June 2015

01 Message from Editor

Corporate News 02 Swiss Privilege takes home fourth straight “ Excellent Brand of Wealth Management Financial Institution” Award

03 Swiss Privilege wins second successive CAPITAL Outstanding Enterprise Award

04 “AXA Hong Kong Streetathon@kowloon east 2015” with over 7,000 runners

Corporate Events 05 Year of the Goat Lunar New Year Dinner

06 Staying ahead of the curve at 2015’s Q1 and Q2 investment seminars

Unearthing new opportunities in China at our latest financial luncheon

07 Enhancing Everyone’s Well-being at Our Recent Health Seminar

Parenting and Kids’ Education Seminar

08 Premium Diamond Appreciation Exclusive High Tea Reception

Jewellery Lovers Join Monica Vinader at a Private Shopping Cocktail

09 Falling in Love with the Unique Charms of Glenlivet

10 Getting in Touch with Nature by Cherry Blossom Hike

11 Soothing Away Stress at Our Organic Strawberry Fun Outing

Frosted Glass Workshop

Contents

12 Tucking into a taste of history at Wetland Park

13 A Big Day Out at Lantau’s Big Buddha

Fund Forum 14 Outlook 2015 : Emerging Market Equities

18 Preferred Securities Remain Attractive in a Low Yield Environment

Fund Manager Analysis 22 Security investment opportunities arise from global urbanization

Global Energy Market Outlook

Exclusive Client Interview 23 Dr. Vincent Yeung

24 Mr. Ronald Lam

25 Dr. Leung Yiu Lam

Seasonal O�ers 26 ST. JOHN

27 ELEMIS

28 Banyan Tree Yangshuo

Views expressed are not necessarily the views of Swiss Privilege (“SP”) and are for reference only. No responsibility is accepted by SP for and the authors for loss occasioned by any person acting or refrainingfrom action as a result of any views expressed therein. Any views or comments given on investment matters are offered for information only and do not constitute investment advice. No part of this magazine may bereproduced without the permission of SP.If you wish to withdraw your consent on the use and provision of your personal data for direct marketing, please send your request in writing to: Data Privacy Officer at customercare.sp@swissprivilege.com.AXA shall, without charge to you, ensure that you are not included in future direct marketing activities.

Message from Editor

Dear Valued Club Suisse member,

In delivering on our commitment to be your lifetime wealth management partner, we do our utmost to meet your every need with quality wealth management and financial protection solutions.

To this end, we are proud to announce that we have recently added two further awards to the coveted array of accomplishments that underline our high standing in the financial industry. The new awards are a fourth straight Excellent Brand of Wealth Management Financial Institution Award from the Hong Kong Leaders’ Choice Brand Awards 2015 and a second successive CAPITAL Outstanding Enterprise Award in the Wealth Management category.

Everyone at Swiss Privilege would like to thank valued clients like yourself for your continuous support! While the recognition of one’s industry peers is always very gratifying, we never forget we must work even harder to maintain the trusting relationship we have built with our clients and their families.

As we prepare to enter the second half of 2015, customer-centricity will remain our top service excellence priority. In addition to further broadening our product range, we also look forward to continuing to inspire you by organizing more varied array of lifestyle events.

Your Lifetime Wealth Management Partner!

Message from Editor 編者的話Message from Editor

01

Swiss Privilege takes home fourth straight “Excellent Brand of Wealth Management Financial Institution” Award

On 9 March 2015, we were honoured with our fourth “Excellent Brand of Wealth Management–Financial Institution” award at the “Hong Kong Leaders’ Choice Brand Awards 2015”. The latest accolade represents further recognition of our team’s unwavering commitment to service excellence.

“Leveraging our specialist financial management expertise, we are committed to continuing to do all we can to broaden our product and service scopes”, said Mr. Eddie Fung, Head of Swiss Privilege. “As always, our ultimate objective is to successfully nurture and strengthen long-term relationships with our many valued clients and their loved ones”, he added.

“As a member of the AXA Group, we regard meeting our social responsibility obligations as a top priority and do everything possible to enthusiastically support charity events to achieve our goals in this area. Arts is one of our key focuses we hereby promise to remain a wholehearted participant in Hong Kong’s vibrant arts scene”, Mr. Fung concluded.

Established by Metro Finance in 2007, the annual “Hong Kong Leaders’ Choice Brand Awards” honour Hong Kong’s most distinguished brands and enterprises. Winners in each category are selected by a judging panel comprised of industry leaders, company CEOs and senior management from leading organizations. Having received the overwhelming support of leading local professionals, the annual awards are now amongst Hong Kong’s most highly prized accolades.

02

Corporate News

Swiss Privilege is delighted to announce that it has just honoured with “The 15th CAPITAL Outstanding Enterprise Award” in the Wealth Management category for a second straight year. Mr. Eddie Fung, Head of Swiss Privilege, received the award at a gala award presentation ceremony held on 1 April 2015.

“We are very proud to receive our second straight CAPITAL Wealth Management Award as the accolade underlines our tireless efforts in ensuring the best products and services for our valued clients”, said Mr. Fung. “We hereby resolve to further widen and deepen our specialist wealth protection and management expertise so as to continue to deliver the best possible solutions for clients and their loved ones. Our ultimate aim in enhancing our customer-centric service remains establishing ourselves as clients' lifetime wealth management partner of choice.”

The annual CAPITAL Outstanding Enterprise Awards salute local enterprises who have made outstanding efforts and attained measurable achievements in the previous year. The awards are highly coveted by the industry as each winner is not only voted for by the public online but also stringently evaluated by a team of expert professional judges.

Swiss Privilege wins second successive CAPITAL Outstanding Enterprise Award

03

Corporate News

Organised by RunOurCity and title sponsored by AXA Hong Kong, the second “AXA HONG KONG STREETATHON@kowloon east” attracted more than 7,000 runners on 8 February 2015. Apart from 10km race, a new 21km half marathon was added in which runners set foot on Kwun Tong Bypass which opened for the first time for running.

The launch ceremony was kicked off with a starting pistol fired by Mr. John Tsang Chun-wah, GBM, JP, Financial Secretary, Mr. Stuart Harrison, Chief Executive Officer of AXA Hong Kong, and Mr. Andes Leung, Co-founder and CEO of RunOurCity. Adopting a theme of “Let’s Play in Our City”, the Streetathon has arranged street music performances and invited cheerleader teams to cheer for the runners along the route. Many of the runners dressed up as their favourite toys to compete for the “Funniest Outfit Award”.

At the Kai Tak Cruise Terminal, the “HONG KONG STREETATHON Carnival” was held with exhilarating games for all ages. Besides a series of fun game booths, the GIVE ME FIVE Concert at the main stage was also an attraction of the day. Singer Joey Tang, Shino Lin, J. Arie, Vivian Chan and other singers congratulated runners for finishing the race with energising live music performances. In addition, the renowned Korean pop group Cookin’ Nanta performed at “AXA HONG KONG STREETATHON@kowloon east 2015” as their first performance in Hong Kong.

“AXA Hong Kong Streetathon@kowloon east 2015” with over 7,000 runners

04

Corporate News

Year of the Goat Lunar New Year Dinner

On 13 March, Club Suisse hosted a lavish festive dinner at Dynasty Club where around 140 valued clients joined us in celebrating the Year of the Goat.

Following welcome cocktails, proceedings got underway when our masters of ceremony Ms. Lily Ho and Mr. Jack Hui kick-started the party and introduced our senior management team for a toasting ceremony. After raising a toast and playing an exciting table game, everyone sat down to a superb meal.

Later highlights included a traditional Chinese fan dance extravaganza plus a daring onstage display which fused the use of Chinese martial arts nun chucks with eye-popping light effects and spectacular pop shimmies and shakes. Ms. Lily Ho also enchanted diners with her lovely singing voice.

The evening reached its climax with further fun games and an exciting lucky draw. All charged up with good fortune for the year ahead and everyone returned home already eagerly anticipating our next Club Suisse dinner event.

05

Corporate Events

Unearthing new opportunities in China at our latest financial luncheon

Swiss Privilege customers have long valued the lengths we go to help them add value to their investment portfolios. On 28 January, the financial luncheon held at the IFC Mall’s Cuisine Cuisine restaurant was another excellent example of how we continue to deliver this promise.

Key speaker was Ms. Mabel Chan, Head of Wholesale Distribution, Asia of Henderson Global Investors Hong Kong (HGI HK) Ltd. who gave attendees plenty of latest market information by sharing her insights into the “China’s Delightful New Investment Scene”. A rapt audience of around 60 subsequently savoured delicious lunch while discussing with Ms. Chan and her team about current and emerging investment trends and opportunities in Mainland markets.

Staying ahead of the curve at 2015’s Q1 and Q2 investment seminars

Informative regular seminars that ensure investors can stay on top of investment market trends are yet another huge benefit of being a Club Suisse member.

On 13 January, we once again delivered on this promise by hosting a “Global Investment Opportunities in the Lunar Year of the Goat” seminar which featured a keynote speech on global economic dynamics by financial expert Mr. Louis Shum at Swiss Privilege Centre.

On 13 May, respected market commentator Miss Agnes Wu shared her insights into "The Myths of Global Growth - Where is the momentum from?". Joining her in analyzing the investment horizon during the second half of 2015 was Ms. Aster Hung, Manager of Mutual Fund Sales and Distribution of Principal Investment & Retirement Services Limited, who explored the “Investment Opportunities in the midst of Uncertainty with Interest Rates”. Attendees subsequently returned to homes fizzing with inspiring ideas on upcoming investment opportunities.

06

Corporate Events

Enhancing Everyone’s Well-being at Our Recent Health Seminar

A genuine concern for our valued clients’ health has long been another area in which we have distinguished ourselves and our services. At a health seminar entitled “Know More About Glaucoma and Common Cancer Types in Hong Kong” on 26 March, we once again underlined our belief that good personal health is every bit as vital as comprehensive wealth management.

Keynote speakers at the Swiss Privilege Centre on the day included leading ophthalmologist Dr. Ruby Ching who outlined several common causes of eye disease plus their prevention and cure. Dr. Ching was followed on stage by Senior Nurse Mr. Andy Lee who spoke about the symptoms and treatment of lung, co-rectal, breast, in-situ cervical and other common types of cancer. Everyone left the seminar armed with vital information with which to safeguard the health of themselves and their loved ones.

Parenting and Kids’ Education Seminar

On 25 April, Club Suisse hosted an informative Parenting and Kids’ Education Seminar at the Swiss Privilege Centre.

The seminar began with our guest speaker, Mr. Peter Chiu, former Vice Principal of La Salle College, who shared useful tips on securing youngsters a head start in the competition for places at top primary schools. Parents greatly appreciated being given the “inside track” on Hong Kong’s education path and being advised what – and what not – to do when their kids fought it through to the interview stages of the application process.

The seminar’s other important role was to help Mums and Dads find the most effective ways to fund the cost of their sons’ or daughters’ education from primary school to university. To this end, keynote speaker, Mr. Eric Ng, Senior Business Development Manager of Aberdeen International Fund Managers Ltd, took to the stage to outline family-friendly investments and the most effective ways to capitalize on them.

07

Corporate Events

Jewellery Lovers Join Monica Vinader at a Private Shopping Cocktail

Premium Diamond Appreciation Exclusive High Tea Reception

With Valentine’s Day fast approaching, around 30 jewellery loving Club Suisse members come and check out great gift ideas for their sweethearts during a Premium Diamond Appreciation Exclusive High Tea Reception on 24 January.

Held at the Chow Sang Sang’s Central flagship store, they get together featured a speech from Ms. Cecilia Chan, Certified Gemologist FGS (Lond) GG (GIA), who gave everyone her professional opinions on defining high quality diamonds. In addition to scrumptious high tea reception, our guests greatly enjoyed the various exclusive privileges, lucky draws and souvenirs we had prepared for them. A “Best Dressed” competition made everyone’s day even more memorable.

On 10 February, we joined forces with high-end British jewellery brand Monica Vinader and invited the many fashionistas in our client base to join an ultra-exclusive shopping event. Those who came along enjoyed a privileged up-close-and-personal look at popular Vinader styles and accessories whose fans include the British Royal family!

Attendees at the event inside the Monica Vinader boutique at Central’s IFC Mall sipped glasses of fine wine and tucked into canapés while enjoying sneak peeks of the label’s newest designs. In addition to generous discounts and an exciting lucky draw, the event’s many standouts included complimentary engraving services that enabled guests to personalize their purchases.

08

Corporate Events

Falling in Love with the Unique Charms of Glenlivet

Glenlivet single malts have long been amongst the best loved of all premium scotches. As the many whisky lovers old and new who attended our “Glenlivet Single Malt Scotch Whisky Tasting Night” at the Swiss Privilege Centre on 20 January would happily agree.

In all, some 40 guests tasted a total of six kinds of Glenlivet from different years and boasting subtly differing flavours. Each whisky’s attributes were explained by an expert who also partnered each tipple with different dishes that perfectly complimented its full flavour. Having indulged in an evening of wonderful food and drink with their fellow whisky aficionados, everyone returned home feeling inspired and impressed.

09

Corporate Events

Getting in Touch with Nature by Cherry Blossom Hike

As our clients adore the natural environment, our “Loving Nature – Cherry Blossom Hike” on 7 March provided everyone with an ideal excuse to recharge their body and mind in tranquil surroundings.

After taking a specially chartered coach to Tai Mo Shan Rotary Park Nature Trail, attendees and their loved ones were greeted by their expert hiking guides for the day. Enabling everyone to “stop and smell the flowers”, the subsequent 1-km stroll proved that one doesn't need to go to Japan to experience the beauty of blooming cherry blossoms! The walk ended with a lovely lunch which perfectly teed up attendees for the rest of their weekends.

10

Corporate Events

Frosted Glass Workshop

On 21 April, around 20 handcraft loving Club Suisse members eagerly flocked to a Frosted Glass Workshop at the Swiss Privilege Centre. Guided by an expert instructor, everyone chose their preferred graphic and began the painstaking, step-by-step task of etching on frosted glass.

After mounting a mould of their chosen graphic onto a glass mug, workshop attendees carefully applied some etching cream onto a piece of clear glass. Having enjoyed a little tasty light refreshment, everyone then began removing minute amounts of glass to reveal the characteristic rough surface and translucent quality of frosted glass beneath. A few wonderful hours later, our new glass experts returned home happily clutching their self-made masterpieces!

11

Corporate Events

Tucking into a taste of history at Wetland ParkAs part of our commitment to exploring the Territory's extraordinary natural heritage, Club Suisse recently organized a day tour of Hong Kong Wetland Park and some historical buildings nearby. About 30 clients were greatly enjoyed their day out on 11 April.

Inside the park, everyone learned more about its importance for local biodiversity and conservation efforts. Our group then visited Pui Pui, a crocodile from Shan Pui River, at the designated home for reptiles. Other facilities toured included the Park's Stream and Succession Walks and Mangrove Boardwalk.

After a delicious seafood lunch at Lau Fau Shan, the group took in a declared local monument at Kam Tin's Yi Tai Study Hall. Dating back to the 18th century, this building is legendarily the home of two immortals - Man Cheong and Kwan Tai - respectively the gods of literature and martial arts.

Next up, was the 400-year old Kam Tin Tree House where the heavy aerial roots and trunks of a massive ancient Banyan tree have embedded themselves into the walls of a traditional stone dwelling. Because of its great age, unique cultural significance and colorful history, the Tree House was listed as “Old and Valuable Trees” by Hong Kong's Leisure and Cultural Services Department in 2004.

The day ended with a guided tour of a famous bakery in Yuen Long. Our guests headed home and loaded down with precious memories and souvenirs of a side of Hong Kong many of them had never seen before.

12

Corporate Events

A Big Day Out at Lantau’s Big Buddha

While Buddha Bathing Festival is approaching, Swiss Privilege recently organized a fascinating tour of Lantau Island’s Big Buddha on 16 May. Attracting over 30 attendees, the outing proved very popular with Club Suisse members.

The day begin with a ride on the Ngong Ping Cable Car from Tung Chung. During their 25-minute trip, guests were fascinated in the spectacular bird’s-eye views of Tung Chung Bay and North Lantau.

After strolling through Ngong Ping Village, the group visited the Po Lin Monastery and enjoyed a vegetarian lunch there. Everyone then took a short walk to the Wisdom Path. All guests are admired by the series of 38 wooden steles (upright monuments) which contain verses from the centuries-old Heart Sutra; one of the world’s best-known prayers revered by Confucians, Buddhists and Taoists, and are arranged in “infinity ∞” pattern. The beautiful Chinese calligraphy within each stele is the work of famous contemporary scholar Professor Jao Tsung-I.

The day’s final highlight came when everyone arrived at the Big Buddha, the biggest sitting Buddha statue built outdoor. Erected in 1993, this majestic bronze Buddha sits 26.4 metres atop a lotus throne and is 34 metres high, including the base. Some of our guests climbed the 268 steps for a closer look at this remarkable statue, and visited the exhibition inside the Big Buddha. Finally, we took our return trip via Ngong Ping Cable Car which marked the end of this remarkable trip.

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Corporate Events

As 2014 has progressed, what has become increasingly apparent is the sub-trend and divergent nature of the recovery in global growth. The only developed economy really showing momentum is the US while growth in the eurozone and Japan is stalling. Consequently, rather than assessing how global emerging markets (GEMs) will fare in a global expansionary cycle, we find ourselves instead focusing on how GEMs might perform in a low growth world.

GEMs exports have been increasing, but the overall effect has so far been more muted than would otherwise be expected at this stage in the cycle. Meanwhile, import demand for commodities has been weak. A slowdown in the commodity cycle is partly to blame, not least with the US progressing towards energy self-sufficiency, together with the longer-term diminished effects of global trade liberalisation and a slowdown in off-shoring. Weak demand from the US in addition to slow growth in the eurozone, Japan and China makes it challenging for GEMS to perform. We believe instead that investors should look to GEMs’ primary growth driver of domestic demand, together with the potential positive ramifications of reform implementation, for a positive economic and earnings growth catalyst in 2015.

Fund Forum

Outlook 2015 :Emerging Market Equities

14

Fund Forum

There has been much negative market sentiment surrounding disappointing emerging markets export growth. However, we believe investors should not lose sight of the significant underlying domestic demand-led growth in the emerging world. Do not forget the combined population of China and India is over 2.5 billion, and expanding middle class is driving strong consumption demand and accounting for an increasing share of wealth creation globally. Another important positive for GEMs could come from the increasing number of countries that are embarking on reform programmes to boost growth. Common reform requirements include the need to rein in the influence of the state on the economy and release the potential of the private sector.

Emerging market equity mutual fund flows have been very volatile over 2014 and it is possible this volatility could continue into 2015 given the still-uncertain global backdrop. The year started with net outflows of over USD40 billion from dedicated funds. Since then flows have reversed somewhat but year-to-date there have still been outflows of around USD10 billion, according to fund flow data firm EPFR Global. However, GEM valuations are attractive with the MSCI Emerging Markets index trading at price-to-earnings (P/E) ratio of around 10.5 times, which is an approximate 10% discount to history and over a 50% discount to the S&P 500 – this is the largest discount for over 10 years.

15

Emerging markets have positive structural demographic dynamics

0

200

400

600

800

1,000

1,200

1,40082

75

63

36

1825

37

64

0

10

20

30

40

50

60

70

80

90

%Millions

Source: LHS: IMF DataMapper. Data as at October 2014. RHS: Haver, Schroders. Data as at January 2015. for illustrative purposes only and should not be viewed as a recommendation to buy / sell.

Population Land Natural resources GDP 2010 2030

Emerging Markets Developed Markets Emerging Markets Developed Markets

Estimates of the global middle class growth Resources and demographics (% world)

Fund Forum

In 2015 we believe the primary challenge facing GEMs is the potential ramifications of future monetary policy normalization in the US. For example, a stronger US dollar has historically been correlated with weak GEMs relative returns versus developed markets. We believe it is unlikely that the dollar will continue to appreciate at such a pace in 2015.

Equities tend to perform well during the initial rounds of rate increases as the positive impact of strong economic growth outweighs the tighter financing environment. Although the US is one of the best performing developed economies, its recovery has been sub-trend which may lead interest rates, when they are finally increased, to peak at much lower levels than during a more ‘normal’ cycle. In combination with expansionary policy in the eurozone and Japan, global liquidity is likely to remain supportive for some time to come.

S&P 500MSCI EM

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1995 1997 1999 2001 2003 2005 2007 2009 20152011 2013

(X)

Source: DataStream, March 2015

Emerging world shows attractive valuation with higher long term risk premium

EM vs. S&P500 price to book ratio

16

Fund Forum

Some emerging economies are more vulnerable than others to higher US interest rates. However, the adjustment process has been underway for many of the perceived weaker economies. Subsequently, when policy is eventually tightened in the US, we would expect the impact to be more muted than the summer of 2013.

Tail risks remain, most notably in Ukraine and the Middle East, any significant deterioration in either situation is likely to have global rather than emerging markets-specific ramifications. While the recent pressure on energy prices is creating strains on the budgets of certain energy-producing emerging countries, lower prices are a benefit to the energy importers and overall should boost global consumption demand to the potential benefit of GEM exporters.

Our 2015 outlook for GEMs is constructive. We are positive on markets that could benefit from potential reformist policy and markets that are beneficiaries of a pick-up in manufacturing and industrial exports and weak energy prices. We are cautious on materials and energy.

We are mindful that a stronger US dollar, a potential tighter financing environment and weak commodity prices could have a negative impact on emerging markets equities. Nevertheless, over 2015 we believe GEMs should deliver reasonable absolute and relative returns compared to developed markets, supported by attractive valuations, strong domestic demand and improving exports.

The ariticle is prepared by Schroder Investment Management (Hong Kong) Limited and for reference only. All views expressed cannot be construed as an offer or recommendation by Swiss Privilege and AXA Group and shall not be held liable for damages arising out of any person’s reliance upon this information.

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Important Information

Any security(s) mentioned above is for illustrative purpose only, not a recommendation to invest or divest.

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Opinions stated are matters of judgment, which may change. Information herein is believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.

Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to rise or fall. For risks associated with investment in securities in emerging and less developed markets, please refer to the relevant offering document.

The information contained in this document is provided for information purpose only and does not constitute any solicitation and offering of investment products. Potential investors should be aware that such investments involve market risk and should be regarded as long-term investments.

Derivatives carry a high degree of risk and should only be considered by sophisticated investors.

This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.

Fund Forum

How did Preferred Securities perform last year?

Last year was a strong year for preferred securities. In the U.S., credit has been good, and now it is getting even better. Northern Europe is acceptable and starting to improve, while periphery and southern Europe continue to lag.

Matthew Byer, chief operating officer of Spectrum Asset Management, a wholly owned and independently run affiliate of Principal Global Investors, explains why income-paying preferred securities are well-placed and attractively valued as short-term interest rates begin to rise.

18

Preferred Securities Remain Attractive in a Low Yield Environment

Fund Forum

19

Why did so many longer duration investors get caught out?

Interest rates were projected to go up in 2014. Instead, they fell when quantitative easing (QE) ended in the U.S., and started in Europe, Japan and elsewhere. QE has bought down rates across the globe and investors are doing exactly as they should. When central banks devalue their currencies, investors buy another one. Japanese investors that sold yen and bought U.S. Treasurys would have earned around 18% as the yen fell from ¥102 to ¥119. With more investors still buying, U.S. Treasurys have appreciated.

Where now for interest rates?

A year ago, we knew that U.S. short rates were not going to move in 2014. Now the Federal Open Market Committee is saying an increase will definitely happen this year. That said, long rates will still be influenced by the rest of the world. While the European Central Bank’s €1 trillion QE programme is going to take a long time to deploy, there is plenty of opportunity for further spread compression. With U.S. 5-year treasury yield at 1.5% and the equivalent bunds in negative territory, the allocation decision is easy.

What does that mean for fixed income sub-asset classes, including preferred securities?

Corporate bonds are very expensive and High Yield looks expensive too, even after the volatility in first quarter this year. From an absolute return perspective, preferred securities look expensive. However, relative to corporates and High Yield, they are inexpensive. Bond and equity volatility will increase along with rates, but will eventually settle. Preferred securities are positioned nicely to benefit over the year, although returns will be more muted, dominated by coupon and complemented by spread compression.

Fund Forum

How important is quality?

Quality is paramount. We will definitely see some incremental returns based on selection. Even so, it is always a question of what credit you want to own; there is no point holding a good name in a bad sector. There are preferred securities-issuing banks that have repaired their balance sheets, capitalised appropriately, and right-sized their businesses, but they face macro-economic headwinds in their country of domicile. We are looking for issuers that are turning the corner in locations with tailwinds, not those that face concerns such as structural labour and property valuation issues. The preferred securities market is only half a trillion US dollars in size with around 400 issuers, so it is an easily identifiable space.

A strong start to the hybrid market this year points to a favourable run for the rest of 2015. We expect speed bumps and corrections, of course, as an increasingly bullish consensus usually signals overbought conditions. In the meantime, preferred securities are among the most attractive sectors to own in a fixed income environment that is being increasingly regulated and de-risked by the global central bank’s own version of a “salary cap.”

How big an impact is regulation having on preferred securities?

Widespread regulatory reform, stronger capital buffers, and the transition to Basel III, has reduced risk in the banking and financial sectors, creating a favourable backdrop for investors in preferred securities. A segment of the market will be called within the next five years, creating greater certainty and lower volatility. Newer preferred structures are being developed that are likely to be riskier but deliver higher returns. Preferred securities can offer investors great opportunities for both income and return but experience in this sector is paramount.

Appendix: What are Preferred Securities and why are they attractive to investors?

Preferred securities are fixed income securities, generally ranking junior to senior debt but senior to the common stock. They exhibit equity-like features such as long dated maturity and in many structures deferrable coupon payment if the company is in financial distress. They have similarities to, but are not exactly the same as, the more traditional preferred or preference shares market.

Preferred securities are often referred to as “hybrid” instruments, suggesting that they are somehow simultaneously both equity and debt instruments. A more precise explanation would note that preferred securities are fixed income instruments from the perspective of the investor, and a less expensive form of regulatory or rating agency capital (as compared to common stock) from the perspective of the issuer.

Whether classified as debt or equity on the issuer balance sheet, preferred securities behave as a fixed income investment to the investor when credit is stable – some may behave more equity-like when credit is under stress.

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Fund Forum

The ariticle is prepared by Principal Global Investors (Asia) Limited and for reference only. All views expressed cannot be construed as an offer or recommendation by Swiss Privilege and AXA Group and shall not be held liable for damages arising out of any person’s reliance upon this information.

Important Information

The information in this document contains general information only on investment matters and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. The information it contains does not take into account the investment objectives, particular needs or financial situation of any investor or any particular class(es) of investors. Any person considering making an investment should seek independent advice on the suitability or otherwise of the particular investment. Past performance is not a reliable indicator of future performance and should not be relied upon as a significant basis for an investment decision. You should consider whether an investment fits your investment objectives, particular needs and financial situation before making any investment decision. Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions in this document. All figures shown in this document are in U.S. dollars unless otherwise noted. This document is issued in Hong Kong by Principal Global Investors (Asia) Limited, which is licensed with the Securities and Futures Commission to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities. This document has not been reviewed by the Securities and Futures Commission.

Preferred securities have several characteristics that investors find attractive:

• Diversification & Complement to Core Bonds - While preferred securities are somewhat correlated with the general bond market, they may offer enough diversification to afford a fixed income investor making a reasonable allocation to preferred securities the opportunity for greater total return and reduced total volatility

• Yield enhancement — Preferred securities are generally one of the highest yielding high quality sector of the U.S. dollar fixed income market and they will typically trade at an attractive spread over the same issuer’s senior debt. A case can be made that, if an investor is comfortable with the credit quality of a particular issuer, then they should consider an investment in the subordinated fixed income instrument, e.g., preferred security, of the same company and potential for a higher yield and return.

• High-quality alternative with attractive default and deferral rates.

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Average 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (2005-2014)

Investment GradeCorporate Bonds 0.07% 0.00% 0.00% 1.47% 0.19% 0.07% 0.00% 0.01% 0.03% 0.01% 0.18%

Preferred Securitiesexcluding FNM & FRE 0.69% 0.17% 0.16% 2.86% 3.48% 2.63% 0.38% 0.00% 0.00% 0.00% 1.04%

Preferred Securitiesincluding FNM & FRE 0.65% 0.16% 0.15% 8.52% 3.26% 2.44% 0.35% 0.00% 0.00% 0.00% 1.55%

High YieldCorporate Bonds 3.79% 1.05% 0.60% 5.81% 16.76% 1.70% 1.77% 1.89% 1.14% 1.76% 3.63%

Source: Spectrum Asset Management as of 31 March 2015

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Fund Manager Analysis

The ariticle is prepared by Pictet Asset Management (Hong Kong) Limited and Investec Asset Management Hong Kong Limited for reference only. All views expressed cannot be construed as an offer or recommendation by Swiss Privilege and AXA Group and shall not be held liable for damages arising out of any person’s reliance upon this information.

Investec Tom Nelson and Charles Whall Portfolio Managers

Global Energy Market Outlook

After the January oil-price lows of $46 per barrel (bl) for Brent crude, there was a more constructive development for the energy sector as the oil price started to pick up. Some crude market commentators have suggested that US crude prices will fall further, but we believe this is unlikely. The crude market participants are also concerned over the potential for early easing of Iranian oil production sanctions and the return of Libyan volumes to the market. In reality the normal seasonal increases in demand should be greater than the impact of this incremental supply.

The market continues to focus on the US, missing the impact of low oil prices on investment and maintenance capital elsewhere. While the production response is less immediate for conventional production, reduced rig counts are indicative of less activity, which will feed through to production in the second half of the year. Our project database already showed approximately 1 million bl/d less production from new project start-ups in 2015 than in 2014, and we continue to see delays with 2015 new field start ups.

As there has been no material non-Opec growth outside North America for several years, the combination of less new project production and less sustaining capital will most likely lead to significant negative production surprises. Opec investment levels will also be impacted, so we expect further production disappointment from Nigeria, Libya and Venezuela. In summary, even if Opec makes no market adjustments at the June meeting, we expect falling production to balance the market, resulting in inventory draws in the second half of the year. This leads us to an oil price forecast that is ahead of the current forward curve. After averaging $55/bl in the first quarter, we anticipate Brent crude prices rising to average $70/bl for full-year 2015 and $90/bl in 2016.

The information discusses general market activity or industry trends and should not be construed as investment advice. The economic and market forecasts presented herein reflect our judgment as at the date shown and are subject to change without notice. These forecasts will be affected by changes in interest rates, general market conditions and other political, social and economic developments. There can be no assurance that these forecasts will be achieved. Past performance should not be taken as a guide to the future. Investors are not certain to make profits; losses may be made.All the information contained in this communication is believed to be reliable but may be inaccurate or incomplete. Any opinions stated are honestly held but are not guaranteed and should not be relied upon. This communication is provided for general information only. It is not an invitation to make an investment nor does it constitute an offer for sale. This is not a buy, sell or hold recommendation for any particular investment.This document has not been reviewed by the Securities and Futures Commission (SFC). Issuer: Investec Asset Management Hong Kong Limited.

Pictet Yves Kramer and Frédéric Dupraz, CFA Senior Investment Managers

Security investment opportunities arise from global urbanization

Populations in cities are growing at rapid rates under global urbanization, creating the need for personal and infrastructure security. Meanwhile, the breakneck development of digital technology calls for increasing governments’ attention on enhancing cybersecurity.

Pictet Assets Management believes the security theme is an important pillar in the development of a Smart City, and will bring promising investment opportunities going forward.

Although Internet and digital innovation has made our lives more convenient, there is also an increasing level of vulnerability to cybercrimes. With cybercrimes costing the global economy USD445bn every year, it is clear as to why internet security has quickly become a priority for international authorities.

How fast is the urban population growing? Imagine with 1 million people migrating to cities per week, we would expect around 75% of the world’s population to be living in cities by 2050, as shown by statistics.

Growing urban populations will create further demand for transportation systems and safety technology, such as CCTV monitoring systems and vehicle safety gadgets. In Hong Kong, for example, surveillance cameras are widely used to provide evidence for traffic accidents for professional and average drivers alike.

Without a sound security ecosystem, cities cannot realistically hope to attract the businesses and workers they need to develop. In efforts to make their countries smarter and safer, governments around the world are tightening their regulations on food and product safety. Household products, ranging from toys to kitchenware, are subject to lab tests and inspections. In addition, personal security and protection services, as well as environment protection related industries – such as wastewater treatment and waste management – are likely to flourish.

The information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not indicative of future results. Before making investment decision, investors should refer the offering documents. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. If in doubt, please seek independent advice. This material has not been reviewed by the Securities and Futures Commission. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

Charles WhallTom Nelson Frédéric DuprazYves Kramer

Dr. Vincent Yeung has been working in the

medical industry for more than 30 years.

What made you choose Swiss Privilege to look after your wealth management needs?

為何選擇瑞士尊貴理財照顧您的理財需要？

I used to adore playing the stock market and investing in shares, but the constant ups and downs left me no gain but tense instead!

As I have many different outside interests such as windsurfing, photography, hiking and driving, I’ve always found it hard to balance my hectic professional and personal lives. Throw in my financial management duties and I used to be left with little time for my hobbies. When I met Christie from Swiss Privilege, she quickly helped me to optimize my investment objectives and risk appetite level. By thoroughly understanding my needs, she continues to provide me with tailor-made wealth management services. Free from pressure, I can now focus on my job while fully enjoying my hobbies outside work!

我以往鍾情股票市場買賣和投資股票，但市場恆常的波動令人十分

焦慮！

正因為我有很多不同興趣，例如滑浪風帆、攝影、遠足和駕駛，我

時常有感難以在繁忙的醫護工作和私人生活間取得平衡。加上還要

理財，更使我分身乏術，投放興趣的時間買少見少。直至我認識到

瑞士尊貴理財的Christie，她很快便助我認清投資目標和改善我的投資

風險承受能力。Christie用心了解我的需要，為我提供度身訂造的財

富管理服務。現在我可以安枕無憂，專注於我的事業同時，盡情享受

工餘的嗜好！

How would you describe your relationship with

Christie?

您怎樣形容您和Christie的關係?

Christie and I maintain a close partnership! She regularly reviews my investment portfolio, feeding me back useful financial tips and preventing me from taking unnecessary risks! Having become good friends over the years, we also share many common topics and swap tips on how to stay young, healthy and pretty with each other.

Christie和我保持著緊密的夥伴關係！她會定期檢討我的投資組合，為

我提供有用的財務心得，讓我避免承受不必要的風險！這些年來，我們

已成為好友，彼此常在保持年青、健康美麗上交換心得。

What is your most memorable experience with our

Club Suisse event?

在瑞士尊貴理財的活動中，哪一個給您最深刻的印象？

I love Club Suisse events! Attending investor seminars and financial luncheons helps me to better understand my own investments. I’m also greatly impressed by the thoughtful little extras with which Swiss Privilege further enhances and enriches my lifestyle. I don’t think I’ll ever forget the great time I had at Swiss Privilege’s Audi Experience in Zuhai!

我非常享受參與瑞士尊貴理財舉辦的活動！出席投資講座和財經

午宴，讓我更了解自己的投資。瑞士尊貴理財貼心的安排，為我的

生活添上姿采。於珠海舉辦的奧迪汽車駕駛日的愉快體驗，更令我

一直回味至今！

23

Exclusive Client Interview

Providing professional wealth management service is not the only thing Swiss Privilege is good at. We also take pride in our exclusive lifestyle activities which help to enrich our clients' lives. We are honoured to have three prestigious clients to share their experiences with us.

Enriching your life

Mr. Ronald Lam is a shareholder of a top Dutch

brand catering group and his wife, Mrs. Carman Lam, runs

a leading European women’s fashion export enterprise.

What made you choose Swiss Privilege to look after your wealth management needs?

為何選擇瑞士尊貴理財照顧您的理財需要？

I am so grateful to have met Swiss Privilege’s Ms. Sandy Tai and to have had her team provide us with such excellent wealth management solutions these past few years. Sandy and her colleagues’ professionalism and all round expertise have made my investment journey so much easier. Best of all, with her help in bringing my financial goals closer, I can have more time to enjoy with my family!

我很高興認識到瑞士尊貴理財的Sandy，她的團隊在過去幾年間為

我們提供出色的財富管理方案。Sandy及她的團隊的專業態度和財務

策劃的豐富知識，令我的投資生活變得更輕鬆。最令我快樂的是在她

的協助下，讓我能更快捷地達到自己的投資理財目標，從而有更多

時間與家人享受天倫之樂！

How would you describe your relationship with Sandy?

您會怎樣形容自己和Sandy的關係？

Of all the many possible financial advisors open to me, Sandy is the one I trust the most. In addition to being my family’s appointed wealth management partner, Sandy and her team have become good friends with us. We all share similar interests and lifestyle tastes. Because of the unwavering trust we have built up, I have also introduced Sandy to my nephew, who is the CEO of my catering group has subsequently become a Swiss Privilege Black Diamond member.

在眾多我接觸過的財務顧問中，Sandy是我最信任的一位。她和其

投資理財團隊除了是我們一家「御用」的財富管理夥伴外，更因我們在

不同的活動上志趣相投而成為好友。因著對Sandy的深厚信任，我便

把她介紹給我的姪兒─同為我的飲食集團的行政總監認識，他更成為

瑞士尊貴理財的Black Diamond會員。

What is your most memorable experience with Sandy

during a Club Suisse event?

那一個Club Suisse的活動令您印象最深刻？

My wife and I have participated in many Club Suisse events and banquets over the years. Exclusive trips to East Africa and the South of France remain amongst our most cherished memories of these events. Each journey was filled with care and love and literally packed with unexpected surprises every day! Such evocative experiences ensure both trips have been once-in-a-lifetime treats that no ordinary travel tour can ever come close to matching!

這些年來，我和太太參加過很多Club Suisse的活動和宴會。在眾多活

動中，最令我難忘莫過於東非和南法之旅。旅程中，我們每天都得到

貼心照顧和驚喜！這兩次如此深刻的旅程，肯定是人生中可一不可再

的珍貴體驗，絕非一般旅行團所能媲美！

24

Exclusive Client Interview

Dr. Leung Yiu Lam – Urology specialist

Being a doctor for 25 years, Dr. Leung has recently started undertaking more voluntary work. In addition to offering free treatment and free consultations to needy people, he is also totally committed to promoting public awareness of urological diseases. Dr. Leung was a prime mover behind the establishment of the Hong Kong Society of Practising Urologists (HKSPU) in 2014. HKSPU’s ultimate aim is to enhance Hongkongers’ knowledge of the body’s urinary system via newspaper articles, radio and TV interviews, plus the conducting of academic surveys in leading local universities, etc.

What made you choose Swiss Privilege to look after your wealth management needs?

為何選擇瑞士尊貴理財照顧您的理財需要？

I first met Ms. Eva Lee of Swiss Privilege, at an event a few years back. Although Eva and I had no business relationship at that time, she won me over by regularly updating me about upcoming market trends and other important information. I was so impressed with Eva’s professionalism, dedication to work and all round trustworthiness, I asked her to oversee my financial management and accumulation strategies – a role she continues carrying out to this day.

With professionalism, trust and dedication, Eva also assists other doctor friends of mine with their wealth management needs and they are all delighted with her efforts on their behalf.

我在多年前的一個活動認識到瑞士尊貴理財的Eva。雖然 Eva和我並

沒有工作上的聯繫，但她樂意定期和我分享未來的市場走勢和其他

重要資訊，完全切合我的需要。她的專業和對工作的熱誠，使我

對她的信任有增無減，因此我一直委託Eva為我管理財務和制訂長遠

策略。

憑藉專業、可靠和熱誠，Eva亦協助我其他的醫生朋友處理他們在

財務管理上的需要，他們全都衷心欣賞Eva所付出的努力。

How would you describe your relationship with Eva?

您怎樣形容您和 Eva 的關係？

As a doctor, I work long hours consulting, performing surgeries, and even treating emergency patients in hospital late at night. That’s why I need people like Eva to help me safeguard and grow my accumulated wealth to pass on to my next generation.

Thanks to Eva’s professional financial management expertise, I am not only free to focus on my medical career, but can also spend more time on voluntary work. Both helping others less fortunate than myself and promoting public awareness of urological diseases give my life more meaning!

作為醫生，我經常捱更抵夜，長時間在醫院中做諮詢、施手術，甚至

於晚間治療急症病患，所以工作後的空餘時間並不多。因此我

需要好像Eva一樣的人，為我長遠計劃我的財富保障和增值，以承傳

下一代。

全賴Eva的專業財務管理，我不但可專注全力做好醫務工作，亦可

騰出更多時間從事慈善服務。幫助社會上不幸的一群和推動公眾對

泌尿疾病的認知，令我的人生變得更豐盛！

What is your most memorable experience with our

Club Suisse event?

那一個Club Suisse的活動令您印象最深刻？

My wife, is also a doctor. Because we are both inevitably very busy, we have only been able to join Swiss Privilege’s Movie Day once although Eva always informs us of the many Club Suisse events. I really appreciate the thoughtful way Swiss Privilege caters for its different clients’ lifestyles.

我太太也是一位醫生，因為彼此都總是為工作而忙碌，所以即使Eva

經常通知我們很多有關瑞士尊貴理財所舉辦的活動，但我們都只參加

過一次電影放映日。其實我十分欣賞瑞士尊重理財這份連客戶生活品

味也照顧周到的心思。

25

Exclusive Client Interview

Terms & Conditions:

1. Club Suisse members must present their membership cards in order to enjoy the above offer.2. The above offer is valid from now til 31 August, 2015.3. This promotion cannot be used in conjunction with other promotion offers.4. No extra discount offer for promotional items which is on 60% off or lower.5. This offer can only be used at ST. JOHN located at Landmark and Lee Garden Causeway Bay. 6. In the event of a dispute, ST. JOHN reserves the right to make the final decision.

About St. JohnSt. John is an American luxury house that was founded in 1962. A fascinating coming together of craft and couture based on the premise of a simple, yet elegant knit dress. Over the years, the brand has evolved, but the basis for the collection remains the same today as it did from the very start — effortless, alluring and refined clothing that appeals to women all over the world. Unique American Design with a core in signature innovative knits.

26

Seasonal Offers

ELEMIS is the pioneering luxury British spa and skincare brand with professional spa-therapies and products available to over 1600 luxurious spas and salons around the globe. Favoured by as many as 6.5 million spa-goers each year ELEMIS has carefully crafted the relationship between natural ingredients and scientific advances. The successful combination of powerful natural ingredients, cutting-edge formulation technology and proven clinical trials has enabled ELEMIS to bring to market some of the most influential anti-ageing homecare products and professional spa-therapies the beauty industry has ever seen. ELEMIS treatments and products loved by British celebrities and Hollywood Stars and have also received over 190 international awards.

Terms & Conditions:

1. The above offers are valid from now till 31 August, 2015.2. Club Suisse members must present their membership cards in order to enjoy the above offer.3. The above offers are available at ELEMIS counter & ELEMIS Treatment Space, 10/10 Space TST.4. Please call ELEMIS counter & ELEMIS Treatment Space, 10/10 Space TST to make an appointment for ELEMIS SKINLAB 3D Skin Consultation before your visit.5. The above offers cannot be used in conjunction with any other promotion or discount.6. In the event of a dispute, ELEMIS reserves the right to make the final decision.

ELEMIS counter:Harvey Nichols, Pacific Place, Admiralty, Hong KongT: 2918 1543

ELEMIS Treatment Space, 10/10 Space TST:LG29A, SOGO, 20 Nathan Road, Tsim Sha TsuiT: 3691 8791

27

Seasonal Offers

Hero ingredient for Pro-Collagen range - Padina Pavonica

Terms：

1. The above rates are per room per night, rates are quoted in Renminbi(RMB) and inclusive 10% service charge and 5% government tax, and 1.5% local price regulation fund.2. Extra bed charge with breakfast is RMB 500 per bed per night, inclusive 10% service charge and 5% government tax.3. Check-in time is 15:00 and check-out time is 12:00.4. Late check-out from 12:00-18:00 will be charged 50%, and from 18:00 onwards will be charged 100% of the Best Available Rate of the day.5. Cancellations made 3 days prior to arrival, including no-show and early departure will be subject to a 1-night charge.6. Black out day: June 20-22, 2015; September 26-28, 2015; Sep 30-Oct 06, 2015.7. All the bookings are subject to hotel room availability.8. Banyan Tree Yanghsuo reserves the right to amend the rates, terms and conditions stated above without prior notice.

Located in Yangshuo, Guangxi Province, in the southern part of China, Banyan Tree Yangshuo is a one–hour drive from Guilin Lijiang Jiang International Airport and 15 minutes from the city of Yangshuo.

An illustration of understated elegance–resort buildings and the 142 suites and villas feature local architectural and design hallmarks. Latticed windows, ink wash paintings, darkwoods, bamboo, marble mosaics, earth tones, artwork and classic Chinese furnishings create an authentic sense of Place, all suites and villa have remarkable views of the enchanting mountains and mesmerizing Li River .

Far away from the Humdrum of city life, the modern resort offers premium resort living, exceptional mountain views and idyllic riverscapes. A stay at Banyan Tree Yangshuo will transport you into a realm of simplicity and romance.

High Season 旺季 Shoulder Season 平季 Low Season 淡季

Jul 01–Aug 29 20152015年7月1日至8月29日

Jun 01–30 20152015年6月1日至30日 Aug 30–Nov 14 2015

2015年8月30日至11月14日

Nov 15–Dec 31 20152015年11月15日至12月31日

Room Type 房間類型Weekend 週末

（Fri & Sat 週五及週六）

Weekday 周日Weekend 週末

（Fri & Sat 週五及週六）

Weekday 周日Weekend 週末

（Fri & Sat 週五及週六）

Weekday 周日

Garden View Suite 園景套房 RMB2,656 RMB2,388 RMB2,388 RMB2,120 RMB2,120 RMB1,794Mountain View Suite 山景套房 RMB2,854 RMB2,586 RMB2,586 RMB2,318 RMB2,318 RMB1,992

One Bedroom Garden Villa 單臥房花園別墅 RMB3,250 RMB2,982 RMB2,982 RMB2,714 RMB2,714 RMB2,388One Bedroom Riverside Villa 單臥房水岸別墅 RMB3,577

With a minimum stay of 2 consecutive nights and enjoy the following inclusions for two persons: 連續入住2晚可享受以下優惠 :

• Daily buffet breakfast for 2 persons 每日雙人自助早餐一次• Complimentary Afternoon Tea for 2 persons per stay 雙人下午茶• Complimentary Bamboo raft for 2 persons per stary and free bicycle renting 一次雙人竹筏漂遊及免費自行車租用 • Complimentary access to the outdoor pool and fitness club 免費使用室外泳池、健身房• Complimentary wireless internet access 免費使用無線網路

Zhengdong street No 168 Fuli Town,Yangshuo,Guangxi Province, People’s Republic of China

www.banyantree.com

28

Seasonal Offers

SWISS PRIVILEGE

15/F Luk Kwok Centre72 Gloucester RoadWanchai, Hong KongTel: 2864 5600www.swissprivilege.com

A member of the AXA Group