equity strategy

www.morganmarkets.com

Europe Equity Research10 April 2012

Equity StrategyStay cautious near-term; Q1 results unlikely to restore confidence

European Equity Strategy

Mislav Matejka, CFA AC

(44-20) 7325-5242

[email protected]

Emmanuel Cau, CFA

(44-20) 7325-1684

[email protected]

Siddhartha Singh

(44-20) 7155-6106

[email protected]

J.P. Morgan Securities Ltd.

See page 24 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

We have been very bullish on equities at the start of the year, but have turned cautious a few weeks back. The key drivers of the more bearish stance are tracking. In particular, our call for tactical risk reduction wasbased on the expectation of a loss of macro momentum. Since, the JPM Global composite PMI for March has slipped. The new orders to inventories ratios were sequentially lower in all the key regions; US, EMU and China.This points to further weakening ahead. The roll-over in macro momentum is calling for reduced allocation to Cyclical sectors.

Second, the US EASI is on the verge of entering negative territory. Out of the last 6 times when US EASI went below zero the best return that S&P500 managed over the next 3 months was only 0.7%. On 5 out of these 6 occasions the market was down. Cyclicals are the clear underperformers when EASI is falling.

Additional concerns we are monitoring are the renewed stress in peripheral bonds, elevated gasoline price and Chinese growth uncertainty. What would make us turn bullish again? Reacceleration in macro momentum for one, but this is not likely to happen quickly. Aggressive policy response by Chinese and/or US/Euro officials could be another positive signal, but again this is not likely immediately. Recall that in ’08/’09 China delivered fiscal stimulus worth 15% of GDP, compared to nearly nothing now. Euro policymakers have the tools to arrest the renewed rise in peripheral yields in our view, but could end up being reactive, rather than proactive. Any prospect of QE3 would likely first see much weaker economy and markets.

Q1 reporting season is upon us and is seen by many as a potential catalyst for improving market sentiment. We are not sure. We don’t think that it is likely to disappoint materially as the hurdle rate is low. Consensus is looking for 3.0% yoy EPS growth in the US and a 4.6% fall in Europe. But also we believe it is unlikely to provide a significant boost to the market. Weaker topline growth and stalling macro momentum argue against strong improvement in corporate guidances.

EPS revisions ratio did stabilise most recently. This is the “2nd leg” which we expect to support the market in 2H. However it is unlikely to decisively break higher in the near term as macro concerns will weigh on the prospect of further EPS upgrades.

Despite most recent weakness, Cyclicals are still outperforming Defensives by 10% ytd and are sitting on big P/E re-rating. This rerating might reverse further if earnings fail to surprise on the upside. Sectors which had the biggest P/E expansion ytd and also trade at a premium to their LT average relative P/Es are Transport, Durables, Discretionary Retailing, Chemicals and Hotels&Leisure. On the flipside, Food Retailing, Telecoms, Pharmaand Energy are at discount and had the smallest rerating this year.

On the last 6 occasions that US EASI turned negative market struggled

Source: Bloomberg

Stalling global PMIs call for further rotation out of Cyclicals

Source: Datastream, MSCI

EPS revisions stabilized, but unlikely to break higher in the near term

Source: IBES

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On the last 6 occasions that US EASI turned negative market struggled

Source: Bloomberg

Stalling global PMIs call for further rotation out of Cyclicals


EPS revisions stabilized, but unlikely to break higher in the near term

Source: IBES

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Mislav Matejka, CFA(44-20) [email protected]

Table of ContentsStay cautious near-term; Q1 results unlikely to restore confidence ................................................................................3

Appendix – European reporting calendar for Q1’12............12

European Equity Strategy Key Calls and Drivers ................15

Top Picks ................................................................................16

Technical Indicators...............................................................17

Performance ...........................................................................18

Earnings ..................................................................................19

Valuations ...............................................................................20

Economic, Interest Rate and Exchange Rate Outlook ........22

Sector, Regional and Asset Class Allocations ....................23

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Stay cautious near-term; Q1 results unlikely to restore confidence

We have recently tactically reduced our cyclical exposure (see "Stalling momentum calls for reduced beta, but big picture has not changed", 26th March). While we don't think that the upcycle is over, we expect the near-term macro momentum to be mixed following the improvement over the past 4-5 months. This is callingfor reduced risk exposure and a more balanced sector allocation in our view.

Stall in macro momentum signals a change in sector leadership

Figure 1: Global composite PMI

Source: J.P. Morgan

Our Global composite PMI moved lower in March, to 54.6 from 55.4 in February. While this level is consistent with 3% global growth, the forward looking components were mixed, with new orders to inventories falling.

Table 1: New orders to inventories ratios of key regional manufacturing PMIs

Global US EMU UK China*Nov 11 1.01 1.18 0.89 1.02 0.89Dec 11 1.04 1.20 0.96 1.05 0.98Jan 12 1.08 1.16 1.03 1.09 1.07Feb 12 1.07 1.11 1.02 1.08 1.04Mar 12 1.05 1.09 0.98 1.13 0.96

Source: Datastream, Bloomberg, *Markit PMI

We note that the softening trend in new orders to inventories is broad based across the main regions.

Figure 2: Cyclicals/Defensives relative performance and Global composite PMI

Source: MSCI, Datastream, J.P. Morgan

If the Global PMI is flat or down over the next few months, Cyclicals will continue to struggle. This is especially after their strong outperformance of the past few months.

Figure 3: European Cyclicals vs Defensives relative performance


Cyclicals have already stopped outperforming Defensives in the past few weeks and have fallen by 6% in absolute terms since their peak on 16th March.

EASI approaching zero points to unattractive near-term risk-reward for stocks

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https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-814706-0.pdf


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Figure 4: US EASI

Source: Bloomberg

The US EASI index is currently at 4.6, fast approaching zero, a level which was typically followed by poor equity performance.

Table 2: S&P500 performance after US EASI went below zero

DateEASI<0

SPX +1m

SPX +3m

+3m max fall

+3m max rise

20-Feb-03 7.0% 10.0% -4.3% 13.1%18-Feb-04 -2.6% -4.9% -5.9% 0.4%2-Jul-04 -2.3% -0.9% -5.5% 0.5%20-Jan-05 2.2% -1.9% -3.2% 4.2%15-Jun-05 1.8% 2.8% -1.3% 3.2%27-Jan-06 -0.2% 1.7% -2.3% 2.2%31-Jul-06 2.2% 8.3% -0.8% 8.8%13-Mar-07 5.1% 9.4% 0.7% 11.7%18-Sep-07 1.4% -2.1% -7.4% 3.0%11-Jan-08 -3.7% -2.9% -9.1% 1.1%6-Oct-08 -4.8% -11.8% -28.8% 0.0%13-Nov-09 1.3% -1.6% -3.4% 5.2%11-Jun-10 0.3% 0.7% -6.3% 3.3%2-May-11 -3.4% -4.4% -7.9% 0.0%Average 0.3% 0.2% -6.1% 4.1%Median 0.8% -1.3% -4.9% 3.1%Hit Ratio 57.1% 42.9%

Source: Bloomberg

During Q1, our view was that EASI peaking, but remaining positive, was not a reason to fade the rally, as market typically continues to perform well post the peak. However, the risk-reward for stocks becomes less compelling when the EASI turns outright negative. The market was down on 5 out of the last 6 occasions whenEASI went below zero.

During these 6 periods, the maximum move up in the market over the next 3 months after EASI went below zero was 5% while the maximum fall was 29%, pointing to asymmetric risk-reward.

Table 3: Cyclicals / Defensives relative performance after US EASI went below zero

DateEASI<0

Cyc vs Def +1m

Cyc vs Def +3m

+3m min Cyc O/P

+3m max Cyc O/P

20-Feb-03 2.7% -9.1% -9.1% 6.3%18-Feb-04 -2.0% -3.6% -4.6% 0.5%2-Jul-04 -1.0% -0.9% -5.7% 1.3%20-Jan-05 -0.2% -5.7% -6.8% 1.2%15-Jun-05 1.0% -0.8% -1.6% 2.3%27-Jan-06 -1.3% 5.5% -2.2% 5.7%31-Jul-06 0.5% 5.9% -1.3% 8.3%13-Mar-07 -1.2% 1.5% -2.1% 1.9%18-Sep-07 1.6% -5.9% -6.9% 1.7%11-Jan-08 5.3% 8.8% -0.6% 10.1%6-Oct-08 -1.6% -5.5% -13.3% 3.6%13-Nov-09 -2.4% -2.5% -4.4% 1.6%11-Jun-10 -1.5% -1.9% -5.0% 0.9%2-May-11 -3.8% -0.9% -6.2% 0.4%Average -0.3% -1.1% -5.0% 3.3%Median -1.1% -1.4% -4.8% 1.8%Hit Ratio 35.7% 28.6%

Source: Bloomberg, MSCI, Datastream

The same applies to sector leadership. Cyclicals tended to underperform Defensives in the months after EASI turned negative.

Renewed stress in the periphery is an additional headwind, but circuit-breakers are available

Figure 5: Ytd move in Spanish and Italian 10Y bond yields

Source: Datastream

The recent spike in Spanish and Italian bond yields is another concern, as it is reminiscent of last summer. A number of factors can explain the recent increase in peripheral stress: exhaustion of the impact of the 3YLTRO, Spanish fiscal slippage, end of the SMP, and upcoming French and Greek elections.

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Periphery continues to face a long and painful fiscal adjustment which is likely to keep bond markets jittery for a foreseeable future. However, we believe that a number of circuit breakers are available at present to avoid a significant worsening of the funding situation in the periphery.

Table 4: Peripheral Eurozone funding needs for the remainder of the year

Rest of 2012Gross conv.

Issuance, € BnNet conv. Issuance,

€ BnAustria 14 4Belgium 13 -2Finland 11 5France 129 59Germany 135 22Greece 0 0Ireland 0 0Italy 114 45Netherlands 39 23Portugal 0 -10Spain 62 22Total 516 169

Source: J.P. Morgan Fixed Income Research

According to our colleagues from the Global Asset Allocation team (see “Flow and Liquidity”, dated 30th March), less than €50bn out of the €320bn injected into the EMU banking system via the February LTRO havebeen deployed so far. They estimate that Spanish and Italian banks borrowed around €80bn each in the 2nd LTRO, which would translate to around €100bn of domestic government debt purchases, assuming a 60% usage ratio. This is more than enough to absorb the net government debt issuance of the two countries for the remainder of 2012, at €22bn and €45bn for Spain and Italy, respectively. However, this would capture only 19% of the refinancing of maturing bonds.

Figure 6: ECB SMP purchases of Euro debt

Source: ECB

Also, we believe that if Spanish and Italian yields continue to rise, the ECB will likely reactivate the SMP to avoid contagion to other sovereign and bank funding markets.

US labour market holding up limits downside risksthough

Figure 7: US jobless claims and recessions

Source: BLS, NBER

While the moderation in the pace of manufacturing output growth is calling for a tactical beta reduction, we advise against positioning for a more pronounced macro slowdown over the medium term. The US economy is continuing to show signs of a broadening recovery, particularly evident in the labor market.

Figure 8: Global PMI and jobless claims

J.P. Morgan, Bloomberg

We note that the 10-15% S&P500 correction last summer occurred against the backdrop of a falling Global PMI and elevated jobless claims, above 400k. So far claims are remaining near the lows of the current upcycle.

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Q1 earnings season preview

Figure 9: Q1 reporting season calendar

Source: Bloomberg

Many believe that the Q1 earnings reporting season will bring positive newsflow and drive a second leg of EPS upgrades and market upside. The reporting season is kicking-off today in the US with Alcoa and the bulk of results will be announced next week. As usual, it will start two weeks later in Europe.

While we think earnings are unlikely to materially disappoint, we doubt they will provide a significant boostto the market.

Low hurdle rate reduces the likelihood of broad based disappointments

Figure 10: S&P500 yoy EPS growth

Source: Thomson Reuters

In the US consensus is looking for 3.0% yoy S&P500 EPS growth in Q1, the lowest growth rate since the start

of the current upcycle. This is half the growth rate (5.5%)expected at the start of the year.

Figure 11: S&P500 QoQ EPS vs US GDP growth

Source: Thomson Reuters, Bloomberg

Sequentially S&P500 EPS is expected to fall 2.1% in Q1.

Table 5: S&P500 level 1 sectoral Q1 EPS growth expectations

Q1'12e EPS%q/q %y/y

Energy 11.4% 1.1%Materials 44.9% -15.4%Industrials -11.8% 10.6%Discretionary -21.9% 6.5%Staples -6.9% 2.2%HealthCare 3.9% 0.6%Financials 8.6% 5.6%Technology -17.5% 6.3%Telecom n.m. -14.1%Utilities 41.1% -7.8%S&P 500 -2.1% 3.0%S&P 500 Ex-Financials -2.9% 1.1%


Sectorwise, Materials are expected to show highest %qoq earnings growth due to base effects from Q4’11. On the other hand, Industrials, Discretionary and Tech sector earnings are expected to show outright contraction vs Q4.

Table 6: MSCI Europe level 1 sectoral Q1 EPS growth expectations

Q1'12e EPS%q/q %y/y

Energy -10.4% 8.9%Materials 57.8% -23.9%Industrials -14.2% 0.6%Discretionary 3.4% 14.0%Staples -42.6% 9.0%HealthCare 7.4% -1.5%Financials 46.1% -10.8%Technology -44.9% -41.8%Telecom 17.4% -10.9%Utilities 16.7% -13.0%MSCI Europe 5.3% -4.6%MSCI Europe ex-Financials -3.3% -2.1%

Source: Datastream, MSCI, IBES

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Consensus is looking for MSCI Europe EPS to fall 4.6%yoy but to be up 5.3% qoq. Stripping out financials, the yoy and qoq growth rates are -2.1% and -3.3%,respectively.

Preannouncements not as bad as for Q4

Figure 12: Negative to Positive earnings pre-announcements for S&P500


So far, ahead of the current reporting season, the earnings newsflow looks better than into the Q4 reporting season. The ratio of negative to positive pre-announcements for Q1 stands at 2.8x, below 3.6x recorded for Q4.

Table 7: S&P500 performance following different levels of Negative to Positive EPS preannouncements

QuartileN/P ratio(median)

Median S&P500

Perf +1m

Average S&P500

Perf +1m Hit Ratio*Q1 3.6 2.7% 2.3% 70%

Q2 2.3 3.0% 2.5% 82%

Q3 2.0 0.3% -1.6% 60%Q4 1.4 -2.6% -1.2% 40%

Source: Thomson Reuters, Bloomberg, *% of time positive performance

While 2.8x negative to positive pre-announcements is high in a historical context, it actually did not lead to market fall. As we showed before (see "Q4 reporting -Poor preannouncements, but hurdle rate is low", dated 16th January), stocks tended to perform well during the quarters that started with a high N/P preannouncements ratio.

Global macro activity improved in Q1, but sub-trend GDP growth points to mixed top-line delivery.

Table 8: Summary of the key global macro data - Q1 vs Q4

Q1'12 vs Q4'11

Q4'11 vs Q3'11

Q3'11 vs Q2'11

Leading IndicatorsISM 1.8% 0.4% -7.8%IFO 2.3% -2.6% -3.9%Euro PMI Manufacturing 4.4% -5.1% -10.2%UK PMI Manufacturing 6.5% -3.3% -4.9%China PMI Manufacturing 0.1% -1.2% -2.8%Real GDP (%qoq, saar)US 1.5% 3.0% 1.8%Euro 0.0% -1.3% 0.6%UK 2.0% -1.2% 2.3%EM 5.7% 4.1% 4.9%China 7.2% 9.2% 8.4%IP (%qoq, saar)US 9.0% 5.1% 4.9%Euro -1.0% -6.7% 1.6%UK -1.0% -5.3% -0.1%EM 10.3% 1.4% 2.9%Retail Sales (%qoq, saar)US 5.5% 7.6% 4.6%Euro -0.8% -3.3% 1.3%UK 1.2% 4.4% -0.9%China -4.6% 22.4% 22.5%Car Sales (%qoq, saar)US 8.5% 8.0% 2.8%Euro -5.1% 1.2% 0.3%UK 1.2% -0.9% -2.0%China 0.8% 4.2% 10.8%

Source: Bloomberg, J.P. Morgan forecasts for Q1 GDP, IP, Retail sales and Auto sales

After the sharp activity slowdown of Q4, the macromomentum has turned up in Q1 with most indicatorsshowing sequential improvement during the quarter. Our economists expect Global real GDP growth to have accelerated to 2.4%qoq in Q1 from 1.6% in Q4.

Figure 13: MSCI Europe yoy EPS growth vs IFO


In Europe, the IFO, which is a good indicator of the EPS growth momentum, was up 2.3% in Q1 after 3 quarters in a row of sequential decline. However, it is still down 5% yoy, pointing to negative EPS growth.

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Figure 14: US ISM vs S&P500 quarterly EPS surprises

Source: Datastream, Thomson Reuters

The ISM, which was up in Q1 compared to Q4 suggests there is potential for modest positive EPS surprises, in line with the past few reporting seasons. However, it seems unlikely that earnings will come out significantly above expectations.

Figure 15: S&P500 Sales Growth (ex-Financials) vs GDP Growth

Source: Thomson Reuters, NIPA

Both the US and European GDP have been growing sub-trend in Q1, which suggests top-line delivery is likely to be mixed at best.

Table 9: S&P 500 Level 1 sectoral sales growth expectations

Q1'12e Sales%qoq %yoy

Energy -3.0% 0.9%Materials 6.8% 5.0%Industrials -3.8% 5.7%Discretionary -11.4% 5.7%Staples -5.1% 5.7%HealthCare -2.2% 2.7%Financials 2.7% 0.7%Technology -7.8% 6.7%Telecom -0.7% 3.9%Utilities 16.6% 9.8%

S&P 500 -3.4% 4.1%S&P 500 ex-Financials -4.2% 4.6%


We note that consensus is already looking for sequential revenue fall in the US for most sectors.

Table 10: MSCI Europe Level 1 sectoral sales growth expectations

Q1'12e Sales%q/q %y/y

Energy -12.7% 2.9%Materials 0.6% 2.4%Industrials -15.3% 6.0%Discretionary -6.0% 23.8%Staples 8.3% 3.7%HealthCare -2.9% 8.4%Financials 5.4% 9.6%Technology -18.7% -13.3%Telecom -5.1% 0.6%Utilities -16.8% 4.7%MSCI Europe -9.4% 3.8%MSCI Europe ex-Financials -11.2% 3.0%


Also in Europe consensus expects revenue fall ex-Financials.

Our constructive margin call over medium term remains.

Figure 16: Quarterly EBIT margins for Eurozone

Source: Worlscope

While top-line growth is likely to be soft at the overall market level in Q1, we think that European profit margins could actually stabilize after their weakness of H2’11.

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Figure 17: EBIT margins expectations for MSCI Europe ex-Financials

Source: IBES

Consensus EBIT margins estimates for Europe have already been reduced significantly since the start of last year. IBES is looking for a 50bp fall in ‘12e margins vs '10, compared to expectations of a 110bp increase one year ago.

At the same time, the destocking that put pressure on margins in Q4 is over, which points to stronger pricing power and firmer margins in Q1.

Figure 18: J.P. Morgan global commodity price index

Source: J.P. Morgan

Also commodity prices tend to impact margins with the lag. We believe that Q1 margins should also benefit from the large drop in commodity prices during H2'11.

US profit margins defying gravity supportive of further medium term equity upside

Figure 19: US NIPA corporate profit margins and recessions

Source: BEA, NBER

In the US, profit margins have been more resilient than in Europe so far and were flat in Q4, near their historical highs.

Table 11: S&P500 performance after the peak in profit margins to the peak of the market

Profit Margins Peak S&P500 Peak S&P500 Perf

Dec 48 Jun 48 n/mDec 50 Jan 53 28%Jun 55 Aug 56 19%Jun 59 Jan 60 3%Mar 66 Nov 68 19%Mar 73 Jan 73 n/mSep 77 Feb 80 20%Mar 81 Nov 80 n/mDec 88 Jul 90 32%Sep 97 Sep 00 55%Sep 06 Oct 07 16%Average 24%Median 19%

Source: Bloomberg

We believe the US margins upcycle is not over, as we expect labour costs to remain low given the still high unemployment rate (see “Two medium term arguments for a shift into equities", 13th February). However, even if one believes that margins have already peaked in Q3'11 it doesn't mean the equity upcycle is exhausted. Historically, profit margins lead the peaks in economic activity by 7 quarters on average and the equity market peaks by 5 quarters. Following the peak in margins, the S&P500 tended to go up another 24% on average before peaking.

EPS revisions momentum back in positive territory, but unlikely to decisively break higher in the near term.

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340

350

Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11 Jan 12 Mar 12

J.P. Morgan Commodity Index H1'11 average H2'11 average

6%

7%

8%

9%

10%

11%

12%

13%

14%

47 50 53 56 59 62 65 68 71 74 77 80 83 86 89 92 95 98 01 04 07 10

Recessions US Corporate profits as a % of GDP



10



Figure 20: +ve to -ve EPS revisions for MSCI Europe vs Global composite PMI

Source: IBES

One of our calls of the past few months was the expectation that a turn in EPS revisions would follow the initial phase of the rally which was driven by multiple expansion (see “First leg – P/E rerating, next to be EPS upgrades”, 12th March).

As expected, the ratio of EPS upgrades to downgrades has moved into positive territory recently. This is consistent with the stabilization in global activity seen during Q1.

Figure 21: EPS revisions momentum and Eurozone EASI

Source: Bloomberg, IBES

However, if the macro momentum were to stall over the next few months, it is likely that the pace of EPS upgrades will slow.

Figure 22: Cyclicals vs Defensives +ve to -ve EPS revisions

Source: IBES

Cyclicals have enjoyed the bulk of positive EPS revisionsso far, but the momentum seems to be stabilizing now relative to Defensives.

Where to look for earnings surprises?

Figure 23: Ytd change in ‘12e P/E

Source: IBES

Cyclical sectors have enjoyed significant P/E multiple expansion ytd, as the move in price was significantly higher than the change in EPS estimates.

35

40

45

50

55

60

65

-80%

-60%

-40%

-20%

0%

20%

40%

99 00 01 02 03 04 05 06 07 08 09 10 11 12

MSCI Europe +v e to -v e EPS revisions Global composite PMI (rhs)

-80%

-60%

-40%

-20%

0%

20%

40%

-200

-150

-100

-50

0

50

100

150

03 04 05 06 07 08 09 10 11 12

EMU EASI MSCI Europe +ve to -ve EPS revisions (brought Fwd by 1m,rhs)

-60%

-40%

-20%

0%

20%

40%

60%

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Cyclical-Defensives +ve to -ve EPS revisions

4%

4%

5%

5%

6%

7%

9%

11%

12%

15%

16%

16%

17%

18%

20%

21%

21%

22%

24%

24%

24%

25%

29%

36%

42%

0% 10% 20% 30% 40% 50%

Food Drug Ret

Telecoms

Semicon

Energy

Healthcare

Food Bev&Tob

Media

HPC

Utilities

Europe

Retailing

Chemicals

Real Estate

Cap Goods

Cons Durables

Hotels,Rest&Leis

Transport

Automobile

Insurance

Cons Mat

Software

Met&Min

Div Fin

Banks

Tech Hardware

Ytd ch in '12e P/E



11



Table 12: European level 2 sectors YTD P/E move and valuations relative to historical median

Source: IBES

We think the sectors that had the biggest P/E expansion year to date and which are also trading at a premium to their historical multiple relative to the market could be the most at risk of earnings disappointment. Transport, Consumer Durables, Retailing, Chemicals and Hotels & Leisure fall in this category.

Screening for stock opportunities

Table 13: De-rated Stocks - earnings opportunities


At the stock level, we have screened for names that have underperformed their sector year to date despite having positive and higher EPS revisions than their sector. These stocks could offer better risk reward in the coming earnings season. Our bottom up analysts are OW the following stocks: Volkswagen, Shire, EDP and Enel.

Table 14: Re-rated Stocks to avoid


On the flip side, we screened for stocks that have outperformed their sector year to date while their earnings have been revised downwards both in absolute terms and relative to the sector. These stocks could be the most at risk of earnings disappointment.

Europe

Energy

Chemicals

Cons Mat

Met&Min

Cap Goods

Transport

Automobile

Cons Durables

Media

Retailing

Hotels,Rest&Leis

Food Drug Ret

Food Bev&Tob

HPC

Healthcare

Banks

Div Fin

InsuranceReal Estate

Software

Tech Hardware

Semicon

Telecoms

Utilities

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

-10% -5% 0% 5% 10% 15% 20% 25%

Cur

rent

P/E

rel t

o M

edia

n si

nce

1995

Ytd P/E Re-rating

Stock Sector Ticker Ctry Abs Rel Abs Rel Reporting Date

VOLKSWAGEN PREF. (XET) DISCRETIONARY VOW3 GR DE 12% -3% 10% 2% 26/04/2012

BANKINTER 'R' FINANCIALS BKT SM ES -25% -34% 3% 5% 26/04/2012

BRITISH LAND FINANCIALS BLND LN GB 1% -8% 0% 3% 21/05/2012

GJENSIDIGE FORSIKRING FINANCIALS GJF NO NO -2% -11% 0% 3% 04/05/2012

INTESA SANPAOLO FINANCIALS ISP IM IT -4% -13% 6% 9% 15/05/2012

MAPFRE FINANCIALS MAP SM ES -4% -13% 3% 6% 04/05/2012

NATIONAL BK.OF GREECE FINANCIALS ETE GA GR 1% -9% 60% 63% 20/04/2012

POHJOLA PANKKI A FINANCIALS POH1S FH FI 5% -4% 4% 7% 03/05/2012

TRYG FINANCIALS TRYG DC DK -2% -11% 0% 3% 14/05/2012

UBI BANCA FINANCIALS UBI IM IT -6% -15% 3% 6% 14/05/2012

VIENNA INSURANCE GROUP A FINANCIALS VIG AV AT 3% -6% 5% 8% 23/05/2012

ZURICH FINANCIAL SVS. FINANCIALS ZURN VX CH 4% -5% 6% 9% 10/05/2012

SHIRE HEALTH CARE SHP LN GB -10% -10% 8% 6% 26/04/2012

FERROVIAL INDUSTRIALS FER SM ES -10% -18% 69% 66% 26/04/2012

SCHINDLER 'P' INDUSTRIALS SCHP SW CH -2% -10% 7% 4% 19/04/2012

ARM HOLDINGS IT ARM LN GB 0% -12% 10% 9% 24/04/2012

UNITED INTERNET (XET) IT UTDI GR DE 1% -12% 3% 2% 10/05/2012

ACERINOX 'R' MATERIALS ACX SM ES -8% -16% -1% 2% 27/04/2012

NOVOZYMES MATERIALS NZYMB DC DK -7% -14% 3% 6% 25/04/2012

RANDGOLD RESOURCES MATERIALS RRS LN GB -22% -29% 0% 4% 03/05/2012

SALZGITTER (XET) MATERIALS SZG GR DE 2% -5% 2% 5% 15/05/2012

SUEDZUCKER (XET) STAPLES SZU GR DE -4% -7% 7% 3% 15/05/2012

EDP ENERGIAS DE PORTUGAL UTILITIES EDP PL PT -12% -11% 0% 3% 10/05/2012

ENEL GREEN POWER UTILITIES EGPW IM IT -14% -13% 0% 3% 09/05/2012

GAS NATURAL SDG UTILITIES GAS SM ES -14% -13% 1% 5% 08/05/2012

Perf EPS Ch

Stock Sector Ticker Ctry Abs Rel Abs Rel Reporting Date

NESTE OIL ENERGY NES1V FH FI 16% 18% -3% -7% 26/04/2012

DANSKE BANK FINANCIALS DANSKE DC DK 25% 16% -12% -9% 10/05/2012

KBC GROUP FINANCIALS KBC BB BE 63% 54% -12% -10% 10/05/2012

NATIXIS FINANCIALS KN FP FR 35% 26% -7% -4% 09/05/2012

ROYAL BANK OF SCTL.GP. FINANCIALS RBS LN GB 29% 20% -18% -15% 04/05/2012

SOCIETE GENERALE FINANCIALS GLE FP FR 18% 9% -22% -19% 03/05/2012

CELESIO (XET) HEALTH CARE CLS1 GY DE 7% 7% 0% -2% 14/05/2012

QIAGEN (XET) HEALTH CARE QGEN US DE 12% 11% -1% -3% 25/04/2012

GROUPE EUROTUNNEL INDUSTRIALS GET FP FR 18% 10% 0% -3% 23/07/2012

SCANIA 'B' INDUSTRIALS SCVB SS SE 34% 26% -1% -3% 24/04/2012

ALCATEL-LUCENT IT ALU FP FR 36% 24% 0% -1% 26/04/2012

STORA ENSO 'R' MATERIALS STERV FH FI 16% 8% -10% -7% 24/04/2012

VEDANTA RESOURCES MATERIALS VED LN GB 19% 12% -12% -9% 10/04/2012

YARA INTERNATIONAL MATERIALS YAR NO NO 13% 6% -7% -3% 27/04/2012

HELLENIC TELECOM.ORG. TELECOMS HTO GA GR 5% 10% -11% -9% 07/05/2012

INMARSAT TELECOMS ISAT LN GB 10% 15% -20% -18% 09/05/2012

SWISSCOM 'R' TELECOMS SCMN VX CH 2% 7% -5% -2% 02/05/2012

FORTUM UTILITIES FUM1V FH FI 6% 7% -3% 0% 26/04/2012

RWE (XET) UTILITIES RWE GR DE 29% 29% -5% -2% 10/05/2012

VERBUND UTILITIES VER AV AT 7% 8% -6% -3% 03/05/2012

Perf EPS Ch

12



Appendix – European reporting calendar for Q1’12

Table 15: European reporting calendar for Q1'12

Rep. Actual EPS IBES EPSe

Name Sector Ctry Ticker Date Cur 4Q10 1Q11 2Q11 3Q11 4Q11e %yoyKUEHNE+NAGEL INTL. INDUSTRIALS CH KNIN VX 16/04/2012 CHF 1.29 1.34 1.20 1.23 1.31 2%ASML HOLDING IT NL ASML NA 18/04/2012 EUR 0.90 0.97 0.84 0.68 0.64 -29%SCA 'B' MATERIALS SE SCAB SS 18/04/2012 SEK 1.89 1.96 1.82 2.35 2.29 21%ACTELION HEALTH CARE CH ATLN VX 19/04/2012 CHF 1.20 0.64 0.57 -0.11 0.74 -38%AKZO NOBEL MATERIALS NL AKZA NA 19/04/2012 EUR 0.54 1.15 0.63 0.17 0.65 20%GETINGE HEALTH CARE SE GETIB SS 19/04/2012 SEK 1.75 2.03 2.14 4.69 2.15 23%MODERN TIMES GP.MTG 'B' DISCRETIONARY SE MTGB SS 19/04/2012 SEK 7.29 6.79 4.69 7.33 6.21 -15%NOKIA IT FI NOA3 GY 19/04/2012 EUR 0.13 0.06 0.03 0.06 -0.03 -SCHINDLER 'P' INDUSTRIALS CH SCHP VX 19/04/2012 CHF 1.24 1.32 1.42 0.79 1.07 -14%SKF 'B' INDUSTRIALS SE SKFB SS 19/04/2012 SEK 3.44 3.76 3.52 2.79 2.93 -15%TELE2 'B' TELECOMS SE TEL2B SS 19/04/2012 SEK 2.75 2.50 2.87 3.00 2.66 -3%TELIASONERA TELECOMS SE TLSN SS 19/04/2012 SEK 1.04 1.01 1.11 1.07 1.14 10%WARTSILA INDUSTRIALS FI WRT1V FH 20/04/2012 EUR 0.38 0.35 0.26 0.48 0.39 3%ORION 'B' HEALTH CARE FI ORNBV FH 22/04/2012 EUR 0.49 0.34 0.34 0.32 0.39 -20%ALFA LAVAL INDUSTRIALS SE ALFA SS 23/04/2012 SEK 1.71 1.92 1.84 2.43 1.76 3%PHILIPS ELTN.KONINKLIJKE INDUSTRIALS NL PHIA NA 23/04/2012 EUR 0.16 0.04 0.10 -0.07 0.20 25%SAIPEM ENERGY IT SPM IM 23/04/2012 EUR 0.41 0.55 0.51 0.58 0.54 32%ARM HOLDINGS IT GB ARM LN 24/04/2012 BPN 2.73 2.98 3.05 3.71 3.21 18%ASSA ABLOY 'B' INDUSTRIALS SE ASSAB SS 24/04/2012 SEK 2.53 3.02 3.29 3.43 3.14 24%KONE 'B' INDUSTRIALS FI KNEBV FH 24/04/2012 EUR 0.38 0.56 0.61 0.96 0.37 -3%KPN KON TELECOMS NL KPN NA 24/04/2012 EUR 0.39 0.28 0.31 0.32 0.20 -49%NORDEA BANK FINANCIALS SE NDA SS 24/04/2012 EUR 0.20 0.18 0.15 0.20 0.18 -10%NOVARTIS 'R' HEALTH CARE CH NOVN VX 24/04/2012 USD 1.41 1.46 1.45 1.23 1.36 -4%SCANIA 'B' INDUSTRIALS SE SCVB SS 24/04/2012 SEK 3.14 3.04 2.88 2.67 1.93 -39%SEB 'A' FINANCIALS SE SEBA SS 24/04/2012 SEK 1.58 1.57 1.29 1.19 1.18 -25%STORA ENSO 'R' MATERIALS FI STERV FH 24/04/2012 EUR 0.22 0.21 0.10 0.10 0.12 -45%ABB 'R' INDUSTRIALS CH ABBN VX 25/04/2012 USD 0.33 0.38 0.39 0.44 0.30 -9%CREDIT SUISSE GROUP N FINANCIALS CH CSGN VX 25/04/2012 CHF 0.90 0.48 0.53 -0.62 1.02 13%ELECTROLUX 'B' DISCRETIONARY SE ELUXB SS 25/04/2012 SEK 1.60 1.96 3.00 1.13 1.82 14%ERICSSON 'B' IT SE ERICB SS 25/04/2012 SEK 1.39 1.61 1.52 0.58 0.67 -52%GLAXOSMITHKLINE HEALTH CARE GB GSK LN 25/04/2012 BPN 31.90 24.70 28.20 29.30 29.19 -8%NOVOZYMES MATERIALS DK NZYMB DC 25/04/2012 DKK 1.53 1.42 1.62 1.13 1.55 1%QIAGEN (XET) HEALTH CARE DE QGEN US 25/04/2012 USD 0.21 0.23 0.24 0.31 0.21 0%SAP (XET) IT DE SAP GR 25/04/2012 EUR 0.44 0.59 0.72 1.08 0.53 20%SIEMENS (XET) INDUSTRIALS DE SIE GR 25/04/2012 EUR 1.85 0.82 1.32 1.52 1.60 -14%SWEDBANK 'A' FINANCIALS SE SWEDA SS 25/04/2012 SEK 2.47 3.01 3.11 2.66 2.69 9%TELENOR TELECOMS NO TEL NO 25/04/2012 NOK 1.71 1.80 1.60 1.43 1.88 10%ALCATEL-LUCENT IT FR ALU FP 26/04/2012 EUR 0.01 0.04 0.09 0.07 -0.03 -ASTRAZENECA HEALTH CARE GB AZN LN 26/04/2012 USD 2.23 1.73 1.71 1.61 1.73 -22%BBV.ARGENTARIA FINANCIALS ES BBVA SM 26/04/2012 EUR 0.25 0.25 0.17 0.18 0.19 -24%BANCO DE SABADELL FINANCIALS ES SAB SM 26/04/2012 EUR 0.05 0.05 0.03 0.02 0.04 -20%BANCO SANTANDER FINANCIALS ES SAN SM 26/04/2012 EUR 0.26 0.22 0.26 0.19 0.19 -27%BANKINTER 'R' FINANCIALS ES BKT SM 26/04/2012 EUR 0.10 0.10 0.10 0.07 0.08 -20%BAYER (XET) HEALTH CARE DE BAYN GR 26/04/2012 EUR 1.45 1.29 1.12 0.97 1.44 -1%COLOPLAST 'B' HEALTH CARE DK COLOB DC 26/04/2012 DKK 9.20 11.40 12.64 11.40 12.27 33%DASSAULT SYSTEMES IT FR DSY FP 26/04/2012 EUR 0.51 0.64 0.77 0.87 0.68 33%DEUTSCHE BANK (XET) FINANCIALS DE DBK GR 26/04/2012 EUR 2.13 1.24 0.74 0.15 1.68 -21%FIAT DISCRETIONARY IT F IM 26/04/2012 EUR 0.02 0.07 0.01 0.08 0.20 900%FIAT INDUSTRIAL INDUSTRIALS IT FI IM 26/04/2012 EUR 0.08 0.19 0.17 0.10 0.10 25%FORTUM UTILITIES FI FUM1V FH 26/04/2012 EUR 0.48 0.24 0.21 0.40 0.53 10%HUSQVARNA 'B' DISCRETIONARY SE HUSQB SS 26/04/2012 SEK 0.84 1.18 0.10 -0.24 1.02 21%KESKO 'B' STAPLES FI KESBV FH 26/04/2012 EUR 0.24 0.54 0.54 0.50 0.24 0%MAN (XET) INDUSTRIALS DE VOW GR 26/04/2012 EUR 1.13 1.89 1.13 -0.49 1.58 40%METSO INDUSTRIALS FI MEO1V FH 26/04/2012 EUR 0.56 0.58 0.72 0.93 0.55 -2%NESTE OIL ENERGY FI NES1V FH 26/04/2012 EUR 0.10 0.23 0.15 0.05 0.13 30%RANDSTAD HOLDING INDUSTRIALS NL RAND NA 26/04/2012 EUR 0.38 0.59 0.66 0.69 0.34 -11%ROYAL DUTCH SHELL A(LON) ENERGY GB RDSA LN 26/04/2012 USD 1.02 1.05 1.12 1.04 1.11 9%ROYAL DUTCH SHELL B ENERGY GB RDSA LN 26/04/2012 USD 1.02 1.05 1.12 0.78 1.09 7%SANDVIK INDUSTRIALS SE SAND SS 26/04/2012 SEK 1.71 1.78 1.97 1.97 1.66 -3%SHIRE HEALTH CARE GB SHP LN 26/04/2012 USD 0.41 0.45 0.43 0.50 0.60 46%STMICROELECTRONICS (PAR) IT FR STM IM 26/04/2012 USD 0.19 0.14 0.09 -0.01 -0.02 -

13




Name Sector Ctry Ticker Date Cur 4Q10 1Q11 2Q11 3Q11 4Q11e %yoySVENSKA HANDBKN.'A' FINANCIALS SE SHBA SS 26/04/2012 SEK 4.63 4.88 5.10 4.70 5.15 11%TECHNIP ENERGY FR TEC FP 26/04/2012 EUR 0.92 1.15 1.08 1.35 1.02 11%TENARIS ENERGY IT TEN IM 26/04/2012 USD 0.27 0.24 - 0.34 0.31 15%UPM-KYMMENE MATERIALS FI UPM1V FH 26/04/2012 EUR 0.32 0.26 0.19 0.16 0.14 -56%VOLVO 'B' INDUSTRIALS SE VOLVB SS 26/04/2012 SEK 2.01 2.52 1.89 2.33 1.77 -12%ATLAS COPCO 'A' INDUSTRIALS SE ATCOA SS 27/04/2012 SEK 2.47 2.45 2.91 2.77 2.59 5%BASF (XET) MATERIALS DE BAS GY 27/04/2012 EUR 1.94 1.75 1.52 1.05 1.41 -27%DAIMLER (XET) DISCRETIONARY DE DAI GR 27/04/2012 EUR 0.99 1.51 1.34 1.62 1.34 35%DEUTSCHE BOERSE (XET) FINANCIALS DE DB1 GR 27/04/2012 EUR 1.14 0.96 1.31 0.89 1.18 4%DSV 'B' INDUSTRIALS DK DSV DC 27/04/2012 DKK 1.51 1.84 2.03 1.96 1.55 3%ELISA TELECOMS FI ELI1V FH 27/04/2012 EUR 0.28 0.29 0.36 0.36 0.29 4%ENI ENERGY IT ENI IM 27/04/2012 EUR 0.61 0.40 0.50 0.43 0.59 -3%GALP ENERGIA SGPS ENERGY PT GALP PL 27/04/2012 EUR 0.05 0.08 0.07 0.10 0.10 100%NORSK HYDRO MATERIALS NO NHY NO 27/04/2012 NOK 0.65 0.61 0.50 0.42 0.25 -62%NOVO NORDISK 'B' HEALTH CARE DK NOVOB DC 27/04/2012 DKK 7.06 7.21 7.39 8.33 8.39 19%SANOFI HEALTH CARE FR SAN FP 27/04/2012 EUR 1.66 1.64 1.79 1.56 1.69 2%SSAB 'A' MATERIALS SE SSABA SS 27/04/2012 SEK 1.20 2.73 1.19 -0.23 1.12 -7%TOTAL ENERGY FR FP FP 27/04/2012 EUR 1.38 1.24 1.24 1.20 1.39 1%YARA INTERNATIONAL MATERIALS NO YAR NO 27/04/2012 NOK 9.15 7.82 9.13 8.82 8.92 -3%ERSTE GROUP BANK FINANCIALS AT EBS AV 30/04/2012 EUR 0.60 0.54 -1.33 - 1.05 75%UBS 'R' FINANCIALS CH UBSN VX 30/04/2012 CHF 0.47 0.26 0.07 0.26 0.39 -17%BP ENERGY GB BP/ LN 01/05/2012 USD 0.28 0.31 0.27 0.54 0.27 -4%RECKITT BENCKISER GROUP STAPLES GB RB/ LN 01/05/2012 BPN 52.20 56.80 63.90 74.20 55.40 6%BRITISH SKY BCAST.GROUP DISCRETIONARY GB BSY LN 02/05/2012 BPN 10.50 10.95 11.50 12.30 11.45 9%SWISSCOM 'R' TELECOMS CH SCMN VX 02/05/2012 CHF 9.05 9.36 10.89 7.05 8.09 -11%TNT EXPRESS INDUSTRIALS NL TNTE NA 02/05/2012 EUR - 0.07 0.03 -0.02 0.06 -VESTAS WINDSYSTEMS INDUSTRIALS DK VWS DC 02/05/2012 EUR -0.42 0.27 -0.29 -0.27 -0.18 -ADIDAS (XET) DISCRETIONARY DE ADS GR 03/05/2012 EUR 1.00 0.67 1.45 0.09 1.01 1%BANCO ESPIRITO SANTO FINANCIALS PT BES PL 03/05/2012 EUR 0.05 0.08 -0.02 0.02 0.04 -20%BEIERSDORF (XET) STAPLES DE BEI GR 03/05/2012 EUR 0.53 0.58 0.33 0.59 0.52 -2%BG GROUP ENERGY GB BG/ LN 03/05/2012 USD 0.24 0.33 0.30 0.43 0.37 54%BMW (XET) DISCRETIONARY DE BMW GR 03/05/2012 EUR 1.84 2.75 1.64 1.22 1.70 -8%BOLIDEN MATERIALS SE BOL SS 03/05/2012 SEK 3.51 2.94 3.06 2.88 3.05 -13%CONTINENTAL (XET) DISCRETIONARY DE CON GR 03/05/2012 EUR 2.34 2.08 1.59 2.42 1.94 -17%DEUTSCHE LUFTHANSA (XET) INDUSTRIALS DE LHA GR 03/05/2012 EUR -0.59 0.66 1.08 -0.04 -1.10 -FRESENIUS (XET) HEALTH CARE DE FRE GR 03/05/2012 EUR 1.04 1.17 1.22 1.24 1.11 7%FRESENIUS MED.CARE (XET) HEALTH CARE DE FME GR 03/05/2012 USD 0.73 0.86 0.92 1.02 0.77 5%HEIDELBERGCEMENT (XET) MATERIALS DE HEI GR 03/05/2012 EUR -0.83 0.88 1.43 1.06 -0.67 -INFINEON TECHS. (XET) IT DE IFX GR 03/05/2012 EUR 0.15 0.16 0.21 0.10 0.09 -40%METRO (XET) STAPLES DE MEO GR 03/05/2012 EUR 0.00 0.20 0.70 1.91 -0.03 -ORKLA INDUSTRIALS NO ORK NO 03/05/2012 NOK 1.71 1.56 0.58 0.23 0.87 -49%POHJOLA PANKKI A FINANCIALS FI POH1S FH 03/05/2012 EUR 0.24 0.26 0.14 0.13 0.22 -8%RANDGOLD RESOURCES MATERIALS GB RRS LN 03/05/2012 USD 0.45 1.22 1.15 1.25 1.39 209%SANOMA DISCRETIONARY FI SAA1V FH 03/05/2012 EUR 0.11 0.29 0.30 0.18 0.11 0%SCOR SE FINANCIALS FR SCR FP 03/05/2012 EUR -0.44 0.66 1.03 0.55 0.66 -SMITH & NEPHEW HEALTH CARE GB SN/ LN 03/05/2012 USD 0.18 0.18 0.16 0.22 0.18 0%SOCIETE GENERALE FINANCIALS FR GLE FP 03/05/2012 EUR 1.59 1.36 0.75 0.75 0.85 -47%ABERTIS INFRAESTRUCTURAS INDUSTRIALS ES ABE SM 04/05/2012 EUR 0.16 0.26 0.34 0.16 0.23 44%BANCO POPULAR ESPANOL FINANCIALS ES POP SM 04/05/2012 EUR 0.12 0.07 0.06 0.05 0.07 -42%BELGACOM TELECOMS BE BELG BB 04/05/2012 EUR 0.60 0.62 0.61 0.69 0.57 -5%BNP PARIBAS FINANCIALS FR BNP FP 04/05/2012 EUR 2.12 1.77 1.84 0.93 1.74 -18%DNB FINANCIALS NO DNB NO 04/05/2012 NOK 1.78 2.17 1.52 2.51 1.87 5%FOMENTO CONSTR.Y CNTR. INDUSTRIALS ES FCC SM 04/05/2012 EUR 0.35 0.51 0.60 0.50 0.17 -51%GJENSIDIGE FORSIKRING FINANCIALS NO GJF NO 04/05/2012 NOK 1.30 1.80 1.25 1.32 1.28 -2%GRIFOLS HEALTH CARE ES GRF SM 04/05/2012 EUR 0.18 0.18 0.17 0.13 0.19 6%LAFARGE MATERIALS FR LG FP 04/05/2012 EUR -0.10 1.01 0.93 0.00 -0.15 -LEGRAND INDUSTRIALS FR LR FP 04/05/2012 EUR 0.47 0.51 0.45 0.49 0.53 13%LINDE (XET) MATERIALS DE LIN GR 04/05/2012 EUR 1.86 1.89 1.88 2.01 1.77 -5%SWEDISH MATCH STAPLES SE SWMA SS 04/05/2012 SEK 2.49 2.92 3.26 3.40 3.14 26%TRANSOCEAN (SWX) ENERGY CH RIG US 04/05/2012 USD - 0.64 - 0.24 0.57 -WACKER CHEMIE (XET) MATERIALS DE WCH GR 04/05/2012 EUR 3.39 2.87 2.50 -1.66 0.73 -78%COMMERZBANK (XET) FINANCIALS DE CBK GR 05/05/2012 EUR 0.59 0.35 0.11 0.09 0.06 -90%SECURITAS 'B' INDUSTRIALS SE SECUB SS 07/05/2012 SEK 1.13 1.28 1.63 1.75 1.24 10%SOLVAY MATERIALS BE SOLB BB 07/05/2012 EUR 1.23 1.74 1.18 1.70 1.37 11%ADECCO 'R' INDUSTRIALS CH ADEN VX 08/05/2012 EUR 0.54 0.74 0.77 0.73 0.63 17%DEUTSCHE POST (XET) INDUSTRIALS DE DPW GR 08/05/2012 EUR 0.27 0.23 0.32 0.31 0.31 15%

14




Name Sector Ctry Ticker Date Cur 4Q10 1Q11 2Q11 3Q11 4Q11e %yoyDSM KONINKLIJKE MATERIALS NL DSM NA 08/05/2012 EUR 0.91 0.99 0.94 0.71 0.60 -34%GEA GROUP (XET) INDUSTRIALS DE G1A GR 08/05/2012 EUR 0.23 0.41 0.48 0.73 0.29 26%GENERALI FINANCIALS IT G IM 08/05/2012 EUR 0.40 0.31 0.13 - 0.29 -28%HOLMEN 'B' MATERIALS SE HOLMB SS 08/05/2012 SEK 4.40 3.60 4.10 3.50 3.32 -25%MUENCHENER RUCK. (XET) FINANCIALS DE MUV2 GR 08/05/2012 EUR -5.28 4.14 1.61 3.52 2.99 -SAMPO 'A' FINANCIALS FI SAMAS FH 08/05/2012 EUR 0.58 0.55 0.22 0.49 0.50 -14%STATOIL ENERGY NO STL NO 08/05/2012 NOK 3.74 4.02 3.58 4.56 4.48 20%AKER SOLUTIONS ENERGY NO AKSO NO 09/05/2012 NOK 1.85 0.45 -0.83 2.50 1.59 -14%AMADEUS IT HOLDING IT ES AMS SM 09/05/2012 EUR 0.32 0.28 0.31 0.20 0.38 19%CARLSBERG 'B' STAPLES DK CARLB DC 09/05/2012 DKK 1.67 14.08 13.24 6.47 0.95 -43%E ON (XET) UTILITIES DE EOAN GR 09/05/2012 EUR 0.69 -0.20 0.34 0.48 0.44 -36%FRAPORT (XET) INDUSTRIALS DE FRA GR 09/05/2012 EUR 0.27 0.86 1.20 0.27 0.21 -22%HENKEL PREF (XET) STAPLES DE HEN3 GR 09/05/2012 EUR 0.73 0.79 0.85 0.77 0.90 23%HEXAGON 'B' IT SE HEXAB SS 09/05/2012 EUR 0.21 0.22 0.19 0.24 0.22 5%HOLCIM 'R' MATERIALS CH HOLN VX 09/05/2012 CHF 0.03 1.09 1.11 -0.07 0.09 200%ING GROEP FINANCIALS NL INGA NA 09/05/2012 EUR 0.39 0.40 0.34 -0.14 0.30 -23%K + S (XET) MATERIALS DE SDF GR 09/05/2012 EUR 1.42 0.66 0.64 0.80 1.11 -22%LANXESS (XET) MATERIALS DE LXS GR 09/05/2012 EUR 2.05 2.23 1.91 0.48 1.65 -20%LUNDIN PETROLEUM ENERGY SE LUPE SS 09/05/2012 USD 0.18 0.25 0.13 -0.05 0.12 -33%MEDIOBANCA FINANCIALS IT MB IM 09/05/2012 EUR 0.18 -0.06 - - 0.14 -22%NATIXIS FINANCIALS FR KN FP 09/05/2012 EUR 0.17 0.17 0.13 - 0.11 -35%NOKIAN RENKAAT DISCRETIONARY FI NRE1V FH 09/05/2012 EUR 0.48 0.57 0.60 0.71 0.56 17%OMV ENERGY AT OMV AV 09/05/2012 EUR 0.90 0.77 0.71 1.00 1.01 12%TDC TELECOMS DK TDC DC 09/05/2012 DKK 1.07 0.93 1.22 1.06 1.03 -4%TELECOM ITALIA TELECOMS IT TIT IM 09/05/2012 EUR 0.03 0.03 0.04 - 0.03 0%ACS ACTIV.CONSTR.Y SERV. INDUSTRIALS ES ACS SM 10/05/2012 EUR 0.65 1.33 0.63 0.72 0.34 -48%AEGON FINANCIALS NL AGN NA 10/05/2012 EUR 0.19 0.17 0.05 0.13 0.15 -21%ARCELORMITTAL MATERIALS FR MT NA 10/05/2012 USD 0.40 0.93 0.46 -0.36 0.30 -25%ARKEMA MATERIALS FR AKE FP 10/05/2012 EUR 2.51 3.02 2.09 0.88 3.42 36%BT GROUP TELECOMS GB BT/A LN 10/05/2012 BPN 5.80 4.90 5.60 5.80 6.39 10%COCA-COLA HLC.BT. STAPLES GR EEEK GA 10/05/2012 EUR 0.00 0.40 0.43 0.08 -0.03 -CIE.GL.DE GPHYQ.-VERT. ENERGY FR GA FP 10/05/2012 EUR -0.08 -0.04 0.18 0.22 0.07 -CORIO FINANCIALS NL CORA NA 10/05/2012 EUR 0.73 0.74 0.69 0.76 0.75 3%DANSKE BANK FINANCIALS DK DANSKE DC 10/05/2012 DKK 2.18 1.30 -0.40 0.23 0.63 -71%DEUTSCHE TELEKOM (XET) TELECOMS DE DTE GY 10/05/2012 EUR 0.16 0.22 0.30 -0.02 0.11 -31%HOCHTIEF (XET) INDUSTRIALS DE ACS SM 10/05/2012 EUR -2.30 0.19 1.34 -1.41 0.36 -KBC GROUP FINANCIALS BE KBC BB 10/05/2012 EUR 1.50 1.11 -1.17 0.23 1.14 -24%PORTUGAL TELECOM SGPS TELECOMS PT PTC PL 10/05/2012 EUR 0.15 0.11 0.12 0.04 0.11 -27%SKANSKA 'B' INDUSTRIALS SE SKAB SS 10/05/2012 SEK 0.32 1.86 2.16 1.91 1.18 269%TELEKOM AUSTRIA TELECOMS AT TKA AV 10/05/2012 EUR 0.24 0.12 0.30 -0.14 0.12 -50%UNICREDIT FINANCIALS IT UCG IM 10/05/2012 EUR 0.28 0.20 -0.17 0.20 0.03 -89%UNITED INTERNET (XET) IT DE UTDI GR 10/05/2012 EUR 0.20 0.19 0.21 - 0.18 -10%VALLOUREC INDUSTRIALS FR VK FP 10/05/2012 EUR 0.69 0.95 0.77 - 0.50 -28%ZURICH FINANCIAL SVS. FINANCIALS CH ZURN VX 10/05/2012 USD 4.07 9.02 8.43 3.79 6.75 66%ACCIONA UTILITIES ES ANA SM 11/05/2012 EUR 0.88 3.02 1.19 1.14 4.24 382%CREDIT AGRICOLE FINANCIALS FR ACA FP 11/05/2012 EUR 0.42 0.13 0.37 0.18 -0.35 -INDRA SISTEMAS IT ES IDR SM 11/05/2012 EUR 0.30 0.34 0.24 0.22 0.23 -23%REPSOL YPF ENERGY ES REP SM 11/05/2012 EUR 0.65 0.44 0.35 0.31 0.45 -31%SUBSEA 7 ENERGY NO SUBC NO 11/05/2012 USD 0.20 0.39 0.31 0.28 0.30 50%TELEFONICA TELECOMS ES TEF SM 11/05/2012 EUR 0.38 0.34 -0.10 0.41 0.32 -16%BANCA MONTE DEI PASCHI FINANCIALS IT BMPS IM 14/05/2012 EUR 0.01 0.01 0.00 - 0.01 0%CELESIO (XET) HEALTH CARE DE CLS1 GY 14/05/2012 EUR 0.31 0.17 0.31 0.33 0.25 -19%TRYG FINANCIALS DK TRYG DC 14/05/2012 DKK 4.50 6.00 2.65 5.26 5.96 32%UBI BANCA FINANCIALS IT UBI IM 14/05/2012 EUR 0.09 0.28 0.04 - 0.10 11%VIVENDI TELECOMS FR VIV FP 14/05/2012 EUR 0.76 0.71 0.55 0.35 0.77 1%ALLIANZ (XET) FINANCIALS DE ALV GR 15/05/2012 EUR 1.88 2.17 1.79 1.06 2.76 47%BANCO POPOLARE FINANCIALS IT BP IM 15/05/2012 EUR 0.03 0.04 -0.01 - 0.08 167%INTESA SANPAOLO FINANCIALS IT ISP IM 15/05/2012 EUR 0.05 0.05 0.03 - 0.05 0%MERCK KGAA (XET) HEALTH CARE DE MRK GR 15/05/2012 EUR 2.03 0.94 1.91 1.69 1.78 -12%SALZGITTER (XET) MATERIALS DE SZG GR 15/05/2012 EUR 0.79 0.89 0.38 0.46 0.50 -37%SUEDZUCKER (XET) STAPLES DE SZU GR 15/05/2012 EUR 0.26 0.46 0.32 0.53 0.45 73%THYSSENKRUPP (XET) MATERIALS DE TKA GR 15/05/2012 EUR 0.58 0.51 1.67 -0.11 0.14 -76%EADS (PAR) INDUSTRIALS FR EAD FP 16/05/2012 EUR -0.01 0.15 0.26 0.61 0.32 -OPAP DISCRETIONARY GR OPAP GA 17/05/2012 EUR 0.52 0.34 0.42 0.40 0.31 -40%BRITISH LAND FINANCIALS GB BLND LN 21/05/2012 BPN 7.23 7.20 7.40 7.50 7.37 2%RYANAIR HOLDINGS INDUSTRIALS IE RYA ID 21/05/2012 EUR -0.03 0.09 0.27 0.01 -0.04 -VIENNA INSURANCE GROUP A FINANCIALS AT VIG AV 23/05/2012 EUR 0.85 0.83 0.77 0.66 1.63 92%RAIFFEISEN BANK INTL. FINANCIALS AT RBI AV 24/05/2012 EUR 1.13 1.49 0.67 0.91 1.01 -11%VOESTALPINE MATERIALS AT VOE AV 30/05/2012 EUR 1.02 1.13 0.69 0.27 0.55 -46%SEADRILL ENERGY NO SDRL NO 31/05/2012 USD 0.61 0.60 0.71 0.73 0.69 13%AHOLD KON. STAPLES NL AH NA 06/06/2012 EUR 0.25 0.17 0.21 0.25 0.29 16%KABEL DEUTSCHLAND (XET) HLDG. DISCRETIONARY DE KD8 GR 08/06/2012 EUR 0.00 0.09 0.40 0.62 0.55 -

Source: Datastream, IBES

15



European Equity Strategy Key Calls and Drivers

We have recently advised cutting beta and risk in portfolio for the following reasons: 1) Macro momentum is stalling, as seen in weakening Global PMIs; 2) US EASI could turn negative soon, pointing to a negative risk-reward for stocks; 3) Stocks have rallied 30% from their '11 lows and valuations have normalized; 4) Sector rotation into Cyclicals was substantial Ytd and Cyclicals are now trading above fair value compared to Defensives; 5) Investors have participated in the rally and sentiment has turned bullish; 6) Chinese risk remains underestimated by the market, macro dataflow is stillmixed post the holiday season; 7) US gasoline prices are near last year’s peak and could start hurting the consumer. We have recently cut Cyclicals from OW to N post strong Ytd performance (we still like Construction Materials, Semiconductors and Software, have cut Autos, Mining and Capital Goods). We are cautious on commodities. Within Eurozone, we still find DAX the most attractive, and remain OW core vs periphery, with a preference for Italy over Spain. The medium term picture is still constructive in our view, but we think there could be a better entry point.

Table 16: J.P. Morgan Equity Strategy — Factors driving our medium-term views

Driver Impact Our Core Working Assumptions Recent DevelopmentsGlobal Growth Neutral Global growth to be near trend in 2012 Global composite PMI down in MarchEuropean Growth Negative Eurozone likely to have entered mild Recession in Q4’11 March PMI consistent with modest GDP contraction Inflation Positive DM and EM inflation to move lower Chinese CPI lower at 3.2% in FebruaryMonetary Policy Positive ECB to cut rates to 0.75% by mid year, 3 more RRR cuts in China China cut RRR by 50bps in FebruaryCurrency Neutral Looking for weaker EUR/USD Near term EUR/USD stabilization likely

Earnings Neutral Mid-single digit European EPS growth in ‘12e EPS negative revisions have turned up

Valuations Positive Equities attractively valued vs bonds and history Europe on 10.7x Fwd P/E, 24% below LT average Technicals Neutral AAII Bull Bear index improved recently

Source: J.P. Morgan estimates.

Table 17: J.P. Morgan Equity Strategy — Scenarios: Base Case and Risks

Scenario Macro environment in 2012Upside scenario Eurozone funding crisis stabilizes as a credible backstop is implemented, global growth rebounds, profit margins move even higher. ->Positive

EPS growth and significant P/E expansion. Base-case scenario Euro situation remains volatile but does not get worse, US growth slows due to fiscal tightening but does not go into recession, China soft

landing. ->Flat EPS growth and modest P/E expansionDownside scenario Euro crisis worsens. Policy action inadequate. One or more core countries lose market access. US double dip and/or China hard landing. -

>double digit EPS fall and P/E compression to ’09 lows

Source: J.P. Morgan estimates

Table 18: J.P. Morgan Equity Strategy — Key sector calls*

Sector Recommendations Key DriversThe view could be expressed through these ETFs hedged by SDJ600 GR

Insurance Overweight Cheap, rising bond yields XIPS GRConstruction Materials Overweight US construction picking up, Chinese outlook remains supportive XOPS GRBanks Overweight Consensus UW, new ECB measures key to reduce funding costs X7PS GRUtilities Underweight Pricing weakness, regulatory risk, dividend risk, expensive X6PS GRPharma Underweight Consensus OW, P/E rerating in 2011 XDPS GR

Source: J.P. Morgan estimates. * Please see the last page for the full list of our calls and sector allocation.

Table 19: J.P. Morgan Equity Strategy — Key regional calls

Region Recommendations J.P. Morgan Views ETFsGlobal OW EM vs DM Growth inflation tradeoff improving, EM equities cheap MXFS LN / SMSWLD GRDeveloped OW Europe vs US Cheaper valuations and investors positioning favor Europe SMSEUR GR / SMSUSA GREurozone OW Core vs Periphery Stronger GDP and EPS growth outlook and lower EUR/USD favor core EMU DAX30S GR / SDJE50 GR

Source: J.P. Morgan estimates

16



Top PicksTable 20: J.P. Morgan European Strategy: Top European picks

Name Price TickerJPMRating

AnalystName Sector

IBES consensus estimates Performance

12e EPS Gr 12e P/E 12e DY 11 ytd -3m -12mBP 452.1 £ BP/ LN OW Frederick G Lucas Energy -23.4% 6.4 4.6% -1.8% -4.5% -3.7%BG Group 1409.0 £ BG/ LN OW Frederick G Lucas Energy 16.2% 14.8 1.2% 2.4% -1.4% -9.5%ENI 17.1 E ENI IM OW Nitin Sharma Energy 15.1% 7.8 6.2% 7.1% 4.3% -3.4%Petrofac 1698.0 £ PFC LN OW Andrew Dobbing Energy 18.3% 14.5 2.4% 17.8% 15.9% 11.6%Heidelberg Cement 43.3 E HEI GR OW Michael Morris Materials 17.1% 13.5 1.4% 32.2% 25.3% -13.8%Saint-Gobain 31.3 E SGO FP OW Michael Morris Industrials -2.1% 9.7 4.2% 5.4% 3.3% -29.8%Arkema 67.4 E AKE FP OW Martin Evans Materials -21.0% 9.3 2.2% 23.2% 19.7% 1.1%Rio Tinto 3406.5 £ RIO LN OW Benjamin Defay Materials -4.7% 7.0 2.8% 9.0% 1.9% -23.9%Arcelor Mittal 13.4 E MT NA OW Alessandro Abate Materials 34.2% 9.0 4.2% -4.8% -10.0% -47.7%Safran 26.9 E SAF FP OW John Middleton Industrials 26.3% 13.3 2.8% 16.1% 17.5% 5.5%Vinci 37.0 E DG FP OW Elodie Rall Industrials 1.1% 10.5 4.8% 9.6% 7.1% -17.2%Schneider 46.4 E SU FP OW Andreas Willi Industrials 1.0% 11.6 3.9% 14.1% 10.3% -24.6%Volvo 93.7 SK VOLVB SS OW Nico Dil Industrials -6.1% 11.4 3.8% 24.4% 16.9% -16.2%Brenntag 90.9 E BNR GR OW Robert Plant Industrials 20.8% 13.9 2.6% 26.4% 25.8% 15.4%IAG 2.2 E IAG LN OW David Pitura Industrials -62.5% 36.2 0.0% 24.9% 20.1% -14.4%Deutsche Post 14.1 E DPW GR OW Christopher G Combe Industrials 1.7% 11.5 5.1% 18.9% 14.4% 9.6%Volkswagen 129.4 E VOW3 GR OW Ranjit A Unnithan Discretionary 5.8% 6.6 2.9% 11.8% 5.2% 10.7%Continental 70.3 E CON GR OW Ranjit A Unnithan Discretionary -0.7% 8.4 2.5% 46.7% 33.4% 9.4%SABMiller 2535.0 £ SAB LN OW Matthew Webb Discretionary 8.3% 19.5 2.2% 11.8% 9.7% 13.3%Publicis 40.1 E PUB FP OW Filippo Pietro Lo Franco Discretionary 20.8% 12.6 2.0% 12.9% 11.6% -0.8%Marks & Spencer 370.0 £ MKS LN OW Gillian Hilditch Discretionary -4.8% 11.2 4.7% 19.0% 19.8% 8.1%Anheuser-Busch InBev 54.1 E ABI BB OW Mike J Gibbs Staples 10.5% 16.1 2.7% 14.3% 16.7% 29.2%BAT 3176.0 £ BATS LN OW Rae Maile Staples 10.2% 14.8 4.3% 3.9% 3.6% 25.5%Casino 71.9 E CO FP OW Paul Diamond Staples 16.8% 12.5 4.5% 10.5% 11.5% 4.5%Nestle 56.3 SF NESN VX OW Polly Barclay Staples 11.4% 17.1 3.7% 4.3% 3.5% 6.0%Unilever 25.7 E UNA NA OW Celine Pannuti Staples 17.0% 15.6 3.7% -3.4% -3.5% 16.2%Sanofi 57.1 E SAN FP OW Richard Vosser Health Care -12.0% 9.8 4.8% 0.5% 1.5% 13.7%Roche 158.4 SF ROG VX OW Alexandra Schuele Health Care 10.4% 11.7 4.6% -0.5% -2.6% 19.1%SwedBank 101.0 SK SWEDA SS OW Sofie Peterzens Financials 3.3% 9.2 5.4% 13.3% 7.4% -9.1%HSBC 556.8 £ HSBA LN OW Raul Sinha Financials 2.9% 9.5 5.0% 13.4% 11.4% -14.0%DnB Nor 71.0 NK DNBNOR NO OW Sofie Peterzens Financials 1.9% 8.8 4.1% 21.3% 23.6% -17.4%UBS 12.1 SF UBSN VX OW Kian Abouhossein Financials 20.9% 9.2 1.7% 8.5% 4.8% -27.8%Societe Generale 20.4 E GLE FP OW Delphine Lee Financials -23.9% 6.1 3.8% 18.4% 19.9% -55.5%Land Securities 719.0 £ LAND LN OW Harm M Meijer Financials 4.5% 18.9 4.0% 13.1% 14.4% -3.7%Swiss Re 56.7 SF SREN VX OW Michael Huttner Financials -8.2% 9.3 6.0% 18.3% 15.3% 4.1%Aegon 3.9 E AGN NA OW Duncan Russell Financials -11.9% 6.6 5.1% 26.3% 25.2% -28.5%Infineon 7.4 E IFX GR OW Sandeep S Deshpande IT -34.8% 17.3 1.8% 27.7% 22.5% -0.5%ASML 36.5 E ASML NA OW Sandeep S Deshpande IT -28.7% 14.9 1.3% 12.3% 13.9% 17.0%Imagination Technologies 681.5 £ IMG LN OW Sandeep S Deshpande IT -7.7% 68.8 0.0% 24.1% 22.6% 54.3%SAP 51.3 E SAP GR OW Stacy E Pollard IT 8.8% 16.6 1.7% 25.5% 22.5% 17.0%Tele2 133.6 SK TEL2B SS OW Akhil Dattani Telecoms 10.4% 11.0 10.4% -0.2% 0.2% -9.7%Inmarsat 446.2 £ ISAT LN OW Torsten Achtmann Telecoms 17.5% 11.5 6.3% 10.3% 5.9% -28.9%TDC 40.6 DK TDC DC OW Hannes C Wittig Telecoms -12.1% 10.7 11.0% -11.8% -11.7% -3.7%Terna 3.0 E TRN IM OW Javier Garrido Utilities 5.3% 14.8 6.4% 13.3% 9.7% -13.7%Centrica 309.9 £ CNA LN OW Edmund Reid Utilities 13.8% 11.4 5.3% 7.1% 4.3% -6.5%

Source: Datastream, MSCI, IBES, J.P. Morgan, Prices and Valuations as of COB 4th April, 2012

Please see the most recent company-specific research published by J.P. Morgan for an analysis of valuation methodology and risks on companies recommended in this report. Research is available at http://www.morganmarkets.com, or you can contact the covering analyst or your J.P. Morgan representative.

17



Technical Indicators

Figure 24: AAII Bulls vs. Bears

Source: Datastream, Bloomberg, J.P. Morgan

Figure 25: Put Call ratios


Figure 26: Skew


-60%

-45%

-30%

-15%

0%

15%

30%

45%

60%

75%

04 05 06 07 08 09 10 11 12

AAII Bull - Bear

29%

5%

5%

5%

3%

3%

3%

0%

-1%

-10% 0% 10% 20% 30% 40%

Europe 6m fwd av erage return

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

04 05 06 07 08 09 10 11 12

S&P Put Call ratio

5%

3%

2%

4%

1%

4%

4%

4%

7%

0.0% 2.0% 4.0% 6.0% 8.0%Europe 6m fw d average return

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

3.3

3.5

01 02 03 04 05 06 07 08 09 10 11 12

EStoxx 1 year Skew

-11%

-9%

-4%

1%

-2%

2%

5%

7%

6%

-15% -10% -5% 0% 5% 10%

Europe 6m fwd av erage return

18



Performance

Table 21: Sector Index Performances — MSCI Europe

(%change) Local currency

Industry Group 4week 12m 12YTDEurope (1.0) (10.9) 4.7Energy (4.4) (8.7) (1.9)Materials (1.6) (18.0) 7.4

Chemicals 3.3 (0.2) 13.7Construction Materials (0.9) (16.9) 11.5Metals & Mining (5.5) (29.5) 1.5

Industrials (0.4) (15.0) 7.8Capital Goods (1.1) (18.0) 6.3Transport 2.3 (11.1) 15.1

Consumer Discretionary 0.8 (0.6) 15.0Automobile (0.7) (5.8) 24.3Consumer Durables 2.2 8.7 19.1Media (0.9) (9.9) 4.8Retailing 3.4 14.2 10.9Hotels,Restaurants&Leisure 1.3 (4.4) 8.5

Consumer Staples 1.8 8.9 3.8Food & Drug Retailing 2.2 (17.2) (8.9)Food Beverage & Tobacco 1.5 14.3 5.0Household Products 3.6 10.7 13.7

Healthcare 0.9 9.3 0.4Financials (3.2) (25.1) 9.3

Banks (6.0) (31.4) 7.2Diversified Financials (1.1) (26.1) 10.8Insurance (0.2) (11.6) 12.5Real Estate 1.7 (13.4) 8.0

Information Technology 2.0 (6.7) 12.1Software and Services 0.6 15.2 20.2Technology Hardware 1.8 (30.8) 1.7Semicon & Semicon Equip 5.1 (1.6) 12.5

Telecommunications Services (0.2) (17.9) (5.0)Utilities (2.5) (21.8) (0.7)

Source: MSCI, Datastream, as at COB 4th April, 2012.

Table 22: Country and Region Index Performances

(%change) Local Currency US$

Country Index 4week 12m 12YTD 4week 12m 12YTD

Austria ATX (1.6) (27.8) 10.6 (1.7) (33.5) 11.8Belgium BEL 20 1.0 (16.4) 8.6 1.0 (23.0) 9.7Denmark KFX 1.6 (3.3) 16.4 1.5 (10.7) 17.4Finland HEX 20 (3.2) (23.4) 8.6 (3.2) (29.5) 9.7France CAC 40 (2.3) (18.0) 4.9 (2.3) (24.5) 6.0Germany DAX 1.7 (5.5) 15.0 1.7 (12.9) 16.2Greece ASE General (5.5) (52.8) 3.5 (5.6) (56.5) 4.5Ireland ISEQ 1.7 8.5 10.4 1.7 (0.0) 11.5Italy FTSE MIB (7.0) (30.7) 1.0 (7.1) (36.2) 2.1Japan Topix 1.5 (2.8) 14.7 (0.5) (1.2) 7.0Netherlands AEX (1.8) (14.9) 0.4 (1.8) (21.6) 1.5Norway OBX 1.2 (11.1) 8.7 (0.6) (15.3) 12.3Portugal BVL GEN (2.2) (24.5) (1.5) (2.2) (30.5) (0.4)Spain IBEX 35 (6.1) (28.8) (10.6) (6.2) (34.4) (9.6)Sweden OMX (2.0) (9.5) 5.4 (0.6) (15.0) 7.6Switzerland SMI 1.1 (3.9) 3.9 1.2 (3.6) 5.9United States S&P 500 3.4 5.0 11.2 3.4 5.0 11.2United States NASDAQ 4.5 10.0 17.8 4.5 10.0 17.8United Kingdom FTSE 100 (1.5) (5.2) 2.4 (0.5) (6.8) 4.6EMU MSCI EMU (1.4) (16.9) 6.0 (1.4) (23.4) 7.1Europe MSCI Europe (1.0) (10.9) 4.7 (0.6) (15.0) 6.4Global MSCI AC World 1.8 (2.8) 9.3 1.7 (4.0) 9.2

Source: MSCI, Datastream, as at COB 4th April, 2012.

19



Earnings

Table 23: IBES Consensus EPS Sector Forecasts — MSCI Europe

EPS Growth (%)2011E 2012E 2013E 2014E

Europe 0.5 5.2 11.5 8.6 Energy 20.7 1.8 8.5 2.4 Materials 18.1 (2.2) 15.5 8.4 Chemicals 13.3 (0.5) 11.3 9.0 Construction Materials (14.6) 21.7 24.1 22.8 Metals & Mining 26.6 (4.5) 17.0 6.6 Industrials 1.8 7.0 13.6 11.7 Capital Goods 6.5 7.6 12.9 10.4 Transport (29.2) 0.2 22.2 22.1 Discretionary 14.6 9.2 13.3 11.5 Automobile 22.7 7.2 15.5 11.9 Consumer Durables 6.5 16.7 13.8 11.1 Media 13.0 8.6 8.6 8.6 Retailing 2.0 12.1 12.1 11.3 Hotels,Restaurants&Leisure 13.3 1.5 12.6 16.6 Staples 0.8 9.8 9.7 9.1 Food & Drug Retailing (6.0) 7.9 9.5 10.0 Food Beverage & Tobacco 1.5 11.0 10.0 9.1 Household Products 9.7 4.4 7.6 7.4 Healthcare 1.8 (0.1) 7.5 7.9 Financials (15.2) 14.5 15.4 11.1 Banks (6.8) (2.3) 20.3 14.1 Diversified Financials (36.7) 47.6 14.4 11.2 Insurance (17.0) 36.1 8.3 5.8 Real Estate (3.7) 2.8 6.1 3.8 IT 4.5 (10.4) 24.2 14.7 Software and Services 19.8 4.8 12.3 13.9 Technology Hardware (20.7) (16.4) 37.7 13.8 Semicon & Semicon Equip 33.3 (27.2) 31.3 17.9 Telecoms (5.1) (2.1) 3.4 2.8 Utilities (18.9) 3.3 6.2 8.9 Source: IBES, MSCI, Datastream. As at COB 4th April, 2012

Table 24: IBES Consensus EPS Country Forecasts

EPS Growth (%)

Country Index 2011E 2012E 2013E 2014E

Austria ATX (16.1) 22.9 17.3 10.4Belgium BEL 20 (55.9) 138.7 12.1 4.5Denmark Denmark KFX (13.8) 31.8 24.9 16.8Finland MSCI Finland (19.3) (7.8) 21.6 8.7France CAC 40 (1.6) 1.4 11.0 9.2Germany DAX (8.4) 7.3 12.2 9.3Greece MSCI Greece (107.1) - 37.4 5.7Ireland MSCI Ireland 18.6 6.2 23.2 25.2Italy MSCI Italy (9.8) 9.5 15.5 12.0Netherlands AEX 5.6 7.6 14.7 5.3Norway MSCI Norway 20.8 7.3 11.1 9.0Portugal MSCI Portugal (8.9) 10.5 11.8 7.1Spain IBEX 35 (9.0) (5.9) 17.3 7.0Sweden OMX (3.6) 3.6 11.6 11.1Switzerland SMI (8.8) 10.7 11.0 8.2United Kingdom FTSE 100 15.6 1.8 10.9 7.9EMU MSCI EMU (6.1) 5.2 12.8 9.1Europe ex UK MSCI Europe ex UK (6.6) 7.1 12.5 9.4Europe MSCI Europe 0.5 5.2 11.5 8.6United States S&P 500 15.3 8.7 12.8 10.8

Japan Topix 62.0 64.0 17.3 -Emerging Market MSCI EM 3.5 13.0 10.4 6.6Global MSCI AC World 6.4 8.0 12.2 9.6

Source: IBES, MSCI, Datastream. As at COB 4th April, 2012** Japan refers to the period from March in the year stated to March in the following year – EPS post-goodwill.

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Valuations

Table 25: IBES Consensus European Sector Valuations

P/E Dividend Yields EV/EBITDA Price to Book

2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013EEurope 11.0 10.5 9.4 3.9% 4.2% 4.6% 6.1 6.1 5.6 1.4 1.3 1.2Energy 8.6 8.4 7.8 4.2% 4.5% 4.7% 3.9 3.8 3.7 1.4 1.3 1.2Materials 10.0 10.2 8.9 2.8% 3.0% 3.3% 6.0 6.1 5.3 1.4 1.3 1.2Chemicals 13.0 13.1 11.7 2.8% 3.0% 3.3% 6.9 7.2 6.4 2.2 2.0 1.9Construction Materials 17.8 14.6 11.8 2.8% 2.8% 3.2% 7.8 7.6 6.8 0.9 0.8 0.8Metals & Mining 7.8 8.2 7.0 2.7% 2.9% 3.2% 5.5 5.5 4.7 1.2 1.2 1.0Industrials 13.4 12.5 11.0 3.5% 3.6% 3.9% 6.8 6.9 6.2 2.0 1.9 1.7Capital Goods 12.8 11.9 10.5 3.6% 3.8% 4.1% 6.9 6.9 6.1 1.9 1.8 1.7Transport 15.1 15.0 12.3 3.6% 3.2% 3.6% 5.5 6.0 5.4 1.6 1.5 1.4Discretionary 12.3 11.2 9.9 2.9% 3.3% 3.7% 5.5 5.8 5.1 1.9 1.8 1.6Automobile 7.9 7.4 6.4 3.3% 3.8% 4.4% 2.8 3.2 2.8 1.0 0.9 0.8Consumer Durables 18.9 16.2 14.2 1.8% 2.1% 2.4% 9.5 9.2 8.1 3.1 2.7 2.4Media 12.8 11.8 10.9 3.5% 4.0% 4.4% 7.9 7.6 7.0 2.6 2.4 2.2Retailing 17.4 15.5 13.8 3.1% 3.3% 3.7% 9.4 10.1 9.3 3.8 3.5 3.2Hotels, Restaurants & Leisure 14.7 14.5 12.9 3.3% 3.5% 3.9% 7.4 7.9 7.0 2.4 2.3 2.1Staples 16.4 14.9 13.6 3.0% 3.3% 3.6% 9.2 9.2 8.4 2.8 2.8 2.5Food & Drug Retailing 11.0 10.2 9.3 4.0% 4.2% 4.5% 6.4 5.8 5.4 1.6 1.5 1.4Food Beverage & Tobacco 17.6 15.9 14.4 2.9% 3.2% 3.5% 10.0 10.1 9.2 3.2 3.0 2.8Household Products 17.0 16.3 15.1 2.4% 2.6% 2.8% 10.0 10.2 9.2 3.5 4.1 3.6Healthcare 11.5 11.5 10.7 3.6% 3.9% 4.2% 7.8 8.1 7.4 2.8 2.6 2.4Financials 9.7 8.4 7.3 4.2% 4.7% 5.4% - - - 0.7 0.7 0.7Banks 8.3 8.5 7.0 4.1% 4.5% 5.4% - - - 0.6 0.6 0.6Diversified Financials 11.9 8.1 7.1 2.4% 3.0% 4.0% - - - 0.8 0.7 0.7Insurance 10.9 8.0 7.4 5.4% 5.9% 6.3% - - - 0.9 0.9 0.8Real Estate 15.5 15.1 14.2 5.4% 5.6% 5.9% - - - 0.8 0.8 0.8IT 14.5 16.2 13.0 2.2% 2.4% 2.6% 7.2 8.2 6.6 2.4 2.3 2.1Software and Services 15.9 15.2 13.5 1.7% 2.0% 2.2% 8.6 9.1 7.9 3.6 3.2 2.8Technology Hardware 13.1 15.7 11.4 3.6% 3.7% 4.2% 5.8 6.2 4.7 1.4 1.4 1.3Semicon & Semicon Equip 14.0 19.2 14.6 1.6% 1.7% 1.8% 6.8 9.6 7.2 2.7 2.5 2.3Telecoms 9.0 9.2 8.9 7.7% 8.1% 8.3% 5.3 5.2 5.0 1.3 1.4 1.3Utilities 10.7 10.3 9.7 6.4% 6.3% 6.5% 6.9 6.7 6.3 1.0 1.0 1.0

Source: IBES, MSCI, Datastream. As at COB 4th April, 2012

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Table 26: IBES Consensus P/E and 12-Month Forward Dividend Yields — Country Forecasts

P/E Dividend YieldCountry Index 12-Mth Fwd 2011E 2012E 2013E 12-Month Forward Austria ATX 9.2 11.7 9.5 8.1 2.9%Belgium BEL 20 11.8 29.1 12.2 10.9 5.2%Denmark Denmark KFX 16.0 23.0 17.1 13.7 2.0%Finland MSCI Finland 13.1 12.7 13.8 11.3 5.0%France CAC 40 9.5 9.9 9.7 8.8 6.2%Germany DAX 10.2 11.3 10.5 9.4 3.6%Greece MSCI Greece 7.6 -66.8 8.3 6.0 6.6%Ireland MSCI Ireland 19.2 21.5 20.3 16.5 3.1%Italy MSCI Italy 8.4 9.5 8.7 7.5 4.9%Netherlands AEX 9.3 10.4 9.7 8.4 4.0%Norway MSCI Norway 10.2 11.3 10.5 9.5 4.3%Portugal MSCI Portugal 10.7 12.2 11.0 9.8 10.9%Spain IBEX 35 9.1 8.9 9.5 8.1 7.3%Sweden OMX 12.0 12.8 12.3 11.0 4.0%Switzerland SMI 12.2 13.9 12.5 11.3 3.6%United Kingdom FTSE 100 9.9 10.4 10.2 9.2 4.0%EMU MSCI EMU 9.8 10.6 10.1 9.0 5.1%Europe ex UK MSCI Europe ex UK 10.4 11.5 10.8 9.6 4.5%Europe MSCI Europe 10.2 11.0 10.5 9.4 4.4%United States S&P 500 12.9 14.6 13.4 11.9 2.4%Japan Topix 13.2 17.3 21.6 13.2 2.1%Emerging Market MSCI EM 10.3 11.9 10.4 9.3 2.7%Global MSCI AC World 12.0 13.4 12.1 10.7 3.1%

Source: IBES, MSCI, Datastream. As at COB 4th April, 2012; ** Japan refers to the period from March in the year stated to March in the following year – P/E post goodwill

22



Economic, Interest Rate and Exchange Rate Outlook

Table 27: Economic Outlook in Summary

Real GDP Real GDP Consumer prices% oya % oqa, saar % oya

2011E 2012E 2013E 3Q11E 4Q11E 1Q12E 2Q12E 3Q12E 4Q12E 1Q13E 4Q11E 2Q12E 4Q12E 2Q13EUnited States 1.7 2.2 2.2 1.8 3.0 1.5 2.5 3.0 2.0 1.5 3.3 2.1 1.7 1.6Eurozone 1.5 -0.4 0.3 0.6 -1.3 0.0 -1.5 -0.3 0.3 0.5 2.9 2.4 2.0 1.6United Kingdom 0.7 0.8 1.9 2.3 -1.2 2.0 -1.0 2.5 1.5 2.0 4.6 3.0 3.0 2.7Japan -0.7 1.7 1.3 7.1 -0.7 2.2 1.6 1.2 1.0 1.2 -0.3 -0.2 -0.1 -0.2Emerging markets 5.8 5.0 5.6 4.9 4.1 5.7 5.4 5.5 5.8 5.7 5.7 4.8 5.0 5.5Global 2.6 2.2 2.6 3.0 1.6 2.4 2.0 2.6 2.5 2.5 3.6 2.7 2.6 2.6

Source: J.P. Morgan economic research, J.P. Morgan estimates, as of COB 4th April, 2012.

Table 28: Official Rates Outlook

% Forecast Forecast for

Official interest rate Current Last change (bp) next change (bp) Mar 12 Jun 12 Sep 12 Dec 12 Mar 13

United States Federal funds rate 0.125 16 Dec 08 (-87.5bp) On Hold 0.125 0.125 0.125 0.125 0.125Eurozone Refi rate 1.00 Dec '11(-25 bps) Mar '12(-25 bps) 1.00 0.75 0.75 0.75 0.75United Kingdom Repo rate 0.50 5 Mar 09 (-50bp) On Hold 0.50 0.50 0.50 0.50 0.50Japan Overnight call rate 0.05 5 Oct 10(-5bp) On Hold 0.05 0.05 0.05 0.05 0.05

Source: J.P. Morgan estimates, Datastream, as of COB 4th April, 2012.

Table 29: 10-Year Government Bond Yield Forecasts

% Forecast for end of

04-Apr-12 Jun 12E Sep 12E Dec 12E Mar 13EUnited States 2.28 2.50 2.50 2.50 2.50Eurozone 1.79 2.00 2.00 2.00 2.00United Kingdom 2.12 2.55 2.55 2.40 2.40Japan 1.02 1.15 1.05 1.05 1.15

Source: J.P. Morgan estimates, Datastream, as of COB 4th April, 2012.

Table 30: Exchange Rate Forecasts vs. US Dollar

Forecast for end of

04-Apr-12 Jun 12 Sep 12 Dec 12 Mar 13EUR 1.31 1.34 1.36 1.36 1.36GBP 1.59 1.59 1.61 1.61 1.61CHF 0.92 0.90 0.88 0.88 0.88JPY 82.46 86 84 83 82

Source: J.P. Morgan estimates, Datastream, forecasts as of COB 4th April, 2012

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Sector, Regional and Asset Class Allocations

Table 31: J.P. Morgan Equity Strategy — European Sector Allocations

MSCI Europe Weights J.P. Morgan Allocation Deviation From MSCI J.P. Morgan RecommendationEnergy 12.1% 12.0% -0.1% NeutralMaterials 9.9% 10.0% 0.1% Neutral

Chemicals =Construction Materials +Metals & Mining =

Industrials 10.9% 11.0% 0.1% NeutralCapital Goods =Transport =

Consumer Discretionary 8.8% 9.0% 0.2% NeutralAutomobile =Consumer Durables =Media =Retailing =Hotels, Restaurants & Leisure =

Consumer Staples 13.7% 14.0% 0.3% NeutralFood & Drug Retailing =Food Beverage & Tobacco =Household Products =

Healthcare 11.2% 9.0% -2.2% UnderweightFinancials 19.5% 22.0% 2.5% Overweight

Banks +Diversified Financials +Insurance +Real Estate =

Information Technology 3.0% 4.0% 1.0% OverweightSoftware and Services +Technology Hardware =Semicon & Semicon Equip +

Telecoms 6.2% 6.0% -0.2% NeutralUtilities 4.7% 3.0% -1.7% Underweight

100% 100.0% 0% Balanced

Source: MSCI, Datastream, J.P. Morgan

Table 32: J.P. Morgan Equity Strategy — European Regional Allocations

MSCI Europe Weights J.P. Morgan Allocations Deviation From MSCI J.P. Morgan Recommendation

Eurozone 44% 47% 3% OverweightUnited Kingdom 35% 32% -3% UnderweightOthers* 21% 21% 0% Neutral

100% 100% 0% Balanced

Source: MSCI, J.P. Morgan estimates * Switzerland, Sweden, Norway and Denmark.

Table 33: J.P. Morgan Equity Strategy — European Asset Class Allocations

Benchmark Weightings J.P. Morgan Allocations Deviation From Benchmark J.P. Morgan Recommendation

Equities 60% 70% 10% OverweightBonds 30% 25% -5% UnderweightCash 10% 5% -5% Underweight

100% 100% 0% Balanced

J.P. Morgan. Note: We use the MSCI Europe Developed index as the benchmark against which to determine our sector and regional allocations. Our Overweight/Underweight recommendations

reflect our belief that the relevant sector/region will out/ underperform he index in the next 6 to 12 month. Source: Datastream, MSCI, JP Morgan

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Companies Recommended in This Report (all prices in this report as of market close on 05 April 2012)EDP (EDP.LS/€2.08/Overweight), Enel Green Power (EGPW.MI/€1.35/Overweight), Shire plc (SHP.L/2021p/Overweight)

Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.

Important Disclosures

Market Maker: JPMS makes a market in the stock of ASML, Arm Holdings Plc, Qiagen N.V..

Designated Sponsor: J.P. Morgan Securities Ltd. is the appointed designated sponsor to Brenntag.

Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, BP, Brenntag, Casino, Centrica, Deutsche Post DHL, ENI, HSBC Holdings plc, Rio Tinto plc, Roche, SABMiller, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, TDC, Terna, UBS, Vinci, Volkswagen Prefs., Volvo, DnB ASA, Pohjola, Zurich Financial Services, IntesaSanpaolo, Acerinox, Gas Natural, Suedzucker, Danske Bank, KBC Group, Natixis, Qiagen N.V., Royal Bank of Scotland, Stora Enso, RWE, Vedanta Resources, Verbund within the past 12months.

Director: A senior employee, executive officer or director of JPMorgan Chase & Co. and/or J.P. Morgan is a director and/or officer of Rio Tinto plc.

Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of HSBC Holdings plc, Nestle, UBS, Unilever NV, IntesaSanpaolo.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Shire plc, EDP, Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, Arkema, ASML, BG Group, BP, Brenntag, British American Tobacco, Casino, Centrica, Continental AG, Deutsche Post DHL, ENI, HeidelbergCement, HSBC Holdings plc, Imagination Technologies, Infineon Technologies, Inmarsat PLC, Land Securities, Marks & Spencer, Nestle, Petrofac, Publicis Groupe, Rio Tinto plc, Roche, SABMiller, Safran, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, Swiss Re, TDC, Tele2, Terna, UBS, Unilever NV, Vinci, Volkswagen Prefs., Volvo, DnB ASA, IAG, Pohjola, Tryg, UBI, Vienna Insurance Group, Zurich Financial Services, Bankinter, British Land, IntesaSanpaolo, MAPFRE, National Bank of Greece, Acerinox, Arm Holdings Plc, Gas Natural, Novozymes, Randgold Resources Ltd, Salzgitter, Suedzucker, United Internet AG, Alcatel-Lucent, Danske Bank, KBC Group, Natixis, Qiagen N.V., Royal Bank of Scotland, Scania, Stora Enso, Fortum, RWE, Vedanta Resources, Verbund, Yara.

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: EDP, Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, BP, Brenntag, British American Tobacco, Casino, Centrica, Deutsche Post DHL, ENI, HSBC Holdings plc, Imagination Technologies, Infineon Technologies, Inmarsat PLC, Rio Tinto plc, Roche, SABMiller, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, Swiss Re, TDC, Terna, UBS, Unilever NV, Vinci, Volkswagen Prefs., Volvo, DnB ASA, Pohjola, UBI, Zurich Financial Services, Bankinter, IntesaSanpaolo, Acerinox, Gas Natural, Suedzucker, Danske Bank, KBC Group, Natixis, Qiagen N.V., Royal Bank of Scotland, Stora Enso, RWE, Vedanta Resources, Verbund.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Shire plc, EDP, Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, Arkema, ASML, BG Group, BP, Brenntag, British American Tobacco, Casino, Centrica,Deutsche Post DHL, ENI, HeidelbergCement, HSBC Holdings plc, Infineon Technologies, Inmarsat PLC, Land Securities, Marks & Spencer, Nestle, Publicis Groupe, Rio Tinto plc, Roche, SABMiller, Safran, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, Swiss Re, TDC, Terna, UBS, Unilever NV, Vinci, Volkswagen Prefs., Volvo, DnB ASA, IAG, Pohjola, Tryg, UBI, Vienna Insurance Group, Zurich Financial Services, Bankinter, British Land, IntesaSanpaolo, MAPFRE, National Bank of Greece, Arm Holdings Plc, Gas Natural, Novozymes, Suedzucker, Alcatel-Lucent, Danske Bank, KBC Group, Natixis, Qiagen N.V., Royal Bank of Scotland, Stora Enso, RWE, Vedanta Resources, Verbund, Yara.

Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: EDP, Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, BG Group, BP, Brenntag, British American Tobacco, Casino, Centrica, Deutsche Post DHL, ENI, HSBC Holdings plc, Land Securities, Nestle, Rio Tinto plc, Roche, SABMiller, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, Swiss Re, TDC, UBS, Unilever NV, Vinci, Volkswagen Prefs., DnB ASA, IAG, Zurich Financial Services, IntesaSanpaolo, Acerinox, Gas Natural, Suedzucker, Danske Bank, Natixis, Qiagen N.V., Royal Bank of Scotland, Stora Enso, RWE, Verbund, Yara.

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Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking EDP, Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, BP, Brenntag, British American Tobacco, Casino, Centrica, Deutsche Post DHL, ENI, HSBC Holdings plc, Imagination Technologies, Infineon Technologies, Inmarsat PLC, Rio Tinto plc, Roche, SABMiller, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, Swiss Re, TDC, Terna, UBS, Unilever NV, Vinci, Volkswagen Prefs., Volvo, DnB ASA, Pohjola, UBI, Zurich Financial Services, Bankinter, IntesaSanpaolo, Acerinox, Gas Natural,Suedzucker, Danske Bank, KBC Group, Natixis, Qiagen N.V., Royal Bank of Scotland, Stora Enso, RWE, Vedanta Resources, Verbund.

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Shire plc, EDP, Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, BG Group, BP, Brenntag, British American Tobacco, Casino, Centrica, Continental AG, Deutsche Post DHL, ENI, HSBC Holdings plc, Imagination Technologies, Infineon Technologies, Inmarsat PLC, Land Securities, Nestle, Rio Tinto plc, Roche, SABMiller, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, Swiss Re, TDC, Terna, UBS, Unilever NV, Vinci, Volkswagen Prefs., Volvo,DnB ASA, IAG, Pohjola, UBI, Zurich Financial Services, Bankinter, IntesaSanpaolo, National Bank of Greece, Acerinox, Gas Natural, Suedzucker, United Internet AG, Alcatel-Lucent, Danske Bank, KBC Group, Natixis, Qiagen N.V., Royal Bank of Scotland, Stora Enso, RWE, Vedanta Resources, Verbund, Yara.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Shire plc, EDP, Enel Green Power, Aegon, Anheuser Busch InBev, ArcelorMittal, Arkema, ASML, BG Group, BP, Brenntag, British American Tobacco, Casino, Centrica, Deutsche Post DHL, ENI, HeidelbergCement, HSBC Holdings plc, Infineon Technologies, Inmarsat PLC, Land Securities, Marks & Spencer, Nestle, Publicis Groupe, Rio Tinto plc, Roche, SABMiller, Safran, Saint-Gobain, Sanofi, SAP, Schneider Electric, Société Générale, Swedbank, Swiss Re, TDC, Terna, UBS, Unilever NV, Vinci, Volkswagen Prefs., Volvo, DnB ASA, IAG, Pohjola, Tryg, UBI, Vienna Insurance Group, Zurich Financial Services, Bankinter, British Land, IntesaSanpaolo, MAPFRE, National Bank of Greece, Arm Holdings Plc, Gas Natural, Novozymes, Suedzucker, Alcatel-Lucent, Danske Bank, KBC Group, Natixis, Qiagen N.V., Royal Bank of Scotland, Stora Enso, RWE, Vedanta Resources, Verbund, Yara.

Broker: J.P. Morgan Securities Ltd. acts as Corporate Broker to BG Group, British American Tobacco, Imagination Technologies, Inmarsat PLC, Land Securities, Petrofac, Rio Tinto plc, SABMiller, Vedanta Resources.

"J.P. Morgan Securities LLC (J.P. Morgan) is acting as financial advisor to HSBC on the sale of 195 Upstate New York and Connecticut branches and $15.0 billion of deposits from its wholly owned subsidiary, HSBC Bank USA, N.A. and other wholly owned affiliates to First Niagara Bank, N.A., a subsidiary of First Niagara Financial Group, Inc. as announced on 31 July 2011. J.P. Morgan will be receiving fees for so acting. J.P. Morgan may perform, or may seek to perform, other financial or advisory services for HSBC or its associates and may have other interests in or relationships with HSBC or its affiliates, and receive fees, commissions or other compensation in such capacities. This research report and the information herein is not intended to serve as an endorsement of the proposed transaction or result in procurement, withholding or revocation of a proxy or any other action by a security holder. This report is based solely on publicly available information. No representation is made that it is accurate or complete.” J.P. Morgan Securities LLC (J.P. Morgan) is acting as financial advisor to HSBC on the sale of its card and retail services business in the United States except for HSBC Bank USA’s credit card programme, to Capital One Financial Corporation as announced on August 10, 2011. J.P. Morgan will be receiving fees for so acting. J.P. Morgan may perform, or may seek to perform, other financial or advisory services for HSBC or its associates and may have other interests in or relationships with HSBC or its affiliates, and receive fees, commissions or other compensation in such capacities. The transaction is subject to applicable governmental and regulatory approvals. This research report and the information herein is not intended to serve as an endorsement of the proposed transaction or result in procurement, withholding or revocation of a proxy or any other action by a security holder. This report is based solely on publicly available information. No representation is made that it is accurate or complete.

J.P. Morgan and/or its affiliates is acting as financial advisor to SAP AG (NYSE: SAP) in connection with their acquisition of SuccessFactors , Inc. (NYSE: SFSF) as announced on December 3, 2011 pursuant to which a subsidiary of SAP would offer to acquire all outstanding shares of common stock of SuccessFactors for $40.00/per share in cash. The closing of the tender offer is conditioned on SuccessFactors stockholders tendering at least a majority of the outstanding shares of SuccessFactors common stock (on a fully diluted basis) and clearances by relevant regulatory authorities. This research report and the information herein is not intended to provide voting advice, serve as an endorsement of the proposed transaction or result in procurement, withholding or revocation of a proxy or any other action by a security holder.

J.P. Morgan Limited is acting as corporate broker and financial advisor to Vedanta Resources on its corporate reorganisation as announced on 25 February 2012. J.P. Morgan does not currently have a recommendation for Vedanta Resources Plc, Cairn India Ltd, Sesa Goa Ltd and Sterlite Industries (India) Ltd.

MSCI: The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated or used to create any financial products, including any indices. This information is provided on an 'as is' basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any

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third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates.

Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan–covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailing [email protected] with your request.

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.morganmarkets.com.

J.P. Morgan Equity Research Ratings Distribution, as of April 3, 2012

Overweight(buy)

Neutral(hold)

Underweight(sell)

J.P. Morgan Global Equity Research Coverage 45% 43% 12%IB clients* 51% 45% 34%

JPMS Equity Research Coverage 43% 48% 9%IB clients* 70% 61% 53%

*Percentage of investment banking clients in each rating category.For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.morganmarkets.com , contact the primary analyst or your J.P. Morgan representative, or email [email protected].

Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

Other Disclosures

J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketing name for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.

Options related research: If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options, please contact your J.P. Morgan Representative or visit the OCC's website at http://www.optionsclearing.com/publications/risks/riskstoc.pdf

Legal Entities Disclosures U.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC and is authorized and regulated in the UK by the Financial Services Authority. U.K.: J.P. Morgan Securities Ltd. (JPMSL) is a member of the London Stock Exchange and is authorized and regulated by the Financial Services Authority. Registered in England & Wales No. 2711006. Registered Office 125 London Wall, London EC2Y 5AJ. South Africa: J.P. Morgan Equities Limited is a member of the Johannesburg Securities Exchange and is regulated by the FSB. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd, Seoul Branch, is regulated by the Korea Financial Supervisory Service. Australia: J.P. Morgan Australia Limited (ABN 52 002 888 011/AFS Licence No: 238188) is regulated by ASIC and J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/AFS Licence No: 238066) is a Market Participant with the ASX and regulated by ASIC. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a participant of the Taiwan Stock Exchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private Limited, having its registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz East, Mumbai - 400098, is a member of the National Stock Exchange of India Limited (SEBI Registration Number - INB 230675231/INF 230675231/INE 230675231) and Bombay Stock Exchange Limited (SEBI Registration Number - INB 010675237/INF 010675237) and is regulated by Securities and Exchange Board of India. Thailand: JPMorgan Securities (Thailand) Limited is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange

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Commission. Indonesia: PT J.P. Morgan Securities Indonesia is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Philippines: J.P. Morgan Securities Philippines Inc. is a member of the Philippine Stock Exchange and is regulated by the Securities and Exchange Commission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao de Valores Mobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is a member of the Mexican Stock Exchange and authorized to act as a broker dealer by the National Banking and Securities Exchange Commission. Singapore: This material is issued and distributed in Singapore by J.P. Morgan Securities Singapore Private Limited (JPMSS) [MICA (P) 032/01/2012 and Co. Reg. No.: 199405335R] which is a member of the Singapore Exchange Securities Trading Limited and is regulated by the Monetary Authority of Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) which is regulated by the MAS. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission in Malaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect to securities business under licence number 35-07079 and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907, Riyadh 11553, Kingdom of Saudi Arabia. Dubai: JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is Dubai International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE.

Country and Region Specific Disclosures U.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by JPMSL. Investment research issued by JPMSL has been prepared in accordance with JPMSL's policies for managing conflicts of interest arising as a result of publication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. This report has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is only available to relevant persons and will be engaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as professional investors (or equivalent) in their home jurisdiction. Australia: This material is issued and distributed by JPMSAL in Australia to "wholesale clients" only. JPMSAL does not issue or distribute this material to "retail clients". The recipient of this material must not distribute it to any third party or outside Australia without the prior written consent of JPMSAL. For the purposes of this paragraph the terms "wholesale client" and "retail client" have the meanings given to them in section 761G of the Corporations Act 2001. Germany: This material is distributed in Germany by J.P. Morgan Securities Ltd., Frankfurt Branch and J.P.Morgan Chase Bank, N.A., Frankfurt Branch which are regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as of the previous month end satisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered withthe Securities and Futures Commission. (For research published within the first ten days of the month, the disclosure may be based on the month end data from two months prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider/market maker for derivative warrants, callable bull bear contracts and stock options listed on the Stock Exchange of Hong Kong Limited. An updated list can be found on HKEx website: http://www.hkex.com.hk. Japan: There is a risk that a loss may occur due to a change in the price of the shares in the case of share trading, and that a loss may occur due to the exchange rate in the case of foreign share trading. In the case of share trading, JPMorgan Securities Japan Co., Ltd., will be receiving a brokerage fee and consumption tax (shouhizei) calculated by multiplying the executed price by the commission rate which was individually agreed between JPMorgan Securities Japan Co., Ltd., and the customer in advance. Financial Instruments Firms: JPMorgan Securities Japan Co., Ltd., Kanto Local Finance Bureau (kinsho) No. 82 Participating Association / Japan Securities Dealers Association, The Financial Futures Association of Japan, Type II Financial Instruments Firms Association and Japan Securities Investment Advisers Association. Korea: This report may have been edited or contributed to from time to time by affiliates of J.P. Morgan Securities (Far East) Ltd, Seoul Branch. Singapore: JPMSS and/or its affiliates may have a holding in any of the securities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosures section above. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: This material is issued and distributed by JPMSAL in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money. JPMSAL does not issue or distribute this material to members of "the public" as determined in accordance with section 3 of the Securities Act 1978. The recipient of this material must not distribute it to any third party or outside New Zealand without the prior written consent of JPMSAL. Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regarded as professional clients as defined under the DFSA rules.

General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative to JPMS and/or its affiliates and the analyst's involvement with the issuer that is the subject of the research. All pricing is as of the close of market for the securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this report must make its own independent decisions regarding any securities or financial instruments mentioned herein. JPMS distributes in the U.S. research published by non-U.S. affiliates and accepts responsibility for its contents. Periodic updates may be provided on companies/industries based on company specific developments or announcements, market conditions or any other publicly available information. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise.

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"Other Disclosures" last revised January 6, 2012.

Copyright 2012 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. #$J&098$#*P

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