Macroeconomic Prospects for Coffee Exporters John H. Welch john.welch@macquarie.com +1 212 2312 0059 Macquarie Capital (USA) Ltd 125 W. 55th Street, New York, NY 10019 USA September 2011
Macquarie Research is a division of Macquarie Group Limited, an affiliate and parent company of Macquarie Capital (USA) Inc., a registered broker - dealer and member of The Financial Industry Regulatory Authority (“FINRA�). All transactions by U.S. investors involving securities discussed in this report must be effected through Macquarie Capital (USA) Inc., which assumes responsibility in the U.S. for the contents of this report. This research report has been prepared in whole or part by foreign research analysts. These research analysts are not registered/qualified as a research analyst with FINRA, but instead have satisfied the registration/qualification requirements or other research-related standards of a foreign jurisdiction that have been recognized for these purposes by FINRA.
Please read Disclaimer on Pages 62-64. Page 1
World Economic Environment STILL GOOD FOR COFFEE
Page 2
Base Case GLOBAL ECONOMIC FORECASTS
2009
2010(F)
2011(F)
2012(F)
World GDP (Real % change)
-0.2
4.0
3.9
20.9
United States
-2.6
-1.8
2.0
2.9
Euro Zone
-3.6
1.7
2.5
2.3
Japan
-5.2
3.9
-0.6
1.7
Asia Ex-Japan
8.9
9.3
7.8
7.6
China
8.5
9.8
8.5
8.5
India
6.7
8.6
7.8
8.0
Latin America
-1.9
6.4
4.4
3.9
Brazil World Inflation (CPI)
-0.6 3.4
7.5 3.6
3.8 4.5
3.5 3.8
FED Funds target %
0.25
0.25
0.25
0.25
Euro Area Target interest rate
1.00
1.00
1.75
3.00
Japan Target interest rate
0.10
0.10
0.10
0.10
Oil Prices (Dated Brent - End of Year
68.3
87.5
124.0
117.0
EUR/USD (Avg.)
1.43
1.34
1.43
1.45
USD/JPY (Avg)
93
81
85
95
Exchange Rates
Source: OECD, Bloomberg, Macquarie Capital (USA), September 2011 Page 3
The macro environment supports Ag investing %
Low interest rates
7 6
Ag Index 1200
5
Crude oil 160 140
1000
4
120
800
100
3
Commodity + equities boom
2 1
80
600
60
400
40
200 Jul-11
0
Ag index Do llar index
120 110 100 90
Hedge against inflation
80 70
07/11
07/10
07/09
07/08
18 16 14 12 10 8 6 4 2 0 -2 -4
Ju l-0 0 Ju l-0 1 Ju l-0 2 Ju l-0 3 Ju l-0 4 Ju l-0 5 Ju l-0 6 Ju l-0 7 Ju l-0 8 Ju l-0 9 Ju l-1 0 Ju l-1 1
Jul-11
Jul-10
Jul-09
Jul-08
Jul-07
Jul-06
Jul-05
Jul-04
Jul-03
Jul-02
Jul-01
Jul-00
60
Source: Bloomberg, Macquarie Research, July 2011
Crude oil
%
Weaker US dollar
130
07/07
07/06
07/05
07/04
07/03
UK base rate
07/02
0 07/01
Jul-10
Jul-09
Jul-08
Jul-07
Euro interest rate
20 07/00
US fed fund target
Jul-06
Jul-05
Jul-04
Jul-03
Jul-02
Jul-01
Jul-00
0
US
Page 4
India
UK
China
Agri commodities outperformed in 2010 Jan-Jun 2011
Jan-Dec 2010 Natural Gas
Wheat
co co a
Lean Ho gs
Zinc
Sugar
Lead
Zinc
Crude Oil
Wheat
A luminum
Co pper
Heating Oil
Co co a
B rent Crude
Live Cattle
Lean Ho gs
So ybeans
Gas Oil
Feed Cattle
Feed Cattle
Lead
RB OB Gaso line
Kansas Wheat
Wheat
Natural Gas
Go ld
Crude Oil
Co pper
Co tto n
Live Cattle
A luminum
Nickel
Go ld
Sugar
Co ffee
So ybeans
Silver
Co rn
Heating Oil
Kansas Wheat
Co rn
Co ffee
RB OB Gaso line
Silver
B rent Crude
Co tto n
Gas Oil
-40
10
60
-40
110
60 % re t urns
% re t urns
Source: Bloomberg, Macquarie Research, June 2011
10
Page 5
110
As fertiliser & energy prices rise again, cost pressures should start creeping up too US/t
Fertilisers
1000 900 800
US$ /planted 600 acres
700
A mmo nia nitrate
600
Urea
500 400
500
300
400
200
300
0
100
200 US$ /barrel
100
160
0
140
2005
2006
2007
2008
2009
2010
Seed
Fertilizer
Chemicals
Custo m o peratio ns
Fuel, lube, and electricity
Repairs
2011f
120 100 80 60 40
A llo cated o verhead
20 0
Source: USDA, Bloomberg, Macquarie Research, July 2011 Page 6
Crude oil
Longer-term supply trends remain supportive too Mn ha 700
Global harvested area
World water shortage
600 500 400 300
Limited expansion in global arable land
200 100 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 Barley Corn Cotton Rapeseed Soybean Sorghum Wheat
Arable area per person
Increased productivity would be best way forward
Ha/perso n 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 1970
Source: USDA, UNEP, WRI, Macquarie Research, June 2011
Page 7
1980
1990
2000
2020
Coffee
Page 8
Coffee futures hit 34-year highs due to extremely tight inventories Global arabica in deficit this season
NY arabica reached historical highs US c/lb
S/D Arabica (Oct/Sep)
300
Market Balance 6 5 4 3 2 1 0 -1 -2 -3 -4
84 82 80 78 76 74 72 70
250
200
150
Balance Source: Bloomberg, Macquarie Research, June 2011 Page 9
Production
2f
20
11
/1
1f /1 10
20
09
/1
0f
9 20
20
08
/0
8
20
07
/0
7 /0 06
20
20
05
/0
6
100
Consumption
Cash prices have risen even more than futures - signalling tight physical availability Premium of mild arabica coffee is up
Physical cash prices have been soaring 180
US c/lb 350
160 140
300
120
250
100 80
200
60
150
40
100
20 0
Ja n0 M 9 ar -0 M 9 ay -0 9 Ju l-0 Se 9 p0 N 9 ov -0 Ja 9 n1 M 0 ar -1 M 0 ay -1 0 Ju l-1 Se 0 p1 N 0 ov -1 Ja 0 n11
50
Colombian milds Other milds
01/11
07/10
01/10
07/09
01/09
07/08
01/08
07/07
01/07
07/06
01/06
07/05
01/05
0
Robustas Brazilian naturals
Co lo mb M ilds/Other M ilds
Co lo mb M ilds/B raz Naturals
Co lo mb M ilds/NY futures
Oth M ilds/Ro bustas
B raz Naturals/Ro bustas
NY futures/Lo ndo n futures
M n bags 30 25 20
The major producers of quality arabica are struggling to expand supply
15 10 5
Central A merica
Source: ICO, Macquarie Research, July 2011
Page 10
Co lo mbia
Relative scarcity of quality coffee has led to sharp drawdowns in stocks globally World origin and consumer stocks
Main coffee producers: there is a lack of premium arabicas
%
M n 60kg bags
120 100
60
70
50
60 50
40
60
30
40
20
20
10
10
0
0
0
40 30
98 19 99 /0 0 20 01 /0 2 20 03 /0 4 20 05 /0 6 20 07 /0 8 20 09 /1 0f 20 11 /1 2f
20
19 97 /
19 95 /
96
80
Brazil*
Mexico & C America
Colombia
Vietnam
Indonesia*
Sto cks at impo rting co untries
Sto cks at expo rting co untries
Sto ck ratio (%)
'000 bags 6000 5000 4000
Certified Arabica stocks also down
3000 2000 1000
Source: ICE, ICO, Macquarie Research, April 2011
Page 11
Brazil’s rising internal demand, appreciating currency and the 2011/12 “off year” = bullish
Strengthening BRL currency means higher coffee price required
A huge Brazilian crop due, but next year is an “off” year M n bags 60
US$ /bag
B RL index 3.0
450
50
400
40
2.5
350
2.0
300
30
250
1.5
200
20
1.0
150
10
100
0.5
50
0
0
A rabica pro d
Ro busta pro d
0.0
B M F arabica
To t co nsumptio n
Source: ICO, trade data, Macquarie Research, July 2011 Page 12
NY arabica
B RL index
The robusta market also tight on rising demand & low Vietnam/Indonesian supplies, but EU stocks are high Global demand for robusta growing rapidly
Robustas are still at a significant discount to arabicas
M n bags
US c/lb
90 300
80 70
250
60 200
50 40
150
30 20
100
10 50
0
spread
NY arabica futures
Lo ndo n ro busta futures
S/D Ro busta (Oct/Sep
45000
M arket B alance
60
40000
4
35000
3 55
2 1
50
0
Potential for robusta to tighten next season
-1
45
30000 25000 20000 15000
-2
10000
-3
40
5000
-4
0
-5
35 2005/06
2006/07 2007/08
B alance
2008/09 2009/10f
P ro ductio n
2010/11f
2011/12f
Co nsumptio n
Source: Trade sources, ICO, Macquarie Research, March 2011
Page 13
A rabica
Ro busta
Certified LIFFE robusta stocks
Coffee demand remains highly inelastic: if anything we see growth in emerging markets
Stable coffee demand growth Mn bags 140
Per capita consumption of coffee % grow th 7 6 5 4 3 2 1 0 -1 -2 -3
120 100 80 60 40 20
12 10 8 6 4 2 0
19 95 /9 6 19 97 /9 8 19 99 /2 00 0 20 01 /0 2 20 03 /0 4 20 05 /0 6 20 07 /0 8 20 09 /1 0f
0
14
Consumption
% change
Source: ICO, Macquarie Research, July 2011 Page 14
Coffee fundamentals and price outlook 2008/09 2009/10f 2010/11f 2011/12f 127.6 134.1 132.3 140.8 75.6 80.1 79.1 84.4 52.0 53.4 52.8 56.4
2005/06 116.9 76.6 40.3
2006/07 125.5 76.1 49.4
2007/08 132.8 80.7 52.1
4.6%
7.3%
5.9%
-3.9%
5.1%
-1.3%
6.4%
118.5 74.0 44.5
121.5 74.7 46.8
124.6 75.9 48.8
130.2 79.0 51.2
133.6 80.6 53.0
136.0 81.0 55.0
137.4 81.4 56.0
Growth
0.2%
2.5%
2.6%
4.5%
2.6%
1.8%
1.0%
Balance Arabica Robusta c Stocks Stock ratio (%)
-1.6 2.6 -4.2 49.6 41.9
4.0 1.4 2.6 41.8 34.4
8.2 4.9 3.3 39.3 31.5
-2.6 -3.4 0.8 32.6 25.1
0.6 -0.4 0.4 33.7 25.2
-3.7 -1.9 -2.2 30.0 22.1
3.4 3.0 0.4 33.4 24.3
2011 255.6 271.0 250.0 260.0 259.2
2012 240.0 220.0 210.0 175.0 211.3
(m 60-kg bags) b Production Arabica Robusta
Growth
Consumption Arabica Robusta
a Oct-Sep. b For Southern Hemisphere producers, volumes adjusted from Apr-Mar crop years to fit in with Oct-Sep. c Gross stocks in exporting countries and estimated inventories in importing countries on September 30th.
Prices NY Arabica (Coffee C) 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year
2006 112.3 102.2 102.1 114.4 107.7
2007 115.4 109.7 116.4 127.7 117.3
Source: ICO, NKG Stats, Macquarie Research, July 2011 Page 15
2008 143.2 135.6 137.8 111.9 121.5
2009 113.5 123.6 124.8 139.0 125.2
2010 134.5 139.4 174.2 204.7 163.2
Brazil: The Present Has Arrived BUT WHAT ABOUT THE FUTURE?
Page 16
Brazil’s Future is bright no matter what mix of policies of the next administration ÎPresident Dilma will follow a mix from two sets of policies. ÎThe difference is degree of one set over the other. ÎThe Brazilian polity and the political elite have shown good judgment and prudence when making policy choices. ÎIf monetary policy does most of the work, expect continued nominal and real appreciation of the BRL, higher interest rates and slower growth. ÎIf fiscal policy does more of the work, expect a less strong real, lower interest rates, and higher growth.
Page 17
BRAZIL: REAL GDP GROWTH VERSUS REAL INTEREST RATES F o re ca s t
8.0%
3
3
Re a l G DP G rowth
2 6.0% 2
2 4.0% 1
1
2.0% 8
4 Re a l S EL IC in te re st ra te 0.0% 13
12 Q
3
20
20 4 Q
Q
1
20
20 Q
2
20 3 Q
12
11
10
09 20 4 Q
1 Q
2 Q
20
20
09
08
07 3 Q
4 Q
20
20
06
06 Q
1
20 2 Q
20
05
04 20 3 Q
Q
4
20
20 Q
1
20 2 Q
03
03
02
01 20 3 Q
4 Q
1 Q
20
20
00
00
99 19 2 Q
3 Q
Q
4
19
19
98
97
0
-
-2.0%
-
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 18
Economic Growth Recovers Rapidly BUT DEMAND GROWTH IS OUTSTRIPPING SUPPLY BY A WIDE MARGIN 10%
4 qtr s / 4 q tr s
D o m e s tic D e m a n d (A b s o rp tio n )
8%
F o re c a s t
`
6%
4%
2%
R eal GD P
V a lu e A d d e d
0%
-2%
N e t E x p o rts
-4%
Q
4
19
97 Q
2
19
99 Q
4
20
00 Q
2
20
02 Q
4
20
03 Q
2
20
05
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 19
Q
4
20
06 Q
2
20
08 Q
4
20
09 Q
2
20
11 Q
4
20
12
To grow above 4%, Brazil needs investment rates greater than 20%. 22%
4.0%
L o n g T e rm G D P G ro w th R a te (R H S )
20%
3.5%
3.0% 18% 2.5%
16%
2.0%
G ro s s In v e s tm e n t R a te G ro s s S a v in g s R a te (L H S )
14%
1.5%
1.0% 12% 0.5%
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 20
I 20
11
I . II 09 20
20
08
. II
.I
20
20
05
07
. IV
I 20
04
. II
. II 03 20
02
.I
0.0% 20
20
00
. IV
10%
Economic Growth Recovers Rapidly BUT DEMAND GROWTH IS OUTSTRIPPING SUPPLY BY A WIDE MARGIN
9% 8%
Inflation Gap
7% 6% 5% 4%
Output Gap 3% 2% 1%
-2% -3% -4% -5%
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 21
1 ep -1 S
1 b1 Fe
l-1 0 Ju
09 ec D
M
ay
-0 9
-0 8 O
ct
8 -0 ar M
ug -0 7 A
n07 Ja
6 Ju
n0
05 ov N
pr -0 5 A
4 ep -0 S
4 b0 Fe
l-0 3 Ju
02 ec D
M
ay
-0 2
-0 1 O
ct
1 -0 ar M
ug -0 0
Ja
-1%
A
n00
0%
BRAZIL: COMBINED IPCA/IPCA-15 AND CORE INFLATION (% YoY) 9.0%
Trim m ed-Means & S m oo th ed C ore
7.10%
E xclusio n C ore
7.5%
6.0%
4.5% Ta rge t
H eadlin e IP C A/IP C A-15
3.0%
1.5%
Page 22
1 /2 15 9/
4/
15
/2
01
01
1
10 /1 5
/2 0
01 /2 15 6/
1/
15
/2
01
0
0
9 00 8/
15
/2
00 /2 15 3/
11
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011
9
08 10
5/
15
/1 5
/2
/2 0
00
8
07 12
/1 5
/2 0
00 /2 15 7/
2/
15
/2
00
7
7
6 00 9/
15
/2
00 /2 15 4/
/2 0 /1 5 11
6
05
5 00 /2 15 6/
1/
15
/2
00
5
0.0%
THE SELIC TARGET RATE IS STILL TOO LOW EVEN UNDER OPTIMISTIC TAYLOR RULES,BCB STILL NEEDS TO TIGHTEN 30%
25%
F o re c a s t fro m B C F o c u s A c tua l S E L IC Ta rg e t 20%
M a x Ta ylo r R ule (r*=1 1 % )
15%
10%
M in Ta ylo r R ule (r*=5 % )
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 23
3 l-1 Ju
N
ov -
12
2 b1 Fe
Ju
n1
1
0 p1 Se
n10 Ja
09 pr A
08 ug A
N
ov -
07
7 -0 ar M
Ju
n0
6
5 p0 Se
n05 Ja
04 pr A
03 ug A
N
ov -
02
2 -0 ar M
Ju
n0
1
0 -0 ct O
Ja
n00
5%
HIGH MONEY GROWTH IN LOCKSTEP WITH CREDIT GROWTH 45%
B razil: Money and C re dit G rowth ( % y-o-y) 40%
35%
Nondire cte d Cre dit
30%
25% Tota l Cre dit
20%
15%
10% M1
5%
M one ta ry Ba se Grow th
-5%
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 24
1 n1 Ju
pr -1 0 A
9 b0 Fe
07 ec D
-0 6 ct O
ug -0 5 A
4 n0 Ju
pr -0 3 A
Fe
b0
2
0%
THE AVERAGE BASE RATE IS TOO LOW: THE BCB OR THE BNDES NEED TO RAISE RATES 30%
Forecast from BC Focus
25%
20%
Taylor Rule Max
15%
10%
Average Base Rate
Taylor Rule Min 5% 0 -0 n Ja
0 -0 ct O
1 -0 n Ju
M
2 -0 ar
2 -0 v No
gAu
03 M
4 -0 y a
5 -0 n Ja
5 -0 ct O
6 -0 n Ju
M
7 -0 ar
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 25
7 -0 v No
gAu
08 M
9 -0 y a
0 -1 n Ja
0 -1 ct O
1 -1 n Ju
M
2 -1 ar
2 -1 v No
gAu
13
FISCAL POLICY HAS EASED…HIGHER PRIMARY SURPLUSES, LOWER REAL INTEREST RATES 6 .0 %
30 %
Pr im a ry S u rp lu s (% G D P , L H S ) fo r e c a s t
4 .0 % 2 .0 %
20 %
10 %
R e a l In te r e s t R a te (R H S)
0 .0 %
0%
-2 .0 %
-10 %
-4 .0 %
-20 %
-6 .0 %
-30 %
-8 .0 %
-40 %
-1 0 .0 %
-50 %
N o m in a l Fis c a l B a la n c e (% G D P, LH S)
-1 2 .0 %
-60 %
-1 4 .0 %
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 26
3 r-1
Ap
12 n-
11
Ju
g-
0
Au
-1 ct
O
c09
09
De
b-
8
Fe
r-0
07
Ap
Ju
n-
06 g-
Au
-0 5 ct
O
c04
De
04 b-
3
Fe
r-0
Ap
02 n-
01
Ju
g-
0
Au
-0
O
ct
99 c-
99
De
b-
8
Fe
r-9
97
Ap
Ju
n-
96 g-
Au
O
ct
-9
5
-70 %
Economic Growth Recovers Rapidly AND PERHAPS OVERVALUED 4.0
E q u ilib riu m N o m in al E xch an g e R ate
E xch an g e R ate U S D /B R L
3.5
3.0 Ju n e 1.73
2.5
2.0
1.5 1.63
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 27
l-1 1 Ju
0 ep -1 S
09 ov N
n09
ar M
Ja
8 -0
7 -0 ay M
l-0 6 Ju
5 ep -0 S
04 ov N
n04
ar M
Ja
3 -0
2 -0 ay M
l-0 1 Ju
S
ep -0
0
1.0
BRAZIL’S TERMS OF TRADE HAS SHOT UPWARD MASSIVELY Brazil: Exp ort Prices , Im po rt Prices , a nd the Te rm s o f Trad e ( T OT)
Exp o rt P rices U SD (2 006=100 )
160
140
Im p o rt P rices US D (2006 =100)
120
TOT
100 Avg . T OT (1978-2010)
80
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 28
1 M
ay
-1
09 pSe
Ja
n-
08
6 M
ay
-0
4 ep -0 S
Ja
n-
03
1 M
ay
-0
9 ep -9 S
98 n-
ay M
Ja
-9 6
4 -9 ep S
Ja
n-
93
1 M
ay
-9
-8 ep S
Ja
n8
8
9
60
PUSHING THE REAL EXCHANGE RATE STRONGER
3.6
U S D /B R L
3.2
2.8
2.4
2.0
1.6
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 29
1 n1 Ju
N
ov -
09
08 A
pr -
6 ep -0 S
Fe
b0
5
3 l-0 Ju
01 D
-0 ay M
ec -
0
8 O
ct
-9
7 M
ar
-9
95 ug A
Ja
n-
94
1.2
WE EXPECT A SLOW RISE IN USD/BRL 4.0
USD/BRL
3.5
3.0
2.5 Forecast
2.0
Source: Banco Central do Brasil, IBGE, Macquarie Capital (USA), September 2011 Page 30
O
ct
-1
3
13 Ja
n-
2 A
pr
-1
1 l-1 Ju
O
ct
-1
0
0 n1 Ja
A
pr -0
9
8 l- 0 Ju
O
ct
-0
7
07 Ja
n-
6 A
pr
-0
5 Ju
l-0
4 -0 ct O
n04 Ja
A
pr -0
3
2 l- 0 Ju
1 ct -0 O
Ja
n-
01
1.5
BRAZIL’S POLICYMAKERS FACE SIGNIFICANT CHALLENGES: ÎReal appreciation with further monetization by the United States and Japan and perhaps Europe. ÎExpanding current account deficits. ÎFiscal numbers weaker despite creative accounting and one-off revenue flows. ÎImproved but still poor social security and other indicators. ÎLow savings rates. ÎLow although increasing private investment rates. ÎLow public investment rates.
Page 31
Colombia: Good Start for Santos Why doesn’t Colombia grow more?
Page 32
Colombia: President Santos’ Good Start ÎPresident Juan Manuel Santos’ first year was very productive despite sending a barrage of reform initiatives to congress. ÎCongress is on its way to passing constitutional amendments on royalties and fiscal sustainability. ÎThe Colombian economy is rebounding strongly with growth ending 2010 at 4.5% and forecast to accelerate to above 5% in 2011. ÎInflation has rebounded along with this growth reaching 3.24% YoY in June 2011and should peak at 3.6% in 4Q 2011. ÎBANREP has tightened monetary policy but has now paused the intervention rate at 4.5%. We expect the rate to end 2011 at 5%. ÎThe US Congress finally looks like it will ratify the free trade agreement with Colombia. ÎProspects for Colombia's future look good.
Page 33
Colombia: Economy Rebounds 8% 4 -qtrs/4-qrts % 7%
Fore cast
6%
5%
4%
3%
2%
1%
Source: Bloomberg, Macquarie Capital (USA), September 2011 Page 34
20
12
IV
III 20 11
II 20
10
I 09 20
IV 20
07
I II 06 20
20
05
II
I 20 04
IV 02 20
01 20
20
00
II
III
0%
Colombia: Economy Rebounds BUT DEMAND GROWTH IS FASTER THAN SUPPLY 10% 4 -q trs /4 -q rts %
D o m e s tic D e m a n d (A b s o rp tio n )
8%
6%
D o m e s tic V a lu e -A d d e d
4%
2%
-2 % Source: Bloomberg, Macquarie Capital (USA), September 2011 Page 35
I 11 20
II I 20
10
I 10 20
II I 20
09
I 09 20
II I 20
08
I 08 20
II I 20
07
I 07 20
II I 20
06
I 06 20
II I 20
05
I 05 20
II I 20
04
I 04 20
II I 20
03
I 03 20
02 20
20
02
I
II I
0%
INFLATION IS ALSO REBOUNDING BUT AT A MODERATE PACE 10% B AN R E P Intervention R ate
9% 8%
Forecast 7% 6% 5% 4% 3% C ore 20 C P I Inflation
2%
H eadline C P I Inflation 1%
Source: Bloomberg, Macquarie Capital (USA), September 2011 Page 36
13 ov N
n13 Ja
2 M
ar
-1
-1 1 ay M
l-1 0 Ju
9 p0 Se
08 ov N
n08 Ja
7 M
ar
-0
-0 6 ay M
l-0 5 Ju
4 p0 Se
03 ov N
Ja
n03
0%
Colombia: Numbers and Forecasts
Colombia 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F
USD GDP 93,167 91,780 114,138 144,680 162,615 208,513 244,825 233,140 268,945 314,091 328,355
Real GDP 205,591,281 215,073,655 225,104,157 237,982,297 254,505,598 273,710,257 280,369,033 281,800,345 293,917,760 308,907,566 323,735,129
Real GDP growth
Primary Bal. (%/GDP)
2.46% 4.61% 4.66% 5.72% 0.00% 7.55% 2.43% 0.51% 4.30% 5.10% 4.80%
Source: INDEC, Bloomberg, Macquarie Capital (USA), September 2011 Page 37
0.80% 1.80% 3.30% 2.90% 0.00% 3.40% 3.60% 1.00% -1.10% 0.90% 0.70%
Nom. Bal (%/GDP) -3.10% -2.30% -0.50% -0.40% -0.40% -0.40% 0.50% -2.20% -3.80% -3.70% -2.50%
Public Sec Debt Cur. Acct. (%/GDP) (%/GDP) 52.3% 54.3% 49.7% 46.4% 44.4% 40.9% 38.6% 41.3% 40.5% 40.9% 41.3%
-1.40% -1.10% -0.80% -1.30% -1.80% -2.90% -2.80% -3.60% -3.30% -3.10% -2.69%
Colombia: Numbers and Forecasts con’t
Colombia 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F
Curr. Acct. (USD mm) -1,296 -979 -911 -1,886 -2,988 -6,018 -6,901 -5,157 -9,032 -11,400 -11,400
Exports 11,976 13,129 16,731 21,191 23,930 29,381 37,095 32,563 39,546 46,600 51,260
Imports
Trade Bal.
12,699 13,890 16,748 21,204 23,975 30,088 36,320 30,510 37,508 42,009 44,949
-723 -761 -17 -14 -45 -707 775 2,053 2,038 4,591 6,311
Source: INDEC, Bloomberg, Macquarie Capital (USA), September 2011 Page 38
FX Reserves 10,537 10,602 13,216 14,625 15,104 20,601 23,660 24,983 28,451 32,000 33,000
Inflation 7.0% 6.5% 5.5% 4.9% 4.5% 5.7% 7.5% 2.0% 3.2% 3.5% 3.4%
Policy Rate USDCOP Repo Rate 2867 2780 2355 2287 2240 2017 2249 2044 1907 1776 1841
5.25% 7.25% 6.50% 6.00% 7.50% 9.50% 9.50% 3.50% 4.00% 5.00% 4.75%
Mexico: Coming Out of the Malaise Worries from the northern neighbor
Page 39
Mexico: Beat Up But Better ÎThe Mexican economy was hit very hard by the US into recession falling 6.5% in 2009. ÎThe recovery is slowly moving from one based upon manufacturing and exports to services and internal demand. ÎMexican GDP is recovering and we expect growth at 3.8% for both 2011 and 2012. ÎThe well capitalized banking system helped Mexico weather the massive negative shock of the US financial collapse. ÎThe government allowed the fiscal deficit to widen but should have it back under 1% of GDP by 2012. ÎBanxico should keep monetary policy on hold until 4Q 2011 and will start despite the US Fed keeping interest rates near 0%.
Page 40
Mexican industry is recovering with the US 12%
M e xic a n v s . U S In d u s tria l P ro d u c tio n (1 2 m o , % c h a n g e )
9%
6%
F o re c a s
M ex. Ind. P rod .
3%
-6 %
-9 %
U S In d . P ro d .
Source: INEGI, Bloomberg, Macquarie Capital (USA), September 2011 Page 41
12 nJu
l- 1 Ju
ug A
1
0 -1
9 S
ep
-0 ct O
-3 %
-1 2 %
-0
8
7 -0 ov N
D
ec
-0
6
06 nJa
Fe
b-
05
4 M
A
pr
ar
-0
-0
3
2 M
ay
-0
01 nJu
l- 0 Ju
-9 ug A
0
9
8 S
ep
-9
97 ct O
-9 ov N
D
ec
-9
5
6
0%
-4%
-6%
-12% Jan-90 O c t- 9 0 J u l-9 1 A p r -9 2 Jan-93 O c t- 9 3 J u l-9 4 A p r -9 5 Jan-96 O c t- 9 6 J u l-9 7 A p r -9 8 Jan-99 O c t- 9 9 J u l-0 0 A p r -0 1 Jan-02 O c t- 0 2 J u l-0 3 A p r -0 4 Jan-05 O c t- 0 5 J u l-0 6 A p r -0 7 Jan-08 O c t- 0 8 J u l-0 9 A p r -1 0 Jan-11 O c t- 1 1 J u l-1 2
And Mexican GDP has now a corresponding common cycle with US GDP GDP Cycles Mexico x USA
8%
6%
4%
2%
0%
-2%
-8%
-10%
Mexico US
Source: INEGI, Raul Feliz, Bloomberg, Macquarie Capital (USA), September 2011
Page 42
We expect reasonable and steady economic growth for Mexico 1 0%
(4 q t r/ 4 q t r % ) F o re ca st
8%
6%
4%
2%
0%
-2 %
-4 %
-6 %
-8 %
Source: INEGI, Macquarie Capital (USA), September 2011 Page 43
IV 12 20
20
12
I
II 20 11
III 10 20
20
09
IV
I 09 20
20
08
II
III 07 20
20
06
IV
I 06 20
20
05
II
III 20
04
IV 03 20
20
03
I
II 02 20
01 20
20
00
IV
III
-1 0 %
The Real MXN has recovered but still above the levels of before the financial crisis. 21
Real M XN (June 2010)
19
17
15
13
11
Source: Banxico, Bloomberg, Macquarie Capital (USA), September 2011 Page 44
l-1 1 Ju
0 n1 Ju
M
ay
-0
9
08 A
pr -
7 M
ar
-0
6 b0 Fe
Ja
n-
05
03 D
ec -
02
N
ov -
-0 1 O
ct
0 ep -0 S
99 ug A
l-9 8 Ju
7 n9 Ju
M
ay
-9
6
95 pr -
4 A
ar
-9
3 M
b9 Fe
Ja
n-
92
9
The output gap is closing but more slowly in the last few months 8%
6%
4%
Forecast
2%
0%
-2%
-4%
-6%
-8%
-10%
Source: Raul Feliz, Banxico, Bloomberg, Macquarie Capital (USA), September 2011 Page 45
p12 Se
b12 Fe
-1 1 Ju l
c10 De
M
ay
-1 0
-0 9 O
ct
9 ar -0 M
08 gAu
8 n0 Ja
n07 Ju
v06 No
06 rAp
p05 Se
b05 Fe
-0 4 Ju l
c03 De
M
ay
-0 3
-0 2 O
ct
2 ar -0 M
01 gAu
Ja
n0
1
-12%
A Taylor rule has Banxico raising the fondeo rate now but expect only in 2012 Fondeo Rate and T aylor Rule (% per year) 8.6 8.1 7.6 7.1 6.6 6.1 5.6 5.1 4.6 4.1
Ta ylor Rule Pre dic iton
Actual
Page 46
2 -1 ct
O
l- 1
2
2 Ju
A
pr
-1
12 n-
1 Ja
-1 ct
O
l- 1
1
1 Ju
pr
-1
11 n-
Ja
Source: Raul Feliz, Banxico, Bloomberg, Macquarie Capital (USA), September 2011
A
0 -1 ct
O
l- 1
0
0 Ju
A
pr
-1
10 n-
9 Ja
-0 ct
O
l- 0
9
9 Ju
pr
-0
09 A
nJa
ct
-0
8
8 O
l- 0 Ju
-0 pr
A
Ja
n-
08
8
3.6
Inflation remains well behaved and monetary policy on hold until 2012 20
16
18
15
U SD /MXN (R H S)
16
14
Fore cast
14
13
12
12
10
11
8
6
4
10
C PI Inflation (y-o-y% , LH S)
9
Fondeo R ate Target Range
8
2
7 C ore Inflation (y-o-y% , LH S)
Page 47
12 ov N
Se
p1
1
0 l- 1 Ju
9 ay -0
ar M
Source: Raul Feliz, Banxico, Bloomberg, Macquarie Capital (USA), September 2011
M
-0 8
07 nJa
05 ov N
Se
p0
4
3 l- 0 Ju
ay -0 M
M
ar
00 nJa
2
6 -0 1
0
Mexico: Getting Better ÎMexico grew more than 5% in 2010 and will slow down to a reasonable 3.8% in 2011. ÎInflation is well behaved but a closing output gap and maize price shocks will lead Banxico to start raising the fondeo rate in 1Q 2012. ÎThe recovery along with continued loose US monetary will put continuous downward pressure on USD/MXN. ÎFiscal policy is slowly tightening from a mild expansion. ÎPolitical jockeying around the 2012 presidential election has already started, with the possibility of strange coalitions forming over the next 12 months.
Page 48
Mexico Numbers and Forecasts
Mexico 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F
USD GDP 649,212 700,344 759,596 849,744 952,456 1,025,806 1,099,729 877,195 904,793 999,709 1,159,185
Real GDP 7,455,365 7,555,803 7,862,072 8,114,085 8,531,973 8,810,136 8,915,030 8,369,087 8,820,038 9,126,736 9,467,310
Real GDP growth
Primary Bal. (%/GDP)
0.09% 1.35% 4.05% 3.21% 0.00% 3.26% 1.19% -6.12% 5.39% 3.48% 3.73%
Source: Banxico, INEGI, Bloomberg, Macquarie Capital (USA), September 2011 Page 49
1.60% 1.90% 2.20% 2.20% 2.50% 2.20% 1.80% -0.10% 0.20% 1.10% 1.80%
Nom. Bal (%/GDP) -1.10% -0.60% -0.20% -0.10% 0.10% 0.00% -0.10% -2.30% -2.10% -1.90% -1.50%
Public Sec Debt Cur. Acct. (%/GDP) (%/GDP) 22.1% 22.9% 21.3% 20.2% 18.5% 17.5% 21.4% 30.1% 29.2% 29.2% 29.0%
-2.00% -1.00% -0.80% -0.70% -0.60% -1.10% -2.00% -1.74% -0.65% -0.52% -0.89%
Mexico Numbers and Forecasts, con’t
Mexico 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F
Curr. Acct. (USD mm) -14,155 -7,259 -5,236 -4,871 -4,776 -8,660 -16,174 -16.349 -6.289 -5.775 -11.236
Exports 161,046 164,766 187,999 214,233 249,925 271,875 291,343 229,783 229,704 298,473 346,210
Imports 168,679 170,546 196,810 221,820 256,058 281,949 308,603 234,385 234,385 301,482 350,886
Trade Bal. -7,633 -5,779 -8,811 -7,587 -6,133 -10,074 -17,261 -4,602 -4,681 -3,009 -4,676
Source: Banxico, INEGI, Bloomberg, Macquarie Capital (USA), September 2011 Page 50
FX Reserves 47,984 57,435 61,496 68,669 67,680 77,991 85,441 90,838 113,597 125,500 121,000
Inflation 5.7% 4.0% 5.2% 3.3% 4.1% 3.8% 6.5% 3.6% 5.4% 4.1% 3.5%
Policy Rate USDMXN Fondeo Rate 10.37 11.23 11.15 10.62 10.81 10.85 13.43 12.86 12.39 11.82 12.28
8.25% 6.12% 8.75% 8.25% 7.00% 7.50% 8.25% 4.50% 4.50% 4.50% 5.50%
Central America: Growing But Vulnerable Inflation in Costa Rica, Elections in El Salvador, and Guatemala
Page 51
Costa Rica: Vulnerable Stability Î With Central American growth at 4%, Costa Rica is set to grow at 4.2% in 2011 and 4.1% in 2012. Î Inflation remains relatively high at just above 6% annualized. We expect the current monetary tightening to continue through 2012, which should continue to exert downward pressure on the USD/CDC, at least in real terms. Î The government’s fiscal stance continues loose and the government faces significant opposition implementing a fiscal reform any time soon. Î The current account deficit is set to expand with the expansion of the economy and the strengthening of the currency. Tourism has recovered and traditional exports (e.g. coffee) are currently growing at 11%, mostly because of the continued rise in prices with coffee the most important. Î The twin deficits represent the main sources of vulnerability to the Costa Rican economy.
Page 52
Costa Rica Numbers and Forecasts
Costa Rica 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F
USD GDP 16,825 17,499 18,566 19,919 22,464 26,218 29,684 29,060 35,131 38,278 42,033
Real GDP 1,480,435 1,575,249 1,642,346 1,739,021 1,891,701 2,042,033 2,099,560 2,077,107 2,149,806 2,240,097 2,331,941
Real GDP growth
Primary Bal. (%/GDP)
2.90% 6.40% 4.26% 5.89% 0.00% 7.95% 2.82% -1.07% 3.50% 4.20% 4.10%
Nom. Bal (%/GDP)
0.30% 1.20% 1.60% 2.50% 3.10% 3.70% 2.40% -0.80% -3.10% 3.10% 2.80%
Source: Global Source, Banco Central de Costa Rica, Bloomberg, Macquarie Capital (USA), September 2011 Page 53
-4.00% -3.10% -2.50% -1.60% -0.70% 0.60% 0.20% -3.40% -5.20% -5.40% -5.60%
Public Sec Debt Cur. Acct. (%/GDP) (%/GDP) 59.0% 59.8% 59.2% 55.1% 50.7% 45.3% 39.4% 42.4% 43.7% 45.4% 46.8%
-5.1% -5.0% -4.3% -4.9% -4.6% -6.3% -9.3% -1.8% -3.7% -5.4% -5.6%
Costa Rica Numbers and Forecasts, con’t
Costa Rica 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F
Curr. Acct. (USD mm) -857 -880 -792 -981 -1,023 -1,646 -2,752 -537 -1,299 -2,072 -2,350
Exports 5,264 6,102 6,302 7,027 8,200 9,337 9,504 8,788 9,385 10,058 11,288
Imports
Trade Bal.
7,188 7,663 8,268 9,824 11,548 12,952 15,372 11,395 13,616 15,749 17,905
-1,924 -1,561 -1,967 -2,797 -3,348 -3,615 -5,868 -2,606 -4,231 -5,691 -6,617
FX Reserves 1,500 1,839 1,922 2,313 3,115 4,114 3,799 4,066 4,627 4,827 4,927
Source: Global Source, Banco Central de Costa Rica, Bloomberg, Macquarie Capital (USA), September 2011 Page 54
Inflation 9.7% 9.9% 13.1% 14.1% 9.4% 10.8% 13.9% 4.0% 5.8% 6.2% 6.5%
Policy Rate USDCRC Base Rate 378.60 418.67 458.60 496.65 517.25 498.12 555.12 565.24 512.00 520.00 525.00
17.50% 13.75% 14.25% 15.25% 8.97% 5.52% 10.00% 9.00% 8.00% 8.50% 10.50%
El Salvador: Overdone Negativity ÎMost Wall Street analysts continue with a negative outlook for El Salvador. We are not quite so negative. Some of this negativity comes from El Salvador's slow growth rate. ÎWith Central American growth at 4%, El Salvador will once again underperform the region with growth at 1.7%. ÎInflation is running above 6% annualized and should end the year close to 7% as electricity prices are poised to increase. ÎThe government is currently pushing to bring down the fiscal deficit under the auspices of an IMF program. So far the government has outperformed its IMF targets and has not yet drawn on the SBA credit line and intends to keep it as precautionary. ÎExports have rebounded sharply, running at a rate of 25% (May). The current account deficit is expanding, mainly financed by remittances.
Page 55
Guatemala: Elections and good export performance ÎPresidential elections on 11 September 2011 and retired general Otto Pérez Molina looks to win. ÎWith Central American growth at 4%, Guatemala is currently growing at just above 3% annualized and should end 2011 just below that. ÎExports are currently the main source of growth, increasing 27% YoY in May. ÎThe current account deficit is expanding, mainly financed by remittances. ÎThe government’s fiscal stance is improving based mainly on 19% growth in revenues. The fiscal deficit should end 2011 at 3% of GDP. The government completed an agreement with the IMF and might renew it after the election. ÎInflation is currently running at 6.4%, above the 4%-6% target range of the Banco Central de Guatemala (Banguat).
Page 56
Indonesia and Vietnam: Strong Growth and Inflation
Page 57
Vietnam: in a tight spot between inflation and growth ÎInflation remains strongly elevated, at over 23% YoY, with much of this supply-driven. This trend should continue for the remainder of 2011 with key hard and soft commodity prices remaining elevated. ÎThe slowdown in global trade (particularly manufacturing) will also adversely impact the Vietnamese economy. We expect ~6% growth in 2011, compared to 6.8% in 2010. ÎThe combination of higher interest rates in 1H11 and higher inflation will likely weigh on private consumption and investment. ÎBut policymakers remain focused on growth, with the State Bank of Vietnam announcing a surprise 100bp repo rate cut in July following aggressive rate hikes in 1H11.
Page 58
Indonesia: robust growth, and inflation concerns are manageable for now ÎRobust domestic consumption and ongoing fixed investment should remain the key drivers of above-trend (~6.5%) growth in 2011. ÎHeadline inflation has dipped below 5% due to food and fuel subsidies, and tolerance of a significant appreciation in the rupiah. However, core inflation remains elevated. ÎBank Indonesia has lagged global peers in tightening monetary policy, but will likely leave rates on hold until year-end. ÎIn a nod to ongoing investor support, Indonesian asset markets continue to perform strongly. While the key stock index fell ~8% in August following global jitters, it is still averaging 22% higher than 2010. ÎStructural economic reform remains a long-term challenge Page 59
Inflation YoY% 14
Headline Core
12 10 8 6 4 2 0 Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Source: Datastream, Macquarie Research, September 2011
The numbers Vietnam
Indonesia 2009
2010
2011F
2012F
GDP
4.6
6.1
6.4
6.4
Household consumption
4.9
4.6
5.1
Gross fixed investment
3.3
8.5
Industrial production
2.2
CPI Policy rate (yr end) USD/IDR (yr avg)
2009
2010
2011F
2012F
GDP
5.3
6.8
6.1
6.5
5.3
Household consumption
3.7
7.0
2.8
5.4
9.3
10.4
Gross fixed investment
8.7
8.5
5.1
7.2
4.5
4.9
4.8
Industrial production
7.6
14.0
14.0
15.5
4.8
5.1
5.7
5.9
CPI
7.0
8.9
17.4
10.1
6.50
6.50
6.75
7.25
USD/VND
17941
19498
21043
21586
10357
9101
8600
8400
Source: Datastream, Macquarie Capital (USA), September 2011 Page 60
(yr end)
COFFEE EXPORTERS PERFORMING SIMILARLY ÎPrice increase in primary commodities, especially coffee, continues to power terms of trade improvement, higher economic growth, and strong capital inflows. ÎStronger currencies and expanding current account deficits have accompanied this growth. ÎCapital flows to these countries. ÎPolicy makers are struggling to tighten fiscal and monetary policies to soften the appreciation and the inflation impact of these favorable winds. Improved but still poor social security and other indicators.
Page 61
Important disclosures: Volatility index definition*
Recommendation definitions Macquarie - Australia/New Zealand
This is calculated from the volatility of historic price movements.
Outperform – return > 3% in excess of benchmark return Neutral – return within 3% of benchmark return Underperform – return > 3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie – Asia/Europe Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected <-10%
Very high–highest risk – Stock should be expected to move up or down 60-100% in a year – investors should be aware this stock is highly speculative. High – stock should be expected to move up or down at least 40-60% in a year – investors should be aware this stock could be speculative. Medium – stock should be expected to move up or down at least 30-40% in a year.
Macquarie First South - South Africa
Low–medium – stock should be expected to move up or down at least 25-30% in a year.
Outperform – return > 10% in excess of benchmark return Neutral – return within 10% of benchmark return Underperform – return > 10% below benchmark return
Low – stock should be expected to move up or down at least 15-25% in a year.
Macquarie - Canada Outperform – return > 5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return > 5% below benchmark return
•Applicable to Australian/NZ stocks only
Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit /efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards).
Recommendation – 12 months
Macquarie - USA
Note: Quant recommendations may differ from Fundamental Analyst recommendations
Outperform – return > 5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return > 5% below benchmark return
Recommendation proportions – For quarter ending 30 June 2011 Outperform Neutral Underperform
AU/NZ 50.37% 36.86% 12.77%
Asia 64.60% 21.22% 14.18%
RSA 64.62% 29.23% 6.15%
USA 45.63% 51.30% 3.07%
CA 67.74% 28.50% 3.76%
EUR 48.02% (for US coverage by MCUSA, 12.44% of stocks covered are investment banking clients) 38.42% (for US coverage by MCUSA, 12.95% of stocks covered are investment banking clients) 13.56% (for US coverage by MCUSA, 0.00% of stocks covered are investment banking clients)
Page 62
Company Specific Disclosures: Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures. Analyst Certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN 94 122 169 279 (AFSL No. 318062) (MGL) and its related entities (the Macquarie Group) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General Disclaimers: Macquarie Securities (Australia) Ltd; Macquarie Capital (Europe) Ltd; Macquarie Capital Markets Canada Ltd; Macquarie Capital Markets North America Ltd; Macquarie Capital (USA) Inc; Macquarie Capital Securities Ltd and its Taiwan branch; Macquarie Capital Securities (Singapore) Pte Ltd; Macquarie Securities (NZ) Ltd; and Macquarie First South Securities (Pty) Limited; Macquarie Capital Securities (India) Pvt Ltd; Macquarie Capital Securities (Malaysia) Sdn Bhd; Macquarie Securities Korea Limited and Macquarie Securities (Thailand) Ltd are not authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL) or MGL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of any of the above mentioned entities. 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The Research Distribution Policy of Macquarie
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Capital Markets Canada Ltd is to allow all clients that are entitled to have equal access to our research. United Kingdom: In the United Kingdom, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated by the Financial Services Authority (No. 193905). Germany: In Germany, research is issued and distributed by Macquarie Capital (Europe) Ltd, Niederlassung Deutschland, which is authorised and regulated in the United Kingdom by the Financial Services Authority (No. 193905). France: In France, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated in the United Kingdom by the Financial Services Authority (No. 193905). Hong Kong & Mainland China: In Hong Kong, research is issued and distributed by Macquarie Capital Securities Ltd, which is licensed and regulated by the Securities and Futures Commission. 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No portion of the report may be reproduced or quoted by the press or any other person without authorisation from Macquarie. Nothing in this research shall be construed as a solicitation to buy or sell any security or product. Thailand: In Thailand, research is issued and distributed by Macquarie Securities (Thailand) Ltd, a licensed securities company that is authorized by the Ministry of Finance, regulated by the Securities and Exchange Commission of Thailand and is an exchange member no. 28 of the Stock Exchange of Thailand. The Thai Institute of Directors Association has disclosed the Corporate Governance Report of Thai Listed Companies made pursuant to the policy of the Securities and Exchange Commission of Thailand. Macquarie Securities (Thailand) Ltd does not endorse the result of the Corporate Governance Report of Thai Listed Companies but this Report can be accessed at: http://www.thai-iod.com/en/publications.asp?type=4. 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Contact Macquarie Capital (USA) Inc. SALES US Karen Acierno (303) 952 2730 Karen Blando (212) 231 2515 Larry Busnardo (303) 952 2750 Michael Cagney (312) 660 9144 Will Cape (312) 660 9051 David Chambers (212) 231 2505 Brian Cohen (212) 231 8002 Wes Dalton (415) 762 5007 Michael Dâ&#x20AC;&#x2122;Arcangelo (212) 231 2573 Peter Doerr (312) 660 9052 John Donaldson (212) 231 8026 Eddie Friedmann (212) 231 8011 Roni Gudell (617) 598 2504 Greg Jannetta (617) 598 2507 Jay Kreske (312) 660 9041 Heidi Muccifori (212) 231 2466 Bruce Murdock (212) 231 8025 Todd Pigott (212) 231 8007 Susan Reid (416) 848 3558 Jack Rose (415) 762 5002 Richard Sears (212) 231 2489 Blair Smith (212) 231 8004 Mark Swank (212) 231 2415 Ben Taylor (415) 762 5025 Ingrid Willinge (212) 231 8017 Email Addresses firstname.surname@macquarie.com eg karen.acierno@macquarie.com
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