28
Macroeconomic outlook Chiara Corsa, UniCredit Group
Macroeconomic outlook
Chiara Corsa, UniCredit Group
The global recovery is running out of steam –especially industrialized countries lagging behind
Global Trade (exports + imports), volume, Index (Jan-2008=100)
Industrial production, Index (Jan-2008=100)
p y gg g
Index (Jan-2008=100)
102
104
106
120
125
Industrialized countries
Emerging Asia
94
96
98
100
110
115 Emerging Europe
Emerging Latin America
88
90
92
94
95
100
105
82
84
86
85
90
95
78
80
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
80Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
2Source: CPB trade monitor, UniCredit Research
Companies' mood deteriorating on a worldwide levelp g
Manufacturing PMIs Manufacturing PMIs
60
65
60
65
GermanyFrance
55
60
50
55
ItalySpain
45
50
40
45
50
35
40
EMUUSChinaIndia
35
40
30
35
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-1125
30
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
3
Also growth locomotive Asia is slowing down, driven by higher food prices and monetary tighteningp y g g
Consumer prices, in % yoy Chinese minimum deposit reserve ratio for major banks in %
20
22
banks, in %
10
12 Emerging markets Industrialized countries
16
18
8
12
14
4
6
8
10
0
2
4
6
2000 2002 2004 2006 2008 2010-2Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
4Source: Thomson Datastream, Bloomberg, UniCredit Research
China: Despite preceding breathtaking growth, still high catch-up potential in the medium termp
Real GDP per capita (index with start of development=1) Private consumption per capita (in USD, 2009)
17
19China (1970-2010)
India (1970-2010)
US (1820-1977)
UK (1830-1987) 30000
35000
11
13
15UK (1830-1987)
Germany (1950-2010)
25000
30000
7
9
11
15000
20000
3
5
5000
10000
10 20 40 60 80 100 120 140
Number of years0
5000
India China US
5Source: Thomson Datastream, UniCredit Research
US acceleration in 3Q no more than a temporary reboundp y
Disposable income basically flat
Real disposable income, in % yoy
Our GDP forecast
Real GDP, annualized rates of change in %
3.5
4.0
4.5qoq yoy
6.0
8.0
10.0
1.5
2.0
2.5
3.0
0.0
2.0
4.0Aug 2011:
0.3%
0.0
0.5
1.0
I/10 II/10 III/10 IV/10 I/11 II/11 III/11 IV/11 I/12 II/12 III/12 IV/12-6.0
-4.0
-2.0
Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10
GDP growth accelerated to 2.5% (saar) in 3Q
Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10
S BEA D t t U iC dit R h
A temporary bounce: fundamental situation remains weak (sluggish recovery in the labor market and weak real income)
We expect the recovery to lose momentum in the coming months although we do not expect a recession
6
Source: BEA, Datastream, UniCredit Research
US labor market faces structural problemsp
Distribution of unemployed by duration, in % Average duration of unemployment, in weeks4570
35
4060
15 weeks and over 27 weeks and over
30
35
40
50
20
25
30
10
15
10
20
5Jan-50 Jan-60 Jan-70 Jan-80 Jan-90 Jan-00 Jan-10
0Jan-50 Jan-60 Jan-70 Jan-80 Jan-90 Jan-00 Jan-10
S BLS U iC dit R h
7
Source: BLS, UniCredit Research
US: Fiscal stimulus keeps economy afloat; But growth is borrowed from the future – new public debt finances old private debt p p
Fiscal balance, in % of GDPCredit market debt outstanding, in % of GDP (until 1Q11)(until 1Q11)
3.0
350
400Government
GSE
Financials
-3.0
0.0
250
300
Financials
Corporates
Households
-6.0150
200
-9.0
50
100
-12.0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2009 - 2012
0
50
1929 1939 1949 1959 1969 1979 1989 1999 2009
8 Source: FoF, IMF, CBO, UniCredit Research
EMU: Tighter financial conditions push the eurozone to the brink of recession
Tighter financial conditions
Drag on GDP
Composite PMI flags a worrying loss of momentum
61
64Financial Market Index
4
5
49
52
55
58
C iti l l l1
2
3
Boost to GDP
37
40
43
46Critical level
-2
-1
0
Source: Bloomberg, Markit, UniCredit Research
Jul-98 May-00 Mar-02 Jan-04 Nov-05 Sep-07 Jul-09 May-11
The Financial Market Index (FMI) aggregates in one indicator the signal of the VDAX, DJ Euro Stoxx 50 and non-financial corporate spread (BBB, 5-7y). Volatility and spread enter the algorithm with a positive sign, equity with a negative sign. The FMI is negatively correlated with economic growth and leads eurozone GDP by one quarter and Ifo expectations by one month.
01-Jan-99 01-Mar-02 01-May-05 01-Jul-08 01-Sep-11
Our Financial Market Index (FMI) signals intense market stress, although off the August peak.
The GDP outlook has quickly deteriorated in response to tighter financial conditions, a stronger-than-expectedslowdown in global growth, and tougher fiscal consolidation than previously assumed (particularly in Italy).
In 4Q 2011, we see the economy contracting, although we do not expect a full-blown recession.
9
EMU: How tight financial conditions impact GDP – sentiment channel
Composite PMI response to tighter financial conditions Households turn more cautious 0 2
Response of D_EMU_PMI to D_FMI5 4
Consumer Confidence - LS
0 4
-0.2
0.0
0.2
-15
-10
-5
0
2
3
Consumer Confidence LSFMI - RS
-0.8
-0.6
-0.4
-30
-25
-20
15
-1
0
1
Source: Bloomberg, EC, Markit, UniCredit Research
-1.2
-1.0
1 2 3 4 5 6 7 8 9 10
-40
-35
Jan-99 Feb-01 Mar-03 Apr-05 May-07 Jun-09 Jul-11-2
The growth response to the financial shock via the sentiment channel is strongly significant and materializes quickly.
For any 1-point increase in our Financial Market Index (i.e. financial conditions tighten), the eurozone composite PMIdrops 1 3 points in the three months post shock equivalent to -0 1/-0 15pp in GDP growthdrops 1.3 points in the three months post shock, equivalent to -0.1/-0.15pp in GDP growth.
Labor market trends and inflation are the most important determinants of consumer confidence, but their explanatorypower decreases significantly at times of suddenly rising financial tensions.
household confidence (and hence consumption) is very sensitive to severe market stress.
10
EMU: How tight financial conditions impact GDP – banking channelBanks tighten lending standards more aggressively
Credit standards for loans to enterprises
70
80
Realized600
FinSub-SeniTraxx FinSen
5Y Financials CDS
20
30
40
50
60Expected
300
400
500iTraxx FinSen FinSub
-20
-10
0
10
20
0
100
200
Source: Bloomberg, ECB, UniCredit Research
-301Q 2003 1Q 2005 1Q 2007 1Q 2009 1Q 2011M
ar-0
8
Jun-
08
Sep
-08
Dec
-08
Mar
-09
Jun-
09
Sep
-09
Dec
-09
Mar
-10
Jun-
10
Sep
-10
Dec
-10
Mar
-11
Jun-
11
Sep
-11
Financials CDS spreads surged above the post-Lehman Sovereigns are no longer lenders of last resort Financials CDS spreads surged above the post Lehman Sovereigns are no longer lenders of last resort.
The BLS shows that in 3Q11 banks tightened significantly their credit standard both on loans to corporates andhouseholds. This deterioration was mainly due to the re-intensification of the sovereign debt crisis.
11
EMU: Tug-of-war between declining confidence and still good fundamentalsFinancing gap far from an end-of-cycle position
1.0
2.0
1.5
2.5
-3.0
-2.0
-1.0
0.0
-0.5
0.5
-6.0
-5.0
-4.0
-3.5
-2.5
-1.5
-9.0
-8.0
-7.0
1999Q4 2001Q3 2003Q2 2005Q1 2006Q4 2008Q3 2010Q2-5.5
-4.5Financing Gap (in % of GVA) - LS
Output Gap - RS
Financing Gap = Savings-InvestmentShaded Areas = Above-Potential Growth
NFCs’ financing gap – a proxy for the need for external finance to fund investment plans – looks healthy.
The financing gap is highly cyclical with turning points in correspondence of the main cyclical junctures
Source: Eurostat, OECD, UniCredit Research
The financing gap is highly cyclical, with turning points in correspondence of the main cyclical junctures.
The broadly-balanced financing gap indicates that corporates are still far from a vulnerable end-of-cycle position.
Sound private-sector fundamentals in the core countries suggest that GDP should re-accelerate in the course of 2012.But risks are clearly to the downside.
12
What needs to be done?
Top priority
Avoid negative feedback loop between markets and real economy
How ?
- ECB: emphasis on non-standard measures. In case of need, there is roomfor rate cuts. But this is not sufficient
- Ultimately, governments are responsible for a lasting solution to the crisis
13
ECB pulls out all stops on unconventional measures
Taylor rule: from tightening to easing bias
4.5
5.0
2 5
3.0
3.5
4.0
1.0
1.5
2.0
2.5
Actual
Source: ECB, Markit, UniCredit Research
0.0
0.5
Jan-99 Feb-01 Mar-03 Apr-05 May-07 Jun-09 Jul-11
Fitted
Stealth Easing
Faltering GDP and market woes pushed the ECB from a tightening to an easing bias within just a couple of months.
Our Taylor rule says that the refi rate level is appropriate, but will probably become somewhat restrictive in thecoming months.coming months.
However, if the environment remains non-recessionary and financial tensions do not escalate significantly further,the ECB may prefer to continue resorting to non-standard tools to counter downside risks to growth.
At the end of the day, conventional monetary stimulus can do little in this environment.
14
Roadmap for government action...
Further structural and fiscal reforms
- liberalization of labor and product/services markets to boost potential growthliberalization of labor and product/services markets to boost potential growth
- binding constitutional limits for the budget deficit
Establishing a proper rescue mechanism with adequate flexibility and resources
- crucial to provide strict rules for engagement (EFSF/ESM interventions never adressing solvency problems but acting exclusively in liquidity situations)
In case of solvency problems (Greece, maybe Portugal), debt relief is needed
Bank recapitalization
15
...and political risks to EMU growth and stability p g y
No deliverance of more and sustained structural reforms in peripheral and core European countries to generate growthcountries to generate growth
Failure of Greece or other peripheral country to deliver, with corresponding bond default, EMU exit and massive contagion to other countries
Permanent fiscal transfer system by introducing eurobonds without political union
16
Euro Summit: good progress in the right direction
Agreement on two options to leverage the EFSF: 1) Insurance on new debtAgreement on two options to leverage the EFSF: 1) Insurance on new debt issued by member states 2) Create an SPV to collect resources from private and public investors. The options could be combined. The leverage effect could be up to four or five. Details will be discussed by the Eurogroup in November.
Recapitalisation of the banking sector: banks should increase the capital ratio p g pto 9% by June 2012. Banks should first use private resources of capital and should be subject to constraints regarding the distribution of dividends and bonuses. If necessary, national governments should provide support and, if this is not available, the EFSF should be used.
Haircut of 50% on Greek bonds held by the private sectors to bring the Greek debt down to 120% vs. the IMF new baseline of 152%. This would help reducing EU/IMF financing support under the new version of the second aid package
17
Eurozone balance sheets: the devil is in the details
Debt (in % of GDP)
NFCs IIPGovtHHs2009 2010 2009 2010 2009 2010 2009 2010
EMU 103.8 103.5 65.9 65.9 79.3 85.1 -16.3 -12.9IT 84.4 81.5 43.9 45.2 116.1 119.0 -25.3 -24.3DE 67 0 65 5 64 1 61 7 73 5 83 2 37 7 42 4
NFCs IIPGovtHHs
DE 67.0 65.5 64.1 61.7 73.5 83.2 37.7 42.4ES 138.8 139.0 86.0 84.9 53.3 60.1 -92.1 -87.1FR 103.5 104.8 53.2 55.2 78.3 81.7 -8.6 -10.0GR 68.3 62.1 52.6 59.9 127.1 142.8 -85.2 -99.5AT 91.1 91.2 56.5 57.1 69.6 72.3 -12.3 -5.2IR 204.5 185.9 123.1 119.0 65.6 96.2 -103.1 -90.9PT 156.1 152.9 95.8 95.2 83.0 93.0 -109.0 -107.6
UK 118.6 112.0 103.5 99.8 69.9 80 -20.3 -13.0JP 89 1 85 2 64 9 62 2 216 3 220 3 56 5 52 5
NFCs = Non Financial Corporations
JP 89.1 85.2 64.9 62.2 216.3 220.3 56.5 52.5US 49.4 48.6 97.6 92.2 84.6 91.6 -17 -16.9
NFCs = Non-Financial Corporations
HH = Households
Govt = Government
IIP = International Investment Position Source: National Sources, UniCredit Research
18
Portugal looks problematic
GDP (in %)7.0
Massive growth underperformance
6 NFCs HH Govt
Savings/Investment balance (in % of GDP) - changes (in pp) in 2000-07
3.0
4.0
5.0
6.0
0
2
4
-1.0
0.0
1.0
2.0
SP GR IR PT-6
-4
-2
Source: Eurostat, UniCredit Research
-2.02001 2002 2003 2004 2005 2006 2007
SP GR IR PT-8
Saving Invest Saving Invest Saving Invest Saving InvestSpain Portugal Ireland Greece
Before the crisis, Portugal massively underperformed the rest of peripheral countries. Unlike most other peripheral countries dissaving was not accompanied by a sustained increase in investment Unlike most other peripheral countries, dissaving was not accompanied by a sustained increase in investment. A rapid decline in savings by all sectors was behind the large widening of the current account deficit. High indebtedness and structurally weak growth are a toxic mix difficult to overcome. Growth underperformance during the good years implies that now the social acceptance of austerity will be lower than in
the rest of the periphery.
19
Italy’s fiscal performance: flow variables look good
Structural primary balance: Italy outperforms Cautious handling of public finance during the crisis
y p g
Change in the ratios (in pp), 2007-2009
0Structural primary balance, in % of GDP
4.0
-6
-4
-2
2 0
0.0
2.0
-12
-10
-8
Fiscal balance in % of GDP
Structural primary balance in % of GDP-6.0
-4.0
-2.0
GESPFR
Source: Eurostat, IMF, MEF, UniCredit Research
-14GE SP FR IT
-8.02003 2004 2005 2006 2007 2008 2009 2010
IT
When we consider flow variables, Italy’s fiscal performance looks good and compares favorably not only to theperiphery, but also to the core countries of the eurozone.
This comes from the combination of a cautious handling of public finances during the crisis and a sizeable fiscal effortby the government between 2010 and this summer which is worth a cumulative 5% (1 5% in 2010 and 3 5% in 2011)by the government between 2010 and this summer, which is worth a cumulative 5% (1.5% in 2010 and 3.5% in 2011).
Moreover, recent belt-tightening measures come on top of a fiscal consolidation effort which had been in place forsome time and which had brought Italy towards a sound structural primary balance ahead of the financial crisis.
20
Italy: debt is sustainable even with weak economic growthDebt dynamics is not explosive even if rates spike… …or GDP remains structurally weak
y g
130
140
120
130
90
100
110
120
90
100
110
120
Base
50
60
70
80 Base
100bp interest rate shock
50
60
70
80Base
2% real GDP growth
0.5% real GDP growth
Source: Eurostat, MEF, UniCredit Research
Under our baseline scenario of 1% GDP growth, 2% inflation and a constant interest rate at 4.4%, a decline in debt/GDPto 95% in 2030 requires Italy to run a primary surplus of 2.7% of GDP (average since euro inception: 2.4%).
501999 2004 2009 2014 2019 2024 2029 1999 2004 2009 2014 2019 2024 2029
Stressed scenario on the effective interest rates:
+100bp increase: a 5.4% (4.4% + 100bp) interest rate represents a break-even level which stabilizesthe debt dynamics through the forecast horizon.
Stressed scenario on real GDP growth: Stressed scenario on real GDP growth:
Under a worst case scenario of only 0.5% GDP growth, the debt-to-GDP dynamics is not explosive;
Needless to say, a much more benign debt patter would emerge if the government successfully boosts the country’s growth potential via far-reaching reforms on the supply side of the economy.
21
Italy: loss of competitiveness is due to productivity underperformance
Unit Labor Costs (ULCs): cumulative growth (in %)
40
48
E
Labor productivity: cumulative growth (in %)
16
20
Eurozone
26.8
34.432.2
17 3
24
32
40 Eurozone
Italy
3.9
7.3
11.9 11.6
3.31.5 0.9
6.8
4
8
12 Italy
1.44.7
11.314.5
1.7
12.517.3
0
8
16
-7.1
-2.8
12
-8
-4
0
Source: EC, ISTAT, Eurostat, UniCredit Research
1999-2001 1999-2004 1999-2008 1999-2009 1999-2010 -121999-2001 1999-2004 1999-2008 1999-2009 1999-2010
Italy’s main challenge remains the structurally low growth potential.
Italy’s loss of competitiveness in terms of unit labor costs vis à vis Germany was huge in the last decade.
This is mostly the legacy of a structural decline in labor productivity and does not stem from an excessive increase in This is mostly the legacy of a structural decline in labor productivity and does not stem from an excessive increase incompensation.
Raising productivity is the way to go.
22
Italy: households finances remain safe
1000Housing wealth Financial wealthFinancial Liabilities Net wealth
Net wealth (in % of nominal gross disposable income) An international comparison
Household net wealth, % disposable income9
400
600
800
4
5
6
7
8
20042008
-200
0
200
0
1
2
3
4
An asset/liability analysis suggests that households’ finances remain relatively safe.
Source: BoI, OECD, UniCredit Research
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0US Canada Japan Germany France UK Italy
Italian households not only remain among the least leveraged in the eurozone (around 45% of GDP vs. around 70% in the eurozone)…
…if we look at the assets owned by households, we see that in 2009 (latest data available), Italian households enjoyed an increase of both their financial and real assets (as a percentage of disposable income). As financial liabilities remained stable at a low level (81% of disposable income), net wealth increased to 814% of real disposable income.
Moreover, a cross-country analysis shows that Italy has one of the highest net wealth-to-disposable-income ratio among the largest advanced economies (8x vs. 5x in the US). As a reference, Italian households’ share of global net wealth is at 5.7%, larger than the country’s share of world GDP (3%).
23
There is light at the end of the tunnel: Ireland shows the way!
Unit Labor Costs (2000 = 100)140
Spread vs. 10Y Bund (in pp)12.00
Spread is responding Competitiveness has been restored
120
125
130
135EMU
Ireland8.00
10.00 SPITPTIR
100
105
110
115
120
2.00
4.00
6.00
Source: Bloomberg Eurostat UniCredit Research
95
100
Q1 2000 Q3 2001 Q1 2003 Q3 2004 Q1 2006 Q3 2007 Q1 2009 Q3 20100.00
1-Jan-07 1-Dec-07 1-Nov-08 1-Oct-09 1-Sep-10 1-Aug-11IR
Source: Bloomberg, Eurostat, UniCredit Research
Among peripheral countries, Ireland is the one that saw the swifter adjustment in ULCs.
This is allowing the country to quickly re-gain lost competitiveness.
Falling ULCs led to a slightly positive CA position (it was -6% of GDP before the crisis).
The spread is responding nicely!
24
CEE: Regional growth to move in line with global trends
CEE real GDP growth to move in line with EMU
6.0 % 8.0
By end-2013 GDP will have to yet recover to its pre-crisis peak in some countries
35 0 pp
0.0
2.0
4.0
0.0
2.0
4.0
6.0
Germany5.0
15.0
25.0
35.0GDP relative to peak as of Q1-11GDP relative to peak end-2012GDP relative to peak end-2013
-6.0
-4.0
-2.0
01 02 03 04 05 06 07 08 09 10 11 12 13
-6.0
-4.0
-2.0GermanyEMUCEE 17 (rhs)
-25.0
-15.0
-5.0
KZT LN RY
KK ZK UB
GN UF
SIT ON
RK
LTL
AH EK VL
Economic activity in Central and Eastern Europe will move in line with the developed world.
Source: CEE national statistics offices, Eurostat, UniCredit Research
200
200
200
200
200
200
200
200
200
20 20 20 20 K P TR SK CZ
RU
BG H S RO HR L UA EE L
But we cannot look at CEE as a uniform region any longer. Instead there is large differentiation across countries, with some having already seen GDP recover to its pre-crisis peak but others lagging considerably.
25
CEE: Risks – outflow of capital
Portfolio flows dominate capital inflows to the region
200
250 EURbn E&OOther invest non-govtOther invest govt
Portfolio inflows to CEE: Turkey & Poland dominate
1520 EURbn
50
100
150
200g
PortfolioFDICapital A/CTotal
-10-505
1015
Russia
-100
-50
0
2004 2005 2006 2007 2008 2009 2010 H1-11-30-25-20-1510
2008 2009 2010 2011
Poland
Turkey
IMF countries
Source: IMF, UniCredit Research
IMF countries refer to the aggregate of inflows to Hungary, Latvia, Romania and Ukraine.
In Turkey and Poland we monitor closely the risk of a sharp outflow of short term capital. This is also a risk inHungary.
To date weekly data flows have shown that EM bond funds continue to show inflows, though at a much slowerpace but equity funds have shown outflows for a number of weeks now In Hungary as well as Poland pronouncedpace, but equity funds have shown outflows for a number of weeks now. In Hungary, as well as Poland, pronouncedoutflows would threaten sovereign financing.
26
CEE: Risks – the banking sector
Net foreign asset position of banking sector
10.0 % of GDP
-5.0
0.0
5.0
-20.0
-15.0
-10.0
2007Latest
-25.0
CZK SIT
ZAR
RU
BK
ZT ILS
BG
NTR
YU
AH
RS
DP
LN LIT
BY
RR
ON
HR
KH
UF
Latest
Source: IMF, UniCredit Research
Banking sectors in countries such as Russia and Kazakhstan have significantly reduced their exposure to foreignfunding since the 2008 crisis but others remain much more at risk of a shut down in foreign funding. Hungary, Croatiaand Romania are worse positioned.
27
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We and/or any other entity of UniCredit Corporate & Investment Banking may from time to time with respect to securities mentioned in this publication (i) take a long or short position and buy or sell such securities; (ii) act as investment bankers and/or commercial bankers for issuers of such securities; (iii) be represented on the board of any issuers of such securities; (iv) engage in "market making" of such securities; (v) have a consulting relationship with any issuer. Any investments discussed or recommended in any report provided herein may be unsuitable for investors depending on their specific investment objectives and financial position. Any information provided herein is provided for general information purposes only and cannot substitute the obtaining of independent financial advice. p p y g pHVB London is regulated by the Financial Services Authority for the conduct of business in the UK as well as by BaFIN, Germany. UniCredit CAIB Securities UK Ltd., London, a subsidiary of UniCredit Bank Austria AG, is authorised and regulated by the Financial Services Authority.Notwithstanding the above, if this publication relates to securities subject to the Prospectus Directive (2005) it is sent to you on the basis that you are a Qualified Investor for the purposes of the directive or any relevant implementing legislation of a European Economic Area ("EEA") Member State which has implemented the Prospectus Directive and it must not be given to any person who is not a Qualified Investor. By being in receipt of this publication you undertake that you will only offer or sell the securities described in this publication in circumstances which do not require the production of a prospectus under Article 3 of the Prospectus Directive or any relevant implementing legislation of an EEA Member State which has implemented the Prospectus Directive.Note to US Residents:The information provided herein or contained in any report provided herein is intended solely for institutional clients of UniCredit Corporate & Investment Banking acting through UniCredit Bank AG, New York Branch and UniCredit Capital Markets, Inc. (together "HVB") in the United States, and may not be used or relied upon by any other person for any purpose. It 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 US federal or state securities laws, rules or regulations. Investments in securities discussed herein may be unsuitable for investors, depending on their specific investment objectives, risk tolerance and financial , y , g y , p g p j ,position. In jurisdictions where HVB is not registered or licensed to trade in securities, commodities or other financial products, any transaction may be effected only in accordance with applicable laws and legislation, which may vary from jurisdiction to jurisdiction and may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements.All information contained herein is based on carefully selected sources believed to be reliable, but HVB makes no representations as to its accuracy or completeness. Any opinions contained herein reflect HVB's judgement as of the original date of publication, without regard to the date on which you may receive such information, and are subject to change without notice. HVB may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in any report provided herein. Those reports 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 further performance, and no representation or warranty, express or implied, is made regarding future performance. HVB and/or any other entity of UniCredit Corporate & Investment Banking may from time to time, with respect to any securities discussed herein: (i) take a long or short position and buy or sell such securities; (ii) act as investment and/or commercial bankers for issuers of such securities; (iii) be represented on the board of such issuers; (iv) engage in "market-making" of such securities; and (v) act as a paid consultant or adviser to any issuer.The information contained in any report provided herein may include forward-looking statements within the meaning of US federal securities laws that are subject to risks and uncertainties. Factors that could cause a company's actual y p p y g g j p yresults and financial condition to differ from its expectations include, without limitation: Political uncertainty, changes in 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, competitive environments and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement.
UniCredit Corporate & Investment Banking as of 28 October 2011
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