Ameu sp frontier markets_0413_en _pc_retreat final

HSBC Frontier Markets Equity Strategy The investment case for investing in global frontier markets

May 2013

For professional clients only

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RESTRICTED RESTRICTED - For Professional Clients Only

* As at 31 March 2013

Source: HSBC Global Asset Management. The views expressed above were held at the time of preparation and are subject to change without notice

Comprehensive universe: our universe and approach

provides a sensibly diversified exposure to c.30 frontier market

economies

Change: relative improvements by way of reductions in

institutional voids drives productivity growth and hence

performance of the asset class over time

Consumers: frontier markets provide exposure to a large,

young, and growing base of consumers who should fuel further

productivity (and GDP) growth over time

Commodity wealth: many frontier markets are naturally

endowed with commodities which has resulted in a strong

government credit position

Correlations: low correlations across countries results in

surprisingly low volatility (less than emerging and developed

markets)

Cash returns: payout ratios and dividend yields have been

consistently higher in frontier markets than both developed and

emerging markets

Cheap: frontier markets currently look cheap relative to both

developed and emerging markets

7Cs characterising frontier markets:

A pioneer with a 5+ year track record of investing in frontier

markets, having formed a dedicated frontier markets team in

2007 and launched our first mutual fund in February 2008

A truly global investment approach that invests across c.30

countries, as reflected by our customised and exclusive

benchmark that is reflective of our investment strategy

Access to the global resources of HSBC (e.g. offices in

Kenya, Saudi Arabia, etc) and the retail bank network that

provides incremental informational advantages

A robust and enduring process that has withstood the test of

time and extreme market conditions e.g. Global Financial

Crisis, Dubai debt default, Arab Spring

Strong outperformance over most periods and against our

bespoke benchmark that has proven to be a higher hurdle than

publically available alternatives

Our Frontier Markets mutual funds (Luxembourg UCITS III fund

and US ‘40 Act’ fund) provide investors with daily pricing

USD239 million* invested in the frontier markets across two

mutual funds and a managed account for one of the largest and

most forward-thinking US public pension plans

Our competitive advantage:

HSBC Frontier Markets strategy Executive summary

RESTRICTED

What are Frontier Markets?

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Frontier Markets are often defined as fast growing, low income countries Historic and forecasted GDP growth

Source: Citi Research, Haver, IMF, January 2013.

Any forecast, projection or target when provided is indicative only and is not guaranteed in any way.

GDP Growth Forecasts (IMF), 2012-14 average GDP Growth: FM, EM and DM

0% 1% 2% 3% 4% 5% 6% 7% 8%

Argentina

Croatia

Slovenia

Bulgaria

Kuw ait

Serbia

UAE

Romania

Lithuania

Estonia

Jordan

Pakistan

Tunisia

Bahrain

Ukraine

Mauritius

Oman

Lebanon

Kenya

Vietnam

Kazakhstan

Bangladesh

Nigeria

Qatar

Sri Lanka

Asia Sub-Saharan Africa CIS

MENA Central / Eastern Europe Latin America

0%

1%

2%

3%

4%

5%

6%

7%

8%

1985 1990 1995 2000 2005 2010 2015

Frontier

Emerging

Developed

forecasts

EM

FM

DM

0%

1%

2%

3%

4%

5%

6%

7%

8%

1985 1990 1995 2000 2005 2010 2015

Frontier Emerging Developed

forecasts

EM

FM

DM

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0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

Arg

entina

Bahra

in

Bangla

desh

Bulg

aria

Cro

atia

Georg

ia

Jord

an

Kazakhsta

n

Kenya

Kuw

ait

Lebanon

Lithuania

Mauritius

Nig

eria

Om

an

Pakis

tan

Panam

a

Qata

r

Rom

ania

Saudi A

rabia

Serb

ia

Sri L

anka

Tunis

ia

UA

E

Ukra

ine

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

Cum. real GDP growth (LHS) % Cum. stock mkt return (RHS) %

But GDP growth is not sufficient to generate strong equity returns Cumulative GDP growth versus cumulative stock market returns

Cumulative GDP growth of 25 Frontier Markets versus Stock Market returns from 2002 through to 2012

Source: Citi, data as of December 2012. Any performance information shown refers to the past and should not be seen as an indication of future returns..

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What are frontier markets? Frontier markets and the equity market ecosystem

The equity market ecosystem

Source: HSBC Global Asset Management. Data as at end of December 2012.

Graphic shown for illustrative purposes only.

Type of

market

Productivity

d

Institutional

voids

Top 10

countries

‘Industry Standard’

MSCI index

Developed

Markets

High Low

USA

UK

Japan

Canada

France

Australia

Germany

Switzerland

Sweden

Hong Kong

24

29,473,919

1,610

MSCI World

No of

countries:

Free float

market cap (USDm):

No of

stocks:

Emerging

Markets

Medium Medium

China

Korea

Brazil

Taiwan

South Africa

India

Russia

Mexico

Malaysia

Indonesia

21

3,864,877

821

MSCI Emerging

Markets

No of

countries:

Free float

market cap (USDm):

No of

stocks:

Frontier

Markets

Low High Kuwait

Qatar

Nigeria

UAE

Pakistan

Kazakhstan

Oman

Argentina

Kenya

Lebanon

25

107,407

141

MSCI Frontier

Markets

No of

countries:

Free float

market cap (USDm):

No of

stocks:

INSTITUTIONAL VOIDS

Lo

w

Hig

h

Low High

PR

OD

UC

TIV

ITY

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Institutional voids and productivity growth Reduced institutional voids drives productivity growth

Productivity growth: – Political stability and policies fostering trust, transparency, etc. e.g. free and fair elections

– Increased knowledge accumulation and application e.g. R&D

– Improved economic infrastructure e.g. technology and communications

– Improved social infrastructure: e.g. health, education, empowerment of women

– More effective economic institutions e.g. regulations and enforcement

…results in increased profits and dividend distributions to

shareholders, better wages and conditions to the workforce, lower

prices to consumers, increased tax payments to governments

The views expressed above were held at the time of preparation and are subject to change without notice.

Graphic shown for illustrative purposes only.

Small reductions in

institutional voids

can lead to large

productivity gains

=

return opportunity

for equity

investors

Institutional Voids

Lo

wH

igh

Low High

Pro

du

cti

vit

y

Reduced institutional voids:

–Product market improvements through communications and infrastructure

–Improved capital markets through institutional mechanisms and intermediation

–Human development and deepening of labour markets

–Improved regulation, reduced bureaucracy and corporate interference

–Introduction of effective mechanisms to ensure contract enforcement

…results in significant productivity growth

RESTRICTED RESTRICTED - For Professional Clients Only

Investment case for frontier markets: 7Cs

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Investment case for frontier markets The 7Cs of frontier markets that will drive convergence over time

1. Comprehensive universe

Reflective of our globally diversified approach

Sensibly diversified and proprietary customised benchmark

7. Cheap

Frontier markets are cheaper than both Emerging and Developed markets

Less researched, less liquid, and lack of sell-side coverage

6. Cash returns

Established companies new to stock exchanges that generate strong free cash flow

Dividend yields are higher than both Emerging and Developed Markets

4. Commodity wealth

Focus on growth commodity markets

Natural endowments, competitive advantage in factor markets, and export markets can generate significant wealth

Associated state infrastructure spending and industrial diversification

5. Correlations

Favourable cross-country correlations drives surprisingly low volatility

Lower volatility than Emerging Markets and Developed Markets provides diversification benefits

3. Consumers

Large and expanding populations, liberalisation, increasing product penetration, etc fuel productivity gains and GDP growth

Positive change in frontier markets drives convergence and returns over the long-run

2. Change

Positive political, economic, and social change over time results in reduced institutional voids and associated productivity gains

Productivity gains improves equity returns


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1

For illustrative purposes only.

* There are 30 countries in our custom benchmark, as illustrated in the chart and detailed on the next page. As an active strategy however there will be deviations in the number of countries held, as well as

additional ‘off-benchmark’ frontier countries not highlighted (such as Saudi Arabia)

Comprehensive universe Globally diversified exposure to c.30 Frontier Markets*

Argentina

Bahrain

Bangladesh

Bulgaria

Colombia

Croatia

Egypt

Estonia

Kazakhstan

Kenya

Kuwait

Lebanon

Lithuania

Mauritius

Morocco

Nigeria

Oman

Pakistan

Peru

Philippines

Qatar

Romania Serbia

Slovenia

Sri Lanka

Tunisia

UAE

Ukraine

Vietnam

Jordan

Europe (9)

Americas (3)

Asia-Pacific (5)

Middle East and Africa (13)

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Comprehensive universe Sensibly diversified portfolio by region and country

HSBC has devised a customised and proprietary ‘capped’ benchmark in tandem with MSCI that

reflects our sensibly diversified approach to investing in frontier markets globally

PUBLICLY AVAILABLE EXCLUSIVE TO HSBC PUBLICLY AVAILABLE/

USED IN ETFs

MSCI Frontier Markets MSCI Frontier Emerging Markets MSCI Frontier

Emerging Markets Capped MSCI Frontier Markets 100

Introduced: 30 November 2007

Back history: from 31 May 2002

Number of Countries: 25

Number of stocks: 141

Introduced: 30 September 2008

Back history: from 29 November 2002



Introduced: 31 May 2009




Introduced: 11 April 2012




Index is very concentrated in the GCC

(58% of the total index is represented by

the Middle East, including 26% to Kuwait

alone), while other regions are under-

represented.

Index includes all the countries of the MSCI

Frontier Markets index but is broader.

However ‘crossover’ countries have a

disproportionately large weight (over 50% ot

the total).

Our exclusive capped MSCI Frontier

Emerging Markets index ensures a

broad, well diversified universe that is

predominantly exposed to pure frontier

countries.

Designed for index replication but is

even less representative of the frontier

universe than the MSCI Frontier

Markets index. The Middle East

accounts for 60% of the index, half of

which is in Kuwait).

1

Source: MSCI as of 31 December 2012.

Notes: GCC: Qatar, UAE, Kuwait, Bahrain, Oman [Saudi Arabia is not in the benchmark]; NON-GCC: Argentina, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Lebanon, Lithuania,

Mauritius, Nigeria, Pakistan, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, Vietnam; CROSSOVER: Colombia, Philippines, Peru, Egypt, Morocco

There is an initial cap of 25% for the combined weight of the 5 crossover countries. This gets reset back to 25% if it breaches 30%. There is an initial cap of 10% for any other country. This gets reset

back to 10% every time it breaches 12% The capped index is maintained and calculated by MSCI.

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Change Frontier markets benefit from change or relative improvement

Most countries within the frontier markets universe have become more business friendly since 2004

A low number of days means the regulatory environment is more conducive to entrepreneurial activity

World Bank Survey: starting a business (days, low = good)

0

20

40

60

80

100

120

140

160

Saudi A

rabia

Georg

ia

Colo

mbia

Moro

cco

Panam

a

Bulg

aria

Bangla

desh

Slo

venia

Mauritius

Arg

entina

Lithuania

Pakis

tan

Qata

r

Philippin

es

Trinid

ad

Mongolia

Peru

Egypt

Kazakhsta

n

Nig

eria

Om

an

Sri L

anka

Kuw

ait

Cro

atia

Mozam

biq

ue

Lebanon

Cam

bodia

Serb

ia

Kenya

Bahra

in

Ghana

UA

E

Tunis

ia

Ukra

ine

Zam

bia

Jord

an

Rom

ania

Vie

tnam

Esto

nia

Zim

babw

e

2004 2012

Source: Citi, 2012

2

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Change Frontier markets benefit from rapid change and relative improvement

17 of 27 countries that we have exposure to have improved

Economic freedom covers 10 forms of freedoms in four broad categories: (1) rule of law (property

rights, freedom from corruption); (2) limited government (fiscal freedom, government spending); (3)

regulatory efficiency (business freedom, labour freedom, monetary freedom); and (4) open markets

(trade freedom, investment freedom, financial freedom)

Heritage Foundation Index of Economic Freedom (high = good)

Source: Citi and Heritage Foundation, 2012

0

10

20

30

40

50

60

70

80

90

Vie

tnam

Bulg

aria

Ukra

ine

Zim

babw

e

Bangla

desh

Kazakhsta

n

Egypt

Rom

ania

Mozam

biq

ue

Nig

eria

Cro

atia

Georg

ia

Lebanon

Pakis

tan

Ghana

Slo

venia

Mongolia

Cam

bodia

Kenya

UA

E

Tunis

ia

Lithuania

Qata

r

Phili

ppin

es

Zam

bia

Moro

cco

Sri L

anka

Colo

mbia

Om

an

Saudi A

rabia

Mauritius

Jord

an

Peru

Kuw

ait

Esto

nia

Arg

entina

Panam

a

Trinid

ad

Bahra

in

2000 2012

Free

Mostly Free

Moderately Free

Mostly Unfree

Repressed

2

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Consumers Frontier markets provide mass exposure to domestic consumption

Frontier markets benefit from a young, large, and growing population of consumers (the so-called

“demographic dividend”)

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Professional

Clients Only

Growing populations (Population growth - present to 2050) Young populations (median age)

(50%)

0%

50%

100%

150%

200%

250%

Zam

bia

N

igeria

Kenya

Mozam

biq

ue

Ghana

Kuw

ait

Philippin

es

Zim

babw

e

Saudi A

rabia

Jord

an

Pakis

tan

UA

EE

gypt

Mongolia

P

anam

a

Qata

r B

ahra

in

World

Peru

C

olo

mbia

O

man

Kazakhsta

n

Bangla

desh

N A

merica

Arg

entin

a

Moro

cco

Tunis

ia

Vie

tnam

S

ri L

anka

Lebanon

Mauritiu

s

Slo

venia

E

uro

pe

Trinid

ad

Esto

nia

S

erb

ia

Cro

atia

R

om

ania

Lith

uania

U

kra

ine

Georg

ia

Bulg

aria

grow ing

declining

0

5

10

15

20

25

30

35

40

Zam

bia

M

ozam

biq

uN

igeria

Kenya

Zim

babw

e

Ghana

Jord

an

Pakis

tan

Philippin

es

Bangla

des

Egypt

Mongolia

P

eru

S

audi

Moro

cco

Colo

mbia

O

man

Panam

a

Kuw

ait

Vie

tnam

W

orld

Kazakhsta

Tunis

ia

UA

ELebanon

Arg

entin

a

Bahra

in

Sri L

anka

Trinid

ad

Qata

r M

auritiu

s

Georg

ia

Serb

ia

Rom

ania

U

kra

ine

Lith

uania

E

sto

nia

C

roatia

B

ulg

aria

Slo

venia

3

Source: Citi, 2012

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Consumers Frontier markets benefit from increasing product penetration

Frontier markets are underserved in terms of mobile telephony, internet penetration, transportation,

etc but increasing penetration will drive productivity improvements over time

Internet

Fixed broadband Internet subscribers (per 100 people)*

Mobile phone

Mobile cellular subscriptions (per 100 people)*

Transportation

Passenger cars (per 1,000 people)*

0%

5%

10%

15%

20%

25%

30%

35%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DM EM FM

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DM EM FM

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DM EM FM

* based on the simple average of values for the countries in the respective group. DM, EM and FM classification as per MSCI

Source: World Bank, HSBC Calculations

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Only

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Commodity wealth Frontier Markets have a comparative advantage in factor markets

Many frontier markets (e.g. GCC countries) are naturally endowed with sought after commodities

which has facilitated a strong government credit position (unlike developed markets)

Commodities in Frontier Markets

43%

30%

21%20%

19% 19%

10%9%

8%

4%3%

0%

30%

20%

4%

15%

29%

24%

3%3%

7%

15%

11%

4%

0%

15%

30%

45%

Oil Natural gas Iron ore Copper Uranium Zinc Coal Aluminium Molybdenum Nickel Gold PGMs

% of global reserves % of global production

4

Source: Citi, 2012

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Commodity wealth But it is not just about oil and gas or a ‘commodity play’

Contrary to popular opinion, frontier markets have low correlations with commodity prices

Wealth generated from commodities funds industrial diversification (eg Qatar) and associated

infrastructure projects

Source: Bloomberg, December 2007 to December 2012, correlation of weekly index levels over 5 year period.

Brent Oil DJ UBS Commodities

EM 0.46 0.54

FM 0.36 0.37

Qatar 0.32 0.25

Colombia 0.37 0.45

UAE 0.31 0.32

Nigeria 0.11 0.14

Kuwait 0.16 0.17

Kazakhstan 0.38 0.41

Oman 0.33 0.26

Brazil 0.52 0.63

Russia 0.47 0.48

India 0.33 0.36

China 0.34 0.36

BRIC 0.49 0.56

World 0.51 0.60

S&P 0.46 0.55

Europe 0.48 0.59

4

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20%

40%

60%

80%

100%

120%

140%

2001 2003 2005 2007 2009 2011


Commodity wealth Commodities have generated strong credit positions

Strong government credit position, unlike developed markets

Private sector debt is also moderate

Public debt/GDP, 2001-2012 Private sector credit/GDP, 2010

Source: Citi, December 2012.

Any forecast, projection or target when provided is indicative only and is not guaranteed in any way.

4

0%

40%

80%

120%

160%

200%


Corporate debt Household debt

0%

40%

80%

120%

160%

200%


Corporate debt Household debt

old graph

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Correlations Low cross-country correlations

Low correlations between frontier and emerging markets and individual country constituents

Source: Bloomberg, December 2007 to December 2012, correlation of weekly index levels (Wednesday to Wednesday) over a 5 year period.

N.B. Blue font denotes correlation of 0.5 or lower, Red denotes a negative correlation.

EM

FM

Qata

r

Co

lom

bia

UA

E

Nig

eria

Ku

wait

Ph

ilipp

ine

s P

eru

Pakis

tan

Kazakh

sta

n

Om

an

Ken

ya

Eg

yp

t

Arg

en

tina

Vie

tnam

EM 1.00

FM 0.64 1.00

Qatar 0.54 0.80 1.00

Colombia 0.69 0.49 0.37 1.00

UAE 0.54 0.78 0.64 0.37 1.00

Nigeria 0.02 0.25 0.07 0.03 0.09 1.00

Kuwait 0.35 0.81 0.58 0.31 0.47 0.00 1.00

Philippines 0.68 0.51 0.42 0.53 0.44 0.08 0.30 1.00

Peru 0.71 0.36 0.32 0.59 0.28 (0.06) 0.17 0.44 1.00

Pakistan 0.17 0.33 0.16 0.14 0.26 0.01 0.33 0.11 0.01 1.00

Kazakhstan 0.69 0.50 0.43 0.48 0.39 0.02 0.23 0.40 0.51 0.13 1.00

Oman 0.55 0.72 0.68 0.31 0.67 (0.04) 0.52 0.42 0.35 0.25 0.42 1.00

Kenya 0.42 0.32 0.37 0.32 0.21 (0.03) 0.14 0.35 0.35 0.10 0.44 0.41 1.00

Egypt 0.57 0.55 0.47 0.38 0.51 0.12 0.33 0.41 0.37 0.10 0.42 0.47 0.32 1.00

Argentina 0.66 0.45 0.36 0.47 0.32 0.01 0.21 0.46 0.60 0.15 0.49 0.37 0.40 0.40 1.00

Vietnam 0.42 0.38 0.31 0.33 0.30 0.04 0.19 0.34 0.28 0.00 0.35 0.29 0.22 0.30 0.27 1.00

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Frontier Markets have consistently produced lower volatility of returns compared to emerging and

developed markets

Correlations Low correlations drive surprisingly low volatility1

Rolling 12 month annualised volatility of returns

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Dec-05 May-07 Oct-08 Apr-10 Sep-11 Feb-13

MSCI Emerging Markets MSCI World MSCI FEM Capped

12.40%

13.65%

6.05%

Source: Bloomberg, daily data from December 2005 to March 2013. The views expressed above were held at the time of preparation and are subject to change without notice.'

1.So long as investors embrace a truly diversified frontier markets portfolio globally. Otherwise, investors who selectively target a small number of frontier market countries

(perhaps through a GEM only allocation) will inevitably experience higher idiosyncratic risk and hence much higher levels of volatility. Past performance is not an indication of

future returns.

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Cash returns Frontier Markets have the highest dividend yields

Frontier markets have consistently offered higher dividends yields than both developed and emerging

markets

Certain countries offer dividend yields nearing 8% e.g. Pakistan has a 7.7% dividend yield 12 month trailing dividend yield 12 month trailing dividend yield at year end

Source: MSCI, Thomson Reuters DataStream, HSBC Calculations, March 2013.

* Based on the MSCI indices. World represents EM + DM + FM. DM = Developed Markets, EM = Emerging Markets, FM = Frontier Markets.

The views expressed above were held at the time of preparation and are subject to change without notice. The level of yield is not guaranteed and may rise or fall in the future.

3.9%

2.7%

2.7%

1.5%

2.5%

3.5%

4.5%

5.5%

6.5%

7.5%

8.5%

2008 2009 2010 2011 2012 2013

DM EM FM

3.8

%

2.4

%

2.5

% 2.9

%

2.8

%

4.1

%

2% 2

.2%

2.9

%

2.7

%

6.3

%

4.4

%

4.2

%

5.5

%

4.2

%

1.5%

2.5%

3.5%

4.5%

5.5%

6.5%

7.5%

8.5%

2008 2009 2010 2011 2012

DM EM FM

1.5%

2.5%

3.5%

4.5%

5.5%

6.5%

7.5%

8.5%

Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13

DM EM FM

2.8% 2.6%

4.0%

6

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Cheap Frontier markets look undervalued on a trailing basis

Frontier Markets are cheaper than Emerging and Developed Markets on a trailing Price to Book basis

for a higher level of return

By comparison, on a trailing Price to Earnings basis, frontier markets are trading at 11.8x versus

Emerging Markets at 12.5x and Developed Markets at 16.1x

12-month trailing Price to Book Return on Equity

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

Jan-1

3

DM EM FM

5.5%

7.5%

9.5%

11.5%

13.5%

15.5%

17.5%

19.5%

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

Jan-1

3

DM EM FM

1.5x

1.9x

1.6x

13.1%

11.9%

13.0%

Source: MSCI, Thomson Reuters DataStream, HSBC Calculations, March 2013.

* Based on the MSCI indices. World represents EM + DM + FM. DM = Developed Markets, EM = Emerging Markets, FM = Frontier Markets.


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Forward 12-month P/E estimates

Source: Bloomberg consensus estimates of forward P/E valuations as at March 2013 based on MSCI indices.

The views expressed above were held at the time of preparation and are subject to change without notice. Any forecast, projection or target when provided is indicative only and is not guaranteed in any way

14.2113.70

10.8810.38

4.375.54

7.6 7.92 8.259.45 9.63

10.7 10.7111.23 11.43

12.41 12.81 13.26 13.3 13.4 13.71

15.35

17.61.17.00

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Worl

d

AC

Worl

d

Em

erg

ing M

ark

ets

Fro

ntier

Mark

ets

Arg

entina

Kazakhsta

n

Pakis

tan

Bahra

in

Rom

ania

Om

an

Egypt

Kenya

Sri

Lanka

Vie

tnam

Cro

atia

UA

E

Lebanon

Nig

eri

a

Peru

Qata

r

Slo

venia

Kuw

ait

Colo

mbia

Phili

ppin

es

7 Cheap Frontier markets are undervalued on a forward basis

Frontier Markets are currently trading at attractive valuations, both in absolute terms and relative to

Emerging Markets

Frontier Markets are still trading significantly lower than the pre-crisis levels of August 2008, whereas

Emerging Markets and Developed Markets have almost entirely recovered the losses

RESTRICTED

Management team

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RES

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CTE

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Management team Emerging markets platform

Key:

= investment management team and associated product specialists

= closely affiliated

FM = Frontier Markets, EM = Emerging Markets, DM = Developed Markets

* Joint venture with SABB (Saudi British Bank, an affiliate of the HSBC Group) ** Jintrust Fund Management is a joint venture between HSBC Global Asset Management and Shanxi Trust & Investment Corp

Chris Cheetham

Global Chief Investment Officer (CIO)

Philip Glaze

CIO UK & Global CIO, Multimanager

Bill Maldonado

CIO Asia Pacific & Global CIO, Equity

Research Analysts

Global FM

Seki Mutukwa

Global DM

Linda Saitowitz

Latin America

Carlos Uema

Carlos Lima

Raquel Diniz

Ana Browne

Tatyana Katalan

João Roncaglia

Giuliano Ajeje

Global EM

Tony MacNeary

Helen King

Global Thematic

Sally Godley Maynard

Asia Pacific

Hugh Lee

Kwok Wing Cheong

Ferdinand Cheuk

Sami Abouzahr

Joy Yuan

Debbie Chan

Divya Balakrishnan

Elina Fung

Alex Kwan

Stanley Chen

Mabel Wong (HK)

Arwen Liu

Portfolio Managers – Global

Nick Timberlake

Head of Equities

Global DM Angus Parker Ann Hall Graeme Blyth Nick Dowell Se-Ting Frenzel Ben Hubbard Oliver Gottlieb Tobyn Dickinson

Global FM

Andrew Brudenell

Chris Turner

Global EM

Douglas Helfer

Stephanie Wu

Lee Ray

Ed Conroy

Portfolio Managers – Regional/Local

Latin America

Natalia Kerkis

Aline Cardoso

Fernando Fontoura

Gabriela Cervantes (Mexico)

India (Offshore)

Sanjiv Duggal

Viresh Mehta

Nilang Mehta

India (Onshore)

Tushar Pradhan + team of 6

Asia Pacific

Husan Pai

Mick Dillon

Karma Wilson

Philip Mok (HK)

Mandy Chan (China)

Michael Chiu (China)

Equity Dealers

Latin America

Nelson Sussumu

+ team of 2

Asia

James Levy

+ team of 4

EMEA

Steve Chappell

+ team of 5

Equity Product Specialists

Global EM & FM /

Smart Beta

David Wickham

Jake Williams

Indexation & ETFs Carmen Gonzalez Calatayud Brummer

Olena Datsenko

Alfred Le Leon

Latin America

Victor Arakaki

EM (BRIC, Russia,

CIVETS)

Soren Beck-Petersen

Tanya Chadha

Global DM

James Hogan

Asia Pacific

Chris Adams

Grace Chuang

India (Offshore)

Roshan Padamadan

Saudi British Bank (Riyadh)*

Research Analysts

Jafar Khan

Abdulmajeed

Al Hagbani

+ team of 4

Portfolio Managers

Abdullah Al Hamed

Khaled Al Braikan

+ team of 6

EM Debt (New York)

Sovereign Analyst

Binqi Liu

Portfolio Engineers

Vinayak Potti

Phil Yuhn

Portfolio Managers

Guillermo Osses

Srinivas Paruchuri

Lisa Chua

Marge Karner

HSBC Retail Banking & Wealth Management Global Asset Management - HSBC Insurance - HSBC Premier

HSBC Global Banking & Markets Global Banking - Global Markets - Global Research

Jintrust Fund Management (Shanghai)**

Research Analysts

Quentin Cao

+ team of 8

Portfolio Managers

Tom Lin

+ team of 12

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Seki Mutukwa – Senior Analyst

Seki Mutukwa is a Senior Analyst in the Frontier Markets equity team and has been working in the industry since 2004. Prior to joining HSBC in 2012, he spent

six years as a Portfolio Manager/ Analyst with Blackfriars Asset Management, a London based fund management boutique formerly majority owned by BNY

Mellon Asset Managementt, where he focused on emerging and frontier markets across Europe, Middle East and Africa. Prior to this he was an Analyst with

State Street Global Advisors. Seki holds an MSc in investment management from Cass Business School and is a CFA charterholder.

Andrew Brudenell – Co-Portfolio Manager

Andrew Brudenell is the lead Senior Portfolio Manager of the Frontier Markets strategy and has been working in the industry since 1997. Andrew joined HSBC in

2007 as a member of the Global Emerging Markets equity team and subsequently joined the dedicated Frontier Markets equity team at launch in early 2008.

Prior to HSBC, Andrew worked as a US Portfolio Manager at Scudder Investments in New York and at Deutsche Asset Management in London. He holds an

MSc from the London School of Economics and is a CFA charterholder.

Chris Turner – Co-Portfolio Manager

Chris Turner is a Senior Portfolio Manager and co-portfolio manager of the Frontier Markets strategy and has been working in the industry since 1986. Prior to

joining HSBC in 2012, Chris was a Portfolio Manager with EMSO Partners (Citi Capital Partners) where he covered a number of emerging and frontier markets.

Prior to this, he worked in emerging markets equity with Morley Fund Management (now Aviva Investors) and Morgan Grenfell Asset Management (now

Deutsche Asset Management) in a similar role. Chris is a graduate of University College London.

Management team A dedicated and experienced frontier markets team

David Wickham – Senior Product Specialist

David Wickham is a Director and Senior Product Specialist responsible for leading the promotion of the Global Emerging Markets, Global Frontier Markets, and

Alternative Indexation equity capabilities. Prior to joining HSBC in 2011, he was a Senior Portfolio Manager with Invesco Asset Management in London where he

managed the firm’s non-US private equity investment program. David holds a Master’s degree in International Relations from the University of Cambridge and

an MBA with Distinction from the University of Oxford. David is a Nonresident Fellow of the Brookings Institution and an Associate Fellow of the University of

Oxford’s Saïd Business School.

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Management team and associated global analytical resources Global Asset Management office locations in emerging and frontier markets

Colombia*

Morocco

Peru*

Philippines*

Brazil

Chile

China

Czech

Hungary

India

Indonesia

South Korea

Malaysia

Mexico

Poland

Russia

South Africa

Taiwan

Thailand

Turkey

Hong Kong

Argentina

Bahrain

Bangladesh

Bulgaria Croatia

Estonia

Jordan

Kazakhstan

Kenya

Kuwait

Lebanon

Lithuania

Mauritius

Nigeria

Oman

Pakistan

Qatar

Romania

Serbia

Slovenia

Sri Lanka

Tunisia

UAE

Ukraine

Vietnam

Emerging Countries

Frontier Countries

Egypt*

Source: HSBC Global Asset Management, September 2012

RESTRICTED

Important information

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Important information

This presentation is intended for Professional clients only and should not be distributed to or relied upon by Retail Clients.

The contents of this presentation are confidential and may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose.

The material contained herein is for information only and does not constitute investment advice or a recommendation to any reader of this material to buy or sell

investments.

HSBC Global Asset Management (UK) Limited has based this presentation on information obtained from sources it believes to be reliable but which it has not

independently verified. HSBC Global Asset Management (UK) Limited and HSBC Group accept no responsibility as to its accuracy or completeness.

This presentation is intended for discussion only and shall not be capable of creating any contractual or other legal obligations on the part of HSBC Global Asset

Management (UK) Limited or any other HSBC Group company. Care has been taken to ensure the accuracy of this presentation but HSBC Global Asset Management

(UK) Limited accepts no responsibility for any errors or omissions contained therein.

This presentation and any issues or disputes arising out of or in connection with it (whether such disputes are contractual or non-contractual in nature, such as claims in

tort, for breach of statute or regulation or otherwise) shall be governed by and construed in accordance with English law.


Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability

for any failure to meet such forecast, projection or target.

The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested.

HSBC GIF Frontier Markets Fund is a sub-fund of the HSBC Global Investment Funds, a Luxembourg domiciled SICAV. UK based investors in HSBC Global

Investment Funds are advised that they may not be afforded some of the protections conveyed by the provisions of the Financial Services and Markets Act 2000. HSBC

Global Investment Funds is recognised in the United Kingdom by the Financial Conduct Authority under section 264 of the Act. The shares in HSBC Global Investment

Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to

United States Persons. All applications are made on the basis of the current HSBC Global Investment Funds Prospectus, Key Investor Information Document (KIID),

Supplementary Information Document (SID) and most recent annual and semi-annual reports, which can be obtained upon request free of charge from HSBC Global

Asset Management (UK) Limited, 8 Canada Square, Canary Wharf, London, E14 5HQ. UK, or the local distributors. Investors and potential investors should read and

note the risk warnings in the prospectus and relevant KIID and additionally, in the case of retail clients, the information contained in the supporting SID.

'The HSBC Frontier Markets Fund is an unregulated collective investment schemes for UK Regulatory purposes. The promotion of the Fund is therefore restricted in

the UK by the Financial Services and Markets Act 2000 and this document can only be issued to persons permitted under COBS 4.12 of the FCA Handbook. UK based

investors are advised that they may not be afforded some of the protections conveyed by the provisions of the Act. In particular, compensation will not be available

under the Financial Services Compensation Scheme in the UK.

Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up.

Investments in Frontier Markets are by their nature higher risk and potentially more volatile than those inherent in some established markets.

Economies in Frontier Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by

trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which

they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade.

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Important information (cont’d)

Brokerage commissions, custodial services and other costs relating to investment in Frontier Markets generally are more expensive than those relating to investment in

more developed markets. Lack of adequate custodial systems in some markets may prevent investment in a given country or may require a sub-fund to accept greater

custodial risks in order to invest, although the Custodian will endeavour to minimise such risks through the appointment of correspondents that are international,

reputable and creditworthy financial institutions. In addition, such markets have different settlement and clearance procedures. In certain markets there have been times

when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. The inability of a sub-fund

to make intended securities purchases due to settlement problems could cause the sub-fund to miss attractive investment opportunities. Inability to dispose of a

portfolio security caused by settlement problems could result either in losses to a sub-fund due to subsequent declines in value of the portfolio security or, if a sub-fund

has entered into a contract to sell the security, could result in potential liability to the purchaser.

The risk also exists that an emergency situation may arise in one or more developing markets as a result of which trading of securities may cease or may be

substantially curtailed and prices for a sub-fund’s securities in such markets may not be readily available.

Investors should note that changes in the political climate in Frontier Markets may result in significant shifts in the attitude to the taxation of foreign investors. Such

changes may result in changes to legislation, the interpretation of legislation, or the granting of foreign investors the benefit of tax exemptions or international tax

treaties. The effect of such changes can be retrospective and can (if they occur) have an adverse impact on the investment return of shareholders in any sub-fund so

affected.

Stock market investments should be viewed as a medium to long term investment and should be held for at least five years.

Any performance information shown refers to the past and should not be seen as an indication of future returns.

MSCI Index – The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any

financial instruments or products or any indices. The MSCI information is provided on an ‘as is’ basis and the user of this information assumes the entire risk of any use

it may make or permit to be made of this information. Neither MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating the

MSCI information (collectively, the ‘MSCI Parties’) makes any express or implied warranties or representations with respect to such information or the results to be

obtained by the use thereof, and the MSCI Parties hereby expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy,

completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in

no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential or any other damages (including, without limitation,

lost profits) even if notified of, or if it might otherwise have anticipated, the possibility of such damages

To help improve our service and in the interests of security we may record and/or monitor your communication with us.

This presentation is approved for issue in the UK by HSBC Global Asset Management (UK) Limited, who are authorised and regulated by the Financial Conduct

Authority.

www.assetmanagement.hsbc.com/uk

Copyright © HSBC Global Asset Management (UK) Limited 2013. All rights reserved.

23986/AS/0513 FP13-0821 exp 10/08/13

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