Opportunities Created by the Global Power Shift: Investing in the Next Decade

Investors’ Insight Vontobel Asset Management

Opportunities Created by the Global Power Shift: Investing in the Next Decade

Foreword

When the real estate bubble burst in the U.S., unleashing the largest economic crisis since the Great Depression of the 1930s, it brought with it far-reaching consequences for the financial markets and, in turn, for investors. The turmoil reinforced the trend towards lower interest rates which began following the high-inflation 1970s, with credit in the industrialized countries now available at virtually zero interest and attractive yields on government bonds a thing of the past.

“Currently one-third of global economic output is generated in

The study is structured as follows: Section 1 examines the global challenges facing investors in the coming decade.

Section 2 focuses on the new, increasing macroeconomic stability of most emerging markets.

Section 3 outlines three suggestions for a portfolio ­restructuring and the impact this will have on risk/return characteristics.

Section 4 summarizes the findings.

emerging markets.”

If interest rates start to rise in the coming years, as we ­expect them to, returns may even turn negative. With this in mind, investors with balanced portfolios need to take urgent action: on the one hand by reducing their bond component, and on the other by diversifying their port­ folios through emerging market bonds. The picture is similar for equities: the increasing economic importance of the emerging economies – one third of global economic output is currently generated in this region – should be ­reflected in the composition of equity portfolios. Precious metals and commodities have also proved a safe haven in the current crisis, affording protection against the weak and volatile equity markets and rising fears of inflation, and remain attractive in the long term.

Dr Thomas Steinemann, Chief Strategist Vontobel Group

Dr Ralf Wiedenmann, Head of Economic Research

Oliver Russbuelt, Senior Investment Strategist

March 2011 3

Section 1: Global challenges for investors in the coming decade

The financial crisis of the past three years, which was ­triggered by the exorbitant debts incurred by U.S. homeowners, showed us just how vulnerable the industria­li­zed nations are. In essence, the crisis exacerbated and acce­l­ erated some longstanding global trends. These can be described as follows:

Chart 1.1: Ageing of society more pronounced in industrialized nations than in emerging markets Share of people over 65 in the total population 35%

32.6%

30%

27.4%

25%

Shift in the global balance of power The key developed countries are stagnating, while the emerging economies are experiencing a dramatic phase of growth. Following the slew of crises in Asia and Latin America in the 1990s, several countries in these regions have stabilized on both a macroeconomic and – in many cases – a political level. Numerous dictatorships, espe­cially in Asia, had to yield to democratically elected governments, as exemplified by the case of Indonesia. A ­stable economy and a minimum of political freedom are important prerequisites for a sustainable economic upswing – something which has become particularly apparent over the last ten years. At the start of the 1990s, emerging markets accounted for only 20 % of global economic output, compared to as much as one third today.

And this is only the beginning: in 20 years’ time, according to U. S. estimates, this figure could be almost one half. Although the share of the emerging economies in global equity market capitalisation is already 13 %, this is by no means a true reflection of their economic clout.

Other factors that speak in favour of the emerging countries are their significantly healthier public finances 1 and, above all, demographic developments. Chart 1.1 shows

21.4%

20% 15%

20.2%

15.5% 12.5%

11.7%

10% 6.4%

5% 0%

1950

6.1%

1975

8.5%

2009

2025

2050

Emerging Markets

Developed World

Source: United Nations

the proportion of pensioners in the total population for deve­l­oping and emerging countries in the past, present and ­future.

For every percentage point by which the share of over65-year-olds in a society grows, government debt relative to gross domestic product increases by approximately ­seven percentage points 2. This is due to what is known as “implicit government debt”, which essentially arises from future pension payments. What is especially disturbing about this form of debt is that it is not yet even visible. Beginning around 2020, however, it will place a major drain on government bud­gets in the West, as the University of Freiburg discovered in their compre-

Chart 1.2: Implicit government debt of selected European countries % of GDP 450% 400% 350% 300% 250% 200% 150% 100% 50% 0%

AT

BG

CZ

DE

ES

FI

Government employer pension scheme

FR

GR

HU

IT

LT

LV

MT

NL

PL

Social security pension scheme

Source: Working paper of the Research Center for Generational Contracts, University of Freiburg, Germany 1 See

the Vontobel study “From the Financial to the Debt Crisis” of March 2010

2 Neue

4

Zürcher Zeitung 4 September 2010

PT

SE

SK

UK

hensive study. Chart 1.2 illustrates the ­estimated implicit government debt of the main European countries. These “invisible” government debts amount to between 200 % and 350 % of GDP and need to be added to existing “visible” debts.

In emerging countries, by contrast, such burdens resulting from pension and social commitments are not an issue, since demographic trends there are more favourable. With this in mind, investors should try to take advantage of the positive aspects of emerging market developments through an appropriate selection of equities and bonds.

Decline in inflation and interest rates since the 1980s After the inflationary 1970s, central banks started tigh­t­ ening monetary policy, dampening inflation expectations and triggering a sustained decline in inflation rates and bond yields. This trend was fuelled by high productivity growth, not least thanks to increasing globalization (see chart 1.3).

Chart 1.3: The interest rate trough may have been reached ­following a long decline Yields on government bonds in Switzerland and Germany 12 10 8 6 4 2 0 1960

1970

1980

German 10Y Govt. Bond Yield

1990

2000

2010

Swiss 10Y Govt. Bond Yield

Source: Thomson Datastream

Interest rates may have bottomed out and should trend higher again in the coming years. This means that future bond yields will in all likelihood drop below the levels seen in the past 30 years. In view of the large share of government bonds in many portfolios, we think the time is right to change the mix.

Exchange rate volatility speaks in favour of safehaven currencies – as well as those from the emerging economies The currency problems facing the euro zone are nothing new, but little has been done to eliminate them. The ­European Union still seems to lack the political will to take the necessary steps to solve the euro crisis – decisions which should have been made when the common currency was first introduced. If the status quo persists, fur­ther setbacks for the euro are inevitable. The outlook for the U. S. dollar is not much rosier: the printing presses are running at full tilt due to the Fed’s exceptional monetary ­stabilization measures, known as quantitative easing. Furthermore, in December 2010 the U. S. government pro­ mised a further economic stimulus package amounting to a staggering USD 800 billion, euphemistically referred to as a “budget compromise”. These circumstances undermine the long-term strength of greenback and are propping up the Swiss franc and the Japanese yen. The emerging market currencies, meanwhile, are notching up impres-­ sive gains against the dollar and the euro and look set to keep pace with the Swiss franc in the medium term.

Buoyed by solid growth and stable public finances, will these currencies be among the winners in the coming ­decades? This is a distinct possibility given the improved overall economic stability of these countries.

5

Section 2: New economic stability in the emerging markets

As recently as the 1990s, the emerging economies were going through one crisis after the other due to their unsound economic policies, which placed little emphasis on stability (see chart 2.4). This resulted in high rates of inflation or even hyperinflation, currency volatility, and sky­rocketing government and foreign debt. But the countries learned their lessons from the crisis, and since 2000 the macroeconomic situation has markedly improved.

Inflation trending downwards in the medium term In the past, many central banks chose to peg their currencies to the dollar to ensure price stability. This strategy worked at first, but over time had disastrous effects on their current account balances and public finances. ­Argentina, for example, went bankrupt in 2002 and had to abandon its currency peg to the dollar, causing the ­Argentine peso to plummet in value.

In the meantime, however, emerging countries have ­realized that inflation targets are the best means to fight inflation. In many instances, currency pegs have been ­replaced by a flexible regime. The central banks in these countries, like those in the industrialized nations, are ­attempting to control erratic price fluctuations through so-called managed floating. As chart 2.1 shows, inflation rates have declined dramatically in the emerging economies in the last 15 years. Whereas inflation stood at ­almost 40 % in 1995, by 2010 it had fallen to 6.5 %.

6

Chart 2.1: Inflation in the emerging economies is almost on a par with that in the industrialized nations Annual inflation of the consumer price index 40 35 30 25 20 15 10

IMF forecast

5 0 1995

2000 Developed markets

2005

2010

2015

Emerging markets

Source: IMF, World Economic Outlook, October 2010

Can we expect the emerging economies to keep their inflation rates at similarly low levels in the future? We think they can, because the central banks of many emer­ging economies have become independent and now use generally recognized methods to manage their money supply and currencies. Questionable currency pegs are now a thing of the past. Over the last ten years, the monetary authorities of these countries have done a good job adhering to their inflation targets. The International Mone­tary Fund (IMF) also forecasts that inflation in the emer­ging economies will remain low over the next five years (see chart 2.1). However, there are currently concerns about ­rising inflation because of an increase in food and energy prices.

Public finances in good shape Emerging markets have made good progress in the area of public finances. Budget deficits relative to gross domestic product have been lower than those of industrialized ­nations over the past seven years. The emerging markets even managed to record a budget surplus between 2005 and 2007, which together with strong economic growth has helped to bring down the debt-to-GDP ratio. Public debt in the emerging markets fell from 54 % to 37 % of GDP between 2002 and 2010, while the industrialized ­nations saw that measure rise from 70 % to 96 % during the same period, with a further increase expected in the near term (see chart 2.2).

Chart 2.2: Government debt in the emerging markets is ­ trending downwards, while that in the industrialized nations is on the rise Government debt in % of GDP 120

IMF forecast

100

The emerging economies are breaking new ground in the way they finance their debt. Thanks to more mature ­domestic capital markets and relatively stable exchange rates, most of their government bonds (82 %) are deno­ miated in local currencies and no longer in dollars. This is music to the ears of the countries’ finance minis­ters, which avoid exchange rate risks when redeeming the bonds. The success of government bond issues in local currency also shows the high degree of trust the currencies enjoy on a domestic and an international level.

Ratings on the rise Improved public finances have called the rating agencies to action. In 2010, ratings upgrades for emerging economies exceeded the number of downgrades by a factor of six. China and Taiwan, for example, have the second-best ­rating AA, while Chile, Estonia and Malaysia have an A (see chart 2.3). The opposite is true for the industriali­zed nations, a few of which were downgraded and none of which were upgraded between 2008 and 2010, with the trend towards lower ratings likely to persist in the coming years.

80

Chart 2.3: Emerging economies’ ratings on the rise

60

Rating trends of selected emerging economies AA–

40

A+ 20 2000

A 2002

2004

Developed markets

2006

2008

2010

2012

2014

Emerging markets

Source: IMF, World Economic Outlook, October 2010

A major problem facing industrialized nations is the growing share of pensioners in the total population. Without dramatic changes to these countries’ state pension and health systems, government debt will rise considerably in the coming decades (section 1). In the emerging markets, demographic trends are much more favourable, meaning that these countries will likely retain their edge in the area of public finances in the long term (see chart 1.1).

A– BBB+ BBB BBB– BB+ BB BB– B+ 2005

2006

2007

China

Poland

2008

2009 Brazil

2010

2011 Turkey

Source: S & P, Bloomberg

Declining foreign debt In the past, many emerging countries have struggled with high current account deficits, which over the years have resulted in rising levels of foreign debt. Today, however, many post current account surpluses and are reducing their gross foreign debt. Some former net debtors have

7

­ ecome net creditors, like Brazil in 2008, and some have b used their foreign trade surpluses to build up sovereign wealth funds. Of the total global volume of these vehicles of almost USD 4,200 billion, USD 3,400 billion is attributable to the emerging economies. Chinese funds account for USD 831 billion, followed by Abu Dhabi (USD 689 billion) and Saudi Arabia (USD 444 billion).

Grafik 2.5: Emerging market currency reserves have increased

Emerging market currencies have become significantly more stable since 2003 and have appreciated consider­ ably against the euro. This is partly due to the countries’ newly-established currency reserves, especially in Asia, which serve as a buffer in the event that export revenues or capital imports collapse. The currency reserves of developing countries have increased almost ten-fold from USD 659 billion to USD 5,933 billion since the beginning of 2000 (see chart 2.5).

dramatically

Interest rates little changed since 2003 Yields have moved sideways on balance since 2003.

While interest rates are tending lower in Latin America, in Asia they are posting a slight rise (see chart 2.6).

Emerging market currency reserves in USD bns 6,000 5,000 4,000

Grafik 2.6: Government bonds issued by emerging economies 3,000

recovered quickly after the financial crisis Yields of government bonds issued by the emerging economies in local currency

2,000 1,000 0

12 11 00

01

02

03

04

05

06

07

08

09

10

10

Source: IMF, Thomson Datastream

9 8

Currency stability on the rise In the second half of the 1990s, emerging market currencies went through a series of crises. The Mexican peso, for example, lost two thirds of its value compared to the German mark during the so-called Tequila crisis from 1994 to 1995, while the Asia crisis saw the ­value of the Thai baht fall by 50 % versus the German currency (see chart 2.4).

7 6 5 4 3

2003 Asia

2004

2005

2006

Latin America

2007

2008

2009

2010

Eastern Europe

Source: JPMorgan Global Diversified Emerging Markets Government Bond Index

Grafik 2.4: Emerging market currencies have become more stable since 2003. Are we about to enter an era of the emerging market currencies?

Long-term trends in emerging market currencies

100

Tequila crisis (1994 – 95)

90

South African rand crisis (1996) Asia crisis (1997)

80

Dot-com crisis

70

Subprime & financial crisis Euro crisis

60 50 40 1994

?

Ruble crisis (1998) Brazilian real crisis (1999)

1996

1998

2000

CHF / Emerging market Currencies

2002

2004

2006

2008

2010

2012

2014

EUR / Emerging market Currencies

Source: Thomson Datastream, Vontobel Currency basket: MSCI EM Equity (until end of 2002); JPM GBI-EM Global Diversified (as of beginning of 2003)

8

2016

2018

In spite of the good economic conditions, risks still persist.

The mass protests in various Arab countries are a fitting reminder that the emerging markets have still a long way to go in terms of political stability. Some emerging markets recently introduced checks on the movement of cap-

How to invest in emerging market bonds Investments in emerging market bonds can be made via bonds in local currency or in US dollars, primarily via so-called Brady bonds. Brady bonds were introduced in 1989 in an attempt to manage the Latin American debt crisis of the 1980s by providing a solid mechanism for the repayment of the foreign debt of the countries concerned. Backing these bonds with U. S. government paper guarantees the redemption of at least the principal and in some cases also interest payments. This form of securitization revolutionized global trade in emerging market bonds. Improved macroeconomic stability coupled with increasing investor interest in the emerging markets enabled these countries to issue bonds in local currency for the first time around the turn of the new millennium. Ever since, the local bond markets have developed steadily. Bonds issued by the emerging countries currently account for over 10 % of global outstanding volumes – a figure that is expected to rise to 30 % by 2030 and to over 40 % by 2050, according to Goldman Sachs.

ital. At the end of 2010, for example, Brazil increased the tax rate on bonds in Brazilian real acquired by foreign investors to 6 %. Due to these economic policy risks, emerging market bonds will continue to have a yield premium in the future.

Investors can rely on various benchmarks to measure the performance of emerging market bonds. JPMorgan Chase & Co. has been compiling reference indices for Brady bonds since 1993, and since 2002 has maintained an entire index family for local bonds, led by the widelyobserved JPM Government Bond Emerging Market Global Diversified Index. This index comprises exclusively emerging markets which, according to the World Bank, have belonged to the low/middle income category without interruption for at least two years and where there are no substantial hurdles to investment. The index is strongly diversified on a regional basis – the weighting of each individual country may not exceed 10 % – and covers all of the world’s relevant emerging regions.

Chart B1: Regional breakdown of the JPM Government Bond Emerging Market Global Diversified Index Asia

29.3%

Eastern Europe

33.9%

Latin America

26.6%

Africa/Middle East

10.2%

Asia

29.3 %

Latin America

26.6 %

Malaysia

10.0 %

Brazil

10.0 %

Thailand

10.0 %

Mexico

10.0 %

Indonesia

8.8 %

Columbia

4.5 %

Philippines

0.5 %

Peru

2.0 %

Eastern Europe

33.9 %

Chile

Poland

10.0 %

Africa/Middle East

10.2 %

Turkey

10.0 %

South Africa

10.0 %

Hungary

7.5 %

Russia

6.4 %

Egypt

0.1 %

0.2 %

Source: JPM, Emerging Markets Bond Index Monitor, 31 January 2011

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Section 3: Three steps to creating a balanced, future-oriented portfolio

An analysis of many investors’ strategic portfolio structures reveals some interesting results: equities and bonds from emerging economies are underrepresented. In an ­average balanced private client portfolio, only around 5 % 3 of assets are invested in emerging economies. In the case of institutional investors, this quota is even lower.

While most clients allow their asset managers to build up positions primarily in ­equity funds in the tactical asset ­allocation process, substantial, long-term emerging market holdings are still the exception. Another charac­te­­­r­is­tic feature of today’s portfolios is their extremely large weighting of government bonds from industrialized ­nations, which frequently account for one half of a balanced portfolio.

How should investors take on the global challenges of the coming decade? Our solution is to broaden the scope of the risk buffer and return driver asset classes (chart B2) and also to slightly increase the weighting of ­return drivers within the portfolio.

Three measures can achieve this: 1. Reduce the weighting of bonds in general while including emerging markets bonds for diversification reasons.

2. Diversify the equities part by increasing the emerging markets stocks quota.

3. Increase the share of liquid alternative investments by building up positions in precious metals, commodities and real estate.

Chart 3.1: Example structure of the new balanced portfolio Cash

5%

Risk buffers

45%

Industrial country bonds

26%

Yield drivers

55%

Emerging country bonds

4%

Industrial country equities

36%

Emerging country equities

4%

Hedge funds

8%

Precious metals

5%

Real estate

6%

Commodities

6%

Source: Vontobel

Chart B2: Functions of the various asset classes within the context of a balanced portfolio

Equities

Bonds

Cash

Risk buffers

Alternative investments

Weighting of asset classes according to Bank Vontobel In the financial world, it has become common practice to distinguish key asset classes such as cash, bonds, equities and alternative investments 4. We, by contrast, specify asset classes according to the specific function assigned to them within a balanced portfolio. Each asset class has certain characteristics which prove useful in different market phases. For example, precious metals generally provide protection against crises and inflation, while equity investments are directly coupled to a company’s fluc­ tuating success. For clarity’s sake, we distinguish between two functions: risk buffers and return drivers. The aim of the risk buffer asset class is to exert a stabilizing effect on portfolios, especially in times of crisis. The aim of ­return driver asset class, meanwhile, is to generate optimum returns.

Cash

X

Industrial country bonds

X

Yield drivers

Emerging country bonds

X

Industrial country equities

X

Emerging country equities

X

Investment theme equities

X

Funds of hedge funds (UCITS)

X

Precious metals

X

Commodities

X

International real estate Swiss real estate funds

X X

Source: Vontobel

Anlagepanorama 11 October 2010 (average tactical asset allocation weighting of the eight participating private banks) investments generally comprise hedge funds, real estate, private equity and commodities. In an institutional context, real estate is generally managed as an independent asset class.

3 NZZ

4 Alternative

10

On measure 1: After declining steadily over the last 30 years, yields of government bonds issued by industria­l­ ized nations may now have finally bottomed out. The forecast slight rise in interest rates will likely result in low or even negative returns. Investors will demand ­higher credit risk premiums due to industrialized nations’ growing levels of government debt as well as higher in­ flation premiums due to more expansive monetary policies. The situation is different in the emerging econo­mies, where increasing macroeconomic stability (section 2) will further improve these countries’ credit ratings and thus reduce risk premiums. Currency risk compensation also looks set to decrease, since we expect emerging market currencies to remain stable compared to the euro and the Swiss franc over the long term. With this in mind, we recommend reducing the proportion of government bonds while increasing diversification through emerging market bonds.

Relevance for institutional investors This study is based on portfolio structures for private ­clients. The relevant risk measures in chart 3.2 also refer to our new portfolio structures for private clients. Insti­ tutional investors have a different set of considerations.

Their benchmarks are geared towards the individual ­situation of a specific pension fund and the respective ­legal framework. Thus, the recommendations in this ­study do not directly apply to institutional investors. ­Nevertheless, they could use it as an occasion to rethink

On measure 2: On the equities front, we also advise to build up positions in the emerging markets. The region already generates one third of global economic output and that share is expected to continue to rise. Given the increased robustness of the emerging markets, econo­mic fluctuations look set to diminish and returns should become more stable, as described in detail in section 2.

Valuation discounts on equities as a premium for increased earnings volatility should disappear over time. Since these developments are not yet fully priced in, we see potential for equities in this region to outperform their peers over the coming years.

e­ xisting benchmarks: Can the bond allocation be re­du­ced in favour of alternative investments such as com­ modities, precious metals and real estate? In the area of foreign-currency bonds, can emerging market bonds also be included in the benchmark? Should the benchmark for foreign equities comprise emerging market stocks? The world has changed and will continue to change – both for private investors as well as for insti­ tutional clients.

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On measure 3: In the broad and extremely heterogeneous class of alternative investments, we favour liquid asset classes that offer attractive risk/returns. Precious metals and commodities have proved a risk buffer in the current crisis. The same applies to liquid hedge fund strat­ egies which comply with European UCITS regulations.

The real estate sector is benefiting from the global trends of a growing world population and increasing urbanization. In view of the current low interest rate environment, the sector also offers attractive dividends, stable cash flows and protection against inflation.

Why do we also recommend a slightly higher weighting of return drivers? Shifts within the risk buffer and return driver categories will have a positive impact on expected returns but this will only partly offset the anticipated ­decline in returns tied to slipping bond yields, in particular.

It therefore seems prudent to slightly increase the pro­ portion of return drivers in the portfolio. True, this will increase volatility. But it will also improve other risk measures: the Sharpe ratio 5 will improve, the recovery period 6 will become shorter and the maximum drawdown 7 will remain constant.

The new portfolio structures have more attractive risk-­ adjusted returns and thus exceed the previous ones by far.

Chart 3.2: New portfolio structure improves risk/return characteristics (example of a balanced portfolio) Portfolio structure

6.0%

Yield p.a.

5.5% 5.0%

Old portfolio structure (historical return)

New portfolio structure (expected return)

p. a.

5.06 %

4.29 %

9.01 %

7.94 %

–30.33 %

–29.81 %

Risk Volatility p. a.

Old portfolio structure (expected return)

Key figures Max. drawdown 7

3.5%

Recovery period (in months) 6 3.0% 7.0%

Old

Performance

4.5% 4.0%

New

7.5%

8.0%

8.5% 9.0% Risk p.a.

9.5%

10.0%

Sharpe ratio 5

42

52

0.51

0.45

Quelle: Vontobel, Thomson Datastream

Source: Vontobel, Thomson Datastream Calculation of returns based on index data of the past 15 years and the average expected return over the next five years; risk and key measures with index data over the past 15 years.

5 The

Sharpe ratio represents the excess return (difference between investment return and risk-free return) of a portfolio relative to volatility.

It thus shows the return of a portfolio independent of the risk entered into.

6 Longest period in months that investors would have to stay invested in order to achieve a positive return, if they invested at an unfavourable point in time.

7 Maximum loss that investors would sustain if they invested at an unfavourable point in time.

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Section 4: Summary and conclusions for investors

The financial crisis essentially exacerbated and accelera­ted three longstanding global trends. Firstly, interest rates for government bonds from industrialized nations have fallen to record lows in the wake of the flight to quality.

Secondly, the contribution made by emerging econ­o­mies to global economic output has since reached 30 %, while their market capitalization accounts for only 13 % of the global equity market. And thirdly, the debt crisis is stoking currency turmoil in the large currency blocks of the U. S. and the euro zone, whereas the currencies of the emerging markets and the traditional safe-haven curren­cies – the franc and the yen – continue to stabilize.

“Emerging market bonds are a suitable way of introducing an element of ­diversification to the bond portion of a portfolio.”

In view of the recovery of the global economy since 2009, interest rates are expected to rise over the coming years.

For investors, this means that bond components of a balanced portfolio will likely post only small or even nega­tive returns. We therefore recommend reducing the bond component in favour of commodities, precious metals and real estate where possible. We also recommend an ­increased diversification in the area of fixed income, ­trad­itionally geared towards government bonds from indus­ trialized countries. Emerging market bonds are a ­suitable way of introducing this element of diversification to the bond portion of a portfolio.

The measures recommended in this study relate to longerterm, strategic portfolio restructuring. It is well known that the financial markets are not a one-way street and will still be subject to setbacks and high volatility in the future.

In addition to the basic considerations outlined here, pro­ active, tactical decisions will continue to play a vital role for investment success.

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Disclaimer Although Vontobel Group believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this report.

This document is for information purposes only and nothing contained in this document should constitute a solicitation, or offer, or r­ ecommendation, to buy or sell any investment instruments, to effect any transactions, or to conclude any legal act of any kind whatsoever.

This document has been produced by the organizational unit Asset Management of Bank Vontobel AG. It is explicitly not the result of a financial analysis and therefore the “Directives on the Independence of Financial Research” of the Swiss Bankers Association is not applicable. All estimates and opinions expressed in this brochure are the authors’ and reflect the estimates and opinions of Bank Vontobel. No part of this material may be reproduced or duplicated in any form, by any means, or redistributed, without acknowledgement of source and prior written consent from Bank Vontobel AG.

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