Global Emerging Market Equity. New approaches to investing in emerging market equity. December 2016

Transcription

1 Global Emerging Market Equity New approaches to investing in emerging market equity December 216 This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information contained in this document is not intended as investment advice or recommendation. Non contractual document.

2 Contents Introduction 3 Strategic asset allocation 4 Tactical asset allocation 6 New approaches for investing in emerging markets 9 Smart Beta: Fundamental weighing 1 Smart Beta: Lower Volatility 11 Active fundamental stock selection: Emerging market opportunity 12 2 Non contractual document

3 Introduction We believe that the secular economic development theme in emerging markets remains robust, and we see profit growth as key in supporting further emerging market equity appreciation. In our view there are several potential catalysts for profit growth: Improvements in global growth Stabilisation in commodity sector profits Accelerating growth of local economies Valuation multiple expansion on rising expectations for profit growth Company (and investor) attention to Environment, Social and Governance considerations However, the recent US Presidential election has brought additional headwinds for the asset class, as proposed policies may harm the emerging market export engine. At the time of writing, specific asset classes, markets, subsectors and currencies have moved on anticipation of proposed changes. Looking at economic development trends and the outlook for company profits, we believe emerging markets continue to offer investment opportunities Today, we believe investors are being paid to take risk in emerging market equities. We believe asset allocators and active managers can be proactive in looking for attractive entry points and take advantage of perceived mispricing to capture the long-term investment potential of emerging markets. Investors may look to access emerging market beta, or alpha-seeking strategies within emerging markets. In this document we first discuss strategic and tactical asset allocation topics for investors to consider, then introduce investors to new approaches for investing in emerging markets. 3 Non contractual document

4 déc.-9 déc.-1 déc.-11 déc.-12 déc.-13 déc.-14 déc.-15 Strategic asset allocation We assess medium-term expected returns for emerging markets equity based on dividend yield, earnings per share growth, and market repricing. Figure 1 Expected 1-year nominal returns (Annualised, USD unhedged, %) The results suggest that, as at 3 September 216, emerging market equities expected returns appear attractive versus developed market equities, government bonds and cash (Figure 1). In a low interest-rate environment, emerging markets have also been offering an attractive dividend yield relative to developed market equities, indicating discipline in their cash flow management (Figure 2). This implies that emerging market beta should be a serious consideration for asset allocation. Global Emerging Markets Asia ex Japan Developed Markets Global listed real estate Local EM Debt US High Yield EUR High Yield US Corporate Credit US Government Bonds UK Gilts German Bunds Japan JGBs (1,) (1,6%),9%,6% 5,5% 5,1% 5,9% 8,8% 9, 6,9% 4,2% 2,7% 2,7% Expected returns and dividend yield may drive allocations into emerging market equity. (5%) 5% 1 15% Source: HSBC Global Asset Management as at 3 September 216. For illustrative purposes only. Any forecast, projection or targets where provided is indicative only and is not guaranteed in any way. Figure 2 Dividend yield (12m forward, %) 4,5% 4, 3,5% 3, 2,5% 2, Emerging Markets Developed Markets Source: IBES, MSCI, DataStream, HSBC Global Asset Management as at 3 September 216. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (France) accepts no liability for any failure to meet such forecast, projection or target. The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns. 4 Non contractual document

5 déc.- déc.-3 déc.-6 déc.-9 déc.-12 déc.-15 Volatility (12m) déc.-99 déc.-2 déc.-5 déc.-8 déc.-11 déc.-14 Adding emerging market equities to a diversified equity portfolio could positively impact the overall portfolio characteristics. Emerging markets have typically had about three percentage points higher volatility than developed markets (Figure 3). However, the correlation between emerging market and developed market returns has remained relatively low (Figure 4), which means an allocation to emerging markets may not significantly raise the overall portfolio volatility (Figure 5). Figure 4 Correlation of Emerging Markets versus Developed Markets (52 week, weekly returns,%) Emerging Markets: MSCI Daily TR Emerging Markets net USD Developed Markets: MSCI Daily TR World net USD Source: HSBC Global Asset Management, Bloomberg as at 3 September 216. For illustrative purposes. Figure 3 Volatility (12 month,%) Figure 5 Portfolio volatility for varying allocation to Emerging Markets 2 18% 16% 14% 12% Percent allocation to Emerging Markets Emerging Markets Developed Markets Emerging Markets: MSCI Daily TR Emerging Markets net USD Developed Markets: MSCI Daily TR World net USD Source: HSBC Global Asset Management, Bloomberg as at 3 September 216. For illustrative purposes. Portfolio consists of MSCI Daily TR Emerging Markets net and MSCI Daily TR World net. Source: HSBC Global Asset Management as at 3 September 216. Simulated data is shown for illustrative purposes only and does not constitute any investment recommendation in the above mentioned asset classes. Simulations are based on monthly index returns. Prospective investors should understand the assumptions and evaluate whether they are appropriate for their purposes. The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns. 5 Non contractual document

6 janv.-5 janv.-7 janv.-9 janv.-11 janv.-13 janv.-15 déc.-5 déc.-7 déc.-9 déc.-11 déc.-13 déc.-15 janv.-1 janv.-2 janv.-3 janv.-4 janv.-5 janv.-6 janv.-7 janv.-8 janv.-9 janv.-1 janv.-11 janv.-12 janv.-13 janv.-14 janv.-15 janv.-16 déc.-7 déc.-9 déc.-11 déc.-13 déc.-15 Tactical asset allocation Economic acceleration We have recently seen signs of economic acceleration, including an improvement in emerging market exports (Figure 9), which could set the stage for profit growth. In China, there have been signs of growth stabilisation in key economic indicators such as industrial production, retail sales, fixed asset investment and export volumes (Figure 1). These trends could alleviate fears of a hard landing. In Russia, recent manufacturing and GDP data suggest the economy is exiting recession (Figure 11), while manufacturing is stabilising in Brazil, with expectations for fiscal and political reform (Figure 12). Fundamentals could be signalling profit growth and resuming of share prices upward trend Figure 9 Emerging market exports (% change, year-on-year) Figure 1 Chinese economic trends (Year-on-year,%) 6 25% % % Value Volume Industrial Production Retail Sales Fixed Asset Investment (RHS) Export volume (RHS) Source: CPB Netherlands Bureau for Economic Policy Analysis as at 31 August 216. Source: CEIC, HSBC Global Asset Management as at 3 September 216. Figure 11 Russia manufacturing PMI Figure 12 Brazil manufacturing PMI 12% 8% 4% -4% -8% -12% % 2% 1% -1% -2% -3% -4% -5% Real GDP, qoq, % (LHS) Manufacturing PMI (RHS) Source: CEIC, HSBC Global Asset Management as at 3 September 216. Real GDP, qoq, % (LHS) Manufacturing PMI (RHS) Source: CEIC, HSBC Global Asset Management as at 3 September Non contractual document

7 China India Indonesia Malaysia Philippines Thailand Korea Taiwan mars-15 juin-15 sept.-15 déc.-15 mars-16 juin-16 sept.-16 mars-15 juin-15 sept.-15 déc.-15 mars-16 juin-16 sept.-16 Growth forecasts and monetary policy GDP growth and inflation forecasts have been steady in major countries (Figures 13 and 14). Should growth acceleration require support, there is scope for monetary policy easing. Current monetary policies are not particularly loose compared with pre-financial crisis levels (Figure 15). Further easing could provide a strong liquidity backdrop for equity markets. US Presidential election The recent US Presidential election has brought additional headwinds for the asset class, however, as proposed policies may harm the emerging market export engine, through onshoring manufacturing, imposition of tariffs, limitation of remittances or repatriation of foreign profits. It remains to be seen the extent to which these and other proposals are implemented, and this could generate market volatility as debate unfolds. At the time of writing, specific asset classes, markets, sub-sectors and currencies have moved on anticipation of proposed changes. Certainly, asset allocators and active managers can be proactive in looking for attractive entry points and take advantage of perceived mispricing to capture the long-term investment potential of emerging markets. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (France) accepts no liability for any failure to meet such forecast, projection or target. Figure GDP growth forecast (Year-on-year, %) Brazil Russia India China Source: HSBC Global Asset Management, Bloomberg as of November 216. Figure Inflation forecast (Year-on-year, %) Brazil Russia India China Source: HSBC Global Asset Management, Bloomberg as of November 216. Figure 15 Real policy rates 4% 3% 2% Current 1% -1% Source: HSBC Global Asset Management, Datastream as at 7 September Non contractual document

8 janv.-96 janv.-98 janv.- janv.-2 janv.-4 janv.-6 janv.-8 janv.-1 janv.-12 janv.-14 janv.-16 janv.-95 janv.-97 janv.-99 janv.-1 janv.-3 janv.-5 janv.-7 janv.-9 janv.-11 janv.-13 janv.-15 janv.-95 janv.-97 janv.-99 janv.-1 janv.-3 janv.-5 janv.-7 janv.-9 janv.-11 janv.-13 janv.-15 In making tactical allocations investors have traditionally considered the direction of oil prices, the strength of the US dollar, and the direction of interest rates when aiming to understand the potential direction of emerging market equities. We see these apparent headwinds as reflecting an historic perception rather than the current reality. Oil-price sensitivity There appears to be an historic positive relationship between the level of emerging market equities and the level of oil prices (Figure 6). Oil prices could be an indication of economic growth, with marginal demand largely arising from emerging markets. Certainly, a rise in oil and commodity prices could have a beneficial impact on overall profitability and index return, though the impact could be more muted than in the past, as energy and materials names now comprise only a 13.6% weighting within the MSCI Emerging Markets index. US Dollar sensitivity There appears to be an historic inverse relationship between the level of emerging markets and the level of the Dollar Index, possibly reflecting the historic sensitivity of external debt positions of emerging market countries to foreign exchange movements (Figure 7). As discussed in a recent brochure 1, external debt positions have fallen over time, and there has been a shift away from short-term debt towards medium to long-term debt. Foreign exchange reserves may offer a buffer for shortterm external debt. A strong US dollar may also be beneficial to emerging market exports. Figure 6 Oil prices (Brent Crude $/bbl) Figure 7 Dollar Index (DXY) MSCI Emerging Markets Brent Crude ($/bbl, RHS) Source: HSBC Global Asset Management, Bloomberg as at 3 September 216 MSCI Emerging Markets Dollar Index (DXY inverted, RHS) Source: HSBC Global Asset Management, Bloomberg as at 3 September 216. For illustrative purposes. Figure 8 Correlation with interest rate changes (MSCI Daily TR Emerging Markets Net vs US 1-Year Treasury yield) Direction of interest rates There is a relatively low correlation between emerging market returns and changes in US 1- year Treasury yields (Figure 8), averaging.2 over the past twenty years. The communications of the US Federal Reserve may contribute to this, as policy moves are wellsignalled.,8,6,4,2, -,2 -,4 -, Rising interest rates may also signal confidence in economic growth, which would be supportive of emerging market profits, though it may raise the discount rate for long duration assets. 1 Could emerging market equities regain momentum? HSBC Global Asset Management, November 216 Correlation US 1-Year Treasury yield (%, RHS) Source: HSBC Global Asset Management, Bloomberg as at 3 September 216. For illustrative purposes. The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns. 8 Non contractual document

9 New approaches to investing in emerging market Equity investment approaches Smart Beta / Alternative Weighting Schemes Passive Cap-Weighted Indexation Single Factor* Multi-Factor* Fundamental Weighting Lower Volatility Active Fundamental Stock Selection Pure Factor Global Multi-Factor Economic Scale New approaches to investing in emerging markets Investors looking to access emerging market beta, or alpha-seeking strategies within emerging markets, now have a number of compelling investment options to consider, spanning the risk spectrum. Of the equity investment approaches in the diagram above, a number stand out today as applicable to emerging markets. We highlight in the subsequent pages some of the new developments in emerging market investing. Passive Cap-Weighted Indexation A range of cost-effective country exchangetraded funds (ETFs) are now available for tactical allocation, including: Asia ex Japan: China, Korea, Taiwan, Malaysia, Indonesia EMEA: Russia, Turkey, South Africa Latin America: Brazil, Mexico Smart Beta: Fundamental weighting Active Fundamental Stock Selection Typical stock selection strategies aim to identify significant mispricing within the market. Active investment strategies now seek to incorporate: Environmental, Social and Governance (ESG) considerations in investment decision-making, as such factors can have a material effect on a company s fundamental outlook Carbon exposure (CO2 emissions) and carbon intensity (emissions per unit revenue), as companies face an industrial shift to a low carbon economy and the risk of regulation under carbon pricing scenarios Beyond the more familiar emerging markets, investors could consider the Frontier Markets asset class which comprises countries in earlier stages of economic development. These countries tend to have lower GDP/capita, lower levels of infrastructure investment, and less mature institutions. Alternative weighting schemes, or Smart Beta, seek to deliver excess returns over market capitalisation-weighted indexation, by taking advantage of excess volatility in markets. Fundamentally-weighted strategies can be wellpositioned as a fulfilment option for a core emerging market equity allocation. Smart Beta: Lower volatility Investing in emerging markets comes with volatility. A lower volatility approach provides a way to accommodate this volatility, and it could be a viable alternative to higher beta emerging market strategies. * The majority of client interest is currently for factor and multi-factor strategies in global, World ex US and US equity. That said, we do have the capability to mange these strategies in emerging markets. 9 Non contractual document

10 janv.-5 janv.-7 janv.-9 janv.-11 janv.-13 janv.-15 Cumulative return Smart Beta: Fundamental weighting Approach A fundamentally-weighted strategy can provide investors with broad emerging market equity exposure. As an example, the HSBC Economic Scale Index (ESI) strategy weights companies based on their economic footprint, that is, their contribution to the global economy, as measured by Gross National Product (GNP), or Value Added. In contrast to traditional market capitalisation weighted indices (MSCI All Country World), the weights for developed and emerging markets differ for an alternative weighting scheme (HSBC ESI Worldwide), as it puts a higher emphasis on emerging markets (Figure 16). Weighting companies in proportion to their economic footprint, rather than price, helps to avoid the performance drag associated with systematically overweighting overpriced shares and underweighting underpriced shares. Rebalancing Rebalancing can also be a key driver of performance in Smart Beta strategies. Figure 16 Emerging market weights % 9 Developed markets HSBC ESI Worldwide Source: HSBC Global Asset Management, MSCI as at 3 June 216. Allocation is as at the date indicated, may not represent current or future allocation and is subject to change without prior notice. Table A: Value of Rebalancing 29% 1 Emerging markets MSCI All Country World Overall excess return Potential rebalancing Alpha' To demonstrate the value of rebalancing, portfolio returns can be decomposed into the sensitivity to the styles/factors identified by Fama and French. The alpha not attributed to these styles/factors can be associated with rebalancing. Rebalancing can make a significant contribution to the excess performance in emerging markets, with relatively little exposure or sensitivity to small cap and value factors (Table A). This potential for excess return from rebalancing increases with the volatility or noise of the underlying market. Combination with active strategies As a core equity allocation, a fundamentally weighted strategy can be blended with an active strategy. As an example, a base portfolio of 5 core Developed Markets and 5 high conviction active emerging market exposure could be compared to a blended portfolio including an allocation to a fundamentallyweighted strategy. At a portfolio level, the allocation to Smart Beta adds alpha at an absolute level over a 1-year period, while reducing risk (annualised volatility) from 2.1% to 19.6% (Figure 17). Figure 17 Blending a core fundamentally-weighted strategy with an active manager Base: 5 MSCI World index, 5 HSBC GIF Global Emerging Markets Equity; With allocation to Smart Beta: 5 MSCI World index, 3 HSBC GIF Global Emerging Markets Equity, 2 HSBC ESI Emerging Markets. Source: Euromoney, using monthly returns in USD with gross income re-invested from 31 Jan Jul 216. Market beta Smallcap beta Value beta Tracking error HSBC ESI Emerging Markets 3.67% 3.42% HSBC ESI Worldwide 1.79% 1.22% % HSBC ESI World 1.47% % Base With allocation to Smart Beta The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns. Index data prior to 15 June 212 is back-tested (simulated) data calculated by the independent calculation agent, Euromoney Indices. Data subsequent to the Index launch date has been calculated daily by Euromoney Indices. Past performance and back-tested (simulated) data are not a reliable indication of future returns. Back-tested performance results have many inherent limitations and were achieved with the benefit of hindsight by means of a retrospective application of the HSBC Economic Scale Index rules-based methodology to determine the appropriate weightings. The results do not represent the results of actual trading using client assets and as such do not include any dealing costs that may be incurred by funds tracking an index. No representation is being made that the Index will or is likely to achieve results similar to those shown. In fact, there are frequently sharp differences between back tested performance results and actual results subsequently achieved. The data is supplemental to the GIPS compliant presentation at the end of this material. Source: Datastream, data (using weekly total returns in GBP with gross dividends re-invested) from 4th July 21 to 3 March Non contractual document

11 Smart Beta: Lower Volatility Investors allocating to emerging markets may often consider core strategies, aiming for outperformance. As an alternative, a lower volatility strategy could be an attractive proposition, given the higher volatility of emerging market equities and the historic return characteristics of the MSCI Emerging Markets Minimum Volatility index. Looking back at historic performance compared to the MSCI Emerging Market index, the MSCI Emerging Markets Minimum Volatility index outperformed as the tech bubble burst, but generally lagged during the multi-year bull run, particularly in the closing stages. Since the Global Financial Crisis unfolded, the Minimum Volatility index outperformed, then lagged the rebound on a one-year basis but began to outperform on a trailing three-year basis from September 28 onwards (Figures 18 and 19). As the global economy began to recover, there has been a period of heightened volatility and the Minimum Volatility index has typically outperformed the standard index. Investing in emerging markets comes with volatility. A lower volatility approach provides a way to accommodate this volatility and offers s a viable alternative to higher beta emerging market strategies. Figure 18 Minimum Volatility performance difference (One-year returns) Typical characteristics of lower volatility investing In general, lower volatility approaches aim to: 1. Offer a smoother performance pattern Can lend higher confidence in funding obligations and liabilities Aim to help soften the impact of equity on overall portfolio risk or Profit and Loss statement Can allow or balance a tactical allocation to more aggressive, higher volatility strategies 2. Offer lower drawdowns Can require less capital appreciation to rebuild balances May provide the capacity to stay invested with less likelihood of triggering a derisking decision 3. Deliver better risk-adjusted returns May appeal to investors with strict risk budgets who appreciate more return for the same level of risk assumed Investors who need to hold internal capital against risk weighted assets could find additional capital efficiency if risk-adjusted returns are increased Figure 19 Minimum Volatility performance difference (Three-year annualised returns) % % % One-year return difference MSCI Daily TR Emerging Markets Net USD (RHS) Three-year annualised return difference MSCI Daily TR Emerging Markets Net USD (RHS) MSCI Emerging Markets Minimum Volatility less MSCI Emerging Markets Source: HSBC Global Asset Management, Bloomberg as at 3 September 216. Data shown is gross and the effects of commission, fees and other charges will reduce the overall return. MSCI Emerging Markets Minimum Volatility less MSCI Emerging Markets Source: HSBC Global Asset Management, Bloomberg as at 3 September 216. Data shown is gross and the effects of commission, fees and other charges will reduce the overall return. The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns. 11 Non contractual document

12 EBIT/Enterprise value Price-to-Book (x) Active fundamental stock selection: Emerging market opportunity While emerging market beta is clearly attractive, we see a clear opportunity for active managers to add value through stock selection. The breadth of investment opportunities within emerging markets is advantageous: the MSCI Emerging Markets index contains over 8 names across 23 countries and eleven sectors, allowing managers to reflect relative preferences (Figure 2). Ex-post, the dispersion of one-year returns confirms that stock selection has the potential to add value (Figure 21). Today we see a dispersion in the relationship between Profitability and Valuation (Figures 22 and 23), indicating a potential investment opportunity that could be confirmed through proprietary fundamental research. As discussed in one of our recent brochures 4, dispersion is seen also in the ESG profile, carbon exposure and carbon intensity. 4 Could emerging market equities regain momentum? HSBC Global Asset Management, November 216 Figure 2 Stock selection opportunity (Country-Sector exposure combinations) China Korea Taiwan Philippines Thailand Malaysia Indonesia India Russia Turkey South Africa Poland Czech Republic Hungary Greece Egypt UAE Qatar Brazil Mexico Chile Peru Colombia Number of stocks Consumer Discretionary Industrials Materials Energy Financials Information Technology Consumer Staples Health Care Telecommunication Services Utilities Real Estate Source: HSBC Global Asset Management, MSCI, as at 3 September 216. Figure 21 Dispersion in stock returns (Individual stock one-year return,%) Source: HSBC Global Asset Management as of 3 September 216. Figure 22 Dispersion in Profitability-Valuation (Return on Invested Capital and EBIT Yield,%) 3 Figure 23 Dispersion in Profitability-Valuation (Return on Equity and Price-to-Book) Return on Invested Capital (%) Return on Equity (%) Source: HSBC Global Asset Management as of 3 September 216. Source: HSBC Global Asset Management as of 3 September 216. The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns. 12 Non contractual document

13 Conclusion We believe that the investment thesis for emerging market equities remains intact and investors are being paid to take risk in the asset class. We have shown that in our opinion emerging market equities offer attractive expected returns and dividend yield. Additionally, adding emerging market equities to a diversified equity portfolio could positively impact the overall portfolio characteristics, as the correlation with developed market equity has remained relatively low. We believe there are several potential considerations for tactical allocations: Beneficial impact from oil price increases A strong US Dollar may be positive for exports Low correlation between emerging market returns and changes in US 1-year Treasury yields, may signal less sensitivity to interest rates As emerging market equity investing is developing, with new approaches arising, we see both alpha and beta opportunities for asset managers. Capturing this investment potential of emerging markets requires robust investment solutions. HSBC Global Asset Management offers a breadth of equity investment capabilities that are differentiated by design and tailored to deliver clients investment objectives. Contacts Client Management Tel: +33 () client.services-am@hsbc.fr 13 Non contractual document

14 Important information This document is distributed by HSBC Global Asset Management (France) and is only intended for professional investors as defined by MiFID. The information contained herein is subject to change without notice. All non-authorised reproduction or use of this commentary and analysis will be the responsibility of the user and will be likely to lead to legal proceedings. This document has no contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management on the markets, according to the information available to date. They do not constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global Asset Management (France) will not be held responsible for any investment or disinvestment decision taken on the basis of the commentary and/or analysis in this document. It is important to remember that the value of investments and any income from them can go down as well as up and is not guaranteed. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in established markets. Fluctuations in the rate of exchange of currencies may have a significant impact on performance. The value of the underlying assets are strongly affected by interest rate fluctuations and by changes in the credit ratings of the underlying issuer of the assets. All data from HSBC Global Asset Management unless otherwise specified. Any third party information has been obtained from sources we believe to be reliable, but which we have not independently verified. Past performance is not a guide to future performance. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an as is basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the MSCI Parties ) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. ( Important information for Luxembourg investors: HSBC entities in Luxembourg are regulated and authorised by the Commission de Surveillance du Secteur Financier (CSSF). Important information for Swiss investors: This document is intended exclusively towards qualified investors in the meaning of Art. 1 para 3, 3bis and 3ter of the Federal Collective Investment Schemes Act (CISA). HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. The above document has been produced by HSBC Global Asset Management (France) and has been approved for distribution/issue by the following entity: HSBC Global Asset Management (France) RCS Nanterre. Portfolio management company authorised by the French regulatory authority AMF (no. GP9926) with capital of euros. Postal address: Paris cedex 8, France. Offices: Immeuble Coeur Défense Tour A - Etage 21, 11, esplanade du Général de Gaulle Courbevoie - La Défense 4 (Website: HSBC Global Asset Management (Switzerland) Limited Bederstrasse 49, P.O. Box, CH-827 Zurich, Switzerland (Website: Copyright 216. HSBC Global Asset Management (France). All rights reserved. Updated in December 216. AMFR_EXT_628_ Non contractual document