Global Strategy-2910 Nomura

8/13/2019 Global Strategy-2910 Nomura

1/18

Global Equity Strategy EQUITY STRATEGY EQUITY RESEARCH

Delayed stratification

Portfolio masala

October 29, 2013

A p atch o f w eaker US data po ses something of an eq ui ty nav igationalchallenge as Fed taper expectations creep farther into the fut ure,extending t he cheaper-US-dollar lifeline for struc turally w eakereconomies most particu larly among the EMs. Despite this sho rt-term backst ep, we ultimately believe the US recovery is intact multi-quarter, and the cheap-dollar regimes days are still numbered. This,plus t he likelihood that Chinas summer growth spu rt has peaked andis set to slow, keeps us cautio us on weaker EM risks. Yet as theonce-dismiss ible near-term EM bounce drags on int o a length ierreprieve, port folio managers may wish to ind ulge a bi t of weak-USDhedging . India str ikes us as an attractive lon g-side vehicle, and weupgrade it to small Overweight, funded by reduc ing China to Neutral.We never subscribed to the notion of a generalized EM crisis over thesummer, when expectations of an imminent Fed taper ushered capitaloutflows from poorer-quality global markets (primarily those with largercurrent account deficits and/or higher domestic yields that had attracted

larger hot money inflows). Rather, we saw a rational process ofdifferentiation i.e., between the structurally sounder EMs able to stand ontheir own as US dollar costs looked set to normalize, and the weakermarkets that had merely been propped up by fickle yield-seeking short-term inflows. That process of differentiation appears on hold for now.Looking into H1 2014, though, not only do we see the current reprievefrom higher US dollar funding costs as relatively temporary, but we alsocontinue to regard many Emerging Marke ts as beset by country-specificstructural growth constraints in any case,

be they increasingly obsolete growth models, unavoidable demographicheadwinds, and/or classic middle income traps. Thus, we do not regardthe push-out of Fed expectations recently under way necessarily as agame-changer for EM equities. Still, tactical hedges may be advisable .Among Asia-Pacific equity markets that benefit more from a looser longerFed, India alone still offers some degree of value by historical standards.Moreover, a Chinese GDP deceleration from here likely implies softercommodity prices as well which would benefit resources-importing Indiabut challenge large parts of commodity-exporting ASEAN and Australia.And Indias region-low trade/GDP ratio also better insulates it from the USdata disappointments that are behind the shifting Fed expectations.Moreover, Indias upcoming state elections (November 11-December 4)offer the prospect of a major pro-growth sentiment boost as marketsanticipate next Mays national polls. Investors honeymoon with new RBI

Governor Rag ram Rajan seems still in effect with even a likely rate hiketoday an arguable positive from the standpoint of rupee support and anti-inflationary credibility. Even Indias abysmal sub-5% GDP now offers amore upward skew of risks compared to Chinas toppish-looking growth.

Anchor themesFed taper expectations creepfarther into the future, extendingthe cheap-US-dollar lifeline for

structurally weaker EMs. Thislucky break may still prove fairlytemporary but portfoliomanagers may consider addingweak-USD beneficiaries as ahedge against potential furtherUS setbacks. India strikes us asthe ost attractive

Research analysts

Global Strategy

Michael Kurtz, NIHK - [email protected]+852 2252 2182

Mixo Das, NIHK - [email protected]+852 2252 1424

Yiran Zhong, NIHK - [email protected]+852 2252 1413

See Appendix A-1 for analystcertification, importantdisclosures and the status ofnon-US analysts.

Asia-Pacific's msuch vehicle.

hu

as we cataloged earlier this year
http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90


2/18

Nomura | Global Equity Strategy October 29, 2013

2

Delayed stratificationA patch of weaker US data poses something of an equity navigational challenge as Fedtaper expectations have lately begun creeping farther into the future, extending thelifeline of lower US dollar funding costs for structurally weaker economies mostparticularly among the Emerging Markets. EM equities have underperformed theirDeveloped Market cousins for most of the past 15 months due to a combination offactors: 1) rising US yields off July 2012 lows induced unwinding of carry trades funded

out of cheaper US dollars over the previous few years; 2) resulting weaker localcurrencies compounded the unattractiveness of local equity exposure; and in manycases, 3) weaker cyclical and structural local economic performance has also been afactor.

We never subscribed to the notion of a generalized EM crisis over the summer, whenexpectations of an imminent Fed taper ushered capital outflows from poorer-qualityglobal markets (primarily those with larger current account deficits and/or higherdomestic yield environments that had attracted larger hot money inflows i.e., mostlythe upper-left quadrant in Figure 1, below). Rather, we saw a rational and arguablyoverdue process of differentiation i.e., between the structurally sounder markets able tostand on their own as US dollar costs looked set to normalize, and the weaker marketsthat had merely been propped up by fickle short-term yield-seeking flows. By no means

were all EMs sold down equally.

Fig. 1: Global Emerging Markets: Current account deficit & government bond yields

Source: IMF, Bloomberg, Nomura Strategy

Thus, between the May 28 peak in the MSCI EM index and its most recent trough on

August 28, USD-denominated volatility of -20% or more hit equity markets such asIndonesia, India, the Philippines, Thailand, Chile, Peru, Brazil, and Turkey, whereas lessthan -10% drawdowns were seen in the likes of Korea, China, Taiwan, Colombia, and all of Eastern Europe (Figure 2):

Brazil

IndiaTurkey

RussiaSouth Africa

IndonesiaColombia

MexicoChile HungaryPeru

PolandChinaThailand

Philippines

MalaysiaKorea

Taiwan

0.0

2.0

4.0

6.0

8.0

10.0

12.0

-10.00 -5.00 0.00 5.00 10.00 15.00IMF C/A Forecast for 2013 (% GDP)

1 0 y r

B o n

d y i e

l d ( % )


3/18


3

Fig. 2: EM equity index performance before and after Aug. 28 trough(US$ terms)

Source: Bloomberg, Nomura Strategy

That process of differentiation now appears largely on hold. Less than two months afterUS yields briefly crossed above 3.0% (on September 6), a rapid sequence of events astring of softer US data, Larry Summers' withdrawal from contention for the Fedchairmanship, the FOMCs September 18 decision not to initiate a widely expectedreduction of its US$85bn/month asset purchases, the October 1-17 US governmentshutdown, related political brinkmanship, and the only-temporary three-month agreedsolution to the US budget impasse, plus dovish Fed vice-chair Janet Yellen'snomination to replace Ben Bernanke at the Fed helm next year has lulled yields backdown to roughly 2.5% at writing.

The pullback in US Treasury yields and resultant US dollar softness has allowedEM equities and FX to re-strengthen (Figure 3, inset). A favorable moderation in oilprices, largely reflecting a momentary reduction in political risks , has also played asupporting role.

Fig. 3: MSCI EM / DM performance


-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

E M

A s

i a

I n d o n e s

i a

I n d i a

P h i l i p p

i n e s

T h a

i l a n

d

M a

l a y s

i a

T a

i w a n

C h i n a

K o r e a

L a

t i n

A m e r i c a

C h i l e

P e r u

B r a z i

l

M e x

i c o

C o

l o m

b i a

E E M E A

T u r k e y

M o r o c c o

S o u

t h A f r i c a

H u n g a r y

R u s s

i a

E g y p

t

C z e c

h R e p u

b l i c

P o

l a n

d

May 8 - Aug 28 Aug 28 - Oct 25

0

10

20

30

40

50

60

70

80

90

100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mar-13 May-13 Jul-13 Sep-13
http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=639341&appname=Email&cid=am9mMW9hUDJ5MjA90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=639341&appname=Email&cid=am9mMW9hUDJ5MjA90


4/18


4

Moreover, our US rates team still sees near-term downside risk to yields. They believethe Fed would like to see 10-year US Treasuries trading within a 2.25-2.75% range in thenear term and see the path for 10-yr yields as bound on either side both by expectationsover the timing of the eventual first Fed hike and by changes in the term premium due toexpected growth and inflation (Figure 4):

Fig. 4: Path for 10-yr rates is bound on either end by both 1st Fed hike expectation andmovements in term premium


On the data front, we also note in Figure 5 that the spread between the economicsurprise indices (i.e., actual economic data vs. consensus expectations) for EM and G10economies has taken a turn in EMs relative favour in recent weeks. This in largemeasure reflects the softening of US economic data while Chinese and some other EMeconomic performance accelerated albeit we think only temporarily in Chinas case .

Fig. 5: Economic s urpri se index: EM - G10Citigroup Economic Surprise Indices


Valuations may have played an accessory role in EMs recently improved relativeperformance as well, as EMs remain comparatively cheap by a variety of metrics notonly in the equity space (Figures 6-7) but on the credit side as well: EM credits yield gap

vs. US High Yield credits has narrowed sharply YTD (Figure 8).

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0Mar 14

Jun 14

Sep 14

Dec14

Apr15

Jul15

Oct 15

Jan 16

May 16

Aug16Sep 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 13 Nov 13

%First Hike Date 10yr UST Yield (RHS)

QE3Starts

SequestrationQE4

Starts

JEC

JuneFOMC

SepFOMCGovt.Shut down

Debt CeilingResolution

-100.0

-80.0

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

100.0

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Econ Surprise EM - G10


5/18


5

Fig. 6: EM vs. DM: 12-month Fwd PER

Source: Datastream, Nomura Strategy

Fig. 7: EM vs. DM: PBV


Indeed a substantial rise in correlations suggests, curiously if improbably, that the impactof US Treasury yields on the perceived fundamentals of EM assets exceeds that on US high-yield assets (Figure 9).

Fig. 8: Yield spreads: EM debt and US High-yi eld debt


Fig. 9: US Treasury yi elds v ersus US HY and EM spreads

26-week correl


EMs: More breather than hol iday

Despite the near-term softer US Treasury yield and dollar trends under way since mid-September, we are wary of projecting them too far into the future: Nomura global FXStrategist Jens Nordvig wrote earlier this month that we still expect USD to outperformnext year, albeit at a slower pace than we had previously assumed, and with the take-offdelayed somewhat ( USD Strength Delayed , October 4).

As Figures 10-11 suggest, dollar strength is broadly inversely correlated with EM/DMrelative equity performance and with hard commodity (and often energy) prices.

Thus, any resumption in US dollar upside in 2014 would likely add to fundamental EMheadwinds.

6

8

10

12

14

16

18

20

22

24

26EM DM

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

EM DM

2

2.5

3

3.5

4

4.5

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

EM debt US HY debt

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

2006 2007 2008 2009 2010 2011 2012 2013

Correl - US HY spread and Treasury Correl - EM spread and Treasury
http://intranet.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=636838&appname=GRP&cid=YVZodlJEWm5OM2xtUjBVOTA1http://intranet.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=636838&appname=GRP&cid=YVZodlJEWm5OM2xtUjBVOTA1


6/18


7/18


7

(for example) Chinas moderating growth and demographic headwinds, Brazils deepstructural dysfunctions, and socio-political instability in multiple EEMEA countries.

Fig. 13: Global emergi ng mark et (GEM) Fund Flow s* and 12-month fo rward GEMreturns relative to developed markets* as a % of GEM market cap, 12mma ann.

Source: EPFR, Bloomberg, Nomura Strategy

It is also worth noting that while higher US yields were one key trigger for outflows fromEM assets in recent months, Eurozone investors have been the bigger geographic driverof outflows (Figure 14). A substantial part of EM underperformance may thus have been

reflected in the fact that EM exposure now entails substantially greater VAR comparedwith European bond markets such as Spain and Italy (Figure 15). The reverse of thiscontrast contributed substantially to inflows to EM bonds from Europe during 2011-12;but with EM bond Sharpe ratios now set on a lower platform for the next 12 months, thesame comparison may now work against EMs.

Fig. 14: Cumulative DM fixed income flows into EM

Source: EPFR, Nomura

Fig. 15: Six-month annualized volatility on 10yr bondsEM high yielders include Turkey South Africa, Mexico, Indonesia

Source: Bloomberg, Nomura

Structural challenges

Nor are we convinced that EMs in general, at least, are necessarily better value simplybecause they feature somewhat lower equity valuations. A key reason for EMs greater

-60

-40

-20

0

20

40

60-1

-0.5

0

0.5

1

1.5

2

2.5

Net purch ase of GEM funds

12 mth forward EM / DM relativereturns (rhs, i nverted)

Oct.

estimate

0

50

100

150200

250

300

350

400

450

500

2008 2009 2010 2011 2012 2013

EM High Yield Spain/Italy Germany/US

driven by fundamental improvements in Europe largely independent of EM dynamics. This is


8/18


8

discounts is that in aggregate their trailing ROEs are failing to sustain established 10-year norms (currently 12.8% across all EMs vs. historical 14.4% avg.), while the DM-dominated MSCI World aggregate is generating trailing ROEs in line with long-termaverage (currently 12.1% Figure 16).

Fig. 16: EM vs. DM ROE: return g eneration is also no l onger a dist inc t advantage for EMequities

Source: Nomura StrategyInsight

In an April 2013 report, we condensed the outlook for GEM relative performance down tothree key factors: 1) the US dollar trend, 2) the global trade cycle (GEMs as a whole arestill very export-intensive at a gross export/GDP ratio of roughly 26%), and, critically, 3) abasket of country-specific idiosyncratic/structural factors (see All That Glitters is NotGEMs, April 5, 2013). On the latter, a key consideration for EM Equities as a broad assetclass is that the EM GDP growth differential over DM GDP growth (Figure 17) has

narrowed from the 5-6ppt gap of 2005-08 to just 3.5ppt now and is no longertranslating to superior EM corporate earnings growth for EMs (Figures 18-19).

Fig. 17: EM vs. DM real GDP growth and IMF forecast: out performanc e of GDP growthhas already peaked

Source: IMF, Nomura Strategy

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

ROE EM ROE World

-2

-1

0

1

2

3

4

5

6

7

1980 1982 1984198619881990 1992 1994 1996 1998 2000 2002 2004200620082010 2012 2014 2016 2018

EM - DM Real Growth
http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=605206&appname=Email&cid=am9mMW9hUDJ5MjA90


9/18


9

Equity investors, then, have been right to question why they should take the extra risks inEMs e.g., political uncertainty, FX risk, lower liquidity, weaker corporate governance if they are not being compensated with additional return.

Fig. 18: EM-DM 12m Fwd EPS growth diff erential


Fig. 19: EM-DM 12m Fwd EPS growt h di fferential: EM Asia


Moreover, as we explored previously in our cross-asset report Asias rising risk premium (June 28, 2013), EM countries external balances overall have deteriorated significantly,and even loose policy settings still led to inflows and stronger currencies (while globalDM yields were even lower). Crucially, in many cases, these policy settings, easier thanwhat domestic conditions alone would warrant, have led to stretched financial cycles andare becoming a drag on growth.

Upgrade India to Tactical Overweight , Reduce China toNeutral

As noted, the current juncture thus poses a challenge for portfolio management as Fedtaper expectations creep farther into the future, extending the cheap-US-dollar lifelinefor structurally weaker economies particularly among the EMs. Looking into H1 2014,though, not only do we see the relief from higher US dollar funding costs as relativelytemporary, but we also continue to regard many Emerging Markets as beset by country-specific structural growth constraints in any case.

Thus, we do not regard the push-out of Fed expectations recently under way as agame-changer for the EM equity asset class, and from a longer-term perspective weremain largely underweight EMs outside select Asian markets. Tactically, however, asthe once-dismissible near-term EM bounce drags on into a lengthier reprieve, portfoliomanagers may wish to indulge a degree of weak-USD exposure to hedge portfoliosagainst potential further disappointments in US fundamental data. India strikes us as aparticularly attractive EM vehicle for such positioning and we upgrade it to small(+1.0ppt) Overweight at this time.

India admittedly may be merely one of several Asia-Pacific markets set relatively tobenefit from the pushing-back of Fed taper expectations; but given Indias lowesttrade/GDP ratio in the Asia-Pacific region, its growth is inherently less vulnerable to USand China downside risks.

And compared to the Asia-Pacifics other weak-dollar beneficiaries (principally in EMASEAN and Australia), Indian equities at least still offer some degree of value byhistorical standards (whereas all four main EM ASEAN markets sell at premiums onboth PER and PBV bases, while Australia is relatively pricier than India Figure 20).

-50

-40

-30

-20

-10

0

10

20

30

40

50

60EM Asia - DM Fwd earnings growth, 24m average


10/18


10

Fig. 20: India vs. EM ASEAN + Aust ralia: PER and PBV premium /disco unt to long -termmean


Moreover, a Chinese GDP deceleration from its 3Q13 peak of 7.8%, per our Chinaeconomist Zhang Zhiweis view , also implies softer commodity prices which wouldbenefit resources-importing India, whereas it could prove more challenging forlarge parts of commodity-exporting ASEAN.

Our China strategist Wendy Liu on October 25 advised taking profits on H-share gainsand selling into further upside in anticipation of better entry levels when the index tradeslower/sideways in coming months (see China portfolio tracker - Fingers on the trigger ).As such, we fund our tactical upgrade of India by reducing China to Neutral from ourprevious +2.0ppt Overweight recommendation, in line with Wendys tactical view.

Additionally, we note that several upcoming Indian state elections (to be held November

11-December 4) offer the prospect of a pro-growth market sentiment lift in anticipation ofkey national polls in May next year: Nomura India economist Sonal Varma and seniorpolitical strategist Alastair Newton jointly wrote this month that we expect the mainopposition Bharatiya Janata Party (BJP) to perform strongly in the five state electionsscheduled for November and December by retaining power in two states and regainingpower in Rajasthan. If the BJP emerges stronger from the state elections, this wouldbe seen as increasing the likelihood of a BJP-led government at the centre. Sentimentcould improve as a result, since the BJP is seen as more market friendly and moreamenable to structural reforms ( Indian state elections: Likely outcomes and implications ,October 10).

Indian markets arguably are also still reaping the honeymoon benefits from RaghuramRajans accession to the RBI governorship on September 4. Even an expected RBI rate

hike today may be seen as market-positive from the standpoint of structural rupeesupport (local currency volatility has declined markedly since Rajan took office Figure21) and anti-inflationary credibility.

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Philippines Malaysia Thailand Indonesia Australia India

PER: Prem/Disc vs. L-term Avg. PBV: Prem/Disc vs. L-term Avg.
http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=638130&appname=GRP&cid=YVZodlJEWm5OM2xtUjBVOTA1http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=638130&appname=GRP&cid=YVZodlJEWm5OM2xtUjBVOTA1http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=640234&appname=Email&cid=RVBvdFFJMmlDTFE90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=637756&appname=Email&cid=dkR3ZkdHMUo4NGM90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=637756&appname=Email&cid=dkR3ZkdHMUo4NGM90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=640234&appname=Email&cid=RVBvdFFJMmlDTFE90http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=638130&appname=GRP&cid=YVZodlJEWm5OM2xtUjBVOTA1http://go.nomuranow.com/research/globalresearchportal/getpub.aspx?pid=638130&appname=GRP&cid=YVZodlJEWm5OM2xtUjBVOTA1


11/18


11

Fig. 21: 3m USD/INR volatilit yATM volatility


We also note that even shorter term, 1) Indian calendar Q3 earnings thus far are beatingboth consensus expectations and actual Q2 performance (with 47% of results reported Figure 24); and foreign equity buying in India is under positive momentum (unlike EMASEAN, which has continued to be net- sold by foreign investors even as theirbenchmark indexes have rallied Figures 22-23).

Fig. 22: Cumulative Foreign Buying in Asia Since May 21US$mn


Fig. 23: Cumulative Foreign Buying in Asia Since May 21% Mkt-Cap


Even Indias abysmally low GDP growth (4.4% y-y in 2Q13, down from a 9.7% y-yaverage as recently as 2010) almost constitutes contrarian cause for optimism, giventhat at such already low levels, risks presumably are less downwardly skewed than theyare, for example, for Chinas now-toppish growth figures.

[Please see our Global and Asi a-Pacific st ock Focu s List s in Figures 26-27]

6

8

10

12

14

16

18

20

22

Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13

3m USD/INR Vol

Rajan takes office at RBI

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2 0 - M a y - 1

3

2 7 - M a y - 1

3

0 3 - J u n - 1

3

1 0 - J u n - 1

3

1 7 - J u n - 1

3

2 4 - J u n - 1

3

0 1 - J u l - 1 3

0 8 - J u l - 1 3

1 5 - J u l - 1 3

2 2 - J u l - 1 3

2 9 - J u l - 1 3

0 5 - A u g - 1

3

1 2 - A u g - 1

3

1 9 - A u g - 1

3

2 6 - A u g - 1

3

0 2 - S e p - 1

3

0 9 - S e p - 1

3

1 6 - S e p - 1

3

2 3 - S e p - 1

3

3 0 - S e p - 1

3

0 7 - O c t - 1 3

1 4 - O c t - 1 3

2 1 - O c t - 1 3

Korea

Taiwan

India

Philippines

Thailand

Indoneisa-3.5%

-2.5%

-1.5%

-0.5%

0.5%

1.5%

2.5%

2 0 - M a y - 1

3

2 7 - M a y - 1

3

0 3 - J u n - 1

3

1 0 - J u n - 1

3

1 7 - J u n - 1

3

2 4 - J u n - 1

3

0 1 - J u l - 1 3

0 8 - J u l - 1 3

1 5 - J u l - 1 3

2 2 - J u l - 1 3

2 9 - J u l - 1 3

0 5 - A u g - 1

3

1 2 - A u g - 1

3

1 9 - A u g - 1

3

2 6 - A u g - 1

3

0 2 - S e p - 1

3

0 9 - S e p - 1

3

1 6 - S e p - 1

3

2 3 - S e p - 1

3

3 0 - S e p - 1

3

0 7 - O c t - 1 3

1 4 - O c t - 1 3

2 1 - O c t - 1 3

Korea

Taiwan

India

Philippines

Thailand

Indoneisa


12/18


12

Fig. 24: Asi a-Pacific ex-Japan: 3Q13 Net Income by co untry and sector

Source: Bloomberg. Nomura Research

ASIA, NET INCOME, By Country

Country

reported /total

reporting

reported %reporting

(market cap)

reported %total (market

cap)Estimates Avail able % Surpr ise % Disap poi nt

SurpriseSpread

WeightedBeat/Miss

Q3 y/yGrowth,Year -1

Q2 y/yGrowth,

Current Year

Q3 y/yGrowth,

Current Year Aust rali a/NZ 3 / 26 1% 0% 1 0% 100% -100% -36% -16.3% 176.4% 8.9%HK/China 36 / 140 36% 23% 20 35% 45% -10% 2% -3.1% 33.0% 61.3%India 53 / 173 47% 26% 49 35% 27% 8% 7% 43.7% 16.7% 23.9%Indonesia 12 / 109 19% 19% 9 44% 22% 22% 3% 30.3% 17.1% 13.6%Korea 45 / 211 41% 32% 44 23% 61% -39% -16% 54.0% 8.9% 1.3%Malaysia 11 / 109 12% 12% 5 60% 0% 60% 8% 4.5% 9.3% 34.0%

Philippines 1 / 54 4% 4% 1 0% 0% 0% 4% 0 .9% -15.4% 7.9%Singapore 31 / 115 19% 15% 17 65% 12% 53% 14% 4.3% 18.3% 51.1%Taiwan 6 / 224 17% 16% 5 20% 40% -20% -1% 55.4% 21.7% 5.1%Thailand 14 / 91 21% 21% 14 21% 29% -7% 1% 25.1% 28.2% 16.7%

Total 212 / 1252 28% 19% 165 34% 36% -2% 0% 19.3% 23.8% 37.2%

100%80%60%40%20%0%20%40%60%80%100%

3025201510

505

101520

M a l a y s i a

S i n g a p o r e

I n d o n e s i a

I n d i a

P h i l i p p i n e s

T h a i l a n d

H K / C h i n a

T a i w a n

K o r e a

A u s t r a l i a / N Z

Surprises Disappointments Surprise Spread (rhs)

40%

30%

20%

10%

0%

10%

20%

30%20%10%

0%10%20%30%40%50%60%70%

S i n g a p o r e

M a l a y s i a

I n d i a


I n d o n e s i a

H K / C h i n a

T h a i l a n d

T a i w a n

K o r e a


Growth, Year 1 Growth, Current y ea r Wei gh ted Beat/Miss (rhs)

ASIA, NET INCOME, By Sector

Sector

reported /total

reporting

reported %reporting

(market cap)


cap)Estimates Avai labl e % Surp ris e % Disap poi nt

SurpriseSpread

WeightedBeat/Miss


Q2 y/yGrowth,

Current Year

Q3 y/yGrowth,

Current Year Discretionary 24 / 174 33% 22% 21 29% 43% -14% 2% 30.0% 67.0% 30.8%Energy 12 / 57 20% 13% 9 33% 56% -22% 14% 40.2% 15.7% -12.0%Financials 63 / 278 24% 17% 46 48% 13% 35% 6% -6.0% 23.1% 83.3% Banks 29 / 98 21% 19% 26 42% 15% 27% 1% 13.7% 14.4% 14.3% Real Estate 21 / 108 17% 6% 11 64% 9% 55% 19% 32.6% 38.6% 84.5% Insurance 4 / 23 52% 32% 1 100% 0% 100% 900% -77.5% 43.8% 307.9% Diversified Finl. 9 / 49 21% 15% 8 38% 13% 25% 7% 4.5% 23.2% 22.0%Healthcare 8 / 49 11% 6% 6 17% 50% -33% -19% 32.3% 14.3% -13.9%Industrials 35 / 204 22% 13% 27 30% 48% -19% -6% 14.5% -3.8% 22.4%Materials 25 / 154 29% 14% 19 32% 53% -21% -24% 41.2% -13.5% 17.1%Staples 11 / 113 11% 6% 8 63% 25% 38% -5% 6.2% 4.8% 6.0%

Tech 20 / 146 41% 30% 16 31% 38% -6% 1% 25.8% 30.5% 24.1%Telecom 9 / 37 56% 49% 8 0% 25% -25% -5% 6.0% 18.5% 11.8%Utilities 5 / 40 15% 7% 5 0% 80% -80% -11% 451.8% 78.9% 17.3%

Total 212 / 1252 28% 19% 165 34% 36% -2% 0% 19.3% 23.8% 37.2%To tal ex -Fi nan ci al s 149 / 974 31% 19% 119 29% 45% -17% -3% 30.3% 24.2% 16.6%

100%

80%

60%

40%

20%0%

20%

40%

60%

60

40

20

0

20

40

60

S t a p l e s

F i n a n c i a l s

T e c h

D i s c r e t i o n a r y

I n d u s t r i a l s

M

a t e r i a l s

E n e r g y

T e l e c o m

H e a l t h c a r e

U t i l i t i e s


30%25%20%15%10%5%0%5%10%15%20%

100%

0%

100%

200%

300%

400%

500%

E n e r g y

F i n a n c i a l s


T e c h

S t a p l e s

T e l e c o m


U t i l i t i e s

H e a l t h c a r e

M

a t e r i a l s

Growth, Year 1 Growth, Current year Weighted Beat/Miss (rhs)


13/18


13

Fig. 25: Asi a-Pacific ex-Japan: 3Q13 Sales by co untry and sector

Source: Bloomberg. Nomura Research

ASIA, SALES, By Country

Country

reported /total

reporting

reported %reporting

(market cap)


cap)Estimates Avail able % Surpr ise % Disappoin t

SurpriseSpread

WeightedBeat/Miss


Q2 y/yGrowth,

Current Year

Q3 y/yGrowth,

Current Year Aust rali a/NZ 3 / 26 1% 0% 2 0% 0% 0% 2% -7.5% 2.1% 6.4%HK/China 37 / 140 37% 24% 19 16% 11% 5% 2% 13.0% 16.7% 16.3%India 47 / 173 45% 25% 44 11% 20% -9% 0% 27.4% 15.8% 21.9%Indonesia 11 / 109 18% 18% 8 25% 13% 13% 2% 11.3% 12.6% 15.6%Korea 42 / 211 37% 29% 41 2% 34% -32% -3% 5.3% 1.3% -0.2%Malaysia 10 / 109 11% 11% 4 0% 25% -25% 0% 5.3% 6.1% 3.0%Philippines 1 / 54 4% 4% 1 0% 0% 0% 0% 7.0% -1.4% -6.7%Singapore 30 / 115 17% 14% 16 31% 19% 13% 10% 20.1% 9.6% 11.1%Taiwan 6 / 224 17% 16% 5 0% 60% -60% -1% 29.1% 17.7% 12.2%Thailand 13 / 92 21% 21% 13 31% 15% 15% 12% 10.6% 17.8% 6.8%

Total 200 / 1253 28% 19% 153 13% 23% -10% 1% 14.4% 13.2% 12.9%

50%

40%

30%

20%

10%

0%

10%

20%

15

10

5

0

5

10

T h a i l a n d

I n d o n e s i a

S i n g a p o r e

H K / C h i n a



I n d i a

M a l a y s i a

K o r e a

T a i w a n


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

10%5%0%5%

10%15%20%25%30%35%

T h a i l a n d

S i n g a p o r e

H K / C h i n a


I n d o n e s i a

M a l a y s i a


I n d i a

T

a i w a n

K o r e a


ASIA, SALES, By Sector

Sector

reported /total

reporting

reported %reporting

(market cap)


cap)Estimates Avail able % Surpr ise % Disappoin t

SurpriseSpread

WeightedBeat/Miss


Q2 y/yGrowth,

Current Year

Q3 y/yGrowth,

Current Year Discretionary 24 / 174 33% 22% 21 10% 24% -14% -4% 20.0% 19.9% 18.7%Energy 12 / 57 20% 13% 9 33% 11% 22% 4% 12.4% 4.2% 15.2%Financials 51 / 278 23% 17% 34 32% 6% 26% 5% 15.5% 14.9% 13.5% Banks 23 / 98 19% 17% 20 25% 5% 20% 3% 12.5% 10.7% 10.2% Real Estate 23 / 108 28% 10% 12 42% 8% 33% 14% 29.5% 21.2% 25.7% Insurance 4 / 23 52% 32% 1 0% 0% 0% - 15.9% 21.9% 17.6% Diversified Finance 1 / 49 6% 5% 1 100% 0% 100% 52% 54.8% 39.1% -17.7%Healthcare 8 / 49 11% 6% 6 0% 33% -33% -3% 17.7% 14.4% 9.8%Industrials 35 / 204 22% 13% 27 4% 41% -37% -6% 9.4% 1.2% 2.8%Materials 25 / 154 29% 14% 19 11% 26% -16% 1% -2.3% 3.7% 2.4%Staples 11 / 114 11% 6% 8 0% 13% -13% 0% 9.3% 5.2% 4.7%Tech 20 / 146 41% 30% 16 0% 38% -38% 0% 26.2% 14.3% 17.6%Telecom 9 / 37 56% 49% 8 0% 13% -13% 3% 9.0% 18.4% 12.6%Utilities 5 / 40 15% 7% 5 20% 20% 0% 0% 3.8% 2.6% 7.6%

Total 200 / 1253 28% 19% 153 13% 23% -10% 1% 14.4% 13.2% 12.9%Total ex -Finan ci al s 149 / 975 31% 19% 119 8% 28% -20% 0% 14.0% 12.5% 12.7%

50%

40%

30%

20%

10%0%

10%

20%

30%

40

30

20

100

10

20

30

40

F i n a n c i a l s

E n e r g y

U t i l i t i e s

S t a p l e s

T e l e c o m


M a t e r i a l s

H e a l t h c a r e


T e c h


8%

6%

4%

2%

0%

2%

4%

6%

5%

0%

5%

10%

15%

20%

25%

30%

F i n a n c i a l s

E n e r g y

T e l e c o m

M a t e r i a l s

S t a p l e s

U t i l i t i e s

T e c h

H e a l t h c a r e





14/18


14

Fig. 26: Asia-Pacific Strategy Focus List

Note: Prices as of 28 October 2013.Source: Bloomberg, Nomura Strategy

Country Sector Stock Ticker Date AddedPrice Change since

addi tion (US$) Pr imary Analys tNomuraRating Price (local)

Upside(%)

Australia Materials BHP BHP AU 3-Dec-12 0.6 Amber Mackinnon Buy 37.9 11 Australia Financials QBE QBE AU 26-Aug-13 -4.0 Toby Langley Buy 14.5 31China Financials ICBC 1398 HK 12-Nov-12 2.9 Lucy Feng Buy 5.20 33China Tech Lenovo 992 HK 28-Jan-13 -0.6 Leping Huang Buy 8.06 22China Financials PICC 2328 HK 11-Mar-13 7.5 Jesse Wang Buy 11.3 1China Industrials CSR 1766 HK 10-Jun-13 22.0 Yang Luo Buy 6.20 56China Financials Haitong Sec. 6837 HK 22-Jul-13 19.2 Lucy Feng Buy 11.4 23China Discretionary Dongfeng 489 HK 22-Jul-13 10.2 Benjamin Lo Buy 10.9 22China Materials Lee & Man Paper 2314 HK 29-Jul-13 6.7 Yang Luo Buy 5.31 32China Energy COSL 2883 HK 30-Sep-13 9.9 Gordon Kwan Buy 21.4 19HK Industrials Hutch 13 HK 3-Dec-12 22.6 Benjamin Lo Buy 96.2 14HK Industrials MTR 66 HK 27-May-13 -6.8 Benjamin Lo Buy 29.7 29India Health Care Dr. Reddy DRRD IN 5-Nov-12 18.4 Saion Mukherjee Buy 2400 5India Tech HCL Tech HCLT IN 22-Jul-13 15.2 Ashwin Mehta Buy 1063 32India Energy Reliance RIL IN 23-Sep-13 3.6 Anil Sharma Buy 891 21Indonesia Utilities PGAS PGAS IJ 30-Sep-13 1.0 Daniel Raats Buy 5050 19Japan Discretionary Toyota Motor 7203 JP 25-Jun-12 66.9 Masataka Kunugimoto Buy 6310 35Japan Discretionary Fuji Media 4676 JP 16-Jul-13 3.8 Yoshitaka Nagao Buy 1966 8Japan Financials MUFG 8306 JP 25-Jun-12 40.8 Ken Takamiya Buy 629 30Japan Financials Orix Corp 8591 JP 25-Jun-12 94.7 Wataru Ohtsuka Buy 1673 8Japan Financials Mitsui Fudosan 8801 JP 18-Sep-12 65.5 Daisuke Fukushima Buy 3285 18Japan Financials SMFG 8316 JP 15-Apr-13 5.2 Ken Takamiya Buy 4725 8Japan Industrials Sho-Bond 1414 JP 16-Jul-13 10.3 Kentaro Maekawa Buy 4585 -3Japan Industrials Kubota 6326 JP 15-Oct-12 46.8 Ryo Tazaki Buy 1466 40Japan Industrials IHI 7013 JP 15-Jan-13 48.2 Ryo Tazaki Buy 405 -1Japan Industrials SMC 6273 JP 18-Mar-13 23.3 Katsushi Saito Buy 22530 16Japan Materials Kumiai Chem 4996 JP 15-Apr-13 24.6 Shunta Omura Buy 726 20Japan Staples Lawson 2651 JP 18-Mar-13 13.0 Masafumi Shoda Buy 7850 15Japan Staples Seven & I 3382 JP 15-Apr-13 0.7 Masafumi Shoda Buy 3615 22Japan Tech Hitachi 6501 JP 22-Oct-12 26.1 Masaya Yamasaki Buy 673 19Korea Financials Hana Financial 086790 KS 5-Nov-12 28.9 Michael Na Buy 40100 37Korea Discretionary LG Electronics 066570 KS 3-Dec-12 -10.4 James Kim Buy 67800 47Korea Tech SK Hynix 000660 KS 19-Aug-13 22.1 CW Chung Buy 33100 21Korea Industrials Hyundai Dev. 012630 KS 21-Oct-13 2.7 Michael Na Buy 24350 19Malaysia Financials CIMB CIMB MK 8-Apr-13 -2.7 Julian Chua Buy 7.64 18Singapore Financials DBS DBS SP 25-Jun-12 26.1 Julian Chua Buy 16.6 27Singapore Industrials Keppel Corp KEP SP 11-Mar-13 -4.4 Nitin Kumar Buy 10.9 17Singapore Telecom Singtel ST SP 22-Jul-13 -2.3 Sachin Gupta Buy 3.74 18Taiwan Tech TSMC 2330 TT 6-Aug-12 37.7 Aaron Jeng Buy 110 12Taiwan Financials Fubon FHC 2881 TT 11-Mar-13 -3.5 Jesse Wang Buy 42.1 23Taiwan Tech Largan 3008 TT 2-Sep-13 -3.8 Anne Lee Buy 990 25Taiwan Financials Farglory 5522 TT 7-Oct-13 -3.0 Jesse Wang Buy 53.3 22

Thailand Financials KBANK KBANK TB 3-Sep-12 8.4 James Moss Buy 186 37


15/18


15

Fig. 27: Global Focus List

Note: Prices as of 25 October 2013 in US$.Source: Bloomberg, Nomura Strategy

North America Underweight Europe Ex UK Overweight

Bloomberg code S tock Name Analyst Rating* Current price** Bloomberg code Stock Nam e Analyst Rating* Current price**DOV US Dover Corp Buy 91.0 ELUXB SS Electrolux Neutral 25.7EMR US Emerson Electric Buy 67.2 ENI IM ENI Neutral 24.7XOM US Exxon Mobil Not Rated 88.0 BNP FP BNP Paribas Buy 73.6SLB US Schlumberger Not Rated 92.9 CS FP AXA Buy 25.2JPM US JP Morgan Not Rated 52.8 ERICB SS Ericsson Buy 12.3

AMZN US Amazon Not Rated 363 SAP GR SAP AG Buy 79.0 AXP US American Express Co Buy 82.6 TEL NO Telenor Buy 25.6MRK US Merck & Co Not Rated 46.5 RXL FP Rexel Buy 25.1DIS US Walt Disney Not Rated 69.3 PHIA NA Philips Buy 35.5MAR US Marriott International Buy 44.5 MT NA ArcelorMittal Buy 16.1IBM US IBM Not Rated 177 CSGN VX Credit Suisse Buy 32.2ORCL US Oracle Corp Buy 33.2 ABBN VX ABB Buy 25.9TSCO US Tractor Supply Not Rated 73.2 SIE GR Siemens Buy 130BRCM US Broadcom Buy 26.4 FP FP Total Buy 61.5QCOM US Qualcomm Buy 68.3VZ US Verizon Buy 50.7

United Kingdom Underweight Japan OverweightBloomberg code S tock Name Analyst Rating* Current price** Bloomberg code Stock Nam e Analyst Rating* Current price**BG/ LN BG Group Buy 20.3 6326 JP Kubota Buy 14.8

AV/ LN AVIVA Buy 7.09 8306 JP Mitsubishi UFJ Fin. Group Buy 6.31REL LN Reed Elsevier plc Buy 14.0 7203 JP Toyota Motor Buy 63.6BT/A LN BT Group plc Buy 5.80 6501 JP Hitachi Buy 6.67CRH LN CRH Not Rated 24.5 8801 JP Mitsui Fudosan Buy 33.2

PRU LN Prudential Buy 20.5 8591 JP ORIX Buy 16.87013 JP IHI Buy 4.108316 JP SMFG Buy 47.93382 JP Seven & I Buy 36.66273 JP SMC Buy 226

Developed Asia-Pac ex-Japan Underweight Emerging Asia OverweightBloomberg code S tock Name Analyst Rating* Current price** Bloomberg code Stock Nam e Analyst Rating* Current price**QBE AU QBE Insurance Group Ltd Buy 13.7 1398 HK ICBC Buy 0.66BHP AU BHP Buy 35.8 2328 HK PICC Buy 1.45DBS SP DBS Buy 13.4 489 HK Dongfeng Buy 1.41ST SP Singtel Buy 3.02 2314 HK Lee & Man Paper Buy 0.7013 HK Hutchison Whampoa Buy 12.3 992 HK Lenovo Buy 1.0466 HK MTR Buy 3.80 DRRD IN Dr. Reddy Buy 39.1

KBANK TB KBANK Buy 5.99000660 KS SK Hynix Inc Buy 30.7086790 KS Hana Financial Buy 37.6

2330 TT TSMC Buy 3.642881 TT Fubon Financial Buy 1.40

Latin America Underweight Emerging Europe, ME and Africa UnderweightBloomberg code Stock Name Anal ys t Ratin g* Cur ren t pr ice ** Bloomberg code Stock Nam e Analyst Rating* Current price**EMBR3 BZ Embraer Not Rated 8.07 SBER RX Sberbank Not Rated 3.24FALAB CI Falabella Not Rated 9.8 PZU PW PZU Not Rated 154GFNORTEO MM Grupo Banorte Neutral 6.43

* Analyst rating refers to Nomura research de partment rating.


16/18


16

Appendix A-1

Analyst Cert ifi cat ion

We, Michael Kurtz, Mixo Das and Yiran Zhong, hereby certify (1) that the views expressed in this Research report accuratelyreflect our personal views about any or all of the subject securities or issuers referred to in this Research report, (2) no part ofour compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in thisResearch report and (3) no part of our compensation is tied to any specific investment banking transactions performed byNomura Securities International, Inc., Nomura International plc or any other Nomura Group company.

Important Disclosures Online availability of research and conflict-of-interest disclosures Nomura research is available on www.nomuranow.com/research , Bloomberg, Capital IQ, Factset, MarkitHub, Reuters and ThomsonOne. Important disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx or requestedfrom Nomura Securities International, Inc., on 1-877-865-5752. If you have any difficulties with the website, pleaseemail [email protected] for help.

The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, aportion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report arenot registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of NSI, and may not be subject toFINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities heldby a research analyst account.

Nomura Global Financial Products Inc. (NGFP) Nomura Derivative Products Inc. (NDPI) and Nomura International plc. (NIplc) areregistered with the Commodities Futures Trading Commission and the National Futures Association (NFA) as swap dealers. NGFP, NDPI, andNIplc are generally engaged in the trading of swaps and other derivative products, any of which may be the subject of this report.

Any authors named in this report are research analysts unless otherwise indicated. Industry Specialists identified in some Nomura Internationalplc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they havecoverage. Industry Specialists do not contribute in any manner to the content of research reports in which their names appear. Marketing

Analysts identified in some Nomura research reports are research analysts employed by Nomura International plc who are primarily responsiblefor marketing Nomuras Equity Research product in the sector for which they have coverage. Marketing Analysts may also contribute toresearch reports in which their names appear and publish research on their sector.

Distribution of ratings (Global) The distribution of all ratings published by Nomura Global Equity Research is as follows: 44% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 41% of companies with this

rating are investment banking clients of the Nomura Group*.

46% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 54% of companies withthis rating are investment banking clients of the Nomura Group*.10% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 21% of companies withthis rating are investment banking clients of the Nomura Group*. As at 30 September 2013. *The Nomura Group as defined in the Disclaimer section at the end of this report.

Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America, andJapan and Asi a ex-Japan from 21 October 2013 The rating system is a relative system, indicating expected performance against a specific benchmark identified for each individual stock,subject to limited management discretion. An analysts target price is an assessment of the current intrinsic fair value of the stock based on anappropriate valuation methodology determined by the analyst. Valuation methodologies include, but are not limited to, discounted cash flowanalysis, expected return on equity and multiple analysis. Analysts may also indicate expected absolute upside/downside relative to the statedtarget price, defined as (target price - current price)/current price.

STOCKS

A rating of 'Buy' , indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral' ,indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce' , indicates thatthe analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended' , indicates that the rating, targetprice and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companiesthat are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage. Investors should not expect continuing oradditional information from Nomura relating to such securities and/or companies. Benchmarks are as follows: United States/Europe/Asia ex-Japan : please see valuation methodologies for explanations of relevant benchmarks for stocks, which can be accessedat: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx ; Global Emerging Markets (ex-Asia) : MSCIEmerging Markets ex-Asia, unless otherwise stated in the valuation methodology; Japan: Russell/Nomura Large Cap.

SECTORS A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance,indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates thatthe analyst expects the sector to underperform the Benchmark during the next 12 months. Sectors that are labelled as 'Not rated' or shown as'N/A' are not assigned ratings. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging

Markets (ex-Asia): MSCI Emerging Markets ex-Asia. Japan/Asia ex-Japan: Sector ratings are not assigned.
http://www.nomuranow.com/researchhttp://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxmailto:[email protected]://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxhttp://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxmailto:[email protected]://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxhttp://www.nomuranow.com/research


17/18


18/18


of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the informationhave any liability for any damages of any kind. MSCI and the MSCI indexes are services marks of MSCI and its affiliates. Investors should consider this document as only a single factor in making their investment decision and, as such, the report should not beviewed as identifying or suggesting all risks, direct or indirect, that may be associated with any investment decision. Nomura Group produces anumber of different types of research product including, among others, fundamental analysis, quantitative analysis and short term trading ideas;recommendations contained in one type of research product may differ from recommendations contained in other types of research product,whether as a result of differing time horizons, methodologies or otherwise. Nomura Group publishes research product in a number of differentways including the posting of product on Nomura Group portals and/or distribution directly to clients. Different groups of clients may receivedifferent products and services from the research department depending on their individual requirements. Clients outside of the US may accessthe Nomura Research Trading Ideas platform (Retina) at http://go.nomuranow.com/equities/tradingideas/retina/ Figures presented herein may refer to past performance or simulations based on past performance which are not reliable indicators of futureperformance. Where the information contains an indication of future performance, such forecasts may not be a reliable indicator of futureperformance. Moreover, simulations are based on models and simplifying assumptions which may oversimplify and not reflect the futuredistribution of returns. Certain securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derivedfrom, the investment.The securities described herein may not have been registered under the US Securities Act of 1933 (the 1933 Act), and, in such case, may notbe offered or sold in the US or to US persons unless they have been registered under the 1933 Act, or except in compliance with an exemptionfrom the registration requirements of the 1933 Act. Unless governing law permits otherwise, any transaction should be executed via a Nomuraentity in your home jurisdiction. This document has been approved for distribution in the UK and European Economic Area as investment research by NIplc. NIplc is authorisedby the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. NIplc is amember of the London Stock Exchange. This document does not constitute a personal recommendation within the meaning of applicableregulations in the UK, or take into account the particular investment objectives, financial situations, or needs of individual investors. Thisdocument is intended only for investors who are 'eligible counterparties' or 'professional clients' for the purposes of applicable regulations in theUK, and may not, therefore, be redistributed to persons who are 'retail clients' for such purposes. This document has been approved by NIHK,which is regulated by the Hong Kong Securities and Futures Commission, for distribution in Hong Kong by NIHK. This document has beenapproved for distribution in Australia by NAL, which is authorized and regulated in Australia by the ASIC. This document has also beenapproved for distribution in Malaysia by NSM. In Singapore, this document has been distributed by NSL. NSL accepts legal responsibility for thecontent of this document, where it concerns securities, futures and foreign exchange, issued by their foreign affiliates in respect of recipientswho are not accredited, expert or institutional investors as defined by the Securities and Futures Act (Chapter 289). Recipients of this documentin Singapore should contact NSL in respect of matters arising from, or in connection with, this document. Unless prohibited by the provisions ofRegulation S of the 1933 Act, this material is distributed in the US, by NSI, a US-registered broker-dealer, which accepts responsibility for itscontents in accordance with the provisions of Rule 15a-6, under the US Securities Exchange Act of 1934. This document has not been approved for distribution to persons other than Authorised Persons, Exempt Persons or Institutions (as definedby the Capital Markets Authority) in the Kingdom of Saudi Arabia (Saudi Arabia) or 'professional clients' (as defined by the Dubai FinancialServices Authority) in the United Arab Emirates (UAE) or a Market Counterparty or Business Customers (as defined by the Qatar FinancialCentre Regulatory Authority) in the State of Qatar (Qatar) by Nomura Saudi Arabia, NIplc or any other member of Nomura Group, as the casemay be. Neither this document nor any copy thereof may be taken or transmitted or distributed, directly or indirectly, by any person other thanthose authorised to do so into Saudi Arabia or in the UAE or in Qatar or to any person other than Authorised Persons, Exempt Persons orInstitutions located in Saudi Arabia or 'professional clients' in the UAE or a Market Counterparty or Business Customers in Qatar . Byaccepting to receive this document, you represent that you are not located in Saudi Arabia or that you are an Authorised Person, an ExemptPerson or an Institution in Saudi Arabia or that you are a 'professional client' in the UAE or a Market Counterparty or Business Customers inQatar and agree to comply with these restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the UAEor Saudi Arabia or Qatar. NO PART OF THIS MATERIAL MAY BE (I) COPIED, PHOTOCOPIED, OR DUPLICATED IN ANY FORM, BY ANY MEANS; OR (II)REDISTRIBUTED WITHOUT THE PRIOR WRITTEN CONSENT OF A MEMBER OF NOMURA GROUP. If this document has been distributedby electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could beintercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errorsor omissions in the contents of this document, which may arise as a result of electronic transmission. If verification is required, please request ahard-copy version.

Nomura Group manages conflicts with respect to the production of research through its compliance policies and procedures (including, but notlimited to, Conflicts of Interest, Chinese Wall and Confidentiality policies) as well as through the maintenance of Chinese walls and employeetraining.

Addi ti onal i nformati on is avai lab le upon reques t and di sc lo su re i nformat ion i s avail able at the Nom ura Discl osure webpage: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx Copyright 2013 Nomura International (Hong Kong) Ltd.. All rights reserved.
http://go.nomuranow.com/equities/tradingideas/retina/http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxhttp://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxhttp://go.nomuranow.com/equities/tradingideas/retina/

Global Strategy-2910 Nomura

Documents

Transcript of Global Strategy-2910 Nomura