Global Market Outlook - Standard Chartered · PDF fileGlobal Market Outlook ... we continue to...

14
This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank Global equities continue to climb the wall of worry. It is normal for equity markets to start rallying even when there are a lot of fears in the market. Indeed, many believe this is when returns are strongest. This period of strong returns in the face of persistent fears is sometimes referred to as ‘climbing the wall of worry’. US equities have been climbing the wall of worry for some time. We went overweight US equities in April 2012. At the time, there were many excuses to ignore our views (see chart below). The deferment of the latest excuses, debt ceiling fears and the government shutdown, pushed the US market to a new all-time high within 24 hours. While we remain bullish on US equities, we believe Europe has greater scope to continue climbing the wall of worry in the coming 12 months. Investors are far from convinced the recent economic recovery will prove sustainable, for instance citing record unemployment levels. Meanwhile, banking sector stress tests are another reason to worry, as is the reducing popularity of the Euro project in some of the core countries, although notably not in Germany. Positives are being downplayed. The fact that the periphery countries have made substantial progress in addressing both fiscal and current account deficits has been lost on many. As has the fact that equity markets should do well from high unemployment levels as accelerating growth can occur with no concern about inflationary pressures. We expect strongly positive returns from European equities in the coming 12 months as investors start to accept the economic recovery is likely to be sustained, earnings are likely to accelerate and the political commitment to the single currency project remains strong. Contents Market Performance Summary Pg 2 Investment strategy Pg 3 Economic and policy outlook Pg 4 Asset class outlook Fixed income Pg 6 Equities Pg 7 Commodities Pg 9 Alternative strategies Pg 10 Foreign exchange Pg 10 Conclusion Pg 11 Asset allocation summary Pg 12 Economic & market calendar Pg 13 Disclaimer Pg 14 Steve Brice Chief Investment Strategist Rob Aspin, CFA Head, Equity Investment Strategy Manpreet Gill Head, FICC Investment Strategy Adi Monappa, CFA Head, Asset Allocation Audrey Goh, CFA Investment Strategist Victor Teo, CFA Investment Strategist Climbing the ‘wall of worry’ US equities are still climbing the ‘wall of worry’ Source: Bloomberg, Standard Chartered Global Market Outlook This reflects the views of the Wealth Management Group November 2013

Transcript of Global Market Outlook - Standard Chartered · PDF fileGlobal Market Outlook ... we continue to...

This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank

Global equities continue to climb the wall of worry. It is normal for

equity markets to start rallying even when there are a lot of fears in the

market. Indeed, many believe this is when returns are strongest. This

period of strong returns in the face of persistent fears is sometimes

referred to as ‘climbing the wall of worry’.

US equities have been climbing the wall of worry for some time. We

went overweight US equities in April 2012. At the time, there were many

excuses to ignore our views (see chart below). The deferment of the

latest excuses, debt ceiling fears and the government shutdown, pushed

the US market to a new all-time high within 24 hours.

While we remain bullish on US equities, we believe Europe has

greater scope to continue climbing the wall of worry in the coming

12 months. Investors are far from convinced the recent economic

recovery will prove sustainable, for instance citing record unemployment

levels. Meanwhile, banking sector stress tests are another reason to

worry, as is the reducing popularity of the Euro project in some of the

core countries, although notably not in Germany.

Positives are being downplayed. The fact that the periphery countries

have made substantial progress in addressing both fiscal and current

account deficits has been lost on many. As has the fact that equity

markets should do well from high unemployment levels as accelerating

growth can occur with no concern about inflationary pressures.

We expect strongly positive returns from European equities in the

coming 12 months as investors start to accept the economic recovery

is likely to be sustained, earnings are likely to accelerate and the

political commitment to the single currency project remains strong.

Contents Market Performance Summary Pg 2

Investment strategy Pg 3

Economic and policy outlook Pg 4

Asset class outlook

Fixed income Pg 6

Equities Pg 7

Commodities Pg 9

Alternative strategies Pg 10

Foreign exchange Pg 10

Conclusion Pg 11

Asset allocation summary Pg 12

Economic & market calendar Pg 13

Disclaimer Pg 14

Steve Brice Chief Investment Strategist

Rob Aspin, CFA Head, Equity Investment Strategy

Manpreet Gill Head, FICC Investment Strategy

Adi Monappa, CFA Head, Asset Allocation

Audrey Goh, CFA Investment Strategist

Victor Teo, CFA Investment Strategist

Climbing the ‘wall of worry’

US equities are still climbing the ‘wall of worry’

Source: Bloomberg, Standard Chartered

Global Market OutlookThis reflects the views of the Wealth Management GroupNovember 2013

Global Market Outlook

2

*Performance in USD terms unless otherwise stated, YTD period from 31 Dec 2012 – 16 May 2013 Sources: MSCI, JP Morgan, Barclays Capital, Citigroup, Dow Jones, HFRX, FTSE, Bloomberg, Standard Chartered

* All performance shown in USD terms unless otherwise stated. *YTD performance data from 31 Dec 2012 – 24 Oct 2013 and 1 Month performance from 24 Sep – 24 Oct 2013 Sources: MSCI, JP Morgan, Barclays Capital, Citigroup, Dow Jones, HFRX, FTSE, Bloomberg, Standard Chartered

Market Performance Summary (Year to date & 1 Month)*

-1.9%2.1%

5.4%8.8%

12.2%

-10.8%-7.4%

-1.3%-1.0%-0.3%

4.6%

-21.3%-19.6%

-14.0%-9.2%-8.5%

2.1%

0.9%1.0%

6.0%6.8%

12.3%

-5.6%-2.9%

-1.5%-1.0%-0.8%

3.6%

1.3%7.8%

14.2%14.9%

19.3%19.6%

23.1%24.1%

26.5%32.2%32.6%

-6.8%-5.4%

-4.0%-0.5%-0.1%0.0%

3.5%5.6%

11.2%17.0%

19.3%21.3%22.2%22.3%

24.7%26.1%

30% ‐10% 10% 30%

1234567891011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556575859606162636465666768697071

Year to Date

0.3%0.3%

0.9%1.7%

1.2%

1.5%2.5%

1.4%1.0%1.2%

2.4%

3.4%1.8%2.1%

0.4%0.3%

-0.7%

2.0%2.1%

1.9%2.2%

4.0%

2.3%3.0%

0.6%2.0%

2.8%3.0%

3.0%3.8%

2.6%2.8%2.9%2.9%

4.2%6.3%

3.3%3.8%

3.5%

1.9%6.3%

2.3%4.2%

2.1%-1.6%

2.0%2.9%

4.9%2.9%

3.4%2.1%

4.7%3.5%3.4%

0.9%

‐4% ‐2% 0% 2% 4% 6% 8%

Macro CTAsArbitrage

Composite (All strategies)Equity Long/Short

Event Driven

JPYAUDSGD

Asia ex-JapanGBPEUR

Precious MetalGold

Industrial MetalAgriculture

Diversified CommodityCrude Oil

Global IG CorporatesAsia High Yield Corporates

US High YieldGlobal High Yield Corporates

Europe High Yield

EM IG SovereignAsia EM Local Currency

US SovereignGlobal IG Sovereign

Global HY SovereignEU Sovereign

MaterialsGlobal Property Equity/REITs

EnergyUtilities

Consumer StaplesIT

FinancialTelecomIndustrial

HealthcareConsumer Discretionary

BrazilIndia

EM ex AsiaAfrica

Emerging Markets (EM)China

Asia ex-JapanRussia

AustraliaGlobal High Dividend Yield Equities

Global equitiesMiddle East

EuropeDeveloped Markets (DM)

USJapan

Alternatives

FX (against USD)

Commodity

Bonds | Credit

Equity | Country & Region

Equity | Sector

Bonds | Sovereign

1 Month

Global Market Outlook

3

Over the next 12 months, we expect:

equity markets to perform well, led by Developed markets (DM).

Asia ex-Japan expected to generate positive returns

the recent strong performance of investment grade bonds to

reverse and generate negative returns

US and Europe high yield to generate positive returns

Paradoxically, the recent government shutdown/debt ceiling debacle

should prove positive for global equities. With economic data likely to be

weak near term, the Fed may further delay the tapering of asset purchases.

This is supportive for global equities and may lead to short term out-

performance of Emerging market (EM) equity markets while offering an

opportunity to reduce Asian local currency bond exposures.

However, we continue to have a preference for DM equity markets on a

6-12 month basis. We expect liquidity conditions in Europe and Japan to

continue easing and even when tapering begins in the US, we believe this

will have a limited impact on the US equity market. However, eventually

liquidity conditions in EM may become less supportive - we have already had

a taste of what tapering could mean for currencies and liquidity in the region.

Additionally, China is proactively trying to control credit creation.

Under-performance relative to DM, but still positive performance. We

expect EM/Asia ex-Japan (AXJ) equities to under-perform DM over the next

6-12 months. That said, we believe AXJ markets will generate positive

returns given still-reasonable earnings growth, cheap valuations and a 2.6%

dividend yield. Therefore, we prefer a diversified global equity exposure,

tilted towards DM equities, but certainly not exclusively DM-focused.

USD-denominated investment grade bonds expected to generate

negative returns over the next 12 months. We believe recent positive

returns are likely to reverse as the uptrend in yields resumes once economic

data rebounds. Thus, we prefer to focus on high yield credit in the US and

Europe where we expect low, but positive, returns over the next 12 months.

We still see DM equities as the favoured asset class on a 12 month

view. EM equities could outperform in the short term, and are likely to

generate positive returns over the next 12 months.

B.R.I.D.G.E. themes performing well so far B.R.I.D.G.E. performance YTD (USD)*

* For the period 31 Dec 2012 to 24 Oct 2013 Source: Bloomberg, Standard Chartered * Income basket is equally weighted performance of global high dividend yielding equities (MSCI ACWI High Dividend Yield USD),Global HY bonds (BarCap Global HY TR USD) and Asian local curr bonds (BarCap Asia Local Net TR USD, until 20 June)

Asset Performance (USD)*

* For the period 24 Sept to 24 Oct 2013

Source: Bloomberg, Standard Chartered Indices are JP Morgan US 3M Cash Index, MSCI AC World TR Net, CITI World BIG, DJ-UBS Commodities, DXY and ADXY

‐1.0%

6.8%

‐5.7%

17.0%

11.1%

19.3%

-12% -7% -2% 3% 8% 13% 18%

Overweight Assets

Underweight Assets

+ High Dividend Yield Equities

Diversified Income Basket

Global Equities

+ Asia Local Currency Bonds

+ Global High Yield Bonds

G3 IG Bonds

Trade closed on 20 June 2013

0.97

-1.71

0.27

2.02

3.36

0.03

-3 -1 1 3 5

Asian FX

USD Index

Commodities

Bonds

Equities

Cash

%

Investment Strategy: ‘Risk on’ extended

Asset allocation summary*

Source: Standard Chartered, *’start date’ reflects the date at which this tactical stance was initiated

Asset Class Relative Outlook Start Date Relative Outlook Start Date

Cash UW Feb-12 Cash UW Feb-13

Fixed Income UW Jan-11 UW Jan-11

Equity OW Aug-12 N Oct-12

Commodities UW Jun-13 OW Sep-11

Alternatives OW Jun-13 N Sep-12

US OW Apr-12

Europe OW Jul-13

Legend Japan N Apr-13

Asia ex-Japan UW Jun-13

OW - Overweight N - Neutral UW - Underweight Other EM UW Aug-12

DM - Developed Markets Commodities UW Jun-13

EM - Emerging Markets Alternatives OW Jun-13

DM Investment Grade

EM Investment Grade

DM High Yield

EM High Yield

Sub-asset Class

Equity

Start Date - Date at which this tactical stance was initiated

Fixed Income

Global Market Outlook

4

Data becoming more mixed.

In the US, data has become more mixed. New orders sentiment remains

consistent with strong growth going forward while housing data has

stabilised. However, employment data has continued to soften.

In Europe and Japan, the data continues to point to a sustained

recovery with business confidence remaining firm.

In Asia, the economy has stabilised, but we continue to believe the

Chinese authorities do not want too strong an economic rebound. This

view is reinforced by recent interest rate moves and policy statements.

US: Still on recovery path

While data may soften in the near term, the recovery remains on track.

The government shutdown and last minute deal to avoid a breach of the debt

ceiling is likely to have negatively impacted sentiment and the economy. This

likely pushes Fed tapering into 2014.

Labour market data weakens. The employment report has been weak

for three consecutive months. More recently, initial benefit claims have

risen. While the latter has been caused by temporary factors, it is adding

to concerns the recent slowdown in job creation will extend.

Housing market data mixed. After a period of weakness, the situation

is stabilising. Construction activity is starting to increase and house

prices are still rising, reducing the number of home-owners that are in

negative equity.

Business confidence remains robust. Business confidence indices for

both the manufacturing and service sectors remain well above the 50

level which separates expansion and contraction. Meanwhile, the new

orders indices are the strongest areas of both surveys.

Government indecision has three implications:

Growth: Near term data releases may disappoint as the effects of the

government shutdown and uncertainty surrounding the debt ceiling talks

undermine activity.

Tapering: This backdrop is likely to persuade FOMC members to hold

off on tapering its asset purchases this year. We now expect the Fed to

taper only in Q1, with a bias to this happening later rather than earlier. It

would require strong upside data surprises to bring tapering to

December, in our opinion. It is important to note, however, that the

composition of FOMC voting members becomes more hawkish in 2014.

Chances of a long term fiscal deal have increased: Both political

parties and the President have seen dissatisfaction ratings rise. We

believe this increases the incentive to get a deal done before we run into

the debt ceiling again in Q1/Q2 of next year. The key is whether the

politics within the Republican Party allow for this to happen.

Europe: Recovery continues

Euro area business confidence data remains firm. Business

confidence data continues to point to an expansion in both the

manufacturing and service sectors. While we saw a marginal decline in

the latest surveys, they remained well above the 50 level – which

Positive economic surprises starting to wane Economic surprise indices – US & Europe

Source: Citigroup, Bloomberg, Standard Chartered

US labour market data weakens slightlyUS non farm payroll vs. initial jobless claims

Source: Bloomberg, Standard Chartered

US housing market is still on an uptrend NAHB index and US home price index %,y/y

Source: Bloomberg, Standard Chartered

US forward-looking indicators still strong US ISM new orders – Manufacturing and non-manufacturing

Source: Bloomberg, Standard Chartered

-210

-160

-110

-60

-10

40

90

140

Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

Ind

ex

US Europe

300

350

400

450

500

550

600

650

700

-1000

-800

-600

-400

-200

0

200

400

600

Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

'000

'000

US nonfarm payroll 3mma Initial jobless claims 4wma (RHS)

-15

-10

-5

0

5

10

0

10

20

30

40

50

60

70

Sep-08 Aug-09 Jul-10 Jun-11 May-12 Apr-13

%

Ind

ex

NAHB Index Home price index y/y (RHS)

30

35

40

45

50

55

60

65

70

Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13

Ind

ex

ISM Manufacturing PMI ISM Non-Manufacturing

Economic and policy outlook

Global Market Outlook

5

separates sector expansion from contraction – and was likely affected

by short term political uncertainty in both the US and Germany.

Economy sweet spot to extend. Inflation remains low and falling. High

levels of unemployment mean wage pressures are unlikely to increase

for many months, and possibly years, to come. This view is reinforced

by the continually dovish stance taken by European Central Bank

officials with a potential interest rate cut and another liquidity injection

still being discussed.

Banking sector stress tests important. The ECB is due to start

examining the health of Euro area banks in November. This will be key

as it may encourage banks to boost capital ratios – either by

constraining lending or raise capital – as well as raising provisions. This

is a potential source of risk.

Asia: Japan recovering, positive surprises in Asia ex-Japan wane

Japan

Signs on capital spending positive. The Bank of Japan’s quarterly

survey of Japanese companies showed that business investment plans

are accelerating. It seems business leaders are becoming increasingly

optimistic that ‘Abenomics’ will work. This optimism could prove self-

reinforcing, especially if wages start to accelerate.

Increase in consumption tax mitigated by the stimulus package.

The government has confirmed its plan to hike the consumption tax in

April 2014. However, the government has announced a stimulus

package to support the economy through the transition. Consensus

2014 growth forecasts have been stable since the announcement

suggesting analysts are willing to give the government the benefit of the

doubt and are projecting the recovery to extend into 2014.

China

Data may be taking a pause. There are signs the Chinese economic

recovery, following the government’s mini-stimulus, may be pausing.

Retail sales and industrial production data decelerated marginally while

power production fell. However, new loans accelerated, suggesting the

economy is unlikely to slump significantly in the coming months.

Policy: We expect the authorities to keep a tight leash on credit creation

as they try to balance off the need for growth and the need to avoid a

credit bubble. This view is reinforced by a central bank adviser saying

policy will be tightened slightly following the recent increase in inflation.

Rest of Asia:

Growth still relatively tepid. The wider Asian region appears to be

seeing the initial benefits of the recent pick-up in the global economy.

Growth is expected to pick up as we move into 2014.

EM policy: The likelihood that the Fed may not taper until Q1 2014 is likely

to alleviate some of the short term pressure on EM currencies, reducing the

need to tighten liquidity. However, many countries in the EM world are

entering their electoral cycles with significant current account deficits.

Therefore, we expect liquidity to generally tighten over the next 6-12 months.

Overall, the economic data is consistent with the ‘Transition to

Stronger Growth’ theme. However, we still foresee some speed bumps,

especially for some of the Emerging markets, along the way.

Europe manufacturing sector likely to strengthen Euro area – Manufacturing and services PMI

Source: Bloomberg, Standard Chartered

Economic surprises between China and Japan starting to converge Economic surprises indices – China & Japan

Source: Citigroup, Bloomberg, Standard Chartered

Japanese companies accelerate investment spending Japan Tankan business conditions, Manufacturing and Non-manufacturing

Source: Bloomberg, Standard Chartered

China recovery remains relatively tepid China manufacturing PMI and power production, % y/y

Source: Bloomberg, Standard Chartered

35

40

45

50

55

60

65

30

35

40

45

50

55

60

65

Mar-06 Apr-07 May-08 Jun-09 Jul-10 Aug-11 Sep-12

Ind

ex

Ind

ex

Europe Manufacturing PMI Europe Services PMI (RHS)

-150

-100

-50

0

50

100

Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

Ind

ex

China Japan

-40

-30

-20

-10

0

10

20

30

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

Mar-99 Apr-01 May-03 Jun-05 Jul-07 Aug-09 Sep-11

%%

Fixed Investments Manufacturing Fixed Investments Non-Manufacturing (RHS)

Global Market Outlook

6

We remain Underweight G3 government bonds. Rise in Treasury yields

is likely delayed, but is still expected as we move into 2014.

Developed market, both the US and Europe, high yield are our preferred

exposure within corporate credit.

We close our CNH bond Overweight on rising credit concerns.

The current rebound offers an opportunity to reduce Asia local

currency bond exposure at better levels.

G3 sovereign bonds:

Long-term path for US Treasury yields remains to the upside, but

short-term outlook is now likely more subdued. A higher likelihood of

a delay to Fed QE tapering is likely to delay a rise in US Treasury yields.

While much of the delay is now likely in the price, yields are likely to

remain largely around current levels until the tapering conversation

returns to the table. We maintain our view that 10-year Treasury yields

are likely to remain within a 2.4-3.0% range for now.

Longer-term, however, this does not change our view that Treasury

yields are likely to trend higher. Tapering of Fed QE purchases is only

delayed, not indefinitely postponed, in our view. We continue to believe

a short maturity profile is appropriate on a 12-month investment horizon.

Corporate credit (USD):

We remain comfortable with Developed market high yield credit.

Our case for US HY remains unchanged – lending conditions remain

comfortable, the all-in yield remains reasonably attractive and default

rates remain low. There are a number of similarities with European HY.

Valuations are largely in a similar place to US HY (see chart on left) and

an improving economic outlook arguably reduces forward-looking

default risks. While we believe risks for the HY asset class are gradually

rising, we believe Developed market HY (i.e. the US and Europe) offer

the most attractive relative value within corporate credit. As before,

however, we recognise total returns are likely to be moderate.

Local currency bonds:

Take profits on CNH bonds. ‘Dim Sum’ bonds have performed

reasonably well since we went Overweight, but we believe this is the

right time to take profits. We have noted before that the rising number of

ratings downgrades relative to upgrades is one piece of evidence

suggesting credit risks in Asia may be rising. Given the large number of

corporates (including unrated corporates) in the CNH universe, we

believe it makes sense to use the current rally to take profits.

Use rebound to reduce exposure to Asia local currency bonds. A

resumption in Fed tapering expectations is ultimately likely to lead to

renewed Asian FX weakness, similar to that witnessed in Q3. We see

the current rebound in this asset class as an opportunity for investors

who have not yet reduced exposure, as we suggested earlier, to do so.

Conclusion: Overweight Developed market HY. Continue to favour

corporates over sovereigns. Use current rebound to reduce exposure

to Asia local currency bonds, including taking profit on CNH bonds.

Stay Underweight G3 sovereigns.

Performance of Fixed income YTD* (USD)

* For the period 31 December 2012 to 24 October 2013

Source: Barclays Capital, JPMorgan, Bloomberg, Standard

Chartered. Indices are Barclays Capital US Agg, US High Yield,

Euro Agg, Pan-Euro High Yield, JPMorgan Asia Credit Index

Key support remains at 2.4% for US 10-year Treasury yields US treasury 10y yields trough to peak

Source: Bloomberg, Standard Chartered

European HY arguably offers slightly greater value relative to US HY US, Europe HY spreads, deviation from median

Source: Barcap, Bloomberg, Standard Chartered

Asian FX rebound likely offers an opportunity to reduce Asia local currency bond exposure BarCap EM Asia local currency, total returns index

Source: Barcap, Bloomberg, Standard Chartered

-0.62

6.02

6.84

12.31

-1.39

0.96

-4 0 4 8 12

US IG

US High Yield

Europe IG

Europe High Yield

Asia IG

Asia High Yield

%

2.401

3

5

7

9

11

13

15

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

%

+285bp

+325bp

+263bp

+160bp

-3

-1

1

3

5

7

Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13

%

BarCap Europe HY Barcap US HY

135

140

145

150

155

160

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13

Ind

ex

50% retracement from May to August fall

Fixed Income – Underweight

Global Market Outlook

7

Given a gradually improving macro backdrop, benign inflation and still

loose G3 monetary policy settings, we believe equities will continue to

outperform other asset classes and end the year higher – particularly in

the case of Europe. Our view is supported by the fact that we are

entering what is typically a strong seasonal period for equities.

While constructive, we are the first to acknowledge that risks remain

and investors need to be cognisant that a) equities have had a strong

run year-to-date and b) that it remains a very policy-driven environment.

We maintain our preference for the Developed markets (DM) over Emerging

markets (EM) on a 6-12 month basis. However, as we noted last month, the

decision by the Fed not to taper has been supportive to EM equities and they

continued to marginally outperform this month due to the US debt ceiling and

Federal budget discussions being pushed out. We see this EM rally possibly

continuing a little further into year end, at least until the fears over tapering

come back to haunt the market. With this is mind, we would continue to

advocate that investors that are relatively OW EM, consider to shift some of

this exposure into the Developed markets, with a particular preference for

Europe.

We stick with our preference for DM longer term on the basis of:

Economic Momentum: The growth differential keeps narrowing. While

the macro outlook is improving in DM, the reverse is increasingly the

case for EM, with growth expectations being revised down.

Earnings expectations: While EM valuations are relatively cheap,

earnings continue to be revised down and the weaker macro outlook

may remain a headwind on the longer term. In parts of DM such as

Europe, there is scope, albeit on the longer term, for significant

improvement in earnings, due to operational leverage and margin

improvement.

Liquidity and stronger USD: Fed tapering has, in our view, only been

postponed and the eventual tightening will likely be negative for EM in

relative terms.

Key region/country views:

Europe (OW): Since going OW in July the market has outperformed and

we expect further upside.

Underlying economic data has continued to show improvement.

Although very early in the earnings season, companies are beating

earnings expectations and this may be a reflection of margins

stabilising/improving, in line with our expectations. Margins have been

beaten down over the past years and there is upside potential here.

While valuations have largely reverted back to their 10yr mean, the

improvement in margins and outlook will likely be reflected in an

improvement in earnings revisions (we are already starting to see this).

Since investor sentiment improved in July, we have seen the more cyclical

parts of the market outperform, particularly the previously sold down areas.

This is in line with our preference for ‘defensive & early cyclicals’ and we

Performance of Equity markets YTD* (USD)

* For the period 31 December 2012 to 24 October 2013 Source: Bloomberg, Standard Chartered. Indices are MSCI World TR, MSCI Emerging Markets TR, MSCI USA TR, MSCI Europe TR USD, MSCI Asia ex-Japan TR USD, MSCI Japan TR USD

US and EU entering a period of seasonal strength US and Europe equity market – average monthly returns from 1993

Source: MSCI, Bloomberg, Standard Chartered

DM has significantly outperformed since YTD MSCI World/MSCI Emerging markets price ratio

Source: Bloomberg, Standard Chartered

EU margins have fallen and room to improve MSCI Europe and US operating margins

Source: Bloomberg, Standard Chartered

26.14

3.49

22.19

24.73

-0.07

22.25

19.31

-8 -2 4 10 16 22 28

Japan

Asia ex-Japan

Europe

US

Emerging Markets

Developed Markets

Global equities

%

80

85

90

95

100

105

110

115

120

125

130

Jan-13 Mar-13 May-13 Jul-13 Sep-13

Ind

exed

=100(J

an 2

013)

Global Developed Emerging

6

7

8

9

10

11

12

13

14

15

Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12

%

Europe US

Equity – Overweight

Global Market Outlook

8

find the best opportunities in the Industrials sector and particularly those

areas of the market that are more domestically focussed.

US (OW): While Europe is preferred, the US should still offer further

upside.

Earnings are so far coming in ahead of expectations – of the companies

that have reported, the earnings surprise has been 5.1%, with earnings

growth coming in at over 6%.

With the Fed still very supportive, underlying inflation remaining low, the

housing market improving, economic growth likely to pick up and

companies doing share buybacks, the equity market should be well

supported.

We believe valuations will eventually overshoot into overvalued territory.

The best opportunity in the US, in our opinion, is the Technology sector.

It offers great value, higher than average returns on capital invested and

should benefit from an eventual improvement in technology capex.

Japan (N): BoJ actions still supportive.

We still have a preference for taking hedged exposure to Japan

(expecting the Yen to weaken further) and to the exporters.

Asia ex-Japan (UW):

Asian equity markets still expected to generate positive returns.

Valuations vary substantially across the region, but overall they remain

cheap relative to history – on both price-to-book and price-earnings

perspectives – and cheap relative to bonds.

Earnings growth is expected to remain relatively robust – the consensus

is for over 12% earnings growth. While this may prove slightly optimistic,

we believe earnings growth will remain significantly positive. Add in the

c.2.6% dividend yield and it would take a significant decline in valuations

to generate negative returns over the next 12 months.

Preferred themes:

High dividend & high quality: With cash and sovereign bonds offering

so little yield, or income, investors are likely to still favour equities for

their high dividend yield. The European market for example still offers a

yield of c.3.5%.

‘Defensive & early cyclicals’: This theme is particularly relevant to the

US and EU. In the US, we have a key preference for Technology while

in Europe we favour the more domestic focussed players and Industrials.

Risk to our view. Equities have continued to climb the wall of worry. EM

equities have rallied as fears of a hard landing in China and tapering eased.

In DM, the markets continue to get unprecedented support from central

banks in the form of QE and low interest rates. Kicking the ‘debt ceiling can’

down the road has also been supportive. Should underlying economic

growth disappoint, however, and/or monetary policy unexpectedly tighten,

equities may start to underperform. With this in mind, we advocate investors

consider having a balanced approach, maintaining diversity and a focus on

stock specific drivers, rather than just chasing the momentum.

Conclusion: We continue to prefer equities to bonds and would

suggest underweight investors consider averaging into equities, with a

focus on Developed markets.

Expectations for EU earnings showing an improving trend 12m forward EPS% (indexed=100, 1 March 2013)

Source: Datastream, Standard Chartered

Earnings beating expectations in US S&P 500 3Q earnings surprise

Source: Bloomberg, Standard Chartered

Average age of Tech equipment reaching historical peaks Age of Technology equipment and software in US

Source: Bank Credit Analyst Research, Standard Chartered

Asia ex-Japan earnings revisions still negative but trend improving MSCI Asia ex-Japan earnings revisions ratio and 3m chg% in 12m forward EPS

Source: Datastream, Standard Chartered Earnings revision ratio=Net upgrades/(Upgrades+Downgrades)*100

80

85

90

95

100

105

110

115

120

125

130

Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

Ind

exed

(100=

1 M

ar

13)

US EU

5.1%

2.6%

14.2%

3.3%

4.2%

4.1%

2.0%

2.5%

0.9%

7.0%

6.2%

0 50 100 150 200 250

AllSecurities

Energy

Materials

Industrials

Discretionary

Staples

HealthCare

Financials

Technology

Telco

Utilities

No

of

co

mp

anie

s

Beat In-line Miss % - Earnings surprise

-10

-8

-6

-4

-2

0

2

4

6

8

-8

-6

-4

-2

0

2

4

6

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Rat

io

%

MSCI ASIA EX-JAP 3m% Chg 12m Fwd EPS Earnings Revision Ratio(RHS)

Global Market Outlook

9

We remain Underweight commodities. A potential delay in Fed tapering

may be a short term positive for select commodities, but gold’s

disappointing performance during the US debt ceiling debate, in

particular, raises doubts on the extent of any potential strength in

commodities. Oil may fail to support the broader asset class due to

seasonal weakness. Continued uncertainty in China remains an

overhang.

We remain Underweight gold. There is a risk prices may strengthen

somewhat in the short term as a weaker US Dollar and a likely delay in Fed

QE tapering support the metal. However, a large part of this move may have

already occurred, suggesting further upside may be limited to key resistance

at USD 1360 or, at the most, USD 1420. A break below the long-term trend-

line (see chart on left) would be, technically, a very bearish outcome for gold.

Longer term, we maintain our Underweight and bearish view on gold:

The inflation-adjusted price of gold remains very high, inconsistent with

the low level of US inflation

Rising equity returns and bond yields over the longer term will likely

continue to raise the opportunity cost of holding gold

Geopolitical concerns have, thus far, provided little support. Gold’s

disappointing performance over the course of the US debt ceiling, in

particular, suggesting risk aversion may not be a significant source of

support.

Long-term US dollar strength would also work against the metal

We remain Neutral on industrial metals. Still high inventory levels and the

lack of any significant turnaround in final demand remain key risks. A delay

in Fed tapering may prove to be supportive in the short term, but this impact

alone is likely to be only temporary.

We remain Overweight oil, but expect prices to remain largely within their

3-year range. Demand and supply data remain well-matched for now. A

delay in Fed tapering would likely be temporarily positive for oil, but keep in

mind we are entering a seasonally weak period for oil prices (see chart on

left). Together, they point to a fairly balanced outlook for oil.

We remain Neutral agricultural commodities. Smaller-than-expected

planting intentions in the US (i.e. smaller acreage than expected) proved to

be initially supportive for most agricultural commodity prices. Indonesia’s

intentions to redirect some crude palm oil output towards domestic biodiesel

may place upward pressure on palm oil prices. Total demand, however,

remains subdued which, in turn, is likely to keep a lid on agri prices.

Conclusion: A delay in Fed tapering is positive for commodity prices in

the short term, but still high inventories (metals), seasonal weakness

(oil) and very high inflation-adjusted prices (gold) are likely to continue

weighing on commodities over a longer time horizon.

Performance of Commodities YTD* (USD)

* For the period 31 December 2012 to 25 October 2013

Source: DJUBS, Bloomberg, Standard Chartered

DJUBS, DJUBS Agri, DJUBS Precious metals, DJUBS

Energy, DJUBS Industrial metals

Break below long-term trendline would be very negative for gold Gold spot (USD/Oz)

Source: Bloomberg, Standard Chartered

We are entering a seasonally weak period for oil prices Average monthly performance of crude oil from 1988

Source: Bloomberg, Standard Chartered

-13.98

-0.81

-21.31

-9.19

-8.54

-30 -25 -20 -15 -10 -5 0

Industrial Metals

Energy

Precious Metals

Agriculture

Commodities composite

%

135

335

535

735

935

1135

1335

1535

1735

1935

2135

Oct-00 Oct-02 Oct-04 Oct-06 Oct-08 Oct-10 Oct-12

US

D/O

z

0.57%

1.60%

3.97%

2.56%

0.59%1.18%

5.61%

3.19% 3.06%

-2.98%-2.61%

-1.15%

-4%

-2%

0%

2%

4%

6%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

%

Commodity – Underweight

Global Market Outlook

10

We remain Overweight Alternative Strategies, based on our view that

the asset class offers exposure to our preferred asset classes, but with

the possibility of lower volatility. A diversified approach offers

attractive exposure by itself, but equity long/short offers an alternative

way of gaining exposure to equities, our preferred asset class.

Diversified exposure to Alternative strategies remains attractive, in our

view. A basket of alternative strategies offers the potential of a lower level of

volatility (relative to equities) and somewhat limited sensitivity to rising

interest rates. We view both these characteristics as attractive in an

environment where interest rates may continue trending higher over the long

term and the outlook for some regional equity markets remains uncertain.

Equity long-short and event-driven strategies remained the top-performing

strategies both year-to-date and for the full month of September.

We see equity long/short strategies as attractive for investors

uncomfortable with accepting the volatility associated with long-only

exposure. These strategies can be interesting for investors wanting to raise

equity exposure to benefit from what we view to be an attractive long-term

trend, but are uncomfortable with the inescapable volatility associated with a

long-only position.

Conclusion: Maintain Alternative Strategies Overweight. Favour

diversified exposure and equity long-short strategies both as portfolio

diversifiers and for lower volatility relative to long-only equities.

USD – We are moderately bullish on the USD in the medium term

We remain moderately bullish on the USD, but acknowledge the currency

may remain weak in the short term. The economic impact from the

temporary US government closure and relatively disappointing recent

economic data is likely to mean Fed tapering is delayed. While the USD may

have already largely priced this in, we are conscious that negative

momentum poses the risk of further weakness in the short term. Beyond

that, however, we continue to believe tapering of QE purchases is still likely

in 2014. This, together with our expectation for gradually higher Treasury

yields, causes us to maintain our medium term bullish view.

EUR – We are moderately bearish in the medium term

EUR strength may persist largely due to USD weakness in the short term. A

strong current account balance and rising Bund yields countries have also

supported to the currency. However, we continue to believe an eventual

resumption of Fed tapering expectation and likely European policymakers

preference to keep lower rates for longer than the are likely to weigh on the

currency. We therefore maintain our medium term bearish view on the Euro.

GBP – We are medium-term bearish

Inexpensive valuations and USD weakness are likely to offer some short-

term support to the currency. However, we continue to believe continued

monetary stimulus is likely needed to meet unemployment goals, which is

medium-term bearish for the currency. Elevated inflation remains a key risk.

Performance of Alternative Strategies YTD* (USD)

* For the period 31 December 2012 to 24 October 2013

Source: HFRX, Bloomberg, Standard Chartered

HFRX global hedge, HFRX equity hedge, HFRX event driven,

HFRX relative value, HFRX macro/CTA

USD likely to remain within long-term sideways range DXY Index

Source: Bloomberg, Standard Chartered

-1.88

2.10

5.43

8.76

12.17

-4 -2 0 2 4 6 8 10 12 14

Macro CTAs

Relative Value

Composite

Equity Long/Short

Event Driven

%

77

78

79

80

81

82

83

84

85

Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13

Ind

ex

Foreign Exchange

Alternative Strategies – Overweight

Medium term refers to a time horizon of 6 to12 months Short term refers to a horizon of the less 3 months

Global Market Outlook

11

JPY – We are medium-term bearish

Extreme net short market positioning and Japan’s decision to raise the

consumption tax poses the risk of short-term Yen strength. However, we

continue to believe the Bank of Japan is likely to act to defend its inflation

goal if growth suffers. We, therefore, remain comfortable with a long-term

bearish view on the currency.

AUD – We are medium-term bearish

Extreme market positioning has largely corrected following the currency’s

recent bounce. While we believe the RBA is likely to continue favouring a

weaker currency, the risk of renewed inflation pressure may hold the central

bank back from being able to lower rates further. Lacklustre commodity

prices are also not a support. We believe current levels offer an

opportunity to reduce exposure to the AUD.

We have favoured the NZD over the AUD since late February this year, a

trade that has performed well so far. However, given Australia’s higher

inflation outlook, is is likely the yield premium offered by NZD rates over AUD

rates has now peaked. We prefer to close this idea at this time.

CNY – We are medium-term neutral

We believe Chinese authorities are likely to maintain a stable Renminbi in

the midst of ongoing policy reforms and development of the offshore

Renminbi market. It remains our preferred regional currency.

SGD – We are medium-term neutral

The policy decision to maintain ‘modest and gradual appreciation’ of the

currency is in line with our view that the currency is likely to offer relative

stability in the region. We maintain a neutral medium-term view on the SGD.

We are medium-term bearish on other Asia ex-Japan currencies

Asia ex-Japan currencies are likely to be one of the key short-term

beneficiaries of any potential delay in Fed QE tapering. However, we are

reluctant to chase any rally as a large part of these expectations appear to

be in the price now following the currencies’ recent rally.

Longer-term, we remain concerned about continued external imbalances and

debt levels in select countries. An eventual Fed tapering decision poses the

risk of renewed volatility amongst the countries facing the largest risks. We,

therefore, remain medium-term bearish.

Conclusion: We remain medium-term bullish on the USD and bearish

on AUD and Asian currencies.

The likely delay in Fed tapering may lead to further, but temporary, USD

weakness. However, a likely eventual resumption of the Fed QE

tapering conversation causes us to maintain our medium-term views,

even if paths diverge in the short term.

The likely delay in Fed tapering is providing further support for global

equities. It is also encouraging investors to continue looking at

investments that generate significant income. EM equities may

outperform short term on the back of a likely delay in Fed tapering.

However, over the longer term, we expect DM equities to outperform as

Fed tapering comes back on the agenda. As such, we retain our

Overweight on Europe and US equities.

Current account surpluses have been a key source of support for EUR EUR currency and Euro area current account balance (%)

Source: Bloomberg, Standard Chartered

NZD outperformance over AUD has likely run its course NZD-AUD pair

Source: Bloomberg, Standard Chartered

Market positioning strongly net short the JPY JPY non-commerical future positions

Source: Bloomberg, Standard Chartered

Rising China FX reserves suggest appreciation pressure remains in place China foreign exchange reserves

Source: Bloomberg, Standard Chartered

-2.5

-1.5

-0.5

0.5

1.5

2.5

0.6

0.8

1

1.2

1.4

1.6

1.8

Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

%

EU

R

Current Account Balance (RHS) EUR Curncy

0.77

0.79

0.81

0.83

0.85

0.87

0.89

Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13

NZ

D-A

UD

22 Feb 2013: expressed preference for NZD over AUD

-200

-150

-100

-50

0

50

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

'000

Co

ntra

cts

1.5

2

2.5

3

3.5

Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep

Trill

ion

Conclusion

Global Market Outlook

12

Asset Allocation Summary

Source: Standard Chartered

All figures are in percentages Currency : USD

Summary View vs. SAA Conservative ModerateModerately Aggressive

Aggressive

Cash UW 21 0 0 0

Fixed Income UW 35 35 17 4

Equity OW 27 43 61 86

Commodities UW 5 9 9 4

Alternatives OW 12 13 13 6

Asset Class Region View vs. SAA Conservative ModerateModerately Aggressive

Aggressive

Cash & Cash Equivalents USD Cash UW 21 0 0 0

IG Developed World UW 24 15 0 0

IG Emerging World N 4 9 3 0

HY Developed World OW 2 6 6 2

HY Emerging World N 5 5 8 2

North America OW 8 12 17 23

Europe OW 9 13 18 26

Japan N 0 2 2 3

Asia ex-Japan UW 8 13 20 27

Other EM UW 2 3 4 7

Commodities Commodities UW 5 9 9 4

Hedge FoF/CTAs OW 12 13 13 6

Emerging Market Equity

Tactical Asset Allocation - November 2013 (12M)

Investment Grade

High Yield

Developed Market Equity

Global Market Outlook

13

Economic & Market Calendar

25 October 2013 Source: Bloomberg, Standard Chartered

Next Week: October 25 - November 1 This Week: October 18 - October 25

Event Period Expected Prior Event Period Actual Prior

MO

N

CH Industrial Profits YTD YoY Sep -- 12.80% US Chicago Fed Nat Activity Index Sep -- 0.14

SK Consumer Confidence Oct -- 102 US Existing Home Sales MoM Sep -1.9% 1.7%

US Dallas Fed Manf. Activity Oct -- 12.8 JN Exports YoY Sep 11.5 14.7

JN Imports YoY Sep 16.5 16

JN Leading Index CI Aug F 106.80 106.50

TA Export Orders YoY Sep 2.0% 0.5%

HK CPI Composite YoY Sep 4..6% 4.5%

SK Foreign Direct Invetsments YoY 3Q -32.90% -3.30%

TU

E

JN Jobless Rate Sep 4.0% 4.1% US Richmond Fed Manufact. Index Oct 1.00 0.00

JN Small Business Confidence Oct -- 49.8 TA Unemployment Rate Sep 4.18% 4.19%

IN RBI Repurchase Rate Oct-13 7.75% 7.50% US Empire Manufacturing Oct 1.52 6.29

US Retail Sales Ex Auto and Gas Sep 0.50% 0.10%

US S&P/CS Composite-20 YoY Aug 12.40% 12.39%

US Consumer Confidence Index Oct 76 79.7

WE

D

SK Industrial Production YoY Sep -- 3.3% UK Bank of England Minutes -- --

JN Industrial Production YoY Sep P 6.20% -0.40% US MBA Mortgage Applications Oct-13 0.3% 1.3%

EC Economic Confidence Oct -- 96.9 CA Bank of Canada Rate Decision Oct-13 1.0% 1.0%

EC Industrial Confidence Oct -- -6.7 EC Consumer Confidence Oct -14.5 -14.9

US MBA Mortgage Applications Oct-13 -- -0.60% AU CPI YoY 3Q 2.2% 2.4%

US CPI Ex Food and Energy YoY Sep 1.8% 1.8% CH MNI Business Sentiment Indicator -- --

US CPI YoY Sep 1.2% 1.5% SI CPI YoY Sep 1.6% 2.0%

TA Industrial Production YoY Sep 1.06% -0.70%

MA CPI YoY Sep -- 1.9%

JN Small Business Confidence Oct -- 49.8

US NAHB Housing Market Index Oct 55.0 57.0

TH

UR

US FOMC Rate Decision Oct-13 -- 0.25% EC PMI Manufacturing Oct A 51.3 51.1

NZ RBNZ Official Cash Rate Oct-13 2.5% 2.5% EC PMI Services Oct A 50.9 52.2

JN Markit/JMMA Manufacturing PMI Oct -- 52.5 EC PMI Composite Oct A 51.5 52.2

NZ ANZ Business Confidence Oct -- 54.1 US Initial Jobless Claims Oct-13 358K 373K

TA GDP YoY 3Q P 2.50% 2.49% US New Home Sales MoM Sep -- 7.9%

JN Construction Orders YoY Sep -- 21.4% US Kansas City Fed Manf. Activity Oct 6 2

TH Exports YoY Sep -- 2.5% CH HSBC/Markit Flash Mfg PMI Oct 50.9 51.2

EC Unemployment Rate Sep -- 12.0% HK Exports YoY Sep 1.5% -1.3%

EC CPI Core YoY Oct A -- 1.0% HK Imports YoY Sep 0.4% -0.2%

CA GDP YoY Aug -- 1.4%

US Initial Jobless Claims Oct-13 -- --

JN BoJ Monetary Policy Statement Oct-13 -- --

FR

I

SK CPI YoY Oct -- 0.80% GE IFO Business Climate Oct -- 107.7

SK Exports YoY Oct -- -1.50% GE IFO Current Assessment Oct -- 111.4

SK HSBC/Markit Manufacturing PMI Oct -- 49.7 GE IFO Expectations Oct -- 104.2

CH Manufacturing PMI Oct -- 51.1 UK GDP YoY 3Q A -- 1.3%

CH HSBC/Markit Manufacturing PMI Oct -- 50.2 US Durable Goods Orders Sep -- 0.10%

TA HSBC/Markit Manufacturing PMI Oct -- 52 US Cap Goods Orders Nondef Ex Air Sep -- 1.5%

ID HSBC/Markit Manufacturing PMI Oct -- 50.2 US Univ. of Michigan Confidence Oct F -- 75.2

ID CPI YoY Oct -- 8.40% SK GDP YoY 3Q P 3.3% 2.3%

ID Exports YoY Sep -- -6.30% JN Natl CPI YoY Sep 1.1% 0.9%

IN HSBC/Markit Manufacturing PMI Oct -- 49.6 SI Industrial Production YoY Sep -- 3.5%

AU Commodity Index YoY Oct -- -3.10% TH Mfg Production Index ISIC NSA YoY Sep -- -3.10%

US ISM Manufacturing Oct 55.10 56.2

TH CPI YoY Oct -- 1.42%

ID Consumer Confidence Index Oct -- 107.1

Previous data are for the preceding period unless otherw ise indicated Previous data are for the preceding period unless otherw ise indicated

Data are % change on preivous period unless otherw ise indicated Data are % change on preivous period unless otherw ise indicated

P - preliminary data, F - f inal data, sa - seasonally adjusted P - preliminary data, F - f inal data, sa - seasonally adjusted

YoY - year on year, MoM - month-on-month YoY - year on year, MoM - month-on-month

Global Market Outlook

14

Disclosure Appendix

This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within the Standard Chartered Bank, particularly those of the Global Research function. Standard Chartered Bank is incorporated in England with limited liability by Royal Charter 1853 Reference Number ZC18. The Principal Office of the Company is situated in England at 1 Basinghall Avenue, London, EC2V 5DD Standard Chartered Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. In Dubai International Financial Centre (“DIFC”), the attached material is circulated by Standard Chartered Bank DIFC on behalf of the product and/or Issuer. Standard Chartered Bank DIFC is regulated by the Dubai Financial Services Authority (DFSA) and is authorised to provide financial products and services to persons who meet the qualifying criteria of a Professional Client under the DFSA rules. The protection and compensation rights that may generally be available to retail customers in the DIFC or other jurisdictions will not be afforded to Professional Clients in the DIFC. Banking activities may be carried out internationally by different Standard Chartered Bank branches, subsidiaries and affiliates (collectively “SCB”) according to local regulatory requirements. With respect to any jurisdiction in which there is a SCB entity, this document is distributed in such jurisdiction by, and is attributable to, such local SCB entity. Recipients in any jurisdiction should contact the local SCB entity in relation to any matters arising from, or in connection with, this document. Not all products and services are provided by all SCB entities. This document is being distributed for general information only and it does not constitute an offer, recommendation, solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This document is for general evaluation only, it does not take into account the specific investment objectives, financial situation, particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons. Opinions, projections and estimates are solely those of SCB at the date of this document and subject to change without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance. Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be). This document has not and will not be registered as a prospectus in any jurisdiction and it is not authorised by any regulatory authority under any regulations. SCB makes no representation or warranty of any kind, express, implied or statutory regarding, but not limited to, the accuracy of this document or the completeness of any information contained or referred to in this document. This document is distributed on the express understanding that, whilst the information in it is believed to be reliable, it has not been independently verified by us. 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Accordingly, SCB, its affiliates and/or subsidiaries may have a conflict of interest that could affect the objectivity of this document. This document must not be forwarded or otherwise made available to any other person without the express written consent of SCB. Copyright: Standard Chartered Bank 2013. Copyright in all materials, text, articles and information contained herein is the property of, and may only be reproduced with permission of an authorised signatory of, Standard Chartered Bank. Copyright in materials created by third parties and the rights under copyright of such parties are hereby acknowledged. 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