WEEKLY INSIGHT. January 29, Kwe method applied to finance

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1 WEEKLY INSIGHT January 29, 2018 Kwe method applied to finance Thanks to global positive macro economical figures (Improving business sentiment in Europe, increasing orders and decreasing jobless claims in the US, Uk recovery, ), risky assets ended the weeks in green territory, especially equities at new historical highs. By the meantime, Mario Draghi stated that nothing had really changed since the last ECB meeting (weak underlying inflation, unproductive wage negotiation, ect..) In that context and despite the positive momentum on rates, US treasuries closed relatively flat while high yield bonds posted a positive return thanks to credit. In contrast, government bonds in euro, swiss franc and british pounds suffered from a significant yield pick up while high yield stayed relatively flat. Furthermore, equities in North America and Emerging markets led the dance, while the old continent indices suffered from the euro appreciation. European IT and Utility sectors posted the worst figure, down respectively -2.8% and -2.2%. In contrast, we note the excellent performance of US Discretionary, Telecoms and Utilities (each up more than 2%) as well as the EM markets energy posting an outstanding +4.2%. In addition, energy commodities more than doubled their gains of the year thanks global growth acceleration while golds confirmed its good shape, trading above 1350$/OZ. Finally, all major currencies appreciated against the USD, but the Swiss one is on top, up 3%, closely followed by the ZAR and GBP. We also note the Japanese Yen and the Euro, respectively 2.2% and 1.6% stronger this week. Next, Jobs in Japan and US monetary policy will be particularly at glance on top of a series of Markit statistics on European activity. CHART OF THE WEEK The positive equity cycle may not be over soon Emerging-market equity investors can add one more reason to buy: earnings. Aside from strong global economic growth and cheap valuations, analysts have consistently raised profits estimates for the companies this year- the first time in seven years. According to history, a typical cycle lasts six to seven years of disappointment and two to three years of positive surprises. Following that reasoning, the positive surprises started at the beginning of As the equity market is apparently able to anticipate good news 12 months forwards, but completely blind when the downturn arises, we may profit two more flourish years ahead 110 1,290 Expected earnings Emerging market level (l.h.scale) 105 1, , Source: Bloomberg, CBH

2 EUROPE MSCI EUROPE % 1.8% 2.4% 15 STOXX % 2.3% 2.9% 15 STOXX 50 3, % 0.2% 4.0% 15 CAC 40 5, % 1.3% 4.1% 15 DAX 13, % 1.5% 3.2% 14 FTSE 100 7, % 2.3% -0.4% 15 IBEX 35 10, % 2.4% 5.5% 14 MIB 23, % 4.5% 9.0% 14 PSI 20 5, % 6.9% 7.1% 16 SMI 9, % 3.4% 1.4% 17 MSCI EUROPE 1W 1M 3M YTD Est. P/E Cons. Disc. -1.0% 2.4% 2.0% 3.0% 13 Cons.Staples -1.4% -1.4% -1.5% -1.8% 19 Energy 1.0% 3.6% 7.5% 3.3% 16 Financials 0.4% 5.5% 4.2% 6.0% 12 Health Care 0.9% 1.4% 0.0% 1.1% 16 Industrials -1.8% 1.9% 0.5% 2.6% 18 Inf. Technology -2.8% 1.3% 0.3% 2.4% 22 Materials -1.4% 4.3% 5.7% 3.5% 16 Telecom Serv. 0.6% -1.0% -0.1% -0.2% 15 Utility -2.2% -2.0% -5.8% -1.2% 14 Italy Business Confidence Jan 30/1/ EC ZEW Survey Expectations Jan [0.8%] 31.8B Finland Consumer Confidence Jan 29/1/218 [24.0] EC Consumer Confidence Jan A 3.0% 1.3 Euro Area GDP 4Q A 30/1/ % UK ILO Unemployment Rate Nov 0.0% 4.3% Italy Consumer Confidence Jan 30/1/ GE IFO Expectations Jan 1.7% LME Copper Stocks Jan 29 29/1/218 [9525.0M] ECB Main Refinancing Rate Jan % 0.0% EC Consumer Confidence Jan F 30/1/ UK 4Q17 GDP QoQ 4Q A [4.4] 0.5% EU GE CH UK 2Y -0.55% 0.0% -0.2% -0.1% 10Y 0.63% -0.2% -0.1% -0.4% 2Y -0.55% -0.1% -0.4% -0.2% 10Y 0.63% -0.4% -1.2% -1.1% 2Y -0.79% 0.0% 0.0% 0.0% 10Y 0.07% -0.5% -0.2% -1.2% 2Y 0.62% -0.1% -0.1% -0.3% 10Y 1.44% -0.5% 0.0% -1.7% Corporates 1-5Y* HY IG 5-10Y* 0.77% -0.1% 0.1% 0.0% 10+Y* Y* 2.89% 0.1% 0.7% 0.7% 5-10Y* Y* * quoted in EUR vs. EUR AUD % -1.0% 0.1% CHF % 0.0% 0.7% GBP % 1.0% 1.3% JPY % -1.6% 0.2% USD % -6.3% -3.4% BRL % -1.9% 1.6% MXN % -2.7% 2.7% NOK % -0.3% 3.1% RUB % -3.5% -0.8% SEK % -0.6% 0.5% ECB 8/3/ % 0.00% 0.00% 0.00% BOE 8/2/ % 0.50% 0.55% 0.60% SNB 15/3/ % -0.75% -0.75% -0.75% Euro GE FR IT ES PT UK CH GDP (% change Y/Y) GDP (% change Q/Q) Inflation rate (Y/Y) Unemployment rate (%) Debt (as % of GDP)

3 NORTH AMERICA MSCI NORTH AM. 2, % 10.6% 6.0% 19 S&P 500 2, % 11.5% 6.7% 19 DOW JONES 26, % 13.1% 7.1% 18 NASDAQ 7, % 13.8% 8.0% 23 TORONTO 16, % 2.0% 0.0% 16 MEXICAN IPC 50, % 3.4% 2.7% 17 MSCI USA 1W 1M 3M YTD Est. P/E Cons. Disc. 2.1% 8.7% 18.2% 9.4% 23 Cons.Staples 0.6% 2.3% 9.1% 2.5% 20 Energy 0.9% 6.0% 14.8% 6.6% 24 Financials 1.3% 6.7% 11.4% 6.9% 14 Health Care 1.4% 7.9% 9.0% 8.3% 18 Industrials 0.4% 5.8% 9.5% 5.6% 20 Inf. Technology 0.3% 6.9% 12.2% 7.2% 20 Materials 0.8% 5.7% 7.4% 5.5% 18 Telecom Serv. 2.4% -1.1% 9.7% -0.5% 12 Utility 2.0% -2.1% -6.7% -3.0% 17 US Employees on Nonfarm Payrol Jan 2/2/ K US Markit PMI Manufacturin Jan P DOE Change in Crude Oil Inventory Jan 26 31/1/218 [ ] US Initial Jobless Claims SA Jan 20 [8.3%] 233 US Initial Jobless Claims SA Jan 27 1/2/ K US GDP 4Q17 QoQ 4Q A 0.4% 2.6% Federal Funds Target Rate - Up Jan 31 31/1/ % US Durable Good Orders Dec P 245.0K 2.9% ISM Manufacturing PMI SA Jan 1/2/ CA CPI YoY Dec K 1.9% Conf. Board Consumer Confidence Jan 30/1/ MX Retail Sales YoY Nov % US CANADA 1-3Y 2.12% 0.0% %- -0.2%- 3-5Y 2.47% 0.1% %- -0.6%- 5-7Y 2.59% 0.1% %- -1.0%- 7-10Y 2.66% 0.2% -0.9% -1.4% 1-3Y 1.76% 0.0% %- -0.1%- 3-5Y 1.97% 0.0% %- -0.5%- 5-7Y 2.10% 0.0% %- -0.9%- 7-10Y 2.22% 0.0% -1.3% -1.3% Corporates 1-5Y* 2.74% 0.1% %- -0.3%- 5-10Y* 3.45% 0.3% %- -0.8%- 10+Y* 4.10% 0.7% 2.6% -0.9% IG HY 1-5Y* 5.57% 0.2% - 0.8% - 0.8% Y* Y* 6.17% 0.5% 2.4% 2.0% * quoted in USD vs. USD AUD % 5.6% 3.7% CHF % 6.7% 4.2% EUR % 6.7% 3.5% GBP % 7.8% 5.0% JPY % 5.0% 3.8% BRL % 4.7% 5.2% ILS % 3.9% 2.6% MXN % 3.8% 6.3% RUB % 3.0% 2.7% FED 31/1/ % 1.70% 1.90% 2.05% BOC 7/3/ % 1.20% 1.35% 1.50% BdeM 8/2/ % 7.40% 7.50% 7.25% US CA MXN GDP (% change Y/Y) GDP (% change Q/Q) Inflation rate (Y/Y) Unemployment rate (%) Debt (as % of GDP)

4 ASIA MSCI ASIA PACIFIC % 12.0% 7.4% 15 NIKKEI , % 8.7% 3.8% 19 HANG SENG 33, % 17.6% 10.8% 13 SHANGAI 3, % 4.4% 7.6% 14 SENSEX 36, % 8.8% 5.9% 24 KOSPI 2, % 3.8% 4.3% 10 S&P/ASX 200 6, % 2.3% -0.2% 16 MSCI ASIA-PAC 1W 1M 3M YTD Est. P/E Cons. Disc. 0.9% 6.8% 13.0% 6.1% 16 Cons.Staples 2.0% 3.9% 11.8% 3.9% 24 Energy 4.2% 10.0% 18.9% 9.3% 13 Financials 0.8% 8.8% 12.6% 7.9% 12 Health Care 2.8% 8.5% 13.8% 6.8% 29 Industrials 1.5% 9.0% 13.0% 8.5% 15 Inf. Technology 2.0% 10.4% 12.4% 9.0% 17 Materials 1.5% 8.3% 12.7% 6.6% 15 Telecom Serv. 1.9% 4.1% 1.7% 3.5% 16 Utility 2.3% 3.8% 2.0% 3.3% 13 Japan GDP Dec P 31/1/ % PH 4Q17 GDP YoY 4Q 3.2% 6.6% Japan Unemployment Rate SA Dec 30/1/ % JP Policy Rate Jan % -0.1 Australia CPI All Groups Goods 4Q 31/1/ NZ CPI YoY 4Q 9.4% 1.6% New Zealand Merchandise Trade Dec 29/1/ M MY Ovenight Policy Rate Jan 25 [0.6%] 3.3% Japan Jobs to Applicants Ratio Dec 30/1/ % HK Trade Balance Dec 5.4% -59.9B China Manufacturing PMI SA Jan 31/1/ JP National CPI YoY Dec 6.7% 1.0% JAPAN AUSTRALIA 1-3Y -0.11% 0.0% -0.1% 0.0% 3-5Y -0.08% 0.0% -0.1% -0.1% 5-7Y -0.05% 0.0% 0.0% -0.2% 7-10Y 0.04% 0.0% -0.1% -0.3% 1-3Y 2.04% 0.1% 0.2% 0.1% 3-5Y 2.35% 0.1% -0.1% -0.2% 5-7Y 2.56% 0.2% -0.1% -0.5% 7-10Y 2.79% 0.2% -0.2% -1.2% Corporates 1-5Y* 0.32% 0.0% 0.1% 0.0% IG 5-10Y* Y* * quoted in JPY vs. USD AUD % 5.6% 3.7% HKD % -0.2% 0.0% JPY % 5.0% 3.8% NZD % 7.3% 3.4% SGD % 4.6% 2.2% CNY % 5.0% 2.8% IDR 13, % 2.1% 1.9% INR % 2.0% 0.5% KRW 1, % 5.7% 0.3% MYR % 9.4% 4.5% RBA 6/2/ % 1.50% 1.55% 1.60% BOJ 9/3/ % 0.00% -0.10% -0.10% RBNZ 7/2/ % 1.75% 1.80% 1.85% RBIN 7/2/ % 6.00% 6.00% 6.00% PBOC % 4.35% 4.35% 4.40% CN JP IN AU NZ SK HK SI GDP (% change Y/Y) GDP (% change Q/Q) Inflation rate (Y/Y) Unemployment rate (%) Debt (as % of GDP)

5 EM & OTHER COUNTRIES MSCI EMERING MKT 1, % 14.0% 9.1% 14 MSCI EM LATAM 3, % 12.0% 13.2% 15 MSCI EAST EUROPE % 18.5% 12.8% 8 MSCI SOUTH AFRICA 1, % 8.5% 3.6% 17 TEL AVIV 25 1, % 7.3% 2.2% 13 RUSSIAN RTS 1, % 15.1% 11.5% 7 FTSE/JSE AFRICA 54, % 4.3% 3.8% 17 IBOVSPA BRAZIL 85, % 12.4% 11.7% 14 MSCI EM 1W 1M 3M YTD Est. P/E Cons. Disc. 1.4% 8.1% 12.7% 6.3% 18 Cons.Staples 1.1% 6.3% 11.8% 4.2% 24 Energy 4.5% 14.3% 17.7% 13.9% 10 Financials 3.0% 13.6% 19.0% 12.2% 11 Health Care 1.7% 13.4% 20.4% 8.6% 28 Industrials 2.6% 9.6% 10.1% 8.2% 14 Inf. Technology 2.5% 11.0% 12.5% 8.8% 16 Materials 2.0% 11.2% 14.3% 8.9% 13 Telecom Serv. 2.2% 5.7% 7.0% 4.0% 16 Utility 2.9% 6.3% 4.5% 5.3% 11 Bank of Russia Gold and FX reserve Jan 26 1/2/2018 [442.8B] Brazil IBGE Inflation IPCA-15 Jan 0.3% 3.0% South Africa Trade Balance Inc Dec 31/1/ B Russia Industrial Production YoY Dec [513.0M] -1.5% Brazil Industrial Production N Dec 1/2/ % Chile CPI MoM Dec 3.5% 0.4 South Africa CPI YoY Jan 21/2/218 [4.7%] South Africa CPI YoY Dec 3.5% 4.7% Nikkei India Manufacturing PMI Jan 1/2/2018 [54.7] Russia Unemployment Rate Dec [ M] 5.1% Markit Russia Manufacturing PM Jan 1/2/ Russia Retail Sales Dec [0.2%] 3.1% IL RU 2Y 0.22% -4.4% -4.3% -4.4% 10Y 1.68% -0.4% 1.6% 0.3% 2Y 6.84% -0.2% 1.2% 0.2% 10Y 7.47% 0.0% 1.2% 1.2% BZ CL 2Y 7.67% 0.3% 2.9% 0.8% 10Y 9.74% 1.0% -1.3% -1.1% 2Y 2.87% 0.1% -1.3% 0.3% 10Y 4.49% 0.3% 1.0% 0.8% vs. USD ARS % -9.6% -4.6% BRL % 4.7% 5.2% CLP % 5.3% 2.4% ILS % 3.9% 2.6% RUB % 3.0% 2.7% SA 2Y 7.03% 0.3% 3.1% 0.9% 10Y 8.42% 0.5% 7.3% 1.6% ZAR % 19.9% 4.2% BOI 26/2/ % 0.10% 0.10% 0.15% BCB 7/2/ % 6.70% 6.70% 6.75% BCCE 1/2/ % 2.45% 2.55% 2.65% CBR 9/2/ % 7.50% 7.15% 6.95% SARB 28/3/ % 6.70% 6.60% 6.65% IL RU SA BZ AR CL GDP (% change Y/Y) GDP (% change Q/Q) Inflation rate (Y/Y) Unemployment rate (%) Debt (as % of GDP)

6 COMMODITIES LAST LAST 6M 1W 3M YTD COMMODITY INDEX % 5.5% 2.8% PRECIOUS METALS 1, % 7.2% 4.1% GOLD ($/oz.) 1, % 6.8% 3.8% SILVER ($/oz.) % 3.6% 2.7% PLATINUM ($/t oz.) 1, % 9.9% 8.5% ENERGY % 15.3% 7.7% WTI CRUDE ($/bbl.) % 24.3% 9.2% BRENT CRUDE ($/bbl.) % 20.2% 5.2% NATURAL GAS ($/MMBtu) % 10.9% 19.3% INDUSTRIAL METALS % 3.9% 0.2% STEEL ($/T.) % 12.2% 2.6% ALUMINUM ($/mt) 2, % 2.9% -0.7% COPPER ($/lb.) % -0.2% -3.3% SOFT COMMODITIES % 0.2% -5.4% CORN ($/bu.) % -2.6% 1.2% WHEAT ($/bu.) % -3.1% 2.2% GOLD $/oz Jan 17 Mar 17 May 17 Jul 17 Sep 17 Nov 17 Jan 18 WTI CRUDE OIL $/bbl Jan 17 Mar 17 May 17 Jul 17 Sep 17 Nov 17 Jan 18 IMPRINT Publication date : 29/1/2018 All data as of : 26/1/2018 6

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