Technical Analysis. Weekly Comment. Global. SPX Still Vulnerable Watch Bonds, USD and Japan!! Equities Sales Trading Commentary

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1 h Equities Sales Trading Commentary Technical Analysis Weekly Comment Global Michael Riesner Marc Müller 30/08/ These are sales views based on Technical Analysis. They do not represent the UBS House View. SPX Still Vulnerable Watch Bonds, USD and Japan!! US Trading: Tactically, we saw the SPX vulnerable for a pullback into early September before starting a bounce higher into end September, where we expect the US market to hit a more important medium-term top. After last week s failed attempt to break its mid-august top at 2194, and with intact short signals in our daily trend work, the SPX remains in consolidation mode. On the sector front, with the market starting to anticipate rising interest rates, defensive sectors (DJU, DRG, S&P staples) are losing further ground, whereas financials are gaining relative momentum. Having said that, in absolute terms financials and semiconductors are overbought and vulnerable for a breather. A breather in outperforming financials and technology accompanied by a breakdown in defensives makes the SPX vulnerable for a short sell-off/initial spike in volatility into later this week/next week, where we see the market moving into another short-term buying opportunity. As long as the SPX trades below 2194, the market remains vulnerable for more consolidation work into later this week and ideally into next week. Support is at 2150 and 2134/2120. A break of the latter would imply a temporary undershooting towards 2100/worst case Given the weakness/selective breakdowns in defensive key sectors we see strength into end September more as part of a distributive top building case (with best case overshooting towards 2210) instead of expecting a new high momentum breakout. From a trading aspect, we would buy the dips in cyclical themes into next week. US Strategy: Since late May, we have been discussing what we need to see to get confirmation that the SPX is trading in a wave 5 of a larger degree, where our focus was on market breadth, sector leadership, and breaking the pivotal early Q2 top. With the early July breakout, we got a strong impulse in our breadth indicators. Sector-wise we got initial breakouts in cyclical key themes but at the end of the day it was the break of the May 2015 all-time high at 2134 that gave us the ultimate confirmation that the SPX is trading in a wave 5 of a larger degree, which is confirmation that the US market is trading in a new cyclical bull market that should last minimum into H and more likely into H However, this bull market will not be one-way. From a cyclical/tactical standpoint, we see the risk of a more significant corrective process from later September into initially later October/early November (wave a) and finally into late Q1 (wave c) before resuming the underlying bull cycle. So the whole wave 5 bull cycle will very likely be highly selective (regionally and thematically) and also highly trading oriented, where from a trend perspective our focus remains on cyclical outperformance. European Trading: After hitting its mid-august reaction high at 3063, and on track with our cyclical roadmap, the Euro Stoxx is in pullback mode, where we expect more consolidation work into later this week/next week before starting a new bounce higher into later September. On the upside, 3063 is an important resistance, where a break would imply a test of the pivotal late April top at On the downside, we anticipate a test of 2900 to worst case 2810 into next week, which tradingwise would be a buying opportunity. On the sector front, the break of the 2011 underperformance trend of cyclicals versus defensives is a major game changer, which leaves our sector focus on buying the dips in cyclical themes. Inter Market Analysis: Last week we highlighted the contracting cross-asset volatility in Equities, FX, gold and the US bond market. With the Friday move, the US 10-Year Treasury yield is testing the upper end of a multi-week breakout resistance. A break of 1.63% would imply higher yields into deeper Q4 towards 1.80%/2.00%, which at least tactically we would see as the source for increasing cross-asset volatility into Q4 via rising interest rate differentials versus Europe, and renewed US dollar strength. Thematically, a move higher in interest rates suggests further pressure in the crowded defensive sector themes, whereas the USDJPY and Japan should profit and outperform. Tactically, we would buy Japan where a break of the steep 2016 bear trend at 104 in USDJPY would be the trigger for a short-term surprise into later September/early October. Last week, we saw a first bullish reversal in the US dollar, which we saw as part of a tactical basing process. With the break of 95 in the DXY, and selective breakouts in key EM pairs, we get further buy signals, which implies more US dollar strength into deeper/later September. Tactically, we expect a litmus test of the July high at 97.60, which represents a medium-term inflection point in our cyclical model and where a break of would imply that a larger US dollar rally is underway. As we highlighted last week, a bullish US dollar is short-term headwind for commodities, gold and EMs. UBS 1

2 US Equity Market Update: Chart 1. ) S&P-500 Daily Chart Chart 2. ) S&P-500 Daily Chart with Bollinger Bands Chart 3. ) S&P-500 with VIX Index Down into Next Week In late July and into mid-august we highlighted the overbought stance of the US market. After completing an impulsive wave 5 bull structure into mid-august we saw the SPX vulnerable for a short-term pullback into early September before starting a bounce higher into end September where we expect the US market to hit a more important tactical top. After last week s failed attempt to break its mid-august top at 2194, and with intact short signals in our daily trend work, the SPX continues to trade in its very tight consolidation range of the last two weeks. Last week we highlighted the contracting volatility in equities, FX, bonds and gold. Bollinger bands are a very popular measure of volatility. With the contracting volatility of the last few weeks the SPX Bollinger Bands have been narrowing to one of the tightest ranges of the last few years!! We continue to think that this is a contrarian indication for significant higher volatility in September and into October. Although we basically think that particularly into later September there is still something missing on the upside in the US, over the next 5 to 10 trading sessions we can already see an initial pick up in volatility via a short but relatively sharp sell-off before starting a bounce higher into later September. On the US sector front, we see defensive key sectors (DJU, DRG and staples) losing further ground on the back of the speculation about rising interest rates on the macro side, whereas financials are gaining relative momentum. However, in absolute terms, financials and semiconductors are overbought and vulnerable for a breather. The problem is that with a breather in outperforming financials/technology plus commodity related themes facing headwind from the bouncing US dollar, accompanied by a breakdown in defensives, this makes the SPX vulnerable for a short selloff/initial spike in volatility into later this week/next week, where we see the market moving into another short-term buying opportunity. Conclusion: As long as the SPX trades below 2194, the market remains vulnerable for more consolidation work into later this week and ideally into next week. Support is at 2150 and 2134/2120. A break of the latter would imply a temporary undershooting towards 2100/worst case Given the weakness and selective breakdowns in defensive key sectors we see strength into end September more as part of a distributive top building case (with best case overshooting towards 2210) instead of expecting a new high momentum breakout. Into next week we would buy the dips in cyclical themes. UBS 2

3 US Equity Market Update: Chart 4. ) S&P-500 versus Dow Jones Transport On a short-term basis, the selectivity in the US market is further increasing. The number of SPX stocks trading above their 20-day moving average (see page 14) is deteriorating, and in the outperforming Russell-2000 we have a small divergence forming in the Russell, which hit a new reaction high last week versus the deteriorating number of new 52-week highs in the broader market. Also the Dow Theory remains a negative factor, since the early August breakout to a new all-time high in the SPX was so far not confirmed by a tactical new high in the late June rally leg of the Dow Jones Transport. Chart 5. ) S&P-500 with NAAIM Exposure Index Chart 6. ) S&P-500 with CBOE Put/Call Ratio On the sentiment side we still have signals suggesting a short-term headwind, and even if we are wrong with our short-term view and the SPX starts a new breakout attempt, the elevated market sentiment should minimum cap the market on the upside. On the positioning side, the NAAIM exposure index is at a multi-year extreme. In the VIX index, we have a divergence forming versus the SPX. The SKEW/VIX (see page 13) ratio is at its multi-year extreme and the CBOE put/call ratio is still at a quite low reading. With this kind of sentiment frame, the risk/reward ratio for the US market is negative where even on a short-term basis we cannot rule out a negative surprise into next week before starting a new bounce into later September. UBS 3

4 US Equity Market Update: Selective Breakdowns in Defensives!! In June/July, we highlighted several times the constructive patterns that have been forming in the relation of cyclicals versus defensives. In recent weeks we have seen further outperformance of cyclicals, which has finally caused the ultimate breakout of a huge inverted head & shoulder bottom versus the defensive camp. From a trend perspective this is clearly bullish the overall market, and it is just further confirmation that the SPX is trading in wave 5 of a larger degree, which de facto is a new cyclical bull market. Having said that, tactically, the high momentum breakout in this spread was not solely based on the outperformance of cyclicals, where the selectivity has been increasing via energy stocks pulling back, whereas technology/semiconductors continued to outperform and financials have been gaining strength. The problem is that the weakness in defensives is not just a relative trade, since we see real breakdowns in utilities/healthcare and consumer staples sitting on the edge. So investors are losing real money, which sends out a completely different message on the SPX, where the weakness in the crowded defensives weighs, which via the increasing selectivity will cap the market on the upside going forward. Conclusion: Apart from the bullish trend theme, tactically the current sector setup is a potential threat for the SPX. On the back of the market starting to anticipate rising interest rates, we see defensives losing further ground, whereas financials are gaining relative momentum. However, in absolute terms financials and semiconductors are overbought and vulnerable for a breather. The problem is that if we see the outperforming financials/technology taking a breather, plus commodity themes facing headwind from the bouncing US dollar, accompanied by a breakdown in defensives, this makes the SPX vulnerable. So even short-term we cannot rule out seeing a negative surprise/sell-off in the SPX before later this week/next week; we see the market moving into another short-term buying opportunity. Chart 7. ) US Cyclicals versus US Defensives Chart 9. ) Dow Jones Utilities (DJU) Daily Chart Chart 8. ) US Healthcare Index (DRG) Daily Chart Chart 10. ) S&P Consumer Staples Daily Chart UBS 4

5 US Equity Market Update: Chart 11. ) US Banking Index (BKX) Daily Chart Banks and broker stocks are gaining momentum. Both the BKX and XBD are on the way to testing their pivotal late April high, which is a key level. The problem is that at least on a very short-term basis, financials are overbought so that a near-term pullback is likely before we see a real and very likely also a successful break of the April high, and therefore the break of the 2015 bear trend. Chart 12. ) US Semiconductor Index (SOX) Daily Chart The setup for semiconductors has not changed. Semiconductors continue to outperform but with an extension of some 18% to its 200-day moving average, the SOX index is massively overbought. With an intact divergence in our daily momentum work we still see the risk of a short-term pullback, which in the bigger picture we would see as just the beginning of a distributive top building case, where into later September we can expect further new highs, which nonetheless would bring us an even bigger divergence in our indicator work as a leading indicator for moving into a more important tactical top. Nonetheless, for aggressive traders we recommend buying the dips into potential weakness into next week. Chart 13. ) US Housing Sector (HGX) Daily Chart Continue to keep an eye on the housing sector. A break of 245 in the HGX would be short-term negative and imply that a bigger trading top is in place. UBS 5

6 Inter Market Update: US Bonds Are Sitting On the Edge Last week we highlighted the contracting cross-asset volatility in Equities, FX, gold and the US bond market. We continue to think that the US bond market as a key driver for the US dollar will be a key variable on the macro side for financial markets into later Q3 and into Q4. On Friday we saw a significant move higher in the US 10-Year Treasury yield, which is testing the upper end of a multi-week breakout resistance. Again, after the early July reversal we saw and continue to see the sideways trading action in the US 10-Year Treasury yield as the setup for another move higher in yields, which at least tactically would have far reaching consequences on the macro side. From a cyclical aspect, a break of 1.63% in the US 10-Year yield chart would imply higher yields into deeper Q4 towards 1.80% to 2.00%. More importantly, a break of 1.63% would also break the 2015 downtrend in yields!! In the bigger picture this would be ultimate confirmation that a major basing process in US yields is underway, so that after expecting another significant pull back in yields into later Q we would expect a big move higher in yields into H2 2017!! At least tactically, a breakout in yields we would see as the source for significantly increasing cross-asset volatility into Q4 via rising interest rate differentials versus Europe, and renewed US dollar strength. Thematically, a move higher in interest rates suggests further pressure in the crowded defensive sector themes, whereas the USDJPY and Japan should profit and outperform. Tactically, we would buy Japan where a break of the steep 2016 bear trend at 104 in the USDJPY would be the trigger for a short-term surprise into later September/early October. Chart 14. ) US 10-Year Treasury Yield Chart In the FX side, last week we highlighted the initial reversal in the DXY, which we saw as the basis for a tactical basing process. With the break of 95 in the DXY and selective breakouts in key EM pairs we get a first significant long signal in the DXY, which implies more US dollar strength into deeper/later September. As we said last week, tactically this is very important since we expect a litmus test of the July high at 97.60, which represents a medium-term inflation point in our cyclical model. Again, a break of would imply that a larger US dollar rally is underway, which would generally be headwind for commodities, gold and EMs. Chart 15. ) US 10-Year Treasury Yield with CBOE Bond Vola Index Chart 16. ) US/EU Interest Rate Differential versus EURUSD UBS 6

7 Inter Market Update: Chart 17. ) US Trade Weighted Dollar Index (DXY) Daily Chart As last week anticipated, the break of 95 generates a first important buy signal in the DXY. As the whole July pull back has been developing in a corrective a-b-c shape, we expect the current strength to be just the beginning of a more significant US Dollar rally, which makes a test of the pivotal July high at very likely into September. A stronger US Dollar suggests tactical headwind for commodities, gold and Emerging Markets. Chart 18. ) USDSGD Daily Chart We see initial breakouts in Asian/EM currency pairs. Generally, the size of the patterns in these pairs is significant, which is the main reason why we see a new US Dollar bounce leg as part of a bigger Dollar rally and not just as a tactical counter pattern. Chart 19. ) EURUSD Daily Chart After the recent reversal, the EURUSD is sitting on a first trading support at around to 1.11, which also represents the 200-day moving average. Intraday the EUR is oversold so we can see a rebound but all in all we think a serious test of 1.118/1.11 is just a question of time. Key support is the December trend support at 1.10, where a break would imply a re-test of the December low at around 1.06 would be underway. UBS 7

8 Inter Market Update: Chart 20. ) Gold Daily Chart Chart 21. ) XAG Daily Chart Chart 22. ) Gold Bugs Index (HUI) Daily Chart Gold Still Vulnerable... Last week, we warned about the current macro set up for gold, where a move higher in yields and a US Dollar bounce would clearly be tactical headwind for the yellow metal. On a very short-term basis gold as well as silver are looking a bit oversold. However, by anticipating more US Dollar strength into later September/early October we also expect the precious metals and the mining sector to remain vulnerable for more correction work before resuming the underlying bull cycle. In gold, the level of $1300 remains a key support. It is the 23% retracement of the December/July bull cycle and it is the trend support of the steep December bull trend. Over the next few weeks it is very likely to see a test of this level and also a break of $1300 would not really be a surprise. Keep in mind, in the bigger picture, the December bull is definitely too steep to be sustainable. In this context we would see the current correction in gold and gold mines just a normalization of the longterm momentum. Strategically, we are sticking to our long-term bull call on gold, silver and gold mines. Tactically, a break of $1300 would imply further weakness towards worst case $1250 into later September, where we have the next medium-term low projection in our cyclical model as the basis for a new bull leg into year end, where we expect gold to hit new highs. In silver, we expect to see a test of $18.00 to into later September. In the gold bugs index, a break of 237 would imply a move lower towards 216, which would be a very normal 38% retracement of the very steep 2016 bull cycle. Also here a potential late September tactical bottom would bring us just the first important higher low after completing the major August/December bottom. UBS 8

9 Asian Corner: Tactical Buy in Japan But Trend Remains Negative Into Q1! Statically, we have been bullish USDJPY and bullish Japan since summer 2012, where on the back of a major long-term low projection in our cyclical model, we expected the USDJPY to start a multi-year bull market. In our 2016 strategy we turned our bias to bearish and it was our view that Japan should follow the cyclical bear trend in global equities, so that on a 12 month basis (and against the overwhelming bullish consensus in the markets) we should see a negative surprise in Japan before starting another significant bull leg in later Q Tactically, the trigger for a break down in the Nikkei-225 we got via completing the major head & shoulder top formation in the USDJPY at 116, which we highlighted as the ultimate confirmation that a cyclical bear market in Japan is underway, and where the Nikkei turned into an underperformer market globally. In July both the Nikkie-225 and the USDJPY were extremely oversold. Last week, the USDJPY has successfully re-tested its July bottom at 100, which we see as the basis for a bounce and potential tactical surprise on the upside on the back of the current macro constellation. Again, on the macro side, historically, we have a very close correlation between the USDJPY versus gold and the US 10-year treasury. In March, the long-term trend breakout in gold (as confirmation that a new bull market is gold has started) was the ultimate bearish indication for USDJPY. Tactically, gold is in correction mode and we expect more correction work in gold into late September/early October on the back of a bouncing US Dollar and a potential move higher in US 10-year yields. Within this time window we have the chance to see a significant bounce in the USDJPY and therefore a tactical relative surprise in the Nikkei-225 on the upside. Keep in mind, the very steep bear trend in USDJPY comes in at around 104, which is not far away and where a break of this trend into later September is in our view very likely. With this move we Chart 23. ) Nikkei-225 Daily Chart should see the Nikkei minimum testing its pivotal late April high at 17614, which also represents the 2015 bear trend! Apart from a potential tactical positive surprise, the problem for Japan remains the long-term trend patterns in the market. After a tactical correction into late September/early October we see gold resuming its underlying bull trend and also US yields we see starting another significant pull back from a Q4 top into later Q1 before starting a more significant move higher. So correlation wise we still have the risk to see a tactical negative surprise in Japan into later Q1, which in the bigger context we would nonetheless see as a long-term buying opportunity for starting a new bull cycle into H Nonetheless, from a trading aspect we would buy USDJPY and Japan for a bounce into late September!! Chart 24. ) USDJPY Daily Chart Chart 25. ) Gold versus USDJPY (inverse) UBS 9

10 European Equity Market Update: Still Vulnerable into Next Week s Low Projection After hitting its mid-august reaction high at 3063, and on track with our cyclical roadmap, the Euro Stoxx is in pullback mode, where we expect more consolidation work into later this week/next week before starting a new bounce higher into later September. On the upside, 3063 is an important resistance, where a break would imply a test of the pivotal late April top at On the downside, we anticipate a test of 2900 to worst case 2810 into next week, which trading-wise would be a buying opportunity. On the sector front, the break of the 2011 underperformance trend of cyclicals versus defensives is a major game changer, which leaves our sector focus on buying the dips in cyclical themes. Chart 26.) Euro Stoxx-50 Daily Chart Euro Stoxx-50: The Euro Stoxx-50 effectively trades in neutral stance between its August 15 th reaction high at 3063 and its early August low at On a near-term basis we see the rebound of the last 5 sessions as a corrective countertrend move after having seen a first correction leg down. In this context, as well as following our cyclical roadmap, we expect to see a second corrective down leg into later this week and ideally into next week where we would favor Europe moving into our suggested minor trading low as the basis for another bounce higher into later September where we can expect to see a litmus test of the late April high at 3157, which more or less also represents the 201 cyclical down trend in Europe. Chart 27.) EU Cyclicals versus EU Defensives European Cyclicals versus EU Defensives: In Europe we have a very similar sector setup with the US. Over recent weeks we have seen a broader trend of cyclical outperformance led by basic resource, energy stocks, industrials, construction, chemicals, autos and technology. In July, we highlighted the oversold banking sector that completed a bearish wave 5 structure, so that also for banks we took a more constructive view against defensive sectors losing relative ground where the healthcare sector, in particular, has been losing real ground. Generally, with the sector trend of the recent weeks we got a big breakout signal in European cyclicals, which have broken their 2011 relative underperformance trend versus defensives. Keep in mind, it was a key call of our 2016 strategy to expect energy stocks and the mining sector to move into a major low, and if so this would give the cyclical camp a real relative push. Although tactically we can see pull backs in the overbought cyclicals (particularly into early Q4 and into later Q1), the break of the 2011 relative underperformance trend is a major game changer and bullish long-term. It suggests that sooner or later we will also see the Euro Stoxx-50 breaking its 2015 bear trend!! UBS 10

11 European Equity Market Update: Chart 28. ) FTSE-100 Daily Chart FTSE-100: After seeing initial weakness we expect to see more nearterm pulling back into ideally next week before starting another move higher into later September, where we can expect to see a re-test of the April 2015 high, which represents a secular breakout level in the UK market!! We have support at 6616 to Chart 29. ) DAX-30 Daily Chart DAX-30: The DAX continues to consolidate in a constructive manner where to represents an important support area. On the upside, the August 15 th reaction high at represents a key trading resistance. As long as the DAX trades below this level we can see more pulling back into later this week/next week where we see the market moving into its next minor low and tactical buying opportunity for moving higher into later September. On the downside, a break of would imply a shortterm negative surprise towards 10000, which would imply that a bounce into later September could be more part of a distributive top building process instead of seeing a new tactical breakout. Chart 30. ) Swiss Market Index Daily Chart Swiss Market Index: UBS 11

12 STOXX Europe 600 Index Sector Overview: UBS 12

13 Weekly Technical Indicators: (Source: Pinnacle Data, Datastream) Charts: Metastock S&P 500 with AAII Bullish Consensus (%) S&P 500 with AAII Bearish Consensus (%) S&P 500 with INVI Advisors Sentiment Bullish (%) S&P 500 with NAAIM Exposure Index S&P 500 with CBOE Equity Put/Call Ratio S&P 500 with CBOE SKEW/VIX Ratio UBS 13

14 Weekly Comment Weekly Technical Indicators: (Source: Pinnacle Data, Datastream) Charts: Metastock S&P 500 Stocks above 20 day moving average S&P 500 Stocks above 200 day moving average STOXX Europe 600 Stocks above 20 day moving average STOXX Europe 600 Stocks above 200 day moving average MSCI World and MSCI World Markets with Golden Cross (%) MSCI World Markets New 52-Week Highs UBS 14

15 Weekly Technical Indicators: (Source: Pinnacle Data, Datastream) Charts: Metastock S&P 500 with Break-Even Inflation Rate Gold with Break-Even Inflation Rate US Yield Curve versus US Bank Index (BKX)/S&P 500 Yield Difference Germany vs USA and EURUSD Relative Chart STOXX Europe 600 versus S&P 500 Relative Chart Nikkei 225 versus S&P 500 UBS 15

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However, it is important for you to note that should you make a deposit with UBS AG, Australia Branch in connection with the services UBS provides you, that deposit will not be covered by the provisions in the Banking Act 1959 (Cth) for the protection of depositors, as these provisions do not apply to foreign ADIs including UBS AG, Australia Branch. For example, depositors with foreign ADIs do not receive the benefit of the following protections: (i) Deposits are not covered by the financial claims scheme and are not guaranteed by the Australian Government; (ii) Deposits do not receive priority ahead of amounts owed to other creditors. This means that if a foreign ADI was unable to meet its obligations or suspends payment, its depositors in Australia would not receive priority for repayment of their deposits from the foreign ADI's assets in Australia; (iii) A foreign ADI is not required to hold assets in Australia to cover its deposit liabilities in Australia. This means that if the foreign ADI was unable to meet its obligations or suspends payment it is uncertain whether depositors would be able to access the full amount of their deposit. UBS Securities Australia Ltd is a subsidiary of UBS AG. However, it is not an authorised deposit-taking institution under the Banking Act 1959 (Cth). The obligations of UBS Securities Australia Ltd do not represent deposits or other liabilities of UBS AG, and UBS AG does not stand behind, support or guarantee UBS Securities Australia Ltd in any way. New Zealand These materials are distributed in New Zealand by UBS New Zealand Ltd. The information and recommendations in these Materials are provided for general information purposes only. To the extent that any such information or recommendations constitute financial advice, they do not take into account any person s particular financial situation or goals. We recommend that recipients seek advice specific to their circumstances from their financial adviser. Korea Distributed in Korea by UBS Securities Pte. Ltd., Seoul Branch. This document may have been edited or contributed to from time to time by affiliates of UBS Securities Pte. Ltd., Seoul Branch. India Prepared by UBS Securities India Private Ltd. (Corporate Identity Number U67120MH1996PTC097299) 2/F, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai (India) Phone: SEBI Registration Numbers: NSE (Capital Market Segment): INB , NSE (F&O Segment) INF , BSE (Capital Market Segment) INB Dubai These materials are distributed by UBS AG Dubai Branch (regulated by the DFSA) and are intended for Professional Clients only and are not for further distribution within the United Arab Emirates. Saudi Arabia These materials have been issued by UBS AG (and/or any of its subsidiaries, branches or affiliates), a public company limited by shares, incorporated in Switzerland with its registered offices at Aeschenvorstadt 1, CH-4051 Basel and Bahnhofstrasse 45, CH-8001 Zurich. This publication has been approved by UBS Saudi Arabia (a subsidiary of UBS AG), a Saudi closed joint stock company incorporated in the Kingdom of Saudi Arabia under commercial register number having its registered office at Tatweer Towers, P.O. Box 75724, Riyadh 11588, Kingdom of Saudi Arabia. UBS Saudi Arabia is authorized and regulated by the Capital Market Authority to conduct securities business under license number Singapore These materials are distributed in Singapore by UBS Securities Pte. Ltd or UBS AG Singapore Branch to institutional investors or accredited investors. Asian jurisdictions (excluding HK, Singapore & Japan) This material is not to be construed as a solicitation or an offer to buy or sell any securities, related financial instruments or services. Please also note that the products have not be intended for marketing to the public. Malaysia These materials are authorized to be distributed in Malaysia by UBS Securities Malaysia Sdn. Bhd ( x). 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These materials are being issued only to and/or is directed only at persons who are Sophisticated Investors within the meaning of the Israeli Securities Law and these materials must not be relied or acted upon by any other persons. Any securities mentioned herein that have not been registered under the Securities Act of 1933 may not be offered or sold in the United States except pursuant to an exception from the registration requirements of the Securities Act and applicable state securities laws and in such circumstances as may be permitted by applicable law. UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. UBS All rights reserved. UBS 17