Divergences in the euro zone generating different impulses

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1 Divergences in the euro zone generating different impulses The economic indicators have been a mixed bag in recent weeks, producing at times both positive and negative surprises. The recent pullback in the ifo growth expectations combined with the slowing growth rate for the euro zone money supply M1 suggest that the pace of growth will slow in the coming months. The diverging trend in the earnings estimates between the national equity markets in the euro zone is ongoing. Among the large national equity markets in EMU, only the German equity market shows a positive medium-term revisions trend for corporate profits. Widening interest rate differentials among the EMU countries point to tensions and, therefore, a higher negative tail risk for the euro zone equity market. We expect the Euro STOXX 50 to continue its sideways move. Among the national equity markets of EMU, Germany could be the most likely candidate for a positive surprise during the 3Q reporting season. Cyclicals: The September rally was dominated by cyclicals, but this move is not sustainable. Among the cyclicals, we recommend continuing to focus on Chemicals. It is the only cyclical sector we believe has still sustainable potential. Dividend yield: Value added for the defensive sectors Health Care, Oil & Gas, Telecom and Utilities (in each case overweighted). ONLY THE GERMAN EQUITY MARKET SHOWS A CLEAR, POSITIVE REVISIONS TREND MSCI Germany index earnings KEY VIEWS & RECOMMENDATIONS Index targets End 2010 STOXX Europe EURO STOXX DAX 00 MDAX 70 S&P Topix 8 CROSS-ASSET-RECOMMENDATION Equities COUNTRY-RECOMMENDATIONS Global (in local currency) Europe USA Japan STYLE-RECOMMENDATIONS STOXX Large vs. STOXX STOXX Mid vs. STOXX STOXX Small vs. STOXX SECTOR-RECOMMENDATIONS Western Europe (vs. STOXX Europe 0) Chemicals Health Care Oil & Gas Telecommunications Utilities Banks Basic Resources Construction & Materials Retail Travel & Leisure underweight underweight neutral underweight neutral neutral neutral overweight underweight Source: UniCredit Research MSCI Germany index earnings 12M forward (I/B/E/S) MSCI Germany index earnings, estimates for the year... (I/B/E/S) 30 Source: Reuters, Thomson Datastream, UniCredit Research Dr. Tammo Greetfeld, (UniCredit Bank) Equity Strategist tammo.greetfeld@unicreditgroup.de Christian Stocker, CEFA (UniCredit Bank) christian.stocker@unicreditgroup.de UniCredit Research page 1 See last pages for disclaimer.

2 Diverging earnings development The evidence pointing to an upper turning point in the ifo growth expectations in 3Q is mounting. The economic indicators have been a mixed bag in recent weeks, producing at times both positive and negative surprises. The latest ifo numbers showed a renewed decline in the ifo business expectations; the money supply M1 is in an intact trend of falling growth rates and points to a further deterioration of the ifo business expectations in the coming months (see chart). The pullback in the ifo business expectations gels with the recently weaker-than-expected PMI indices for Germany. There is, therefore, mounting evidence that as expected Germany will also feel the impact of the global growth slowdown in the coming months, which should in turn have negative fallout for the euro zone. This means pressure for the revisions trend of the 2011 earnings estimates and, therefore, in principle a headwind for the equity market (see dated 13 August). The diverging revisions trend of the earnings estimates in the euro zone is, therefore, ongoing (see here also the Strategy Special dated 22 July). The diverging trend of corporate profits is laying the foundation for ongoing differences in the performance of the markets relative to each other. ONLY THE GERMAN EQUITY MARKET SHOWS A CLEAR, POSITIVE REVISIONS TREND MSCI Germany index earnings THE DEVELOPMENT OF THE MONEY SUPPLY ARGUES FOR A COOLING OF THE GROWTH EXPECTATIONS Euro zone: M1 money supply and ifo business expectations MSCI Germany index earnings 12M forward (I/B/E/S) MSCI Germany index earnings, estimates for the year... (I/B/E/S) Source: Thomson Datastream, UniCredit Research The tensions in EMU are increasing again and could once again prove to be a greater strain for the equity market. The unresolved causes of the tensions in EMU continue to hurt the equity market. Among the most recent developments, we think the following are interesting: EMU: M1 money supply (change yoy, %, shifted by 6M, RS) ifo business climate - subindex expectations Source: Thomson Datastream, UniCredit Research The revisions of the earnings estimates paint a mixed picture. The following chart shows the revisions trend for the earnings estimate of the German equity market. Among the large national equity markets, Germany is the only market where the earnings estimates have been revised upwards since the beginning of the year and have remained in this upward trend since the end of June (since the end of June, the 2010 estimates have been revised up by 7.5%, 2011E +3.3%). In Spain and Italy, the estimates for both 2010 and 2011 have been revised slightly downwards since June (Spain 2010E -0.6%, 2011E -0.6%; Italy: 2010E -0.8%, 2010E -1.5%; France 2010E +2.9%, 2011E -0.3%). 2 0 Yields of Portuguese and Irish government bonds have risen sharply and are now slightly above the interest rate for a 3-year "emergency loan" from the EU/IMF based on the methodology used to calculate the interest rate for Greece (see chart). This signals a renewed escalation of the tensions within EMU. This also holds true for the still strong dependence of some Southern European banking systems on Eurosystem lending. To comply with the rating requirements, the European Financial Stability Facility will in an emergency be able to lend only less than the originally planned EUR 4bn, thereby indicating limits on the possibilities to overcome the crisis with "mutual lending". UniCredit Research page 2 See last pages for disclaimer.

3 It is not possible to state a priori whether and when the tensions might escalate into a strain. But the development of both interest rate spreads and capital movements within the euro zone underscore the existing risks for a negative "tail risk ". Above and beyond that, the planned tightening of the stability and growth pact because of the stronger austerity efforts will initially have a negative impact on growth (over the long term, stable government finances are naturally a prerequisite for sustainable GDP growth and, therefore, positive for the equity market). Bottom line: The Euro STOXX 50 is trading near the upper edge of the range of the sideways move expected in the coming months. The more positive relative earnings development of German corporates within EMU bolsters the prospect of a positive relative performance by the German equity market. A SUSTAINED WEAKENING OF THE BANKING SECTOR WOULD POINT TO RISKS USA: S&P 500 and S&P 500 Banks Footnote: Among the other potential risk factors, it is noticeable that for some weeks now the performance of the S&P500 and the banking sector has been diverging once again, similar to the situation in 2007 at the beginning of the subprime crisis. Against the backdrop of the still weak US real estate market, a continuation of the most recent trend would be a sign of rising risks on the US equity market THE MOUNTING PRESSURE ON IRELAND AND PORTUGAL INCREASES THE RISKS ALSO FOR THE EQUITY MARKET Euro zone: Government bond yields compared (3Y) S&P 500 Banks S&P Rate for a "3Y emergency loan" Portugal (red) Ireland (light grey) Source: Thomson Datastream, UniCredit Research Dr. Tammo Greetfeld, (UniCredit Bank) Equity Strategist tammo.greetfeld@unicreditgroup.de 2 Spain (dark grey) Puchases of government bonds by the Eurosystem (EUR bn, RS) S O N D J F M A M J J A S O N D J F 0-20 Source: Thomson Datastream, UniCredit Research Outlook: The Euro STOXX 50 continues to trade sideways German equity market with positive "surprise risk". We expect the Euro STOXX 50 to continue its sideways move. Among the national equity markets of EMU, Germany could be the most likely candidate for a positive surprise during the 3Q reporting season. The sector allocation retains its defensive bias (see Sector Strategy). The table on page 6 provides an overview of the individual stocks the UniCredit company analysts think are most promising in the respective sectors. UniCredit Research page 3 See last pages for disclaimer.

4 Sector Strategy The economic recovery in Europe is probably peaking at the moment. The impulses from the USA continue to weaken; the leading economic indicators for important emerging markets such as China and Brazil also point to an impending slowdown in export demand. At the same time, the current situation component of the leading indicators at least for Germany points to an excellent 3Q10. Against this backdrop, the 3Q reporting season should still not represent any impediments for overall market. Furthermore, the companies that gave presentations at our GIC (German Investment Conference) last week provided a predominantly constructive outlook for 4Q10 as well. In light of these developments, it is therefore safe to assume that the picture of a growth slowdown in 2011, implied by the leading indicators, is at the moment still being overshadowed by the current robust state of corporate earnings. It cannot be ruled out that some cyclical sectors will make a renewed run towards new highs for the year. Among the cyclicals, we recommend in this environment continuing to concentrate on Chemicals. It is the only cyclical sector we believe still has sustainable potential. In principle, we are, however, sticking to our recommendation to focus on defensive sectors with a high dividend yield on risk / reward considerations. The STOXX Europe 0 sectors Chemicals, Health Care, Oil & Gas, Telecom and Utilities remain overweighted. We continue to underweight Banks, Basic Resources Construction & Materials, Retail as well as Travel & Leisure. The September rally was dominated by cyclicals, but this move is not sustainable. The indications pointing to a very positive 3Q10 for corporates have increased strongly in September. In September, the Economic Confidence Indicator for the euro zone posted its highest reading since January 2008; the current situation component of the ifo business climate also continued to rise in September and is near the all-time highs. This very robust picture was also confirmed (at least for Germany) by most of the companies represented last week at our GIC (German Investment Conference, 115 German companies, of which 27 DAX companies). At the same time, it emerged that corporates still expect little if any fall-off in business activity in 4Q10 either. Against this backdrop, the solid earnings expectations for 2010 will likely prove to be accurate; the uncertainty and lack of clarity about the development of earnings in 2010 is small. In the wake of the 3Q10 earnings reporting, above all cyclicals could, therefore, build on their outperformance since September IN THE SHORT TERM, THE PICTURE FOR INDUSTRIALS HAS IMPROVED ONCE AGAIN YTD performance comparison of industrials and defensives JAN FEB MAR APR MAI JUN JUL Relative performance industrial sectors / STOXX Europe 0 AUG SEP Relative performance Defensives / STOXX Europe 0 Industrial production and expected earnings trend for industrials German industrial production, with a lead of 2M Expected earnings trend industrial sectors (rs)? Source: Thomson Datastream, UniCredit Research UniCredit Research page 4 See last pages for disclaimer.

5 The medium-term picture, however, clearly argues against a sustainable rally by the cyclicals: Leading indicators: The leading indicators (here primarily the subcomponent expectations to the extent available) are currently near their cyclical highs or have already surpassed them. This picture is the same in all regions of the world (Europe, USA, Asia), with the result that there is the danger of a "synchronized" growth slowdown in An abrupt economic downturn before the end of 2010 is improbable here; earnings will remain solid in 4Q10. The earnings dynamic has, however, peaked; the danger of negative earnings revisions in 2011/12 will increase as the leading indicator continue to fall. In the process, the negative earnings revisions for cyclicals will be higher than for defensives, whose earnings are much more stable. Industrial production: Industrial production in Europe and primarily in Germany has recovered again significantly since the lows posted at mid-2009 (see also chart above), even though the level before the economic downturn was still over 10% higher. 2011/12 is unlikely to see a further rise on this scale; in fact the leading indicators imply at best a sideways move in the coming quarters. The close correction with the development of the earnings expectations of cyclicals (see also chart above) also implies here in the best case a sideways move of the earnings expectations for cyclicals. Export demand: Bucking the normal seasonal pattern, export demand, above all from the Asian region, did not develop negatively in the summer months either. This was also confirmed at our GIC by the companies that depend to a large extent on exports in the sectors Chemicals, Automobiles and Machinery. Now that the OECD Leading Economic Indicator has, however, also peaked for the cycle in China, export demand is expected to moderate in the coming quarters. This will then feed through more strongly to the aforementioned sectors, with the automotive sector currently showing the highest valuation gaps to its own history and to overall market. Earnings momentum: In light of the correlations outlined above, we assume that cyclicals are currently peaking for the cycle in terms of earnings or already peaked with the 2Q10 reporting season. Since the economy is still robust, an intensified decline in earnings should, as already explained, not be expected for the time being. Looking to the coming quarters, the momentum (above all versus defensives) will, however, slow appreciably. Even an absolute decline in the earnings of cyclicals in 2011 versus 2010 cannot be ruled out as things stand today. Volatility expectations: In an environment of rising volas, industrials do not, as a rule, continue to outperform - at least not versus defensives. In view of the expected further decline of the leading indicators as well as the indications of unchanged existing tensions within the EMU (cf. also text to the overall market), we expect in the coming months an intensified increase of volatilities and therefore an outperformance of defensive sectors. Dividend yield: Value added for the defensive sectors Health Care, Oil & Gas, Telecom and Utilities. The growth expectations are - as described uncertain; the visibility for equity market performance going forward is limited. Since bond yields are near their all-time lows, the dividend yield is therefore becoming increasingly attractive. Rising dividends are expected again for FY 2010, and these expectations are being supported by the development of business so far. The expected dividend yield of the STOXX Europe sectors Telecom, Oil & Gas und Utilities for 2010 (payout in 2011) is currently roughly 6.5%. Compared to this, the yield of the corresponding corporate bonds (iboxx Euro Corporates) is low at roughly 3.5%. The gap to Bunds, which are yielding only 2.2%, is at historically high levels. Above all in connection with the growing risks for investments in cyclical sectors, we recommend (also on cross asset considerations) focusing on defensive sectors with a high dividend yield. Alongside Telecom and Utilities, these are Health Care and Oil & Gas, all of which we are overweighting (see chart). ON RISK / RETURN CONSIDERATIONS, SECTORS WITH A HIGH DIVIDEND YIELD ARE BECOMING MORE ATTRACTIVE Dividend yield of defensive sectors compared to the yield of Bunds Dividend yield Utilities Dividend yield Oil & Gas Dividend yield Telecom Yield 10Y Bunds Dividend yield Health Care Christian Stocker, CEFA (UniCredit Bank) christian.stocker@unicreditgroup.de Source: Thomson Datastream, UniCredit Research UniCredit Research page 5 See last pages for disclaimer.

6 SECTOR ALLOCATION WESTERN EUROPE STOXX Europe 0 sector Benchmark weight (%) Portfolio weight over + / underweighted (%) Portfolio position (%) Shares with a Buy rating (STOXX Europe 0 universe) Automobiles & Parts BMW, Daimler, Fiat, Michelin, Pirelli, Volkswagen Pref. Banks Banca Popolare Emilia Romagna, Banco Santander, Barclays, BBVA, Credit Suisse, Erste Bank, HSBC, Raiffeisen International, Royal Bank of Scotland, UBI Banca Basic Resources ENRC, Kazakhmys, NORSK HYDRO Chemicals Akzo Nobel, BASF SE, Clariant, DSM, Lanxess, Symrise Construction & Materials Assa Abloy, Wienerberger Financial Services Deutsche Börse AG Food & Beverage Associated British Food, Carlsberg Breweries, Heineken, Nestlé Health Care Fresenius SE, Merck KgaA, Rhön-Klinikum, Industrial Goods & Services STADA. Synthes Atlantia, Deutsche Post DHL, Finmeccanica, Fraport, GEA Group, Siemens Insurance Atlantia, Deutsche Post DHL, Finmeccanica, Fraport, Legrand, SKF Media Allianz, Hannover Re, Munich Re Oil & Gas Pers. & Household Goods Acergy, Aker Solutions, Dragon Oil, Total Real Estate adidas, Beiersdorf, Electrolux, L'Oréal, LVMH, Philips, Richemont Retail IMMOFINANZ Technology Ahold, Celesio, METRO, Tesco Telecommunications AIXTRON, ASML, Infineon, SAP, Temenos, United Internet Travel & Leisure KPN, Telecom Italia, Telefonica, Vodafone bwin Utilities EDF, EDP, Fortum, GDF Suez, Iberdrola Renovables, Red Electrica, RWE, Terna Source: STOXX Ltd., UniCredit Research UniCredit Research page 6 See last pages for disclaimer.

7 STOXX 0 EUROPE SECTORS: VALUATION OVERVIEW STOXX sectors Price change I/B/E/S earnings growth I/B/E/S 12M fwd. earnings* P/E P/B ratio Expected ROE P/CF DY YTD -13W 2010E 2011E -3 months Revisions Ratio Valuation change -3M 2011E Current 10Y high 10Y low Current -3 months Current Current Automobiles & Parts 22.2% 16.4% 41.2%.9% 2.0% -23.6% % Banks -4.9% 9.0% 124.5% 30.7% 9.5% -1.1% 0.0% % Basic Resources 4.5% 13.3% 112.9% 37.5% -5.3% -1.5% 15.7% % Chemicals 6.6% 9.7%.0% 10.1% 6.4% 2.3% 3.2% % Construction & Materials -10.5% 0.1% 4.5% 17.3% -1.7% -2.8% 1.6% % Financial Services 3.3% 7.9% -37.7% 24.8% 3.6% 0.0% 3.2% % Food & Beverage 11.0% 1.6% 9.8% 11.0% 3.3% 0.6% -2.0% % Health Care 3.1% 0.3% 11.2% 6.8% -0.6% 0.8% 2.0% % Industrial Goods 18.7% 8.8% 52.6% 16.3% 9.2% 1.5% -0.8% % Insurance -0.7% 7.6% 15.6% 12.6% 4.7% 1.1% 2.4% % Media 8.5% 7.7% 9.7% 9.8% 2.7% 2.1% 4.7% % Oil & Gas -9.1% 10.0% 35.2% 15.4% 0.2% -2.3% 10.0% % Pers. & Household Goods 18.6% 7.2% 30.4% 11.8% 6.1% 1.8% 1.2% % Real Estate 6.8% 15.0% 8.2% 4.6% -11.9% 2.7% 11.9% % Retail 14.2% 11.0% 14.2% 12.7% 2.6% 4.3% 7.0% % Technology 6.7% 1.8% 51.3% 23.5% 5.6% -0.8% -3.4% % Telecommunications 2.6% 10.5% 0.5% 4.0% 1.2% 0.9% 8.1% % Travel & Leisure 14.2% 6.8% 54.5% 35.0% 10.1% 0.0% -5.3% % Utilities -11.8% 4.7% -3.7% 1.0% -1.5% -0.2% 5.7% % STOXX Europe 0 2.8% 7.3% 35.3% 16.5% 3.8% 0.5% 3.2% % I/B/E/S 12M fwd. earnings: -3 months: Change in the 12M fwd. estimates compared to the value 3 months ago in % (earnings dynamic) Revisions Ratio: Ratio of upward revisions to the earnings estimates minus the downward revisions compared to the total number of the earnings estimates Valuation change -3M: Price change in percent minus the change in the earnings expectations as % in the last 3 months (valuation expansion) Source: STOXX Ltd., I/B/E/S, UniCredit Research UniCredit Research page 7 See last pages for disclaimer.

8 SECTORS: STOXX 0 COMPANIES COVERED BY UNICREDIT RESEARCH WITH A BUY OR SELL RATING* Sector Company Rating ISIN Automobiles & Parts BMW Buy DE Automobiles & Parts Daimler Buy DE Automobiles & Parts Fiat Buy IT Automobiles & Parts Michelin Buy FR Automobiles & Parts Pirelli Buy IT Automobiles & Parts Volkswagen Pref. Buy DE Banks Alpha Bank Sell GRS Banks Banca Popolare Emilia Romagna Buy IT Banks Banco Popolare Sell IT Banks Banco Popular Sell ES Banks Banco Sabadell Sell ES01138A34 Banks Banco Santander Buy ES J37 Banks Barclays Buy GB Banks BBVA Buy ES Banks Commerzbank Sell DE Banks Credit Suisse Buy CH Banks EFG EUROBANK ERGASIAS Sell GRS Banks Erste Bank Buy AT Banks HSBC Buy GB Banks Lloyds Banking Group Sell GB Banks National Bank of Greece Sell GRS Banks Piraeus Bank Sell GRS Banks Raiffeisen International Buy AT Banks Royal Bank of Scotland Buy GB Banks UBI Banca Buy IT Basic Resources ENRC Buy GB00B29BCK10 Basic Resources Kazakhmys Buy GB00B0HZPV38 Basic Resources NORSK HYDRO Buy NO Chemicals AkzoNobel Buy NL Chemicals BASF SE Buy DE000BASF111 Chemicals Clariant Buy CH Chemicals DSM Buy NL Chemicals K+S Sell DE Chemicals Lanxess Buy DE Chemicals Symrise Buy DE000SYM9999 Construction & Materials Assa Abloy Buy SE Construction & Materials Wienerberger Buy AT Financial Services Deutsche Börse AG Buy DE Food & Beverage Associated British Foods Buy GB Food & Beverage Carlsberg Breweries Buy DK Food & Beverage Heineken Buy NL Food & Beverage Lindt & Sprüngli Sell CH Food & Beverage Nestlé Buy CH Health Care Fresenius SE Buy DE Health Care Merck KGaA Buy DE Health Care Rhön-Klinikum Buy DE Health Care STADA Buy DE Health Care Synthes Buy US87162M96 Ind. Goods & Services ABB Sell CH Ind. Goods & Services Atlantia Buy IT Ind. Goods & Services Deutsche Post DHL Buy DE Ind. Goods & Services Finmeccanica Buy IT Ind. Goods & Services Fraport Buy DE Ind. Goods & Services Legrand Buy FR Ind. Goods & Services SKF Buy SE Ind. Goods & Services ThyssenKrupp Sell DE Ind. Goods & Services Volvo Sell SE Insurance Allianz Buy DE Insurance Hannover Re Buy DE Insurance Munich Re Buy DE Oil & Gas Acergy Buy LU Oil & Gas Aker Solutions Buy NO Oil & Gas Dragon Oil Buy IE Oil & Gas REC Sell NO Oil & Gas SolarWorld Sell DE Oil & Gas Total Buy FR Oil & Gas Vestas Sell DK Pers. & Household Goods adidas Buy DE Pers. & Household Goods Beiersdorf Buy DE Pers. & Household Goods Electrolux Buy SE Pers. & Household Goods L Oréal Buy FR Pers. & Household Goods LVMH Buy FR Pers. & Household Goods Philips Buy NL Pers. & Household Goods Richemont Buy CH Real Estate IMMOFINANZ Buy AT UniCredit Research page 8 See last pages for disclaimer.

9 SECTORS: STOXX 0 COMPANIES COVERED BY UNICREDIT RESEARCH WITH A BUY OR SELL RATING* (CONTINUED) Sector Company Rating ISIN Retail Ahold Buy NL Retail Carrefour Sell FR Retail Celesio Buy DE000CLS1001 Retail METRO Buy DE Retail Tesco Buy GB Technology AIXTRON Buy DE000A0WMPJ6 Technology ASML Buy NL Technology Ericsson Sell SE Technology Infineon Buy DE Technology SAP Buy DE Technology Temenos Buy CH Technology United Internet Buy DE Telecommunications KPN Buy NL Telecommunications Telecom Italia Buy IT Telecommunications Telefonica Buy ES E18 Telecommunications Vodafone Buy GB00B16GWD56 Travel & Leisure bwin Buy AT Utilities EDF Buy FR Utilities EDP Buy PTEDP0AM0009 Utilities Fortum Buy FI Utilities Gas Natural Sell ES Utilities GDF Suez Buy FR Utilities Iberdrola Renovables Buy ES Utilities Red Electrica Buy ES Utilities RWE Buy DE Utilities Terna Buy IT *This list shows the current ratings for the stated companies, not changes to ratings Source: UniCredit Research UniCredit Research page 9 See last pages for disclaimer.

10 Disclaimer Our recommendations are based on information obtained from, or are based upon public information sources that we consider to be reliable but for the completeness and accuracy of which we assume no liability. All estimates and opinions included in the report represent the independent judgment of the analysts as of the date of the issue. We reserve the right to modify the views expressed herein at any time without notice. Moreover, we reserve the right not to update this information or to discontinue it altogether without notice. 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11 ADDITIONAL REQUIRED DISCLOSURES UNDER THE LAWS AND REGULATIONS OF JURISDICTIONS INDICATED Notice to Austrian investors This document does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. This document is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published, in whole or part, for any purpose. Notice to Czech investors This report is intended for clients of UniCredit Bank AG, UniCredit Bank AG London Branch, UniCredit Bank AG Vienna Branch, UniCredit Bank AG Milan Branch, UniCredit Securities, UniCredit Menkul Değerler A.Ş., UniCredit Bulbank, Zagrebačka banka, UniCredit Bank, Bank Pekao, Yapi Kredi, UniCredit Tiriac Bank, ATFBank in the Czech Republic and may not be used or relied upon by any other person for any purpose. Notice to Italian investors This document is not for distribution to retail clients as defined in article 26, paragraph 1(e) of Regulation n approved by CONSOB on October 29, In the case of a short note, we invite the investors to read the related company report that can be found on UniCredit Research website Notice to Russian investors As far as we are aware, not all of the financial instruments referred to in this analysis have been registered under the federal law of the Russian Federation On the Securities Market dated April 22, 1996, as amended, and are not being offered, sold, delivered or advertised in the Russian Federation. Notice to Turkish investors Investment information, comments and recommendations stated herein are not within the scope of investment advisory activities. Investment advisory services are provided in accordance with a contract of engagement on investment advisory services concluded with brokerage houses, portfolio management companies, non-deposit banks and the clients. Comments and recommendations stated herein rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not suit your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely on the information stated here may not result in consequences that meet your expectations. Notice to Investors in Japan This document does not constitute or form part of any offer for sale or subscription for or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. 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Any transaction by U.S. persons (other than a registered U.S. broker-dealer or bank acting in a broker-dealer capacity) must be effected with or through UCI Capital Markets. The securities referred to in this report may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Available information regarding the issuers of such securities may be limited, and such issuers may not be subject to the same auditing and reporting standards as U.S. issuers. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where UCI Capital Markets is not registered or licensed to trade in securities, commodities or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements. The information in this publication is based on carefully selected sources believed to be reliable, but UCI Capital Markets does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author s judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice. UCI Capital Markets may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance. 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Factors that could cause a company s actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company s products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement This document may not be distributed in Canada or Australia. UniCredit Research page 11

12 UniCredit Research* Thorsten Weinelt, CFA Global Head of Research & Chief Strategist European Equity Research Christopher Williams, Head of European Equity Research , Dr. Ingo Heimig Head of Research Operations Stefanie Ruehl, CFA Head of Research Product Development & Marketing EUROPEAN SECTOR ANALYSTS Aerospace & Defence/Airlines/ Industrials Uwe Weinreich Gabriele Parini Automobiles & Parts Georg Stürzer Christian Aust, CFA Gabriele Parini Banks Eugenio M. Cicconetti Tania Gold James Invine Marketing Analyst Joseph Champion Capital Goods James Stettler Alessandro Falcioni Peter Bauernfried, CEFA Alasdair Leslie Peter Rothenaicher Antonio Vizzari Marketing Analyst Andy Bell Chemicals & Health Care Andreas Heine Markus Mayer Dr. Silke Stegemann Construction & Materials Peter Bauernfried, CEFA Maurizio Moretti Consumer/HPC Nicolas Sochovsky Graeme Eadie Katharina Kastenberger Marketing Analyst Rupert Trotter Fashion & Luxury Goods Davide Vimercati Volker Bosse Insurance/Financial Services Bernd Müller-Gerberding, CFA Marketing Analyst Joseph Champion Media Maurizio Moretti Metals & Mining Christian Obst Alexander Hodosi Jonathan Schroer, CFA Mid & Small Cap Roberto Odierna Pierluigi Amoruso Peter Bauernfried, CEFA Alessandro Falcioni Katharina Kastenberger Maurizio Moretti Peter Rothenaicher Antonio Vizzari Christian Weiz Oil & Gas Sergio Molisani David Thomas Stefano Vitali Marketing Analyst Clay Smith Real Estate Andre Remke, CFA Pierluigi Amoruso Alexander Hodosi Renewables Michael Tappeiner Retailers (Food) Volker Bosse Semiconductors/ Telecom Equipment/ Technology Hardware Guenther Hollfelder, CFA Software & IT Services Knut Woller Alexander Rummler Telecommunications Thomas Friedrich, CFA Giovanni D'Amico Tourism, Leisure & Services Christian Obst Jonathan Schroer, CFA Utilities Lueder Schumacher Javier Suarez Scott Phillips Vincent Ayral Marketing Analyst Jenny Ping REGIONAL RESEARCH Austria Thomas Neuhold, CFA, Head Peter Bauernfried, CEFA Alexander Hodosi Katharina Kastenberger Italy Roberto Odierna, Head Pierluigi Amoruso Giovanni D'Amico Alessandro Falcioni Sergio Molisani Maurizio Moretti Gabriele Parini Javier Suarez Davide Vimercati Stefano Vitali Antonio Vizzari Germany Andreas Heine, Co-Head Georg Stürzer, Co-Head Christian Aust, CFA Volker Bosse Thomas Friedrich, CFA Guenther Hollfelder, CFA Markus Mayer Bernd Müller-Gerberding, CFA Christian Obst Andre Remke, CFA Peter Rothenaicher Alexander Rummler Jonathan Schroer, CFA Dr. Silke Stegemann Michael Tappeiner Uwe Weinreich Christian Weiz Knut Woller ESG Research Patrick Berger, CFA Equity Strategy Gerhard Schwarz, Head Volker Bien Dr. Tammo Greetfeld Christian Stocker EQUITY SALES Equity Sales London Equity Sales Milan Equity Sales Munich Equity Sales New York Equity Sales Vienna Equity Derivates Publication Address UniCredit Research Corporate & Investment Banking UniCredit Bank AG Arabellastrasse 12 D Munich Tel Fax Bloomberg UCGR Internet *UniCredit Research is the joint research department of UniCredit Bank AG (UniCredit Bank), UniCredit CAIB Group (UniCredit CAIB), UniCredit Securities (UniCredit Securities), UniCredit Menkul Değerler A.Ş. (UniCredit Menkul), Zagrebačka banka and UniCredit Bulbank. UniCredit Research page 12