishables
and energy) recorded positive growth of 2.9% (YoY)
in June (May: 2.9%).
The left-wing alliance New Popular Front (NFP) won
the most seats in the second round of the French
parliamentary election. The far-right National Rally(NR) struggled to gain more seats despite its leadingin the first round. However, the market is concernedover political uncertainties given that deliberations ofbills may not proceed smoothly because of a large
policy gap between NFP and centrist Ensemble
alliance which allied with NFP in the election.

Bond Market
Rates Flat in Near Term, Then Down
 Review
German 10-year yields fell (prices rose) in June.
The market became more concerned about politicaluncertainties and fiscal deterioration because ofFrench President Emmanuel Macron’s snap
election. Yields fell (prices rose) as investors
purchased German bonds, which are considered as
riskless assets. Worsened business sentiment in
the euro area was also a downward pressure toyields.

 Outlook
We expect German bond yields to be flat over thenear term and fall after that. Although they will beflat, we do still expect to see some fluctuations overthe near term because of uncertainty around the
Fed rate cuts and impacts of political and fiscal
concerns in France. However, in the longer term
we believe yields will fall gently as the ECB started
rate cuts in June and is likely to cut interest rates
further while watching inflation trend in the region.

The European equity market fell in June on theback of rising concerns of political situation in
France and concerns about trade frictions between
Europe and China over automobiles.

 Outlook
We expect the European equity market to face anupside resistance. Economic indicators andcorporate earnings in Europe lack strength and thedeterioration in the Chinese economy may
negatively impact European corporate earnings.
The equity market is pricing in these negatives andvaluations are not expensive. However, we expect
the market to see an upside resistance because
France’s political instability will likely dragvaluations down in the near term.

Currency Market
EUR to Fall Slowly vs JPY
 Review
EUR appreciated versus JPY in June. EUR
depreciated versus JPY in the first half of the monthas EUR was sold as far-right wing parties madestrong gains in the EU elections and France’s
political concerns. EUR appreciated versus JPY in
the second half of the month as outlook for the BoJ
to raise interest rates in July was abated. This was
because the BoJ decided to trim JGB purchases
but postponed to announce how and how much
JGB purchases the central bank would taper until
next policy meeting.

 Outlook
We expect EUR to gently depreciate versus JPY.
EUR will likely face downward pressure versus JPY
as the ECB has cut rates in June and will likely
lower rates further whilst watching for eurozone
inflation trend. This is in addition to the BoJ
stepping towards normalisation of its own policy.
However, we believe EUR depreciation versus JPY
will be gentle as the BoJ will likely cautiously
normalise policy while assessing the effects ofpolicy changes on the Japanese economy and as
the ECB indicated that it is not in a rush to cut rates
further.

■This document has been compiled by Sompo Asset Management Co., Ltd for the purpose of information provision. ■ This document has been created based on informationthat Sompo Asset Management Co., Ltd believes to be reliable, although the firm does not guarantee the accuracy or completeness of such information. The contents, opinions,and forecasts expressed in this report may at any time be changed or withdrawn without prior notice. ■ Performance data used in this report reflects past performance and is
not a guarantee or indicator of future results. ■This document does not constitute a legal disclosure document ■This document is not an invitation or solicitation to buy the
products shown therein, nor does it guarantee an investors ability to enter into a contract with Sompo Asset Management Co., Ltd.

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as of July 11, 2024

Economy & Financial Market Outlook: Emerging Market
EconomyStock Market

EM Slows But Stronger than Developed

Market to seesaw

Economic slowdown in China continues. New
home sales in the country (except some large cities
such as Shanghai) still remained negative YoY andretail sales also struggle to recover.

 Review

The Chinese government has been implementing
economic stimulus measures which it hasannounced but pace of the implementation will
likely slow as the pace of municipalities’ issuanceof special bonds (fiscal source of the stimulus
measures) is slower than last year. Hence, we will
be watching for medium- to long-term national
goals and further economic stimulus measures
expected to be announced in the third plenum
planned to be held on July 15th.
We expect that tightened monetary policy
environments and impacts of economic slowdowns
in developed countries will put downward pressureson the emerging market. However, we believe
economies in developing countries will be morerobust than those in developed countries as
inflationary pressure is easing against a backdropof firm domestic demand.

Bond Market
Yields to Fall Gradually on Rate Cuts
 Review
Emerging market yields slightly fell in June on theback of a fall in US interest rates, stemming fromabated concerns over rising US inflation. Yields inColumbia fell as the central bank cut its policy rate by
50 bps for the third consecutive meeting. Yields in
Brazil rose due to rising concerns over fiscal
deterioration in the country, arising from President
Luiz Inacio Lula da Silva’s remarks of raisingminimum wages.

 Outlook
We expect emerging country yields to slowly
decrease given that developing countries are shifting
to rate cuts on the back of weakening inflationarypressure and the US now looking to start rate cuts.

Emerging market equities rose (local currency basis)
in June. We saw a turbulence in the market in the
beginning of the month given the result of India’s
general election. However, share prices, particularly
for AI-related names, significantly rose following
positive news (including Apple’s announcement ofincorporating AI features into new iPhones) for asemiconductor market and supply chains ofsmartphones. Emerging markets finished up although
the Chinese market sagged in the second half of themonth due to weaker-than-expected major economic
indicators and a news report that Canada will impose
tariffs on China-made electric vehicles, in line withactions by the US and EU.

 Outlook
We expect emerging market equities to seesaw given
the mixture of positive and negative catalysts. On one
hand the market is concerned about high share prices
for AI-related names. On the other hand, before thethird plenum, expectations for the Chinese
government’s policies will likely support the market
while profit-taking is easing in the Chinese equity
market.

Currency Market
Appreciation on Shift to US Rate Cuts
 Review
Emerging market currencies as a whole depreciatedversus USD (individual movements vary) as USD
was solid but appreciated versus JPY as JPY
depreciation was larger than emerging currencies’
depreciation versus USD. The South African randappreciated because the market was positive on
the re-election of South African President Cyril
Ramaphosa after his ruling party lost its
parliamentary majority in a general election at theend of May and struck a coalition deal with the
opposition parties in June. The Mexican peso
depreciated as the market was concerned of fiscal
deterioration in the country following the left-wing
ruling party’s landslide victory in the general election.

 Outlook
We expect emerging market currencies as a whole
to appreciate when the Fed initiates rate cuts butthat individual movements will be determined byfundamentals.

■This document has been compiled by Sompo Asset Management Co., Ltd for the purpose of information provision. ■ This document has been created based on informationthat Sompo Asset Management Co., Ltd believes to be reliable, although the firm does not guarantee the accuracy or completeness of such information. The contents, opinions,and forecasts expressed in this report may at any time be changed or withdrawn without prior notice. ■ Performance data used in this report reflects past performance and is
not a guarantee or indicator of future results. ■This document does not constitute a legal disclosure document ■This document is not an invitation or solicitation to buy the
products shown therein, nor does it guarantee an investors ability to enter into a contract with Sompo Asset Management Co., Ltd.

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Risks and Expenses relating to Discretionary Investment Contracts● Risks relating to Discretionary Investment Contracts
Under discretionary investment contracts, marketable securities such as global/domestic equities and fixedincomes are mainly invested. Market values of these assets are subject to change due to fluctuations in market
price of assets, foreign exchange rates, and so on. Such investment may incur losses in the initial fiduciary
assets, or may damage beyond the initial invested principal amounts.
The contents and characteristics of risks vary according to asset type, investment restrictions, traded markets,
investee countries, and so on. Thus, before entering into a contract, prospective clients are requested to first
confirm all relevant items of the "Documents prior to conclusion of contract.“● Fees relating to discretionary investment contracts[Clients bear the following expenses.]■Fees applicable directly and/or indirectly during the period of a discretionary investment contract
An investment management fee will be applicable. The fee tables to be applied vary depending on the assets,
the amount of contract, the contract details, and so on. Thus, the fee schedule and/or maximum fee amounts
cannot be provided in advance. Prospective clients are therefore requested to confirm the relevant items byreading carefully the "Documents prior to conclusion of contract" .
■Other costs and expenses
There may be variable additional costs incurred. As the amount and/or the maximum amount of those "othercosts and expenses" vary depending on investment circumstances, those cannot be specified beforehand.
*The total costs relating to discretionary investment contracts cannot also be specified beforehand as they vary
according to contract periods<Notes> The above risks and costs pertain to discretionary investment contracts in general. As the risks andcosts entailed by discretionary investment contracts may vary by each contract, prospective clients arerequested to read carefully all relevant items of the "Documents prior to conclusion of contract" in advance.
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regarding the accuracy, completeness or adequacy of the information in this material. Past performance is not aguarantee of future results.

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Risks and Expenses regarding Investment Trusts (Mutual Funds)● Risks relating to Investment Trusts (Mutual Funds)
Investment Trusts mainly invest in marketable securities such as domestic and global equities and fixedincomes and those are subject to price fluctuations of markets, Thus, the unit prices of such funds may also
fluctuate depending on changes in market price of such assets, and changes in foreign exchange rates in caseof assets denominated in foreign currencies.
Fund prices are therefore exposed to the risk of fluctuations in price of marketable securities and/or foreignexchange rates, and so on. Accordingly, principal amounts invested by clients are not guaranteed.
As each investment trusts fund has its own target asset class, investment restrictions, traded markets andinvestee countries, and so on, the degree and characteristics of the risks entailed by each mutual fund vary.
Prospective clients are therefore requested to read carefully the prospectus and the "Documents prior toconclusion of contract" of the relevant mutual funds.
● Fees and expenses relating to Mutual Funds[Clients bear the following expenses.]■Fees and expenses to be paid directly at the time of subscription (subscription fee): Maximum 3.85% (3.5%
excluding tax)
■Fees and expenses to be paid directly at the time of redemption or selling (redemption fee): Maximum 0.5%
■Expenses to be paid indirectly during the holding period (management fees) : Maximum 2.09% (1.9%
excluding tax)
■Other expenses: Additionally, the expenses according to the holding period of Investment Trusts are paid byclients. As the "Other expenses" items fluctuate according to the investment circumstance, the schedule and/or
upper limit relating those expenses cannot be provided in advance. Prospective clients are therefore requested
to confirm the relevant items by reading carefully the prospectus and the "Documents prior to conclusion ofcontract" of the relevant mutual fund.
As the total costs vary according to the holding period of each investor, it cannot be specified beforehand.
<NOTES> The above risks and costs pertain to investment trusts in general. The fee rates listed above are thehighest among all investment trusts managed by SOMPO ASSET MANAGEMENT CO., LTD. As the risks andcosts entailed by an investment trust may vary by each investment trust, prospective clients are requested toread carefully all relevant items of prospectus and the "Documents prior to conclusion of contract" in advance.

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Other Important Notices
This document has been compiled by Sompo Asset Management Co., Ltd for the purpose of information
provision.
This document has been created based on information that Sompo Asset Management Co., Ltd believes to bereliable, although the firm does not guarantee the accuracy or completeness of such information. The contents,
opinions, and forecasts expressed in this report may at any time be changed or withdrawn without prior notice.
Performance data used in this report reflects past performance and is not a guarantee or indicator of future
results.
This document does not constitute a legal disclosure document.
Disclaimer (GIPS)“SOMPO ASSET MANAGEMENT CO., LTD. claims compliance with the Global Investment PerformanceStandards(GIPS®). SOMPO ASSET MANAGEMENT CO., LTD. has been independently verified for the periods
1 April 2012 through 31 March 2023. We have defined its investment advisory business and investment trust
business as the "Firm" and claimed compliance with the GIPS®. A complete list of composite descriptions andpolicy of portfolio evaluation, performance calculation, and compliant presentation development are available
upon request.”
Contact information:

SOMPO ASSET MANAGEMENT CO., LTD
Investment Advisory Marketing Department
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