Research Monthly Without Investment Proposals Oct 2010

Private Banking

October 2010Zurich

Global ResearchInvestment horizon: 6–12+ months

Research MonthlyBuild controlled-risk equity exposure as near-zero rates persist even longer

Equities

uBUY Microsoft, a lower risk technology stock. u page 10

Alternative investments

uBUY commodity exposure to metals and agriculture. u page 12

Foreign exchange

uBUY profit on unhedged BITZ currency investments and invest in BITZ structures that offer capital protection. u page 16

Overview

Growth continues, equity valuations reasonable, but ongoing risk of shocks.

Overweight equities strategically; aim to limit downside, e.g. via highdividend stocks, convertibles.

In fixed income, favor high yield, EM and bank bonds, avoid long maturities.

EUR/USD and EM units have strategic upside; JPY and CHF still supported but less potential.

Important disclosures are found in the Disclosure Appendix

� | Research Monthly | October �010 | Editorial

Editorial

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In the Cold War, the near certainty of retaliation ensured that neither side ever used its fearsome nuclear weapons. Today, the economic “nuclear weapon” of the US is pro-tectionism, and China’s equivalent is the ability to sell its vast holdings of US government debt. Large-scale use of these weapons would trigger a global depression in which both sides would be major losers, so they don’t get used. Most of the time, markets operate on the assumption that this balance of power will persist, allowing the US to keep issuing Treasury bonds at historically low rates and allow-ing China to keep exporting via a cheap currency. But there is always a risk that shifting politics could destabilize the balance. Before it actually breaks, the two sides are highly likely to step back from “nuclear” conflict (as Kennedy and Khrushchev did after the 196� Cuba crisis) – but even if the balance does not actually break, markets may suffer a bout of panic over the seemingly inexorable expansion of US public debt.

Indeed, to persuade American politicians to begin with serious fiscal consolidation, one of these market scares may be needed, much like it took the Greek debt crisis to force Europeans to start tackling their own government deficits. For strategic investors prepared to weather such bouts of temporary crisis-induced volatility, stock markets look substantially cheap relative to bonds and offer rea-sonable value in absolute terms, implying the potential for good longer-term returns. Those who want to capture part of this upside, while aiming to control the downside, should consider some of the investment proposals introduced last month (re-iterated this month), such as high dividend-yield equities, convertibles and emerging currency bonds. We see that as attractive relative to holding cash or low-risk

bonds at the near-zero interest rates that are another by-product of the “nuclear” stand-off.

Giles Keating, Head of Research for Private Banking and Asset Management +41 (0)44 33� �� 33, [email protected]

In this issue

Global strategy. Build controlled-risk equity exposure as near-zero rates persist even longer page 4

Strategic asset allocation page 5

Recent Research Monthly investment ideas page 6

Economics. ZERO world with strong emerging markets page 7

Fixed income. Focus on selected financial, emerging market and high-yield bonds page 8

Equities. Q4 dilemma – Follow the rally or wait? page 10

Alternative investments. We identify several investment opportunities in alternative assets page 12

Foreign exchange. We stay bearish USD against European and emerging market currencies page 13

Investment themes

Fixed income investments: Steer duration and credit exposure with the right vehicle u page 14

Industrial metals – both direct and indirect investments are attractive u page 15

Structural EM FX appreciation, but rising need for portfolio risk management u page 16

Credit Suisse Megatrends. Building equity exposure to the Megatrends page 17

Editorial deadline: �8 September �010

� | Research Monthly | October 2010

Credit Suisse Cycle Clock

Recovery The Cycle Indicator is currently in “Recovery” (since August 2009). During the recovery phase, equities and commodities have historically performed best, while government bonds and cash investments have tended to underperform.

< Metals & Mining, Capital Goods, Transportation & Logistics, Biotechnology, IT (ex Semi’s)

= Food & Staples Retailing, Beverages, Hotels, Restaurants & Leisure, Diversified Telecommunication Services

Investment summaryOctober 2010

Economics

Data signal that recovery continues, the pace is unexciting but doubledip risk has largely faded.

Real GDP growth in % Inflation in % Short interest rates 3M LIBOR Bonds: 10-year government

Spot1 3 M 12 MSpot1 3 M 12 M2009E 2010E 2011E2009E 2010E 2011E

CH –1.9 2.4 1.2

EMU –4.0 1.6 1.6

USA –2.4 2.7 2.0

UK –4.9 1.4 2.7

Japan –5.2 �.� 1.8

CH –0.5 0.6 0.7

EMU 0.4 1.4 1.4

USA –0.7 1.8 1.2

UK 1.8 �.1 2.1

Japan –1.4 –1.2 –0.4

CHF 0.18 0.2–0.4 0.7–0.9

EUR 0.88 0.8–1.0 1.4–1.6

USD 0.29 0.�–0.5 0.�–0.5

GBP 0.7� 0.6–0.8 1.4–1.6

JPY 0.22 0.2–0.4 0.2–0.4

CHF 1.44 1.�–1.5 1.8–2.0

EUR 2.�4 2.5–2.7 2.7–2.9

USD 2.61 2.9–�.1 �.0–�.2

GBP �.04 �.1–�.� �.6–�.8

JPY 1.01 0.9–1.1 1.1–1.�

Bonds: Selected indices Foreign exchange & commodities

Spot1 3 M 12 M

EUR/USD 1.�5 1.�4–1.�8 1.�8–1.42

USD/CHF 0.980.94–0.98 0.9�–0.97

EUR/CHF 1.�� 1.28–1.�2 1.�1–1.�5

USD/JPY 84 81–85 81–85

EUR/JPY 114 111–115 114–118

EUR/GBP 0.85 0.81–0.85 0.8�–0.87

GBP/USD 1.58 1.61–1.65 1.6�–1.67

EUR/SEK 9.17 8.70–9.10 8.40–8.80

AUD/USD 0.960.96–1.00 0.92–0.96

USD/CNY 6.696.50–6.70 6.�0–6.50

Index YTM (%)

Total return YTD (%)

Spread to benchmark

(bp)

Spread change YTD

(bp)

Tech.support

Tech.resistance

12 M spread

outlook

Investment grade

USD (CS LUCI) �.70 10.92 1�6.6 1�.6 124.0 146.0

EUR (CS LEI) 2.69 6.15 127.1 26.5 119.0 1��.0

CHF (CS LSI) 1.40 4.71 5�.9 –22.5 52.0 56.0

GBP (CS LEI) �.98 9.45 1�1.9 10.6 124.0 1�8.0

Emerging markets / below investment grade

EM USD (JPM EMBI+) 5.58 1�.11 282.6 8.8 260.0 �02.0

EM Local Markets (JPM ELMI+)2 2.55 4.�8 n.a. n.a. n.a. n.a.

High Yield (CS HY Index) 7.79 10.�8 652.0 5.0 610.0 720.0 Gold (USD)

1,295.95 1,200–1,�00

1,250–1,�50

Oil (USD) 76.49 80–85 85–90

Equities: Sectors & stocks, 12 M

Equities: Selected indices

Snapshot Price3 MTD (%) YTD (%) Tech. support Tech. resistance Fair value 12 M forward4

12 M outlook

S&P 500 1,148.67 9.5 �.0 1,100 1,180 1,217–1,�89 Neutral

SMI 6,�60.77 2.9 –2.8 6,200 6,600 7,�50 Neutral

FTSE100 5,598.48 7.1 �.4 5,400 5,8�0 5,827– 6,574 Neutral

Euro Stoxx 50 2,792.75 6.5 –5.8 2,700 2,850 �,0�4–�,508 Neutral

Nikkei 225 9,471.67 7.� –10.2 9,220 9,780 11,000–11,500 Neutral

Global Research asset category strategy IC5 view

Strategic 6–12+ M

By region/strategy Comments and comparison of weightings Tactical 1–6 M

Fixed income

We expect USA to outperform Canada; Australia, Eurozone, UK, Switzerland and Japan are set to neutral.

We share the market’s view of a prolonged low interest rate environment but view current yields as not representing value for strategic investors.

Equities

EM overweight; Japan, USA, Switzerland, UK neutral; Europe ex UK neutral, Canada and Australia underweight.

We remain strategically positive on equities. They should outperform bonds going forward, supported by the upturn in the business and earnings cycles. Tactically, a buying opportunity may emerge soon. We still favor select cyclicals over defensives.

Commodities

Industrial metals set to outperform, energy and agriculture neutral. Precious metals should underperform the overall index.

Tactical view is neutral as there are some concerns due to the economic slowdown. However, this should be only temporary as longerterm fundamentals remain positive. Supply/demand balances are tightening.

Real estate

Switzerland, USA, EM overweight; Europe (excl. UK, CH), UK, AsiaPacific neutral; Japan underweight.

Real estate equities: Some further upside potential. Direct real estate: Growth in rents to become main driver of returns. We are positive strategically.

Private equity Focus on secondaries, small/medium LBOs, infrastructure, EM and distressed real estate.

Return prospects for new LBO investments are attractive as deal valuations have come down.

Hedge funds We favor global macro, convertible arbitrage and distressed debt.

Convertible arbitrage benefits from mispricing and distressed debt from bad debt recovery cycle. We upgrade global macro, given higher market risks.

Foreign exchange

EUR /USD USD/CHF GBP/USD USD/JPY

US yields close to zero: We stay bullish on creditor and emerging market currencies vs. USD.

1 London close 24/09/ 2010 2 Outlook: Absolute total return direction 3 Prices as of 24/09/ 2010 4 Central – optimistic scenario5 Investment Committee = Direction from current levels n.a. = not available


We have kept our strategic (6–12+ months) view on equi-ties at overweight throughout the Eurozone debt crisis and the double-dip scare that dominated markets between May and August. This is because we believed the former would be contained and the latter was a false alarm. We felt that strategic investors should focus on the underlying value in equities, the robustness of emerging market growth and ultimately, the positive momentum in corporate earnings. Events are gradually supporting that analysis. There is still periodic market volatility when weaker Eurozone sovereigns and banks come under pressure but the European Stabil-ity Fund is now in place and its sheer size suggests the systemic threat of country indebtedness can be dealt with. Meanwhile, economic indicators, such as business surveys, have started to rebound or at least stabilize after their recent lows, implying a double dip is unlikely. In addition, devel-oped countries’ monetary policy looks to stay aggressively easy for even longer than previously expected. The Fed is considering more “quantitative easing” (in effect printing money to buy bonds) and even the Swiss National Bank has become more dovish. Near-zero short rates, combined with the continued economic recovery, are positive for equity markets, whose absolute valuations are not expensive and whose relative value against bonds appears outright cheap. So, we stick clearly with our strategic overweight.

Having said this, we do believe that stock markets are especially vulnerable to large setbacks like that seen in May. The rapid pace of global structural adjustment and the over-hang of government debt create pressures and uncertain-ties that can impact markets in seemingly random ways. One example is given by the likely switch from Democrat to Republican control of the US House of Representatives this November. This may initially be seen as market-positive, implying low likelihood of both corporate profit and tax un-friendly legislation, but as 2011 progresses, investors may focus instead on the darker implication of gridlock in the process of cutting the budget deficit. This could lead to a sudden equity setback.

One way to address the risk of such setbacks while still gaining exposure to the long-run attractions of equities is to make short-term tactical portfolio adjustments. Those who follow our Investment Committee report will know that we made a tactical downgrade to our recommended equity weightings just before the Greek debt crisis in May, and having partially reversed this, we are now awaiting an op-portunity to move all the way back to overweight, which we believe may come soon.

Another approach is to seek out investments that of-fer reasonable participation in stock market upside while limiting the downside. We listed five ideas of this type last month and we believe they remain valid. Two give direct exposure to equities: purchase of convertible bonds; and in-vestment in solid high-dividend-yield stocks. The next three

Global strategyBuild controlled-risk equity exposure as near-zero rates persist even longer

Overview

Growth continues, equity valuations reasonable, but ongoing risk of shocks.

Overweight equities strategically; aim to limit downside, e.g. via high-dividend stocks, convertibles.

In fixed income, favor high yield, EM and bank bonds, avoid long maturities.

EUR/USD and EM units have strategic upside; JPY and CHF still supported but less potential.

US dividend less medium maturity corporate bond yield

The difference between the dividend and corporate bond yield in the US is at a 37-year low.

Source: Datastream, Credit Suisse

–11

–9

–7

–5

–3

–1

73 76 79 82 85 88 91 94 97 00 03 06 09

US dividend less medium maturity corporate yield

%

� | Research Monthly | October 2010 | Global strategy

Strategic asset allocation Time horizon: 6 –12+ months

Source: Credit Suisse

Fixed income Risk profile: Low

Income Risk profile: Moderate

Balanced Risk profile: Medium

Capital gain Risk profile: Enhanced

Equity Risk profile: High

Recommended Neutral

Cash ¢2% ¢�%

Equities ¢82% ¢80%

Alternative investments ¢16% ¢1�%

Recommended Neutral

Cash ¢3% ¢� %

Bonds ¢32% ¢3�%


Alternative investments ¢22% ¢20%

Recommended Neutral

Cash ¢3% ¢� %

Bonds ¢53% ¢��%



Recommended Neutral

Cash ¢4% ¢� %

Bonds ¢79% ¢80%

Alternative investments ¢17% ¢1�%

use other assets to give exposure to the positive driving forces behind equities: emerging currencies (via options or investment products that can eliminate downside apart from counterpart risk); selected bonds with attractive risk-reward (see below); and investments in certain hedge fund styles and in insurance-linked securities. We believe a portfolio based on these ideas provides upside with controlled risk and represents an attractive alternative to unusually large cash holdings at a time of near-zero interest rates.

We have balanced our strategic equity overweight with an underweight in fixed income. For a while, the markets moved against this view due to safe-haven flows and double-dip fears. Yields are now back down toward their recent lows and also remain low by historic standards. Our view is that ultimately such levels still do not represent value for strategic investors, but we accept that they may persist for some time at around or not far above current levels, given the aggressively easy stance of central banks. So while we retain our strategic underweight in fixed income, we recom-mend selected high-yielding and emerging country bonds (in both “hard” and local currencies), as well as some bank bonds set to benefit from the Basel III rules.

[email protected], +41 (0)44 332 22 33

The neutral allocations serve as a guideline and repre-sent the average weighting over an entire market cycle. Since the global strategy is based on a medium-term investment horizon, it deviates from the neutral posi-tion. We continue to recommend overweighting stocks and alternative assets. We recommend underweighting fixed income assets and cash. In our view, investments in emerging markets are particularly attractive, both in fixed income and equities. Within the area of alternative assets, we remain overweight commodities.

Recommended Neutral

Cash ¢2% ¢�%

Bonds ¢13% ¢1�%




For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: http://www.credit-suisse.com/research/disclaimer

FI Fixed incomeEQ EquitiesAI Alternative investmentsFX Foreign exchange

Recent Research Monthly investment ideas

Selected recommendations from this month’s issue

Recommendation Action to be taken

BUY Microsoft, a lower risk technology stock. EQ Target price: USD 34.

BUY commodity exposure to metals and agriculture. AI Supply /demand balances are tightening in these markets. Build exposure.

BUY Rio Tinto, a global diversified miner with a broad range of high quality metal and mineral assets.

EQ Target price: GBP 14.50.

BUY profit on unhedged BITZ currency investments and invest in BITZ structures that offer capital protection.

FX Protect against downside risks of BITZ currencies.

BUY Archer Daniels Midland – a leading producer of agricultural commodities. EQ Target price: USD 38.

BUY Lafarge – a leading cement company with global reach. EQ Target price: EUR 44.50.

Selected ideas from previous months

September 2010 (03/09/2010)


BUY Swatch – a recent addition to the CS Top 30 portfolio, to benefit from rising affluence – as supported by recent strong Swiss export data.

EQ Target price: CHF 390; stop loss CHF 310.

BUY Start to build diversified commodity exposure for the strategic time horizon. AI Positive long-term outlook. After the correction in May, the sector looks attractive.

BUY participation in long-term emerging market currency appreciation. FX BUY participation in long-term emerging market currency appreciation.

BUY MTN – Good strategic positioning to benefit from African telecom growth. EQ We downgraded MTN to HOLD; take profit.

BUY Coca-Cola – Leading global brand with strong growth potential in EM. EQ Target price: USD �5; stop loss USD 50.

August 2010 (27/07/2010)


BUY VTB Capital SA 4% 08/2013 in CHF. FI Target price: 101–101.5.

BUY SAB Miller – a stock in the staples sector with significant emerging market sales exposure.

EQ Target price: GBP 22; stop loss GBP 18.

BUY KfW 3.25% 2013, exchangeable into Deutsche Telekom shares – a convertible bond from a solid issuer, with positive YTM and an option to participate in equity upmoves.

EQ Add exposure up to 107.

BUY a broadly diversified basket or index of agricultural markets. AI Continue to hold as fundamentals and technicals remain supportive.

BUY Products related to direct commercial real estate in the USA. AI Add exposure in Q4 2010.

BUY LVMH – a luxury goods player experiencing strong demand from Asia. EQ Start taking profit. Target price: EUR 113; stop loss 90.

BUY BMW – a luxury car producer benefiting from high demand in China. EQ Target price: EUR 55; stop loss EUR 39.


Source: Bloomberg, Credit Suisse

93

94

95

96

97

98

99

100

101

12/07 06/08 12/08 06/09 12/09 06/10

US Japan Eurozone UK

Index, 12/2007=100

Employment developments since the start of the US recession

The US employment decline was very pronounced compared to that of the Eurozone, the UK and Japan. This remains a big challenge for the US recovery and for the Fed, who has a dual mandate (price stability and employment).

Overview

As recovery in major economies remains intact but slowing, interest rates stay low.

EMs tighten very gradually. Given better growth prospects and ZERO environment elsewhere, inflows are strong.

weaker countries needing the support of low interest rates. Despite some moderate tightening in our forecasts, we thus expect the ECB to keep interest rates very low this year and next. The global monetary policy stance generally remains very supportive and the Fed is likely to stay on hold for the foreseeable future. In emerging markets, where growth has also slowed somewhat and inflation is less of an issue for now, tightening is also happening very gradually.

Capital flows to emerging markets remain strongInflows into emerging markets remain strong as investors look for yield they cannot find in the ZERO world of very low bond yields in major currencies. Given the currency ap-preciation risks, emerging markets are thus less willing to tighten policy ahead of major central banks. Some of them are thus essentially “importing” a policy stance that is too loose for the domestic context but also very growth sup-portive for now.

[email protected], +41 (0)44 333 50 62

During the summer months, deteriorating global economic data and indicators caused concerns among investors that the economy would return to recession. It is, however, quite normal for the recovery to lose some of its momentum after an initial rebound and for business surveys to deteriorate after sharp improvement. Looking forward, we thus remain of the view that unless a major unexpected shock occurs, a double dip is unlikely and the recovery will continue. How-ever, its pace will differ significantly among regions and even within regions, with EMs clearly the growth leaders.

Inflation decline normal; deflation unlikelyIt is also quite normal for inflation to fall after a recession as slack in the economy and on labor markets remains large. We expect inflation to begin to stabilize at low levels over the coming months. The quick and decisive policy response, paired with significant improvement in financial markets and banks’ capital positions, stand in sharp contrast to the de-velopments in Japan prior to the onset of deflation there. While inflation numbers could temporarily dip below zero in some economies, persistent deflation in the Eurozone or the US is unlikely, in our view.

US labor market healing only graduallyIn the US, the labor market deterioration has been the most pronounced among the major economies and job growth has been disappointing in recent months (see chart). This remains a major challenge. In contrast, the more rigid Euro-pean labor markets have generally deteriorated less during the crisis, albeit in part due to government support. This has helped support the recovery. The fact that Germany has become the European growth “engine,” profiting from external demand, should help to make the recovery more broad-based (e.g. pushing consumer spending).

Monetary policy very supportiveInterest rates might soon be too low, given the state of the economy, particularly in Germany. But the ECB faces the challenge of diverging economic developments, with the

EconomicsZERO world with strong emerging markets

� | Research Monthly | October 2010 | Asset categories

1 Recommendations express the relative attractiveness of particular segments across the sovereign yield curves on a three- to six-month horizon. Investors should be aware that recommendations do not consider exchange rate risks.

Market update and outlookWith government bond yields up from their recent historic lows and no prospect of rates increases before H2 2011 by major central banks, government bond yields are not likely to grind much above the upper trading range of the past few months. In the USA, the Federal Reserve is re-investing maturing mortgage-backed and agency bonds into US trea-suries, thereby providing support to the asset class, while in Europe, recurrent worries about the weaker EMU govern-ments keep interest rate increases for benchmark sover-eigns limited. At the same time, yields are at unattractively low levels in many bond market segments. Long-maturity government bonds, for example, look very low compared to real GDP and inflation forecasts. Investment grade cor-porate credits similarly offer relatively low yield. In our view, best total return perspectives within investment grade now lie in financials bonds, particularly subordinated ones, as the market has not yet fully reflected the favorable phasing out period for hybrid capital recently announced by the Ba-sel Committee. We also expect decent returns in selected emerging market bonds, particularly those denominated in local currencies. Finally, we see an attractive yield pick-up in AUD bonds, especially for USD-based investors.

StrategyFor new core individual bond investments, we recommend selecting short/medium maturity senior bonds of solid fi-nancial corporates, such as BNP or Rabobank, and adding medium-dated investment grade emerging market sover-eigns and corporate bonds in hard currency. Brazil, Russia and Turkey bonds offer value, in our view, as fundamen-tals indicate spread tightening potential. Among emerging market corporates, we recommend, among others, bonds issued by Russian banks (e.g. VTB, Bank of Moscow). Risk-tolerant investors may consider selected Chinese property developers (e.g. Shimao Property, Country Garden) to en-hance their yield.

For satellite investments and more risk-tolerant inves-tors, we recommend selected Tier 1 bonds by HSBC, Uni-Credit and Societe Generale and Lower Tier 2 bonds by Deutsche Bank. We also find selected bonds by KfW or IADB denominated in TRY, MXN, RUB attractive, given to-tal return expectations in these currencies. Currency risk must be monitored along the lifecycle of the bonds, how-ever. For existing bond investments, we recommend using phases of interest rate declines within the current trading range to trim down exposure to long-maturity bonds, which have performed well since the start of the year, and switch-ing into shorter maturity credits. For trading investors, our weekly fixed income trading corner provides fixed income investment ideas geared to generating attractive total re-turn. Our trading portfolios in USD, for example, showed a YTD gross total return of 7.�% on 21 September 2010.

nannette.hechler-fayd'[email protected], +41 (0)44 333 17 06

Overview

Basel III paves the way for bank bonds to outperform.

We recommend emerging market hard currency and local currency bonds.

Fixed incomeFocus on selected financial, emerging market and high-yield bonds

We prefer a short maturity range for bonds with high ratings (AAA/AA), while for A/BBB, somewhat longer maturities can be also considered.


0 1 2 3 4 5 6 7 8 9 10

CHF AAA/AA

A /BBB

EUR AAA /AA

A /BBB

GBP AAA/AA

A /BBB

USD AAA/AA

A /BBB

Preferred maturities (years)

Recommended yield-curve positioning1

Selected bond recommendations

� | Research Monthly | October 2010 | Fixed income

Currently attractive convertibles

ISIN Issuer (rating) S&P/Moody’s

Underlying Coupon (%)

Maturity Par value Currentprice1

Yield to maturity

(%)

Parity Delta(%)

Conversionratio

Equityprice

CS equity

rec.2

Core ideas

XS030�600848 PORTUGAL TEL FIN (BBB/Baa)

PORTUGAL TEL-REG

4.13 28/08/2014 3 EUR 50,000 105.�8 2.51 83.12 27 4,310.34 �.65 BUY

US03�483AW22 ARCHER DANIELS (A/A)

ARCHER-DANIELS

0.88 15/02/2014 USD 1,000 105.13 –0.62 75.35 31 22.83 32.�� BUY

DE000A0E�DE7 KFW (AAA/n.a.)

DEUTSCHE TELEKOM

3.25 27/06/2013 4 EUR 100,000

105.20 1.26 72.4� 6 7,113.8� 10.1� HOLD

1 All prices as of 24 September 2010 c.o.b. 2 Equity rating of underlying 3 Soft call after September 2010 if stock price above EUR 154 Soft call after June 2011 if stock price above EUR 18.28 Source: Bloomberg, Credit Suisse

Sec. no. ISIN No. Curr. Issuer Rating 8 S&P/ Moody’s

Cou-pon(%)

Maturity Min. denomination /

increment

Vol. (m)

Ask price1

YTM/ YTC (%)

Bench-mark

spread

Dur.

CHF

11452584 CH0114525840 CHF RABOBANK NEDERLAND 4 AAA/Aaa 3M LIB +17

16/07/2012 5,000/5,000 200 100.15 n.a. n.a. n.a.

3102657 CH0031026575 CHF BANK OF AMERICA CORP A/A2 3 14/06/2013 5,000/5,000 250 102.85 1.�1 14� 2.57

11760241 CH0117602414 CHF LLOYDS TSB BANK PLC 4 A+e/Aa3 3M LIB +112

07/10/2013 5,000/5,000 175 100.00 n.a. n.a. n.a.

1814087 CH0018140878 CHF CITIGROUP INC A/A3 3 17/12/2014 5,000/5,000 650 101.75 2.56 200 3.83

22�7685 CH0022�76853 CHF ROYAL BK OF SCOTLAND PLC 7 BBB/Baa3 2.375 02/11/2015 5,000/5,000 700 �2.�0 3.�4 322 4.55

USD

4483317 US2�8785EW25 USD EUROPEAN INVESTMENT BANK 4 AAA/Aaa 3M LIB +30

05/03/2012 1,000/1,000 2,000 100.51 n.a. n.a. n.a.

108��415 USN4578BPX65 USD ING BANK NV 3 A+/Aa3 2.65 14/01/2013 100,000/1,000 1,000 102.0� 1.72 126 2.21

11224�08 US87�38WAK�� USD TELEFONICA EMISIONES SAU 2, 3 A–/Baa1 2.582 26/04/2013 75,000/1,000 1,200 101.81 1.86 133 2.46

11738727 USF8586CAE24 USD SOCIETE GENERALE 3 A+/Aa2 2.2 14/0�/2013 100,000/1,000 1,000 100.65 1.�7 136 2.85

11736486 US53�47QAA58 USD LLOYDS TSB BANK PLC 3, 7 BBBe/Baa2 6.5 14/0�/2020 100,000/1,000 2,000 101.60 6.28 370 7.25

11237542 US�12828MY36 USD TSY INFL IX N/B 2, 3 AAA/Aaa 0.5 15/04/2015 100/100 11,237 102.61 –0.07 n.a. 2.23

EUR

1075�348 XS046�1�2388 EUR LLOYDS TSB BANK PLC A+/Aa3 3.25 26/11/2012 50,000/1,000 1,500 101.88 2.34 165 2.02

11512020 XS05254�01�8 EUR BNP PARIBAS AA/Aa2 2.875 13/07/2015 1,000/1,000 1,500 102.16 2.3� 103 4.41

2225125 XS022536�403 EUR BAYER AG 5 BBB–/Baa3 5 2�/07/2105 1,000/1,000 1,300 �8.50 5.36 405 4.14

16�7252 XS01784047�3 EUR HSBC CAPITAL FUNDING LP 6 A–/A3 5.3687 Perpetual 1,000/1,000 1,400 �6.�4 6.36 538 2.��

1704571 XS017�207583 EUR SG CAPITAL TRUST III 2, 6 BBB+/Baa2 5.41� Perpetual 1,000/1,000 650 �3.67 7.78 6�6 2.60

2301041 XS0231436238 EUR UNICREDITO ITAL CAP TRST 6 BBB/Baa3 4.028 Perpetual 50,000/1,000 750 83.�5 8.00 673 4.11

2480346 DE0001030500 EUR DEUTSCHLAND I/L BOND AAA/Aaa 1.5 15/04/2016 0.01/0.01 15,000 107.83 0.08 n.a. 2.62

Other currencies

11137630 XS04�6515�73 GBP NEDER WATERSCHAPSBANK AAA/Aaa 2.375 10/12/2013 1,000/1,000 200 102.67 1.51 38 3.03

11225406 XS0503530874 GBP SOCIETE GENERALE A+/Aa2 3.875 17/12/2015 50,000/50,000 350 102.68 3.31 141 4.5�

11440078 XS051�118730 AUD AUST & NZ BANKING GROUP AA/Aa1 6 12/12/2013 1,000/1,000 175 ��.3� 6.22 124 2.78

11607551 XS05321�1284 AUD TOTAL CAPITAL SA AAe/Aa1 5.75 18/08/2014 2,000/2,000 150 ��.22 5.�8 �4 3.36

11361301 XS0513882836 NOK SWEDISH EXPORT CREDIT AA+/Aa1 3 10/06/2013 10,000/10,000 1,500 ��.�7 3.01 6� 2.53

11465461 XS052101603� NOK EUROPEAN INVESTMENT BANK AAA/Aaa 2.75 05/07/2013 10,000/10,000 700 100.17 2.68 37 2.61

Emerging markets / Below investment grade

11530545 CH0115305457 CHF VTB CAPITAL SA (VTB BANK BBB/Baa1 4 16/08/2013 5,000/5,000 400 100.�0 3.66 314 2.67

11631712 CH0116317121 CHF BK MOSCOW (BOM CAPITAL) n.r./Baa1e 4.5 10/0�/2013 5,000/5,000 350 102.65 3.54 311 2.72

112535�5 XS0504�54180 USD RUSSIA FOREIGN BOND 3 BBB/Baa1 3.625 2�/04/2015 100,000/100,000 2,000 100.�6 3.40 21� 4.13

11474602 XS0521476118 USD BAHRAIN MUMTALAKAT HLDNG 3 A/n.r. 5 30/06/2015 100,000/1,000 750 102.5� 4.3� 314 4.15

11523006 USY3860XAB�2 USD ICICI BANK LIMITED 3 BBB–/Baa2 5 15/01/2016 100,000/1,000 500 103.85 4.18 271 4.5�

1177�� XS0543�56717 USD SBERBANK (SB CAP SA) 3 n.r./A3e 5.4 24/03/2017 100,000/1,000 1,000 ��.�5 5.41 357 5.40

10532836 XS04513�4331 MXN INTL BK RECON & DEVELOP AAA/Aaa 6.5 11/0�/2013 1,000/1,000 3,100 104.73 4.74 –55 2.65

1165�743 XS0536053118 BRL KOMMUNALBANKEN AS AAAe/Aaae 8 14/0�/2012 5,000/5,000 100 �8.72 8.73 –302 1.73

108�031� XS0477�57616 TRY EUROPEAN INVESTMENT BANK AAA/Aaa 10 10/0�/2013 1,000/1,000 500 105.46 7.84 –58 2.4�

For the detailed analysis accompanying the recommendations listed, please refer to the latest Global Research Credit Updates and Investment Ideas.

1 Indicative prices as of 24 September 2010 2 Subject to withholding tax 3 Semi-annual coupon 4 Quarterly coupon 5 Subordinated debt, yield to call, duration to call 6 Subordinated debt, Tier-1, yield to call, duration to call 7 Subordinated debt, LT2 8 e = Expected rating, subject to final documentation n.a. = not applicable n.r. = not rated

10 | Research Monthly | October 2010 | Asset categories

EquitiesQ4 dilemma – Follow the rally or wait?

Overview

Tactical indicators mixed despite a very strong September.

US set to come into focus as earnings season and mid-term elections approach.

September has so far been a peculiar month. Despite the usual warnings of seasonal weakness (S&P 500 has re-turned an average of –1% every September since 1928), this is so far the best September month on record since 1954 (from 1 Sept. to 22 Sept.).

Several factors are behind this. First, investor-posi-tioning coming through the end of the summer has been skewed to the bearish side. For instance, net long-short speculative positioning had been the most negative since March of this year.

Second, the rally in equities has been both provoked and supported by generally better-than-expected macro-economic news (especially in the USA and China).

Third, corporate activity has continued to embody our ZERO theme, with cash rich corporates engaging further in merger and acquisition activity, and increasing dividends. An example of this is the recent decision of Cisco to aim towards a dividend yield of between 1%–2%.

Despite the rally in early September, equity markets still look attractively valued, especially compared with bonds. Further, we see equity markets supported by the continu-ation of the global recovery. The approach of the mid-term elections at the start of November could provide further support to equities.

However, signs of a fuller and more convincing rally are still missing. China, for long the marginal source of positive risk appetite, is underperforming. Market volumes in Europe and the US are low and earnings momentum appears to be rolling over. The Q3 earnings season starting on 7 October will hence draw close attention from investors.

As a result, we maintain our neutral tactical view on equi-ties, though we remain comfortable with a strategic over-weight stance. Hence, we continue to recommend investors

who are still underweight to use dips to move to a neutral equity position.

For those with excess cash looking for a lower-risk way to enter the market, solid high-dividend-yielding equities look attractive. For those already exposed and who are pre-pared to take more risk, we think some other, more cyclical stocks may now offer higher potential returns.

We have also recently made a number of changes to modestly reduce the risk exposure of our equity sector port-folio (notably changing semiconductors to neutral from over-weight, see Research Weekly, 22 September).

michael.o'[email protected], +44 (0)20 7883 8228

[email protected], +41 (0)44 333 23 94

Top investment idea

uBUY Microsoft, a lower risk technology stock.

US equities have tended to perform well after mid-term elections.

S&P index performance around US mid-term elections

Also see the investment ideason a similar topic on page 15


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115

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130

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

Composite of S&P equity index performance around mid-term elections(includes all 15 cycles since 1950)Current performance

Rebased to 30 Sept = 100 on year of mid-term elections

election date

strongperformancephase

11 | Research Monthly | October 2010 | Equities


Equities at a glanceRegional, sector and individual stocks

Energy Energy N N N O O BG Group – Suncor Energy PTT, CNOOC

Materials Chemicals N N N U N – Givaudan – Orica

Construction Materials N N N U N – – – –

Metals & Mining O O – N O Rio Tinto, Xstrata – Vale, Freeport-McMoRan

Rio Tinto Limited, Angang Steel

Pulp & Paper N N – U N – – – –

Industrials Capital Goods O O O O O Siemens, Schneider Electric

ABB Honeywell International, Caterpillar, General Electric, 3M

IJM, United Tractors, Keppel Corp.

Commercial Services & Supplies N N N N N – – – –

Transportation, incl. Logistics O O O N N – – Fedex SIA

Consumer discretionary

Automobiles & Components N N N U N – – – –

Consumer Durables & Apparel, Textiles, Apparel & Luxury

O O O U N – Swatch Group (Bearer)

– –

Hotels Restaurants & Leisure U U – U N – – Starbucks, Carnival –

Media O O – N U – – – –

Retailing U N N U N – Dufry – –

Consumer staples Food & Staples Retailing U N – O N Metro – Wal-Mart –

Beverages N N – N N Anheuser-Busch – Coca-Cola –

Food Products N U O N N Danone Nestlé, Lindt & Sprüngli PC

Kraft Foods, General Mills

–

Tobacco N U – N N – – Philip Morris International

–

Household & Personal Products N N – N N – – – Shiseido

Health care Healthcare Equipment & Services N U U N U Fresenius Pref Sonova – –

Biotechnology O N N O N – – – –

Pharmaceuticals N N U N U Bayer Novartis Pfizer –

Financials Banks N O N N O BNP Paribas, Lloyds Banking Group

– – United Overseas Bank, China Construction Bank, ANZ Banking Group

Diversified Financials N N N N N – – JPMorgan Chase –

Insurance N N N N N Allianz, Axa Zurich Financial Services, Helvetia

– –

Real Estate N N N N O – – – Capitaland, Sun Hung Kai Properties, Frasers Centrepoint Trust

IT Software & Services O O O O O SAP – – –

Technology Hardware & Equipment

O N N O O – – Hewlett-Packard Samsung Electronics, Toshiba

Semiconductors & Semiconductor Equipment

N N – O O – – – –

Telecommuncation services

Diversified Telecoms U N N U U Telefonica, KPN NV, Telecom Italia

– AT&T Inc. –

Wireless Telecoms N U – U N – – – –

Utilities Utilities N N N N U GDF Suez – – –

Source: Credit Suisse Legend to weights: O Overweight N Neutral U Underweight n.a. = not available

This is our sector strategy and focus list as of 27/09/2010 recommended by Credit Suisse, Private Banking division. Our sector strategy shows our sector preferences with recommendations relative to regional benchmarks: Global: (MSCI World in USD), Europe/EMEA (MSCI Europe in EUR), USA/Latin America (S&P 500/MSCI USA in USD), Asia/Pacific (MSCI AC Asia/Pacific in USD). An overweight (underweight) is a recommendation to invest more (less) than in a neutral position indicated by the market-cap weights of the respective benchmarks. The sector weights as well as the neutral positions in figures are available upon request; please contact your relationship manager. The Focus List is a selection of our favorite stocks within our coverage which have a BUY recommendation. The selection was made to reflect the sector and regional preferences. Updates are provided via our Research Monthly and Research Weekly publications as well as in our Equity Research reports. Additionally, we publish our adds and drops in our Research Equity Daily. The changes are highlighted in bold.

Please note that trading facilities in certain securities may be limited.

Global equity sector strategy and focus list (6–12+ months)

Sector Industry

Glo

bal w

eigh

ts

Eur

ope

Switzerland

US

A

Asia/Pacific

Europe ex UK / UK/EMEA

Regional weight: neutral/neutral/overweight

Switzerland

Country weight:neutral

USA /Latin America/Canada

Regional weight: neutral/neutral/underweight

Asia ex Japan/Japan/Australia

Regional weight: overweight/neutral/underweight


Performance of DJ CS Hedge Fund Index and global equities in 2010


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12/09 01/10 02/10 03/10 04/10 05/10 06/10 07/10 08/10

DJ CS Hedge Fund Index

DJ CS Global Macro Index MSCI World Total Return Index

Indexed performance in USD (31/12/2009 = 100)

Hedge funds delivered better returns than equities from January to August 2010 with lower volatility. As long as market conditions remain stable, hedge funds should keep delivering attractive risk-adjusted returns.

Overview

We see upside potential in agricultural commodities and industrial metals.

Hedge funds outperformed equities through end August with a stable medium-term outlook.

tumbled (MSCI World –3.7%). Hedge funds returned 2.5% in the first eight months of 2010, while global equities fell 5.7%. This confirms that hedge funds can beat equities on a risk-adjusted basis when overall market conditions are normal. We monitor regularly this crucial dimension with our Hedge Fund Barometer published in the Alternative Invest-ment Monthly.

Private equity: Limited cash distribution favors secondary market fundsCurrently, private equity (PE) funds face difficulties selling portfolio companies. As PE funds seek to realize their port-folio companies, secondary market funds act as liquidity pro-viders on the secondary market by buying often discounted stakes in existing PE funds. Secondary market funds should remain attractive investments over the medium term.

[email protected], +41 (0)44 333 96 48

[email protected], +41 (0)44 333 13 62

Alternative investment outlook As Q4 2010 approaches, a number of commodities (agricul-ture and metals) offer attractive risk/return potential. This is also generally the case for real estate equities, which ben-efit from lower interest rates. Hedge funds have delivered smoother returns that are ahead of those of global equities (until end August 2010).

Commodities: On the rise again After having reached a low in May, the major commodity indices are rising again. We expect further upside, with met-als and agriculture being the performance drivers. In recent months, commodity consumers have delayed purchases amid economic concerns. Now, local inventories are depleted and we see a significant pick-up in purchases. This is particularly visible in industrial metals. In precious metals, gold hit a new high in September. Low interest rates are supportive for the gold price and further gains should follow. However, gold should have less upside than cyclical markets.

Real estate equities: Lower rates improve outlook A steady decline in swap rates over the past months has cre-ated a widening gap between property yields and financing costs. This provides scope for further gains in real estate shares in Q4 2010 as lower interest rates warrant higher valuations and firmer top-line growth is expected for 2011. We advise accumulating positions during periods of weak-ness ahead of US mid-term elections.

Hedge funds remain steady in August in spite of equity market weakness Hedge funds posted modest but positive gains in August (DJ CS Hedge Fund Index 0.2%), while equity markets

Alternative investmentsWe identify several investment opportunities in alternative assets

Top investment idea

uBUY commodity exposure to metals and agriculture.

Also see the investment ideason a similar topic on page 15


We stay bearish USD against European currenciesWe hold on to our core bullish view of European currencies like EUR, GBP and CHF, as well as the Scandinavian cur-rencies, against the USD. The combination of low US inter-est rates and the twin deficit in the USA (current account and fiscal account) are bearish for the USD in the current environment of a global recovery. The USD is also lacking support from technical indicators, such as momentum and trend. We therefore expect EUR/USD to appreciate into the high 1.30s over 12M.

We turn neutral EUR/CHFWe have turned strategically neutral EUR/CHF against the backdrop of a more dovish Swiss National Bank and the stretched overvaluation of the CHF vs. EUR based on our estimated CS fair value. While rate spreads will likely remain narrow and Switzerland’s current account surplus stays sup-portive, we think the scope for rate spreads moving in favor of the CHF in coming quarters is limited. We think it is still too early to strategically position for a stronger EUR. Our view on USD/CHF, however, remains outright bearish.

Japan starts currency interventionUSD/JPY has reached our long held forecast of 83. Our overall strategic view on USD/JPY remains bearish – al-though less strong than before – due to the negative techni-cal trend. However, the scope for USD/JPY to fall below 80 is limited, as Japan has started currency interventions and the scope for further narrowing of rate spreads is smaller at current levels. We still recommend avoiding JPY funding.

We stay neutral on commodity currencies over 12MThe overvaluation of AUD and CAD is a concern, which is why we stay neutral over 12M despite positive funda-mentals (widening rate gap, higher commodity prices). We think, however, that these currencies can still be included with a small weight in currency portfolios for diversification purposes. On a tactical view, we have turned positive AUD/USD due to the upgrade of the technical trend.

Global recovery supportive for EM currency strengthWe remain broadly positive for emerging market currencies in Asia, Latin America and Eastern Europe over 12 months. The global recovery is likely to lead to capital flows into fast growing regions; rising inflationary pressure should lead to higher interest rates or central banks allowing currency appreciation; and the valuation of many currencies is at-tractive. Technicals also indicate further strength. However, the advanced recovery stage of some of our FX themes (e.g. carry) increases the need for portfolio risk manage-ment (see page 16).

[email protected], +41 (0)44 333 13 63

Overview

Low US rates, trade deficit and lack of technical support are bearish USD.

We turn strategically neutral EUR/CHF due to a dovish SNB and CHF overvaluation.

USD-based currency portfolio

In line with the overall more neutral strategic FX views, the AUD, NZD, CAD and NOK positions are cut to near zero. We remain long SGD, JPY, CHF and SEK versus short USD.


151487762211

–63–80

–60

–40

–20

0

20

40

USD CAD NZD AUD NOK EUR CHF SEK GBP SGD JPY

Allocation September 2010 Allocation October 2010

% of net asset value

Foreign exchangeWe stay bearish USD against European and emerging market currencies

14 | Research Monthly | October 2010

Overview

Fixed maturity bond funds with substantial credit exposure and short/medium maturity are a diversified and managed alternative to single bonds.

funds benchmarked against indices with relatively stable duration, should favor actively managed funds with a strong track record in managing duration risk. Finally, for investors in fixed income ETFs – a more passive way to gain exposure to bond markets in a cost effective manner – ETFs linked to indices with a high credit exposure and short duration should be favored. Investors holding ETFs linked to indices with longer duration and with excess cash holdings could consider adding products, which benefit from rising interest rates to their portfolio to reduce their overall interest rate risk. [email protected], +41 (0)44 332 90 93

[email protected], +41 (0)44 334 54 37

In the current low government bond yield environment, pri-vate and institutional investors alike are wondering how to position in the quarters ahead, and what the main perfor-mance drivers might be. After 2009, when returns were driven by an impressive credit spread rally, performance in 2010 has come mainly from a sharp decrease in benchmark rates. While the further tightening of credit spreads has contributed to additional returns, fixed income segments with long duration have generally outperformed.

While bond yields may remain low for some time, they have become unattractively low in long maturities, particu-larly compared with long-term real GDP and inflation esti-mates – major determinants of nominal yields. With credit spreads unlikely to widen significantly next year, our strat-egy therefore remains in favor of credit risk as compared to duration risk (see fixed income overview for further details). We thus recommend investors that have benefited from the fall in government rates over the last months, to consider taking profits or switching into bond instruments with great-er credit exposure and shorter maturity. Historically, the spread component of corporate or emerging market bonds provides some buffer when reference rates increase. While benchmark government bonds are fully exposed to duration risk, investment grade corporate bonds offer a limited buf-fer; emerging market sovereign bond yields are more or less split while high yield corporate bond yields are dominated by the credit risk component (see chart).

How to implement our fixed income strategy?A selection of short-dated, lower-rated single bonds or bond baskets is the direct implementation of our fixed income strategy. For investors looking for diversified and managed fixed income investments, fixed maturity bond funds with a large credit exposure and short/medium maturity (1– 5 years depending on the average credit quality of the fund) are an alternative. Much like direct bond investments and bond baskets, these funds have the advantage of declining duration exposure over time as compared to traditional bond funds. Investors considering investing in traditional bond

Investment theme Fixed income investments: Steer duration and credit exposure with the right vehicle

Yield on selected USD fixed income classes

The high-yield bond market exhibits the lowest rate exposure but the highest yield, given its greater credit risk.

Source: Credit Suisse indices

0

1

2

3

4

5

6

7

8

High yield EMcorporate

EMsovereign

Financials Industrials US Treasury

USD bond yields (%)

Benchmark yield1 Spread to benchmark

1 Benchmark yields differ according to respective durations


Base metals: Catch-up potential materializingLeading indicators, such as global manufacturing PMIs, suggest that the recovery in the real economy continues, although the pace of growth is moderating from unsustain-ably high levels. The fact that base metals prices have cor-rected while the economic recovery has continued, created catch-up potential, which has started to materialize, with prices starting to rise after a period of weakness earlier in the summer. Moreover, we think base metals consumption is likely to improve further. Physical consumers, which have deferred purchases in light of increased economic uncer-tainty, are now being forced back into the market as de-mand is surprising to the upside. Chinese imports – China is the world’s largest consumer of metals – remain strong, and aggregate base metals inventories at the London Metal Exchange have started to decline sharply (see chart). We expect to see further declines in exchange inventories, which is a prerequisite for a sustainable rally in base metals prices, in our view.

In tandem with the anticipated rebound in base metal prices, the related mining stocks also have the potential to recover as increased demand translates into higher pro-duction volumes and improved profitability. Mining stocks already have attractive fundamentals. Companies are gen-erating high cash flows, striving to cut costs and, in the meanwhile, posting robust balance sheets once again. BHP Billiton’s bid for Potash Corp. is potentially the start of a new round of merger and acquisitions in the sector as cash-rich companies look to both broaden and deepen their com-

modity portfolios. Moreover, with price/earnings ratios of 7– 8 for 2010E/11E, the sector is trading at attractive lev-els and significantly below its historical average of 14. Our favorites in the sector are diversified international mining stocks, such as Xstrata and Rio Tinto, featuring a combina-tion of quality, growth and a product mix skewed toward our preferred commodities coal, copper and iron ore.

[email protected], +41 (0)44 334 56 41

[email protected], +41 (0)44 333 13 62

Overview

Commodity prices recovering with continuing economic growth.

Miners profiting from rising demand and commodity prices.

Investment theme Industrial metals – both direct and indirect investments are attractive

Industrial metals have started a new inventory cycle

After falling during the recession, physical demand is now rising again. Inventory levels for industrial metals are falling across the board, which in our view is a prerequisite for a sustainable rally.

Top investment ideas

uBUY Rio Tinto, a global diversified miner with a broad range of high quality metal and mineral assets.

uBUY Xstrata, an international diversified metals and coal miner with a strong pipeline of new projects.

Part of the “Multipolar world” Megatrend. See page 17

Source: Bloomberg, Credit Suisse/ IDC

0

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01/95 01/97 01/99 01/01 01/03 01/05 01/07 01/09

Aluminium Copper Lead

Nickel Tin Zinc

Stock-to-use ratio in days of consumption


Emerging market currencies have experienced a signifi-cant recovery since the peak of the global financial market crisis. Among the various emerging market strategies that we highlighted in the February 2010 edition of Research Monthly (growth, carry, commodities, early tighteners and undervaluation), the carry strategy has worked best so far, with a recovery of high yielding currencies of more than 30% vs. USD since early March 2009. High yielding cur-rencies outperformed BRIC currencies by 15% in the same time span. We started to recommend buying “BITZ” cur-rencies (BRL, IDR, TRY and ZAR) as an application of our carry theme since June 2009 (see Research Weekly Asia as of 19 June 2009) on an unhedged basis via forwards, and have reiterated this call several times in Research Monthly (October 2009, February 2010, etc.) since then. However, we believe that investors should now start to pay more at-tention to strategies that help to manage the downside risks of high yielding emerging market currencies.

In the September edition of Research Monthly we high-lighted the ZERO theme and showed how to invest into it via emerging market currencies, namely an Asian and a BITZ currency basket. We are still convinced of structural appreciation of emerging market currencies, but taking into account the strong recovery of some EM currencies, dete-riorating valuation metrics of some emerging market cur-rencies and increasing intervention risk (Brazil and South Africa), we believe that managing FX portfolio risk should receive more attention from now on. One solution to manage EM FX currency risk without losing participation in structural EM currency appreciation is to use capital protected invest-ments. This is part of the ZERO strategy theme, explored in detail in last month’s Research Monthly. At the current

stage we advise to start rolling exposure from unhedged BITZ basket investments to BITZ investments that limit the currency downside but still give upside potential to the cur-rency strength. [email protected], +41 (0)44 332 83 18

[email protected], +41 (0)44 333 52 28

Overview

We are still convinced of structural EM currency appreciation.

While remaining constructive on BITZ, we believe that investors should adopt strategies that help to limit the currency downside risk.

Investment theme Structural EM FX appreciation, but rising need for portfolio risk management

Top investment idea

uBUY profit on unhedged BITZ currency invest-ments and invest in BITZ structures that offer capital protection.

BRIC vs. BITZ performance

BITZ currencies underperformed BRIC currencies during the financial market crisis. With the beginning of the equity market recovery and surging risk appetite in March 2009, BITZ outperformed BRIC currencies and nearly reached pre-crisis levels.

Source: Bloomberg, Credit Suisse/ IDC

75

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10/08 02/09 06/09 10/09 02/10 06/10 10/10 02/11 06/11 10/11

USD/BRIC spot Credit Suisse BRIC forecast

BITZ basket Credit Suisse BITZ forecast

USD vs. equally weighted BITZ (BRL, IDR, TRY and ZAR) and BRIC (BRL, RUB, INR and CNY) basket index

Appreciation vs. USD

Depreciation vs. USD

Part of the “Multipolar world” Megatrend. See page 17

Demographics

Urbanization 21st century lifestyle Education Agriculture

Multipolarworld

Emerging markets Frontier markets Emerging producers Emerging consumers Logistics

Sustainability

Innovation Environment Community


The Credit Suisse Megatrends are long-term investment themes. The best way to capitalize on them is through equity investments. The rating system outlined below re-flects the attractiveness of the relevant stocks (valuation, momentum, bubble building etc.) within each theme:

Attractive investment opportunities – continue to invest in theme

Keep holdings but do not add to existing positions Reduce/exit existing positions

After a decade of negative equity returns, we see a good en-try point into equity markets for long-term investors. Indeed, over the past 110 years, equity markets had 12 instances of negative returns over a decade, and in each of these instances, the subsequent decade provided positive returns ranging from 24% to 370% for the US market. Specifically, for long-term investors, the three Credit Suisse Megatrends (Demographics, Multipolar World and Sustainability) provide good secular investment opportunities, in our view:

Population growth in many emerging markets fuels urbanization and demand for food, which in turn provides support for companies in the construction and agriculture sectors, respectively.

The trend towards a Multipolar World is giving rise to a new middle class in many developing countries, benefiting companies with strong brands. More population and enrich-ment lead to new sustainability issues that call for a better use of resources.

We therefore recommend investing in companies geared to the Megatrends – either directly or via suitable funds – as a framework for long-term investments.

[email protected], +41 (0)44 335 72 98

CreditSuisseMegatrendsBuildingequityexposuretotheMegatrends

The Credit Suisse Megatrends are long-term investment themes. The best way to capitalize on these themes is through equity investments. Accordingly, the rating sys-tem outlined below reflects the attractiveness of equity investments within each theme:

Attractive investment opportunities – continue to invest in theme

Keep holdings but do not add to existing positions Reduce/exit existing positions

Topinvestmentideas

uBUYArcher Daniels Midland – a leading producer of agricultural commodities.

uBUY Lafarge – a leading cement company with global reach.

Overview

Demographics, Multipolar World and Sustain-ability are the three Megatrends that are shaping tomorrow’s economy and society.

Focus on companies benefiting from the megatrends as long-term investments.

isto

ckph

oto.

com


Disclosure appendix

Analyst certificationThe analysts identified in this report hereby certify that views about the compa-nies and their securities discussed in this report accurately reflect their personal views about all of the subject companies and securities. The analysts also certify that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Important disclosuresCredit Suisse policy is to publish research reports, as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse policy is only to publish investment research that is impartial, inde-pendent, clear, fair and not misleading.

The Credit Suisse Code of Conduct to which all employees are obliged to ad-here, is accessible via the website at: https://www.credit-suisse.com/governance/doc/code_of_conduct_en.pdf

For more detail, please refer to the information on independence of financial research, which can be found at: https://www.credit-suisse.com/legal/pb_research/independence_en.pdf

The analyst(s) responsible for preparing this research report received compensa-tion that is based upon various factors including Credit Suisse’s total revenues, a portion of which is generated by Credit Suisse Investment Banking business.

Equity rating history as of 28/09/10

As at the end of the preceding month, Credit Suisse beneficially owned 1% or more of a class of common equity securities of (DEUTSCHE TELEKOM, RIO TINTO, XSTRATA).For the following disclosures, references to Credit Suisse include all of the sub-sidiaries and affiliates of Credit Suisse AG, the Swiss bank, operating under its Investment Banking division.The subject issuer (ARCHER DANIELS MIDLAND, BMW, COCA-COLA, DEUTSCHE TELEKOM, LAFARGE S.A., LVMH MOET HENNESSY LOUIS VUITTON, MICROSOFT, PORTUGAL TELECOM SGPS SA, XSTRATA) cur-rently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.Credit Suisse provided investment banking services to the subject company (BMW, COCA-COLA, DEUTSCHE TELEKOM, LVMH MOET HENNESSY LOU-IS VUITTON, MICROSOFT, PORTUGAL TELECOM SGPS SA, XSTRATA) within the past 12 months.Credit Suisse provided non-investment banking services, which may include Sales and Trading services, to the subject issuer (ARCHER DANIELS MID-LAND, BMW, COCA-COLA, DEUTSCHE TELEKOM, LAFARGE S.A., LVMH MOET HENNESSY LOUIS VUITTON, MICROSOFT) within the past 12 months.Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (BMW, DEUTSCHE TELEKOM, LVMH MOET HENNESSY LOU-IS VUITTON, MICROSOFT) within the past three years.Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (BMW) within the past 12 months.Credit Suisse has received investment banking related compensation from the subject issuer (BMW, COCA-COLA, MICROSOFT, PORTUGAL TELECOM SGPS SA) within the past 12 months.Credit Suisse has received compensation for products and services other than investment banking services from the subject issuer (ARCHER DANIELS MID-LAND, BMW, COCA-COLA, DEUTSCHE TELEKOM, LAFARGE S.A., LVMH MOET HENNESSY LOUIS VUITTON, MICROSOFT) within the past 12 months.Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject issuer (ARCHER DANIELS MIDLAND, BMW, COCA-COLA, DEUTSCHE TELEKOM, LAFARGE S.A., LVMH MOET HEN-NESSY LOUIS VUITTON, MICROSOFT, PORTUGAL TELECOM SGPS SA, SAB MILLER, XSTRATA) within the next three months.As at the date of this report, Credit Suisse acts as a market maker or liquidity provider in the securities of the subject issuer (MICROSOFT).Credit Suisse holds a trading position in the subject issuer (ARCHER DANIELS MIDLAND, BMW, COCA-COLA, DEUTSCHE TELEKOM, LAFARGE S.A., LVMH MOET HENNESSY LOUIS VUITTON, MICROSOFT, MTN GROUP LIM-ITED, PORTUGAL TELECOM SGPS SA, RIO TINTO, SAB MILLER, SWATCH GROUP, XSTRATA).

Additional disclosures for the following jurisdictions

Hong Kong: Other than any interests held by the analyst and/or associates as disclosed in this report, Credit Suisse Hong Kong Branch does not hold any disclosable interests. United Kingdom: For fixed income disclosure information for clients of Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited, please call +41 44 333 33 99.


Guide to analysis

Equity rating allocation as of 28/09/2010

Overall Investment banking interests only

BUY 46.04% 47.05%

HOLD 49.56% 48.78%

SELL 2.64% 2.26%

RESTRICTED 1.76% 1.91%

Company Rating Date

(since)

ARCHER DANIELS

MIDLAND (ADM US)

BUY 13/08/10

BUY 03/08/10

BUY 25/06/10

BUY 03/02/10

BUY 14/01/10

HOLD 03/11/09

HOLD 04/08/09

BMW (BMW GY) BUY 03/08/10

BUY 13/07/10

BUY 06/05/10

BUY 18/03/10

BUY 15/03/10

BUY 01/02/10

BUY 03/11/09

BUY 25/09/09

COCA-COLA (KO US) BUY 21/07/10

HOLD 20/04/10

HOLD 26/02/10

BUY 25/02/10

BUY 09/02/10

BUY 20/10/09

BUY 21/07/09

DEUTSCHE

TELEKOM (DTE GR)

HOLD 05/08/10

HOLD 12/05/10

HOLD 26/02/10

HOLD 25/02/10

HOLD 05/11/09

HOLD 08/09/09

LAFARGE S.A.

(LG FP)

BUY 31/08/10

BUY 02/08/10

BUY 30/07/10

BUY 25/02/10

BUY 19/02/10

BUY 06/11/09

BUY 13/10/09

BUY 29/07/09

LVMH MOET

HENNESSY LOUIS

VUITTON (MC FP)

BUY 28/07/10

BUY 27/07/10

BUY 13/04/10

BUY 19/03/10

BUY 16/02/10

BUY 05/02/10

BUY 20/10/09

BUY 19/08/09

MICROSOFT

(MSFT US)

BUY 23/07/10

BUY 26/04/10

BUY 23/04/10

BUY 01/02/10

BUY 29/01/10

BUY 26/10/09

BUY 23/10/09

BUY 27/07/09

MTN GROUP LIMITED

(MTN SJ)

HOLD 26/08/10

BUY 06/05/10

BUY 26/04/10

BUY 17/03/10

BUY 30/10/09

BUY 30/09/09

BUY 03/09/09

PORTUGAL

TELECOM SGPS SA

(PTC PL)

BUY 05/08/10

BUY 28/07/10

BUY 20/07/10

BUY 19/07/10

HOLD 02/06/10

BUY 11/05/10

BUY 06/05/10

HOLD 05/03/10

HOLD 17/11/09

HOLD 06/08/09

RIO TINTO (RIO LN) BUY 05/08/10

BUY 03/05/10

BUY 06/04/10

BUY 11/02/10

BUY 14/10/09

BUY 21/08/09

SAB MILLER

(SAB LN)

BUY 28/05/10

HOLD 19/11/09

HOLD 15/10/09

HOLD 09/09/09

SWATCH GROUP

(UHR VX)

BUY 04/08/10

HOLD 16/04/10

HOLD 11/02/10

HOLD 21/01/10

HOLD 20/01/10

HOLD 17/08/09

XSTRATA (XTA LN) BUY 03/08/10

BUY 03/05/10

BUY 12/04/10

BUY 08/02/10

BUY 20/10/09

HOLD 04/08/09


Relative stock performanceAt the stock level, the selection takes into account the relative attractiveness of individual shares versus the sector, market position, growth prospects, balance-sheet structure and valuation. The sector and country recommendations are “overweight,” “neutral”, and “underweight” and are assigned according to relative performance against the respective regional and global benchmark indices.

Absolute stock performanceThe stock recommendations are BUY, HOLD and SELL and are dependent on the expected absolute performance of the individual stocks, generally on a 6–12 months horizon based on the following criteria:

BUY: 10% or greater increase in absolute share priceHOLD: variation between –10% and +10% in absolute share priceSELL: 10% or more decrease in absolute share priceRESTRICTED: In certain circumstances, internal and external regulations ex-

clude certain types of communications, including e.g. an in-vestment recommendation during the course of Credit Suisse engagement in an investment banking transaction.

TERMINATED: Research coverage has been concluded.

Absolute bond recommendationsThe bond recommendations are based fundamentally on forecasts for total re-turns versus the respective benchmark on a 3–6 month horizon and are defined as follows:

BUY: Expectation that the bond issue will outperform its specified benchmark

HOLD: Expectation that the bond issue will perform in line with the specified benchmark

SELL: Expectation that the bond issue will underperform its speci-fied benchmark

RESTRICTED: In certain circumstances, internal and external regulations ex-clude certain types of communications, including e.g. an in-vestment recommendation during the course of Credit Suisse engagement in an investment banking transaction.

Credit Suisse HOLTWith respect to the analysis in this report based on the HOLT™ methodology, Credit Suisse certifies that (1) the views expressed in this report accurately re-flect the HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be directly related to the specific views disclosed in this report. The Cred-it Suisse HOLT methodology does not assign ratings to a security. It is an ana-lytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valua-tion model, that are consistently applied to all the companies included in its da-tabase. Third-party data (including consensus earnings estimates) are system-atically translated into a number of default variables and incorporated into the algorithms available in the Credit Suisse HOLT valuation model. The source fi-nancial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. These adjustments provide con-sistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to pro-duce alternative scenarios, any of which could occur. The Credit Suisse HOLT methodology does not assign a price target to a security. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes a war-ranted price for a security, and as the third-party data are updated, the war-ranted price may also change. The default variables may also be adjusted to produce alternative warranted prices, any of which could occur. Additional infor-mation about the Credit Suisse HOLT methodology is available on request.

CFROI®, CFROE, HOLT, HOLTfolio, HOLTSelect, HS60, HS40, ValueSearch, AggreGator, Signal Flag and “Powered by HOLT” are trademarks or registered trademarks of Credit Suisse or its affiliates in the United States and other coun-tries. HOLT is a corporate performance and valuation advisory service of Credit Suisse.

For technical researchWhere recommendation tables are mentioned in the report, “Close” is the latest closing price quoted on the exchange. “MT” denotes the rating for the medium-term trend (3–6 months outlook). “ST” denotes the short-term trend (3–6 weeks outlook). The ratings are “+” for a positive outlook (price likely to rise), “0” for neutral (no big price changes expected) and “-“ for a negative outlook (price likely to fall). Outperform in the column “Rel perf” denotes the expected perfor-mance of the stocks relative to the benchmark. The “Comment” column includes

the latest advice from the analyst. In the column “Recom” the date is listed when the stock was recommended for purchase (opening purchase). “P&L” gives the profit or loss that has accrued since the purchase recommendation was given.

For a short introduction to technical analysis, please refer to Technical Analysis Explained at: https://www.credit-suisse.com/legal/pb_research/ technical_tutorial_en.pdf

Global disclaimer / important information

References in this report to Credit Suisse include subsidiaries and affiliates. For more information on our structure, please use the following link:http://www.credit-suisse.com/who_we_are/en/

The information and opinions expressed in this report were produced by the Global Research department of the Private Banking division at Credit Suisse as of the date of writing and are subject to change without notice. Views expressed in respect of a particular stock in this report may be different from, or inconsis-tent with, the observations and views of the Credit Suisse Research department of Division Investment Banking due to the differences in evaluation criteria. The report is published solely for information purposes and does not constitute an offer or an invitation by, or on behalf of, Credit Suisse to buy or sell any securi-ties or related financial instruments or to participate in any particular trading strategy in any jurisdiction. It has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Although the information has been obtained from and is based upon sources that Credit Su-isse believes to be reliable, no representation is made that the information is accurate or complete. Credit Suisse does not accept liability for any loss arising from the use of this report. The price and value of investments mentioned and any income that might accrue may fluctuate and may rise or fall. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representa-tion that any investment or strategy is suitable or appropriate to individual cir-cumstances, or otherwise constitutes a personal recommendation to any spe-cific investor. Any reference to past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the val-ue, price or income of any products mentioned in this document. Alternative in-vestments, derivative or structured products are complex instruments, typically involve a high degree of risk and are intended for sale only to investors who are capable of understanding and assuming all the risks involved. Investments in emerging markets are speculative and considerably more volatile than invest-ments in established markets. Risks include but are not necessarily limited to: political risks; economic risks; credit risks; currency risks; and market risks. In jurisdictions where Credit Suisse is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable secu-rities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in accordance with applicable exemptions from registra-tion or licensing requirements. Before entering into any transaction, investors should consider the suitability of the transaction to individual circumstances and objectives. Credit Suisse recommends that investors independently assess, with a professional financial advisor, the specific financial risks as well as legal, regu-latory, credit, tax and accounting consequences. A Credit Suisse company may, to the extent permitted by law, participate or invest in other financing transac-tions with the issuer of the securities referred to herein, perform services or so-licit business from such issuers, and/or have a position or effect transactions in the securities or options thereof.

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10C017A


Imprint

PublisherGiles Keating, Managing DirectorHead of Research for Private Banking and Asset ManagementTel. +41 (0)44 332 22 33E-mail: [email protected]

Lars Kalbreier, CFA, Managing DirectorHead of Global Equity and Alternatives ResearchTel. +41 (0)44 333 23 94E-mail: [email protected]

EditorsDr. Oliver Adler, Managing DirectorDr. Nannette Hechler-Fayd’herbe, Managing DirectorLars Kalbreier, CFA, Managing DirectorJoe Prendergast, Managing DirectorEric Güller, Director

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Authors

Dr. Oliver Adler, Managing DirectorHead Global Economics & Real Estate Research Tel. +41 (0)44 333 09 61, E-mail: [email protected]

Sylvie Golay Markovich, CFA, Vice PresidentFixed Income Strategy, Credit StrategistTel. +41 (0)44 334 54 37, E-mail: [email protected]

Eric Güller, CEFA, DirectorEquity Research; Head of Emerging Markets ex Asia Equity Research Tel. +41 (0)44 332 90 59, E-mail: [email protected]

Elena Guglielmin, DirectorGlobal Credit Research; Banks, Insurance, Covered BondsTel. +41 (0)44 333 57 67, E-mail: [email protected]

Dr. Nannette Hechler-Fayd’herbe, Managing DirectorHead of Global Fixed Income and Credit ResearchTel. +41 (0)44 333 17 06E-mail: nannette.hechler-fayd'[email protected]

Thomas Herrmann, Vice PresidentGlobal EconomicsTel. +41 (0)44 333 50 62, E-mail: [email protected]

Marcus Hettinger, DirectorHead of Global Forex ResearchTel. +41 (0)44 333 13 63, E-mail: [email protected]

Lars Kalbreier, CFA, Managing DirectorHead of Global Equity and Alternatives ResearchTel. +41 (0)44 333 23 94, E-mail: [email protected]

Tobias Merath, CFA, Vice PresidentHead of Global Commodity ResearchTel. +41 (0)44 333 13 62, E-mail: [email protected]

Bernhard Obenhuber, Assistant Vice PresidentFixed Income StrategyTel. +41 (0)44 332 90 93, E-mail: [email protected]

Joe Prendergast, Managing DirectorHead of Currency and Commodity StrategyTel. +41 (0)44 332 83 18, E-mail: [email protected]

Sven Schubert, Assistant Vice PresidentEmerging Markets, Economics & ForexTel. +41 (0)44 333 52 28, E-mail: [email protected]

Roger Signer, CFA, Assistant Vice PresidentEquity Research; European and US Construction, Convertibles, Derivatives Tel. +41 (0)44 335 72 98, E-mail: [email protected]

Michael O’Sullivan, DirectorHead of UK Research and Portfolio Analysis Tel. +44 (0)20 7883 8228, E-mail: michael.o'[email protected]

Cédric Spahr, CFA, CAIA, DirectorHead Equity Alternatives & Portfolio Analytics, European Real Estate Tel. +41 (0)44 333 96 48, E-mail: [email protected]

RO

E

Asset Allocation and Global Strategy Publications Guide

14 September 2009Zurich

Global Research

Private Banking

Important disclosures are found in the Disclosure Appendix

Overview

Double-dip unlikely, as low interest rates and buoyant capital markets offset weak banks and future fading of scal /inventory stimulus.

Stay overweight equities. Positive economic surprises, ows out of cash outweigh negatives (but setbacks possible).

Stay underweight xed income. Opportunities mainly in some higher-risk credits. Avoid long maturities given gentle but volatile rates uptrend.

Dollar trend down. Diversify broadly into other currencies including emerging markets.

Foreign exchange

uBUY EUR/USD at spot (currently 1.46) with a target at 1.52 and stop loss at 1.4390. page 8

Fixed Income

uBUY METRO 3 5/8% 06/11 in EUR.

page 10

Equities

uBUY Lafarge, world leader in building materials with an attractive valuation. page 17

Alternative investments

uBUY Platinum at prices below USD 1,300 with a target of USD 1,500. page 21

Research MonthlyEquities stay strong, double-dip unlikely

Zurich, 24 September 2009 Global Research

Stefan Keitel (Chair) CIO, Private Banking & Asset Management (MACS) Giles Keating (Vice-Chair) Head of Research for Private Banking and Asset Management Rolf Bertschi Head of Technical Research, Private Banking Patrick Bucher Deputy CIO, Asset Management (MACS) Michel Degen Co-Head Fixed Income MACS, Asset Management Dr. Nannette Hechler-Fayd'herbe Head of Global Fixed Income and Credit Research, Private Banking Dr. Anja Hochberg Head of Investment Strategy, MACS Lars Kalbreier Head of Global Equity and Alternatives Research, Private Banking Robert Parker Vice Chairman, Asset Management Joe Prendergast Chief Currency Strategist, Private Banking Filippo Rima Head Global Equities MACS, Asset Management

Overview

Global Macro Data still improving, central banks acknowledge this and become more optimistic, but most still signal rates staying low for a long time.

ForexEUR/USD has broken up, may establish 1.44-1.52 range into Q4. Occasional USD rebounds still likely but uptrend to extend again through 2010.

Fixed Income Credit spreads may still narrow, but barely enough to offset rising gov-ernment yields.

EquitiesStill positive given cash overhang, markets breaking long-term moving averages, and valuations on balance neutral. Brief setbacks possible.

CommoditiesBase metals, oil consolidate before resuming uptrend. Gold has at least some further upside.

Fixed Income: / Equities: / Commodities: / Real Estate: Next IC meeting: 2 October 2009

Retail and institutional money market funds as % of market cap Cash levels are falling, although still relatively high.

0

5

10

15

20

25

30

35

Jun 83 Jun 87 Jun 91 Jun 95 Jun 99 Jun 03 Jun 07

Retail Money Market mutual funds/US Eq. Market cap Inst. Money Market mutual funds/US Eq. Market cap

in %

Source: Datastream, Credit Suisse / IDC

Investment Committee view With most central banks signaling their determination to keepinterest rates very low for a prolonged period despite improvingeconomic data, with cash holdings still high and valuations not yet sounding a strong warning, the trend in equity markets still looks up for now. Many investors remain cautious, hoping to buy on dips, and this adds to the upward pressure by tendingto make setbacks short-lived. So does the worsening risk-reward now offered in fixed income: credit spreads still look somewhat wide when compared to likely default rates, so there is still scope to narrow, but much less than before, and probably not enough to properly compensate for the dangerthat government yields look likely to at least edge up.

Guests attending the IC Meeting this week: Guido Bächli, Stefan Braunschweig.

The Investment Committee Meeting of 23 September 2009

29 September 2009Zurich

Asset Management

Important disclosures are found in the Disclosure appendix

Mandates MonthlyUptrend to continue in the near term, slow down expected

Asset Management

Overview

Asset Allocation: We prefer equities over bonds, therebykeeping our moderate equity overweight.

Fixed Income: We are keeping our moderately shortduration stance. No change in the long EUR/short USDbond position.

Equities: No monthly rebalancing of the total equityoverweight. Further profits taken on Emerging markets. UKequities reduced in favor of EU equities as a more cyclicalregion.

Alternative Investments: We remain overweight.

Commodities: We remain neutral on commodities and aremaintaining our positive view on gold.

Currencies: We are maintaining mostly neutral views. USD:neutral stance. GBP: underweight.

Current NeutralCashBondsEquitiesAlternative investments

Current vs. neutral allocationFixed Income

20

75

5

20

75

5

Income Oriented

20

15

58

7

20

20 55

5

Balanced

20

35

37

8

20

38

35

7

Capital Gains Oriented15

55

21

9

15

57

208

Equities15

75

10

15

78

7

Investment Committee Report (bi-weekly)Main investment horizon: Tactical 1–6 monthsProduced by Credit Suisse Asset Management (MACS) in conjunction with Credit Suisse Private Banking ResearchAvailable in English and German (PDF only)

Research MonthlyMain investment horizon: Strategic 6 –12+ monthsCovers global strategy & investment themesProduced by Credit Suisse Private Banking ResearchAvailable in English, German, French, Italian, Spanish and Chinese

Mandates MonthlyMain investment horizon: Tactical 1–6 monthsCovers tactical asset allocation and implementation of investment strategy in discretionary portfoliosProduced by: Credit Suisse Asset Management (MACS)Available in English, German, French, Italian and Spanish

Research Monthly Without Investment Proposals Oct 2010

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Transcript of Research Monthly Without Investment Proposals Oct 2010