Emotional stress test for underweighted investors?

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1 Emotional stress test for underweighted investors? No new world: Peak in ifo growth optimism urges caution. In past cycles over the last 20 years, the reward/risk ratio for equities has deteriorated at an upper turning point in the growth expectations. Overall, the leading indicators point to a slowdown in the growth dynamic looking to KEY VIEWS & RECOMMENDATIONS Index targets End 2010 STOXX Europe EURO STOXX DAX 6000 MDAX 7800 S&P Topix 880 Reporting season: Positive interim track record for Germany. In July, the German equity index reported positive earnings revisions for the index earnings estimates for 2010 and In the other large EMU countries, the negative revisions predominate. Outlook: Bet on the expected direction of the leading indicators. Falling leading indicators mean a headwind for the equity market and argue for a sideways move in 2H10. The equity market is currently trading near the upper edge of the sideways movement. STOXX sectors: Predominantly negative earnings revisions. Since the beginning of the 2Q10 earnings reporting, the earnings expectations were raised in only two sectors but reduced in 17 sectors. 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 underweight underweight neutral underweight neutral neutral neutral Hedge within the defensives: Firmer EUR supports Telecom versus Food & Beverage. The relative performance of Telecom/Food & Beverage is closely correlated at the moment with the EUR development. THE EQUITY MARKET ONLY RARELY POSTED STRONG GAINS "IMMEDIATELY" AFTER A HIGH IN THE BUSINESS EXPECTATIONS Euro STOXX 50 and ifo growth expectations SECTOR-RECOMMENDATIONS Western Europe (vs. STOXX Europe 600) Chemicals Oil & Gas Telecommunications Travel & Leisure Utilities Banks Basic Resources Financial Services Retail overweight underweight Source: UniCredit Research ifo business climate - subindex expectations Euro STOXX 50 (rs) Dr. Tammo Greetfeld, Equity Strategist (UniCredit Bank) tammo.greetfeld@unicreditgroup.de Christian Stocker, CEFA (UniCredit Bank) christian.stocker@unicreditgroup.de Source: Reuters, Thomson Datastream, UniCredit Research UniCredit Research page 1 See last pages for disclaimer.

2 Positive impulse from the reporting season is running out The big picture: Peak in ifo growth optimism urges caution. From our standpoint, the key question an investor should answer for himself is: How probable is it that the ifo growth expectations will continue to trend clearly higher over the next 3-6 months? As we see it, a falling trend is probable (waning impulses from the inventory cycle, end of fiscal support measures, more restrictive fiscal policy in many countries looking to 2011, slow down in order intake in 2H10). The higher the level of the growth expectations, the more hopes are already priced in, and the more vulnerable the equity market becomes to disappointments (and vice versa at lower turning points). For a complete picture, all factors naturally have to be included (especially the trend in long term bond yields and the correlation between equity market and bond market performance). Above and beyond that, every cycle has of course special factors that can overshadow the impact of direction changes in the growth expectations and under certain circumstances dominate or amplify them. In this cycle, the low valuation is a positive standout, while the historically unprecedented low scope of governments and central banks for economic counter-steering is a negative standout (see dated 30 July). On balance, we think the rapid continuation of the share price rally and the emergence of a new uptrend is improbable. The revisions of the earnings estimates paint a mixed picture. In the last two weeks, the equity markets have reacted positively to the reporting season. The vast majority of the companies of the S&P 500 and the Euro STOXX 50 will have reported by the end of this week (S&P 500: about 85% of companies, Euro STOXX 50 72% of companies). As expected, many company reports were very positive. The table reflects the current status of the revisions of the index earnings estimates (position at the end of July compared to the previous month) and the revisions since the beginning of the year (i.e. compared to the earnings estimate at the end of December 2009). Germany is the only large national equity market where the earnings estimates were revised up in recent weeks. On the other equity markets, the estimates for both 2010 and 2011 were revised down. As a result, the diverging revisions trend of the earnings estimates in the euro zone continues (see here also the Strategy Special dated 22 July). For comparison: For the S&P 500, the earnings estimates for 2010 and 2011 were also lowered slightly and also for the Euro STOXX 50. EARNINGS AND VALUATION IN COMPARISON (I/B/E/S) Earnings 2010 Change since Dec 2009 Change since June 2010 Earnings 2011 MSCI Germany MSCI France MSCI Italy MSCI Spain 11.2% 0.7% -5.7% -3.1% 3.5% -0.1% -0.1% -0.3% Change since 4.6% -1.4% -6.5% -6.7% Dec 2009 Change since 0.6% -1.2% -0.2% -0.8% June 2010 P/E P/E A SLOWING OF THE GROWTH DYNAMIC IN THE USA WILL ALSO BE FELT IN GERMANY Leading indicators of the US and Germany Germany: new foreign orders (% change yoy) US: ISM Manufacturing Industries (3M lead, rs) UniCredit Research page 2 See last pages for disclaimer.

3 CHINA: MONETARY INDICATORS POINT TO A COMING LOWER GROWTH DYNAMIC China: money supply M1 and Chinese imports market confidence in a positive conclusion of the reform process? Can a bank stress test resolve the problem of sovereign debt and can "a lot of money" (the EUR 750bn EFSF) restore competitiveness in an emergency? In our assessment, the possibility of a renewed escalation of the tensions in EMU remains one of the central risk factors for the equity market in the second half of the year Positioning: We have been underweighted in equities since 28 April and are maintaining this positioning. Our sector allocation has a defensive bias (see following 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 China: imports (12M-sum, % change yoy) China: money supply M1 (% change yoy, shifted by 9M, rs) S 10 5 DATASTREAM Bottom line: We are near the upper edge of the range of the expected sideways move of the coming months. Falling leading indicators will be a major strain for the equity market in the course of 3Q. Outlook: Sideways move, no new uptrend. We integrate the current developments in the equity market environment as follows into our strategic picture: Dr. Tammo Greetfeld, Equity Strategist (UniCredit Bank) tammo.greetfeld@unicreditgroup.de Economy: Given the described situation overshoot of the growth dynamic in the leading indicators one can act in at least two ways: (1) Some commentators are already focusing on the possible and (they expect) ultimately limited slowdown in the growth dynamic and are concentrating on an immediate and sustained continuation of the uptrend. (2) Another approach is to focus for the time being on the change in direction of the leading indicators (from "rising" to "falling") and therefore to become more cautious and to look for clearer indications for a stabilization/ improvement in the growth outlook. This is our approach. At this juncture, a glance back at 2Q of last year is interesting: At the time, there was much debate over the importance of the "green-shoots" for the equity market outlook: the change at the time in the direction of the leading indicators from "falling" to "rising". At the time, some commentators focused in their assessment on the fact that structurally negative factors ("deleveraging") would ultimately lead to a recovery that would be hardly material ("green shoots will become brown shoots soon"). We all know how the story then played out. EMU risks: Some commentators think the EMU risks have been overcome, which would permit the equity market (and the equity investor) to "return to normalcy". Should investors really assess the EMU risks as "overcome" given the unchanged loss of competitiveness of individual countries and only initial moves to lower government deficits to a sustainable level? Given the long time required for the reform process, is it advisable to bet on unshakable UniCredit Research page 3 See last pages for disclaimer.

4 Sector Strategy The 2Q10 earnings season has brought positive impulses primarily for cyclicals and in some segments also for financials. The earnings expectations were in some cases clearly exceeded. For that reason, it is especially interesting that since the beginning of the earnings reporting the earnings expectations for 2011 have been raised in only two sectors (Automobiles & Parts, Industrial Goods & Services); in the remaining 17 sectors, in contrast, they have been reduced. We continue to assume that the peak in the earnings dynamic has been reached with the 2Q10 reporting and that in the course of the second half of the year the appeal of defensives will increase considerably. In the short term, the risk indicators (e.g. spread between Bunds/EMU Sovereigns or also the EUR/USD development) still argue for a solid equity market environment, which in our view should, however, be temporary and will not usher in a new and sustained uptrend. Since the impulses for clear trends are currently lacking, we present in this issue of the two hedging possibilities within defensive sectors and in the commodity sector, which also suit with our sector strategy: In the environment of a firmer EUR, Telecom will continue to outperform Food & Beverage; the peak in the global leading economic indicators points to an outperformance of Oil & Gas versus Basic Resources. The STOXX Europe 600 sectors Chemicals, Oil & Gas, Telecom and Utilities remain overweighted. Alongside Construction & Materials, we are underweighting Basic Resources as well as Retail. The 2Q10 earnings reporting is no longer bringing an increase of the earnings expectations in fact the negative revisions predominate. The 2Q10 earnings reporting now winding down was, as expected, predominantly positive; the high expectations were in some cases even clearly exceeded. That is the case primarily in the automotive sector and at manufacturers of capital goods (Industrial Goods & Services). It is interesting in this context that since the beginning of the 2Q10 earnings reporting in the USA with Alcoa (12 July) the negative revisions in the 2011 earnings expectations have predominated (see also table and chart). It was only for Automobiles & Parts as well as Industrial Goods & Services that the earnings expectations for 2011 were raised; for the remaining 17 STOXX Europe sectors, in contrast, a slowing earnings momentum is evident. This naturally also resulted from a higher base for 2010, even though the signs for the slowing dynamic we expect in the earnings expectations because of the weakening leading indicators in 2H10 are growing. In this environment, the appeal of defensives will (as we have already described on several occasions) rise again. 2Q10 EARNINGS SEASON: RISING SHARE PRICES, BUT PREDOMINATLY FALLING EXPECTATIONS FOR 2011 STOXX Europe 600 sector Performance since 12 July 2010 (%) Change of the earnings expectations for 2011 since 12 July 2010 (%) Automobiles & Parts Industrial Gds. & Services Technology Telecom Pers. & Household Goods Insurance Retail Chemicals Financial Services Food & Beverage Media Travel & Leisure STOXX Europe Utilities Construction & Materials Banks Health Care Oil & Gas Basic Resources Real Estate Despite the modest revisions picture, share price performance over the past three weeks was predominantly positive. A continuation of the positive performance cannot be extrapolated from the revisions picture. SLOWING EARNINGS DYNAMIC FOR 2011 POINTS TO LACKING SUSTAINABILITY OF RISING SHARE PRICES STOXX Europe sectors: performance and change of the earnings expectations 2011E since 12 July 2010 Revisions (%) 8 6 AUT 4 IGS 2 TEC RTL TLC INS 0 TRL FBV PHH CHM MED UTL FSV -2 OIL CON HTC BNK -4 BRS RES Performance (%) AUT = Automobiles & Parts, BNK = Banks, BRS = Basic Resources, CHM = Chemicals, CNS = Construction & Materials, FSV = Financial Services, FBV = Food & Beverage, HTC = Health Care, IGS = Ind. Goods & Services, INS = Insurance, MED = Media, OIL = Oil & Gas, PHH = Pers. & Household Gds., RET = Retail, TEC = Technology, TEL = Telecom, TRL = Travel & Leisure, UTL = Utilities UniCredit Research page 4 See last pages for disclaimer.

5 Hedge within the defensives: Firmer EUR favors Telecom over Food & Beverage. Food & Beverage has ranked among the strongest outperformers over long stretches in 2010, while the Telecom sector has so far turned in only a marginal outperformance in Based on the earnings estimates for 2011, the expected growth rates for Food & Beverage (+11.9%) are substantially higher than for Telecom (+3.9%). The valuation of the Telecom sector is, in contrast, much lower, also compared to its own history (P/E 2011E Telecom 9.9x, Food & Beverage 13.9x). In the wake of the 2Q10 earnings reporting, the Revisions Ratio for Telecom has become more positive than for Food & Beverage, which in conjunction with the valuation is a clear support for Telecom. Basically, a hedge within defensive sectors is difficult, especially since we expect this sector group to outperform overall in 2H10. Both sectors have solid fundamentals; with respect to the low valuation and resulting catch-up potential also within the defensives, we prefer Telecom over Food & Beverage. Above all if the markets continue to be without a trend, the bet for Telecom will likely pay off in the environment of a firmer EUR. In our sector allocation we have overweighted Telecom; Food & Beverage has a neutral weighting. FIRMER EUR: TELECOM OUTPERFORMS FOOD & BEVERAGE EUR/USD and relative performance Telecom/Food & Beverage THE VALUATION ARGUES TO PREFER TELECOM OVER FOOD & BEVERAGE P/E of Telecom and Food & Beverage in comparison (based on I/B/E/S 12M fwd earnings expectations) NOV DEZ JAN FEB MAR APR MAI JUN Relative performance STOXX E Telecom / STOXX E Food & Bev. JUL AUG EUR / USD (r.s.) STOXX Europe Telecom STOXX Europe Food & Beverage The Telecom sector is receiving additional support compared to Food & Beverage from the firmer euro. Since the end of November 2009, the relative performance of Telecom/Food & Beverage has been closely correlated with the EUR/USD. One reason for this is the high 64.8% weight of non-euro companies in Food & Beverage compared to 46.1% in Telecom. The EUR development therefore influences Food & Beverage much more strongly than Telecom. Above all the CHF, which has also been very strong against the EUR since the end of 2009, influences this development strongly solely via Nestle with a weight of 35% in Food & Beverage. Hedge within the commodity sector: On falling leading indicators, Oil & Gas profits compared to Basic Resources. Oil & Gas must be considered a strongly defensive commodity sector. In phases of falling leading indicators, the oil sector regularly outperforms. The backdrop to this outperformance is that while the demand for energy also slows in economic upswing phases, because of the high share in demand from households and transportation, the demand for energy is, however, considerably more stable than demand in the economy as a whole. This phenomenon is very pronounced above all compared to one of the most cyclical sectors Basic Resources: In an environment of falling global leasing indicators, Oil & Gas clearly outperforms Basic Resources. In our sector allocation, we are overweighting STOXX Europe Oil & Gas and underweighting STOXX Europe Basic Resources. UniCredit Research page 5 See last pages for disclaimer.

6 FALLING LEADING INDICATORS: OIL & GAS OUTPERFORMS BASIC RESOURCES OECD G7 leading indicator and relative performance Oil & Gas/Basic Resources Relative performance STOXX E Basic Resources / Oil & Gas OECD G7 Leading Indicator, change vs. 1Y (r.s.) -15 Christian Stocker, CEFA (UniCredit Bank) christian.stocker@unicreditgroup.de UniCredit Research page 6 See last pages for disclaimer.

7 SECTOR ALLOCATION WESTERN EUROPE STOXX Europe 600 sector Benchmark weight (%) Portfolio weight over + / underweighted (%) Portfolio position (%) Shares with a Buy rating (STOXX Europe 600 universe) Automobiles & Parts BMW, Daimler, Fiat, Michelin, Pirelli, Volkswagen Pref. Banks Banca Popolare Emilia Romagna, Banco Santander, Barclays, BBVA, Credit Suisse, HSBC, Royal Bank of Scotland, UBI Banca Basic Resources ENRC, Kazakhmys, NORSK HYDRO Chemicals Akzo Nobel, BASF SE, Clariant, DSM, Lanxess, Symrise Construction & Materials Financial Services Deutsche Börse AG Food & Beverage Associated British Food, Carlsberg Breweries, Heineken, Nestlé Health Care Fresenius SE, Rhön-Klinikum, STADA Industrial Goods & Services Atlantia, Deutsche Post DHL, Finmeccanica, Fraport, GEA Group, Siemens Insurance Allianz, Hannover Re, Munich Re Media Oil & Gas Dragon Oil, Total Pers. & Household Goods Beiersdorf, L'Oréal, LVMH, Philips, Richemont Real Estate IMMOFINANZ Retail Ahold, Celesio, METRO, Tesco Technology AIXTRON, ASML, Infineon, SAP, United Internet Telecommunications KPN, Telecom Italia, Telefonica, Vodafone Travel & Leisure bwin Utilities E.ON, EDF, EDP, Fortum, GDF Suez, Iberdrola Renovables, Red Electrica, RWE, Terna Source: STOXX Ltd., UniCredit Research UniCredit Research page 7 See last pages for disclaimer.

8 STOXX 600 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 12.7% 14.3% 51.2% 31.6% 19.4% -18.7% % Banks 3.4% 13.6% 129.2% 39.5% 6.4% -2.1% 5.5% % Basic Resources 3.4% 5.3% 117.9% 35.3% 7.8% -8.2% -1.8% % Chemicals 2.0% 6.9% 33.8% 11.7% 8.3% 7.7% -2.7% % Construction & Materials -7.1% -3.4% 8.9% 19.2% 1.8% 3.4% -7.9% % Financial Services 3.3% 4.5% -34.6% 21.6% 6.2% 4.7% -3.8% % Food & Beverage 9.4% 4.3% 9.5% 11.4% 6.5% 3.3% -2.9% % Health Care -0.9% -1.5% 11.2% 5.8% 4.0% -4.4% -6.0% % Industrial Goods 15.8% 7.5% 43.8% 17.6% 11.0% 14.2% -4.8% % Insurance 2.6% 9.6% 11.9% 15.7% 3.3% -1.0% 4.8% % Media 8.7% 3.7% 5.7% 10.7% 6.9% 11.0% -4.6% % Oil & Gas -7.1% -4.9% 35.8% 15.7% 3.1% -0.2% -7.9% % Pers. & Household Goods 14.1% 7.1% 28.4% 12.4% 8.6% 20.1% -2.5% % Real Estate 2.0% 8.2% 6.0% 3.4% 4.7% -2.7% -4.7% % Retail 8.1% 0.4% 14.4% 12.4% 5.2% 2.2% -6.4% % Technology 5.9% -3.9% 52.2% 23.9% -0.4% -5.3% -4.1% % Telecommunications 1.9% 9.8% 0.9% 3.9% 2.8% 6.3% 6.0% % Travel & Leisure 15.4% 3.1% 43.7% 36.1% 8.0% 2.5% -6.9% % Utilities -7.8% -1.4% -4.2% 2.5% -1.8% -1.3% -0.8% % STOXX Europe % 4.6% 33.7% 18.1% 5.4% 4.1% -1.8% % 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 8 See last pages for disclaimer.

9 SECTORS: STOXX 600 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 ES A34 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 HSBC Buy GB Banks Lloyds Banking Group Sell GB Banks National Bank of Greece Sell GRS Banks Piraeus Bank Sell GRS Banks Raiffeisen International Sell 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 DE Chemicals Clariant Buy CH Chemicals DSM Buy NL Chemicals Lanxess Buy DE Chemicals Symrise Buy DE000SYM9999 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 Rhön-Klinikum Buy DE Health Care STADA Buy DE 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 GEA Group Buy DE Ind. Goods & Services SGL Group Sell DE Ind. Goods & Services Siemens Buy DE Ind. Goods & Services ThyssenKrupp Sell DE Insurance Allianz Buy DE Insurance Hannover Re Buy DE Insurance Munich Re Buy DE Oil & Gas Dragon Oil Buy IE Oil & Gas REC Sell NO Oil & Gas SolarWorld Sell DE Oil & Gas Total Buy FR Pers. & Household Goods Beiersdorf Buy DE 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 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 United Internet Buy DE *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 SECTORS: STOXX 600 COMPANIES COVERED BY UNICREDIT RESEARCH WITH A BUY OR SELL RATING* (CONTINUED) Sector Company Rating ISIN Telecommunications KPN Buy NL Telecommunications Telecom Italia Buy IT Telecommunications Telefonica Buy ES E18 Telecommunications Vodafone Buy GB00B16GWD56 Travel & Leisure bwin Buy AT Utilities E.ON Buy DE000ENAG999 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 10 See last pages for disclaimer.

11 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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Conflicts of interest arising are managed by legal and physical and non-physical barriers (collectively referred to as Chinese Walls ) designed to restrict the flow of information between one area/department 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 and another. In particular, Investment Banking units, including corporate finance, capital market activities, financial advisory and other capital raising activities, are segregated by physical and non-physical boundaries from Markets Units, as well as the research department. In the case of equities execution by UniCredit Bank AG Milan Branch, other than as a matter of client facilitation or delta hedging of OTC and listed derivative positions, there is no proprietary trading. Disclosure of publicly available conflicts of interest and other material interests is made in the research. Analysts are supervised and managed on a day-to-day basis by line managers who do not have responsibility for Investment Banking activities, including corporate finance activities, or other activities other than the sale of securities to clients. UniCredit Research page 11

12 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. Notice to UK investors This communication is directed only at 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 who (i) have professional experience in matters relating to investments or (ii) are persons falling within Article 49(2)(a) to (d) ( high net worth companies, unincorporated associations, etc. ) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons ). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Notice to U.S. investors This report is being furnished to U.S. recipients in reliance on Rule 15a-6 ("Rule 15a-6") under the U.S. Securities Exchange Act of 1934, as amended. Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is such a "major U.S. institutional investor" (as such term is defined in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of UniCredit Capital Markets, Inc. ( UCI Capital Markets ). 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. UCI Capital Markets and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. 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 12

13 UniCredit Research* Thorsten Weinelt, CFA Global Head of Research & Chief Strategist European Equity Research Dr. Ingo Heimig Head of Research Operations Christopher Williams, Head of European Equity Research , 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 Alessandro Falcioni Peter Bauernfried, CEFA Katherina Kastenberger Peter Rothenaicher Antonio Vizzari Chemicals & Health Care Andreas Heine Markus Mayer Dr. Silke Stegemann Construction & Materials Peter Bauernfried, CEFA Maurizio Moretti Consumer/HPC Nicolas Sochovsky Graeme Eadie 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 Telecommunications Thomas Friedrich, CFA Giovanni D'Amico Tourism, Leisure & Services Christian Obst Jonathan Schroer, CFA Utilities Lueder Schumacher Vincent Ayral Javier Suarez 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 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 Research Marketing Stefanie Ruehl, CFA 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 13