Ucap Hong Kong Asset Management Limited

20th September 2016

Equity Market Review

Equity Strategy Highlights

� Global Markets Highlights

� Global stocks and bonds dropped in September on concerns central banks may put an end to easy-

money policies.

� Investors now await tomorrow’s BOJ and FOMC meetings for more insight.

� Important Events This Week

� Tuesday : US Housing starts

� Wednesday: BOJ Meeting, FOMC meeting

� Thursday: US Jobless Claims, US Existing Home Sales

� Monday: US New Home Sales

20 September, 2016

Equity Strategy Highlights

� Global Leaders – 2016

� The European portfolio is now in positive territory for the year and remains very strong compared to

indices.

� The US portfolio is still lagging despite a positive performance (and after a strong outperformance in

2015)

� The weakness of the Pharmaceuticals sector is weighting on both portfolios.

• Europe: -0.9% YTD vs Euro Stoxx at -7% YTD (6.1% alpha).

• US: +2.3% YTD vs S&P at +6.3% YTD (-4% alpha).

� Stock-Picking List – 2016

� The average performance of our Stock-Picking YTD is +0.47%. The average alpha is +238 bps.

� We have closed positions for the time being.

20 September, 2016

Global Leaders Update

Astrazeneca

Medtronic & CVS

20 September, 2016

Global Leaders

� The global Health Care sector has become the worst sector performer in 2016 due to fears

surrounding pricing pressures in the US.

� The US remains the most profitable market for Global Pharmaceuticals companies as prices are

typically much higher than in other developed countries. This has led healthcare to become a major

issue in the US presidential election with both Clinton and Trump coming up with their own

proposals.

� The worst outcome for the sector would probably be that Hillary gets elected. But even in that case,

the process of regulating prices should take some time, be done through a direct negotiation with

pharmaceuticals companies and could lead to higher Medicare volumes in exchange for lower prices

and to more funds allocated to R&D.

� The issue is well know by both Pharmaceutical companies and investors and is already priced

in. And there remains a number of positive factors for the sector:

� Low relative valuation,

� High growth prospects with new therapies in developed countries and new markets in emergings,

� High cash piles and an appetite for M&A.

� For these reasons, we want to hold to our pharmaceutical stocks and we add Astrazeneca

and Medtronics (see our August 30 report) to our Global Leaders Portfolios to diversify away

specific risks.

� We also reduce by half the exposure to CVS as the company is exposed to political pressure through

is Pharmacy Benefit Management (PBM) business (CVS Caremark).

20 September, 2016

Astrazeneca

� Astrazeneca is a UK based global pharmaceutical company created in 1999 through the

merger of a Swedish and a UK groups.

� Sales have declined since 2011 after the low of a number of patents but thanks to

acquisitions, cost cutting and investment in R&D, the company is entering a new growth

cycle.

� Astrazeneca is the strong challenger in the race for the Immuno-Oncology market, just

behind Merck and Bristol Myers. The British Pharmaceutical company is also well positioned

in Diabetes and Cardio-Vascular diseases.

� Many key data trial are expected in 2017 that could lead to a further rerating of the stock.

� Despite the recent rebound, the stocks still has an attractive 4% dividend yield.

20 September, 2016

Astrazeneca

20 September, 2016

Astrazeneca

20 September, 2016

The stock rose strongly after the Brexit as most of Astrazeneca revenues are generated outside the UK. It rose gain last week after

one its diabetes drug combination showed good results in a Phase 3trial.

Investment Ideas

Global Leaders

Stock Picking List

Latest Equity Research

20 September, 2016

Global Leaders

20 September, 2016

Benchmark: S&P 500Benchmark: Euro Stoxx 50

� European Portfolio � US Portfolio

The Global Leaders are quality companies that we believe are fit for a long-term investment.

We launched this strategy in August 2011. Please read our special report for a full explanation of this strategy.

Portfolio Benchmark Delta Annualized Portfolio Benchmark Delta Annualized

Performance 93% 57% 36.5% 14% Performance 113% 96% 17.4% 16%

Performance YTD -0.9% -7.0% 6.2% Performance YTD 2.3% 6.3% -4.0%

Volatility 15.9% 22.0% -6.1% Volatility 13.6% 14.4% -0.8%

Max DrawDown -18.7% -27.8% 9.1% Max DrawDown -13.1% -13.0% -0.2%

-15

5

25

45

65

85

105

125Index Benchmark

-10

10

30

50

70

90

110

130

Index Benchmark

*Since August 2011

Global Leaders – Current List

20 September, 2016

� European Portfolio � US Portfolio

Name Mkt Cap ($bn) Sector

Nestlé 245 Consumer Staples

Roche 214 Health Care

Novartis 210 Health Care

ABInbev 202 Consumer Staples

Unilever 139 Consumer Staples

Novo Nordisk 118 Health Care

BATS 116 Consumer Staples

Inditex 112 Consumer Discretionary

L'Oréal 104 Consumer Staples

Sanofi 100 Health Care

LVMH 85 Consumer Discretionary

Astrazeneca 84 Health Care

Daimler 73 Consumer Discretionary

Allianz 67 Financials

Reckitt Benckiser 66 Consumer Staples

BMW 54 Consumer Discretionary

AXA 51 Financials

Heineken 50 Consumer Staples

Vinci 45 Industrials

Fresenius 42 Health Care

Essilor 28 Health Care

Philips 27 Industrials

Dassault Systemes 22 Information Technology

Name Mkt Cap ($bn) Sector

Apple 624 Information Technology

Alphabet 541 Information Technology

Microsoft 449 Information Technology

Facebook 373 Information Technology

Amazon 368 Consumer Discretionary

Exxon 349 Energy

Johnson & Johnson 324 Health Care

AT&T 247 Telecommunication Services

JP Morgan 240 Financials

Wells Fargo 231 Financials

Verizon 210 Telecommunication Services

Visa 195 Information Technology

Merck & Co 172 Health Care

Philip Morris 154 Consumer Staples

Pepsico 152 Consumer Staples

Walt Disney 149 Consumer Discretionary

Altria 123 Consumer Staples

Medtronic 119 Health Care

Mastercard 110 Information Technology

CVS 96 Consumer Staples

Nike 93 Consumer Discretionary

Bristol Myers 92 Health Care

Walgreen 88 Consumer Staples

Honeywell 88 Industrials

Starbucks 79 Consumer Discretionary

Accenture 72 Information Technology

Goldman Sachs 71 Financials

Reynolds 68 Consumer Staples

Costco 67 Consumer Staples

Time Warner 58 Consumer Discretionary

Adobe 50 Information Technology

Stock-Picking List – Performance

� Hit Ratio 35%

� Hit Ratio Alpha 58%

� Average Perf. 0.47%

� Average Alpha 2.38%

� Nb. of Trades 31

� Open Trades 0

20 September, 2016

Average alpha of each stock strategy when

compared to its index (S&P or Euro Stoxx) over

the same holding period.

Average performance of each stock

strategy.

Please ask for more details.

Latest Equity Research

20 September, 2016

Date Document Strategy Stocks Covered

September 19, 2016 Key Highlight Global Leaders Astrazeneca

September 6, 2016 Weekly Report Company Primer Airbus

August 30, 2016 Weekly Report Company Primer Medtronic

August 23, 2016 Weekly Report Thematic View Costco, Kroger

August 12, 2016 Key Highlight Tech Leaders Alibaba

August 8, 2016 Key Highlight Global Leaders Bristol-Myers

August 4, 2016 Key Highlight Global Leaders Time Warner

July 29, 2016 Key Highlight Global Leaders Alphabet

July 29, 2016 Company Primer Global Leaders Apple, Microsoft, CVS, Walgreens, Disney, Time Warner

July 28, 2016 Key Highlight Global Leaders Facebook

July 27, 2016 Key Highlight Global Leaders Apple

July 22, 2016 Key Highlight Global Leaders Starbucks

July 20, 2016 Key Highlight Global Leaders Johnson & Johnson

July 19, 2016 Key Highlight Thematic View IBM

July 15, 2016 Key Highlight Global Leaders JPMorgan

July 12, 2016 Key Highlight Global Leaders Amazon

July 8, 2016 Key Highlight Global Leaders PepsiCo

July 7, 2016 Key Highlight Global Leaders Walgreens

July 4, 2016 Company Primer Thematic View Nike, Under Armour

June 30, 2016 Key Highlight Thematic View US Banks

June 29, 2016 Key Highlight Global Leaders Nike

June 28, 2016 Weekly Report Global Leaders Reckitt Benckiser, Unilever

June 20, 2016 Company Primer Global Leaders Heineken

June 16, 2016 Key Highlight Global Leaders Inditex

June 14, 2016 Company Primer Global Leaders Accenture

June 14, 2016 Key Highlight Global Leaders Apple

June 14, 2016 Weekly Report Tech Leaders Accenture

June 9, 2016 Company Primer Global Leaders Starbucks

June 9, 2016 Company Primer Global Leaders Facebook

June 9, 2016 Company Primer Global Leaders Amazon

June 9, 2016 Company Primer Global Leaders Alphabet

June 7, 2016 Company Primer Tech Leaders PayPal

June 7, 2016 Company Primer Tech Leaders Broadcom

June 7, 2016 Company Primer Tech Leaders Adobe Systems

June 7, 2016 Key Highlight Thematic View Bristol-Myers

June 7, 2016 Weekly Report Tech Leaders Adobe, Broadcom, PayPal

June 3, 2016 Key Highlight Global Leaders Johnson & Johnson

Date Document Strategy Stocks Covered

May 31, 2016 Weekly Report Global Leaders Alphabet, Amazon, Facebook

May 27, 2016 Key Highlight Global Leaders Costco

May 24, 2016 Weekly Report Thematic View Swisscom, Deutsche Tel., Vodafone, BT Group

May 17, 2016 Weekly Report Global Leaders Heineken

May 11, 2016 Key Highlight Global Leaders Amazon

May 5, 2016 Key Highlight Global Leaders Time Warner

May 4, 2016 Key Highlight Global Leaders CVS

April 29, 2016 Key Highlight Global Leaders Amazon

April 28, 2016 Key Highlight Global Leaders Facebook

April 27, 2016 Key Highlight Global Leaders Apple

April 22, 2016 Key Highlight Global Leaders Essilor

April 20, 2016 Key Highlight Global Leaders Johnson & Johnson

April 14, 2016 Key Highlight Global Leaders JPMorgan

April 13, 2016 Key Highlight Global Leaders Facebook

April 5, 2016 Weekly Report Thematic View Ctrip, Expedia, Priceline

April 1, 2016 Company Primer Thematic View Ctrip

April 1, 2016 Company Primer Thematic View Expedia

April 1, 2016 Company Primer Thematic View Priceline

March 31, 2016 Key Highlight M&A Hon Hai

March 16, 2016 Key Highlight Global Leaders Apple

March 10, 2016 Key Highlight Global Leaders Inditex

March 8, 2016 Weekly Report Thematic View 3M, GE, Honeywell, UTC

March 7, 2016 Key Highlight Global Leaders Novo Nordisk

March 4, 2016 Key Highlight Global Leaders Time Warner

February 23, 2016 Weekly Report Thematic View IBM

February 19, 2016 Key Highlight M&A IBM

February 2, 2016 Key Highlight Global Leaders Alphabet

January 29, 2016 Key Highlight Global Leaders Microsoft

January 28, 2016 Key Highlight Global Leaders Facebook

January 27, 2016 Key Highlight Global Leaders Apple

January 25, 2016 Key Highlight Earnings Eiffage

January 15, 2016 Key Highlight Global Leaders JPMorgan

January 13, 2016 Company Primer Global Leaders Accenture

January 13, 2016 Key Highlight Global Leaders Time Warner

January 8, 2016 Key Highlight Global Leaders Walgreens

January 7, 2016 Company Primer Thematic View Siemens

Disclaimer

20 September, 2016

Ucap Hong Kong Asset Management Ltd has issued this document for information purposes only. This document may not be distributed to the United States, Canada,

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Ucap Hong Kong Asset Management Ltd has based this document on information obtained from sources it believes to be reliable but which it has not independently

verified. Ucap Hong Kong Asset Management Ltd makes no guarantees, representations or warranties, and accepts no responsibility or liability as to its accuracy or

completeness. Expressions of opinion herein are subject to change without notice.

Members of the Ucap Hong Kong Asset Management Ltd and/or their officers, directors and employees may have positions in any securities mentioned in this

document (or any related investment) and may from time to time add to or dispose of any such securities (or investment).

In the case where this document is distributed in the United Kingdom by a person who is not authorized by the United Kingdom Financial Services Authority; it is only

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Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not receive back

the full amount invested. When an investment is denominated in a currency other than your local or reporting currency, changes in exchange rates may have an

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