trends institutional monthly

Special focus

The case for counter-cyclicalasset allocationpage 6

Food for thought

Abenomics: No miracles,but progresspage 11

Real estate update

Swiss logistic properties:Investment opportunitypromises growthpage 9

Investment strategy and assetallocation

Fundamentals drive furtherincrease in equity quotapage 3

This material is not investment research or a research recommendation for regulatory purposes. Please find further important information at the end ofthis document. This material is directed at Credit Suisse’s market professionals and institutional clients. Recipients who are not market professionals or in-stitutional clients of Credit Suisse should, before entering into any transactions, consider the suitability of the transaction to individual circumstances andobjectives.

30/06/2014

TrendsInstitutional MonthlyInvestment Strategy & Research

Institutional investors

EditorialNannette Hechler-Fayd'herbeHead of Investment Strategy

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

Robert J ParkerResearch Strategic Advisory

[email protected],+44 20 7883 9864

Since our last monthly publication, a number of significantevents have taken place. Geopolitical factors have escalated.Although the conflict in Eastern Ukraine may, at least temporar-ily, have calmed down, developments in the Middle East andparticularly Iraq have clearly deteriorated badly. Consequently,oil prices have increased, with Brent trading above USD 113per barrel. Monetary policy has eased in Europe with the Euro-pean Central Bank charging banks for deposits, reducing itsreference rate and introducing a new LTRO program targetedat lending to small and medium-sized businesses. ECB policyhas a number of objectives, but clearly avoiding deflation andimproving lending to SMEs are priorities. In the USA, after aweak first quarter, economic indicators have improved and ini-tial evidence suggests that an upturn in inflation and conse-quently expectations of the Federal Reserve raising the Feder-al Funds Rate may eventually be brought forward with implica-tions for the bond markets, duration risk and the outlook forthe US dollar. Likewise, the Bank of England has indicatedthat interest rates may increase ahead of market expectations.The next two months will be dominated by the corporate earn-ings season, where the trend improvement in earnings is likelyto persist against a background of improved economic dataand hopefully some easing of geopolitical tensions. In this edi-tion of Trends, we have continued to focus on two themes inthe asset management industry; first, the trend toward abso-lute return products, where we demonstrate one of our risk-managed approaches to performance generation and, second,the trend to less liquid, but higher-returning assets, where wefocus on one area of the real estate market that has not beensubject to “bubble-like” conditions.

Given the seasonal holidays, we plan to publish our nextedition in September.

In this issue

Investment strategy and asset allocation

Fundamentals drive further increase in equity quota page 3

Special focus

The case for counter-cyclical asset allocation page 6

Real estate update

Swiss logistic properties: Investment opportunity promisesgrowth page 9

Food for thought

Abenomics: No miracles, but progress page 11

Forecast summary page 12

Glossary

Glossary page 13

Editorial deadline: 30 June 2014

2 30/06/2014 Credit Suisse - Trends Institutional Monthly

Investment strategy and asset allocation

Fundamentalsdrive furtherincrease in equityquota

The latest macro news and positive cen-tral bank actions provide new market stim-uli. We are increasing our initial small over-weight to a more visible, albeit still moder-ate allocation.

With valuation support for most creditcalls less compelling, we now also moveemerging market debt back to neutral.

Anja HochbergCIO – Europe & [email protected], +41 44 333 52 06

Economic outlookGlobal leading indicators continue to show a further brighten-ing of the economic outlook. This is most visible in the USA,with stronger PMIs and labor market data. Even if the US Fed-eral Reserve (Fed) had to revise its growth forecasts slightly,based on the weather-related growth dip in Q1, it has neverthe-less confirmed the pick-up of economic momentum. Currently,the Fed’s growth forecasts stand at 3.0%–3.2%, which is atthe upper (optimistic) end of consensus. Our Research teamexpects the first cautious hike in the Fed funds rate in June2015, with an increase to roughly 1% by end–2015.

Global Manufacturing PMI

30

35

40

45

50

55

60

Jan 98 Jan 02 Jan 06 Jan 10 Jan 14

Global manufacturing PMI

Index

Source: PMIPremium, Credit Suisse / IDC

European leading indicators have weakened slightly over thelast couple of weeks, but continue to point to a continuation ofthe economic upswing. Some of the weakening can – giventhe usual quarterly lag – be attributed to US weakness in thefirst quarter, especially as domestic economic indicators lookfairly robust. With the expected re-acceleration in the USA,Germany’s leading indicators should move north again. Giventhe low inflation, European Central Bank president Draghi hasprovided a broad range of measures (main refi rate cut to0.15%, marginal lending rate to 0.4%, deposit rates to–0.1%, a new LTRO until September 2018 with fixed ratesand full allotment conditional on banks providing lending to thereal economy, and preparation for outright ABS purchases),which can be summarized under three headlines:

Additional easing of monetary policy via the interest but alsocurrency channel.

Improvement of the monetary transmission mechanism (i.e.make sure that the low ECB rates lead to cheaper and morecredit).

Pronounced forward guidance to ensure people that theECB would be ready for further measures and does not intenda quick reversal of its policy.

Europe’s profit margins have visible catch-up potentialGlobal, US, euro area.

0

2

4

6

8

10

Jan 89 Jan 93 Jan 97 Jan 01 Jan 05 Jan 09 Jan 13

Global US Euro area

%

Source: Datastream, Credit Suisse / IDC

3 Investment strategy and asset allocation 30/06/2014 Credit Suisse - Trends Institutional Monthly

Swiss leading indicators such as the procurement.ch PMI haveweakened slightly over the last couple of weeks, but continueto point to a visible economic recovery, increasingly supportedby the industrial sector. Given the strong disappointment of theUS economic indicators early this year – which has now beenclearly overcome – a small soft patch in Swiss indicatorscomes as no surprise. The Swiss economy is, however, expect-ed to react far less to the temporary US weakness than itwould normally, given the continued economic growth in theEurozone. The Swiss National Bank has revised its inflationforecast marginally lower for 2015 and 2016 to take into ac-count the very weak dynamics of consumer prices in the Euro-zone. With a forecast at 0.9% for 2016, the SNB also con-firms the absence of strong inflationary pressures over themedium term, which allows it to keep monetary policy expan-sive for the time being. We expect the SNB to maintain theminimum exchange rate until at least the end of 2015.

Fixed Income Although we believe that the Fed will communicate and sup-port the transition to initial rate hikes in a very balanced man-ner, US bond yields will – after having recovered from theweak Q1 growth figures – start to reflect the new reality of en-hanced growth, inflation back at 2% and a Fed that is ready toimplement its first rate hike in 12 months with rising yields. Ac-cordingly, we confirm our negative overall view on the fixed in-come universe and have reinforced this view by moving UStreasury bonds to negative (versus a fixed income benchmarkthat already features the above-mentioned negative view).

We continue to prefer non-core bonds versus core bonds,but see valuation already very stretched in key credit areas,e.g. corporate and high-yield bonds. With the current rally inemerging market debt, this now seems to be the case for thisasset class. In addition, our emerging market risk appetite indi-cator shows that sentiment also appears to be at extreme lev-els. We have also therefore downgraded emerging marketdebt to neutral. In contrast to the afore-mentioned asset class-es, we continue to hold a positive view on European peripheralspreads and consequently expect peripheral bonds to outper-form. This translates into a preference for European bonds ver-sus Swiss bonds in our asset allocation table.

Equities In our last edition, we outlined our positive medium- to long-term equity outlook, but were looking for a stronger catalyst tomove to a more visible overweight (after allowing our equityquota to drift into an overweight). With both economic indica-tors strengthening and central banks providing either more poli-cy support (ECB) or confirming their path (Fed), we feel com-fortable increasing our equity allocation. For a balanced profilewith approximately 40% equity, we would now consider a tacti-cal quota of 44%. We would still regard this as a moderateoverweight given the fact that our technical research team onlyhas a neutral view based on some major resistance levelsahead of us. With more support from technicals, the case for amore sizable equity quota could grow.

We recommend implementing this equity overweight byadding to our preferred markets. We continue to favor Europe

and Japan. Europe has catch-up potential on both the econom-ic and earnings front, and is moderately valued and enjoysstrong ECB support. Within Europe, we have used the techni-cal rebound of the Italian equity market to neutralize our Italianoverweight. This leaves us with Germany as the single outper-former in a pure Eurozone portfolio. We feel confident with thisview, given an improving earnings picture and the solid eco-nomic argument. In a re-accelerating global economic world,Germany is the best-positioned European country. In addition,the weakening euro is most supportive for the German equitymarket as the lattert has the highest share of revenues outsidethe Eurozone. We maintain our market perform for Spain (witha slight positive bias) and our market perform for France (witha slight negative bias). Japan is a clear valuation case thatshould also enjoy more policy support going forward (see alsoour “deep dive” page). For Swiss investors, we recommendcore holdings and adding European exposure.

Foreign ExchangeOur key call, which has enjoyed increasing conviction, is thatthe US dollar will continue to strengthen. This view is mainlybased on a diverging monetary policy (thus providing some ini-tial rate support) and a relatively low valuation. We thereforerecommend building up more USD exposure for EUR andCHF mandates. Our outlook for EUR/CHF remains un-changed, with only minor upmove potential and a well-protect-ed downside.

Fair value EUR/USD

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12 Jan 14

19.06.2014 +1 Stdev -1 Stdev Fair value EUR/USD

EUR/USD

Source: Datastream, Credit Suisse / IDC

Alternative InvestmentsWe continue to recommend a slight overweight in alternative in-vestments, mainly driven by our positive view on hedge funds.The investment environment of this asset class has continuedto improve and we see very good opportunities for managersto extract additional alpha given:

A slight improvement in our Hedge Fund Barometer after amild deterioration. The barometer measures the risks that canhinder the successful implementation of hedge fund strate-gies. The key risks are liquidity, volatility, the business cycleand systemic risks (e.g. crowded trades). There is only one in-dicator that has become slightly more problematic and this isliquidity. Everything else looks good. We therefore favor stylesthat are less susceptible to liquidity conditions.


The attractive opportunity set available to hedge fund man-agers at the moment. The correlation between individual equi-ties, sectors and countries has dropped significantly, which fa-cilitates the generation of returns via sector rotation and stock-picking.

Some good opportunities to be found in individual assetclasses even though market valuations are no longer purely fa-vorable. In this environment, managers can substantially re-duce overall risk by (partially) hedging the market risk. This is

important because it should enable hedge funds to generate amuch better Sharpe ratio than long-only investing.

With regard to the remaining alternative investment asset class-es, we continue to be neutral for both commodities and gold.Global real estate can also be broadly considered to be neu-tral, although with pronounced regional differences. While wefavor European REITS, we are underweight in our open Swissreal estate funds, given the extended valuation and sensitivityto rising bond yields. (24/06/2014)


Special focus

The case forcounter-cyclicalasset allocation

Low yields and longer lifespans leave in-vestors facing unprecedented challengesin the years ahead.

More counter-cyclical asset allocation isa compelling solution, for both institutionsand individuals.

Jonathan J WilmotHead of Macro Strategies and Research for Asset [email protected], +44 20 7888 3807

The retirement challengeIn the developed world, a huge cohort of people is now hittingretirement age with much longer life expectancy than their pen-sion schemes were designed for, and real yields on safe bondsat historic lows. On top of that, most plan members are now re-sponsible for the asset allocation of all or part of their pensionassets, as defined contribution schemes replace defined bene-fit schemes.

For some, all this will mean a more active retirement (exit-ing the labor force later or more gradually), releasing more eq-uity from their residence or passing on less capital to their chil-dren. But, for nearly everybody, there is now greater uncertain-ty about eventual retirement income, and a greater need tomake active investment and lifestyle choices.

The return challengeThere have only been two periods in history when short- andlong-term interest rates have been as low as they have beenover recent years – the 1890s and the 1930s. Thoseepisodes were the aftermath of severe depressions, and al-though policy has limited the economic fallout from the GreatFinancial Crisis, we have experienced on a smaller scale mostof the economic attributes of depression (excess capacity,high unemployment, low corporate investment, deflationary

strains in the banking system) together with almost all of thepsychological, political and social symptoms (weak “animal spir-its”, blame shifting, re-regulation, and increased support forpopulist politicians).

The 1890s and 1930s depressions were succeeded by along period of what I call “reflation”, periods when equities out-performed bonds on trend (though naturally with some sizeablecyclical fluctuations), the huge overhang of slack in the econo-my was slowly eliminated and nominal GDP gradually accelerat-ed (back to trend).

USA: Equity/bond return ratio 1850–2014 (logs)

0

1

2

3

4

5

6

7

8

Dec-1849 Dec-1869 Dec-1889 Dez-1909 Dez-1929 Dez-1949 Dez-1969 Dez-1989 Dez-2009 Dez-2029

Slope = 2.6%

Slope = 2.8%

Reflation Reflation Reflation

Source: Datastream, Credit Suisse

What is striking about those periods is that long-term bondyields did not normalize quickly, and in fact rose more slowlyon trend than nominal GDP (though naturally with some cycli-cal volatility).

These long reflation periods effectively involved a persis-tent subsidy from savers, who experienced low real yields andsome capital losses on their debt holdings, to borrowers whosecash flows accelerated more quickly than their interest expens-es increased, and who benefited from a gradual fall in the realburden of repaying their principal. Thus, reflation promoted“slow and orderly” deleveraging, the more benign sequel to thechaotic deleveraging of a full-blown crisis.

History never repeats itself exactly, but it seems like agood working assumption that most Western economies willneed a prolonged period of reflation to safely complete thedeleveraging process. To be sure, bond yields will likely spikeupward relative to their secular path in response to any (brief)spurts of above-trend growth, but it seems unlikely that theeconomy would be able to sustain high growth in the face ofrapid normalization of real yields.

Moreover, the new normal for real yields may itself fall aslabor force growth slows, unless we experience another pro-ductivity surge (and equity bubble?) similar to the late 1990s.That is certainly possible given current technology trends, butnot yet to be counted on.

6 Special focus 30/06/2014 Credit Suisse - Trends Institutional Monthly

USA: Output per hour (non-farm business sector)

4.5

4.7

4.9

5.1

5.3

5.5

5.7

5.9

6.1

6.3

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

1973-95Trend = 1.6%

2003-2014Trend = 1.6%

1996-2003Trend = 3.1%

Source: BLS, Credit Suisse

The behavioral challengeResearch and experience suggest that investors over-allocateto equities when returns have been unusually high or valua-tions are stretched. And they under-allocate to equities instressed or volatile environments. This behavior can be linkedto well-known biases such as loss-aversion, herding and socialpressure, and even to our inbuilt physiological responses tostress and pleasure.

In short, investor risk appetite tends to be pro-cyclical, pro-moting excess volatility relative to the fundamentals in bothbonds and equities. And this despite the fact that most in-vestors know that a more “rational” investment strategy wouldinvolve counter-cyclical investment (buying in panics or whenassets are very cheap, selling in periods of euphoria or whenassets are very expensive).

The results for individual investors are well known: on aver-age retail investors realize (much) lower-than-market returnswhen they invest in equities. In part this is because they payfees to active managers who do not outperform the market,and in part because their timing of equity market purchases ispro-cyclical. In the United States this timing effect alone is esti-mated at 1%–2% per annum over the past 20 years and insome countries (e.g. Japan, France, Italy) it appears to muchhigher.

US equities: Market versus realized returns

9.3%

5.6%

7.2%

1-1.5%

1-2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

S&P Fee Effect Timing Effect Investor return

Source: Credit Suisse Global Investment Returns Yearbook 2014

It would be nice to report that professional and institutional in-vestors are immune from the psychological, physiological andsocial pressures that drive this behavior, and are stronglycounter-cyclical in their purchases of risky assets. That wouldof course, be stabilizing for the financial system and economy,and tend to reduce asset price overshooting.

But this appears to be very much the exception, not therule. And even if institutional investors typically have access tomore complete and timely information than their retail counter-parts, they face pressures of their own (career risk, regulatoryboundaries, VAR models and other pro-cyclical forms of “risk”management).

And that is before one takes into account the fact that, formany institutions, their strategic asset allocation frameworkand risk budgets are often set by outside consultants or actuar-ies, leaving little room to implement counter-cyclical shifts.Which raises the question of how one can combat the pres-sures – internal and external – that tend to promote pro-cycli-cal asset allocation?

How to be counter-cyclicalHere is a simple framework for thinking about the problem.

Strategic vs. tactical framework

Tactical frameworkStrategic framework

To match global growth cycleTo match secular trendsCore strategy

At risk appetite extremesAt valuation extremesContrarian strategy

As the table indicates, counter-cyclical allocation is not aboutbeing contrarian all of the time, nor is it the same as tail riskhedging, which has become a fashionable topic since the cri-sis.

There are in fact two key components: one is a mechanismfor adjusting the strategic or benchmark allocations in re-sponse to extreme overvaluation episodes. Typically, suchshifts are made with a very long lag: for example, many pen-sion funds only implemented lower strategic equity weightingsin late 2002/early 2003 (the bottom of the bear market), in-stead of in 1999/2000 at the peak of the technology bubble.


The response to the latest crisis has been to further reducebenchmark equity weightings. While that is understandable giv-en the systemic threats of recent years, it almost certainlyleaves (most) investors overexposed to low-yielding “safe as-sets” and under-allocated to equities, especially if one acceptsthe “reflation” thesis.

Global growth momentum and investor risk appetite

-10%

-5%

0%

5%

10%

15%

20%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

-7

-5

-3

-1

1

3

5

7

9

Global Industrial Production 3m/3m SAR, lhs Global Risk Appetite Index, rhs

Panic

Euphoria

Source: Credit Suisse

The second component is about proactively switching betweenequities and safer assets in response to shifts in the globalgrowth cycle, investor risk appetite and, where necessary, ex-ternal shocks. That is precisely the mandate of the successfulrisk appetite allocation strategy (RAII/Holt) offered by CreditSuisse since 2010.

Many institutions can vary their tactical split between equi-ties and safer bonds around their strategic benchmark.Though not uniform, the latitude for tactical variation is often inthe region of 5%–10% of assets and it is this variable compo-nent that should be consciously counter-cyclical in our view.

To be effective, however, we believe that any counter-cycli-cal component should be governed by four principles: 1) that itis largely unconstrained; 2) be managed by a dedicated inter-nal group or external manager rather than through a normal in-vestment committee process; 3) be partly or wholly systematicin its implementation since it will involve taking controversial de-cisions from time to time (adding risk in panics, for example);and 4) defining clear goals and performance criteria.

Arguably, the counter-cyclical component of an equity allo-cation should target returns roughly in line with equities orslightly lower during “good” markets, and seek to outperformsubstantially (much lower drawdown, quicker recovery) in badmarkets. In practice, this can often be simplified to measuringperformance relative to a 50/50 mix of equities and highgrade bonds.

Finally, it is worth noting that new inflows to many pensionplans are largely of the defined contribution type, where thevast majority of new cash ends up in the “default allocation”recommended by the Trustee Board.

Now that so many people can expect to live 20–40 yearsbeyond retirement, a 100% allocation to low-yielding bondshardly seems “prudent.” But, equally, individual plan membersapproaching retirement should have access to better allocationsolutions, especially products that can explicitly counter thepro-cyclical bias revealed in so many academic and empiricalstudies. (26/06/2014)

Credit Suisse has been running a Risk Appetite Alloca-tion Strategy for its clients since 2010. For more infor-mation please contact your Relationship Manager.


Real estate update

Swiss logisticproperties:Investmentopportunitypromises growth

Logistic properties are increasingly popu-lar for real estate investors seeking yieldand portfolio diversification.

Due to the rise of online and multi-chan-nel retailing, we expect the Swiss logistic-properties market to gain momentum inthe coming years.

Fabian WaltertSwiss Real Estate [email protected], +41 44 333 25 57

In the Anglo-American markets, and increasingly in Europe, lo-gistic properties have become established as their own invest-ment class. On average, their high cash flow yields tend to ex-ceed the total yields on other real estate classes. Although lo-gistic properties are relatively volatile due to their dependenceon exports, this segment profits from several long-term trendsthat are reflected in continuously high growth rates in the logis-tics market. These trends include a steady increase in the divi-sion of labor and globalization, which has triggered a dramaticincrease in the transportation of finished products, semi-fin-ished products and components. In addition, the rise of e-com-merce and multi-channel retailing has given a further boost tothe importance of logistics services and thus logistics real es-tate. Nowadays, delivery terms have become crucial for theconsumer decision to buy, so that logistics have received signif-icantly more attention from retailing companies.

Figure 1: External and retail trade as investment driversSpending on new build warehouses and storage depots.

300

350

400

450

500

550

600

650

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

-15

-10

-5

0

5

10

15

20

Real retail trade sales Volume of external trade Construction spending in CHF million (left scale)

%

Source: Swiss Federal Statistical Office, Swiss National Bank, Credit Suisse

Still a limited investment market in SwitzerlandAccording to a recent study published by the Swiss supply anddemand chain standards organization GS1, the size of theSwiss logistics market is estimated at CHF 38 billion and,since 2006, this has grown more quickly than GDP at an aver-age of 3%. Nevertheless, in Switzerland, logistics real estatestill plays a minor role in the case of real estate investments.The market has annual investment volumes of around CHF500 million (new buildings, see Figure 1) and an additionalCHF 200 million of spending on extension and rebuilding,which is a relatively small amount. Ownership ratios are high:more than half of the warehouses and loading areas are own-er-operated. Leasing is also gaining ground. Institutional in-vestors in Switzerland and abroad have developed or pur-chased several logistic properties in recent years. From an in-vestor’s perspective, the opportunities for logistic propertiesare focused on higher expected yields and improved portfoliodiversification. Beside the specific qualities of buildings and at-tractive rental contracts, the central criterion for investment inlogistic properties is a high potential for reusability by third par-ties.

Major locational factors: Accessibility and availability ofland resourcesReusability is rarely a problem if the key locational factors for lo-gistic properties like good transport links and proximity to majorbusiness hubs and infrastructure are ensured. Figure 2 mapsthe geographical spread of construction spending on warehous-es and depots in relation to regional transport links. A clear pic-ture emerges: logistic properties are highly concentratedaround the major transit routes in Switzerland, in particularalong the A1 motorway, with a pronounced presence in thevicinity of motorway junctions. We find further logistic hotspotsin the conurbations of Bern and Zurich, as well as on the out-skirts of Basel, Geneva and Ticino. Most recently there hasbeen a growing importance of locations on the major transitroutes in northern Switzerland, as well as those close to cen-ters in the regions of Zurich, Basel and Geneva. A major obsta-cle for new logistics projects is the limited availability of landfor construction in highly accessible areas. This, together withthe high price of land and labor, means that Switzerland, de-spite the potential for increasing demand, is of limited attrac-

9 Real estate update 30/06/2014 Credit Suisse - Trends Institutional Monthly

tion for major European distribution centers and logisticsparks. However, there is a sufficient quantity of land for medi-um-sized and smaller operations. New plots are being releasedwith the decline of the manufacturing industry.

Figure 2: Construction spending on logistic properties

New build warehouses and storage depots. Background color: regional accessibility

(red=good, blue=poor)

Source: Swiss Federal Statistical Office, Baublatt, Credit Suisse, Geostat

Increasing investment needs due to new opportunitiesfor the logistics industryWe expect the Swiss logistics property market to gain momen-tum in the next few years, primarily driven by the structuralchange in the retailing sector. Online and mail-order sales arecurrently growing at a yearly rate of up to 10% (see Figure 3).We estimate that a third of retail sales will be generated onlinewithin 15 years. This trend will have a corresponding effect onthe logistics sector because retailers’ delivery services play akey role in the competition for customers. Consumers expect

shorter delivery times, flexible places of delivery and an effi-cient execution of product returns. Hence, there is a rising de-mand for comprehensive logistics services, supporting thesales process from the handling of payments to packaging, de-livery and handling of returns. In order to profit from these op-portunities, logistics service providers and retailers increasinglyrequire additional space in highly specialized and automatableproperties. Given the scarcity of adequate plots in urban ag-glomerations, the additional demand for land can partly be ab-sorbed by the conversion of space formerly occupied by the tra-ditional stationary retail sector to showrooms and pick-up sta-tions. Investors with a thorough knowledge of the increasinglycomplex logistics market can find attractive investment opportu-nities to complement their commercial real estate portfolios.

(23/06/2014)

Figure 3: Sales growth for total retail and online tradeLeft scale: index, 2008 = 100; right scale: annual growth

95

100

105

110

115

120

125

130

135

140

2008 2009 2010 2011 2012 2013

-2

0

2

4

6

8

10

12

14

16

Total retail trade, annual growth Online and mail-order sales, annual growth

Total retail trade, index (left scale) Online and mail-order sales, index (left scale)

%

Source: Swiss Federal Statistical Office, GfK, VsV, Credit Suisse

10 Real estate update 30/06/2014 Credit Suisse - Trends Institutional Monthly

Food for thought

Abenomics: Nomiracles, butprogress

Deflation has been overcome due toquantittive easing and the economic recov-ery. However, achieving the 2% inflationtarget will much depend on the ability toraise wage inflation.

Structural reforms are likely to have apositive, albeit limited impact on potentialeconomic growth. Immigration would raisegrowth, but is unlikely on a large scale.

Damian KünziGlobal Macro [email protected], +41 44 333 32 84

After an excellent start, mostly driven by the enormous assetpurchase program of the Bank of Japan (BoJ), euphoria overAbenomics has faded somewhat as uncertainties over the out-look have grown. Below, we provide an interim assessment ofArrow 1 (monetary easing) and Arrow 3 (reforms to boostgrowth). Arrow 2 (fiscal impulse) initially added to aggregatedemand, but has since – rightly, in our view – changed direc-tion: the focus is now on improving the efficiency of the taxsystem as well as on fiscal consolidation.

Arrow 1: Can the 2% inflation target be achieved?While the BoJ seems confident of reaching the 2% inflationtarget over the longer-run, we have some doubts. First, al-though inflation is currently running above 2%, much of this isdue to the tax hike and the pass-through from the sharp JPYdepreciation. Continued strong devaluation seems unlikely giv-en Japan’s still strong net foreign asset position (which will like-ly even improve as net exports rebound), even though interestrate differentials to the USA should keep the JPY soft. Sec-ond, our Phillips-curve-based inflation model suggests that in-flation (excluding tax hike effects) will run at only around 1%p.a. until 2016 even if the economy continues to grow abovepotential. Third, while bonuses are on the rise, base salariesare still stagnant. However, rising housing costs could addmodestly to inflation, and (market-based) inflation expectationscould conceivably rise over the medium term. A crucial ele-ment to increase inflation expectations would be a pick-up inbase salaries, which will likely be the most important milestoneof Abenomics in the next phase. Overall, continued monetaryeasing is likely to be necessary to achieve an inflation level any-where close to the BoJ’s target.

Arrow 3: How far can reforms boost economic growth?Contrary to perceptions, Japan has exhibited relatively robustlabor productivity growth of 1.3% p.a. since 2000. Moreover,the labor force participation rate is already high and that ofwomen has increased steadily. However, the workforce(15–64 year olds) has been shrinking at a rate of 0.7% p.a.While restrictions on immigration are being eased in some ar-eas, mass immigration to counterbalance unfavorable demo-graphics is not politically acceptable. Our analysis suggeststhat other very bold reforms which narrowed the current pro-ductivity gap of approximately 35% to the USA could lift poten-tial GDP growth from the current level around 0.5% to 1.0%.However, the most effective measures like far-reaching tradeagreements and domestic deregulation face political head-winds. The reforms that are most likely to be introduced, i.e.lower corporate taxes and deregulation limited to special eco-nomic zones would have a positive, albeit lower impact on la-bor productivity, in our view. (24/06/2014)

11 Food for thought 30/06/2014 Credit Suisse - Trends Institutional Monthly

Forecast summaryMore information on the forecasts and estimates is availableon request. Past performance is not an indicator of future per-formance. Performance can be affected by commissions, feesor other charges as well as exchange rate fluctuations.

(30/06/2014)

Short interest rates 3M Libor / 10-year government bonds

10Y3M Libor

12M3MSpot12M3MSpotin %

1.1-1.30.8-1.00.660.0-0.20.0-0.20.01CHF

1.7-1.91.4-1.61.260.1-0.30.1-0.30.21EUR *

3.2-3.42.8-3.02.530.5-0.70.2-0.40.23USD

3.4-3.62.9-3.12.640.8-1.00.5-0.70.55GBP

4.3-4.53.9-4.13.542.8-3.02.5-2.72.71AUD **

0.7-0.90.5-0.70.560.1-0.30.1-0.30.13JPY

Spot rates are closing prices as of 27/06/2014. Forecast date: 20/06/2014. * 3M Euribor, ** 3M Bank Billrates.

Source: Bloomberg, Credit Suisse

Equities

12M*3M*Div. y.(%)

P/ESpotIndex

4604352.514.5428MSCI AC World

1,9701,9501.915.61,961US S&P 500

3,7003,5003.513.53,228Eurostoxx 50

7,3006,9504.613.76,758UK FTSE 100

1,4201,3301.813.51,253Japan Topix

6,0005,6004.414.45,445Australia S&P/ASX200

16,20015,3002.715.315,094Canada S&P/TSXcomp

9,3008,8503.115.98,562Switzerland SMI

1,1301,0702.710.91,046MSCI Emerging mar-kets

Prices as of 27/06/2014; *forecast.


Commodities

12M*3M*Spot

120013001316.18Gold (USD/oz)

171921.0Silver (USD/oz)

155015001478.13Platinum (USD/oz)

850850841.15Palladium (USD/oz)

620065006945Copper (USD/ton)

107108105.74WTI Crude Oil (USD/bbl)

625062756278.363Credit Suisse Commodity Benchmark

Spot prices: New York close 27/06/2014; *forecast.


Credit: Selected Indices

12M fore-cast

3M fore-cast

Duration(years)

Spread(bp)

Yield (%)

1.3%0.4%4.71001.5BC IG CorporateEUR

1.5%0.4%7.1992.9BC IG CorporateUSD

1.7%0.5%5.6952.6BC IG FinancialsUSD

-0.1%-0.1%5.2380.7CS LSI ex govtCHF

3.5%0.6%4.13364.9BC High YieldCorp USD

3.5%0.7%4.02934.3BC High YieldPan EUR

3.6%0.6%7.62835.4JPM EM hard currUSD

3.3%0.7%4.7n.a.6.5JPM EM localcurr hedg. USD

BC = Barclays Capital, IG= Investment Grade, CS = Credit Suisse, JPM = JP Morgan (EMBI+ and GBI Gl.Div). Index data as of 27/06/2014.


Foreign exchange

12M3MSpot

1.27-1.311.30-1.341.36EUR/USD

0.93-0.970.90-0.940.89USD/CHF

1.21-1.251.20-1.241.22EUR/CHF

108-112104-108101USD/JPY

140-144138-142138EUR/JPY

0.75-0.790.76-0.800.80EUR/GBP

1.65-1.691.67-1.711.70GBP/USD

0.91-0.950.91-0.950.94AUD/USD

1.07-1.111.07-1.111.07USD/CAD

8.88-8.929.08-9.129.18EUR/SEK

7.73-7.778.03-8.078.36EUR/NOK

4.03-4.074.08-4.124.16EUR/PLN

6.08-6.126.18-6.226.22USD/CNY

1.23-1.271.23-1.271.25USD/SGD

970-990990-10101014USD/KRW

59-6159-6160.1USD/INR

2.40-2.502.30-2.402.20USD/BRL

12.3-12.512.7-12.913.0USD/MXN

Spot rates: London close 27/06/2014.


Real GDP growth and inflation

InflationGDP growth

2015E2014E20132015E2014E2013in %

0.5-0.1-0.21.82.02.0CH

1.00.61.31.51.1-0.4EMU

1.81.71.53.02.21.9USA

1.91.82.62.73.21.8UK

1.82.70.41.11.51.5Japan

3.02.62.66.67.27.7China

Forecast date: 23/06/2014.


12 Food for thought 30/06/2014 Credit Suisse - Trends Institutional Monthly

Glossary

Risk warnings

Financial markets rise and fall based on economic conditions, inflationary pressures, world news and business-specific reports. While trends maybe detected over time, it can be difficult to predict the direction of the market and individual stocks. This variability puts stock investments at riskof losing value.

Market risk

Investors are exposed to interest rates, currency, liquidity, credit market and issuer fluctuations, which may affect the price of bonds.Bond risks

Emerging markets are located in countries that possess one or more of the following characteristics: a certain degree of political instability, rela-tively unpredictable financial markets and economic growth patterns, a financial market that is still at the development stage or a weak economy.Emerging market investments usually result in higher risks as a result of political, economic, credit, exchange rate, market liquidity, legal, settle-ment, market, shareholder and creditor risks.

Emerging markets

Regardless of structure, hedge funds are not limited to any particular investment discipline or trading strategy, and seek to profit in all kinds ofmarkets by using leverage, derivative instruments and speculative investment strategies that may increase the risk of investment loss.

Hedge funds

Commodity transactions carry a high degree of risk and may not be suitable for many private investors. The extent of loss due to market move-ments can be substantial or even result in a total loss.

Commodity investments

Investors in real estate are exposed to liquidity, foreign currency and other risks, including cyclical risk, rental and local market risk as well as envi-ronmental risk, and changes to the legal situation.

Real estate

Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investor’s reference currency.Currency risks


Explanation of indices frequently used in reports

CommentIndex

MSCI World is an index of global equity markets developed and calculated by Morgan Stanley Capital International. Calculations are based onclosing prices with dividends reinvested.

MSCI World

Standard and Poor's 500 is a capitalization-weighted stock index representing all major industries in the USA, which measures the performanceof the domestic economy through changes in the aggregate market value.

US S&P 500

Eurostoxx 50 is a market-capitalization-weighted stock index of 50 leading blue-chip companies in the Eurozone.Eurostoxx 50

FTSE 100 is a market-capitalization-weighted stock index that represents 100 of the most highly capitalized companies traded on the LondonStock exchange. The equities have an investibility weighting in the index calculation.

UK FTSE 100

TOPIX, also known as the Tokyo Stock Price Index, tracks all large Japanese companies listed in the stock exchange's "first section." The indexcalculation excludes temporary issues and preferred stocks.

Japan Topix

S&P/ASX 200 is an Australian market-capitalization-weighted and float-adjusted stock index calculated by Standard and Poor's.Australia S&P/ASX 200

The S&P/TSX composite index is the Canadian equivalent of the S&P 500 Index in the USA. The index contains the largest stocks traded onthe Toronto Stock Exchange.

Canada S&P/TSX comp

The Swiss Market Index is made up of 20 of the largest companies listed of the Swiss Performance Index universe. It represents 85% of thefree-float capitalization of the Swiss equity market. As a price index, the SMI is not adjusted for dividends.

Switzerland SMI

MSCI Emerging Markets is a free-float-weighted Index designed to measure equity market performance in global emerging markets. The indexis developed and calculated by Morgan Stanley Capital International.

MSCI Emerging Markets

The Euro Corporate Index tracks the fixed-rate, investment-grade, euro-denominated corporate bond market. The index includes issues thatmeet specified maturity, liquidity and quality requirements. The index is calculated by Barclays.

BC IG Corporate EUR

The US Corporate Index tracks the fixed-rate, investment-grade, dollar-denominated corporate bond market. The index includes both US andnon-US issues that meet specified maturity, liquidity and quality requirements. The index is calculated by Barclays.

BC IG Corporate USD

The IG Financials Index tracks the fixed-rate, investment-grade, dollar-denominated financials bond market. The index includes both US andnon-US issues that meet specified maturity, liquidity and quality requirements. The index is calculated by Barclays.

BC IG Financials USD

The Liquid Swiss Index ex govt CHF is a market-capitalized bond index representing the most liquid and tradable portion of the Swiss bond mar-ket excluding Swiss government bonds. The index is calculated by Credit Suisse.

CS LSI ex govt CHF

The US Corporate High Yield Index measures USD-denominated, non-investment grade, fixed-rate and taxable corporate bonds. The index iscalculated by Barclays.

BC High Yield Corp USD

The Pan European High Yield Index measures the market of non-investment grade, fixed-rate corporate bonds denominated in euro, pound ster-ling, Norwegian krone, Swedish krone and Swiss francs. The index is calculated by Barclays.

BC High Yield Pan EUR

The Emerging Market Bond Index Plus tracks the total return of hard-currency sovereign bonds across the most liquid emerging markets. The in-dex encompasses US-denominated Brady bonds (dollar-denominated bonds issued by Latin American countries), loans and Eurobonds.

JPM EM hard curr. USD

The JPMorgan Government Bond Index tracks local currency bonds issued by emerging market governments across the most accessible mar-kets for international investors.

JPM EM local curr hedg. USD

The Credit Suisse Hedge Fund Index is compiled by Credit Suisse Hedge Index LLC. It is an asset-weighted hedge fund index and includes onlyfunds, as opposed to separate accounts. The index reflects performance net of all hedge fund component performance fees and expenses.

CS Hedge Fund Index

A measure of the value of the US dollar relative to the majority of its most important trading partners. The US Dollar Index is similar to othertrade-weighted indices, which also use the exchange rates from the same major currencies.

DXY

Source: various index providers, Credit Suisse

13 Glossary 30/06/2014 Credit Suisse - Trends Institutional Monthly

Abbreviations frequently used in reports

DescriptionAbb.DescriptionAbb.DescriptionAbb.

Price-earnings ratioP/EEarnings per shareEPSBasis pointsbp

P/E ratio divided by growth in EPSPEGEnterprise valueEVCompound annual growth rateCAGR

right-hand side (for charts)r.h.s.Free cash flowFCFCash from operationsCFO

Return on equityROEFunds from operationsFFOCash flow return on investmentCFROI

Return on invested capitalROICInterest-bearing debtIBDDiscounted cash flowDCF

Year-on-yearYoYPrice-to-book valueP/BEarnings before interest, taxes, depreciation andamortization

EBITDA


Currency codes frequently used in reports

CurrencyCodeCurrencyCodeCurrencyCode

Peruvian nuevo solPENHong Kong dollarHKDArgentine pesoARS

Philippine pesoPHPHungarian forintHUFAustralian dollarAUD

Polish złotyPLNIndonesian rupiahIDRBrazilian realBRL

Russian rubleRUBIsraeli new shekelILSCanadian dollarCAD

Swedish krona/kronorSEKIndian rupeeINRSwiss francCHF

Singapore dollarSGDJapanese yenJPYChilean pesoCLP

Thai bahtTHBSouth Korean wonKRWChinese yuanCNY

Turkish liraTRYMexican pesoMXNColombian pesoCOP

New Taiwan dollarTWDMalaysian ringgitMYRCzech korunaCZK

United States dollarUSDNorwegian kroneNOKEuroEUR

South African randZARNew Zealand dollarNZDPound sterlingGBP


Important information on derivatives

Option premiums and prices mentioned are indicative only. Option premiums and prices can be subject to very rapid changes: The prices and pre-miums mentioned are as of the time indicated in the text and might have changed substantially in the meantime.

Pricing

Derivatives are complex instruments and are intended for sale only to investors who are capable of understanding and assuming all the risks in-volved. Investors must be aware that adding option positions to an existing portfolio may change the characteristics and behavior of that portfoliosubstantially. A portfolio’s sensitivity to certain market moves can be heavily impacted by the leverage effect of options.

Risks

Investors who buy call options risk the loss of the entire premium paid if the underlying security trades below the strike price at expiration.Buying calls

Investors who buy put options risk loss of the entire premium paid if the underlying security finishes above the strike price at expiration.Buying puts

Investors who sell calls commit themselves to sell the underlying for the strike price, even if the market price of the underlying is substantiallyhigher. Investors who sell covered calls (own the underlying security and sell a call) risk limiting their upside to the strike price plus the upfrontpremium received and may have their security called away if the security price exceeds the strike price of the short call. Additionally, the investorhas full downside participation that is only partially offset by the premium received upfront. If investors are forced to sell the underlying they mightbe subject to taxing. Investors shorting naked calls (i.e. selling calls but without holding the underlying security) risk unlimited losses of securityprice less strike price.

Selling calls

Put sellers commit to buying the underlying security at the strike price in the event the security falls below the strike price. The maximum loss isthe full strike price less the premium received for selling the put.

Selling puts

Investors who buy call spreads (buy a call and sell a call with a higher strike) risk the loss of the entire premium paid if the underlying trades be-low the lower strike price at expiration. The maximum gain from buying call spreads is the difference between the strike prices, less the upfrontpremium paid.

Buying call spreads

Selling naked call spreads (sell a call and buy a farther out-of-the-money call with no underlying security position): Investors risk a maximum lossof the difference between the long call strike and the short call strike, less the upfront premium taken in, if the underlying security finishes abovethe long call strike at expiration. The maximum gain is the upfront premium taken in, if the security finishes below the short call strike at expira-tion.

Selling naked call spreads

Investors who buy put spreads (buy a put and sell a put with a lower strike price) also have a maximum loss of the upfront premium paid. Themaximum gain from buying put spreads is the difference between the strike prices, less the upfront premium paid.

Buying put spreads

Buying strangles (buy put and buy call): The maximum loss is the entire premium paid for both options, if the underlying trades between the putstrike and the call strike at expiration.

Buying strangles

Investors who are long a security and short a strangle or straddle risk capping their upside in the security to the strike price of the call that is soldplus the upfront premium received. Additionally, if the security trades below the strike price of the short put, investors risk losing the differencebetween the strike price and the security price (less the value of the premium received) on the short put and will also experience losses in the se-curity position if they owns shares. The maximum potential loss is the full value of the strike price (less the value of the premium received) pluslosses on the long security position. Investors who are short naked strangles or straddles have unlimited potential loss since, if the security tradesabove the call strike price, investors risk losing the difference between the strike price and the security price (less the value of the premium re-ceived) on the short call. In addition, they are obligated to buy the security at the put strike price (less upfront premium received) if the securityfinishes below the put strike price at expiration.

Selling strangles or straddles


14 Glossary 30/06/2014 Credit Suisse - Trends Institutional Monthly

Disclaimer / Important Information

This material has been prepared by the Private Banking & Wealth Manage-ment division of Credit Suisse AG including its affiliates (“Credit Suisse”).Although it may contain contributions of research analysts or quoteresearch reports, it is not investment research or a research recommenda-tion for regulatory purposes as it does not constitute substantive researchor analysis. Some of the articles in the publication may have been pub-lished by Credit Suisse Research and may be found on the Research web-site (https://investment.credit-suisse.com) including the necessary dis-claimers and disclosure statements. This material is provided for informa-tional and illustrative purposes and is intended for your use only. It is not asolicitation or an offer to buy or sell any security or other financial instru-ment. Any information including facts, opinions or quotations, may be con-densed or summarized and is expressed as of the date of writing. The in-formation contained in this document has been provided as a general mar-ket commentary only and does not constitute any form of regulated finan-cial advice, legal, tax or other regulated service. It does not take into ac-count the financial objectives, situation or needs of any persons, which arenecessary considerations before making any investment decision. CreditSuisse does not advise on the tax consequences of investments and youare advised to contact a tax advisor should you have any questions in thisregard. The levels and basis of taxation are dependent on individual circum-stances and are subject to change. The information provided is not intend-ed to provide a sufficient basis on which to make an investment decisionand is not a personal recommendation or investment advice. It is intendedonly to provide observations and views of Credit Suisse at the date of writ-ing, regardless of the date on which the reader may receive or access theinformation. Observations and views contained in this document may be dif-ferent from, or inconsistent with, the observations and views of Credit Su-isse Research analysts, other divisions or the proprietary positions of Cred-it Suisse, and may change at any time without notice and with no obliga-tion to update. The information may change without notice and Credit Su-isse is under no obligation to ensure that such updates are brought to yourattention. Credit Suisse reserves the right to remedy any errors that maybe present in this document. Credit Suisse, its affiliates and/or their em-ployees may have a position or holding, or other material interest or effecttransactions in any securities mentioned or options thereon, or other invest-ments related thereto and from time to time may add to or dispose of suchinvestments. Credit Suisse may be providing, or have provided within theprevious 12 months, significant advice or investment services in relation tothe investments listed in this document or a related investment to any com-pany or issuer mentioned. Some investments referred to in this documentwill be offered by a single entity or an associate of Credit Suisse or CreditSuisse may be the only market maker in such investments. To the extentthat these materials contain statements about future performance, suchstatements are forward looking and subject to a number of risks and uncer-tainties. Information and opinions presented in this material have been ob-tained or derived from sources which in the opinion of Credit Suisse are re-liable, but Credit Suisse makes no representation as to their accuracy orcompleteness. Credit Suisse accepts no liability for a loss arising from theuse of this material. Unless indicated to the contrary, all figures are unau-dited. All valuations mentioned herein are subject to Credit Suisse valua-tion policies and procedures. It should be noted that historical returns andfinancial market scenarios are no guarantee of future performance.The price and value of investments mentioned and any income that mightaccrue could fall or rise or fluctuate. Past performance is not an indica-tor of future performance. Performance can be affected by com-missions, fees or other charges as well as exchange rate fluctua-tions . If an investment is denominated in a currency other than your basecurrency, changes in the rate of exchange may have an adverse effect onvalue, price or income. You should consult with such advisor(s) as you con-sider necessary to assist you in making these determinations. Nothing inthis document constitutes legal, accounting or tax advice. Investments mayhave no public market or only a restricted secondary market. Where a sec-ondary market exists, it is not possible to predict the price at which invest-ments will trade in the market or whether such market will be liquid or illiq-uid. The retention of value of a bond is dependent on the creditworthinessof the Issuer and/or Guarantor (as applicable), which may change over theterm of the bond. In the event of default by the Issuer and/or Guarantor ofthe bond, the bond or any income derived from it is not guaranteed andyou may get back none of, or less than, what was originally invested. Par-

ties other than the Issuer or Guarantor (as appropriate) (for instance theLead Manager, Co-structure, Calculation Agent or Paying Agent) do nei-ther guarantee repayment of the invested capital nor financial return on theinvestment product, if nothing is indicated to the contrary. Where this docu-ment relates to regulated collective investment schemes, any advice of-fered to retail clients is based on a selection of products from the whole ofthe market. Additional information is, subject to duties of confidentiality,available from Credit Suisse upon request. The market in some of the in-vestments made as part of a Fund’s strategy may be relatively illiquid, giv-ing rise to potential difficulties in valuing and disposing of such invest-ments. Information for determining the value of investments held by aFund may not be readily available which has corresponding implications forthe overall valuation of a Fund. Accurate risk profiling of the Fund holdingsmay also not be readily available. Always refer to the Fund’s Prospectusand/or the Key Investor Information Document before making an invest-ment. Where permitted by law, Credit Suisse may receive fees, commis-sions or other monetary benefits in connection with products listed in thisdocument from third parties. For details please refer to the Credit SuisseTerms and Conditions or contact your Relationship Manager.The distribution of this document and the offer and sale of the investmentin certain jurisdictions may be forbidden or restricted by law or regulation.This material is not directed to, or intended for distribution to or use by,any person or entity who is a citizen or resident of, or is located in, any ju-risdiction where such distribution, publication, availability or use would becontrary to applicable law or regulation, or which would subject Credit Su-isse and/or its subsidiaries or affiliates to any registration or licensing re-quirement within such jurisdiction. Materials have been furnished to the re-cipient and should not be re-distributed without the express written con-sent of Credit Suisse. For further information, please contact your Relation-ship Manager.

Some articles in this publication may have been authored by members ofthe PB&WM Research department, as indicated by the author’s functionaldescription. These articles have been previously published by Research onthe web:https://investment.credit-suisse.com

For further information, including disclosures with respect to any other is-suers, please refer to the Credit Suisse Global Research Disclosure siteat:https://www.credit-suisse.com/disclosure

Distribution Information

Except as otherwise specified herein, this report is distributed by Credit Su-isse AG, a Swiss bank, authorized and regulated by the Swiss FinancialMarket Supervisory Authority. Australia: This report is distributed in Aus-tralia by Credit Suisse AG, Sydney Branch (CSSB) (ABN 17 061 700712 AFSL 226896) only to "wholesale" clients as defined by s761G ofthe Corporations Act 2001. CSSB does not guarantee the performanceof, nor make any assurances with respect to the performance of any finan-cial product referred herein. Bahamas: This report was prepared byCredit Suisse AG, the Swiss bank, and is distributed on behalf of CreditSuisse AG, Nassau Branch, a branch of the Swiss bank, registered as abroker-dealer by the Securities Commission of the Bahamas. Bahrain:This report is distributed by Credit Suisse AG, Bahrain Branch, authorizedand regulated by the Central Bank of Bahrain (CBB) as an InvestmentFirm Category 2. Brazil: Any information contained herein does not con-stitute a public offer of securities in Brazil and securities mentioned hereinmay not be registered with the Securities Commission of Brazil (CVM).Dubai: This information is distributed by Credit Suisse AG Dubai Branch,duly licensed and regulated by the Dubai Financial Services Authority (DF-SA). Related financial products or services are only available to customerswho qualify as either a Professional Client or a Market Counterparty andsatisfy the regulatory criteria to be a client. This marketing material is in-tended for distribution only to Persons of a type specified in the DFSA'sRules (i.e. "Professional Clients" or “Market Counterparty”) and must not,therefore, be delivered to, or relied on by, any other type of Person. Ac-cordingly, the DFSA has not approved this marketing material or any otherassociated documents nor taken any steps to verify the information set outin this document and has no responsibility for it. The Units to which thismarketing material relates may be illiquid and/or subject to restrictions on


their resale. Prospective purchasers of the Units offered should conducttheir own due diligence on the Units. If you do not understand the con-tents of this brochure, you should consult an authorized financial advisor.EEA: When distributed or accessed from the EEA, this is distributed byCredit Suisse Asset Management Limited (authorised and regulated by theFinancial Conduct Authority) or any other Credit Suisse entities. France:This report is distributed by Credit Suisse (France), authorized by the Au-torité de Contrôle Prudentiel et de Résolution (ACPR) as an investmentservice provider. Credit Suisse (France) is supervised and regulated by theAutorité de Contrôle Prudentiel et de Résolution and the Autorité desMarchés Financiers. Germany: Credit Suisse (Deutschland) AG, autho-rized and regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht(BaFin), disseminates reports to its clients that has been prepared by oneof its affiliates. Gibraltar: This report is distributed by Credit Suisse(Gibraltar) Limited. Credit Suisse (Gibraltar) Limited is an independent le-gal entity wholly owned by Credit Suisse and is regulated by the GibraltarFinancial Services Commission. Guernsey: This report is distributed byCredit Suisse (Channel Islands) Limited, an independent legal entity regis-tered in Guernsey under 15197, with its registered address at HelvetiaCourt, Les Echelons, South Esplanade, St Peter Port, Guernsey. CreditSuisse (Channel Islands) Limited is wholly owned by Credit Suisse AG andis regulated by the Guernsey Financial Services Commission. Copies ofthe latest audited accounts are available on request. India: This reportis distributed by Credit Suisse Securities (India) Private Limited ("Credit Su-isse India." CIN no. U67120MH1996PTC104392), registered with the Se-curities and Exchange Board of India (SEBI) as a Portfolio Manager underSEBI registration No. INP000002478, with its registered address at 9thFloor, Ceejay House, Plot F, Shivsagar Estate, Dr. Annie Besant Road,Worli, Mumbai 400 018, India, Tel. +91-22 6777 3777. Italy: This re-port is distributed in Italy by Credit Suisse (Italy) S.p.A., a bank incorporat-ed and registered under Italian law subject to the supervision and controlof Banca d’Italia and CONSOB, and also distributed by Credit Suisse AG,a Swiss bank authorized to provide banking and financial services in Italy.Jersey: This report is distributed by Credit Suisse (Channel Islands) Limit-ed, Jersey Branch, which is regulated by the Jersey Financial ServicesCommission. The business address of Credit Suisse (Channel Islands) Lim-ited, Jersey Branch, in Jersey is: TradeWind House, 22 Esplanade, St He-lier, Jersey JE2 3QA. Luxembourg: This report is distributed by CreditSuisse (Luxembourg) S.A., a Luxembourg bank, authorized and regulatedby the Commission de Surveillance du Secteur Financier (CSSF). Mexi-co: The information contained herein does not constitute a public offer ofsecurities as defined in the Mexican Securities Law. This report will not beadvertised in any mass media in Mexico. This report does not contain anyadvertisement regarding intermediation or pro viding of banking or invest-ment advisory services in Mexico or to Mexican citizens. Qatar: This infor-mation has been distributed by Credit Suisse (Qatar) L.L.C., which is dulyauthorized and regulated by the Qatar Financial Centre Regulatory Authori-ty (QFCRA) under QFC License No. 00005. All related financial productsor services will only be available to Business Customers or Market Counter-parties (as defined by the QFCRA), including individuals, who have optedto be classified as a Business Customer, with liquid assets in excess ofUSD 1 million, and who have sufficient financial knowledge, experienceand understanding to participate in such products and/or services. There-fore this information must not be delivered to, or relied on by, any othertype of individual. Russia: The information contained in this report doesnot constitute any sort of advertisement or promotion for specific securi-ties, or related financial instruments. This report does not represent a valu-ation in the meaning of the Federal Law On Valuation Activities inthe Russian Federation and is produced using Credit Suisse valuation mod-els and methodology. Spain: When distributed or accessed from theEEA, this is distributed by Credit Suisse Asset Management Limited (au-thorised and regulated by the Financial Conduct Authority) or any otherCredit Suisse entities locally authorized, as it is specified in the following lo-cal disclaimers. United Kingdom: Credit Suisse (UK) Limited and CreditSuisse Securities (Europe) Limited are associated but independent legaland regulated entities within the Credit Suisse Group and are authorisedby the Prudential Regulation Authority and regulated by the Financial Con-duct Authority and the Prudential Regulation Authority for the conduct of in-vestment business in the United Kingdom. The registered addresses of

Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limitedare Five Cabot Square, London, E14 4QR and One Cabot Square, Lon-don, E14 4QJ respectively.Copyright © 2014 Credit Suisse Group AG and/or its affiliates. All rightsreserved.14C002A-IS


Imprint

Publisher

Nannette Hechler-Fayd'herbeHead of Investment Strategy+41 44 333 17 06nannette.hechler-fayd'[email protected]

Information about other Investment Strategy & Research publica-

tions

Credit Suisse AGInvestment PublishingUetlibergstrasse 231, P.O. Box 300, CH-8070 Zürich

E-Mail

[email protected]

Internet

https://investment.credit-suisse.com

Intranet (for employees only)

https://isr.csintra.net

Subscription (clients)

Please contact your customer advisor to subscribe to this publication

Subscription (internal)

For information on subscriptions please visit https://isr.csintra.net/sub-scriptions

Authors

Nannette Hechler-Fayd'herbeHead of Investment Strategy+41 44 333 17 06nannette.hechler-fayd'[email protected]

Robert J ParkerResearch Strategic Advisory+44 20 7883 [email protected]

Anja HochbergCIO – Europe & CH+41 44 333 52 [email protected]

Jonathan J WilmotHead of Macro Strategies and Research for Asset Management+44 20 7888 [email protected]

Fabian WaltertSwiss Real Estate Research+41 44 333 25 [email protected]

Damian KünziGlobal Macro Research+41 44 333 32 [email protected]


trends institutional monthly

Documents