Credit-Suisse -Potential consolidation by riteshbhansali


Potential consolidation offers long-term opportunities

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									                                                                                                                          Global Research
                                                                                                                          Private Banking

Research Weekly                                 12/02/2013

        BMW, Burberry, Coca-Cola,
 Buy    Colgate-Palmolive, Hikma
        Pharmaceuticals, PPR, SAB-
        Miller and Unilever
        Multinational companies benefit-
        ing from increasing demand in
        emerging markets.                         consolidation
        6M Gold (XAU/USD) bullish
        risk reversal
        With current option skew, low im-
        plied volatility environment and bot-
                                                  offers long-term
        toming technical momentum, we
        think bullish risk reversals on gold
        are attractive.

Tactical views                                  Tactical views                                  Tactical views
Gauging the Eurozone                            Volatile credit markets                         Long-term fundamentals
GDP decline at the end                          ahead page 2                                    remain attractive for
of 2012 page 2                                                                                  equities page 3

Tactical views                                  Tactical views                                  Tactical views
Near-term strength in                           “Currency wars”           page 3                Medium-and long-term
commodities should                                                                              uptrend in the S&P 500
continue page 3                                                                                 Index remains intact page 3

  Important disclosures are found in the Disclosure appendix. Credit Suisse does and seeks to do business with companies
  covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could af-
  fect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
  For a discussion of the risks of investing in the securities mentioned in this report, please refer to the following Internet link:
2    Tactical views                                                                                 12/02/2013    Credit Suisse - Research Weekly

    Tactical views                                                         Gauging the Eurozone GDP
                                                                           decline at the end of 2012
    Potential                                                              Björn Eberhardt

    consolidation offers                                         , +41 44 333 57 43

                                                                                                                  Investment horizon: 1-6 months

    long-term                                                              This week’s major data releases – Q4 GDP for the Eurozone
    opportunities                                                          as a whole and most of its member states – will bring more
                                                                           clarity about the decline in economic activity toward the end of
                                                                           2012. In the currency union, the decline likely amounted to
                                                                           –0.4% QoQ. Among the largest members, GDP probably fell
                                                                           by –0.5% QoQ in Germany, –0.6% QoQ in Italy and –0.2%
                                                                           QoQ in France. Portugal’s economy probably contracted by
                                                                           0.9%, which is the ninth quarterly decline in a row. Given this
                                                                           widespread weakness and that recovery is still at an early
                                                                           stage, it is not surprising that the recent strengthening of the
                                                                           euro is little welcome by politicians, even though it is also a re-
                                                                           flection of normalizing financial markets. Exchange rates were
                                                                           already briefly discussed at the 11 February Eurogroup meet-
    Andreas Tomaschett                                                     ing, but will likely feature more prominently at the G20 meet-, +41 44 333 37 39                 ing this week on 15 and 16 February in Moscow. Media re-
                                                                           ports suggest that a statement may be released emphasizing
                                          Investment horizon: 1-6 months
                                                                           cooperation and determination to avoid so-called “currency
                                                                           wars.“ In the USA, the first leading indicators for February (the
    This week, GDP data releases are set to provide further in-            Empire State index and the University of Michigan consumer
    sight into the macroeconomic development in emerging coun-             confidence survey) are expected to show some improvement
    tries as well as in developed countries. In particular, Eurozone       compared to January. The Bank of England’s quarterly infla-
    GDP figures are well awaited and should provide information            tion report due to be released on Wednesday will probably
    on economic activity in an environment of austerity. In addition,      show upward revisions to the path of inflation for the next two
    ongoing corporate earnings reports and guidance for 2013 re-           years and a more subdued economic growth outlook in the
    main in focus. In the near term, however, we expect political          near term.                                        (12/02/2013)
    risks associated with the upcoming elections in Italy, politics in
    Spain and US budget discussions, which could weigh on mar-
    ket sentiment.                                                         Volatile credit markets ahead
         Increased uncertainty is already reflected in the divergence
                                                                           Maurice Jiszda
    of realized and option-implied volatility. Rising demand for fu-, +41 44 333 21 41
    ture downside protection involves pressure on credit markets.
    In Foreign Exchange, our analyst highlights exchange rate                                                     Investment horizon: 1-6 months
    policies as one of the main themes at the upcoming G20 sum-
    mit in Moscow. In Equities, we present a selection of stocks of-       Last week, longer-dated benchmark yields declined after the
    fering attractive sales and earnings exposure to fast-growing          overall assessment by the ECB that there are continuing down-
    markets. As indicated in recent corporate earnings releases,           side risks to the economic outlook while inflation risks are
    emerging markets are currently the main growth driver for mul-         broadly balanced. Furthermore, financial conditions remain in
    tinational companies, while developed markets remain challen-          the focus of the Governing Council. Credit spreads showed a
    ging. In addition, our technical analyst provides a technical as-      continuing tendency to widen on rather dovish comments from
    sessment of the S&P 500 index, with SQM as the featured                ECB President Draghi and potential political risks in Italy,
    stock. In Commodities, our fundamental analyst highlights an           Spain and the USA. Eurozone peripheral governments and
    option trading strategy in gold.                   (12/02/2013)        Tier–2 financial capital structure investments underperformed,
                                                                           while emerging market spreads and Tier–1 paper outper-
                                                                                Although realized equity market volatility remains low, mar-
                                                                           ket participants are paying higher prices for significant down-
                                                                           side protection due to intensifying political discussions. Risky
                                                                           assets are likely to feel some pressure unless the demand for
                                                                           protection stabilizes. Hence, we think credit volatility will re-
                                                                           main somewhat elevated over the short term, justifying our tac-
                                                                           tically cautious stance. However, we maintain our strategically
                                                                           bullish view based on our forecast of positive global economic
3    Tactical views                                                                                  12/02/2013    Credit Suisse - Research Weekly

    growth and moderately tighter credit spreads. The positive              grades across commodity markets also confirm that the near-
    tone of economic data among the main emerging market coun-              term price risk is skewed to the upside. Later in this issue of
    tries continues to support the performance of growth-sensitive          the Research Weekly, we look into ways of taking advantage
    assets. Among emerging market risks, investors’ preferences             of rising technical momentum in commodity markets.
    remain clearly skewed toward local currency bonds due to a                   Meanwhile, the primary focus of market participants this
    supportive growth/inflation mix – as evidenced by the fund              week will likely be the oil market and the release of the
    flows. We maintain a neutral view on the global government              monthly oil reports from three major oil agencies (IEA, EIA and
    bond market in the 7–10-year segment. From a tactical per-              OPEC). Since the beginning of the year, oil prices have gained
    spective, we favor government bonds in AUD and USD relat-               more than 5% and both Brent and WTI are currently trading
    ive to CHF and JPY.                            (12/02/2013)             close to important resistance levels. If the agencies upgrade
                                                                            their estimates for oil demand further due to recent positive
                                                                            economic indicators, this would be supportive for prices.
    Long-term fundamentals
    remain attractive for equities
    Andreas Tomaschett                                                      “Currency wars”, +41 44 333 37 39
                                                                            Bernd Berg
                                           Investment horizon: 1-6 months, +41 44 333 52 28

                                                                                                                   Investment horizon: 1-6 months
    So far, stock markets have had a firm start in 2013. Although
    positive fundamentals and still very high cash positions point to
                                                                            The strong performance of the euro against other major curren-
    further upside potential, we turned tactically neutral on a 1–6
                                                                            cies has raised increasing concerns among policymakers and
    month. The main risks for a potential pullback come from sev-
                                                                            politicians in Europe. The euro has risen 9% against the GBP,
    eral sources, e.g. politics in Italy and Spain, bailout talks in
                                                                            8% against the USD and 24% against the JPY over the last
    Cyprus, US spending sequestration, and geopolitics.
                                                                            six months. ECB President Mario Draghi said last week that
    Moreover, short-term sentiment indicators are now somewhat
                                                                            “sustained appreciation of the euro may impact growth and
    stretched. However, although we expect a short-term consolid-
                                                                            price stability.“ His concerns about recent euro strength resul-
    ation, we remain strategically positive on equities on a 6–12+
                                                                            ted in a correction of the EUR against the USD to levels of
    months investment horizon. In particular, the macroeconomic
                                                                            1.34 EUR/USD. The topic of “currency wars“ will also be dis-
    environment remains supportive as the data signal sustainable
                                                                            cussed when G20 finance ministers and central bankers meet
    modest expansion, low inflation, and equity-friendly central
                                                                            in Moscow this week, and the statements will most likely af-
    banks. We recommend for investors to capitalize on short-
                                                                            fect currency markets. While we continue to expect a stronger
    term weakness to increase exposure to equities. In this week’s
                                                                            euro against other major currencies due to improving funda-
    edition, we highlight multinational companies that should bene-
                                                                            mentals, verbal interventions are likely to lead to a more gradu-
    fit from increasing consumption in emerging markets. In our
                                                                            al appreciation of the euro in the weeks ahead.
    view, more favorable demographics, increasing disposable in-
    come and the lower degree of indebtedness is leading to
    stronger economic momentum in emerging markets.

                                                                            Medium-and long-term
                                                                            uptrend in the S&P 500 Index
    Near-term strength in                                                   remains intact
    commodities should continue                                             Pascal Zingg
    Karim Cherif                                                  , +41 44 333 24 59, +41 44 334 56 39
                                                                                                                   Investment horizon: 1-6 months
                                           Investment horizon: 1-6 months

                                                                            The S&P 500 Index remains in a solid medium- and long-term
    Commodity markets started the week lower, with most mar-                technical uptrend and is still hovering firmly above the long-
    kets losing about 1% on Monday. With the most important con-            term 200-day moving average (red line in the upper half of the
    sumer – China – absent due to the Chinese New Year holi-                chart) and the medium-term 55-day moving average (blue line
    days, sentiment in commodities is particularly shaky, so that it        in the upper half of the chart). The index is not far away from
    does not take much to make prices fall. We think recent price           its 2007 all-time high (which was close to 1,580) and we
    weakness may continue in the next few days, but that ulti-              would not be surprised if the S&P 500 Index tries to break
    mately markets should rebound once the Chinese New Year                 that long-term resistance level in the next 1–6 months. The
    holidays draw to a close. The latest technical momentum up-             medium-term momentum indicator (lower half of the chart) is
4    Tactical views                                                                                    12/02/2013   Credit Suisse - Research Weekly

    still rising and continues to suggest further strength for the US
    stock market. Key medium-term support levels are at                   S&P 500 Index
    1450/1430. On the other hand, the short-term momentum                 Daily bar chart with short- and medium-term technical indicat-
    (shaded indicator) is still falling, which indicates that the index   ors.
    will likely consolidate for another 1–4 weeks. Overall, we think                            0.0%
    that both the S&P 500 Index and global equities are poised to                              23.6%

    rise further, and we reiterate our positive outlook for the stra-                          38.2%                                       1450
    tegic and tactical investment horizon.              (12/02/2013)                           61.8%

                                                                                             100.0%                                        1350



                                                                           Sep       Oct         Nov       Dec       2013       Feb
                                                                          Source: MetaStock, Reuters
5     Fixed income trade recommendations                                                                                                                                    12/02/2013              Credit Suisse - Research Weekly

                                                                                                                                 Thomas Keller
    Fixed income trade recommendations                                                                                 , +41 44 333 56 04
                                                                                                                                 Marco Schneider
    Unitymedia bond in                                                                                                 ,

                                                                                                                                                                                                    Investment horizon: 1-6 months
    EUR stopped out of
                                                                                                                                 The Unitymedia EUR 5.125% 01/2023 bond (ISIN:
    the trading corner                                                                                                           XS0877974062) was stopped out of the Trading Corner. This
                                                                                                                                 follows general market pressure in addition to the announce-
                                                                                                                                 ment of the Virgin Media acquisition by Liberty Global, which
                                                                                                                                 could potentially lead to increased debt at Unitymedia. We
                                                                                                                                 have changed our recommendation on Unitymedia to HOLD,
                                                                                                                                 but will regularly re-assess our recommendation, ultimately
                                                                                                                                 looking for improved entry points.             (12/02/2013)

    Closed Fixed Income trade recommendations
    Rec. ISIN                          Curr. Security description                     Rating S&P /              Vol. Dura-                 Open         Close           Closing           Open             Cur-           Target           Total
                                             Issuer                                   Moody's /                 (m) tion                    date        Price**            date             BM-             rent            BM-           return
                                                                                      Fitch*                                                                                             Spread             BM-          Spread              ****
                                                                                                                                                                                             ***         Spread               ***
    HOLD XS0877974062 EUR                        UNITY 5.125%                         BB-                       500       7.5       01/21/2013 98.00                  02/12/2013              391             387             351        -1.79%
                                                 1/21/2023 UNITY-                     /(P)Ba3/BB-
                                                 MEDIA HESSEN /                       e
    *) e stands for expected rating while p stands for provisional rating, both are subject to receipt of final documentation; u stands for unsolicited rating. **) Prices are indicative only and subject to normal market volatility. ***) BM-
    spreads refer to the yield spread of the relevant government benchmark bond. ****) Calculated since open date
                                                                                                                                                                                                               Source: Bloomberg, Credit Suisse
6    Equity trade recommendations                                                                    12/02/2013    Credit Suisse - Research Weekly

    Equity trade recommendations                                            BMW
                                                                            Reto Hess
    Stocks set to                                                 , +41 44 334 56 24

    benefit from the                                                                                               Investment horizon: 1-6 months

    rise of the                                                             BMW is a leading premium carmaker with valuable brands and
                                                                            a strong presence in China, the USA and Germany. In 2012,
                                                                            the company sold 1.8 million cars (+10.6% YoY) with very
    emerging                                                                strong growth in Asia (+31.6%), particularly in China
                                                                            (+40.4%). Almost every fifth BMW car (BMW, MINI, Rolls-
    consumer                                                                Royce) was sold in China in 2012. Thanks to rising wealth and
                                                                            BMW’s very strong auto brand, we expect demand for BMW
                                                                            cars to remain strong in emerging markets. BMW is scheduled
                                                                            to report its FY 2012 figures on 19 March 2013.

    Dominik Garcia                                                          Kevin Lyne-Smith, +41 44 334 25 38                      Head of Global Equity Research
    Andreas Tomaschett                                            , +41 44 334 56 41, +41 44 333 37 39
                                                                                                                   Investment horizon: 1-6 months
                                           Investment horizon: 1-6 months

                                                                            Burberry is an iconic British luxury fashion brand with a focus
                                                                            on premium-priced apparel and accessories. The company has
             BMW, Burberry, Coca-Cola, Colgate-Palmolive,
     Buy     Hikma Pharmaceuticals, PPR, SABMiller and Uni-                 progressively increased control over the brand through fran-
             lever                                                          chise buyouts and in-sourcing, thus enabling far greater con-
             Multinational companies benefiting from increasing de-         trol of the brand and costs. Burberry is a leader in the applica-
             mand in emerging markets.                                      tion of IT platforms, both operationally (supply chain) and
                                                                            through its product marketing strategy. The stock trades at an
                                                                            EV/EBITDA 2013E of 10, which is a discount to its 5-year av-
    The beauty of secular trends such as the rise of the emerging           erage. The company is scheduled to give a trading update on
    market (EM) consumer is their relative resilience during challen-       17 April.                                        (12/02/2013)
    ging economic times. Hence, the comparably defensive con-
    sumption-related sectors in both developed and emerging mar-
    kets have been less affected by the global financial crisis. In
    fact, many EM consumer-related stocks are now trading at
    higher levels than in 2007.                                             Coca-Cola
         One of the driving forces for these companies remains the          Andreas Tomaschett
    continuously increasing spending power in emerging markets,   , +41 44 333 37 39
    particularly as they offer exposure to 3.9 billion potential new
                                                                                                                   Investment horizon: 1-6 months
    customers. The impressive growth rates of the EM economies
    have led to a growing share of households entering the con-
    sumption-hungry middle class. As a consequence, we recom-               The Coca-Cola company is the world’s largest beverage com-
    mend adding exposure to developed market companies with a               pany holding claim to one of the world’s most recognizable
    strong brand, solid fundamentals and significant exposure to            brands. It markets four of the world’s top five soft drink brands
    fast-growing EM economies. Hence, we highlight eight mul-               as well as a diverse array of other beverages in over 200 coun-
    tinational companies in this week’s equity trade recommenda-            tries around the globe. Aside from its strong product portfolio,
    tion that we think are likely to benefit from increasing demand         rising demand for Coca-Cola’s products in emerging markets
    for international brands in emerging markets.                           (>50% of company volumes in 2013E) has continued to be
                                                      (12/02/2013)          the main growth driver. With strong emerging market confid-
                                                                            ence, a more-than-recognizable brand image and an innovat-
                                                                            ive product portfolio, we believe Coca-Cola should continue to
                                                                            see solid growth.                                 (12/02/2013)
7    Equity trade recommendations                                                                       12/02/2013     Credit Suisse - Research Weekly

    Colgate-Palmolive                                                         SABMiller
    Olivier P. Müller                                                         Andreas Tomaschett, +41 44 333 01 46           , +41 44 333 37 39

                                             Investment horizon: 1-6 months                                            Investment horizon: 1-6 months

    Colgate-Palmolive’s emerging-market exposure amounts to                   SABMiller is the second-largest beer brewing company, as
    59.1% of 2013E sales and is thus a strong beneficiary of                  well as one of the largest bottlers of Coca-Cola products. The
    structural category growth. We favor the company’s strong fo-             company holds a diverse portfolio of international and local
    cus on market penetration and cross-selling in emerging mar-              beer brands. 70% of SABMiller’s profits are due to increasing
    kets, along with its very strong footprint in these markets. Re-          exposure in emerging markets in Latin America, Africa, East-
    acceleration of growth in Latin America – Colgate’s biggest re-           ern Europe and Asia Pacific. In our view, the company’s
    gion in terms of sales – should further support the share price           strong position in emerging markets, strong pricing power and
    over the next few quarters.                       (12/02/2013)            cost synergies from past acquisitions and investments give
                                                                              SABMiller potential for high earnings growth and a higher
                                                                              share price.                                    (12/02/2013)

    Hikma Pharmaceuticals
    Thomas Claudio Kaufmann, +41 44 334 88 38
                                             Investment horizon: 1-6 months   Olivier P. Müller
                                                                    , +41 44 333 01 46

    Hikma is uniquely positioned, in our view, to profit from the                                                      Investment horizon: 1-6 months

    long-term economic expansion in the Middle East and North-
    ern Africa (MENA) region. The strong presence in this growth              Unilever is the food products manufacturing company in our
    region (56% of sales in H1 2012), combined with the com-                  coverage universe that has the highest emerging market ex-
    pany’s strong product portfolio, make Hikma a leading player              posure (an estimated 54.4% of total sales in 2013).
    in the MENA region (Top 5 position in MENA pharmaceuticals                Moreover, Unilever’s emerging market exposure is very broad-
    market). Furthermore, with the acquisition of Baxter’s inject-            based and its products target all consumers from bottom-of-
    ables business, the company has added another pillar of                   the-pyramid consumers to high-end consumers – though ow-
    growth to its offerings, with a critical mass and high barriers to        ing to its product portfolio, we think bottom-of-the-pyramid
    entry.                                            (12/02/2013)            consumers are a particularly important growth driver for the
                                                                              company. The key reason why we are positive on the com-
                                                                              pany, however, is that we are confident that CEO Paul Polman
                                                                              has started to turn the company around and boost growth over
                                                                              the past few quarters.                         (12/02/2013)
    Kevin Lyne-Smith
    Head of Global Equity Research, +41 44 334 56 41

                                             Investment horizon: 1-6 months

    PPR’s strong portfolio of luxury brands (Gucci, Bottega Ven-
    eta, YSL) and its focus on lifestyle (Puma) strategically posi-
    tion the company to take advantage of favorable industry
    trends in developed, as well as emerging markets. We think
    the group’s strategy to divest its low-margin retail activities
    should trigger a re-rating of the stock. After the recent rise in
    the stock price, PPR is now trading at an EV/EBITDA 2013E
    of 11.1 above its 5-year average of 9, but we see this as justi-
    fied given the divestments in its business model. The company
    is scheduled to report FY 2012 figures on 15 February.
8     Equity trade recommendations                                                                                                       12/02/2013   Credit Suisse - Research Weekly

    New equity trade recommendations
    Company                                      ISIN                     Rec.     Cur- Last           Target    EPS      EPS      P/E       P/E      DPS         Div           Market
                                                                                   rency price         price     2013E    2014E    2013E     2014E    2013E       Yield         cap (in
                                                                                                                                                                  2013E         USD bn)
    BMW                                          DE0005190003             BUY      EUR       73.50     80.00     8.11     7.73     9.1       9.5      2.8         3.7%          62.9
    BURBERRY                                     GB0031743007             BUY      GBp       1365.00   1430.00   76.00    86.01    18.0      15.9     34.0        2.5%          9.5
    COCA COLA                                    US1912161007             BUY      USD       38.77     43.00     2.25     2.50     17.2      15.5     1.1         2.9%          173.9
    COLGATE-PALMOLIVE                            US1941621039             BUY      USD       108.49    117.00    6.51     6.85     16.7      15.8     2.6         2.4%          51.3
    HIKMA                                        GB00B0LCW083 BUY                  GBp       840.00    860.00    44.94    56.80    18.7      14.8     10.6        1.3%          2.6
    PPR                                          FR0000121485             BUY      EUR       160.80    140.00    10.90    12.30    14.8      13.1     4.1         2.6%          27.1
    SABMiller                                    GB0004835483             BUY      GBp       3176.00   3300.00   170.39   190.98   18.6      16.6     71.3        2.2%          80.1
    UNILEVER                                     NL0000009355             BUY      EUR       29.20     33.00     1.98     2.12     14.8      13.8     1.0         3.4%          117.8
    For a recap of open and closed trade recommendations, please contact your Relationship Manager
                                                                                                                                                              Source: Bloomberg, Credit Suisse
9     Commodity trade recommendations                                                                                                                      12/02/2013            Credit Suisse - Research Weekly

                                                                                                                    provement in economic growth, commodity prices tend to in-
    Commodity trade recommendations                                                                                 crease only when the economic pick-up actually materializes.
                                                                                                                    This seems to be happening now. Equity markets have rallied
    Taking advantage                                                                                                amid the anticipation of economic stabilization. Now that eco-
                                                                                                                    nomic indicators have really started to improve, commodity mar-
    of rising commodity                                                                                             kets are starting to react.

    market momentum                                                                                                 Metals are seeing the first upgrades of technical mo-
                                                                                                                    As economic growth is picking up and prices have started to in-
                                                                                                                    crease, the chart picture is improving as well – particularly for
                                                                                                                    cyclical markets such as metals. After a long period of side-
                                                                                                                    ways trading, industrial metals – and to a lesser extent pre-
                                                                                                                    cious metals – are starting to break out of their trading ranges.
                                                                                                                    Several markets now show positive technical momentum,
                                                                                                                    which indicates a certain likelihood of further gains.
                                                                                                                        It is important to mention that the longer-term trend ratings
                                                                                                                    have not turned positive yet in most markets. It is also still not
                                                                                                                    clear whether economic growth will pick up strongly enough to
                                                                                                                    sustain a more long-term rally that lasts for the full year or
                                                                                                                    even longer. However, the tactical outlook for the coming
    Karim Cherif
                                                                                                                    months is positive., +41 44 334 56 39

                                                                Investment horizon: 1-6 months
                                                                                                                    Buy commodities with rising momentum
                                                                                                                    In our view, the recent upgrades of technical momentum in
                                                                                                                    several markets, combined with the improvement in general
                  6M Gold (XAU/USD) bullish risk reversal                                                           commodity market trading conditions open some attractive
      Buy         With current option skew, low implied volatility environ-                                         trading opportunities. In the past, we recommended buying po-
                  ment and bottoming technical momentum, we think                                                   sitions in platinum and palladium. These recommendations are
                  bullish risk reversals on gold are attractive.                                                    performing well and remain valid. This week, we recommend a
                                                                                                                    new trade idea on gold. While market positioning remains fairly
                                                                                                                    cautious, with put options being more expensive than call op-
    Commodity markets had a reasonably positive start to the New                                                    tions, all technical momentum indicators for gold are in a bot-
    Year. However, the asset class has trailed equity markets until                                                 toming process. We think a risk reversal, where an investor
    very recently. Only in early February did commodity indices                                                     sells a put option in order to finance a call option, is an attract-
    start to outperform. Several markets have seen technical mo-                                                    ive strategy in the current environment. Separately, we also
    mentum upgrades and we think further gains are likely.                                                          think that industrial metals where momentum is also turning
                                                                                                                    (i.e. lead, copper and to a lesser extent aluminum) could also
    Commodities often lag equity markets                                                                            do well. We expect further price gains at which point taking
    At the beginning of an economic recovery, it is not unusual for                                                 outright positions might be advisable.             (12/02/2013)
    commodity markets to initially trail behind equities. While
    equity markets often already trade on the expectation of an im-

    New commodity trade recommendations
    Publication                    Entry date             Buy /       Underlying                          Entry        Premi- Target              Stop-       Spot          Comment
                                                          Sell                                            level        um                         loss        under-
    CCS/11 /02/13                  11/02/13               BUY         6M XAU/USD risk re-                              -1.23%                                 1670.00 Long call strike 1700; short put strike
                                                                      versal                                                                                          1600
    Source: Credit Suisse, Bloomberg; CCS = Currency & Commodity Strategy, RM = Research Monthly, RF = Research Flash / * Spot rate of underlying instrument as of London open on Friday preceding publication of document.
                                                                                                                              For a recap of open and closed trade recommendations, please refer to your Relationship Manager
10       Technical research trade recommendations                                                                                           12/02/2013   Credit Suisse - Research Weekly

                                                                                                             SQM is currently consolidating inside a large triangle technical
     Technical research trade recommendations                                                                chart pattern. In addition, the stock is trading close to its medi-
                                                                                                             um-term 55-day moving average (blue line in the upper half of
     Medium-term                                                                                             the chart) and the long-term 200-day moving average (red line
                                                                                                             in the upper half of the chart) since December 2012. Further-
     technical buy signal                                                                                    more, both the short- and medium-term technical momentum
                                                                                                             indicators (lower half of the chart) are rising toward the zero
     for SQM                                                                                                 line, which implies further strength for the stock. Finally, given
                                                                                                             the potential for an upside breakout from the triangle consolida-
                                                                                                             tion pattern and the promising momentum readings, we recom-
                                                                                                             mend that investors buy SQM from a technical standpoint.

                                                                                                             Daily bar chart with short- and medium-term technical indicat-
     Pascal Zingg                                                                                                                                                                          58
                                                                                                                                                                                           57, +41 44 333 24 59
                                                                 Investment horizon: 1-6 months

                   SQM ADR                                                                                                                                                               500
       Buy         A medium-term technical buy signal has been

                                                                                                             Aug        Sep       Oct         Nov      Dec    2013        Feb
                                                                                                             Source: MetaStock, Reuters

     New technical trade recommendations
     Company                                                ISIN                                      Rec.     Currency                   Last price           Stop-loss
     SQM                                                    US8336351056                              BUY      USD                        57.61                55.87

     For a recap of open and closed trade recommendations, please consult your Relationship Manager
                                                                                                                                                                  Source: Reuters, Credit Suisse
11      Technical research trade recommendations                                                                             12/02/2013         Credit Suisse - Research Weekly

     Important information on derivatives

     Pricing                                Option premiums and prices mentioned are indicative only. Option premiums and prices can be subject to very rapid changes:
                                            The prices and premiums mentioned are as of the time indicated in the text and might have changed substantially in the mean-
     Risks                                  Derivatives are complex instruments and are intended for sale only to investors who are capable of understanding and assuming
                                            all the risks involved. Investors must be aware that adding option positions to an existing portfolio may change the characteristics
                                            and behavior of that portfolio substantially. A portfolio’s sensitivity to certain market moves can be heavily impacted by the lever-
                                            age effect of options.
     Buying calls                           Investors who buy call options risk the loss of the entire premium paid if the underlying security trades below the strike price at ex-
     Buying puts                            Investors who buy put options risk loss of the entire premium paid if the underlying security finishes above the strike price at expir-
     Selling calls                          Investors who sell calls commit themselves to sell the underlying for the strike price, even if the market price of the underlying is
                                            substantially higher. Investors who sell covered calls (own the underlying security and sell a call) risk limiting their upside to the
                                            strike price plus the upfront premium received and may have their security called away if the security price exceeds the strike
                                            price of the short call. Additionally, the investor has full downside participation that is only partially offset by the premium received
                                            upfront. If investors are forced to sell the underlying they might be subject to taxing. Investors shorting naked calls (i.e. selling
                                            calls but without holding the underlying security) risk unlimited losses of security price less strike price.
     Selling puts                           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 is the full strike price less the premium received for selling the put.
     Buying call spreads                    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 underly-
                                            ing trades below the lower strike price at expiration. The maximum gain from buying call spreads is the difference between the
                                            strike prices, less the upfront premium paid.
     Selling naked 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 loss of the difference between the long call strike and the short call strike, less the upfront premium taken in, if the un-
                                            derlying security finishes above the long call strike at expiration. The maximum gain is the upfront premium taken in, if the secur-
                                            ity finishes below the short call strike at expiration.
     Buying put 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 premi-
                                            um paid. The maximum gain from buying put spreads is the difference between the strike prices, less the upfront premium paid.
     Buying strangles                       Buying strangles (buy put and buy call): The maximum loss is the entire premium paid for both options, if the underlying trades
                                            between the put strike and the call strike at expiration.
     Selling strangles or straddles         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 sold plus the upfront premium received. Additionally, if the security trades below the strike price of the short put, in-
                                            vestors risk losing the difference between 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 security position if they owns shares. The maximum potential loss is the full value
                                            of the strike price (less the value of the premium received) plus losses on the long security position. Investors who are short na-
                                            ked strangles or straddles have unlimited potential loss since, if the security trades above the call strike price, investors risk losing
                                            the difference between the strike price and the security price (less the value of the premium received) on the short call. In addi-
                                            tion, they are obligated to buy the security at the put strike price (less upfront premium received) if the security finishes below the
                                            put strike price at expiration.
                                                                                                                                                                   Source: Credit Suisse
12                                                                                                   12/02/2013    Credit Suisse - Research Weekly

     Risk disclaimer                                                        sume this risk. Structured securities are complex instruments,
                                                                            typically involve a high degree of risk and are intended for sale
     Investors should consider this report as only a single factor in       only to sophisticated investors who are capable of understand-
     making their investment decision. For a discussion of the risks        ing and assuming the risks involved. The market value of any
     of investing in the securities mentioned in this report, please        structured security may be affected by changes in economic,
     refer to the following Internet link:                                  financial and political factors (including, but not limited to, spot
                                                                            and forward interest and exchange rates), time to maturity,
                                                                            market conditions and volatility, and the credit quality of any is-
                                                                            suer or reference issuer. Any investor interested in purchasing
     CS may not have taken any steps to ensure that the securities
                                                                            a structured product should conduct their own investigation
     referred to in this report are suitable for any particular investor.
                                                                            and analysis of the product and consult with their own profes-
     CS will not treat recipients as its customers by virtue of their re-
                                                                            sional advisers as to the risks involved in making such a pur-
     ceiving the report. The investments or services contained or re-
     ferred to in this report may not be suitable for you and it is re-
                                                                                 Some investments discussed in this report have a high
     commended that you consult an independent investment ad-
                                                                            level of volatility. High volatility investments may experience
     visor if you are in doubt about such investments or investment
                                                                            sudden and large falls in their value causing losses when that
     services. Nothing in this report constitutes investment, legal,
                                                                            investment is realized. Those losses may equal your original in-
     accounting or tax advice or a representation that any invest-
                                                                            vestment. Indeed, in the case of some investments the poten-
     ment or strategy is suitable or appropriate to your individual cir-
                                                                            tial losses may exceed the amount of initial investment, in such
     cumstances or otherwise constitutes a personal recommenda-
                                                                            circumstances you may be required to pay more money to sup-
     tion to you.
                                                                            port those losses. Income yields from investments may fluctu-
          The price, value of and income from any of the securities
                                                                            ate and, in consequence, initial capital paid to make the invest-
     or financial instruments mentioned in this report can fall as well
                                                                            ment may be used as part of that income yield. Some invest-
     as rise. The value of securities and financial instruments is sub-
                                                                            ments may not be readily realizable and it may be difficult to
     ject to exchange rate fluctuation that may have a positive or ad-
                                                                            sell or realize those investments, similarly it may prove difficult
     verse effect on the price or income of such securities or finan-
                                                                            for you to obtain reliable information about the value, or risks,
     cial instruments. Investors in securities such as ADR’s, the val-
                                                                            to which such an investment is exposed.
     ues of which are influenced by currency volatility, effectively as-
13                                                                                                                12/02/2013       Credit Suisse - Research Weekly

     Disclosure Appendix                                                              Company                    Rating                    Date
                                                                                      PPR (PP FP)                BUY                       08/08/2012
                                                                                                                 BUY                       22/02/2012
     Analyst certification
                                                                                                                 HOLD                      31/10/2011
     The analysts identified in this report hereby certify that views about the       SABMILLER (SAB LN)         BUY                       23/01/2013
     companies and their securities discussed in this report accurately reflect                                  BUY                       22/11/2012
     their personal views about all of the subject companies and securities. The
                                                                                                                 BUY                       18/10/2012
     analysts also certify that no part of their compensation was, is, or will be
                                                                                                                 BUY                       30/07/2012
     directly or indirectly related to the specific recommendation(s) or view(s) in
     this report.                                                                                                BUY                       28/05/2012
                                                                                                                 BUY                       19/04/2012
                                                                                                                 BUY                       09/02/2012
     Knowledge Process Outsourcing (KPO) Analysts mentioned in this report
                                                                                      SQM ADR (SQM US)           HOLD                      06/12/2012
     are employed by Credit Suisse Business Analytics (India) Private Limited.
                                                                                                                 HOLD                      17/10/2012
                                                                                                                 BUY                       31/08/2012
     Important disclosures                                                                                       BUY                       30/05/2012
     Credit Suisse policy is to publish research reports, as it deems appropri-                                  BUY                       07/03/2012
     ate, based on developments with the subject company, the sector or the                                      BUY                       30/09/2011
     market that may have a material impact on the research views or opinions         UNILEVER (UNA NA)          BUY                       23/01/2013
     stated herein. Credit Suisse policy is only to publish investment research                                  BUY                       04/01/2013
     that is impartial, independent, clear, fair and not misleading.
                                                                                                                 BUY                       21/12/2012
     The Credit Suisse Code of Conduct to which all employees are obliged to
                                                                                                                 BUY                       20/12/2012
     adhere, is accessible via the website at:
                                                                                                                 HOLD                      25/10/2012
                                                                                                                 HOLD                      26/07/2012
                                                                                                                 HOLD                      27/04/2012
     For more detail, please refer to the information on independence of finan-
                                                                                                                 HOLD                      02/02/2012
     cial research, which can be found at:
                                                                                      The subject issuer (BMW, BURBERRY GROUP, COCA-COLA, COL-
     The analyst(s) responsible for preparing this research report received com-      GATE-PALMOLIVE, PPR, SABMILLER) currently is, or was during the
     pensation that is based upon various factors including Credit Suisse's total     12-month period preceding the date of distribution of this report, a client
     revenues, a portion of which is generated by Credit Suisse Investment            of Credit Suisse. Credit Suisse provided investment banking services to
     Banking business.                                                                the subject company (BMW, BURBERRY GROUP, COCA-COLA, PPR,
                                                                                      SABMILLER) within the past 12 months. Credit Suisse provided non-in-
                                                                                      vestment banking services, which may include Sales and Trading services,
     Equity rating history as of (12/02/2013)                                         to the subject issuer (BMW, COCA-COLA, COLGATE-PALMOLIVE) with-
                                                                                      in the past 12 months. Credit Suisse has managed or co-managed a pub-
     Company                    Rating                    Date                        lic offering of securities for the subject issuer (BMW, COCA-COLA, COL-
     BMW (BMW GY)               BUY                       07/11/2012                  GATE-PALMOLIVE) within the past three years. Credit Suisse has man-
                                BUY                       03/08/2012
                                                                                      aged or co-managed a public offering of securities for the subject issuer
                                                                                      (BMW, COCA-COLA) within the past 12 months. Credit Suisse has re-
                                BUY                       04/05/2012
                                                                                      ceived investment banking related compensation from the subject issuer
                                BUY                       15/03/2012
                                                                                      (BMW, COCA-COLA) within the past 12 months. Credit Suisse has re-
                                BUY                       09/03/2012
                                                                                      ceived compensation for products and services other than investment
                                BUY                       11/01/2012                  banking services from the subject issuer (BMW, COCA-COLA, COL-
     BURBERRY GROUP             BUY                       24/01/2013                  GATE-PALMOLIVE) within the past 12 months. Credit Suisse expects to
     (BRBY LN)                                                                        receive or intends to seek investment banking related compensation from
                                BUY                       12/11/2012                  the subject issuer (BMW, BURBERRY GROUP, COCA-COLA, COL-
                                BUY                       11/09/2012                  GATE-PALMOLIVE, PPR, SABMILLER) within the next three months. As
                                BUY                       12/07/2012                  at the date of this report, Credit Suisse acts as a market maker or liquidity
                                BUY                       28/05/2012                  provider in the securities of the subject issuer (COCA-COLA, COLGATE-
                                BUY                       26/04/2012                  PALMOLIVE, SQM ADR). Credit Suisse holds a trading position in the
                                HOLD                      09/03/2012                  subject issuer (BMW, BURBERRY GROUP, COCA-COLA, COLGATE-
                                BUY                       18/01/2012
                                                                                      PALMOLIVE, HIKMA PHARMACEUTICALS, PPR, SABMILLER, SQM
                                                                                      ADR, UNILEVER). As at the end of the preceding month, Credit Suisse
     COCA-COLA (KO US)          BUY                       17/10/2012
                                                                                      beneficially owned 1% or more of a class of common equity securities of
                                BUY                       15/08/2012
                                BUY                       18/07/2012
                                BUY                       18/04/2012
                                BUY                       08/02/2012                  Additional disclosures for the following jurisdictions
     COLGATE-PALMOLIVE          BUY                       31/01/2013                  United Kingdom: For fixed income disclosure information for clients of
     (CL US)                                                                          Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited,
                                BUY                       26/10/2012                  please call +41 44 333 33 99.
                                BUY                       27/07/2012                  For further information, including disclosures with respect to any other is-
                                BUY                       27/04/2012                  suers, please refer to the Credit Suisse Global Research Disclosure site
                                BUY                       01/02/2012                  at:
     HIKMA PHARMACEUTIC-        BUY                       02/11/2012
     ALS (HIK LN)
                                BUY                       28/08/2012
                                BUY                       20/03/2012
                                BUY                       07/11/2011
14                                                                                                                        12/02/2013       Credit Suisse - Research Weekly

                                                                                             plied to all the companies included in its database. Third-party data (includ-
     Guide to analysis                                                                       ing consensus earnings estimates) are systematically translated into a num-
                                                                                             ber of default variables and incorporated into the algorithms available in
     Equity rating allocation as of (12/02/2013)                                             the Credit Suisse HOLT valuation model. The source financial statement,
                                                                                             pricing, and earnings data provided by outside data vendors are subject to
                                                                 Investment banking          quality control and may also be adjusted to more closely measure the un-
                                                  Overall              interests only        derlying economics of firm performance. These adjustments provide con-
                                                                                             sistency when analyzing a single company across time, or analyzing mul-
     BUY                                          38.2 %                      38.12 %
                                                                                             tiple companies across industries or national borders. The default scenario
     HOLD                                        51.69 %                       51.1 %
                                                                                             that is produced by the Credit Suisse HOLT valuation model establishes
     SELL                                         7.87 %                       8.38 %        the baseline valuation for a security, and a user then may adjust the de-
     RESTRICTED                                   2.25 %                         2.4 %       fault variables to produce alternative scenarios, any of which could occur.
                                                                                             The Credit Suisse HOLT methodology does not assign a price target to a
                                                                                             security. The default scenario that is produced by the Credit Suisse HOLT
     Relative stock performance
                                                                                             valuation model establishes a warranted price for a security, and as the
     At the stock level, the selection takes into account the relative attractive-           third-party data are updated, the warranted price may also change. The de-
     ness of individual shares versus the sector, market position, growth pro-               fault variables may also be adjusted to produce alternative warranted
     spects, balance-sheet structure and valuation. The sector and country re-               prices, any of which could occur. Additional information about the Credit
     commendations are "overweight," "neutral", and "underweight" and are as-                Suisse HOLT methodology is available on request.
     signed according to relative performance against the respective regional                CFROI(r), CFROE, HOLT, HOLTfolio, HOLTSelect, HS60, HS40, Value-
     and global benchmark indices.                                                           Search, AggreGator, Signal Flag and "Powered by HOLT" are trademarks
                                                                                             or registered trademarks of Credit Suisse or its affiliates in the United
     Absolute stock performance                                                              States and other countries. HOLT is a corporate performance and valu-
                                                                                             ation advisory service of Credit Suisse.
     The stock recommendations are BUY, HOLD and SELL and are depend-
     ent on the expected absolute performance of the individual stocks, gener-
     ally on a 6-12 months horizon based on the following criteria:                          For technical research
                                                                                             Where recommendation tables are mentioned in the report, "Close" is the
                                                                                             latest closing price quoted on the exchange. "MT" denotes the rating for
     BUY                                        10% or greater increase in absolute          the medium-term trend (3-6 months outlook). "ST" denotes the short-term
                                                share price                                  trend (3-6 weeks outlook). The ratings are "+" for a positive outlook (price
     HOLD                                       variation between -10% and +10% in           likely to rise), "0" for neutral (no big price changes expected) and "-" for a
                                                absolute share price                         negative outlook (price likely to fall). Outperform in the column "Rel perf"
     SELL                                       10% or more decrease in absolute             denotes the expected performance of the stocks relative to the bench-
                                                share price                                  mark. The "Comment" column includes the latest advice from the analyst.
     RESTRICTED                                 In certain circumstances, internal and ex-   In the column "Recom" the date is listed when the stock was recommen-
                                                ternal regulations exclude certain types     ded for purchase (opening purchase). "P&L" gives the profit or loss that
                                                of communications, including e.g. an in-     has accrued since the purchase recommendation was given.
                                                vestment recommendation during the           For a short introduction to technical analysis, please refer to Technical Ana-
                                                course of Credit Suisse engagement in
                                                                                             lysis Explained at:
                                                an investment banking transaction.
     TERMINATED                                 Research coverage has been concluded.

     Absolute bond performance
                                                                                             Global disclaimer / important information
     The bond recommendations are based fundamentally on forecasts for total
     returns versus the respective benchmark on a 3-6 month horizon and are                  For a discussion of the risks of investing in the securities mentioned in this
     defined as follows:                                                                     report, please refer to the following Internet link:

     BUY                                        Expectation that the bond issue will out-    References in this report to Credit Suisse include subsidiaries and affili-
                                                perform its specified benchmark              ates. For more information on our structure, please use the following link:
     HOLD                                       Expectation that the bond issue will per-
                                                form in line with the specified bench-
     SELL                                       Expectation that the bond issue will un-
                                                                                             The information and opinions expressed in this report were produced by
                                                derperform its specified benchmark           the Global Research department of the Private Banking division at Credit
     RESTRICTED                                 In certain circumstances, internal and ex-
                                                                                             Suisse as of the date of writing and are subject to change without notice.
                                                ternal regulations exclude certain types     Views expressed in respect of a particular security in this report may be dif-
                                                of communications, including e.g. an in-     ferent from, or inconsistent with, the observations and views of the Credit
                                                vestment recommendation during the           Suisse Research department of Investment Banking division due to the dif-
                                                course of Credit Suisse engagement in        ferences in evaluation criteria. This report is not directed to, or intended
                                                an investment banking transaction.           for distribution to or use by, any person or entity who is a citizen or resid-
                                                                                             ent of or located in any locality, state, country or other jurisdiction where
                                                                                             such distribution, publication, availability or use would be contrary to law or
     Credit Suisse HOLT                                                                      regulation or which would subject Credit Suisse AG, the Swiss bank, or its
     With respect to the analysis in this report based on the HOLT(tm) method-               subsidiaries or its affiliates (“CS”) to any registration or licensing require-
     ology, Credit Suisse certifies that (1) the views expressed in this report ac-          ment within such jurisdiction. All material presented in this report, unless
     curately reflect the HOLT methodology and (2) no part of the Firm's com-                specifically indicated otherwise, is under copyright to CS. None of the ma-
     pensation was, is, or will be directly related to the specific views disclosed          terial, nor its content, nor any copy of it, may be altered in any way, trans-
     in this report. The Credit Suisse HOLT methodology does not assign rat-                 mitted to, copied or distributed to any other party, without the prior ex-
     ings to a security. It is an analytical tool that involves use of a set of propri-
     etary quantitative algorithms and warranted value calculations, collectively
     called the Credit Suisse HOLT valuation model, that are consistently ap-
15                                                                                                                    12/02/2013      Credit Suisse - Research Weekly

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