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BENDURA BANK INVESTMENT GUIDE | MARCH 2018 | 1

1.1. OUR TOPICS IN MARCH The world economy is on an upward path. The indications are pointing towards expansion virtually all over the world. In the Eurozone, economic con-fidence has recently climbed to 116 points and is therefore at its highest level since October 2000. In Germany, the ifo Index is registering record levels. Against this background it slightly appears that the overall economic output in Germany as well as in the Eurozone is likely to rise this year by 2.3 per cent each. At the moment, the high sentiment is converting itself into less growth than in previous upturns. The fact that the real economy is proceeding rather moderately, all in all, against the background of a phenomenal mood has little to do with “adverse effects” from the political sector. The trouble spot that is Syria has now moved somewhat into the background of economic players’ interests. In the meantime, in the run-up to this month’s Winter Olympics, North and South Korea have become politically closer. In Italy, parliamentary elections are taking place on 4th March. In the first special topic we will examine the possible results and their respective significance for the Eurozone economy. The euro appreciated impressively in 2017, not least against the US dollar. The new year has seamlessly followed in the same vain so far. The reasons for this and their respective justification apply to our second spe-cial topic. At the turn of the year, a distinct yield increase was not iceable in the bond markets of industrial coun-tries situated on both sides of the Atlantic. Concern as to whether the currently higher yield level could thwart the upturn is on the minds of market partici-pants. In our opinion, the yield movement is as a result of increasing invest-

ments, decreasing deflation risks and a central bank block which rounds off an ultra-expansive monetary policy, thus a sign of strength. A world-wide recession is not impending. The credit and stock markets are experiencing good framework conditions for the time being. In our allocation we also favour risky security classes rather than low-risk ones currently. 1.2. DAX IN THE RED AGAIN AFTER A GOOD

START TO THE YEAR. BOND MARKETS UNDER PRESSURE.

The basic pattern on the capital markets did not initially change at the start of the year: As in the previous year, the “riskier” asset classes such as stocks or high yields were ahead. In the meantime, the willingness of investors to take risks has disap-peared. The DAX quotes YTD in the red. After just a few trading weeks, investments in federal bonds (REXP) have already built up more losses than in the whole of last year. The underperformance of investments denominat-ed in USD has continued into the new year. Dollar weakness is further burdening an already weak performance development, e.g. US treasuries.

1. VIEWPOINT MARCH 2018

Performance 2017 und 2018 ytd


1.1. OUR TOPICS IN MARCH The world economy is on an upward path. The indications are pointing towards expansion virtually all over the world. In the Eurozone, economic con-fidence has recently climbed to 116 points and is therefore at its highest level since October 2000. In Germany, the ifo Index is registering record levels. Against this background it slightly appears that the overall economic output in Germany as well as in the Eurozone is likely to rise this year by 2.3 per cent each. At the moment, the high sentiment is converting itself into less growth than in previous upturns. The fact that the real economy is proceeding rather moderately, all in all, against the background of a phenomenal mood has little to do with “adverse effects” from the political sector. The trouble spot that is Syria has now moved somewhat into the background of economic players’ interests. In the meantime, in the run-up to this month’s Winter Olympics, North and South Korea have become politically closer. In Italy, parliamentary elections are taking place on 4th March. In the first special topic we will examine the possible results and their respective significance for the Eurozone economy. The euro appreciated impressively in 2017, not least against the US dollar. The new year has seamlessly followed in the same vain so far. The reasons for this and their respective justification apply to our second spe-cial topic. At the turn of the year, a distinct yield increase was not iceable in the bond markets of industrial coun-tries situated on both sides of the Atlantic. Concern as to whether the currently higher yield level could thwart the upturn is on the minds of market partici-pants. In our opinion, the yield movement is as a result of increasing invest-

ments, decreasing deflation risks and a central bank block which rounds off an ultra-expansive monetary policy, thus a sign of strength. A world-wide recession is not impending. The credit and stock markets are experiencing good framework conditions for the time being. In our allocation we also favour risky security classes rather than low-risk ones currently. 1.2. DAX IN THE RED AGAIN AFTER A GOOD

START TO THE YEAR. BOND MARKETS UNDER PRESSURE.

The basic pattern on the capital markets did not initially change at the start of the year: As in the previous year, the “riskier” asset classes such as stocks or high yields were ahead. In the meantime, the willingness of investors to take risks has disap-peared. The DAX quotes YTD in the red. After just a few trading weeks, investments in federal bonds (REXP) have already built up more losses than in the whole of last year. The underperformance of investments denominat-ed in USD has continued into the new year. Dollar weakness is further burdening an already weak performance development, e.g. US treasuries.

1. VIEWPOINT MARCH 2018

Performance 2017 und 2018 ytd

2 | MARCH 2018 | BENDURA BANK INVESTMENT GUIDE

2.1. ITALY FACES DIFFICULT FORMATION OF GOVERNMENT.

Italy is electing a new parliament, i.e. a house of representatives and a new senate, on 4th March. The Right alliance, under the leadership of former premier Berlusconi, is currently ahead in the sur-veys. However, it is questionable as to whether this is enough for a majority of seats. Regardless of an economic revival, Italy has well-known concerns: Low growth, unemployment, escalating government debt, a weakened banking system. Against this background, election promises are not plausible. A new government will be measured by the market on growth stimulating reforms – or on their failure to materialise. 2.2. POLLS SEE RIGHT ALLIANCE AHEAD.

M5S STRONGEST INDIVIDUAL PARTY. A tectonic shift on the political landscape is in the offing for the Italian parliamentary elections (house of representatives and senate) on 4th March. The Democrat Party (PD) of President Paolo Gentiloni and his predecessor and leading candidate of the PD, Matteo Renzi has been lagging behind the protest movement of protest party “Five Star Movement” (Movimento 5 Stelle, M5S for short) for weeks. The winner is likely to be from the right-wing camp consisting of Berlusconi’s party Forza Italia (FI), the former regional party Lega Nord (LN), “Broth-ers of Italy” (FdI) and the minor party “Us with Italy” (NcI). These parties have joined forces to form an electoral alliance which comes to 39% in the sur-veys. This could potentially be enough for a majori-ty in parliament. Berlusconi’s FI is the strongest of those parties with 18%. However, due to sentencing in tax pro-ceedings he might be unable to hold public office until 2019 thus meaning he can only adopt the role of grey eminence and exercise power behind the scenes. In view of his advanced age (Berlusconi

was born in 1936) it remains questionable as to whether he will take office later on. The strongest individual power, according to the surveys, is M5S which is estimated just below 30%. However, it strives to rule alone and not in a coalition which is a disadvantage in view of the electoral law, hence the number of its representa-tives could be lower than its voting strength sug-gests. Surveys on the election in Italy, indications in % of votes

2.3. GENEROUS PROMISES DOMINATE BUT

PUBLIC COFFERS ARE EMPTY. There is no lack of election promises. From tax reductions to pension increases and up to infra-structure projects, it’s all there. Financial viability only plays a subordinate role here regardless of the high debt of public authorities. According to press reports however, it seems that voters are not taking promises at full face value, in other words: Nobody expects them to be kept. For example, in case he wins the election, M5S candidate Luigi Di Maio has promised “citizen’s

2. SPECIAL TOPIC: PARLIAMENTARY ELECTIONS IN ITALY


2.1. ITALY FACES DIFFICULT FORMATION OF GOVERNMENT.

Italy is electing a new parliament, i.e. a house of representatives and a new senate, on 4th March. The Right alliance, under the leadership of former premier Berlusconi, is currently ahead in the sur-veys. However, it is questionable as to whether this is enough for a majority of seats. Regardless of an economic revival, Italy has well-known concerns: Low growth, unemployment, escalating government debt, a weakened banking system. Against this background, election promises are not plausible. A new government will be measured by the market on growth stimulating reforms – or on their failure to materialise. 2.2. POLLS SEE RIGHT ALLIANCE AHEAD.

M5S STRONGEST INDIVIDUAL PARTY. A tectonic shift on the political landscape is in the offing for the Italian parliamentary elections (house of representatives and senate) on 4th March. The Democrat Party (PD) of President Paolo Gentiloni and his predecessor and leading candidate of the PD, Matteo Renzi has been lagging behind the protest movement of protest party “Five Star Movement” (Movimento 5 Stelle, M5S for short) for weeks. The winner is likely to be from the right-wing camp consisting of Berlusconi’s party Forza Italia (FI), the former regional party Lega Nord (LN), “Broth-ers of Italy” (FdI) and the minor party “Us with Italy” (NcI). These parties have joined forces to form an electoral alliance which comes to 39% in the sur-veys. This could potentially be enough for a majori-ty in parliament. Berlusconi’s FI is the strongest of those parties with 18%. However, due to sentencing in tax pro-ceedings he might be unable to hold public office until 2019 thus meaning he can only adopt the role of grey eminence and exercise power behind the scenes. In view of his advanced age (Berlusconi

was born in 1936) it remains questionable as to whether he will take office later on. The strongest individual power, according to the surveys, is M5S which is estimated just below 30%. However, it strives to rule alone and not in a coalition which is a disadvantage in view of the electoral law, hence the number of its representa-tives could be lower than its voting strength sug-gests. Surveys on the election in Italy, indications in % of votes

2.3. GENEROUS PROMISES DOMINATE BUT

PUBLIC COFFERS ARE EMPTY. There is no lack of election promises. From tax reductions to pension increases and up to infra-structure projects, it’s all there. Financial viability only plays a subordinate role here regardless of the high debt of public authorities. According to press reports however, it seems that voters are not taking promises at full face value, in other words: Nobody expects them to be kept. For example, in case he wins the election, M5S candidate Luigi Di Maio has promised “citizen’s

2. SPECIAL TOPIC: PARLIAMENTARY ELECTIONS IN ITALY


income for all”, a minimum pension of 780 Euro, reintroduction of early retirement and tax reduc-tions too. In amongst all of this, state debt should decrease from 130% to 90% within ten years. Ber-lusconi’s promises are going in a similar direction. All of this is not financeable. Admittedly, di Maio is not likely to be in a position to keep his promises. A new government will have to orientate itself to European realities and sooner or later will have no other option but to adopt measures to improve competitiveness of the country and increase flexi-bility on the markets. One topic likely to remain is the banking sector which is still affected by a high rate of non-performing loans. Albeit, the quote has been pushed down by over 12% to below 11% due to a set of measures in conjunction with state rescue of the MSP. Debts and deficits in % of GDP

2.4. MARKET RELAXED ABOUT ELECTION

OUTCOME. ECB RISK APPEARS GREATER.

Ten-year Italian government bonds are now yield-ing at 2%, the spread to federal bonds with the same maturity is 125 Bp and has been decreasing

again since the start of the year, after it had tempo-rarily gained by around 20 Bp in December 2017. One of the reasons for the calmness of the mar-kets may be that in Italy there is no scenario to indicate its exit from the euro. Admittedly, the Lega Nord plans to hold a referendum on the euro but Berlusconi has already denied that he wishes to exit from the euro. An introduction of the lira as a parallel currency, which is certainly unfeasible, is planned in any case. This can be regarded more as a curiosity. In case its wins the election, M5S has published a 20 point programme of immediate action in which the previously favoured referendum on allegiance to the euro is no longer mentioned. All in all, there is evidently no political majority for an anti-euro campaign in Italy at the moment. Admittedly, Italy’s government bonds could face an endurance test of another kind during the course of the year. A key support for the market will be miss-ing if the ECB further reduces its monthly bond purchases from September 2018. In this respect, within the election setting, it cannot be excluded that Italian government bonds are free from risk. Ultimately, a lot will decide if a new government will initiate growth stimulating reforms. Yield of 10-year BTPs and spread against 10Y Bunds


3.1. STRENGTH OF THE EURO COINCIDES WITH US DOLLAR WEAKNESS.

In the period of time from 1st November 2017 to 30th January 2018 virtually all major currencies gained value. This Euro strength coincides with a general weak-ness of the US dollar. In the period under review, the US dollar lost value on all major currencies. This weakness of the US dollar is puzzling. In the United States, the sentiment amongst corpo-rations is almost euphoric and the Federal Reserve is on a course of increasing the interest rate. The US monetary watchdogs have promised three key interest hikes for this year. Performance of major currencies against the Euro in the period from 1.11.2017 to 30.01.2018

3.2. THE US YIELD ADVANTAGE SUGGESTS

AN APPRECIATION OF THE US DOLLAR. The yield advantage of short-dated issues from the US Treasury against their Eurozone counterparts suggests an appreciation of the US dollar against the euro.

This applies even more because according to our forecast the US yield advantage should extend further this year. According to our forecast, the ECB will raise its deposit rate in mid-2019 which is later than ex-pected by market participants. In contrast, the Fed will raise its key interest three times in 2018 ac-cording to our forecast. Euro in US dollar and yield differential of 2-year federal bonds minus 2-year T-Notes

3.3. EURUSD AND QUANTITATIVE

MONETARY POLICY: “EURO-BULLISH” IMPULSE DUE TO THROTTLING OF ECB PURCHASES “COMPENSATED” BY FED’S BALANCE SHEET REDUCTION.

The gradual “exit” of the ECB from its bond pur-chasing programme is frequently mentioned as a driver for the appreciation of the euro. According to the historical correlation between balance sheet development of both of the large

3. SPECIAL TOPIC: PUZZLING WEAKNESS OF THE US DOLLAR.


3.1. STRENGTH OF THE EURO COINCIDES WITH US DOLLAR WEAKNESS.

In the period of time from 1st November 2017 to 30th January 2018 virtually all major currencies gained value. This Euro strength coincides with a general weak-ness of the US dollar. In the period under review, the US dollar lost value on all major currencies. This weakness of the US dollar is puzzling. In the United States, the sentiment amongst corpo-rations is almost euphoric and the Federal Reserve is on a course of increasing the interest rate. The US monetary watchdogs have promised three key interest hikes for this year. Performance of major currencies against the Euro in the period from 1.11.2017 to 30.01.2018

3.2. THE US YIELD ADVANTAGE SUGGESTS

AN APPRECIATION OF THE US DOLLAR. The yield advantage of short-dated issues from the US Treasury against their Eurozone counterparts suggests an appreciation of the US dollar against the euro.

This applies even more because according to our forecast the US yield advantage should extend further this year. According to our forecast, the ECB will raise its deposit rate in mid-2019 which is later than ex-pected by market participants. In contrast, the Fed will raise its key interest three times in 2018 ac-cording to our forecast. Euro in US dollar and yield differential of 2-year federal bonds minus 2-year T-Notes

3.3. EURUSD AND QUANTITATIVE

MONETARY POLICY: “EURO-BULLISH” IMPULSE DUE TO THROTTLING OF ECB PURCHASES “COMPENSATED” BY FED’S BALANCE SHEET REDUCTION.

The gradual “exit” of the ECB from its bond pur-chasing programme is frequently mentioned as a driver for the appreciation of the euro. According to the historical correlation between balance sheet development of both of the large

3. SPECIAL TOPIC: PUZZLING WEAKNESS OF THE US DOLLAR.


central banks and the EURUSD price, the exit from net new purchases, all things being equal, should actually strengthen the euro. On the other hand however, the Fed balance sheet is shrinking at a gradually accelerated pace. In net terms, both effects are largely cancelling each other out over the upcoming quarters. On this proviso, the Euro has already overshot the mark and a correction should follow. EURUSD exchange rate and relative monthly alteration of Fed vs ECB balance sheet sum (in USD billions; negative value = Fed balance sheet shrinks compared with ECB balance sheet)

3.4. ACCORDING TO OUR FORECAST THE

EURO WILL DEPRECIATE TO 1.12 US DOLLARS BY THE END OF 2018.

The euro price is currently USD 1.25. Therefore it is still below the “fair” price in accordance with purchasing power parity. According to our calcula-tions the latter is currently at USD 1.28. However, purchasing power parity is only incorporated into our long-term forecasts due to many years of devi-ations of actual price from the price in accordance with purchasing power parity. Ultimately, we abide by our euro forecast of USD 1.12 at the end of 2018. In view of the latest price

development however we will adjust our euro fore-cast for the end of March 2018 from USD 1.13 to USD 1.18 and for the end of June from USD 1.12 USD to USD 1.15. Euro in US Dollars


4.1. GERMANY: IS THE ECONOMY RUNNING “HOT”?

Germany is experiencing an economic boom. In January, the ifo Business Climate rose again from its previous record level of 117.6 in November. The growth rates of Germany’s GDP have not reached the pre-crisis level again but are currently above 2% Y/Y. On the labour market there is anecdotal evidence of shortages for some qualifications. Employees are therefore lacking, especially in the IT sector, care professions and in construction and crafts. The ongoing wage dispute in the metal industry could be of great significance. Apart from wage increases (6% for 12 months) the trade unions are also claiming an individual entitlement to a reduced 28-hour working week with right of return to full-time after 24 months. For the first time in a long while, the unions appear to be ready to strike and it will be interesting to see whether corporations prefer to allot higher wages or more flexible work-ing hours. Both incorporate increased costs. Employees in many sectors currently have good reasons. Overall, real wages increased by 0.6% in 2017. This was less than in 2014 to 2016 when there were real wage increases by 1.9% to 2.4%). ifo Business Climate and GDP Y/Y

4.2. EMU: THE SIGNS ARE GOOD FOR 2018. 2018 FORECAST RAISED.

Last year was a good one for economy in the Eu-rozone. Economic output in the monetary union rose by 2.5%. This is according to figures for the final quarter provided by Eurostat. With +0.6% Q/Q and 2.6% Y/Y respectively, the fourth quarter itself remained within the range of the preceding peri-ods. Eurostat still has not provided any information about the details yet. However, the trend of an increase in private consumption combined with growth of investments is likely to have continued. In view of the good result and remaining figures from the Eurozone which have been made known since the start of the year, we will take this oppor-tunity to slightly raise our forecast for GDP in the Eurozone during this year. Instead of 2.1% we now assume a GDP growth of 2.3% in 2018. In France, especially, things are runner better than anticipated. GDP there has in-creased by 0.6% Q/Q and 2.4% Y/Y respectively. This is the highest level since the second quarter of 2011. At that time, however, perhaps the growth rate was exaggerated by the rebound of growth rates after the financial market crisis. GDP Q/Q and components

4.3. THE US-ECONOMY INCREASED IN THE

4TH QUARTER WITH AN ANNUAL RATE OF 2.6%.

In correspondence with the preliminary estimate of the US Department of Commerce, the US econo-my increased with a rate of 2.6% for the year (an-nual rate).

4. MACRO


4.1. GERMANY: IS THE ECONOMY RUNNING “HOT”?

Germany is experiencing an economic boom. In January, the ifo Business Climate rose again from its previous record level of 117.6 in November. The growth rates of Germany’s GDP have not reached the pre-crisis level again but are currently above 2% Y/Y. On the labour market there is anecdotal evidence of shortages for some qualifications. Employees are therefore lacking, especially in the IT sector, care professions and in construction and crafts. The ongoing wage dispute in the metal industry could be of great significance. Apart from wage increases (6% for 12 months) the trade unions are also claiming an individual entitlement to a reduced 28-hour working week with right of return to full-time after 24 months. For the first time in a long while, the unions appear to be ready to strike and it will be interesting to see whether corporations prefer to allot higher wages or more flexible work-ing hours. Both incorporate increased costs. Employees in many sectors currently have good reasons. Overall, real wages increased by 0.6% in 2017. This was less than in 2014 to 2016 when there were real wage increases by 1.9% to 2.4%). ifo Business Climate and GDP Y/Y

4.2. EMU: THE SIGNS ARE GOOD FOR 2018. 2018 FORECAST RAISED.

Last year was a good one for economy in the Eu-rozone. Economic output in the monetary union rose by 2.5%. This is according to figures for the final quarter provided by Eurostat. With +0.6% Q/Q and 2.6% Y/Y respectively, the fourth quarter itself remained within the range of the preceding peri-ods. Eurostat still has not provided any information about the details yet. However, the trend of an increase in private consumption combined with growth of investments is likely to have continued. In view of the good result and remaining figures from the Eurozone which have been made known since the start of the year, we will take this oppor-tunity to slightly raise our forecast for GDP in the Eurozone during this year. Instead of 2.1% we now assume a GDP growth of 2.3% in 2018. In France, especially, things are runner better than anticipated. GDP there has in-creased by 0.6% Q/Q and 2.4% Y/Y respectively. This is the highest level since the second quarter of 2011. At that time, however, perhaps the growth rate was exaggerated by the rebound of growth rates after the financial market crisis. GDP Q/Q and components

4.3. THE US-ECONOMY INCREASED IN THE

4TH QUARTER WITH AN ANNUAL RATE OF 2.6%.

In correspondence with the preliminary estimate of the US Department of Commerce, the US econo-my increased with a rate of 2.6% for the year (an-nual rate).

4. MACRO


The US economy recorded a growth rate of 2.3% for 2017 as a whole. Equipment investments soared in the fourth quar-ter of 2017 with an annual rate of 11.4%. Minor inventory investments and a widening of the net export deficit affected overall economic per-formance in the fourth quarter of 2017. Real GDP projected on the change rate for the year compared with the previous quarter in %

4.5. US ECONOMY CREATES TWO HUNDRED

THOUSAND NEW JOBS IN JANUARY 2018.

US employment rose by two hundred thousand in January 2018 compared with the previous month, after an increase of one hundred and sixty thou-sand jobs the month before. The unemployment rate remained at 4.1% for the fourth month in a row. The average hourly wage rose by 2.9% in January 2018 compared with the same period of the previ-ous year, after a corresponding rate of 2.7% in December 2017. US employment, change in comparison with the month before, in thousands

4.6. WORLD ECONOMY: INDUSTRIAL NATIONS AS GROWTH ENGINE.

Economic climate by country group 0 = Long-term mean +1/-1 of a change above/below long-term mean

The prospects for the world economy are very reasonable overall. The Economic Climate for Ad-vanced Economies, by the Kiel-based institute IfW, is indicating significantly upwards. This also bene-fits the Emerging Markets. World industrial production by country group Indexed (2007 = 100; real monthly data)

The increase of worldwide industrial production carries on unpeturbed. The emerging countries in particular are profiting from this but a majority of the growth takes place here, i.e. in the emerging market. Growth in the manufacturing industries is the most important growth driver for this country group and the world economy.


5.1. FED HEADING TOWARDS ANOTHER INTEREST RATE HIKE IN MARCH. WE NOW ASSUME THAT THERE WILL BE THREE INTEREST RATE MOVES IN 2018 – IN ACCORDANCE WITH MARKET EXPECTATIONS!

As expected, the US Federal Reserve left its key interest target range at 1.25% - 1.50%. However, its status report expresses raised expec-tations with regard to an increase of inflation – consequently a clear sign that the FOMC is target-ing the next interest increase at its first meeting under Jerome Powell on 20th/21st March. Meanwhile, the interest rate expectations of market participants at the end of 2018 practically match the Fed’s projections. We share the market expectation that the next interest rate move is likely to take place in March. For 2018 as a whole, we also anticipate three in-terest rate hikes, thus the key interest rate target range at the end of the year is 2 – 2.25%. US overnight rate, market expectations from forward rates on the USD money market and FOMC key interest projections and LBBW fore-casts

5.2. US BOND MARKET: MAKING THE LEAP

INTO THE BEAR MARKET? DOUBLE-TOP AT AROUND 2.65% OVERCOME – IS A SALE IMPENDING NOW?

The US bond market is not only being affected by growing speculation about an interest rate hike but also by:

1) Rising long-term inflation expectations. 2) Rising EUR interest due to more hawkish sig-nals from the ECB. 3) Speculation that even the BoJ could be heading for a change of monetary policy => However, we deem this to be clearly too premature! 4) Rumours that China could throttle or even stop its treasury purchases => Rumours about a change of Chinese investment strategy persist once again but there are no clear indications so far. Yield of 10-year US treasuries and long-term trend

5.3. TWO REASONS WHY 10-YEAR US

INTEREST DOES NOT (CONSISTENTLY) RISE ABOVE 3%: 1. HIGHER INTEREST ADVANTAGE SHOULD INCREASINGLY ENTICE JAPANESE INVESTORS.

The interest rate advantage of 10-year treasuries over 10-year Japanese JGBs is now around 2.7% points and thus a nine-year high. The Japanese central bank is currently setting 10-year interest close to 0% and is also likely to con-tinue to do so for the foreseeable future.

5. INTEREST


5.1. FED HEADING TOWARDS ANOTHER INTEREST RATE HIKE IN MARCH. WE NOW ASSUME THAT THERE WILL BE THREE INTEREST RATE MOVES IN 2018 – IN ACCORDANCE WITH MARKET EXPECTATIONS!

As expected, the US Federal Reserve left its key interest target range at 1.25% - 1.50%. However, its status report expresses raised expec-tations with regard to an increase of inflation – consequently a clear sign that the FOMC is target-ing the next interest increase at its first meeting under Jerome Powell on 20th/21st March. Meanwhile, the interest rate expectations of market participants at the end of 2018 practically match the Fed’s projections. We share the market expectation that the next interest rate move is likely to take place in March. For 2018 as a whole, we also anticipate three in-terest rate hikes, thus the key interest rate target range at the end of the year is 2 – 2.25%. US overnight rate, market expectations from forward rates on the USD money market and FOMC key interest projections and LBBW fore-casts

5.2. US BOND MARKET: MAKING THE LEAP

INTO THE BEAR MARKET? DOUBLE-TOP AT AROUND 2.65% OVERCOME – IS A SALE IMPENDING NOW?

The US bond market is not only being affected by growing speculation about an interest rate hike but also by:

1) Rising long-term inflation expectations. 2) Rising EUR interest due to more hawkish sig-nals from the ECB. 3) Speculation that even the BoJ could be heading for a change of monetary policy => However, we deem this to be clearly too premature! 4) Rumours that China could throttle or even stop its treasury purchases => Rumours about a change of Chinese investment strategy persist once again but there are no clear indications so far. Yield of 10-year US treasuries and long-term trend


INTEREST DOES NOT (CONSISTENTLY) RISE ABOVE 3%: 1. HIGHER INTEREST ADVANTAGE SHOULD INCREASINGLY ENTICE JAPANESE INVESTORS.

The interest rate advantage of 10-year treasuries over 10-year Japanese JGBs is now around 2.7% points and thus a nine-year high. The Japanese central bank is currently setting 10-year interest close to 0% and is also likely to con-tinue to do so for the foreseeable future.

5. INTEREST


The last time that the interest rate advantage of US treasuries consistently rose above the mark of three percentage points was during the dot-com bubble around the year 2000 – thus in an environ-ment of considerably higher GDP growth and infla-tion figures. In the three per cent point range the interest rate advantage for Japanese investors seems to be so attractive that they are increasingly switching to US bonds. Yield of 10-year US treasuries, 10-year Japa-nese government bonds and yield differential


INTEREST DOES NOT (CONSISTENTLY) RISE ABOVE 3%: 2. FED SEES NEUTRAL KEY INTEREST JUST BELOW 3%.

The US Federal Reserve has revised its estimate for neutral key interest (a measure for the ex-pected long-term average key interest level over economic cycles) successively downwards in pre-vious years. Neutral interest was estimated to be 4.25% in 2012 but was only 2.75% recently. Long-term forward yields on the US government market never consistently and clearly rose above this neutral key interest level in previous years. Possible explanation: Forward purchases at this level are becoming increasingly more attractive for

investors, thus further upward yield potential is restricted. Long-term forward yields for 5-year and 10-year US treasuries as well as neutral key interest in accordance with Federal Reserve’s median projection


6.1. PREVIOUS RECORD EARNINGS LIKELY TO BE SIGNIFICANTLY TOPPED IN THE COURSE OF US Q4 REPORTING – QUALITY OF EARNINGS SAW FURTHER IMPROVEMENT.

Now that a third of companies in the S&P 500 have reported on the 4th quarter, everything suggests a significant improvement of the record earnings achieved so far in Q3. Whilst the non-financials have increased their Q3 earnings so far by 7.4% on average, the earnings of the financials have increased by 3.7%. Compared with the 4th quarter of 2016 this is an improvement by 13.8% (NF) and 9.8% (FIN) respectively. The earnings reported so far were above expectations by 3.7% (NF) and 4.7% (FIN). In addition, the earnings quality improved further. The difference between the gross (losses = earn-ings from zero) and net (losses deducted from earnings) earnings calculation in the 1st quarter of 2016 was still at 2.3% but now it is only 0.2%. S&P 500: Development of quarterly earnings In earnings points and per cent

6.2. HIGHER EXTERNAL VALUE OF THE

EURO LIKELY TO HAVE A NEGATIVE IMPACT AS A GENERAL TENDENCY IN DOMESTIC REPORT SEASON – US TAX REFORM POSITIVE FOR EARNING IN 2018.

Since the domestic reporting season is only in the early stages, it is still too early to give an evalua-tion. However, we expect that the high external

value of the euro will be negatively impacted in the figures as a general tendency. The revaluation of latent taxes incurred in the USA is likely to have a positive or negative impact depending on the com-pany. For 2018 however, the US tax reform should have a generally positive effect. Therefore, it will be interesting to see the corporate outlooks. Whilst DAX earning for 2018 is currently forecast-ed around 6% higher than for 2017, estimates for 2019 with 1001 earning points were 6% above it again. Since the start of the year, analysts have slightly raised each of their estimates for 2018 and 2019. DAX: Earnings trend (revised by dividend ef-fect) In earnings points

6.3. IN THE EVENT THAT UPWARD

EARNINGS REVISIONS BY THE END OF 2018 WERE OF SIMILAR EXTENT AS LAST YEAR (+3.0%) THE “NEUTRAL” DAX-LEVEL WOULD BE 14,000 POINTS.

With a price to earnings ratio of 14.0, the DAX is still valued only slightly higher than its historic me-dian (13.3).

6. STOCKS


6.1. PREVIOUS RECORD EARNINGS LIKELY TO BE SIGNIFICANTLY TOPPED IN THE COURSE OF US Q4 REPORTING – QUALITY OF EARNINGS SAW FURTHER IMPROVEMENT.

Now that a third of companies in the S&P 500 have reported on the 4th quarter, everything suggests a significant improvement of the record earnings achieved so far in Q3. Whilst the non-financials have increased their Q3 earnings so far by 7.4% on average, the earnings of the financials have increased by 3.7%. Compared with the 4th quarter of 2016 this is an improvement by 13.8% (NF) and 9.8% (FIN) respectively. The earnings reported so far were above expectations by 3.7% (NF) and 4.7% (FIN). In addition, the earnings quality improved further. The difference between the gross (losses = earn-ings from zero) and net (losses deducted from earnings) earnings calculation in the 1st quarter of 2016 was still at 2.3% but now it is only 0.2%. S&P 500: Development of quarterly earnings In earnings points and per cent

6.2. HIGHER EXTERNAL VALUE OF THE

EURO LIKELY TO HAVE A NEGATIVE IMPACT AS A GENERAL TENDENCY IN DOMESTIC REPORT SEASON – US TAX REFORM POSITIVE FOR EARNING IN 2018.

Since the domestic reporting season is only in the early stages, it is still too early to give an evalua-tion. However, we expect that the high external

value of the euro will be negatively impacted in the figures as a general tendency. The revaluation of latent taxes incurred in the USA is likely to have a positive or negative impact depending on the com-pany. For 2018 however, the US tax reform should have a generally positive effect. Therefore, it will be interesting to see the corporate outlooks. Whilst DAX earning for 2018 is currently forecast-ed around 6% higher than for 2017, estimates for 2019 with 1001 earning points were 6% above it again. Since the start of the year, analysts have slightly raised each of their estimates for 2018 and 2019. DAX: Earnings trend (revised by dividend ef-fect) In earnings points

6.3. IN THE EVENT THAT UPWARD

EARNINGS REVISIONS BY THE END OF 2018 WERE OF SIMILAR EXTENT AS LAST YEAR (+3.0%) THE “NEUTRAL” DAX-LEVEL WOULD BE 14,000 POINTS.

With a price to earnings ratio of 14.0, the DAX is still valued only slightly higher than its historic me-dian (13.3).

6. STOCKS


In case the current earnings estimates are also valid at the end of 2018, the “neutral” DAX level would be 13,600 points. Earnings revisions compared with the actual esti-mate would increase/decrease the neutral level accordingly. In case the “actual” revisions for 2018 turn out as they did for 2017 (+3.0%), the “neutral” DAX level would be around 14,000 points. In view of the much lower bond yields in historical comparison, it would be “normal” if the DAX also continued to be quoted above its neutral value. Our year-end forecast is based on conservative assumptions. “Earnings DAX” with earnings scenarios In index points

6.4. BASED ON EXPERIENCE IT IS NOT

PROVEN THAT A SHARPER INCREASE OF THE LONG-TERM BOND YIELD IS POISONOUS FOR THE ECONOMY, AS HAS BEEN CIRCULATED. IT IS QUITE THE OPPOSITE!

The yields of ten-year securities have significantly risen since the start of September 2017. Rising bond yields are commonly deemed to be poison-ous for stocks. In addition, a faltering US market would most probably have spin-off effects on other stock markets. At the present time, however, we see no problem with the rising bond yield. Generally, it is likely to

increase further against the background of three US key interest hikes this year. Historically, rising interest at the long end was mainly positive for stocks because they accompanied better econom-ic perspectives and corporate earnings. They were only a problem if the absolute yield level turned out to be high. Phases of sharply rising US long-term interest versus S&P 500 In per cent

6.5. IF LONG-TERM BOND YIELDS WERE TO

RISE, PARTICULARLY DUE TO INCREASING INFLATION, THIS WOULD LOOK DIFFERENT. IT IS DIFFICULT TO ENVISAGE IT ABOVE 4%.

Upward bond yields do not always reflect better economic perspectives but sometimes they are the consequence of rising inflation. Historic figures show that investors were hardly delighted with a rising inflation rate. As a rule, stocks developed better in the event of a decrease than when they rose. This applied to nearly all levels of inflation. In general, US inflation has risen since the start of 2015. At its current rate of 2.1%, headline inflation is still well below the minimum level for which stocks are really problematic (4%). Inflation expec-


tation lies marginally above at 2.3% and is also indexed without problem in the meantime. Inflation and S&P 500 In per cent

6.6. OUR FORECAST OF A RESURGENT US

DOLLAR WOULD APPEAR TO BODE WELL FOR THE DAX.

A weak US dollar deteriorates the competitive standing of strongly export-oriented German com-panies. It cannot be fully expected that the DAX will decrease when the dollar is weak or will in-crease during periods when the dollar is strong, even though experience shows it was often the case. However, it can be assumed that the com-petitive disadvantage of German companies during phases of dollar weakness leads to weaker DAX development compared with the US market and vice versa. Since QE & Co. the preceding correlations are seemingly no longer considered to be true. Now that the times of “easy money” are coming to an end, we assume that they will take effect again. Our forecast of a resurgent US dollar would appear to bode well for the DAX.

DAX in the light of a strongly changing Euro/US dollar relation In per cent

DAX in the light of a strongly changing Euro/US dollar relation In per cent


7.1. ECONOMY AND MARKET SCENARIOS. MAIN SCENARIO 65%.

Developments The global economy remains on a robust expan-sion path. GDP grows somewhat stronger world-wide in 2018 than in 2017. US GDP in 2018 grows by 2.4%, China’s economic output increases by 6.3%. The ECB lets its asset purchasing programme run until the end of 2018. According to the ECB, inter-est hikes can only be expected “some time” after the end of purchases, i.e. the second quarter of 2019 at the earliest. The consequences of Brexit are only affecting the economy in the Eurozone and in Germany to a minor extent. After formation of government in Germany and the elections in Italy, discussions on reforms will be initiated at European level. The profit development of companies benefits from the stable economy. Money market interest in the Eurozone remains negative, yields rise moderately. The Fed will cau-tiously continue its monetary policy in 2018.

7.2. ECONOMY AND MARKET SCENARIOS.

MAIN SCENARIO 20%. Developments Clear real economic revival. Downward risks fade into the background. The economy enters into a “Goldilocks Phase”: Strong growth without over-heating tendencies.

The Fed rapidly normalises its monetary policy in view of a favourable economy and rising wages. The ECB streamlines its monetary policy and in-creases key interest rates at the end of 2018. Corporate profits rise considerably in a generally positive context leading to a sustainable stock price increase in the long-term Clear yield increase in the USA and in Europe. Energy prices rise further. US stocks receive sus-tainable additional price boost through Trump poli-cy. 7.3. ECONOMY AND MARKET SCENARIOS.

MAIN SCENARIO 15%. Developments Under President Trump the USA counts on in-creasing protectionism and tariff trade barriers. The conflict over debt limits in the USA, with hard-ened fronts in Congress and towards the president leads to uncertainty on the financial markets. The “Brexit” risk becomes a reality. The EU’s tough negotiations with Great Britain will increase the economic damage to both parties “Hard landing” in China. The world economy is affected. There is pressure on the currencies of emerging markets and commodities prices. Risk aversion on the financial markets is increasing. Federal bonds are sought after as a safe haven. Yields are falling to record lows Corporate profits plummet massively. Flight from stocks. Migration pressure in the EU increases massively, foreclosure tendencies and separatism compro-mise internal trade and the economy along with it.

7. FORECASTS AND ASSET ALLOCATION


7.1. ECONOMY AND MARKET SCENARIOS. MAIN SCENARIO 65%.

Developments The global economy remains on a robust expan-sion path. GDP grows somewhat stronger world-wide in 2018 than in 2017. US GDP in 2018 grows by 2.4%, China’s economic output increases by 6.3%. The ECB lets its asset purchasing programme run until the end of 2018. According to the ECB, inter-est hikes can only be expected “some time” after the end of purchases, i.e. the second quarter of 2019 at the earliest. The consequences of Brexit are only affecting the economy in the Eurozone and in Germany to a minor extent. After formation of government in Germany and the elections in Italy, discussions on reforms will be initiated at European level. The profit development of companies benefits from the stable economy. Money market interest in the Eurozone remains negative, yields rise moderately. The Fed will cau-tiously continue its monetary policy in 2018.

7.2. ECONOMY AND MARKET SCENARIOS.

MAIN SCENARIO 20%. Developments Clear real economic revival. Downward risks fade into the background. The economy enters into a “Goldilocks Phase”: Strong growth without over-heating tendencies.

The Fed rapidly normalises its monetary policy in view of a favourable economy and rising wages. The ECB streamlines its monetary policy and in-creases key interest rates at the end of 2018. Corporate profits rise considerably in a generally positive context leading to a sustainable stock price increase in the long-term Clear yield increase in the USA and in Europe. Energy prices rise further. US stocks receive sus-tainable additional price boost through Trump poli-cy. 7.3. ECONOMY AND MARKET SCENARIOS.

MAIN SCENARIO 15%. Developments Under President Trump the USA counts on in-creasing protectionism and tariff trade barriers. The conflict over debt limits in the USA, with hard-ened fronts in Congress and towards the president leads to uncertainty on the financial markets. The “Brexit” risk becomes a reality. The EU’s tough negotiations with Great Britain will increase the economic damage to both parties “Hard landing” in China. The world economy is affected. There is pressure on the currencies of emerging markets and commodities prices. Risk aversion on the financial markets is increasing. Federal bonds are sought after as a safe haven. Yields are falling to record lows Corporate profits plummet massively. Flight from stocks. Migration pressure in the EU increases massively, foreclosure tendencies and separatism compro-mise internal trade and the economy along with it.

7. FORECASTS AND ASSET ALLOCATION


MARKET MONITOR


TRADITIONAL ASSET MANAGEMENT


Asset allocation100% bonds

BandwidthsMoney market 0-20%Bonds 80-100%Equities 0%

INCOMESTRATEGYAsset Allocation80% bonds20% equities

BandwidthsMoney market 0-20%Bonds 60-80% Equities 15-25%

Asset Allocation60% bonds40% equities

BandwidthsMoney market 0-20%Bonds 40-60%Equities 30-50%



Asset Allocation100% equities

INTEREST INCOMESTRATEGY

GROWTHSTRATEGY

BandwidthsMoney market 0-20%Bonds 0% Equities 80-100%

BALANCEDSTRATEGY

CAPITAL GAINSTRATEGY

The fund is invested exclusively in fixed-interestbearing instruments with a very broad diversification.

Our primary objective is to preserve thecapital and generate a regular income.

The focus of the ”growth“ strategy is oncapital appreciation through price gains.

The aim of the ”capital gain“ investment strategy is toachieve high capital appreciation over thelonger term through price gains.

Capital appreciation as of 31.01.2018since 01.01.2018 0.33%since 31.01.2017 5.47%since 5 years p.a. 5.77%

Key figures since 01.01.2003Overall return 97.00% Sharpe ratio 0.37Standarddeviation(since 5 years) 7.23% Correlation 0.92


Key figures since 01.01.2003Overall return 141.17% Sharpe ratio 0.33

Standarddeviation(since 5 years) 10.69% Correlation 0.93

Capital appreciation as of 31.01.2018since 01.01.2018 -0.84%since 31.01.2017 -2.72%since 5 years p.a. 0.55%


The aim of this strategy is to generate a regular incomeand achieve capital appreciation through price gains.



Capital appreciation as of 31.01.2018since 01.01.2018 -0.43%since 31.01.2017 0.40%since 5 years p.a. 2.33%


MoneyMarket5.00%

Equ. Euro Countries

21.47%

Equ. restof Europe

8.93%

Equ. N. America45.60%

Equ.Japan7.60%

Equ.EmergingMarkets11.40%

MoneyMarket20.00%

EUR Bonds 61.25%

GBP 3.00%SEK 2.25%

DKK 2.25%

USD7.50%

JPY2.25%

AUD1.50%

MoneyMarket20.00%

EUR-Bonds45.00%

FC-Bonds15.00%

Equ. Euro Countries

5.17%

Equ. restof Europe

1.88%


Equ.Japan2.00%


MoneyMarket20.00%

EUR-Bonds28.75%

FW-Bonds11.25%

Equ. EuroCountries

10.34%

Equ. restof Europe

3.76%

Equ. N.America17.10%

Equ.Japan4.00%


MoneyMarket20.00%

EUR-Bonds12.50%

FC-Bonds7.50%

Equ. Euro Countries

15.51%

Equ. restof Europe

5.64%


Equ.Japan6.00%

Equ.EmerginMarkets7.20%


Asset allocation100% bonds

BandwidthsMoney market 0-20%Bonds 80-100%Equities 0%

INCOMESTRATEGYAsset Allocation80% bonds20% equities



BandwidthsMoney market 0-20%Bonds 40-60%Equities 30-50%



Asset Allocation100% equities

INTEREST INCOMESTRATEGY

GROWTHSTRATEGY

BandwidthsMoney market 0-20%Bonds 0% Equities 80-100%

BALANCEDSTRATEGY

CAPITAL GAINSTRATEGY

The fund is invested exclusively in fixed-interestbearing instruments with a very broad diversification.

Our primary objective is to preserve thecapital and generate a regular income.

The focus of the ”growth“ strategy is oncapital appreciation through price gains.

The aim of the ”capital gain“ investment strategy is toachieve high capital appreciation over thelonger term through price gains.




Key figures since 01.01.2003Overall return 141.17% Sharpe ratio 0.33

Standarddeviation(since 5 years) 10.69% Correlation 0.93

Capital appreciation as of 31.01.2018since 01.01.2018 -0.84%since 31.01.2017 -2.72%since 5 years p.a. 0.55%


The aim of this strategy is to generate a regular incomeand achieve capital appreciation through price gains.



Capital appreciation as of 31.01.2018since 01.01.2018 -0.43%since 31.01.2017 0.40%since 5 years p.a. 2.33%


MoneyMarket5.00%

Equ. Euro Countries

21.47%

Equ. restof Europe

8.93%


Equ.Japan7.60%


MoneyMarket20.00%

EUR Bonds 61.25%

GBP 3.00%SEK 2.25%

DKK 2.25%

USD7.50%

JPY2.25%

AUD1.50%

MoneyMarket20.00%

EUR-Bonds45.00%

FC-Bonds15.00%

Equ. Euro Countries

5.17%

Equ. restof Europe

1.88%


Equ.Japan2.00%


MoneyMarket20.00%

EUR-Bonds28.75%

FW-Bonds11.25%

Equ. EuroCountries

10.34%

Equ. restof Europe

3.76%

Equ. N.America17.10%

Equ.Japan4.00%


MoneyMarket20.00%

EUR-Bonds12.50%

FC-Bonds7.50%

Equ. Euro Countries

15.51%

Equ. restof Europe

5.64%


Equ.Japan6.00%

Equ.EmerginMarkets7.20%


MARKET MONITOR


MARKET MONITOR



EconomicsGDP (yoy in %) Inflation (yoy in %) 3-month interest rates (in %)

12/2016 01/2018 02/2018 02/2017 02/2016CH 0.90 CH 0.70 -0.74 -0.73 -0.80DE 1.80 DE 1.20 -0.38 -0.35 -0.22EU 2.00 EU 1.60 2.02 1.06 0.63USA 1.80 USA 2.10 0.58 0.36 0.59UK 2.00 UK 3.00 -0.06 -0.01 -0.01JPN 1.50 JPN 1.40 1.50 1.49 1.93AUS 2.40 AUS 2.00 3.40 3.24 2.30CN 6.80 CN 1.50

10-year treasury yields (in %)

Currencies

EUR/USD

EUR/CHF

6.806.80

0.601.302.372.00

1.2194

2.101.102.70

close end of 02/2018 YTD (in %)

12/201512/20171.902.902.582.501.401.502.80

EUR/USDEUR/CHFUSD/CHFUSD/JPYUSD/RUBUSD/TRYGBP/USDGBP/CHF 1.2997

1.3760

1.15180.9446106.6856.34

3.7992

0.101.402.50

1m-1.8-0.4

10.06.44.8

-0.201.701.80

6m2.40.9

CHFEURUSDGBPJPY

-1.5-3.0-2.9

01/2016-1.30-0.400.301.400.30

01/20170.302.901.702.501.80

1.4-2.30.2

AUDCNY

5y-6.6

-8.5

-5.80.8

15.384.4

111.2-9.3

30d volatility7.86.09.18.5

12.010.010.47.6

-3.1-5.3-1.60.21.9

-1.3

1y15.38.3

-6.1-5.4-3.44.2

11.14.4

1.2-3.0-1.7

1.5-1.6

-2

0

2

4

6

8

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

US

Euro

Swiss

1

1.2

1.4

1.6

1.8

2014 2015 2016 2017 2018

GBP/USD

0.9

1

1.1

1.2

1.3

2014 2015 2016 2017 20180.8

0.9

1

1.1

2014 2015 2016 2017 2018

USD/CHF

1

1.1

1.2

1.3

1.4

2014 2015 2016 2017 2018


Stocksclose end of 02/2018 YTD (in %) 1m 6m 1y 5y 30d volatility

8'906 -6.0 -4.6 -0.2 4.2 17.3 9.43'439 -1.5 -4.7 0.5 3.6 30.6 10.0

12'436 -3.4 -5.7 3.2 5.1 60.6 11.42'297 6.7 0.3 13.6 12.8 54.6 12.0

118'951 1.2 -0.5 8.1 36.0 49.9 19.1295 -1.1 -3.0 5.1 9.7 53.3 7.2

close end of 02/2018 YTD (in %) 1m 6m 1y 5y 30d volatility25'029 0.8 -4.3 14.0 20.3 78.1 8.6

2'714 0.7 -3.9 9.8 14.8 79.2 8.37'273 3.8 -1.9 13.1 24.8 130.1 9.9

close end of 02/2018 YTD (in %) 1m 6m 1y 5y 30d volatility22'068 -6.1 -4.5 12.3 15.4 90.9 14.330'845 1.1 -6.2 10.3 29.9 34.0 11.5

4'024 -1.6 -5.9 5.3 16.5 50.5 12.0

close end of 02/2018 YTD (in %) 1m 6m 1y 5y 30d volatility1'195 3.3 -4.7 9.9 27.6 13.3 9.8

YTD Indices: 5 Year Indices:

Commodities Energy in USD close end of 02/2018 YTD (in %) 1m 6m 1y 5y 30d volatility

61.6 2.2 -4.5 24.2 11.8 -26.1 14.664.7 -1.6 -5.6 21.5 14.5 NV 14.6

2.7 -4.5 -6.7 -8.9 -3.9 -42.6 26.2

Metals in USD close end of 02/2018 YTD (in %) 1m 6m 1y 5y 30d volatility1'318.3 0.1 -2.0 -0.2 5.6 -16.5 8.8

16.4 -4.5 -5.4 -6.6 -10.4 -42.5 15.7983.6 4.2 -1.8 -1.6 -4.0 -37.9 12.0

WTI Crude Oil per barrel in USD Gold per troy ounce in USD

SMI

GoldSilverPlatinum

WTI Crude Oil Brent Crude OilNatural Gas

SH Shenzhen CSI 300

MSCI Emerging Markets

EMEA

Asia/Pacific

Emergin Markets

DaxMOEX Russia Borsa Istanbul 100Euro Stoxx Small 200

Nikkei 225HK Hang Seng

Euro Stoxx 50

AmericasDow JonesS&P 500 Nasdaq

-20%

0%

20%

40%

60%

80%

2014 2015 2016 2017 2018

Dow Jones Euro Stoxx 50 SMI Nikkei

750

1000

1250

1500

2014 2015 2016 2017 201825

50

75

100

2014 2015 2016 2017 2018

-20%

-10%

0%

10%

01/2018 02/2018

Dow Jones Euro Stoxx 50 SMI Nikkei

DISCLAIMERThe information provided in this publication is based on publicly accessible sources that we are not in a position to check but which we regard as reliable. Some of the analyses and commentaries were made available to us by the «Vorarlberger Landes- und Hypotheken-bank AG» in Austria. In our investment service we present our view on the market and products at the time of the copy deadline. We do so for information purposes only, without responsibility or any claim to completeness, and independent of any possible involvement in these products on our own part.

This publication is not intended as a substitute for personal consulting. It serves solely as a source of information and may not be re-garded as either an offer or an invitation to buy or sell. Please contact your investment adviser for additional, more topical information on specific investment opportunities, and for individual investment advice.

BENDURA BANK AG

Dr. INSAM Andreas, CEODr. LACKINGER Gerhard, Mag., Deputy CEO / COODr. KRENN Peter, CSOMÄDER Stefan, CFOWYSS Marcel, MSc, LL.M., CRO

ABLASSER Sandra, BA, Head of Account AdministrationALLES Irina, Dipl.-Bw. (FH), Individual Clients Global MarketsANDRZEJUK Konrad, MSc, Institutional Clients Eastern EuropeBADER Peter, Mag., Head of Institutional ClientsBASIC Mike, Mag., Institutional ClientsBOUKAL Robert W., MBA, Head of Family Office EurasiaCHROMY Michelle, Payment TransactionsCIL Sena, BA, Individual Clients TurkeyDAMRELYOVA Jana, Individual Clients Central EuropeDOLEV-ALGE Ory, Family Office Global MarketsDRESCHER Marc, Deputy Head of LoansDÜRR Marcel, BSc., IT Business SolutionsDÜSEL Rahel, Compliance DepartmentENZENHOFER Selina, Compliance DepartmentDr. FEDERSPIEL Markus, Institutional Clients Head of Central EuropeFEIX Alexander, Mag., Deputy Head of Family Office EurasiaFLEISCH Katharina, BA, Institutional ClientsFORSTER Philipp, B.Sc., Head of Payment TransactionsFRICK Joël Jan, CIIA, Deputy Head of Trading & TreasuryFRITSCHE Simone, MMag., Institutional Clients Head of Global MarketsFRITZ Mechtild, Payment TransactionsFUSSENEGGER Julia, BSc, Deputy Head of Account AdministrationGANAHL Barbara, ReceptionGAO Yun, MA, Family Office EurasiaGÖKTAS Yeliz, Individual Clients TurkeyGRABHER Katharina, Head of MarketingGSTACH Günter, LL.M., Head of LoansGULUA Beniamin, Mag., Institutional Clients Head of Eastern EuropeHAJDOVÁ Markéta, Mag., Individual Clients Central EuropeHEUBACH Julia, B.Sc., Institutional Clients Domestic MarketHETZENECKER Friedrich, Head of Family Office GermanyHIDASI Beáta, Individual Clients Global MarketsHOBI Tamara, Payment TransactionsHUBER Rolf, IT InfrastructureJAUG Sanja, B.Sc., Family Office Global MarketsJENEWEIN Fabian, MSc, Deputy Head of Depositary & Security Issuer ServicesKAYAR Canan, Mag., Individual Clients TurkeyKOCAHAN Azime, Individual Clients Head of TurkeyKÖLBENER Caroline, Institutional Clients Domestic MarketKONAVSKA Aleksandra, BA, Family Office Global MarketsKÜCÜKER Hanife, Individual Clients TurkeyKÜNG Christoph, Mag., CPM, Deputy Head of Asset ManagementLOOSE Holger, Individual Clients Head of Global MarketsLUDESCHER Anzhelika, MBA, Individual Clients Head of Eurasia

LUDESCHER Thomas, MSc, CFA, Head of Trading & TreasuryLURINA-RÜEGG Sanita, Individual Clients Global MarketsMARCIELLO Pasquale, CIIA, CIWM, Head of Asset ManagementMARTE Julia, Accounting & ControllingDr. MARTIN-GRASS Gabriele, MMag. (FH), Head of Legal & Tax DepartmentMELAY Ivan, MSc, Individual Clients Head of Central EuropeMILD Agne, MSc, Institutional Clients Eastern EuropeMORENO Elisabet, Account AdministrationMOXON Chester, Deputy Head of IT & Business DevelopmentMUJIC Nermina, BA, Family Office Global MarketsMUSTER Markus K., MSc, Head of IT & Business DevelopmentNÄF Christian, BSc., IT Business SolutionsOBERDORFER Richard, Mag., LL.M., Head of Internal AuditOHNEBERG Claudia, Head of Depositary & Security Issuer ServicesOUSCHAN Isabel, MMag., Institutional Clients Central EuropePFISTER Gernot, MMag., Compliance DepartmentPLANK Marika, MA, Assistant to the BoardPÖSCHL Markus, Mag. iur., Deputy Head of Legal & Tax DepartmentRATZ Stefan, Dipl.-Bw. (BA), Institutional Clients Head of Domestic MarketREICHART Norbert, Head of Family Office Global MarketsRHOMBERG Manuela, Head of ReceptionRINDERER Alexander, Institutional Clients Head of Global MarketsROSENBOOM Tatjana, LL.M., Deputy Head of Compliance DepartmentSCHMID Urs, SettlementSCHORM Marcus, Institutional Clients Eastern EuropeSPALT Tobias, MSc, Family Office Global MarketsSTEURER Theresa, Dipl.-Bw., Legal & Tax DepartmentSTIER Stefan K., Ass. jur., Head of Compliance DepartmentSTRUB Maryna, M.A., Institutional ClientsSZREDER Maciej, MSc, Individual Clients Central EuropeTSIOBANIDIS Olga, ReceptionUNTERKIRCHER Markus, IT Infrastructure & IT SecurityUSEINI Serif, SettlementVEDUNOVA Julia, Mag., Individual Clients EurasiaVETSCH Peter, lic. iur., RA (CH), LL.M. CAS Forensics Taxation, Legal & Tax DepartmentVOLGGER Andreas, Head of SettlementVUSER Darko, B.Sc.Econ, Family Office Global MarketsWEBER Gulfiya, BA, Individual Clients EurasiaWEI Lin, Family Office EurasiaWELTE Markus, Information Technology-SupportWELTE Martina, Mag. phil., Institutional Clients Global MarketsWERLE Bettina, BA, Account AdministrationWERLE Chantal, BA, Institutional Clients Central EuropeWITTING Corina, Compliance DepartmentWOHLWEND-ZHAO Fan, BBA, BA, Family Office EurasiaZANINI Silvia, Mag., Head of Family Office ItalyZELLER Mariella, Assistant to the BoardZHANG Yijia, MSc, Family Office EurasiaZIMMERMANN Desiree, Compliance Department

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