hsbc - equity insights -how bad could it get

8/6/2019 HSBC - Equity Insights -How Bad Could It Get

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abcGlobal Research

Some valuations are at levels not seen since the early 1980s

But the market turmoil raises the risk of recession

which means that analysts probably need to cut forecasts

further and that sentiment will stay fragile for a while

Markets have gone into freefall in the past week or so. The global index is down by 16%

since August 1 and by 19% since it peaked in late April (Chart 1). That is not quite in the

official bear market territory yet but note that some European markets (particularly

Germany down 25% and Italy down 24% this month) are (Chart 2).

What should investors do now? Given the damage to sentiment in the past few weeks, it is

hard to see markets rebounding healthily straight away. The risk that the market turmoil

tips the world into a new recession and causes earnings to turn down sharply has risen. It

will be a few months before the smoke clears and it becomes plain how much damage has

been done. Analysts have barely adjusted their earnings forecasts yet but historically, in a

recession, they tend to cut them by around 30-40%. However, valuations have become

very cheap with the PB (never mind prospective PE) for Europe, for example, down to

1.1x, a level it hasnt seen since the early 1980s.

We still look for three conditions before calling for a bounce: (1) cyclical indicators,

including earnings, to come down further, (2) risk events (notably European debt) to pass,

and (3) capitulation. We are close to getting there with (3) but not yet for (1) and (2). In

the meantime, we advise investors to buy stocks with good long-term growth prospects,

relatively little short-term earnings risks that have become cheap (see our two notes Stocks

to buy in uncertain times for Europe and Asia, published this week). We remain

overweight the US (more defensive than Europe) and EM (growth prospects still good).

Equity Insights

How bad could it get?

Equity Strategy

Global12 August 2011

Garry Evans*

Strategist

The Hongkong and Shanghai Banking

Corporation Limited

+852 2996 6916

[email protected]

View HSBC Global Research at:http://www.research.hsbc.com

Employed by a non-US affiliate ofHSBC Securities (USA) Inc, and is notegistered/qualified pursuant to NYSE

and/or NASD regulations

ssuer ofeport:

The Hongkong and ShanghaiBanking Corporation Limited

Disclaimer &Disclosures

This report must be readwith the disclosures andthe analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it

1. Global and EM index performance, past 12m 2. Main market performance since Aug 1

90

100

110

120

130

Jul-10 Oct-10 Jan-11 Apr-11 Jul-11

ACWI GEM

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

GermanyItaly

RussiaFranceSpainKoreaBrazilUKUSAustraliaChinaMexicoCanadaTaiwanSwitzerlandIndiaJapan

Source: HSBC Source: HSBC

To vote for HSBC in Asiamoney 2011

http://www.asiamoney.com/polls


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HSBC strategy recommendationsGlobal market calls (benchmark: MSCI AC World Index; countries shown have a minimum weight of 0.5%)

Market ______ HSBC call________ HSBC recommended Blue-chip index current Targetend-2011

% from

current (last quarter) active weight (% pts) level level change

AmericasUS Over (Over) 2.2 S&P 500 1,121 1,430 28%Canada Neutra l (Under) 0 .0 S&P/TSX 12,199 14,500 19%Brazil Neutra l (Over) n \a Bovespa 51,395 71,000 38%Mexico Under (Under) -0.2 Bolsa 32,219 39,000 21%EuropeUK Neutral (Neut ral) 0.0 FTSE 100 5,007 6,300 26%France Under (Under) -2.0 CAC 40 3,003 4,100 37%

Germany Neutral (Neut ral) 0.0 DAX 30 5,613 8,000 43%Switzerland Under (Under) -1.3 SMI 4,792 6,500 36%Spain Under (Neutral) -0.7 IBEX 35 7,966 10,700 34%Italy Under (Neutral) -0 .5 FTSE MIB 14,676 20,500 40%Netherlands Under (Under) -0.5 AEX 277 350 26%Sweden Under (Over) -0.7 OMX 905 1,130 25%Russia Over (Neutral) n\a RTS 1,538 2,075 35%Eurozone Under (Under) -3 .6 EUROSTOXX 50 2,154 3,000 39%Pan-Europe Under (Under) -5 .6 FTSE Eurofi rs t 300 910 1,150 26%Asia PacificJapan Under (Under) -4.0 TOPIX 777 870 12%Austral ia Over (Neutral) 0.6 S&P/ASX 200 4,141 5,200 26%China Over (Over) 2.8 MSCI China 57 78 37%Korea Neutral (Under) 0.0 KOSPI 1,806 2,200 22%Taiwan Over (Over) 1.5 TAIEX 7,736 10,000 29%Hong Kong Neutra l (Neutral) 0 .0 Hang Seng 19,784 26,000 31%

India Neutra l (Neutral) 0 .0 SENSEX 17,131 20,000 17%Singapore Over (Under) 0.8 STI 2,821 3,600 28%OtherSouth Afr ica Neutral (Over) 0.0 JSE All-Share 28,659 34,000 19%World (USD terms)Developed wor ld Under (Under) -6 .0 MSCI DM 1,130 1,420 26%Emerging world Over (Over) 6.0 MSCI EM 981 1,270 29%All-countries world 0.0 MSCI AC 291 365 26%

Source: HSBC, Thomson Financial Datastream

Global sector calls (benchmark: MSCI AC World Index)

Sector _____________HSBC call______________ HSBC recommended Industry preferencecurrent (last quarter) active weight (% pts)

Energy Neutral (Neutral) 0.0 Oil & GasMaterials Over (Neutral) 3.5 MiningIndustrials Neutral (Neutral) 0.0 Capital GoodsConsumer Discretionary Neutral (Under) 0.0 Luxury GoodsConsumer Staples Under (Under) -3.6 Food RetailHealth Care Under (Under) -3.7 Heath Care Equipment & ServicesFinancials Neutral (Over) 0.0 Diversified FinancialsIT Over (Over) 3.7 Tech Hardware & EquipmentTelecom Services Over (Over) 1.9 Mobile TelecomsUtilities Under (Under) -1.7 Water Utilities

Source: HSBC, Thomson Financial Datastream


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How wrong can theconsensus be?

With the lead indicators such as the US

manufacturing ISM falling but still pointing to

growth, the jury remains out on whether this is a

soft-patch in economic activity or the start of a

new recession. The problem is that we are

unlikely to get a conclusive answer on this for a

few more months. So we need to consider the

worst case scenario for earnings in the event theglobal economy does enter a new recession.

Analysts have barely pared back their earnings

forecasts yet. In the US (Chart 3), thanks to a

strong Q2 earnings season (with 71% of

companies beating forecasts), the consensus

continues to look for 17% growth this year

and 15% next.

Europe (Chart 4) looks less healthy. The

consensus has cut the 2011 forecast by 6% overthe past three months and, in the Q2 earnings

season, the beats:misses ratio so far (with about

three-quarters of companies having reported) is as

low as 43:48. This years growth is now forecast

to be only 5%, compared to 14% back in January.

In emerging markets (Chart 5), analysts continue

to see earnings growth as robust, with 14%

growth forecast for both this year and next. Asia

ex Japan is similar 13% this year and 14% next.

In GEMS, analysts have not really cut forecasts at

all: the 2011 forecast is just 2% of its peak from

May and the 2012 forecast just 1% off.

3. Consensus EPS forecast: US

40

50

60

70

80

90

100

110

120

Jan-09

May-09

Sep-09

Jan-10

May-10

Sep-10

Jan-11

May-11

2010 2011 2012

Source: HSBC, Reuters Thompson Datastream, IBES

4. Consensus EPS forecast: Europe ex UK

80

100

120

140

160

180

200

Jan-09

May-09

Sep-09

Jan-10

May-10

Sep-10

Jan-11

May-11

2010 2011 2012


5. Consensus EPS forecast: Emerging markets

0

20

4060

80

100

120

140

Jan-09

May-09

Sep-09

Jan-10

May-10

Sep-10

Jan-11

May-11

2010 2011 2012


We can stress-test for a possible recession scenario

by looking at how wrong consensus forecasts have

been going into previous recessions.


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Chart 6 shows the difference between actual

earnings and the consensus forecast

12 months earlier.

On average, for the period since 1988 for which

we have data, analysts have been 9% too

optimistic. Mostly their forecasts were too high

because they missed recessions (the biggest

misses were in 1990, 2001 and 2008). But they

also chronically over-estimated earnings in the

expansion of 1993-9 although in otherexpansions such as 2003-7 and the past two

years, their forecasts were too cautious.

6. Analysts earnings forecast accuracy All Country World

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

88 90 92 94 96 98 00 02 04 06 08 10


The degree of excess optimism varies from

country to country (Chart 7). Analysts were most

accurate with their forecasts in emerging markets

(although, unsurprisingly, the volatility here is

greater) and most over-optimistic in Japan. Inboth the US and Europe, the over-estimation

averages about 7% over time.

7. Analysts earnings forecast accuracy, by region

-30%

-25%

-20%

-15%

-10%

-5%

0%

ACW

Dev

EM

US

Europe

AsiaexJapan

Japan


What does this say about recessions? In normal

recessions, analysts tend to be about 30-40% too

optimistic for the year ahead in the US and

Europe and rather more than that in Japan and

emerging markets. The 2007-9 recession was

worse than that, with analysts at the worse point

over-estimating by 37% in the US, 43% in Europe

and 47% in Asia ex Japan.

If we assume that a recession next year would be

more like a normal recession (given that we are

starting from a much lower level of activity than

2007), then the likely miss to current earnings

forecasts would be about 30-40%.

How cheap can markets get?

We have been arguing for some time that equity

markets look very cheap and that, therefore, the

structural worries about the global economy were,

to a degree at least, priced in. As of Wednesday

this week, for instance, the 12-month forward PE

for the All Country World Index reached 9.7x. It

has been cheaper than this, since the MSCI

indexes began in 1988, only for three months in

October-December 2008 (Chart 8).


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8. Prospective PE for All Country World Index (with average)

0

5

10

15

20

25

30

88 90 92 94 96 98 00 02 04 06 08 10

MSCI AC WORLD


As an aside, one argument worth dismissing at

this point is how similar the US looks now to

Japan in the mid 1990s, four or five years after its

bubble burst. While there may be similarities in

the way that bond yields fell or growth proved to

be anaemic, the big difference is that, in Japan,

this was not priced in. In the mid-1990s, Japanese

valuations remained sky-high: the prospective PE

in 1994-5 averaged 55x and did not drop below

20x until 2002 (Chart 9).

9. Forward PE, Japan (with average)

0

10

20

30

40

50

60

70

80

88 90 92 94 96 98 00 02 04 06 08 10

MSCI JAPAN -


We clearly need to test current world and US

valuations further. There are two objections that

can be made to using the forward PE since 1988:

(1) it relies on analysts forecasts which might, as

argued above, be very wrong; and (2) the worldwas in a secular bull market for much of the

period since the mid-1980s. If we assume that

earnings could fall, and that we need to go back

further than 1988 for comparison, how cheap

would markets look?

There are two alternatives measures we could look

at: price-to-historic earnings (for which we have

data going back to 1870) and price/book (data from

1975). Both show that valuations are not quite as

cheap as they were in the 1974-1984 period but that

they are still very low by historical standards.

Chart 10 shows PE (using trailing earnings) for

the S&P500 going back to 1870 (using Robert

Shillers data for the period prior to the 1980s).

Currently, the US is on 12.1x trailing earnings,

compared to a long-run average of 14.4x. It has

been cheaper than now only in late 2008-early

2009, 1974-1984 (when it averaged only 9.5x),

and during and for a period after wars (1915-26,

1940-54). Even during the Great Depression

1930-9, PE averaged around 17x.

10. Trailing PE, S&P500 1870-2011 (with average & std devs)

0

5

10

15

20

25

30

1870 1890 1910 1930 1950 1970 1990 201

Source: HSBC, Robert Shiller

Of course, if earnings disappoint by as much as

we suggested above that they might, P/trailing E

might not help very much. But price/book is often

a useful guide to valuation bottoms in earnings

recessions. Even in the big recession of 2007-9,

book value declined from peak to trough by only

25%-30% in big markets (in a more normal

recession, the decline is around 15-25%).


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Chart 11 shows price/book for the US and Europe

ex UK going back to 1975 (and, therefore,

capturing the historically low valuations of the

1970s and early 1980s). Currently, Europe ex UK

is on a PB of 1.10x. It has been cheaper than this

for one month in early 2009 but, before then, not

since 1984. In the 1975-1985 period, however, it

averaged only 0.74x. (It is worth remembering,

though, that ROE for European companies this

year is forecast to be 14%. We dont have the data

for the 1970s readily to hand, but we would bet

ROE then was significantly lower.)

The US does not look quite so cheap on a PB

basis, with a PB currently of 1.65x. That takes it

back (with a two-month exception in early 2009)

to the level of 1985. In the 1975-1985 period, US

PB averaged 1.33x (but, then again, ROE

averaged 10% during that period, against 16%

over the next 12 months).

11. Price/book ratio: US and Europe ex UK

0

1

2

3

4

5

6

7

75 78 81 84 87 90 93 96 99 02 05 08 11

US

EUR ex UK


One valuation measure that bearish investors

often use, but which we find of limited value, is

the cyclically-adjusted PE (CAPE also

sometimes called the Shiller PE). This sounds

sophisticated but, in fact, is nothing more that the

current price divided by the 10-year average of

earnings (usually adjusted for inflation).

By the CAPE, the current level of the US market

does not look that cheap. It is on 14.5x, only a little

below the long-run average of 15.8x (Chart 12).

12. Cyclically adjusted PE (with average & std devs)

0

5

10

15

20

25

30

35

40

1880 1900 1920 1940 1960 1980 2000

Source: HSBC, Robert Shiller

There are a number of problems with the CAPE.

First, the 10 years of historical data includes the

big earnings drop of 2008-9 (Chart 13). Is it

logical to value the current level of the market off

earnings that collapsed? We would prefer to use a

trend-adjusted PE (TAPE) and, since the current

level of earnings for the US at roughly at its

historical trend, this is almost identical to the

historical PE.

13. US earnings, with log trend

0

20

40

60

80

100

120

88 90 92 94 96 98 00 02 04 06 08 10

US


Second, the assumption behind the CAPE is that

earnings are always mean reverting. While that is

usually true, there may be times (such as now, as

we have often argued) where earnings can grow

above trend for a while, driven by sales to

emerging markets and with costs under control.


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So where from here?Since our Q3 Quarterly, published in early July,

we have argued that there were three conditions

that needed to be fulfilled for markets to bottom:,

cyclical indicators to dip further (including

analysts cutting their earnings forecasts), risk

events to pass, and investor capitulation to set in.

We have dealt with analysts forecasts above.

Where do we now stand on the others?

Cyclical indicatorsIn the end, the economy is partly driven by

psychology. How much will the events of the past

few weeks affect consumer and corporate

sentiment and spending decisions? That is very

hard to judge. For the moment, HSBCs

economists have not slashed their growth

forecasts (they still look for 2.5% GDP growth for

the US and 3.4% for the world in 2012 far from

recession conditions). But we will need to watch

the data carefully over the coming months for

signs that growth expectations continue to fall.

Not least, the US manufacturing ISM which we

regard as the best single indicator of the cycle

almost certainly will fall further. It is currently at

50.9, having fallen from a peak of 61.4 in

February. But that means it is still indicating

expansion. Mid-cycle dips often take the ISM

below 50 (see Chart 14) as, for example, in 1985,

1996, 1998 without necessarily signalling arecession. As we have argued previously, the mid-

cycle dip in the ISM typically lasts nine months,

while this one has so far gone on for only five. It

is quite possible for the ISM to fall further,

without it signalling a recession (when it would

typically drop to 40 or below).

14. US manufacturing ISM and US recessions

30

35

40

45

50

55

60

65

70

50 60 70 80 90 00 10

Recessions ISM

Source: HSBC, Bloomberg

How big is the risk of a US recession? Obviously

that is our economists call. But we would make a

couple of observations.

First, this expansion is still very short by historical

standards, having lasted only 26 months, by the

NBERs official definition. This would make it

the third shortest expansion since 1930 (and

probably really the second shortest since many

view the 1980-1 expansion, that lasted only 12

months, as a mis-dating by the NBER).

Second, the level of activity in the US remains at

a very subdued level. The two largest consumer

purchases, for example, autos and houses (Charts

15 and 16), are at such depressed levels, that it is

hard to imagine them falling sharply from here, as

typically happens in a full-blown recession.


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15. US auto sales, SAAR (mn vehicles)

0

5

10

15

20

25

70 75 80 85 90 95 00 05 10


16. US new housing starts (000 units SAAR))

0

500

1000

1500

2000

2500

3000

60 65 70 75 80 85 90 95 00 05 10


Risk events

In many ways, we would argue that the recent

dramatic sell-off was triggered by the failure of

the EU summit at the end of July to tackle the

European sovereign debt issue properly. The

proposal to cut Greeces debt, in effect, by around

20% was considered by the market as plainly

insufficient. The summit also failed to make any

proposals for Ireland and Portugal, or to increase

the European Financial Stability Fund (EFSF) to a

size sufficient to allow it to see off speculative

moves against Italy and Spain. The European

Central Banks subsequent stubborn refusal to

carry out full-hearted credit easing and liquidity

injection (in contrast to the position of the Fed)

has exacerbated the situation.

We would see the USs squabbles over the debt

ceiling as less of a problem. While these were a

reminder of how dysfunctional US politics has

become (and the negotiations over coming months

on the details of spending cuts are also likely to be

unedifying), at least there was a decision and

some sort of medium-term plan to cut the deficit

along with a supportive central bank. Moreover,

the US dollars position as the worlds FX reserve

currency means the problem is much less urgent.

Are these problems going to go away? In Europe,

perhaps not soon. In our view, there need to be

moves towards greater fiscal unity (see Fixing the

eurozone 8 August by HSBCs chief economist,

Stephen King). The debt situation for the three

peripheral eurozone members has not been solved.

The ECB needs to be more accommodative. We

would like to think that markets will push policy-

makers to take more decisive action. But, until

they do, we continue to be cautious on Europeanstocks (where we remain underweight), however

cheap they have got.

Capitulation

Perhaps the one box we can tick is investor

capitulation. In our last Quarterly, we introduced

an HSBC investor sentiment index, which

combines the one-month moving average of 1) the

American Association of Individual Investors

(AAII) weekly survey, 2) the put/call ratio for

equity options on the Chicago Board Options

Exchange, and 3) the VIX index of S&P500

implied volatility.

The index has given useful buy signals at most

market bottoms, both during recessions (2003 and

2009) and intra-cycle (1998, 2005, 2010),

although it did perhaps forgivably send too

early a buy signal in 2002 and 2008 (Chart 17).

The signal at market tops is rather more

complicated: sentiment seems to wane before

stocks peak, as in 2007.


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Currently, sentiment has collapsed to the level of

intra-cycle correction bottoms such as mid-2010

or 1998, but not to the level of a big cyclical

bottom such as 2009 or 2003.

The VIX (which reached 48 this week) and the

put/call ratio (which got over 1x) are at very

bearish levels. The AAII survey, however,

showed a surprising rebound in the latest weekly

numbers, with 33% of retail investors expecting

stocks to rise over the next six months, up from

27% the previous week. Perhaps some investors

believe the market now represents good value or

maybe the survey just lags a little. Remember,

too, that since we use a one month moving

average to smooth out volatility, the numbers are

a little slow to react.

So, whether capitulation has truly set in depends

like many of the other factors we have highlighted

in this note on whether you believe this is just a

(particularly nasty) mid-cycle correction, or a full-

blown recession. The problem is that we are

unlikely to get a conclusive answer on this keyquestion, at least in the near-term.

17. HSBC investor sentiment index

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

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

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

Sentiment index S&P 500 (log, RHS)

Source: HSBC, Thompson Reuters Datastream


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Disclosure appendix

Analyst Certification

The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the

opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their

personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific

recommendation(s) or views contained in this research report: Garry Evans

Important disclosuresStock ratings and basis for financial analysis

HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which

depend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations.

Given these differences, HSBC has two principal aims in its equity research: (1) to identify long-term investment opportunities

based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12-month horizon; and

(2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative, technical

or event-driven techniques on a 0- to 3-month horizon and which may differ from our long-term investment rating. HSBC has

assigned ratings for its long-term investment opportunities as described below.

This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when HSBC

publishes a short-term trading idea the stocks to which these relate are identified on the website at www.hsbcnet.com/research.

Details of these short-term investment opportunities can be found under the Reports section of this website.

HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's

existing holdings and other considerations. Different securities firms use a variety of ratings terms as well as different rating

systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research

report. In addition, because research reports contain more complete information concerning the analysts' views, investors

should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not

be used or relied on in isolation as investment advice.

Rating definitions for long-term investment opportunities

Stock ratings

HSBC assigns ratings to its stocks in this sector on the following basis:

For each stock we set a required rate of return calculated from the cost of equity for that stocks domestic or, as appropriate,regional market established by our strategy team. The price target for a stock represents the value the analyst expects the stock

to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the

implied return must exceed the required return by at least 5ppt over the next 12 months (or 10ppt for a stock classified as

Volatile*). For a stock to be classified as Underweight, the stock must be expected to underperform its required return by at least

5ppt over the next 12 months (or 10ppt for a stock classified as Volatile*). Stocks between these bands are classified as Neutral.

Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage, change of volatility

status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review,

expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily

triggering a rating change.

*A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12

months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However,stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past

month's average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating,

however, volatility has to move 2.5ppt past the 40% benchmark in either direction for a stock's status to change.


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Rating distribution for long-term investment opportunitiesAs of 11 August 2011, the distribution of all ratings published is as follows:

Overweight (Buy) 52% (27% of these provided with Investment Banking Services)

Neutral (Hold) 36% (20% of these provided with Investment Banking Services)

Underweight (Sell) 12% (19% of these provided with Investment Banking Services)

Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment

banking revenue.

For disclosures in respect of any company mentioned in this report, please see the most recently published report on that

company available at www.hsbcnet.com/research.

HSBC Legal Entities are listed in the Disclaimer below.*

Additional disclosures

1 This report is dated as at 12 August 2011.2 All market data included in this report are dated as at close 10 August 2011, unless otherwise indicated in the report.3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its

Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research

operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrierprocedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/orprice sensitive information is handled in an appropriate manner.


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Disclaimer

*Legal entities as at 4 March 2011

UAE HSBC Bank Middle East Limited, Dubai; HK The Hongkong and Shanghai Banking

Corporation Limited, Hong Kong; TW HSBC Securities (Taiwan) Corporation Limited; CA HSBC

Securities (Canada) Inc, Toronto; HSBC Bank, Paris Branch; HSBC France; DE HSBC Trinkaus &

Burkhardt AG, Dsseldorf; 000 HSBC Bank (RR), Moscow; IN HSBC Securities and Capital Markets

(India) Private Limited, Mumbai; JP HSBC Securities (Japan) Limited, Tokyo; EG HSBC

Securities Egypt SAE, Cairo; CN HSBC Investment Bank Asia Limited, Beijing Representative

Office; The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch; The Hongkong

and Shanghai Banking Corporation Limited, Seoul Securities Branch; The Hongkong and ShanghaiBanking Corporation Limited, Seoul Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg;

GR HSBC Securities SA, Athens; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv; US

HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC Mxico,

SA, Institucin de Banca Mltiple, Grupo Financiero HSBC; HSBC Bank Brasil SA Banco Mltiplo;

HSBC Bank Australia Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The

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Global

Garry EvansGlobal Head of Equity Strategy+852 2996 6916 [email protected]

Daniel Grosvenor

+852 2996 6592 [email protected]

EU and US

Peter SullivanHead of Equity Strategy, EU and US

+44 20 7991 6702 [email protected]

Europe

Robert Parkes+44 20 7991 6716 [email protected]

CEEMEAJohn Lomax


Wietse Nijenhuis


Asia

Garry Evans+852 2996 6916 [email protected]

Steven Sun+852 2822 4298 [email protected]

Vivek Misra+91 80 3001 3699 [email protected]

Global Equity Strategy Research Team

hsbc - equity insights -how bad could it get

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