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Global Research Private Banking Investment horizon: 6-12+ months

Research Monthly

June 2013

Buy

Iberdrola hybrid bond in EUR (IBESM 5.75%, call 02/18; ISIN: XS0808632763) Yield pick-up of around 3% vs. the senior bond for a “half-peripheral” utility (Spain: 50% of revenues; UK, USA, Latin America: 50%). Diversified equity and fixed income funds that offer frontier market exposure Frontier markets will likely enjoy high growth and reduced risk premia in the coming years. Apple A recent Top 30 portfolio addition, valuation now attractive following a recent de-rating. Directional hedge fund strategies Market conditions for hedge funds are supportive. Low intra-stock correlations are positive for directional strategies.

Buy

Buy

Investment Strategy

Buy

Low inflation allows easy money to underpin stocks uptrend
page 3

This month’s featured topic

Fixed income

Foreign exchange

Cyclicals to catch up when business cycle firms
page 9

Global Less demand quantitative for safe haven easing currencies supporting EMU peripherals
page 12

page 17

Important disclosures are found in the Disclosure appendix. Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For a discussion of the risks of investing in the securities mentioned in this report, please refer to the following Internet link: https://research.credit-suisse.com/riskdisclosure

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Credit Suisse - Research Monthly

Editorial
Giles Keating Head of Research for Private Banking and Wealth Management giles.keating@credit-suisse.com, +41 44 332 22 33

In this issue
Investment Strategy

Low inflation allows easy money to underpin stocks uptrend  page 3 Investment summary
Economics  page 5

The gradual recovery continues There are moments in markets when an invisible boundary is crossed, the psychology changes, the focus of investors shifts, events that were previously important become irrelevant while others move center stage. Negative psychological shifts of this type are often a response to single events such as a major bankruptcy. Positive shifts tend to be a reaction to a subtle accumulation of less dramatic events, yet when they happen, their impact can be just as powerful. In recent weeks, we seem to have passed such an invisible boundary. Key signals include the breaking of a key S&P 500 resistance at previous peaks around 1600; the weakening of safe-haven assets like CHF and gold; and the resilience of stock markets to sell-offs, with even the sharp one-day fall in the Nikkei of over 7% being (at time of writing) partially reversed almost immediately. Meanwhile the default on bank deposits in a Eurozone country caused barely a ripple in confidence. The recent soft patch in global economic indicators has been accompanied by an ongoing uptrend in global equities. A barrage of FOMC speeches showing an active, if unfinished, debate about Fed exit policy has attracted analyst attention and caused a few weak days for stocks and US Treasury bonds, but no sustained sell-off. Putting this all together, it seems that sentiment is no longer dominated by the old demons of Eurozone break-up, renewed recession, and the Fed inflating asset prices without helping the economy. Now, the dominant view seems centered around an ongoing recovery with modest inflation. Of course uncertainties abound, over the exact pace of recovery, the timing and style of Fed exit, the level to which equity multiples can rise, the risks of weaker credits. These are crucial issues that can cause brief setbacks but they sit within a psychological – and actual – environment that is very different, in a positive way, from where we were just a few months ago.
This month’s featured topic

 page 7

Cyclicals to catch up when business cycle firms
Investment theme

 page 9

Yield at reasonable risk: Corporate hybrids
Credit Suisse Megatrends

 page 10

Megatrends: Frontier markets
Fixed income

 page 11

Global quantitative easing supporting EMU peripherals  page 12
Equities

Central bank policy the main driver of equity prices
Alternative investments

 page 14

Hedge funds and real estate to outperform commodities  page 16
Foreign exchange

Less demand for safe haven currencies Risk disclaimer
 page 19

 page 17

Editorial deadline: 28 May 2013

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Investment Strategy

Low inflation allows easy money to underpin stocks uptrend

our strategic focus on stocks, and would look to enter attractively valued markets more forcefully in temporary setback phases. Fixed income: Credits remain underpinned, duration unattractive The three government bond markets that have consistently stood out with yields far apart from (below) their estimated fair values over recent months were Japanese government bonds (JGBs), German Bunds and the Swiss Eidgenossen. Consequently, they exhibit the greatest vulnerability to a correction. The JGB yield rise is testimony to that, although we do not think much more correction is likely from here over the next 6–12 months. Bunds, although very highly valued, still benefit from the possibility that the ECB could lower rates further. Swiss government bond yields, in contrast, could be the next to correct up closer to their fair value. With systemic risks receding, the attractiveness of un-remunerative Swiss assets has declined and outflows into better yielding alternatives can be expected. Credits remain favored within the fixed income class. We mostly recommend selected bank, corporate and emerging market bonds of short to medium tenor, also as part of our Top 2013 Investment Idea No. 1, “Credits, not duration.” Equities: Favorable environment for stocks; cyclicals with catch-up potential Within equities, we reiterate our current overweights in the USA and Japan. Further marked bond yield increases in Japan from current levels seem unlikely and the threat to Japanese stocks from there thus seems contained. Valuations are attractive and earnings prospects have improved markedly for Japanese companies, given the weaker JPY. In the USA, valuations are higher, but monetary policy and investor flows should remain very supportive. In Switzerland, higher bond yields could prove detrimental, but if they were to coincide with a slightly weaker CHF, then the downside could be quite limited. Even so, the rather defensive Swiss market could start underperforming after a strong first five months. Indeed, from a sector point of view, cyclicals have started to perform better than defensives over the past month. But the extent of cyclicals’ underperformance year-to-date leaves room for further catch-up, in our view. We accordingly maintain our “Recovery stocks” Investment Idea No. 2. Dividend investing (Investment Idea No. 3) remains a valid way for more risk-averse bondproxy investors to gain exposure to stock markets. Alternative Investments: Neutral outlook for commodities; hedge funds and real estate preferred We have revised our strategic outlook for commodities overall, and have turned neutral. Demand for raw materials is rising moderately, but some sectors have seen substantial supply additions. Spare production capacity has emerged, suggesting that upward price pressure for the asset class should remain limited. On gold, we believe that important performance drivers, such as the quest for protection against a general financial meltdown, are fading, while rising inflation expectations fail to materialize as real yields fall no further. But we do not think a proper bear market is likely to ensue as long as real

Low inflation allows Fed exit to be slow and gradual.

Equities, credits, hedge funds and real estate in much of the US and parts of Europe and Asia benefit most. Commodities outlook now neutral.

EUR/USD in trading range; AUD and GBP vulnerable, MXN among currencies with best upside potential.

Nannette Hechler-Fayd'herbe Head of Global Financial Markets Research nannette.hechler-fayd'herbe@credit-suisse.com, +41 44 333 17 06

Conventional cyclical market mechanics back to the fore Five months into the year, signals are that quantitative easing is finally showing real results. This is when conventional relationships between interest rates, bond and equity valuations come back to the fore in financial markets’ mechanics as well as in investors’ minds. Two elements are decisive in determining the degree and imminence of interest rate risks to asset prices. One is whether better economic data are coinciding with rising inflation expectations, therefore resulting in rapidly rising interest rate expectations. Importantly, this is not the case in most developed countries. In the USA, low inflation will likely allow the Fed exit to be slow, with rates globally staying low for a prolonged period. The second is the extent to which asset valuations still have headroom with regard to fundamental anchors. Cheap valuations will allow better absorption of interest rate fluctuations even as the economy and earnings prospects improve. We think that stock valuations remain more attractive than those of bonds. We therefore maintain

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Credit Suisse - Research Monthly

yields are not clearly on the rise. Hedge funds and real estate offer better opportunities, in our view, and they remain our preferred alternative investments. We reiterate our Investment Idea No. 5 on US real estate. Currencies: GBP and AUD at risk of further weakening EUR/USD is likely to remain in its broad trading range for as long as interest differentials do not clearly shift in favor of the USD. For EUR/CHF, 1.20 remains a credible floor with a bias toward a weaker CHF. For USD/JPY, more sideward trading from here does not seem unlikely to us either. In our view, the two currencies most at risk of a depreciation are GBP and AUD. We see appreciation potential in MXN and a selection of Asian currencies, including the slowly appreciating CNY in our Investment Idea No. 6. Top 2013 Investment Ideas: May update We keep all our investment ideas on Green for now. Performances range from 0.9% to 18%. Detailed updates are provided in the summary table and in our separate publication Research Alert, “Top Investment Ideas for 2013 – May update.” (24/05/2013)

Strategic asset allocation (SAA) The neutral allocations serve as a guideline and represent the average weighting over an entire market cycle. Since the global strategy is based on a medium-term investment horizon, it deviates from the neutral position. We recommend an overweight in equities and alternative assets, particularly hedge funds and real estate (selected markets). Conversely, we recommend under weighting fixed income investments and liquidity.
Fixed Income
Benchmark (BM) SAA Cash Fixed Income Equity Alternative BM 5% 80% 0% 15% SAA 3% 80% 0% 17%

Income
Benchmark (BM) SAA Cash Fixed Income Equity Alternative BM 5% 55% 20% 20% SAA 2% 53% 22% 23%

Balanced
Benchmark (BM) SAA Cash Fixed Income Equity Alternative BM 5% 35% 40% 20% SAA 2% 32% 43% 23%

Capital Gain
Benchmark (BM) SAA Cash Fixed Income Equity Alternative BM 5% 15% 60% 20% SAA 2% 12% 63% 23%

Equities
Benchmark (BM) SAA Cash Fixed Income Equity Alternative BM 5% 0% 80% 15% SAA 2% 0% 80% 18%

Source: Credit Suisse

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Credit Suisse - Research Monthly

Investment summary
Short interest rates 3M Libor / 10-year government bonds
3M Libor in % CHF EUR * USD GBP JPY Spot 0.02 0.20 0.27 0.51 0.16 3M 0.0-0.2 0.1-0.3 0.3-0.5 0.5-0.7 0.1-0.3 12M 0.0-0.2 0.1-0.3 0.3-0.5 0.5-0.7 0.1-0.3 10Y bonds Spot 0.65 1.43 2.01 1.90 0.83 3M 0.7-0.9 1.3-1.5 1.7-1.9 1.7-1.9 0.9-1.1 12M 1.1-1.3 1.6-1.8 1.9-2.1 2.2-2.4 1.0-1.2

Equities: Selected indices
Index S&P 500 SMI FTSE-100 Euro Stoxx 50 Nikkei 225 MSCI EM China HShares Price 1,649.60 8,168.78 6,654.34 2,764.29 14,612.45 1,026.68 10,722.30 MTD (%) 3.3% 3.3% 3.5% 1.9% 5.4% -1.2% -1.8% YTD (%) 17.6% 19.7% 12.3% 5.2% 40.6% -2.7% -5.8% 12M price target 1,763 7,843 6,611 2,611 17,500 1,039 13,000

Prices as of 27/05/2013 Source: Bloomberg, Credit Suisse

Spot rates are closing prices as of 24/05/2013. Forecast date: 23/05/2013. * 3M Euribor Source: Bloomberg, Credit Suisse

Bonds: Selected indices
Index YTM (%) 2.7 1.6 0.7 3.0 4.9 5.4 5.3 Spread to benchmark (bp) 108 111 45 129 288 n.a. 453 Total return YTD (%) 0.3 2.0 0.3 3.3 -1.2 0.5 5.5 12M TR outlook       

Foreign exchange
Spot EUR/USD USD/CHF EUR/CHF USD/JPY EUR/JPY EUR/GBP GBP/USD EUR/SEK AUD/USD USD/CNY
Spot rates: London close 24/05/2013 Source: Bloomberg, Credit Suisse

3M 1.31-1.35 0.93-0.97 1.25-1.29 104-108 139-143 0.87-0.91 1.48-1.52 8.58-8.62 0.92-0.96 6.00-6.20

12M 1.31-1.35 0.96-1.00 1.28-1.32 106-110 142-146 0.90-0.94 1.43-1.47 8.58-8.62 0.92-0.96 5.90-6.10

1.29 0.96 1.24 101 131 0.85 1.51 8.59 0.96 6.13

USD (CS LUCI) EUR (CS LEI) CHF (CS LSI) GBP(CS LEI) EM HC (JPM EMBI Global) EM LC hedged in USD (JPM GBI) High Yield (CS HY Index)
Prices as of 23/05/2013

Source: Bloomberg, Credit Suisse

Real GDP growth and inflation Commodities
Spot Gold (USD) Silver (USD) Platinum (USD) Oil (USD)
Spot prices: London close 24/05/2013 Source: Bloomberg, Credit Suisse

GDP growth 3M 1,300 20.0 1,475 100 12M 1,450 20 1,600 100 in % CH EMU USA UK Japan 2012 1.0 -0.6 2.2 0.2 2.0 2013E 1.5 -0.4 2.0 0.8 1.4 2014E 2.0 1.1 2.5 1.5 1.2 1,386.64 22.40 1,452.50 94.15

Inflation 2012 -0.7 2.5 2.1 2.8 0.0 2013E -0.1 1.5 1.6 2.8 -0.4 2014E 1.0 1.8 2.1 2.5 1.8

Source: Bloomberg, Credit Suisse

Global Research asset category strategy
By region/strategy Fixed income Equities Overweight: USA & Australia; Underweight: Europe & Switzerland. Overweight: USA and Germany. Underweight: Switzerland, Latam and Australia. Comments and comparison of weightings Yields set to stay low for governments and credits, as policy stays easy. Multiple expansion set to allow equities to trend yet higher, despite soft earnings, as risk appetite improves. Nikkei drop looks to be profit-taking; we see any negative global impact as temporary. Tactically and strategically neutral amid temporary growth slowdown and deteriorating long-term cyclical factors. Equities: Valuations richer, but some upside potential strategically. Direct real estate: Attractive rental carry. We favor small/mid-sized LBOs, emerging markets and private debt funds. We overweight directional strategies, such as EMs and longshort. We maintain our positive stance for global macro and fixed income arb. We expect EUR/USD to rise to 1.33. BoJ easing set to weaken JPY.
Source: Credit Suisse Investment Committee/Global Research

Tactical 1–6 M  

Strategic 6–12+ M  

Commodities Real estate Private equity Hedge funds

Overweight: Energy, Neutral: Industrial Metals, Underweight: Precious Metals and Agriculture. Overweight: USA, Asia-Pacific and Germany. Focus on natural resources, SME LBOs, emerging markets and private debt funds. We maintain our positive stance on global macro and directional strategies as well as fixed income arb. EUR/USD  , USD/CHF , GBP/USD , USD/JPY .

   

Foreign exchange

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Credit Suisse - Research Monthly

Top Investment Ideas for 2013
Fixed Income 1. Beyond cash: Credit not duration Status  Action Buy short dated AA- to BBB financials and A to BB non-financials (excluding auto) in CHF, EUR and GBP. Hold USD exposure. Rationale/update Cash is likely to continue to be unremunerative (near-zero yields) in most markets. Corporate bonds of short maturities still offer a reasonable yield pick-up versus cash, given essentially stable default rate expectations for 2013. Conservative investors should focus on investment grade credits. We keep the overall constructive status with more limited opportunities in USD.

Equities 2. Recovery stocks  Buy US consumer, M&A and US recovery stocks. Among the three components of the recovery idea, the US recovery stocks have so far performed more modestly than the other two. Based on the expected re-acceleration of the global economy throughout H2 2013, we continue to view the US recovery idea as very attractive. All three components remain on green. For investors who are interested in absolute returns and have expectations of relatively high cash flow disbursements from dividends. Fundamental drivers for equity yield remain intact, despite strong YTD performance. We expect the crude oil price to be well-supported due to robust demand. This should benefit the energy sector, which already started to perform well in mid-April. Higher crude oil prices should disproportionately benefit oil and gas companies with new exploration technologies, or which have an interest in a yet unexploited shale gas, tight oil or deep water oil source, as they are becoming increasingly attractive and profitable the higher the crude oil price is.

3. Dividends and beyond

Buy high-dividend-yielding stocks and stocks generating high free cash flow as well as global convertibles, particularly high yield. Invest in upstream energy stocks.

4. New gas and oil sources

Alternative Investments 5. US real estate  Invest in commercial and residential real estate, REITs as well as homebuilding-related stocks. Despite individual softer releases recently, US housing market indicators generally continued their gradual recovery trend. We see further upside in the coming quarters, given record-high homebuyer affordability. Attractive rental yields coupled with slightly positive rental growth prospects form the basis of our constructive view on US commercial real estate. German real estate also appears relatively inexpensive and can benefit from capital inflows.

Foreign Exchange 6. The new hard currencies  Buy selected Asian currencies and other selected emerging market currencies funded in EUR or USD. Buy MXN, BRL, TRY, PLN and RUB vs. GBP. We continue to recommend diversification into selected EM currencies out of traditional hard currencies, such as EUR and USD. Further, we view GBP as increasingly becoming a new funding currency, especially for long positions in preferred EM currencies.
Source: Credit Suisse

Key to status symbols: green = attractive investment opportunities – continue to invest in theme; yellow = keep holdings but do not add to existing positions; red = reduce /exit existing positions.

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Economics

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Credit Suisse - Research Monthly

Economics

The gradual recovery continues

of monetary conditions becoming more accommodative. The differences within Europe nevertheless remain large. In France, investment confidence in particular has suffered strongly over the past year, whereas Germany remains on the stronger side of the spectrum. In the European periphery, order intake and exports have been stronger recently but unemployment remains very high. Overall, our outlook remains one of ongoing gradual improvement in the Eurozone. US consumer resilience versus production soft patch Regional and national manufacturing surveys in the US already indicate some softening in activity. This has now been confirmed by weaker-than-expected industrial production, with a broad-based decline in the April reading. On the more positive side, the latest consumer numbers, e.g., retail sales, remain resilient. Better labor market trends, rising house and stock prices support consumer wealth and sentiment, which helps offset fiscal headwinds. Overall, our outlook for the US economy remains constructive. If final demand continues to stay resilient, we continue to expect the current production weakness to remain temporary.

European demand likely to rise from depressed levels; US soft patch despite strong consumers; emerging markets softer than expected but still solid.

Monetary policy to remain easy as inflation low; Fed emphasis on flexibility to ensure smooth exit.

Thomas Herrmann thomas.herrmann@credit-suisse.com, +41 44 333 50 62

“Flexible” Fed policy should ensure smooth exit Fed communication continues to highlight greater flexibility. Following discussions about when the Fed might reduce asset purchases, the Fed has indicated that it could also raise purchases further or raise them again after an initial reduction. The Fed’s emphasis on “two-way risk” in asset purchases, i.e., less or more, probably aims to signal that it has the means to manage a smooth exit without unwanted market disruptions, such as a significant and sudden jump in yields. Emerging markets: Weaker than expected; trend solid Overall, indicators out of emerging markets have been unconvincing in recent months. In terms of business survey evidence, the majority of emerging market PMI readings are above the growth threshold of 50, but not by much. Especially data releases from the larger economies, such as China or Brazil, have been weaker than expected. In China, GDP growth is now running around 7%–8%, in line with government plans for a more sustainable but still solid rate, and there seems little willingness to stimulate. Elsewhere, monetary policy can and is likely to turn more supportive and should help ensure somewhat stronger growth in the second half of the year. (24/05/2013)

We expect gradual global growth to continue and inflation to remain low. Central banks are thus likely to maintain their easy policy and some could even ease more. In Europe, GDP still contracted in Q1 but feeble signs of strengthening domestic demand from very depressed levels are emerging. Eurozone car sales are one example of this; while they are still down sharply from pre-crisis levels, they are beginning to improve. Financial markets are demanding lower risk premia from governments in the European periphery and this remains a key driver

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Selected ideas from previous months
May 2013 (30/04/2013) Recommendation BUY CS Top 30 stock: Google. Google released a strong earnings report recently, boosted by mobile advertising, with YouTube set to be a long-term contributor. BUY Global Real Estate Investment Trusts (REITs). We favor US and Asian REITs in particular. BUY A basket of equally weighted 12-month forwards in CNY, SGD and MXN versus USD and EUR, with a target of 105 and a stop loss of 97.5. Diversify out of traditional hard currencies. April 2013 (26/03/2013) Recommendation BUY Funds with exposure to water. Companies active in water treatment are favored by our Traffic Light system. BUY Vodafone. CS Top 30 company and also M&A 15 candidate. BUY Long/short equity. Gain global equity market exposure with limited downside. BUY A basket of equally weighted 12-month forwards in MXN, BRL, TRY, PLN and RUB versus GBP, with a target of 108 and a stop loss of 96.5. Diversify out of traditional hard currencies. March 2013 (26/02/2013) Recommendation BUY ENI, BG Group, Royal Dutch Shell, Galp, Halliburton, Anadarko and Suncor. Energy stocks set to benefit from the rapid rise of new oil and gas sources. BUY CS Top 30 company: General Electric. A clear call on improving capital spending globally. BUY Simon Property Group: Gain diversified exposure to US retail real estate sector.
FI Fixed income, EQ Equities, AI Alternative investments, FX Foreign exchange, RE Real estate For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: http://www.credit-suisse.com/research/disclaimer Source: Credit Suisse

Action to be taken EQ AI FX Add exposure Add exposure Add exposure

Action to be taken EQ EQ AI FX Add exposure Add exposure Add exposure Add exposure

Action to be taken EQ EQ AI Add exposure Add exposure Add exposure

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This month’s featured topic

28/05/2013

Credit Suisse - Research Monthly

This month’s featured topic

Cyclicals to catch up when business cycle firms

tion of business cycles, with many emerging markets seeing slower growth as the US picks up. The second is the dramatic effect of quantitative easing by central banks on market prices. This has had the effect of driving cash rich investors into higher yielding sectors. Against this backdrop, at least two questions present themselves – are defensives now expensive, and what catalysts are required to spur a cyclical rally? (having underperformed defensives by nearly 8% in the past 3 months, cyclicals have outperformed by 3% in the past month). Some defensives looking expensive First, on valuation, upside to consensus analysts targets looks meager for defensive markets, such as Switzerland (0%), and for industries, such as food, beverages and tobacco (1%). P/E ratios are looking full too, with the relative forward P/E for defensives/cyclicals at one standard deviation above its long-term average, though not as stretched as in 2009. Valuations of dividend yielding stocks are also full, with the forward P/E for the MSCI Dividends benchmark index relative to the broad market now close to its highs (our Defensive and Dynamic Dividend baskets, which include a valuation overlay, have forward P/Es close to average levels). In short, investors are paying a premium for defensives. Stay long selected cyclicals Second, the performance of cyclicals is not as bad if we isolate the metals and mining sector. For instance, the consumer durables and autos industries were the third and fourth best performers out of 31 industries in the past quarter. In general, the missing ingredient for cyclicals has been broader, stronger macro growth. If we examine periods in the past 20 years when cyclicals have led the MSCI World recovery/rally, one finds that it has invariably been backed by improving macro (US PMI as the proxy). And, in most of the cases, there was multiple expansion – though this time the multiple expansion has been in defensives. As such, the current “lull” in macro momentum indicators has not helped cyclicals, though the ratio of negative macro surprises in the developed world looks like it is now bottoming. In this context, we reiterate our overweight recommendations on the industrials, consumer discretionary and IT sectors, and underweights in utilities, telecoms and consumer staples. Not to forget financials As a final point, it is also worth mentioning financials, which is not a traditional cyclical sector, though it does tend to perform well in the Recovery stage of the business cycle according to our Cycle Clock analysis. It is currently the sector with the best earnings momentum, and while we are overweight the insurance industry, any pullback in the broad market may present an opportunity to add broader financials exposure. (24/05/2013)

Defensive sectors have strongly outperformed cyclicals this quarter owing to demand for yield.

The metals and mining sector has been the notable laggard.

Michael O'Sullivan Head of Portfolio Strategy & Thematic Research michael.o'sullivan@credit-suisse.com, +44 20 7883 8228

Link between emerging markets and cyclical underperformance Headline equity indices have rallied strongly this year, though the pattern of performance at the sector and regional level has been atypical of what one might expect in the context of a market dominated by strong risk appetite and steadying economic growth. In particular, emerging markets have underperformed developed markets, and cyclicals have lagged defensives. Indeed, the relative performance of classic defensives (utilities, telecoms and staples) relative to cyclical (materials, consumer discretionary, industrials) is now more stretched than in 2009, and nearly as extended as during the aftermath of the dot.com bubble in 2002. This trend has been partly driven by the extreme performance of industries like healthcare, which while not a typical defensive sector, has attracted yield-oriented investors, and by the very poor performance of the metals & mining sector, which has fallen by 20% over the past quarter alone. The weak performance of metals and mining also flags the fact that from a macro point of view, this economic cycle is unusual in at least two respects. The first is the de-synchroniza-

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Investment theme

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Credit Suisse - Research Monthly

Investment theme

Yield at reasonable risk: Corporate hybrids

redeemed for fixed amounts. Like equity, they are deeply subordinated, have optional coupon payments in certain circumstances without triggering a default, and do not have a fixed maturity (or the maturity date is well in the future, i.e. 60 years). Hybrids are, however, normally callable after 5–10 years, although there is no certainty that they will actually be called. On average, corporate hybrids in EUR currently offer a yield-to-call of 3.7% p.a., which corresponds to a yield pickup of 2.4% versus senior bonds of the same issuers. While this spread has narrowed in recent months, it still ranges about 0.5% above its historical average. The hybrids’ yield can also compete with the dividend yield of the STOXX Europe 50 Index (3.8%). Buoyant primary market activity New issues of corporate hybrid bonds have surged strongly this year, with volumes reaching close to EUR 15 bn YTD. We attribute this to the historically low interest rate environment, in which companies can bolster credit metrics at a relatively low cost with a generally tax-deductible instrument (for issuers), and investors’ search for yield and generally positive risk sentiment. The total return chart shows the outperformance of corporate vs. financial hybrids and vs. senior bonds, though it also reveals the high-beta nature of the hybrid asset class in times of market turmoil. New recommendations Despite the recent rally, we continue to see value in selected, fundamentally solid names, and have initiated new BUY recommendations on the asset class (see actionable ideas). In turn, we have downgraded hybrids issued by Bayer, Linde, Henkel and Siemens to HOLD (from BUY) as they have reached ambitious valuation levels. For more information on the asset class, please ask your Credit Suisse representative for the full report, “Corporate hybrid debt on the rise,” published on 7 May 2013. (23/05/2013)

Corporate hybrids on average offer a yield pick-up of 2.4% vs. senior bonds (in EUR), and their yield-to-call level (3.7%) is broadly on a par with dividend yields in Europe.

We recently initiated new BUY recommendations on corporate hybrids from somewhat lower-rated credits, which we deem attractive.

Peter Pönitzsch peter.poenitzsch@credit-suisse.com, +41 44 333 57 68

Buy

Iberdrola hybrid bond in EUR (IBESM 5.75%, call 02/18; ISIN: XS0808632763) Yield pick-up of around 3% vs. the senior bond for a “half-peripheral” utility (Spain: 50% of revenues; UK, USA, Latin America: 50%). KPN (KPN 7%, call 03/23; ISIN: USN4297BBC74), Electricite de France (EDF 5.25%, call 01/23; ISIN: USF2893TAF33) in USD. Loss of S&P’s equity credit after the first call date provides a strong incentive to call, in our view.

Corporate hybrids have outperformed financials and senior bonds (since iBoxx index inception).
Total Return Index (Jan 2006 = 100)

160 150 140

Corporate Hybrids Corporate Senior Financial Senior Financial Hybrids

Buy

130 120 110 100 90 80

Yield pick-up vs. senior bonds in exchange for higher risk Corporate hybrid bonds are obligations issued by non-financial corporates, which contain both debt and equity features. Like debt, the securities have predetermined coupons and can be

70 60 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13

Source: Bloomberg, Credit Suisse

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Credit Suisse Megatrends

28/05/2013

Credit Suisse - Research Monthly

Credit Suisse Megatrends

Megatrends: Frontier markets

tions, while growth rates have come down. Investors need to look beyond the traditional emerging market economies to frontier markets. Under our new Megatrends Framework, frontier markets constitute one of the Megatrend Investments within the Emerging World megatrend. What are frontier markets? Frontier markets are economies with small and illiquid capital markets, but high growth potential. The market capitalization of the group is just 0.5% of the MSCI AC World, compared to emerging markets, which account for 11.7%. They are a disparate group, with great variations in GDP per capita and population sizes. While poor, they enjoy high growth, demographic tailwinds, improving governance, diversification and attractive valuations. Gulf economies account for a high share of equity capitalization, but the group includes countries, such as Kenya, Nigeria and Bangladesh. Benefits of frontier market investing On aggregate, frontier markets account for 13.4% of the global population, but just 4.9% of global GDP. IMF forecasts indicate that in real terms they will grow by 4.2% p.a. over the next 5 years, i.e., double the rate of developed markets. Frontier markets’ populations are still young, while the rate of population growth there is expected to be twice that of emerging markets in the coming decades. Governance in the frontier markets is improving, with several countries having democratically elected governments. Africa exemplifies some of these changes, as fiscal and monetary policies are becoming more stable and exchange rates increasingly market-determined. Governments are retreating from their involvement in industry, while the debt write-downs completed in the middle of the last decade have provided relief. The diversification potential of frontier market investments is stronger than with emerging market investments, which now tend to increasingly move in tandem with global equities; the correlation coefficient of frontier markets is much lower than that of emerging markets (0.54 and 0.88, respectively). Additionally, frontier markets also offer a good pick-up in yield (4% against 2.7% for emerging markets) and trade at a discount on a price-to-book basis. Opportunities exist in both the equity and fixed income space. Investors can access local currency bonds via dedicated frontier market debt funds. Africa has some relatively liquid and growing local currency markets, with Nigeria the largest in terms of size (USD 33 bn) and accessibility. For more information, please see our report, “Frontier markets to benefit from growth and reduced risk premia,” published on 13 May 2013. (23/05/2013)

For risk-tolerant investors, frontier markets are an attractive source of diversification.

Low liquidity, impaired market access and political risks remain a challenge.

Antonios Koutsoukis antonios.koutsoukis@credit-suisse.com, +44 20 7883 6647 Markus Stierli markus.stierli@credit-suisse.com, +41 44 334 88 57

Buy

Diversified equity and fixed income funds that offer frontier market exposure Frontier markets will likely enjoy high growth and reduced risk premia in the coming years.

Megatrends are major economic, social and political forces, which are relevant across decades. The Emerging World megatrend represents the shifts that are taking place in developing economies and that are changing the global economic balance. Recently, some of the large emerging economies have started to lose their appeal as investments due to rising correla-

12

Fixed income

28/05/2013

Credit Suisse - Research Monthly

Fixed income

Global quantitative easing supporting EMU peripherals

over global government bonds. Further, we highlight our Top 2013 investment idea No. 1, “Beyond cash: Credit, not duration,” which we expect to perform in line with our moderate single-digit return expectations. We maintain our positive view on EMU peripherals At its last meeting, the ECB cut the main refinancing rate and left the door open to implement further measures to achieve its targets. We share the market’s confidence that the ECB will do whatever is necessary to support the economic recovery. We continue to recommend selected peripheral government bonds, given the reasonable pick-up in yields. As we expect growth to return to the Eurozone in the second half of the year, we also accumulate corporate bonds from peripheralheavy sectors such as utilities, telecoms and subordinated financials.

EMU peripheral government credit spreads (CDS 5Y)
in bp

Sustained monetary accommodation to support both sovereign and corporate bonds from the Eurozone periphery.

We maintain our strategic positive view on high yield bonds, given our expectations of stable default rates and sustained strong demand.

Maurice Jiszda maurice.jiszda@credit-suisse.com, +41 44 333 21 41

1'600 1'400 1'200 1'000 800 600 400 200 0 Jan 11 May 11 Sep 11 Jan 12 Ireland May 12 Italy Sep 12 Jan 13 May 13

Portugal

Spain

Source: Bloomberg, Credit Suisse / IDC

Flattish 12M total return expectations for government bonds Most major 10-year government bond benchmarks have remained range bound since the start of the year. US Treasuries and UK Gilts trade around our fair value estimates, while the valuations of German, Swiss and Japanese paper appear stretched. In our view, the global monetary expansion – in a bid to achieve higher growth and inflation – should ultimately lead to sustainably favorable credit conditions. We thus reiterate our preference for corporate and emerging markets bonds

No bubble in high yield – we remain constructive Given the continued relaxation of bank lending standards, expectations of a sustained economic upturn, as well as sound corporate balance sheets, we forecast essentially stable default rates globally 12 months from now. Further, we expect strong demand technicals to remain intact, as real short-term rates are likely to remain negative in most major currencies and investors continue their hunt for yield. Although absolute yields are at record lows, corporate high yield remains our preferred fixed income asset class, as credit spreads still more than compensate for expected default risk on a strategic horizon. (24/05/2013)

13

Fixed income

28/05/2013

Credit Suisse - Research Monthly

Selected bond recommendations
ISIN Curr. Issuer Rating (1) Coup. Maturity Min.denom./ inc. (in 1000) 5/5 5/5 5/5 2/1 200 / 1 200 / 1 200 / 1 200 / 1 150 / 1 Vol. (m) Ask price (2) 102.95 102.40 104.85 YTM/ YTC (%) 1.09 1.40 2.21 1.97 3.70 2.23 1.87 2.15 2.80 Benchm. spread Duration

CHF CH0181738904 CH0204477274 CH0197482711 USD US06051GET22 US46115HAJ68 US34540UAA79 CHF CHF CHF USD USD USD RCI BANQUE SA SBERBANK (SB CAP SA) UNICRED BANK IRELAND PLC BANK OF AMERICA CORP (3) INTESA SANPAOLO SPA (3) FORD MOTOR CREDIT CO LLC (3) IMPERIAL TOBACCO FINANCE (3) CREDIT AGRICOLE LONDON (3) TELEFONICA EMISIONES SAU (3) BBB / Baa3 NR / A3 NR / NR A- / Baa2 BBB+ / Baa2 BB+ / Baa3 BBB / Baa3 A / A2 BBB / Baa2 BBB- / Baa3 BBB+ / Baa2 BBB+ / Baa2 BBB / Baa3 NR / A2e A- / Baa2 BBB / Baa3 A+ / A2 NR / NR NR / NR BB- / Ba3 BB+ / NR BBB / NR BB / Ba1 NR / Ba2 BB+ / Ba1 BBB / Baa1 B+ / (P)Ba3 BB / Ba1 BBB+ / A3 BBB- / Baa3 BB / Ba1 BB / Ba3 NR / Ba1 NR / Baa3 BBB / A3 BBB / NR 2.500 2.065 3.375 2.000 3.875 2.375 2.050 2.125 3.192 16/07/2015 28/02/2017 25/10/2017 11/01/2018 16/01/2018 16/01/2018 11/02/2018 17/04/2018 27/04/2018 200 250 185 139 146 240 118 301 149 107 132 195 2.0 3.6 4.0 4.4 4.1 4.3 4.4 4.6 4.5

3,000 100.12 1,500 100.73 1,250 100.62 1,250 100.81 500 99.87

USG4721VBK91 USD US22532MAH51 USD US87938WAQ69 USD EUR XS0901738392 XS0852993285 XS0863482336 XS0905797113 Others XS0937583580 AU3CB0208775 XS0921284666 XS0856595961 XS0935312305 XS0933295114 EM/Below IG* XS0804472057 XS0231264275 XS0893205186 DE000A1R08U3 XS0686703736 XS0873432511 XS0919581982 XS0918739318 XS0903872603 FR0011401728 XS0877983642 XS0847609434 XS0889401054 XS0861979440 XS0925177130 US71647NAF69 XS0813929782 AUD AUD GBP GBP NOK NOK CHF EUR EUR EUR EUR EUR EUR EUR GBP GBP RUB USD USD USD USD USD USD EUR EUR EUR EUR

1,250 101.77

BBVA SENIOR FINANCE SA INTESA SANPAOLO SPA UNICREDIT SPA RCI BANQUE SA

3.250 4.000 3.375 2.875

21/03/2016 09/11/2017 11/01/2018 22/01/2018

100 / 100 100 / 1 100 / 1 1/1

1,500 102.37 1,711 104.50 1,000 103.01 600 102.30

2.36 2.91 2.67 2.35

234 259 230 200

2.7 4.0 4.2 4.3

ING BANK NV BANK OF AMERICA CORP (3) RCI BANQUE SA BNP PARIBAS VOLKSWAGEN FIN SERV NV RABOBANK NEDERLAND SUNRISE COMMUNICATIONS I (3) MOL HUNGARIAN OIL & GAS VNESHECONOMBANK(VEB) THYSSENKRUPP AG HEIDELBERGCEMENT FIN LUX (3) FRESENIUS FINANCE BV (3) RUSSIAN RAILWAYS (RZD) UNITYMEDIA HESSEN / NRW (3) KONINKLIJKE KPN NV (4, 6) ELECTRICITE DE FRANCE (3, 4, 5) GAZPROMBK (GPB FINANCE) (3) FRANSHION INVESTMENT LTD (3) VIMPELCOM HLDGS (3) YAPI VE KREDI BANKASI (3) UNICREDIT SPA (3, 7) PETROBRAS GLOBAL FINANCE (3) SOCIETE GENERALE (3, 7, 8)

4.500 4.500 3.250 2.375 2.250 2.625 5.625 3.875 3.035 4.000 9.500 2.875 3.374 5.625 6.875 6.000 7.875 4.700 5.200 5.500 6.375 4.375 6.625

04/06/2018 23/08/2018 25/04/2018 20/11/2019 27/05/2016 29/05/2018 31/12/2017 05/10/2015 21/02/2018 27/08/2018 15/12/2018 15/07/2020 20/05/2021 15/04/2023 14/03/2073 perpetual 25/07/2016 26/10/2017 13/02/2019 06/12/2022 02/05/2023 20/05/2023 perpetual

2/1 10 / 10 1/1 1/1 10 / 10 10 / 10 150 / 1 50 / 1 100 / 1 1/1 50 / 50 1/1 100 / 1 100 / 1 100 / 1 100 / 100 5,000 / 100 200 / 1 200 / 1 200 / 1 200 / 1 2/1 200 / 1

175 425 300 300 750 500 370 750 1,000 500 500 1,000 350 400

99.61 99.43 101.13 102.04 99.94 99.51 104.00 102.75 99.60 133.02 102.18 99.13 103.62 101.50

4.59 4.62 3.00 2.03 2.27 2.73 4.65 2.65 3.13 3.16 2.99 2.54 3.50 5.15 6.57 4.18 7.85 4.32 4.79 5.18 6.17 4.41 6.43

172 178 217 84 105 125 453 273 276 273 251 175 253 418 523 297 188 369 377 330 500 241 473

4.4 4.6 4.5 5.9 2.9 4.6 2.8 2.2 4.3 4.7 4.4 6.4 6.9 6.3 5.2 8.8 2.7 3.9 4.8 7.2 4.2 8.0 4.1

1,600 103.99

1,250 106.88 20,000 100.05 500 600 750 3500 101.50 102.00 102.10 99.74

1,000 102.38

1,500 104.50

*Emerging Markets/Below Investment Grade; 1) e = expected rating, subject to final documentation / NR = not rated; 2) Indicated prices as of 24 May 2013; 3) Semi-annual coupon; 4) Corporate subordinated hybrid debt, yield to call, duration to call; 5) first call 29/01/2026; 6) call 14/03/2020; 7) Subordinated bank debt; 8) First call 11/06/2018, yield to call, duration to call. For the detailed analysis accompanying the recommendations listed, please refer to the latest Global Research Credit Updates and Investment Ideas. Source: Bloomberg, Credit Suisse

14

Equities

28/05/2013

Credit Suisse - Research Monthly

Equities

Central bank policy the main driver of equity prices

greater significance in the aftermath of the dot.com bubble, when central banking orthodoxy held that asset price bubbles were hard to identify and harder still to lance. Equities today are well off the high multiples reached in 2000, but the effect of central banks on asset prices (bonds as well as equities), and the interplay of this with fundamentals, is again becoming a debating point in the context of aggressive quantitative easing from the Federal Reserve and the Bank of Japan. Risk appetite is now high, close to what we would describe as “euphoria” territory, though when we dig into the detail of our risk appetite index, most of the rise in this index has been driven by the sharp rise in Japanese equities. Indeed, at the sector level (as we detail in this month’s featured topic on cyclicals and defensives), risk appetite is more muted, and in the expectation of a firmer business cycle, we advocate a move from the more expensive defensive industries toward selected cyclical industries, such as capital goods and consumer durables. We still favor US equities At the regional level, we continue to differentiate between markets where central banks are highly supportive (the US and Japan stand out here) and those where central banks are perhaps more restricted in terms of the options available to them (the Eurozone, for instance). It is also worth noting that both earnings growth and momentum are more promising for Japan and the US than for other regions. As such, we continue to favor these regions, underweighting the commodity-sensitive markets of Australia and Canada. We are also underweight Switzerland, where performance has been uncharacteristically strong this year for a typically defensive market, though we note that valuations for Switzerland are high and the market might be vulnerable if funds were to flow out of the Swiss market. Strategically, provided that central banks in the developed world do not relent in the inventive and supportive monetary policy that the Fed and Bank of Japan have demonstrated, equities are likely to be underpinned, especially in those countries where relatively stronger earnings combine with accommodative policy. (24/05/2013)

Japan stands out as the only region with positive earnings momentum.

Cyclical sectors beginning to make up performance gap with defensives.

Michael O'Sullivan Head of Portfolio Strategy & Thematic Research michael.o'sullivan@credit-suisse.com, +44 20 7883 8228

Buy

Apple A recent Top 30 portfolio addition, valuation now attractive following a recent de-rating.

Interplay of quantitative easing and asset prices In December 1996, Federal Reserve Chairman Alan Greenspan’s comment on “irrational exuberance” produced a short-lived correction in equities. This phrase later took on

15

Equities

28/05/2013

Credit Suisse - Research Monthly

Global equity sector strategy and top picks
Sector (strategic weight) Industry (strategic weight) Europe (N) / UK (N) Switzerland (U) USA (O) Latin America (U)/ Emerging Europe & Africa (N) Novatek*, Ultrapar*, Pacific Rubiales* Mexichem* AmBev* Brasil Foods* Toyota Motor, Bridgestone, Honda Motor Sony+ Seven & I Astellas Pharma Gamuda*, Komatsu+ Asia ex Japan (N) / Japan (O) / Australia (U)

Energy (N)

Energy (N)

-

-

Anadarko Petroleum, Schlumberger General Electric, Masco McDonald's Time Warner Home Depot Coca-Cola Procter & Gamble Baxter International Gilead AbbVie

Cnooc Ltd, Woodside+

Materials (N)

Chemicals (N) Construction Materials (N) Metals & Mining (N) Pulp & Paper (N)

Schneider Electric Deutsche Post+ BMW+ Diageo Unilever Reckitt Benckiser Fresenius SE Hikma Pharmaceuticals BNP Paribas

Lonza ABB, Schindler, Georg Fischer Nestlé, Lindt & Sprüngli PC Tecan Roche (Genussscheine), Novartis, Actelion -

-

Industrials (O)

Capital Goods (O) Commercial Services & Supplies (N) Transportation, incl. Logistics (N)

Consumer discretionary (N)

Automobiles & Components (O) Consumer Durables & Apparel, Textiles, Apparel & Luxury (N) Hotels, Restaurants & Leisure (N) Media (N) Retailing (U)

Consumer staples (U)

Food & Staples Retailing (N) Beverages (U) Food Products (U) Tobacco (U) Household & Personal Products (N)

Healthcare (N)

Healthcare Equipment & Services (N) Biotechnology (N) Pharmaceuticals (N)

Financials (N)

Banks (N)

-

Sberbank*, Itau Unibanco*

China Construction Bank, Sumitomo Mitsui Financial Group, Kasikornbank*, Bank Mandiri*, HDFC Bank, Mitsubishi UFJ, Mizuho Financial Group Asian Property Development, Henderson Land Development Tencent* Samsung*, Toshiba, AU Optronics+ -

Diversified Financials (N) Insurance (O) Real Estate (N)

Allianz, AXA -

Zurich Insurance Group, Swiss Re -

JPMorgan, Invesco -

-

IT (O)

Software & Services (O) Technology Hardware & Equipment (O) Semiconductors & Semiconductor Equipment (O)

ARM Holdings+ Vodafone -

-

Mastercard Intel -

Mail.ru* MTN Group*

Telecom services (U) Utilities (U)

Diversified Telecoms (U) Wireless Telecoms(U) Utilities (U)

-

-

This is our sector strategy and top picks as of 27 May 2013 recommended by Credit Suisse, Private Banking division. Our sector/industry strategy shows our sector/industry preferences with recommendations relative to regional benchmarks: Global: (MSCI World in USD), Europe (MSCI Europe in EUR), Switzerland (Swiss Market Index in CHF), USA (S&P 500 in USD), Asia/Pacific (MSCI AC Asia/Pacific in USD). An overweight (underweight) is a recommendation to invest more (less) than in a neutral position indicated by the market-cap weights of the respective benchmarks. The sector/industry weights as well as the neutral positions in figures are available upon request; please contact your relationship manager. The Top Picks is a selection of our favorite stocks within our coverage. The selection was made to reflect the sector/industry and regional preferences. Regular full updates are provided via our Research Monthly publications as well as in our Equity Research reports. Additionally, we publish our adds and drops in our Research Daily publication. Legend: (O) = Overweight, (N) = Neutral, (U) = Underweight. (*) = Emerging Markets top picks. Changes are marked as follows: (+) = additions to the top picks, (#) = changes to sector/industry/country weightings. For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: http://www.credit-suisse.com/research/disclaimer. Please note that trading facilities in certain securities may be limited. Source: Credit Suisse

16

Alternative investments

28/05/2013

Credit Suisse - Research Monthly

Alternative investments

Hedge funds and real estate to outperform commodities

weighing on commodities, but benefits real estate and certain hedge fund strategies. Selectivity remains key, and we have a clear preference for US real estate investments as well as directional hedge fund strategies. We are cautious on commodities. Commodities: A more cautious approach is warranted Commodities continue to be under selling pressure. The soft patch in global growth and the deterioration in technical indicators suggest that a more cautious investment approach is warranted – at least until growth picks up more sustainably. We have downgraded our strategic outlook for commodities as a whole to neutral. Within commodities, performance can be quite divergent. Oil prices should have some upside amid slowing supply growth. In precious metals, gold is likely to remain under moderate pressure near term, given declining inflation expectations. Longer term, valuation should provide some support and limit the downside risks. Food prices are likely to decline amid overvaluation and surging supply. Hedge funds: Directional strategies continue to perform very well The DJ CS Hedge Fund Index was up 1.4% in April. With a year-to-date performance of 5.0%, hedge funds managed to deliver close to 60% of their average annual historical performance in the first four months of trading. Directional strategies, in particular, have continued their winning streak, with equity long/short and emerging market funds up more than 6.0%. As liquidity and volatility conditions remain supportive and herding tendencies among managers are limited, we think hedge funds have further upside potential. Within hedge funds, directional strategies such as long/short equity should continue to outperform, given low inter-stock market correlations. Real estate: Further upside for US property investments The performance of most direct and indirect US real estate investments has been strong in recent months. While the valuations of many listed US real estate investments are no longer cheap, we continue to see value strategically due to a promising fundamental outlook. We expect the US housing market recovery to broaden in the coming quarters, given record-high homebuyer affordability. Attractive rental yields coupled with slightly positive rental growth prospects form the basis of our constructive view on commercial real estate. (23/05/2013)

Hedge funds: Directional strategies remain supported by favorable volatility and liquidity conditions.

US real estate: Further upside for listed investments despite richer valuations due to robust fundamental outlook.

Tobias Merath Head Commodities & Alternative Investments Research tobias.merath@credit-suisse.com, +41 44 333 13 62

Buy

Directional hedge fund strategies Market conditions for hedge funds are supportive. Low intra-stock correlations are positive for directional strategies.

Clear difference between alternative investment categories Developments in alternative investments have recently diverged, and we think this will continue. The current environment of rather soft growth, falling inflation but high liquidity is

17

Foreign exchange

28/05/2013

Credit Suisse - Research Monthly

Foreign exchange

Less demand for safe haven currencies

Within emerging markets, currency selection will be key. The yield advantage has fallen further as central banks eased and currencies are no longer cheap. We continue to prefer the CNY. We still expect USD/CNY to fall to 6.00 over 12 months, driven by the current account surplus, capital inflows and possibly a widening of the trading band. Diversification out of traditional hard currencies, such as USD, EUR and GBP (Top Investment Idea No. 6: “The new hard currencies”) remains a topic as long as monetary stimulus in the major economies is not reduced. In Latin America, we prefer the MXN as it offers yield, is fairly valued and is in a technical uptrend. (24/05/2013)

USD model currency portfolio Our USD-based currency portfolio shows an assumed 60% benchmark home bias and 40% exposure to a broader universe of foreign currencies, against which we allocate strategically and tactically, according to our views and portfolio analytics.
CNH PLN

Capital outflows to weaken JPY versus USD and CHF versus EUR.

TRY PLN NOK SEK TRY NOK SEK FX

CNH

Emerging currencies: Yield advantage is being eroded. Selection is key. We prefer CNY.

Marcus Hettinger Head of Global Forex Research marcus.hettinger@credit-suisse.com, +41 44 333 13 63

USD base USD USD USD

EUR EUR MXN MXN

Our currency views are broadly unchanged compared to last month. Several central banks across the world have eased monetary policy further and yield compression has continued, even in emerging markets. We thus continue to expect EUR/USD to trade within its broad range of 1.25 to 1.35. We expect the pair to trade toward the upper part of that range given the positive technical trend rating. Further JPY weakness is very likely, in our view, as there are first signs of capital outflows out of Japan, but undervaluation of the JPY is now becoming more pronounced above 100. Within Europe, less demand for safe havens will also weigh on the CHF vs. EUR, especially as the CHF remains richly valued and yields are very low. SNB President Thomas Jordan has also left all options open as regards the EUR/CHF the floor. In our view, the UK needs a weaker currency to rebalance the economy as the current account deficit remains very high. We thus retain our strategic bearish view on GBP vs. USD and EUR. The current soft patch in global growth, little upside for commodity prices and overvaluation are likely to continue to weigh on the AUD and we thus remain negative on the AUD overall.

Core Diversification Americas USD 60% 0% 0% EMEA 0% 0% 0% 0% 0% 0% 0% 0% 0% APAC 0% 0% 0% 0% 0% Gold
FX

Strategic Allocation USD MXN CAD EUR SEK NOK TRY PLN GBP CHF RUB ZAR CNH JPY AUD NZD SGD XAU FX 60% 4% 0% 13% 5% 5% 5% 4% 0% 0% 0% 0% 4% 0% 0% 0% 0% 0%

+

Tactical Overlay 0% 0% 0% -1% 0% 0% 0% -1% 0% 0% 0% 0% 2% 0% 0% 0% 0% 0%

=

Optimal Portfolio USD MXN CAD EUR SEK NOK TRY PLN GBP CHF RUB ZAR CNH JPY AUD NZD SGD XAU 60% 4% 0% 12% 5% 5% 5% 3% 0% 0% 0% 0% 6% 0% 0% 0% 0% 0%

0%
40%

Source: Credit Suisse

18

Foreign exchange

28/05/2013

Credit Suisse - Research Monthly

Important information on derivatives
Pricing Option premiums and prices mentioned are indicative only. Option premiums and prices can be subject to very rapid changes: The prices and premiums mentioned are as of the time indicated in the text and might have changed substantially in the meantime. Derivatives are complex instruments and are intended for sale only to investors who are capable of understanding and assuming all the risks involved. Investors must be aware that adding option positions to an existing portfolio may change the characteristics and behavior of that portfolio substantially. A portfolio’s sensitivity to certain market moves can be heavily impacted by the leverage effect of options. Investors who buy call options risk the loss of the entire premium paid if the underlying security trades below the strike price at expiration. Investors who buy put options risk loss of the entire premium paid if the underlying security finishes above the strike price at expiration. Investors who sell calls commit themselves to sell the underlying for the strike price, even if the market price of the underlying is substantially higher. Investors who sell covered calls (own the underlying security and sell a call) risk limiting their upside to the strike price plus the upfront premium received and may have their security called away if the security price exceeds the strike price of the short call. Additionally, the investor has full downside participation that is only partially offset by the premium received upfront. If investors are forced to sell the underlying they might be subject to taxing. Investors shorting naked calls (i.e. selling calls but without holding the underlying security) risk unlimited losses of security price less strike price. Put sellers commit to buying the underlying security at the strike price in the event the security falls below the strike price. The maximum loss is the full strike price less the premium received for selling the put. Investors who buy call spreads (buy a call and sell a call with a higher strike) risk the loss of the entire premium paid if the underlying trades below the lower strike price at expiration. The maximum gain from buying call spreads is the difference between the strike prices, less the upfront premium paid. Selling naked call spreads (sell a call and buy a farther out-of-the-money call with no underlying security position): Investors risk a maximum loss of the difference between the long call strike and the short call strike, less the upfront premium taken in, if the underlying security finishes above the long call strike at expiration. The maximum gain is the upfront premium taken in, if the security finishes below the short call strike at expiration. Investors who buy put spreads (buy a put and sell a put with a lower strike price) also have a maximum loss of the upfront premium paid. The maximum gain from buying put spreads is the difference between the strike prices, less the upfront premium paid. Buying strangles (buy put and buy call): The maximum loss is the entire premium paid for both options, if the underlying trades between the put strike and the call strike at expiration. Investors who are long a security and short a strangle or straddle risk capping their upside in the security to the strike price of the call that is sold plus the upfront premium received. Additionally, if the security trades below the strike price of the short put, investors risk losing the difference between the strike price and the security price (less the value of the premium received) on the short put and will also experience losses in the security position if they owns shares. The maximum potential loss is the full value of the strike price (less the value of the premium received) plus losses on the long security position. Investors who are short naked strangles or straddles have unlimited potential loss since, if the security trades above the call strike price, investors risk losing the difference between the strike price and the security price (less the value of the premium received) on the short call. In addition, they are obligated to buy the security at the put strike price (less upfront premium received) if the security finishes below the put strike price at expiration.
Source: Credit Suisse

Risks

Buying calls Buying puts Selling calls

Selling puts Buying call spreads

Selling naked call spreads

Buying put spreads Buying strangles Selling strangles or straddles

19

28/05/2013

Credit Suisse - Research Monthly

Risk disclaimer
Investors should consider this report as only a single factor in making their investment decision. For a discussion of the risks of investing in the securities mentioned in this report, please refer to the following Internet link: https://research.credit-suisse.com/riskdisclosure CS may not have taken any steps to ensure that the securities or financial instruments referred to in this report are suitable for any particular investor. CS will not treat recipients as its customers by virtue of their receiving the report. The investments or services contained or referred to in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about such investments or investment services. Nothing in this report constitutes investment, legal, accounting or tax advice or a representation that any investment or strategy is suitable or appropriate to your individual circumstances or otherwise constitutes a personal recommendation to you. The price, value of and income from any of the securities or financial instruments mentioned in this report can fall as well as rise. The value of securities and financial instruments is affected by changes in spot or forward interest and exchange rates, economic indicators, the financial standing of any issuer or reference issuer, etc., that may have a positive or adverse effect on the income from or price of such securities or financial instruments. By purchasing securities or financial instruments, you may incur a loss or a loss in excess of the principal as a result of fluctuations in market prices or other financial indices, etc. Investors in securities such as ADRs, the values of which are influenced by currency volatility, effectively assume this risk. Commission rates for brokerage transactions will be as per the rates agreed between CS and the investor. For transactions conducted on a principal-to-principal basis between CS

and the investor, the purchase or sale price will be the total consideration. Transactions conducted on a principal-to-principal basis, including over-the-counter derivative transactions, will be quoted as a purchase/bid price or sell/offer price, in which case a difference or spread may exist. Charges in relation to transactions will be agreed upon prior to transactions, in line with relevant laws and regulations. Please read the precontract documentation, etc., carefully for an explanation of risks and commissions, etc., of the relevant securities or financial instruments prior to purchase. Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility, and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct their own investigation and analysis of the product and consult with their own professional advisers as to the risks involved in making such a purchase. Some investments discussed in this report have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realized. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment, in such circumstances you may be required to pay more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realizable and it may be difficult to sell or realize those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. Please contact your Relationship Manager if you have any questions.

20

28/05/2013

Credit Suisse - Research Monthly

Disclosure Appendix
Analyst certification The analysts identified in this report hereby certify that views about the companies and their securities discussed in this report accurately reflect their personal views about all of the subject companies and securities. The analysts also certify that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Knowledge Process Outsourcing (KPO) Analysts mentioned in this report are employed by Credit Suisse Business Analytics (India) Private Limited. Important disclosures Credit Suisse policy is to publish research reports, as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. The Credit Suisse Code of Conduct to which all employees are obliged to adhere, is accessible via the website at:
https://www.credit-suisse.com/governance/doc/code_of_conduct_en.pdf

Company GENERAL ELECTRIC CO (GE US)

Rating BUY BUY BUY BUY BUY BUY BUY

Date 22/04/2013 09/04/2013 21/01/2013 24/12/2012 22/10/2012 23/07/2012 23/04/2012 19/04/2013 24/01/2013 23/10/2012 20/07/2012 03/05/2012 23/04/2013 28/01/2013 18/10/2012 24/07/2012 20/04/2012 08/05/2013 12/03/2013 16/11/2012 06/09/2012 01/08/2012 14/05/2012 25/04/2013 15/02/2013 25/10/2012 14/08/2012 11/07/2012 04/11/2011 25/04/2013 06/02/2013 07/01/2013 26/10/2012 24/07/2012 21/06/2012 09/05/2012 10/05/2013 21/03/2013 02/11/2012 02/08/2012 06/07/2012 17/05/2012 03/05/2013 01/02/2013 02/11/2012 27/07/2012 27/04/2012 07/05/2013 29/01/2013 20/11/2012 31/07/2012 02/05/2012 02/05/2013 13/02/2013 02/11/2012 30/07/2012 11/06/2012 21/02/2011 02/05/2013 11/02/2013

GOOGLE (GOOG US)

BUY BUY BUY BUY BUY

HALLIBURTON (HAL US)

BUY BUY BUY BUY BUY

HENKEL PREFERRED (HEN3 GY)

HOLD HOLD BUY BUY BUY BUY

For more detail, please refer to the information on independence of financial research, which can be found at:
https://www.credit-suisse.com/legal/pb_research/independence_en.pdf IBERDROLA (IBE SM)

HOLD HOLD BUY BUY HOLD HOLD

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which is generated by Credit Suisse Investment Banking business.
KPN NV (KPN NA)

RESTRICTED HOLD HOLD

Equity rating history as of (28/05/2013)
Company ANADARKO PETROLEUM (APC US) Rating BUY BUY BUY BUY BUY APPLE INC (AAPL US) BUY HOLD BUY BUY BUY BUY BUY BAYER (BAYN GR) BUY BUY BUY BUY BUY ENI (ENI IM) BUY BUY BUY BUY BUY HOLD GALP ENERGIA SGPS S.A. (GALP PL) BUY BUY BUY BUY BUY Date 13/05/2013 11/02/2013 22/11/2012 03/08/2012 08/05/2012 24/04/2013 24/01/2013 07/12/2012 26/10/2012 27/08/2012 25/07/2012 25/04/2012 26/04/2013 28/02/2013 01/11/2012 23/08/2012 04/05/2012 25/04/2013 20/02/2013 30/10/2012 06/08/2012 13/07/2012 02/05/2012 15/05/2013 13/02/2013 30/10/2012 31/07/2012 04/05/2012 SUNCOR ENERGY (SU CN) SIMON PROPERTY GROUP INC (SPG US) SIEMENS (SIE GY) ROYAL DUTCH SHELL-A (RDSA NA) LINDE AKTIENGESELLSCHAFT (LIN GY)

HOLD HOLD HOLD BUY HOLD HOLD BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY BUY HOLD HOLD TERMINATED BUY BUY

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Company

Rating BUY BUY BUY

Date 22/11/2012 13/08/2012 09/05/2012 13/02/2013 14/11/2012 30/07/2012 22/05/2012

Guide to analysis
Equity rating allocation as of (28/05/2013)
Investment banking interests only 40.92 % 50.9 % 5.59 % 2.59 %

VODAFONE (VOD LN)

BUY BUY BUY BUY

Overall BUY HOLD SELL RESTRICTED 40.76 % 51.59 % 5.41 % 2.23 %

The subject issuer (ANADARKO PETROLEUM, APPLE INC, BAYER, ENI, GENERAL ELECTRIC CO, GOOGLE, HALLIBURTON, HENKEL PREFERRED, IBERDROLA, KPN NV, LINDE AKTIENGESELLSCHAFT, ROYAL DUTCH SHELL-A, SIEMENS, SIMON PROPERTY GROUP INC) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (ANADARKO PETROLEUM, BAYER, ENI, GENERAL ELECTRIC CO, GOOGLE, HALLIBURTON, HENKEL PREFERRED, IBERDROLA, KPN NV, LINDE AKTIENGESELLSCHAFT, SIMON PROPERTY GROUP INC) within the past 12 months. Credit Suisse provided non-investment banking services, which may include Sales and Trading services, to the subject issuer (ANADARKO PETROLEUM, APPLE INC, BAYER, ENI, GENERAL ELECTRIC CO, HALLIBURTON, IBERDROLA, ROYAL DUTCH SHELLA, SIEMENS, SIMON PROPERTY GROUP INC) within the past 12 months. Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (ANADARKO PETROLEUM, ENI, GENERAL ELECTRIC CO, GOOGLE, HALLIBURTON, IBERDROLA, KPN NV, SIEMENS, SIMON PROPERTY GROUP INC) within the past three years. Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (ENI, GENERAL ELECTRIC CO, IBERDROLA, KPN NV) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject issuer (ANADARKO PETROLEUM, ENI, GENERAL ELECTRIC CO, GOOGLE, HALLIBURTON, IBERDROLA, KPN NV, SIMON PROPERTY GROUP INC) within the past 12 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject issuer (ANADARKO PETROLEUM, APPLE INC, BAYER, ENI, GENERAL ELECTRIC CO, HALLIBURTON, IBERDROLA, ROYAL DUTCH SHELL-A, SIEMENS) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject issuer (ANADARKO PETROLEUM, APPLE INC, BAYER, ENI, GENERAL ELECTRIC CO, GOOGLE, HALLIBURTON, HENKEL PREFERRED, IBERDROLA, KPN NV, LINDE AKTIENGESELLSCHAFT, SIMON PROPERTY GROUP INC, SUNCOR ENERGY) within the next three months. As at the date of this report, Credit Suisse acts as a market maker or liquidity provider in the securities of the subject issuer (ANADARKO PETROLEUM, APPLE INC, GENERAL ELECTRIC CO, GOOGLE, HALLIBURTON, SIMON PROPERTY GROUP INC). Credit Suisse holds a trading position in the subject issuer (ANADARKO PETROLEUM, APPLE INC, BAYER, ENI, GALP ENERGIA SGPS S.A., GENERAL ELECTRIC CO, GOOGLE, HALLIBURTON, HENKEL PREFERRED, IBERDROLA, KPN NV, LINDE AKTIENGESELLSCHAFT, ROYAL DUTCH SHELL-A, SIEMENS, SIMON PROPERTY GROUP INC, SUNCOR ENERGY, VODAFONE ). As at the end of the preceding month, Credit Suisse beneficially owned 1% or more of a class of common equity securities of (BAYER, KPN NV, SIEMENS, VODAFONE ). Additional disclosures for the following jurisdictions United Kingdom: For fixed income disclosure information for clients of Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited, please call +41 44 333 33 99. For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at:
https://www.credit-suisse.com/disclosure

Relative stock performance At the stock level, the selection takes into account the relative attractiveness of individual shares versus the sector, market position, growth prospects, balance-sheet structure and valuation. The sector and country recommendations are "overweight," "neutral", and "underweight" and are assigned according to relative performance against the respective regional and global benchmark indices. Absolute stock performance The stock recommendations are BUY, HOLD and SELL and are dependent on the expected absolute performance of the individual stocks, generally on a 6-12 months horizon based on the following criteria:

BUY HOLD SELL RESTRICTED

10% or greater increase in absolute share price variation between -10% and +10% in absolute share price 10% or more decrease in absolute share price In certain circumstances, internal and external regulations exclude certain types of communications, including e.g. an investment recommendation during the course of Credit Suisse engagement in an investment banking transaction. Research coverage has been concluded.

TERMINATED

Absolute bond performance The bond recommendations are based fundamentally on forecasts for total returns versus the respective benchmark on a 3-6 month horizon and are defined as follows:

BUY HOLD

Expectation that the bond issue will outperform its specified benchmark Expectation that the bond issue will perform in line with the specified benchmark Expectation that the bond issue will underperform its specified benchmark In certain circumstances, internal and external regulations exclude certain types of communications, including e.g. an investment recommendation during the course of Credit Suisse engagement in an investment banking transaction.

SELL RESTRICTED

Credit Suisse HOLT With respect to the analysis in this report based on the HOLT(tm) methodology, Credit Suisse certifies that (1) the views expressed in this report accurately reflect the HOLT methodology and (2) no part of the Firm's compensation was, is, or will be directly related to the specific views disclosed in this report. The Credit Suisse HOLT methodology does not assign ratings to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valuation model, that are consistently ap-

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plied to all the companies included in its database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default variables and incorporated into the algorithms available in the Credit Suisse HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to produce alternative scenarios, any of which could occur. The Credit Suisse HOLT methodology does not assign a price target to a security. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes a warranted price for a security, and as the third-party data are updated, the warranted price may also change. The default variables may also be adjusted to produce alternative warranted prices, any of which could occur. Additional information about the Credit Suisse HOLT methodology is available on request. CFROI(r), CFROE, HOLT, HOLTfolio, HOLTSelect, HS60, HS40, ValueSearch, AggreGator, Signal Flag and "Powered by HOLT" are trademarks or registered trademarks of Credit Suisse or its affiliates in the United States and other countries. HOLT is a corporate performance and valuation advisory service of Credit Suisse. For technical research Where recommendation tables are mentioned in the report, "Close" is the latest closing price quoted on the exchange. "MT" denotes the rating for the medium-term trend (3-6 months outlook). "ST" denotes the short-term trend (3-6 weeks outlook). The ratings are "+" for a positive outlook (price likely to rise), "0" for neutral (no big price changes expected) and "-" for a negative outlook (price likely to fall). Outperform in the column "Rel perf" denotes the expected performance of the stocks relative to the benchmark. The "Comment" column includes the latest advice from the analyst. In the column "Recom" the date is listed when the stock was recommended for purchase (opening purchase). "P&L" gives the profit or loss that has accrued since the purchase recommendation was given. For a short introduction to technical analysis, please refer to Technical Analysis Explained at:
https://www.credit-suisse.com/legal/pb_research/technical_tutorial_en.pdf

press written permission of CS. All trademarks, service marks and logos used in this report are trademarks or service marks or registered trademarks or service marks of CS or its affiliates. The information, tools and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. CS does not offer advice on the tax consequences of investment and you are advised to contact an independent tax adviser. Please note in particular that the bases and levels of taxation may change. CS believes the information and opinions in the Disclosure Appendix of this report are accurate and complete. Information and opinions presented in the other sections of the report were obtained or derived from sources CS believes are reliable, but CS makes no representations as to their accuracy or completeness. Additional information is available upon request. CS accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that liability arises under specific statutes or regulations applicable to CS. This report is not to be relied upon in substitution for the exercise of independent judgment. CS may have issued, and may in the future issue, a trading idea regarding this security. Trading ideas are short term trading opportunities based on market events and catalysts, while company recommendations reflect investment recommendations based on expected total return over a 6 to 12-month period as defined in the disclosure section. Because trading ideas and company recommendations reflect different assumptions and analytical methods, trading ideas may differ from the company recommendations. In addition, CS may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysts who prepared them and CS is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report. CS is involved in many businesses that relate to companies mentioned in this report. These businesses include specialized trading, risk arbitrage, market making, and other proprietary trading. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication by CS and are subject to change without notice. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of CS, CS has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or CS’s website shall be at your own risk. Distribution of research reports Except as otherwise specified herein, this report is distributed by Credit Suisse AG, a Swiss bank, authorized and regulated by the Swiss Financial Market Supervisory Authority. Australia: This report is distributed in Australia by Credit Suisse AG, Sydney Branch (CSSB) (ABN 17 061 700 712 AFSL 226896) only to "Wholesale" clients as defined by s761G of the Corporations Act 2001. CSSB does not guarantee the performance of, nor make any assurances with respect to the performance of any financial product referred herein Bahamas: This report was prepared by Credit Suisse AG, the Swiss bank, and is distributed on behalf of Credit Suisse AG, Nassau Branch, a branch of the Swiss bank, registered as a broker-dealer by the Securities Commission of the Bahamas. Bahrain: This report is distributed by Credit Suisse AG, Bahrain Branch, authorized and regulated by the Central Bank of Bahrain (CBB) as an Investment Firm Category 2. Brazil: Any information contained herein does not constitute a public offer of securities in Brazil and securities mentioned herein may not be registered with the Securities Commission of Brazil (CVM). Dubai: This information is distributed by Credit Suisse AG, Dubai Branch, duly licensed and regulated by the Dubai Financial Services Authority (DFSA). Related financial products or services are only available to wholesale customers with liquid assets of over USD 1 million. who have sufficient fi-

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The information and opinions expressed in this report were produced by the Global Research department of the Private Banking division at Credit Suisse as of the date of writing and are subject to change without notice. Views expressed in respect of a particular security in this report may be different from, or inconsistent with, the observations and views of the Credit Suisse Research department of Investment Banking division due to the differences in evaluation criteria. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Credit Suisse AG, the Swiss bank, or its subsidiaries or its affiliates (“CS”) to any registration or licensing requirement within such jurisdiction. All material presented in this report, unless specifically indicated otherwise, is under copyright to CS. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior ex-

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Authors
Giles Keating Head of Research for Private Banking and Wealth Management +41 44 332 22 33 giles.keating@credit-suisse.com Nannette Hechler-Fayd'herbe Head of Global Financial Markets Research +41 44 333 17 06 nannette.hechler-fayd'herbe@credit-suisse.com Thomas Herrmann +41 44 333 50 62 thomas.herrmann@credit-suisse.com Michael O'Sullivan Head of Portfolio Strategy & Thematic Research +44 20 7883 8228 michael.o'sullivan@credit-suisse.com Peter Pönitzsch +41 44 333 57 68 peter.poenitzsch@credit-suisse.com Antonios Koutsoukis +44 20 7883 6647 antonios.koutsoukis@credit-suisse.com Markus Stierli +41 44 334 88 57 markus.stierli@credit-suisse.com Maurice Jiszda +41 44 333 21 41 maurice.jiszda@credit-suisse.com Tobias Merath Head Commodities & Alternative Investments Research +41 44 333 13 62 tobias.merath@credit-suisse.com Marcus Hettinger Head of Global Forex Research +41 44 333 13 63 marcus.hettinger@credit-suisse.com

Publisher Giles Keating Head of Research for Private Banking and Wealth Management +41 44 332 22 33 giles.keating@credit-suisse.com Oliver Adler Head Economic Research +41 44 333 09 61 oliver.adler@credit-suisse.com Nannette Hechler-Fayd'herbe Head of Global Financial Markets Research +41 44 333 17 06 nannette.hechler-fayd'herbe@credit-suisse.com

Editor Kevin Lyne-Smith Head of Global Equity Research +41 44 334 56 41 kevin.lyne-smith@credit-suisse.com

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