This action might not be possible to undo. Are you sure you want to continue?
2011 Global Outlooks
Please read the important disclosures and analyst certifications on pp. 16-22. gl
2011 Global Outlooks - Global Research
Head of Global Research Senior Corporate Managing Director
Thank you for your interest in Nomura research in 2010. Our global fixed income and equity research teams have issued global outlook reports for 2011 covering macroeconomics, forex, equity strategy, inflation strategy, and geopolitics. We have also put together distinctive 2011 outlook reports for each region. We hope you will find the investment ideas presented in these products useful. Nomura has endeavored to provide research spanning the globe, and with the increasing globalization of financial markets, we think research in tune with changes in global trends will be more important than ever. We started up US fixed income research operations in 2009 and US equity research in October 2010, completing our lineup of economic, forex, equity, fixed income and quantitative analysis research. In 2011, Nomura aims to have our researchers in each region cooperate across borders to provide research highlighting new investment opportunities. Expect more good things from Nomura research in the new year.
Global Head of Fixed Income Research
Head of Global Equity Research
an investment pull-back in China. may exacerbate tensions around global rebalancing in general and around CNY in particular. This assessment is based on a consistent historical pattern of returns during similar points in the cycle. With better fundamentals and fewer aftermath issues.2011 Global Outlooks . we reduce exposure to emerging markets as policy tightening and an already heavy inflow of capital limit the scope for further asset price gains. led by Asia. but weakening against EM currencies. We forecast earnings growth of 16% in 2011. and a total return of 20%.Global Research 2011Global Outlooks 2011 Global Economic Outlook Rocky Road of Recovery The developed world recovery is set to stay muted due to ongoing de-leveraging. fiscal restraint and other crisis legacies. Financials should outperform. An upside surprise?: animal spirits stir and crisis-calibrated monetary policies help release pent-up developed world demand. while sectors that can grow organically should also do well. Regionally. 4) EM economic outperformance. but we see the ECB and BOE raising rates way ahead of the Fed and BOJ. EM overheating turns sour. Developed-world inflation should stay contained. |2| . 2011 Global FX Outlook A global balancing act We believe the outlook for risky currencies is mildly positive for 2011. much of the emerging world. We still expect positive returns in emerging markets. while equity valuations in Japan look especially appealing. Downside risks: euro area fiscal crisis escalates and spreads. If stock prices and bond yields rise. most critically Spain. We expect asset allocators in developed economies to respond to the valuation gap that now exists between stocks and bonds. 5) Events in Europe. butting against continued US political pressures. 3) that the notion of EM economic outperformance may be tested in 2011 (we think markets will look beyond any temporary growth convergence). We anticipate the US dollar consolidating in 2011 against other major currencies. 2011 Global Equity Strategy Outlook Reducing the Risk Premium The 6% risk premium now embedded in global equities seems inappropriately high to us compared with current volatility and credit spreads. The challenges are: 1) this view is buy-side consensus and we must be alert to overshooting in price and positioning (and we have a clear ‘value’ focus in our recommendations below). We see inflationary pressures mounting in EM as funds keep flowing in and the authorities intervene to stem rising currencies. 2) a sustained shift in Fed view (something we dispute). threaten to upset risk markets. while implied growth rates look out of line with likely economic and earnings trends. We increase exposure to Japanese and US equities because we think both regions will likely continue to benefit from loose monetary policy and the aforementioned asset shift. is set to keep growing briskly.
especially in short-end interest rates – our systematic taking of that carry risk was one of the more underappreciated trades of 2010. We expect China to continue a smooth trajectory towards the handover of power to the 5th Generation leadership in 2012-13. we appear to be in a transition period. Decisions in the United States – ranging from fiscal policy to relations with China – stand to be the main focus of markets. eg. moving to deflation concerns in the middle of 2010 (remember deflation floors?) and recovering somewhat since then. upside pressures are mounting while deflationary forces are diminishing. But we see current valuations as low against fundamentals: despite all the headwinds. although a repeat of the 2010 crisis is.2011 Global Outlooks . As of the end of 2010. unlikely. We expected continued loose G4 monetary policy to be supportive of carry trades. There is no need to expect hyper-inflation (and we don’t) to find inflation markets complacent. |3| . in our view. from concerns about an inflation spiral up to summer 2008 (remember the inflation caps?). Inflation markets have experienced highly distinct periods over the past three years. So 2011 should be a reasonably strong year for inflation valuations. Sovereign debt issues could yet pull market attention back to the eurozone. a number of issues stand to fuel tensions locally. To be fair. 2011 Global Inflation Outlook Reality Check We stress test the vision of a world where inflation never occurs again. but we see only a low probability of a major global shock emanating from the region in the next 12 months. In the Middle East. We believed decoupling between large developed economies and China and its large trading partners would be a definitive trade in 2010 – and we stuck with the trade despite the substantial shock to risk appetite during Europe’s debt crisis. which at the start of the year was a highly unpopular view.Global Research 2011 Global Outlooks 2011 Global Fixed Income Strategy Outlook Four Macro Themes for 2011 One of the golden rules of year-ahead articles is to begin with a healthy dose of humility. a more balanced scenario in 2009. We expect the coalition government in the United Kingdom to survive potentially difficult local elections and a referendum set for 5 May 2011. 2011 Global Geopolitics Outlook Politics Remain Pivotal Even as Risk Aversion Recedes Politics and policy will continue to be key drivers of market sentiment as governments move forward in 2011 with exit strategies from the financial crisis. an Israeli military strike against Iran. something closer to 2009 than 2010. the economy is in a recovery phase. many of our core themes in 2010 fared well. Generic issues where policy decisions stand to play a particularly important role include the management of capital inflows and food price inflation. We were bullish G4 rates.
Consumer Staples and Consumer Cyclicals. |4| . We do not want to ‘pay-up’ for defensive exposure. and underweight Utilities. therefore we overweight Financials. However. are leading EEMEA policymakers to adopt new strategies to cope with shifting global growth. a very low cost of debt. with high rates of profitability on existing capital. and prefer ‘B to B’ over ‘B to C’. Periphery governments must continue with their programme of fiscal austerity and structural reform. 2011 EEMEA Economic Outlook A Postmodern World Structural changes. losing the confidence of markets and official backers. combined with cyclical trends. and by the drawing of attention to conventions. Oxford English dictionary. That potentially leaves even more scope than usual for policy errors. rising inflation and increased fiscal scrutiny. 2011 European Equity Strategy Outlook Reasons for reinvestment A key reason behind the low multiples attached to European stocks is the lack of organic growth. The sovereign debt crisis is the issue that has dominated the thinking of European policymakers over 2010 and will no doubt continue to do so in the year ahead. Tech and Media. We downgrade exposure to both Healthcare and Telecom. while adding to Industrials and Financials. Postmodernism: A style and concept characterized by distrust of theories and ideologies. We are biased towards sectors that benefit from rising stock markets and lower risk premiums. too little and markets lose confidence anyway. Too much tightening runs the risk of economic stagnation or political opposition which could render it unfeasible.2011 Global Outlooks .Global Research 2011 Regional / Country / Product Outlooks 2011 European Economic Outlook Finding the balance Policymakers in Europe need to strike a balance between different policy options. We forecast a 13% gain for European equities in 2011. continued economic recovery and indications that investors are rewarding more proactive deployment of cash flows – CEOs are likely to increase organic investment as well as M&A.
Telenet and Eutelsat. 3) the changed reaction function of regional central banks who are less inclined to tighten policy into a commodity price-driven rise in headline inflation than they were in 2007-08. some media companies could become M&A targets in 2011. which are spurring demand for duration. Relative Asia growth outperformance.Global Research 2011 Regional / Country / Product Outlooks 2011 European Media Outlook Investment-driven growth. Earnings upgrades will have to be generated by internal investment in organic growth initiatives and accretive acquisitions. 2011 Asia FX Outlook Capital flows. |5| . Capital inflows into EM and particularly Asia. 2. and 5.2011 Global Outlooks . As well as making accretive acquisitions. BSkyB is our top pick on M&A grounds and a bid of 800p+ could come as early as Q1. The impact of capital controls and the risks of an FX policy shift towards allowing appreciation. 2) our assumption that there will be less pass-through of high commodity prices to underlying inflation than the market believes. 3. Our view is underpinned by several factors: 1) an ongoing regional economic slowdown. CNY appreciation. Asian central banks implementing more capital controls. but the power to shock is reduced. in growth markets). There may still be scope for further cyclical gains. 4) regulatory changes in the global banking. but risks of growth slowing. and 5) a bias among regional policy makers to tighten monetary conditions via exchange rates rather than interest rates. growth ebbs We identify the following key themes driving Asia FX into 2011: 1. Our top picks for internally generated growth are Reed Elsevier (which has raised investment levels. accretive acquisitions and M&A 2010 has produced some upside surprises from the early cyclical advertising exposed stocks. 4. 2011 Asian interest rate strategy Outlook History rhymes We retain a positive view on Asian interest rate markets into 2011. insurance and pension industries.
We view 2011 as the start of the world's population shifting from favourable demographics to an aging society. Wage costs in Asia are rising quickly. interest hikes. We are Bullish on Financials. wealth effects and growing bi-lateral trade between EM. Property. Near-term concern over inflation will weigh on equity market performance. We present our suggested quant screen approach in 2011. sufficient liquidity (+18% y-y M2 growth) and undemanding valuations (in line with historical average forward P/E of 12. In terms of styles in Asia. The world’s aging comes at a time when China has reached the 'Lewis' point — it has run out of cheap labour. 2011 Asia Pacific Quantitative Outlook Productivity factor for extra juice Productivity and competitiveness. But amid tightening monetary policy and price control efforts.2011 Global Outlooks . Consumer. the 12th FYP and rising global commodity prices. Asian equities should benefit from rising domestic consumption. 2011 China Equity Strategy Outlook Higher ground We believe solid earnings growth (21%+ y-y). as well as the ability of companies to manage costs. RMB appreciation. Against a likely backdrop of surging inflation. We expect companies demonstrating better competitiveness and beneficiaries of productivity gains to outperform. This is also passing through Asia from Japan. real negative interest rates. inflation and the return of the productive economy We expect global equities to deliver positive returns as funds move away from bonds as growth fears subside. Korea and Taiwan. we spell out our sector winners/losers for 2011.Global Research 2011 Regional / Country / Product Outlooks 2011 Asia Pacific Equity Strategy Outlook Deflation. Asian authorities continue to prioritise growth over inflation. sustain capital spending and grow market share. we suggest adding exposure to the composite productivity factor in 2011 and continue to emphasise momentum and growth over value. Oil & gas and Online gaming. We highlight them below. any share price weakness should present buying opportunities for long-term gains. We upgrade Taiwan on better global growth prospects. |6| . will likely be key return drivers in 2011.6x) will support 20%-plus upside in China’s equity market in 2011.
valuations remain inexpensive. |7| . subdued property prices and a strengthening won are delaying aggressive monetary policy tightening. not to mention for investment banking earnings.Global Research 2011 Regional / Country / Product Outlooks 2011 Korea Equity Strategy Outlook Land of the investing calm We expect Kospi earnings to rise 15% in 2011. A strong currency. BoK rate hikes have been much slower than expected. offshore marine (capex cycle) and commercial property (cyclical upswing). Our market year-end target is 2230. while liquidity conditions and sentiment are favourable. underpinned by attractive valuations. The excitement infused by the ongoing flurry of M&A activity in three different sectors can only be positive for market sentiment. Going into the New Year. M&A activity and rising retail participation. Greater cooperation within ASEAN to improve trade and FDI across ASEAN. and 3) ample liquidity supporting asset reflation evident in the buoyant property market — the bull market in Malaysia looks set to continue into 2011. Set against a favourable backdrop of — 1) an ongoing consumption boom. and has helped sentiment on Korea equities. 2011 Malaysia Equity Strategy Outlook The rally is still young Most of the characteristics of the super bull market in the early 1990s have resurfaced. favourable liquidity conditions and a strong S$. driven by a younger and wealthier population. 2011 Singapore Equity Strategy Outlook Riding the reflation cycle in 2011 We see 10 to 15% market returns in Singapore in 2011. despite current account surpluses having reached a record high. Macro and industry drivers underpin our positive stance towards banks (attractive valuations). Unlike 2010. with a fair risk premium of 6. We prefer those stocks benefiting from rising commodity prices. Korean equities are entering 2011 with no signs of overheating.2011 Global Outlooks . sector rotational plays. we believe the property. We see Korea as is a key beneficiary of emerging market growth. 2) improving commodity prices. Moderation in exports due to a stronger S$ is consistent with our view of slower but more sustainable GDP growth going into 2011. The global economy has avoided a double dip. with five key features clearly apparent: economic recovery. reasonable valuations and available policy flexibility (strong fiscal position) support Singapore’s market outlook in 2011. A highly leveraged household. resulting in loose monetary conditions and excess liquidity. liquidity. palm oil and bank sectors will be the winners.7%. commodities (food inflation). while better Singapore-Malaysia relations could accelerate cross-border investments.
The factors that could dominate policy are the strength of consumer demand and inflation.2% for FY11 and 2. could restrict premium expansion for equities. 3. implying a potential return of around 12%. We expect the Japanese economy to perform weakly in the near term. 2.100. the current account and policy action. As key stock-selection themes we see: (1) a steepening of the JGB yield curve.1% for FY12. Our end-2011 TOPIX target is 1. and related strengthening of their currencies. and (4) improvement in the inventory-shipment balance in the electronic parts and devices sector. but we maintain our outlook for Japan to break out of its economic lull in 2011 H2.3%. We believe this. Reflecting retroactive revisions to figures. 2011 Japan Economic Outlook We expect Japan to break out of its lull in 2011. We maintain our growth forecasts of 1. and the BOJ's monetary policy stance. |8| . we have raised our FY10 forecast for real GDP growth from 2. (3) Japanese companies’ use of accumulated cash to increase shareholder returns and fund capital investment and M&As. We recommend overweighting the financials. combined with a likely tightening of the policy environment. machinery. 5. led by exports We have made revisions to our economic outlook for FY10–FY12 following the announcement of second preliminary real GDP estimates for 2010 Q3. housing/real estate. 4. led by exports. 2011 Japan Equity Strategy Outlook An end to collective pessimism 1.100.7% to 3. (2) ongoing rapid growth and rising inflation rates in emerging economies. We think Japanese equities are likely to outperform global equities in 2011. We expect support from improvement in Japanese equities’ relative valuations.2011 Global Outlooks .Global Research 2011 Regional / Country / Product Outlooks 2011 India Equity Strategy Outlook Under the weather We expect 2011 to be a year of below-average returns for the market and set our December 2011 Sensex target at 22. Global commodity prices will likely be key in determining the evolution of inflation. We see downside risk to the 20% y-y earnings growth in FY12F now being priced in by consensus. and electrical machinery/precision equipment sectors. firming earnings momentum.
prepayments. Supply and Demand Technicals: The technical backdrop should remain very strong for nonagency RMBS given expectations for limited new issue supply and the potential reinvestment demand from paydowns.2011 Global Outlooks .Global Research 2011 Regional / Country / Product Outlooks 2011 US Rates Outlook Calibrating the Rates Compass The recent movements in the bond market have a similar look and feel to what took place during December 2009. 2011 Securitized Products Outlook Navigating the Maze of Options Agency MBS had started the year 2010 on a nervous note as MBS spreads were very tight and the market was worried about the likely widening of spreads once the Fed concluded its MBS purchase program in 1Q‘10.” We therefore maintain an overall bearish bias and see rates trading at the higher end of our basline core view of 2. credit burnout. the spread between the current coupon MBS yield and the average yield of 5-year and 10-year Treasuries had widened by close to 40bp from the historical tights hit in July’10. Recommended positioning in the RMBS market for 2011: We maintain an overweight bias on the overall non-agency sector. We present our outlook for modification activity going forward Mortgage Credit Performance: We present our outlook for liquidation timelines. and longer duration subprime seasoned mezzanine bonds. that overall rate movements will also contract. This range of 125 bps compares to the 160 bps of 2010. what is different now in our minds is that we believe investors will continue to “sell into strength” whereas in the latter half of 2010 they would “buy into strength.60% in 1H11. |9| . and recommend buying recent vintage SSNR option ARM bonds. and overall default and loss projections. A repeat of that sort of trading experience could be indeed what is ahead at the start of 2011. severities. SSNR dirty prime/cleaner Alt-A fixed-rate collateral. Although agency MBS spreads held up pretty well for about 3-4 months after the Fed‘s purchase program was completed. 2011 Non-agency MBS Market Outlook Review of 2010 and Key Themes for 2011 Outlook for housing and loan modifications: Our base case forecast is that national home prices will drop 5% in 2011 driven by distressed inventory liquidations and demographic trends. The market went on to trade better in the first few weeks of 2010 only to fade up to higher yields. However.35% to 3. We believe that as economic variability declines.
We expect that 60% of loans coming due will be able to refinance. net operating income will continue to be weak across all property types through 2011. occupancy and rents at commercial properties are starting to rebound.2011 Global Outlooks . we expect gross issuance of GNMA MBS to decline from $363bn in 2010 to $282bn in 2011 and the net issuance to decline from $182bn in 2010 to $134bn in 2011. While credit enhancement decreased compared to 2009. resulting in a steady stream of new delinquencies. and we believe bonds are adequately enhanced as structures de-lever quickly. 2011 Auto ABS Market Outlook Our main investment recommendation Auto ABS was a solid performer in 2010 amid robust issuance and range bound spreads. coupled with lower conventional to FHA refinancing. This. Further. Issuance of auto floorplan and subprime ABS saw a significant uptick while prime loans and leases were down. because of the steep drop in occupancy levels during the previous recession. GM’s purchase of AmeriCredit changes the captive issuer landscape. Maturities: Although the $38bn in loans set to mature in 2011 have a weaker profile than those that matured in 2010. However. mitigating factors help maintain credit protection. Auto collateral performance remains strong: early credit metrics show that 2010 vintage is performing on par with 2009 and better than 2007 and 2008. they will benefit from increased credit availability and investor appetite. | 10 | .Global Research 2011 Regional / Country / Product Outlooks 2011 GNMA Market Outlook Navigating the Maze of Options We think that a combination of the tightening of FHA underwriting standards and higher insurance fees will lead to a relatively higher percentage of loans being insured through private mortgage insurance in 2011. Commercial Property Prices: Commercial property prices are likely to continue bouncing along the bottom as more distressed assets hit the market. while recoveries have benefitted from a strong used car market. should lead to lower GNMA net issuance in 2011. Overall. while another 10% will receive a maturity date extension. and we anticipate the new General Motors Financial to ramp up its near-prime and lease offerings in 2011. while stronger trophy assets garner increased investor interest. the surge in home sales in the sub-$200k price segment due to tax credits has subsided. 2011 CMBS Market Outlook Key Themes in the CMBS Market Property Fundamentals: As the economy slowly recovers.
With listed China exposure still limited to HKSE. Toshiba Machine and Nabtesco. We construct a Nomura Food Vulnerability Index for 80 countries. Zoomlion and Komatsu are our top BUYs on this basis. but they are no panacea. trading recommendations from our fixed income and equity strategy teams and specific stock ideas. SANY. We expect rising mechanisation in China as a consequence of labour cost increases. In this Special Report we draw on a scorecard approach and our country specialists to assess which countries in the region are most likely to impose controls. Machinery China No barriers We believe rising labour costs. while strong volume growth from 2Q and onwards should support share-price appreciation. improving product quality and technology level. and for good reason: the growth rates and interest rates of Asian economies are now so much higher than those of the advanced economies. The case for capital controls in Asia Asia Special Report –Global Economics Under certain conditions. another multiyear surge in food prices is likely given rapidly growing demand for food in the developing world. | 11 | . we also recommend Japanese suppliers Kawasaki Heavy Industries. Chinese construction machinery makers will likely become more competitive due to strong growth of the domestic market. Free-flowing foreign capital is no doubt beneficial to the world economy.2011 Global Outlooks . Asian policymakers raised this concern at the recent IMF-World Bank annual meetings. capital controls can be a legitimate policy response to surging inflows. constraints and uncertainties surrounding food supply and the development of increasingly powerful feedback loops. if the inflows suddenly reverse. Possible negative growth in March 2011 could hurt share prices. an improving product mix and gradually increasing pricing power will bring the limelight back to strong growth in the machinery sector. but the experience in emerging economies is that sudden surges can fuel asset bubbles and. We would advise investors to focus on excavators and concrete machinery: these should be 2011’s fastest growing segments.Global Research 2011 Global Collaboration -Running Themes The coming surge in food prices Global Economics and Strategy Even with lacklustre growth in advanced economies. a high risk of financial crisis. We also discuss: Macro implications.
Smart Grids IT for electric power networks—a new global battleground Smart grid investment is likely to be substantial over a long time frame. While we think this will dent DRAM demand in the short term. Samsung Electronics is best prepared for this transition. We accordingly see two groups of smart grid-related companies: those with strong short-term earnings growth potential and those with attractive longer-term strategies. with low-end smartphones key to growth in 2012. and our top pick. we see memory share prices likely to gather momentum soon. We are also BUYers of Hynix and Toshiba. The share prices of memory names move in tandem with memory prices. we are updating our forecasts for the global handset market. but with an increasing shift to mid-range smartphones. With the bottom of the memory market in sight. On a like-for-like basis. | 12 | . Global Mobile Phone trends Android momentum drives… We expect 2011 handset market trends to follow 2010 patterns. from 9% to 11% in 2011 and from 7% to 10% in 2012. but given the ongoing technology standardization and various types of testing. Our handset market revenue forecasts increase to 13% in 2010. we believe it will benefit the overall memory industry substantially in terms of earnings for several years to come. except in areas such as advanced metering infrastructure (AMI). in our view. from 9% and to 11% from 9% in 2011. with Apple and Android likely to hold a 50% revenue share in 2012. In conjunction with a number of company reports published today (HTC. our handset unit estimates show an increase from 11% to 16% in 2010.Global Research 2011 Global Collaboration -Running Themes Global Memory A new direction We are in the middle of a megatrend – the rise of tablets and smartphones. The industry shift is continuing. at the expense of Nokia and RIM.2011 Global Outlooks . it could take several years to get fully under way. Full details are shown in the table below. RIM and ZTE). Motorola.
issued 26 March 2010). LED lighting: The final—and biggest—LED application coming to prominence. 10-121. we think competitive factors in all facets of the value chain could change. Cosmetics in China C-Bons integration to boost Beiersdorf’s top line and margins In this report. We look for continued momentum in passenger cars. Prices should stay strong in 2011F. We believe there is plenty of gas left in the tank. momentum inland. but we think demand for LEDs used in general lighting has gotten off to a solid start. from TV LEDs. China Auto and auto parts Passengers in front Auto sales in China are set to expand by 28% to 17.5mn units in 2010F.Global Research 2011 Global Collaboration -Running Themes LED lighting Change spurred by demand shift from TVs to lighting Demand for LEDs used in TVs has not grown as much as previously anticipated. With China expected to become the largest cosmetics market in the world over the next 15 years (#3 today) and already representing the primary engine of growth for the sector. mass production. driven by inland demand (favouring small cars) and replacement demand (upward shift in product mix). with industry utilization remaining above 80% amid a modest 15% forecast rise in capacity to 15mn. We believe the market has been too focused on one number – the proportion of total sales derived from China. we take a close look at the Chinese cosmetics market and try to assess the relative strengths and weaknesses of the companies under our coverage. small-quantity production. Sales have been underpinned by favourable government policies. which require low-variety. we see companies with clear and durable competitive advantages in the region as well positioned to deliver superior medium-term earnings growth at a group level. which require high-variety.4%). As demand shifts to general lighting LEDs. taking sales to 12. and fundamental demand backed by rising personal wealth. | 13 | . We previously believed that the LED lighting market would take off in earnest during 2010 through 2011 (refer to Report no.8mn (up 16. following 46% growth in 2009. Our forecasts call for 15% growth in 2011F to 20mn.2011 Global Outlooks .
services and fleet renewal demand. LatAm. Asia slowing to 1.Global Research 2011 Global Collaboration -Running Themes Rail equipment Rail on a growth track: next stops Russia and India Both Russia and India have over EUR 200bn of railway development planned. While both countries are more open markets than China. Middle East and Africa. Europe to grow at a steady 2. EUVL poised for mass production Japanese extinction lithography equipment industry facing Extreme ultraviolet lithography (EUVL) is fast emerging as the main candidate to be the next generation in semiconductor lithography technologies.3% owing to expected completion of China's high-speed build-out.5% pa to 2015. | 14 | . especially for FA. a technique that allows existing light sources to continue to be used. we think that localisation and partnerships will be key to accessing these markets.3% for 2008-15.2% pa on the back of signalling. Even companies that had previously viewed double patterning technology (DPT). freight and high-speed development is starting. While we think EUVL will be the mainstream mass production technology in five years’ time. as the main candidate have been substantially veering toward EUVL for mass production.2011 Global Outlooks . while the accompanying rise in personal incomes is spurring sales of autos and electronics. These factors are combining to create a virtuous cycle beneficial to machinery demand. Sharply rising labor costs have motivated company managers to invest in factory automation (FA). Solid rail equipment demand forecast by Unife: global growth of 2. and CIS regions are all forecast to grow fastest at around 4. Global capital goods: demand and competition in China Japanese/European parts/services companies strong in core Chinese manufacturers are expanding production and increasing sophistication. although financing is not yet fully ringfenced: Mainline. We expect Japanese and European companies to maintain their technological edge in core components. Faster growth of 4% likely for 2010-15. we see risks in basing opinions of companies on changes in lithography technology five years out.
please contact your local Sales Representative to request your account created. To access Global Research Portal. with each page giving access to both the latest reports and to those published in the past.com/research Nomura’s Global Research Portal is designed as a gateway for our clients to access our research from equity. economics and FX. fixed income.2011 Global Outlooks .Global Research Please access our Global Research Portal http://www. | 15 | .nomura.
16% of companies with this rating are investment banking clients of the Nomura Group*. Distribution of ratings (Global) Nomura Global Equity Research has 1878 companies under coverage. on 1-877-865-5752. are classified as a Sell rating. In addition.com/research/pages/disclosures/disclosures. | 16 | . Inc.aspx ..com/research or requested from Nomura Securities International. The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues. 37% have been assigned a Neutral rating which. Inc.COM. REUTERS and BLOOMBERG. salesperson (1-877-865-5752) or email grpsupport@nomura. Industry Specialists do not contribute in any manner to the content of research report in which their names appear. 54% of companies with this rating are investment banking clients of the Nomura Group*. For clients in Europe.COM.Global Research Any Authors named on this report are Research Analysts unless otherwise indicated Analyst Certification Each research analyst identified herein certifies that all of the views expressed in this report by such analyst accurately reflect his or her personal views about the subject securities and issuers.com for assistance.com for technical assistance. 41% of companies with this rating are investment banking clients of the Nomura Group*.nomura. a portion of which is generated by Investment Banking activities. Nomura International plc or any other Nomura Group company. Important disclosures may be accessed through the left hand side of the Nomura Disclosure web page http://www. Industry Specialists identified in some Nomura International plc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they have coverage. is. 13% have been assigned a Reduce rating which. or will be.. REUTERS. Online availability of research and additional conflict-of-interest disclosures Nomura Japanese Equity Research is available electronically for clients in the US on NOMURA. for purposes of mandatory disclosures.nomura. please email grpsupport-eu@nomura. are classified as a Buy rating. directly or indirectly related to the specific recommendations or views that he or she has expressed in this research report. please contact your Nomura Securities International. each research analyst identified on the cover page hereof hereby certifies that no part of his or her compensation was. for purposes of mandatory disclosures. Inc. Japan and elsewhere in Asia it is available on NOMURA.2011 Global Outlooks . If you have any difficulties with the website. BLOOMBERG and THOMSON ONE ANALYTICS. for purposes of mandatory disclosures. If you have difficulty with this site or you do not have a password. is classified as a Hold rating. nor is it tied to any specific investment banking transactions performed by Nomura Securities International. Important Disclosures Conflict-of-interest disclosures Important disclosures may be accessed through the following website: http://www. 48% have been assigned a Buy rating which.
unless otherwise stated in the valuation methodology. indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. SECTORS A 'Bullish' stance. multiple analysis. etc. Benchmarks are as follows: United States: S&P 500.2011 Global Outlooks . A 'Bearish' stance. the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis. STOCKS A rating of 'Buy'. etc. Analysts may also indicate absolute upside to price target defined as (fair value . A 'Buy' recommendation indicates that potential upside is 15% or more. Benchmarks are as follows: United States/Europe: Please see valuation methodologies for explanations of relevant benchmarks for stocks (accessible through the left hand side of the Nomura Disclosure web page: http://www. Explanation of Nomura's equity research rating system in Europe. In most cases. A rating of 'RS-Rating Suspended'. US and Latin America for ratings published from 27 October 2008 The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock. indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. which is defined as (Price Target . based on an appropriate valuation methodology such as discounted cash flow. A rating of 'Reduce'. In most cases.current price)/current price. | 17 | . *The Nomura Group as defined in the Disclaimer section at the end of this report. indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months. the Price Target will equal the analyst's 12-month intrinsic valuation of the stock.Current Price) / Current Price. Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia. indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company. Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published from 30 October 2008 and in Japan from 6 January 2009 STOCKS Stock recommendations are based on absolute valuation upside (downside). subject to limited management discretion. indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%.Global Research As at 30 September 2010. A 'Neutral' stance.nomura. Europe: Dow Jones STOXX 600.Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia. Middle East and Africa. indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral'. subject to limited management discretion.com/research).
indicates that the analyst expects the stock to underperform the Benchmark by 15% or more over the next six months. indicates that the analyst expects the stock to outperform the Benchmark by 5% or more but less than 15% over the next six months. Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. A rating of '2' or 'Buy'. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation.Hardware/Semiconductors: FTSE W Europe IT Hardware. Stocks labeled 'Not rated' or shown as 'No rating' are not in Nomura's regular research coverage. projections. and it undertakes no obligation to update the analysis. A 'Neutral' stance. Middle East and Africa. A rating of 'RS' or 'Rating Suspended' indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. indicates that the analyst expects the sector to perform in line with the Benchmark during the next six months. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies. indicates that the analyst expects the stock to outperform the Benchmark by 15% or more over the next six months. conclusions or other information contained herein. indicates that the analyst expects the sector to underperform the Benchmark during the next six months. indicates that the analyst expects the sector to outperform the Benchmark during the next six months. Telecoms: FTSE W Europe Business | 18 | . A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.2011 Global Outlooks . A rating of '5' or 'Sell'. A rating of '4' or 'Reduce'. A 'Bearish' stance. Explanation of Nomura's equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe. Europe. indicates that the analyst expects the stock to either outperform or underperform the Benchmark by less than 5% over the next six months. US and Latin America published prior to 27 October 2008) STOCKS A rating of '1' or 'Strong buy'. Benchmarks are as follows: Japan: TOPIX. Nomura might not publish additional research reports concerning this company. A rating of '3' or 'Neutral'. MSCI World Technology Hardware & Equipment. estimates. indicates that the analyst expects the stock to underperform the Benchmark by 5% or more but less than 15% over the next six months. SECTORS A 'Bullish' stance. by sector .Global Research A 'Reduce' recommendation indicates that potential downside is 5% or more. United States: S&P 500. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation.
However.2011 Global Outlooks .. and by other risks related to the company or the market. A 'Neutral' recommendation indicates that upside or downside is less than 10%. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. ('NSI'). reflect in part the analyst's estimates for the company's earnings. if the analyst doesn't think the market will revalue the stock over the specified time horizon due to a lack of events or catalysts. therefore. Global Emerging Markets: MSCI Emerging Markets ex-Asia. Affiliates and subsidiaries of Nomura Holdings. United Kingdom. subject to limited management discretion. Nomura International plc. price volatility may cause the actual upside or downside based on the prevailing market price to differ from the upside or downside implied by the recommendation. Ltd. Communications equipment: FTSE W Europe IT Hardware. then the fair value may differ from the intrinsic fair value. Inc. Nomura Securities International. Recommendations are set with a 6-12 month horizon unless specified otherwise. New York. In most cases. Price targets Price targets. A 'Buy' recommendation indicates that upside is between 10% and 20%. In most cases. the 'Nomura Group'). (collectively. if applicable. A 'Sell' recommendation indicates that downside is more than 20%. Nomura International (Hong Kong) Ltd. with the contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or elsewhere identified in the publication.. include: Nomura Securities Co. Korea (Information on Nomura | 19 | . A 'Strong buy' recommendation indicates that upside is more than 20%. Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published prior to 30 October 2008 STOCKS Stock recommendations are based on absolute valuation upside (downside). Ecology Focus: Bloomberg World Energy Alternate Sources. our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. within this horizon.. which is defined as (Fair Value . Disclaimers This publication contains material that has been prepared by the Nomura entity identified on the banner at the top or the bottom of page 1 herein and. Auto & Components: FTSE W Europe Auto & Parts. Nomura Financial Investment (Korea) Co. NY. Ltd. Inc.Global Research Services. the Fair Value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc. Business Services: FTSE W Europe. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation. A 'Reduce' recommendation indicates that downside is between 10% and 20%.Current Price)/Current Price. and may not occur if the company's earnings differ from estimates. Accordingly. Hong Kong. if discussed.. Japan. ('NSC') Tokyo. The achievement of any price target may be impeded by general market and macroeconomic trends.
INF231299034. and/or its officers. among others. manager or lender) for. Nomura Securities Singapore Pte Ltd. Taipei Branch. are specified in disclaimers and related disclosures in this report. that may be associated with any investment decision. Nomura Group produces a number of different types of research product including.. of companies mentioned herein. and buy or sell. if any.nomura. Opinions expressed are current opinions as of the original publication date appearing on this material only and the information. If and as applicable. THIS MATERIAL IS: (I) FOR YOUR PRIVATE INFORMATION. India (Registered Address: Ceejay House. may act as a market maker and principal. OR DISTRIBUTION OF THIS INFORMATION. willing to buy and sell certain of the securities of companies mentioned herein. involved in the preparation or issuance of this material may. In addition. Nomura Singapore Ltd. including the opinions contained herein. FIT FOR ANY PARTICULAR PURPOSE OR MERCHANTABLE AND DOES NOT ACCEPT LIABILITY FOR ANY ACT (OR DECISION NOT TO ACT) RESULTING FROM USE OF THIS PUBLICATION AND RELATED DATA. have long or short positions in. without limitation.or. fundamental analysis. In addition. regulated by the Monetary Authority of Singapore).kr ). or related securities or derivatives. the Nomura Group may buy and sell certain of the securities of companies mentioned herein. Nomura Australia Ltd. directors and employees. the Nomura Group. Bhd.. Investors should consider this report as only a single factor in making their investment decision and. TO THE MAXIMUM EXTENT PERMISSIBLE ALL WARRANTIES AND OTHER ASSURANCES BY NOMURA GROUP ARE HEREBY EXCLUDED AND NOMURA GROUP SHALL HAVE NO LIABILITY FOR THE USE. Capital Nomura Securities Public Company Limited. RELIABLE. or solicit investment banking or other business from. regulated by the Monetary Authority of Singapore).2011 Global Outlooks . are subject to change without notice. P. including persons. Level 11. Taiwan. the securities (including ownership by NSI. COMPLETE.. or derivatives (including options) thereof. NSE INB231299034. Australia (ABN 48 003 032 513). Nomura is under no duty to update this publication. Nomura Indonesia.Global Research analysts registered with the Korea Financial Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis. the Nomura Group.. Plot F. SEBI Registration No: BSE INB011299030. quantitative analysis and short term trading ideas. Please see the further disclaimers in the disclosure information on companies covered by Nomura analysts available at www. the report should not be viewed as identifying or suggesting all risks. direct or indirect. excluding NSI. regulated by the Australian Securities and Investment Commission and holder of an Australian financial services licence number 246412. as such. companies mentioned herein.. Mumbai. Mumbai. Nomura Financial Advisory and Securities (India) Private Limited. AND WE ARE NOT SOLICITING ANY ACTION BASED UPON IT.com/research under the 'Disclosure' tab. referenced above). MISUSE. INE 231299034). India. Worli. Malaysia. Further. Singapore (Registration number 198702521E.400 018.kofia. AND (III) BASED UPON INFORMATION THAT WE CONSIDER RELIABLE. Dr. (II) NOT TO BE CONSTRUED AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE ILLEGAL. investment banking and non-investment banking compensation and securities ownership (identified in this report as 'Disclosures Required in the United States'). NOMURA GROUP DOES NOT WARRANT OR REPRESENT THAT THE PUBLICATION IS ACCURATE. Singapore (Registration number 197201440E. other members of the Nomura Group may from time to time perform investment banking or other services (including acting as advisor. to the extent permitted by applicable law and/or regulation. Nomura International (Hong Kong) Ltd. as agent for its clients. NSI's investment banking relationships. Indonesia. recommendations contained in one type of research product may differ from recommendations contained in other types of | 20 | . Nomura Securities Malaysia Sdn.T. Annie Besant Road. Shivsagar Estate. Further.
the values of which are influenced by foreign currencies. | 21 | . or needs of individual investors. or immediately following. Neither this publication nor any copy thereof may be taken or transmitted or distributed. It is intended only for investors who are 'eligible counterparties' or 'professional clients' as defined by the FSA. Unless prohibited by the provisions of Regulation S of the U. for distribution in Hong Kong by NIHK.2011 Global Outlooks . Securities Act of 1933. the investment. under the US Securities Exchange Act of 1934. It does not constitute a personal recommendation. NSC and other non-US members of the Nomura Group (i. where it concerns securities. this publication has been distributed by Nomura Singapore Limited ('NSL') and/or Nomura Securities Singapore Pte Ltd ('NSS'). Nomura International plc or any other member of the Nomura Group. this publication. Any failure to comply with these restrictions may constitute a violation of the laws of the Kingdom of Saudi Arabia or the United Arab Emirates. issued by their foreign affiliates in respect of recipients who are not accredited. may not be offered or sold in the United States or to US persons unless they have been registered under such Act. a US-registered broker-dealer. which is regulated by the Hong Kong Securities and Futures Commission. In Singapore. directly or indirectly. futures and foreign exchange. This publication has also been approved for distribution in Malaysia by Nomura Securities Malaysia Sdn Bhd. effectively assume currency risk. which accepts responsibility for its contents in accordance with the provisions of Rule 15a-6. or except in compliance with an exemption from the registration requirements of such Act. The securities described herein may not have been registered under the US Securities Act of 1933.S. be redistributed to retail clients as defined by the FSA. as the case may be. Foreign-currency-denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of. This publication has been approved for distribution in Australia by Nomura Australia Ltd. By accepting to receive this publication. ('NIHK'). as defined by the FSA. Inc. which is authorized and regulated in Germany by the Federal Financial Supervisory Authority ('BaFin'). which is authorized and regulated by the UK Financial Services Authority ('FSA') and is a member of the London Stock Exchange.Global Research research product. and. directors and employees may. by Nomura Securities International. investors in securities such as ADRs. Recipients of this publication should contact NSL or NSS (as the case may be) in respect of matters arising from. or income derived from. their officers. Unless governing law permits otherwise. excluding NSI). financial situations.e. whether as a result of differing time horizons. to the extent it relates to non-US issuers and is permitted by applicable law. you must contact a Nomura entity in your home jurisdiction if you want to use our services in effecting a transaction in the securities mentioned in this material. it is possible that individual employees of Nomura may have different perspectives to this publication. have acted upon or used this material prior to. expert or institutional investors as defined by the Securities and Futures Act (Chapter 289). This publication has not been approved for distribution in the Kingdom of Saudi Arabia or to clients other than 'professional clients' in the United Arab Emirates by Nomura Saudi Arabia. This publication may be distributed in Germany via Nomura Bank (Deutschland) GmbH. by any person other than those authorised to do so into the Kingdom of Saudi Arabia or in the United Arab Emirates or to any person located in the Kingdom of Saudi Arabia or to clients other than 'professional clients' in the United Arab Emirates. This publication has been approved for distribution in the United Kingdom and European Union as investment research by Nomura International plc ('NIPlc'). therefore.. and may not. or in connection with. you represent that you are not located in the Kingdom of Saudi Arabia or that you are a 'professional client' in the United Arab Emirates and agree to comply with these restrictions. In addition. its publication. which is authorized and regulated in Australia by the Australian Securities and Investment Commission ('ASIC'). in such case. This publication has been approved by Nomura International (Hong Kong) Ltd. or take into account the particular investment objectives. this material is distributed in the United States. methodologies or otherwise. NSL and NSS accepts legal responsibility for the content of this publication.
aspx | 22 | . lost. which may arise as a result of electronic transmission.nomura. by any means. maintenance of a Restricted List and a Watch List. personal account dealing rules. or contain viruses. such as e-mail. arrive late or incomplete.com/research/pages/disclosures/disclosures.Global Research No part of this material may be (i) copied. If verification is required. then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted. Further information on any of the securities mentioned herein may be obtained upon request. The sender therefore does not accept liability for any errors or omissions in the contents of this publication. corrupted. policies and procedures for managing conflicts of interest arising from the allocation and pricing of securities and impartial investment research and disclosure to clients via client documentation. or (ii) redistributed without the prior written consent of the Nomura Group member identified in the banner on page 1 of this report. Additional information available upon request NIPlc and other Nomura Group entities manage conflicts identified through the following: their Chinese Wall.2011 Global Outlooks . please request a hard-copy version. confidentiality and independence policies. photocopied. destroyed. If this publication has been distributed by electronic transmission. or duplicated in any form. Disclosure information is available at the Nomura Disclosure web page: http://www.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.