facing our demons - ctbc private bank · avoid the game, it often ends in tears. for commodities,...

Facing Our Demons

Global Investment Committee

Monthly Outlook July 2016

中國信託銀行 CTBC Bank Co., Ltd.

Arab Spring

Brexit Summer

U.S. Autumn

Global Winter ?

2

This page intentionally left blank

3

Newsletter Title

● Brexit served as a real wake up call for investors and the general public that the current status quo which has been in effect for decades is be-coming unworkable. So many fac-tions and fractions were at the root cause of Brexit that in reality the referendum was never about whether to exit Europe or not—it was a litmus test of our own views on our own societal construct. It was rejected, and it is being re-jected across the world in the form of rising populism, the spectre of a Trump as U.S. President, the rise of the far right in Europe which in it-self will threaten the current cub-bishness of the EU technocrats in Brussels. The front cover is in the form a shield and is meant to repre-sent that we have been warned, and forewarned is forearmed. We do not see the end of the world but see potential for an internationally sup-ported re-birth from the existential crisis that was Brexit.

● Its been a complex month for mar-kets having to contend with a series of one-off digital outcome events starting with the non inclusion of Chinese equities in the MSCI EM index (for now), moving on to the UK referendum on whether or not to leave the EU after 40 years of living together. As it turns out, the British electorate voted for a ‘divorce’ and threw world curren-cies and markets into turmoil. This referendum was always going to

acrimonious, and it called into question the very root of Western dogma, which is the adherence to a democratic process no matter what the outcome and whether or not, it delivers the most efficient results. In the words of the WWII UK politician, Sir Winston Chur-chill, “democracy is the worst form of government, except for all the others that have been tried.” Since the June 24th results, which saw a swift contraction on confi-dence, we have seen an improve-ment in the U.S. data topped with a very large swing in the Non Farm Payroll numbers. This has set a more positive tone into the end of the month and has, in fact, pushed the S&P500 to new all time highs in the first trading week in July.

● We continue to feel cautious about the global economy. We also rec-ognize that by many traditional measures, the U.S. and some other markets are expensive, but bonds have driven this relationship, we think to about as far as it can or should go, and therefore at these all time high levels would be bet-ter sellers into strength. Having said that, initial readings on Earn-ings appear to be more upbeat than Q1 and therefore would sup-port a slightly higher multiple.

● The USD is still our preferred cur-rency as the Fed gets to grips with a resurgence in U.S. economic ac-tivity.

Special points of interest:

The first half of the year has been brutal. Additional geopoliti-cal volatility keeps markets in the dark.

Sub par growth, vola-tility, the USD, oil and disinflation, Brexit and its spin-off is-sues, also features in future investment environment.

We maintain our 15% cash holdings increasing our U.S. holding further and reducing our Euro-pean exposures again. Sporadic bouts of tension are abundant.

“Search for yield” returns to the mar-kets and we have reduced bond hold-ings a touch in favour of finding higher dividend paying risk assets in the U.S..

15 July 2016

Index

Michael Coglin

Overview 3

Key Forecast & Strategy 4

Asset Class Outlook 5

Asset Allocation 12

Model Portfolio P/L 14

Sample Fund Portfolio 15

● Bottom line: We are not any more bearish than we have been at 15% cash holdings; we favour taking on additional equity exposure as the flight to quality into fixed income has run a significant distance already. In an on-going search for yield, investors will be forced back into conservative, de-fensive, dividend paying stocks, as opposed to keeping an artificially sup-ported long position in the sovereign bond markets, many of which are trading at negative yields across the majority of their maturity spectrum. Europe takes a back seat, while Asia ex Japan gets a boost from a renewed interest in China, which we believe to be far from a hard landing. The stocks we do maintain are mostly defensive, with a bias to dividend yield and clipping coupons. The overall asset allocation is roughly unchanged.

From the Head of Research

Facing our demons


4

Key Forecast

Newsletter Title

Economic View Implication

This is a month that has been absolutely dominated by geopolitical events, namely the Brexit vote where the UK public referendum result turned 40 plus years of post war poli-tics completely on its head. This was a move akin to the seismic change wrought on the oil complex when Saudi Arabia abandoned its price fixing policy in favor of maintaining market share and squeezing out higher cost producers. The latter decision, set the stage for the former result, as the world has strug-gled in a post debt ridden 2008 Financial Cri-sis infrastructure to cope with massive dis-ruptions and continuous macro and micro economic shocks. It is not surprising to see volatility higher this year as these unimagina-bly large tectonic plates collide.

The investment community has turned to-wards and away from risk during the course of the month in response to: surprising dov-ishness of the Fed early on in the month, to the initial shock of Brexit, to the aftershocks of Brexit as whole governments got ploughed under into the fields of the unknown. The referendum has come to stand for more than just the UK’s attitude towards Euro politics. It has highlighted just how disenfranchised the public feel. This has generated grotesque upheavals to populist politics away from the centre towards the extremes, creating uncer-tainty, moves from common sense towards, politicians and policies, aimed at immediate gratification. People have voted for no-confidence. STAY BALANCED

U.S.: At their former meetings, the Fed rightly was concerned that the markets were mis-pricing risk, and therefore took up the baton to gently teach them a lesson in what to ex-pect by putting them on notice for rate hikes. Then May’s NFPR, weakening economics and growing growth concerns coupled with in-creased political uncertainty as highlighted by Brexit, forced Yellen to think twice and put things on hold. With NFPR tonight, and Brexit result now known, we might see more conviction either way.

Domestically, the U.S. has exhibited a bout of economic resilience as other regions vacillate between the prospects of recession or ex-tremely marginal growth. A number of U.S. cylinders are firing including employment, the auto sector, confidence and housing. These are the critical drivers of the current growth in the economy and look relatively robust. Earnings did disappoint to the extent that equities look expensive. Bonds likewise. There are still conservative yield plays to be had. Increase OVERWEIGHT.

The steady Eurozone has been shaken up by the UK referendum as it faces slightly in-creased chances of being challenged in other countries. Certainly the ‘mood’ of the public is more uniform than the Euro economy, and it is not friendly. The kneejerk reaction to try close the doors behind Britain’s exit is a fools game, and one which seasoned politicians should not go for.

Mixed data, with steady recovery prospects in Germany means there are some “value plays to be found”. Risks are very much tilted to the downside into 2017 and support from fiscal and monetary disciplines are required. Diminishing confidence reports, make it hard to find the courage to pull the trigger. Reduce to UNDERWEIGHT.

China has seen a small but positive turn in manufacturing with PMIs being broadly sta-ble. Markets are skittish as attention has turned to an increased sensitivity to the NPL problem. Various people in authority have highlighted that recent stimulative measures are very akin to “old style” stimulus which only serves to exacerbate the growth in debt, storing up problems for the future. Signs of stabilization in broad economic indicators are encouraging.

Risk to our 6.7% Q2 GDP forecast is to the downside and the outlook for H2 is more negative as less policy support is likely on the back of increased debt concerns. Rate cuts are required. Headline indicators such as IP, trade investment and retail sales signal stabi-lization, as do the technical index price charts. Credit and monetary data were weaker than expected confirming policy shift to the centre. Increase to slight OVERWEIGHT.

Japan’s economy has moved from bad to worse, and has just about stayed there. Huge swings in the Yen which is acting as a safe haven have resulted in a crashing stock mar-ket and increased pressure on Abe and Ku-roda to invoke further stimulus.

We had been looking for opportunities to be-come more constructive on Japan but were unable to as a result of the previous BoJ meet-ings, and now the mixed messages from the G7, the BoJ and Abe. Yen volatility stems di-rectly from the confusion. Maintain UNDER-WEIGHT.

The USD will rose again around 3% . Specu-lators in China having pushed metals into the stratosphere, are now focused on similarly illiquid and easily manipulated Ags and Softs. Avoid the game, it often ends in tears.

For commodities, we added a hedge position in Gold and see no reason to release it. Oil subject to EIA reports. Expect H2 to sit $50 - 55. The world is looking at a series of binary options currently. Be long VOLATILITY.

Thematic: choppy range bound volatile markets, FX and commodities volatility playing a stronger role in the movements of markets, initial improvements in earnings welcomed, no hard landing for China, value over growth, very selective sector rotation from defen-sives to specific deep value, large cap over small, financials, risk-off, absolute returns, dy-namic asset allocation. We have lowered our year end 10yr yield to 1.25%-1.75% with potential to 1% in the short term. The chase for yields reawakens, and supports stocks.


We initially saw a 2% to 4% %

upside from the start of the year in the U.S., trade the ranges and better sellers into strength. We are now at +6% ytd and +20% off the

lows

Our basic asset allocations are

mostly un-changed with a preference for

U.S. assets

Global Macro themes will drive

investments, such as dividends

and cash flows with more defen-

sive stocks

5

15 July 2016 Page 5

Equity Outlook

Equity Forecast Main Index Rating Expected

Return Price

Next annual PE ratio

5-year aver-age PE

10-year aver-age PE

U.S. S&P 500 3+ 2-4% 2,164 15.3 15.6 15.2

Europe Euro Stoxx 50 2+ 2-4% 2,963 11.4 13.2 12.2

China Shanghai Composite 3+ 7-9% 3,054 11.8 10.0 13.8

Hang Seng Index 2 6-8% 21,561 10.0 10.9 12.0 Hong Kong

HSCEI Index 2 6-8% 9,010 6.6 7.8 9.8 Japan Nikkei 2+ 1-3% 16,386 13.9 17.5 18.1

5=very overweight; 4=overweight; 3=neutral; 2=underweight; 1=very underweight Performance measurement date: 14 July 2016

For investment themes, we continue to stay defensive. High dividend stocks to outperform near term - Mar-ket volatility is expected to stay high on global growth concerns. In our view, a dividend strategy provides lower volatility and a more stable return.

U.S. Sector Outlook


Sector Comments Sector Comments

Financials

O

US financials have been increasing share buybacks and dividend payments, which in our view is a sign of their growing health and stability. US banks' NIMs have benefited from the first 25 bps rate hike in Dec. NIMs likely to have bottomed and expected to improve marginally going forward. Valuations are at acceptable lev-els, thus a more challenging earnings backdrop may be unlikely to trigger broad-based underperformance.

Discre-tionary

N

Expectations are low as American consumers continue to present a mixed picture. Major retailers are painting a negative picture but retail sales data from the Commerce Depart-ment showed good growth. This sector posted EPS growth of 19% y/y and revenue growth of 6.2% y/y in 1Q. It is fairly valued at around 18-19x PE.

Telecom

O

A stronger dollar, which depresses infla-tion expectations, highlights the yield ap-peal (~4%) and domestic focus of the telecom sector. The defensive telecom sector is also trading at attractive 15x forward earnings as compared to the con-sumer staples at around 22x and S&P500 at around 18x. Risks include increasing wireless competition (especially from the smaller carriers) and secular pressures in wireline.

Energy

N

Visibility around the future path of oil prices still uncertain, and lack of supply discipline could be a longer lasting phenomenon. Longer term, we think oil prices should trend higher, but it will be a choppy ride. Integrated players are trading at high valuations (FY17E PE of 21-22x). As for the oil services companies, earn-ings visibility is still poor.

Health-care

O

We are long term bullish on healthcare due to its risk aversion beneficiary nature and increasing demand from aging popu-lation and rising emerging market in-come. Their balance sheet is also very solid and dividend yields are generally quite high too. Earnings momentum is positive and PE not excessive at 16x. On the downside, volatility might increase as we head towards Nov 8 election due to potential drug pricing regulation.

IT

N

US consumers are supporting the growth in the technology segment. Corporates have un-derinvested in technology investments over the past several years. But the low level of business confidence is making them hesitant to increase capital investment beyond what is absolutely necessary. Valuations are also sup-portive at 16.7x.

Utilities

N

Global bond yields continue to face down-ward pressure, suppressing market-based inflation expectations. Utilities have a tight inverse correlation with 10-year bond yields, hence this is a pure defensive portfolio move. On the fundamentals, profitability is shaky, 1Q revenue fell 10% y/y and EPS declined 0.8% y/y. Valua-tions have moved up to 18.5x forward PE, close to 10-year high and slightly above US at ~18x.

Industrial

U

Global manufacturing PMI posted a small 40 bps increase to 50.4 in June. We saw across the board strength in major economies, but the reading in the EM space was flat, reflecting weakness in China. The uneven manufacturing environment supports a still underweight.

Staple

N

Fed's reluctance to hike interest rate might extend Consumer staples as a safe haven. However, this sector is now trad-ing at multi-year highs (PE around 22x and PB of 5x) driven by the search for safety and yield. Top line growth remains challenged. Their traditionally narrow profit margins were somewhat buffered by aggressive cost cuts and low commod-ity costs in 2015. However, with the re-cent rebound in energy price, that benefit might fade in 2H.

Material

U

Economically sensitive sector. Global eco-nomic outlook remains uncertain. Don't expect materials to outperform.

6

Sector Comments Sector Comments

Financials

O

Chinese banks beaten down on slowing China growth and rising NPL worries. With strong capital positions, low P/B valuations and attractive dividend yields, top tier China banks are attractive divi-dend plays. China insurers fallen in line with market on A-share exposure wor-ries. New business growth remain ro-bust. Rising penetration, new products, more demand for insurance from increas-ingly affluent middle class to drive insur-ance earnings over the long-term.

Telecom,

Media, and

Tech

O

High tech is likely to be more resilient to a global slowdown due to ability to sustain mar-gins. Internet plays will need to show ability to meet/exceed high revenue growth expecta-tions to sustain valuations. The China govern-ment has been vocal about moving up the technology curve and has been supportive of the sector, thus underpinning the sector’s long term growth.

Consumer

O

Longer term, the rise in income from the middle class in China and South East Asia is likely to underpin profit growth for consumer companies with exposure to these economies. Near-term, growth con-cerns and price competition in a slowing growth environment may lead to a tem-porary slowdown in earnings growth.

Property

N

Chinese property developers have been guid-ing slower property sales due to tightening measures in certain cities and higher base. Valuations already near cycle lows; reflecting weakening cyclical demand drivers and struc-tural challenges. We are cautious on HK prop-erty given falling prices and lower volumes. Street expecting price declines as much as 20%. HK office segment more defensive. Of-fice vacancy improved on limited supply and steady demand. Singapore residential prop-erty prices may decline 5-10% this year. In-dustrial REIT rent reversion expected to de-cline to single-digit range on weak demand.

Energy

O

The demand-supply balance is clearly improving as capacity is being reduced. If oil prices were to stabilize near the cur-rent levels, then EPS downgrades are mostly done.

Industrial

N

Concerns surrounding slowing global and China growth likely to crimp earnings. The decline in commodity prices have also led to lower capex and orders.

Newsletter Title


Europe Sector Outlook Sector Comments Sector Comments

Health-care

O

We are long term bullish on healthcare due to its risk aversion beneficiary nature and increasing demand from aging popu-lation and rising emerging market in-come. The impact from Brexit is largely limited to FX translation impact, in our view. Volatility might increase as we head towards Nov 8 US Presidential election due to potential pricing regulation risks.

Telecom

N

Limited correlation between telecom reve-nues and GDP, since demand for services such as broadband, mobile and payTV should be comparatively reliable and consistent. This sector is likely to perform well in negative GDP reversion scenario. High dividend yield of around 5% should appeal to investors seeking for yield in negative rate environment. How-ever, this sector is now trading at relatively expensive 17x forward earnings.

Discre-tionary

O

Sector is holding up well, despite chal-lenging markets and rollover in macro momentum. Discretionary also the only sector which is showing better than the market EPS and sales growth in Europe, and is by far the best ranking Cyclical on this front. Valuations are also supportive.

IT

N

This diverse sector calls for careful stock se-lection, especially since earnings momentum has peaked in some sub-segments. Companies that are backed by above-market margins, less debt burdens and ample cash are in better good position to invest in a low growth world and could be less affected by tightening finan-cial conditions.

Energy

O

The demand-supply balance is clearly improving as capacity is being reduced. If oil prices were to stabilize near the cur-rent levels, then EPS downgrades are mostly done. Energy likely seen as a de-fensive (>5% dividend yield) sector in current environment. It is low beta and is attractively priced (PBV of 1.1x, -1std dev from mean).

Financials

U

Banks trading on depressed valuations (0.5x PB), near their trough PBV seen in 2011. How-ever, likely seen as a value trap in the current backdrop of negative rates, potentially grow-ing stress among peripheral sovereigns, and Brexit risks. A flattening of the yield curve does not help either.

Utilities

N

Moody’s placed long term credit ratings of 11 European utilities for downgrade, confirming rating of 19 others. Main rea-son is exposure to weakening commodity and power pricing environment. 'That said, search for yield in a negative rate environment could prove to be an offset.

Industrial

U

Global manufacturing PMI posted a small 40 bps increase to 50.4 in June. We saw across the board strength in major economies, but the reading in the EM space was flat, reflecting weakness in China. The uneven manufactur-ing environment supports a still underweight.

Staple

N

While consumer staples are trading at record high valuations, esp. the tobacco, beverages and household & personal care segments, they do offer good and visible earnings overall. Most companies are largely international players, which will benefit from a weaker euro.

Material

U

Economically sensitive sector. Global eco-nomic outlook remains uncertain. Don't ex-pect materials to outperform.

Asia Sector Outlook

7

5=very overweight; 4 =overweight; 3=neutral; 2=underweight; 1=very underweight IG index proxies: Markit Itraxx 5Y CDS. Performance measurement date: 14 July 2016

Fixed Income Outlook

Newsletter Title

UST yield curve has strongly Bull-Flattened in 1H UST volatility spiked up into Brexit vote


We see Brexit as a political event that has morphed into a market and economic event. The Brexit’s uncertainty is going to be a series of unknown political events. Geopolitical envi-ronment has become increasingly unpredictable. Political developments are likely to shape market sentiment and dominate financial landscape down the road. The political contagion from Brexit is difficult to anticipate or quantify.

Rates Outlook - Where Are Rates Headed in H2 ?

Global accommodative monetary policy is here to stay, and even the Fed is no longer on a divergent path with rest of the world. In fact, Fed is expected to keep rates on hold for an extended period with some even suggesting that Fed’s next action could be a cut instead of a hike. Negative yields will force investors to look at higher-yielding debt instruments. When compared with other core government bonds, the UST are “high-yielding”. Both the UST 10yr and 30yr yields have touched record low levels this year. We see the UST 10yr yield in a new 1.25 – 1.75% trading range into the year end, from 1.5 – 2.5% in 2Q2016.

Asian Credits

Brexit contagion into the Asian debt markets was actually quite limited. Asian credits have been resilient and have unexpectedly become the defensive product of choice. More inves-tors would move from low or negative bond yields into the credit markets. Asian credits have always offered a more attractive risk-adjusted returns, largely on account of its lower volatility and will be less vulnerable to global risk assets volatility.

We see the 10yr yield in a

new 1.25%-1.75% trading range into the

year end

10Y Sovereign Rating Yield 1M Change bps

US 3+ 1.53 (3.8)

China 3 2.84 (12.8)

United Kingdom 3 0.79 (32.8)

Italy 2 1.21 (27.9)

Spain 2 1.16 (39.4)

Germany 3 (0.04) (3.2)

Corporate IG Rating Close 1Y High 1Y Low

US Investment Grade 3 71.331 124.600 124.600

US High Yield 3 391.322 588.570 337.547

Europe Investment Grade 3 70.785 125.719 58.689

Europe High Yield 3 317.943 486.563 260.083

Asian Investment Grade 3 120.623 177.921 104.500

Asian credits have been re-

silient and have unex-

pectedly be-come the de-fensive prod-uct of choice

8

15 July 2016 Page 8

How To Position for The Best Carry In 2H2016?

The world has become fundamentally and economically weaker after Brexit. Expect more headwinds in the Asian credits space. HY corporates would not benefit much from lower UST yields. Carry has emerged as the main component of returns this year. Careful credit selection remains an important consideration in the current environment.

Sector Outlook

HG Sovereign / Quasi-Govt

China (Selective Overweight)

Developments in China this year will largely determine how emerging markets fare in 2H. China to keep CNY stable or higher against a basket of currencies to minimize and miti-gate any upside movement in the USDCNY. Chinese asset management companies (AMC) and SBLC-supported bonds continue to be highly favored. The belly and long-end of HG (High Grade) credits will be well demanded for its stable carry over the Chinese HY space.

Other Sovereigns (Neutral)

Both Indonesia and Philippines credits have survived Brexit unscathed, and remain ex-pensive compared to the other EM names. Recovery in oil prices is supportive to the GCC credit space. Large deficit financing needs of the region’s sovereigns should lead to an uptick in issuance. Heavy supply will lead to negative technicals in the GCC space.

HG Financials (Selective Overweight)

We have always preferred IG corporates over IG financials across all regions. However, we prefer Asian financials even as we expect Asian banks’ asset quality to weaken gradu-ally. We see further issuance and more supply coming on stream from the financial sec-tor. Financial spreads are likely to come under pressure on increasing supply down the road. We still like AMCs and leasing companies from China that are trading attractive to bank senior papers.

HG Corporates (Overweight)

The diminishing new supply and better relative value of China corporates should lead to spread tightening in this sector. Onshore RMB bond issuance has ballooned since August last year and will slow down offshore financing needs. China HG corporates are also cur-rently trading cheap on a rating-adjusted basis to the others. The belly and long-end of HG (High Grade) credits will be well demanded for its stable carry over the HY space. The BBB/BB sector offers the best relative value. Carry remains an important strategy in a flat yield curve environment. Chinese oil and energy-related names are back in favor and could see further spread tightening as crude oil stays above the $45 per barrel level.

Dim Sum Bonds (Selective Overweight)

We maintain a Selective Overweight in Dim Sum bonds because there are many positives in this sector. The technical backdrop of the Dim Sum bonds remains strong. CNH bond valuations is now quite compelling, as global DM bond yields have declined sharply. The relative value in Dim Sum bonds are even more compelling than the UST. CNH bonds’ RV, short maturity and credit standing are very compelling reasons for one to park your CNH funds in them.

HY Corporates (Neutral / Selective Overweight)

HY corporates would not benefit much from lower UST yields. Hence our cautious stance and preference for IG over the HY space. The Chinese property HY sector is very suscepti-ble to idiosyncratic and rating downgrade risks. Nevertheless, we are Neutral to Selective Overweight on China property.


Fixed Income Outlook (continued)

Carry emerged as main compo-nent of returns

this year. Careful credit selection remains impor-tant considera-tion in current environment

Belly and long-end of HG credits will be well de-manded for its

stable carry over Chinese HY space

We see further issuance and more supply coming on

stream from the financial sector

The diminishing new supply and better relative value of China

corporates should lead to

spread tighten-ing in this sector

9

Commodity Outlook

Newsletter Title

5=very overweight; 4=overweight; 3=neutral; 2=underweight; 1=very underweight Performance measurement date: 14 July 2016 Energy: Overweight. Strategic energy recommendations have been long for a 50 – 55 target. Going forward, we continue to favour energy exposure over base and precious metals, ags and softs. Still, we are tactically long copper, silver and sugar based on short-term catalysts. We will look for sell-offs in deferred oil markets to get long. Lastly, we continue to favour long inflation-related plays. 2016 yr end price to be higher at $50 to $55, with a year average of $40 to $45. Capped around $60.

Base Metals: For most base/industrial metals, they are still in oversupply situation and considering that incremental demand from China is suspect, we remain bearish overall. Fundamentally, we most prefer zinc given the more favourable demand-supply outlook expected for 2016.

Precious Metals: Neutral. Precious Metals: Neutral. We have been positive on Gold as a hedge and it has, and continues to work well in that capacity, albeit it has gone through our initial take profits level of 1,300. Currently at 1,366 we see immediate upside to 1,392 and strong resistance at 1,433. If things get really ugly in the UK (i.e. Scotland leaves), we could easily see 1,500. We are maintaining the hedge and will review versus unfolding circumstances. Currently gold is technically overbought – sell into strength as a basic philosophy

Soft and Alternatives: Stay underweight.

We expect oil price to modestly recovery by year end


Alternative Rating Price 1 M Change %

Gold 3+ 1,335 3.2

Brent Oil 3 47.4 (5.6)

Silver 3 20.3 15.5

Platinum 3 1,103 12.5

Copper 3 4,941 8.4

Aluminum 3 1,671 4.1

Nickel 3 10,320 16.6

Corn 2 364.75 (16.6)

Cotton 2 73.9 16.5

Overall outlook for commodities

remains poor given the over-

supply situation, especially for base metals

Oil price will continue to be under pressure

in the near term but modest re-covery by year

end remains our expectation

Gold will likely range-trade for 2016 but with

downward bias from recent

highs at $1,366

Gold likely to range trade this year, with downward bias from recent highs

10

15 July 2016 Page 10

EURUSD: The ECB’s additional stimulus which has only about just begun will add an extra EUR20 billion a month from its purchases of assets and push this number to the intended EUR80 billion in total all the way till March 2017 or until the Governing Coun-cil sees a sustained adjustment in the trajectory of inflation in the Euro zone to 2% over the medium term. Through its various asset purchase programs now including some eligible corporate bonds and coupled with its negative interest rate curve should exert downward pressure on the EUR. The path lower for the EURUSD is expected to remain slow as the Fed turns ever more patient. Bottom Line: We maintain our forecast at 1.0500 for EURUSD

USDCHF: In the eyes of the SNB, the CHF is ‘significantly overvalued’. SNB views that the economy is still not doing so well with poor Q1 GDP at only 0.1% q/q and weaken-ing private consumption although we do note that there is some pick up in overall infla-tion but mainly due to higher oil prices. As with Europe, we feel that the SNB is ready to move rates further into negative territory if needed be and to deter too much safe haven monies flooding its banks and will continue to engage in direct FX intervention to keep the EURCHF cross in a range of between 1.07 – 1.11. An expected weaker EUR should see USDCHF drift higher and at the extremes, we expect more FX action from the SNB. Bottom Line: Fed’s likelihood to raise rates once this year will also likely to keep a floor on USDCHF, we keep our target at 1.02.

AUDUSD: A somewhat surprise cut by the RBA to the Official Cash Rate (OCR) by 25 bps to 1.75% is a signal. With a Brexit decision and likely lower global growth outlook, we expect central banks either going for further easing or maintaining lower for even longer interest rates. AUD is propped up by yield chasers as BoJ also pursued negative interest rates. Expected subdued demand for global commodities will eventually weigh on the AUD and the RBA is aware of the lack of wage growth and the inflation picture remains low. RBA is consistent with their view that a lower A$ is helping to re-balance the economy but the fact that inflation is not improving despite the AUD being lower means only that the currency is not low enough. Bottom Line: We think the RBA is not done yet and expect further dovishness in the months ahead. Our target at 0.68.

USDJPY: Brexit was an unwelcomed result with its direct impact on risk sentiment. Officials are getting quite nervous as USDJPY nears the 100 psychological barrier and the intensified rhetoric from the Japanese officials seem to point to their patience being tested. There is a distinct risk to our view if Abe does not present a big fiscal stimulus or if the Bank of Japan fails to protect 100 even though that support for USDJPY did break momentarily during the Brexit results day but has since been trading higher as the market calmed down. We cannot rule out a BoJ action in the next few months. Bot-tom Line: Bar is set very high if Abe wants the JPY to depreciate beyond 111 from where we are standing at 102-103 at the time of this report. They have all to lose for going forward if both the Abe and Kuroda does not act soon. We target USDJPY at 110.


Currency Rating Price 1 M Change %

EURUSD 2 1.11 (1.03)

USDJPY 3 105.35 0.01

AUDUSD 2 0.76 3.32

USDTWD 3+ 32.01 1.81

GBPUSD 2 1.33 (5.68)

USDCNY 3 6.68 (1.49)

USDCHF 3 0.98 (1.83)

USDCAD 3 1.29 0.17

USDSGD 4 1.34 0.64

5=very overweight; 4 =overweight; 3=neutral; 2=underweight; 1=very underweight Performance measurement date: 14 July 2016

Path lower for the EURUSD is expected to re-

main slow as the Fed turns ever more patient

We think the RBA is not done yet and expect further dovish-

ness in the months ahead

Abe and Kuroda have all to lose for going for-

ward if both do not act soon

FX Outlook

11

GBPUSD: Path of the Sterling will now largely depend on the outcomes of domestic politics even before officials can trigger Article 50 which will then set off the 2-year countdown for their exit and to have a new deal with the EU. Governor of the BoE has indicated that he will ease by the Summer and raising some taxes and possibly lower-ing corporate taxes in order to try to maintain investment appetite but it may be futile if Scotland, Northern Ireland breaks away and leave England and Wales vulnerable. It is going to be difficult to predict an equilibrium rate for the GBP if the political land-scape presents itself to be so uncertain and the end point of what the UK will look like in the next few months from the threats of nations within the UK leaving the Union let alone adjust for the economic fallout from likely a worse trade deal with the EU as a non-member. GBPUSD hit our revised target at 1.5000 on the day of the results but fell as it swung to a leave. Bottom Line: We now forecast GBPUSD at 1.2800 but caution that a break up of the UK may prove even more disastrous for the currency.

USDCAD: Oil prices have steadied over the past month and is likely to toward our $50-$55 range for the rest of the year. We expect that the CAD should also not see a further large depreciation from the current levels but is likely to have a FED hike pulling in the other direction to some degree. USDCAD is expected to largely be range-bound given the better outlook for oil prices but the hurt to the Canadian economy will take time to dissipate. Weak global growth outlook will likely continue to exert downward pres-sure on growth and inflation and a weaker normalization path of the FED is likely to cap USD gains against the CAD. Bottom Line: We maintain our forecast and set a neu-tral tone for the rest of the year with a 1.3500 target.

USDSGD: After its April adjustment to the slope of the SGD NEER, SGD actually weak-ened to 1.38 before risk-off and safe haven purchases of the SGD brought USDSGD back to 1.34 zone. The Brexit result continued to add to pessimism and continued demand for the SGD but this could all disappear given the very weak fundamentals of the Singa-pore economy and the gravitational pull of a higher USDCNY in the region. With the approval of the recent Amnesty Tax bill in Indonesia, there is a possibility of increased capital outflow back to Indonesia. China’s outlook remains at best stable and with global growth outlook likely to be downgraded, the open economy should experience more headwinds. IMF has warned that Singapore could go into deflation as malls are seeing more tenants giving up retail space and tourist arrivals start to fall. Bottom Line: We set our target for USDSGD at 1.41.

USDCNY: Through the Brexit vote, USDCNY and USDCNH has behaved rather well with little stress noticed on the forwards or NDF markets as both spot USDCNY broke higher than January’s high which was accompanied by massive volatility and capital outflows. Current capital account activity is a picture of relative calm and fears seems to be un-der control. With the US Fed unlikely to pursue an aggressive interest rate hike trajec-tory, we expect more calm to prevail but it is an uneasy calm at best if growth in China continues to slide further. CNY should be more sensitive to the movements in the JPY with 14.7% weight with the USD still holding court with 26.4%. A hawkish Fed is likely to see more depreciation of the CNY in the coming months but with the more cautious stance likely to be adopted by the major central banks following the fluid situation in the UK, any rate rises from the FED is likely to be even more gradual. Bottom Line: USDCNY has hit our target at 6.6500 but we think that there is some slight room for further CNY depreciation if the FED is on track to raise rates once this year but the bas-ket and calm capital flows should see it trade closer just 6.7000 towards the year end.

USDTWD: Now back to the pre-referendum trading range around 32.30. EM Asian currencies are more isolated from external shocks according to historical evidences and Taiwan with minimum exposure to UK is expected to be less impacted. CBC cut rate again by 12.5bps, which brings the policy rate to 1.375%, not far from the histori-cal low at 1.25% set during 09’ GFC. Bottom Line: We suspect USDTWD likely to con-solidate around the current level for a longer period of time though our long tern bear-ish view on TWD is unchanged given its negative output gap. In Q3, USDTWD could stay range bound between 32.0 – 32.7.

Newsletter Title

FX Outlook (continued)


We caution that a break up of the

UK may prove even more disas-

trous for the Sterling

We maintain forecast for

USDCAD and set neutral tone for rest of the year

We think that there is some

slight room for further CNY de-preciation if the FED is on track to raise rates once this year

12

SAA (based on Morningstar’s approach) captures the long term effects of the markets. It is a statistical methodology that projects the expected returns of each asset class based on its risk premium. The stan-dard deviation (volatility) is based on historical data and projected forward. It captures the long-term market effects.

The SAA is based on an investment time horizon of 3 to 5 years which greatly improves the return/risk reward compared to a 1 year horizon. It also means a higher probability of achieving the expected returns. SAA is updated annually based on Morningstar’s long term asset classes forecast.

Strategic Asset Allocation (SAA)


SAA Country and Sector Allocation: Equity Exposure for C3 Model Portfolio


C1 - Conservative C2 - Moderate C3 - Growth C4 - AggressiveC5 - Very

Aggressive

SAA % SAA % SAA % SAA % SAA %

U.S. 7 12 17 22 25

Europe 4 7 11 15 18

Japan 2 5 7 8 9

Asia ex Japan 3 7 13 18 24

EM ex Asia 0 3 5 6 8

Total 16 34 53 69 84

Global Bonds 49 39 27 18 7

EM Bonds 11 8 7 5 1

Global HY Bonds 6 5 3 2 0

Total 66 52 37 25 8

Global REITs 1 3 3 4 5

Commodities 2 2 3 2 3

Total 3 5 6 6 8

Cash Cash Equivalents 15 9 4 0 0

100 100 100 100 100

3.6 4.5 5.4 5.9 6.4

Expected S. D. (%) 6.3 8.4 10.8 13.1 15.3

Asset Class

Equity

Fixed Income

Alternatives

Total

Expected Geometric Return (%)

13

TAA*: difference from last TAA; SAA*: difference from current TAA to current SAA. TAA – The TAA reflects the GIC’s views of the financial markets. It tries to capture the short-term market ineffi-ciencies. We review the TAA in our monthly Global Investment Committee meeting. We rebalanced our TAA end day 8 July 2016. ● June was total mayhem when it came to the markets. Total returns on the month were diverse both inter

and intra asset class. At a asset class level, bonds were the out performing assets due to an intensive flight to quality as political risk by almost every measure dialed up massively. Aside from the unfortunate, busi-ness as usual, terror attacks by various aggressive parties, we also witnessed a wholesale revolt by the Brit-ish public in the face of post war political history. On June 23rd, the British public, willfully declined Euro-pean Community membership in an In / Out referendum. This has resulted in market pandemonium, not purely in the foreign exchange markets but across all asset classes, as economists and experts try to figure out what this really means in terms of effects on trade, on growth and on future financial and political rela-tionships. Fast out of the blocks comes France, trying to lure London’s financial executives to Paris with tax breaks and promises. Immediately, George Osborne returns the serve with an alluring tax spin of his own. There are an imponderable number of binary events looking at us from the road ahead, such as Ireland and Scotland succeeding to Europe from the UK OR NOT? U.S. elections Trump or else? European Elections in 2017.

● In our Global Investment Meeting held on July 8th, we tried to get back to basics, as in, what is going on in the real economies of the world. Unfortunately, many of the leading indicators are modestly unchanged at best or even turning a little downwards at worst. The U.S. economy remains the strong one in the pack and with China stabilizing on the manufacturing downturn, Asia and Australia have found some relief. Europe will have a period of indecision as companies delay any further investments due to increased political un-certainty.

● For the U.S. economy, we are not sure that even one rate hike is merited in 2016 and therefore we stick with our initial Q4 rate rise projection with no other hikes in the year. Although stabilizing, the risks to China have significantly increased as support of their credit fuelled growth waned publically; this will required rate cuts sometime soon. Their currency seems to have been less wild than last August and therefore they can probably afford to drop rates a touch, and at a minimum, RRR. Oil, having bounce all the way to $50 has potentially more downside than upside in the coming months despite drops in U.S. inventories.

● We maintain our overall defensive position in high cash holdings, in equities by country and by sector and security selection (defensive dividend stocks), our overweight in bonds and hedges in Gold; this holding has worked well. We continue to feel cautious about the global economy. The USD is well supported from here.

Newsletter Title

Tactical Asset Allocation (TAA and delta’s):


TAA

JuneTAA* SAA*

TAA

JuneTAA* SAA*

TAA

JuneTAA* SAA*

TAA

JuneTAA* SAA*

TAA

JuneTAA* SAA*

U.S. 11 + 3 + 4 16 + 4 + 4 23 + 5 + 6 30 + 5 + 8 31 + 5 + 6

Europe 1 - 1 - 3 4 - 1 - 3 6 - 3 - 5 10 - 3 - 5 12 - 5 - 6

Japan 1 - 1 1 - 4 3 - 4 5 - 3 7 - 2

Asia ex Japan 1 + 1 - 2 4 + 1 - 3 8 + 2 - 5 14 + 2 - 4 21 + 3 - 3

EM ex Asia 0 0 - 3 0 - 5 0 - 6 0 - 8

Total 14 + 3 - 2 25 + 4 - 9 40 + 4 - 13 59 + 4 - 10 71 + 3 - 13

Global Bonds 25 - 24 26 - 13 25 - 2 17 - 1 14 - 2 + 7

EM Bonds 10 - 1 8 9 + 2 6 + 1 0 - 1

Global HY Bonds 29 - 2 + 23 21 - 3 + 16 6 - 2 + 3 3 - 3 + 1 0

Total 64 - 2 - 2 55 - 3 + 3 40 - 2 + 3 26 - 3 + 1 14 - 2 + 6

Global REITs 0 - 1 - 1 2 - 1 - 1 2 - 2 - 1 3 - 1 - 1 3 - 1 - 2

Commodities 2 2 3 3 + 1 4 + 1

Total 2 - 1 - 1 4 - 1 - 1 5 - 2 - 1 6 - 1 7 - 1 - 1

Cash Cash Equivalents 20 + 5 16 + 7 15 + 11 9 + 9 8 + 8

100 100 100 100 100

16 +Proposed SD Band (%) 6 - 9 9 - 11 11 - 14 14 - 16

Equity

Fixed Income

Alternatives

Total

TAA Results (%)

C1 C2 C3 C4 C5

14

Newsletter Title

Model Portfolio Performance

Note: Benchmark refers to market benchmark (MB) ; SAA Alpha= SAA Return-Benchmark Re-turn ; TAA Alpha =TAA Return-SAA Return ; Performance measure date: as of 30 June 2016

Performance Snapshot Time Period : 1/5/2012 to 30/6/2016

Annualized Return %

Std Dev Sharpe Ratio Alpha

C1

MB 2.77 4.89 0.57 -

SAA 2.63 4.49 0.58 (0.14)

TAA 2.88 4.95 0.58 0.25

C2

MB 3.72 5.83 0.64 -

SAA 3.35 6.48 0.53 (0.37)

TAA 3.68 6.35 0.59 0.33

C3

MB 4.66 7.02 0.67 -

SAA 3.93 8.06 0.51 (0.73)

TAA 4.73 7.57 0.64 0.80

C4

MB 5.57 8.37 0.68 -

SAA 4.45 9.80 0.48 (1.12)

TAA 5.29 9.12 0.60 0.84

C5

MB 6.47 9.80 0.68 -

SAA 4.75 11.38 0.46 (1.72)

TAA 5.97 10.45 0.60 1.22

Conservative (C1) Moderate (C2)

Aggressive (C4)

Growth (C3)

Very Aggressive (C5)


Since inception our TAA has out-performed SAA and we are very close to our ex-pected returns

for all portfolios

Our Strategic Asset Allocation

generated to-gether with Morningstar

trailed the mar-ket benchmark

Our TAA process protected our

portfolios when markets went

down

15


Time Period : 1/5/2012 to 30/6/2016

Annualized Return %

Std Dev Sharpe Ratio

Alpha

C1 2.72 5.04 0.54 0.53

C2 3.55 6.54 0.55 0.49

C3 5.02 7.77 0.66 0.45

C4 6.07 9.30 0.67 0.39

C5 6.50 10.34 0.65 0.18

Performance Statistics

(1) Please read the disclosure pages for further information. This sheet must be accompanied by all portfolio disclosure pages. Unless specifi-cally noted in the accompanying disclosure pages, the source of all information is CTBC Private Banking. (2) CTBC publish TAA decision since April 25th 2012. However, the mutual fund selection of the portfolio started on Oct 2012. TAA fund performance before Oct 2012 is estimated based on actual TAA decisions and pro forma mutual fund portfolio performance. (3) Past performance is not an indication of future performance. * Other asset allocation includes REITS, commod-ity and other fixed income funds.


Flagship Portfolio (C3) - Mutual Funds

40% 40% 5% 15%

Risk-Reward

11%

11%

7%

5%

5%

1%

11%10%

9%

6%

4%

2%

3%

15%

Asset Class Fund Name C3 % Change

from last GIC

Asia Pacific ex Japan Equity

Matthews Asia Funds-Asia Dividend A 11 +2

BGF Asia Pacific Equity Income USD -

ChinaAMC China Opportunities -

Developed Markets Equity

Aberdeen Japan Equity A2 (USD Hedged) -

Robeco US Premium Equities D 7

Pioneer Funds US Fundamental Growth 11 +5

Sandler Plus US Equity Long Short 5

Allianz Europe Equity Growth A 5 -3

iShares MSCI Germany Index 1

Emerging Markets Equity

First State Glbl Emerg Mkts Leaders I -

Global Investment Grade Bond

Amundi Fds Bd Global Aggregate AU-C 4

M&G Optimal Income 10

PIMCO GIS Gl Inv Grd Crdt E Acc 11

Aviva Investors Glbl Convert A USD -

Global High Yield Bond

Rebeco High Yield Bonds 0DH USD 6 -2

Aviva Investors Global High Yid Bd A -

Emerging Markets Bond

AllianceBernstein RMB Income Plus 9

Henderson Horizon Glbl Prpty Eqs A2 2 -2 Alternative

SPDR Gold Shares 3

Cash Cash 15

16


(1) Please read the disclosure pages for further information. This sheet must be accompanied by all portfolio disclosure pages. Unless specifically noted in the accompanying disclosure pages, the source of all information is CTBC Private Banking. (2) CTBC publish asset allocation decision since April 25th 2012. However, the Compact portfolios started in July 2013 . Portfolio performance before July 2013 is estimated based on actual long term asset allocation decisions and pro forma mutual fund portfolio performance. (3) Past performance is not an indication of future performance. * Other asset alloca-tion includes REITS, commodity and other fixed income funds.


Compact Portfolio —Mutual Funds

Time Period : 1/5/2012 to 30/6/2016

Annualized Re-

turn % Std Dev Sharpe Ratio Alpha

C1 4.14 4.71 0.87 2.15

C2 4.39 6.33 0.70 0.95

C3 5.23 7.72 0.69 0.64

C4 6.01 9.00 0.68 0.46

C5 6.34 10.46 0.63 0.28

Performance Statistics

Risk-Reward

C3 Asset Allocation

38% 37% 10% 15%

17%

9%

6%

6%

20%

16%

1%

10%

15%

Fund Name C3 % Change from

last GIC Equity Matthews Asia Funds - Asia Dividend A Inc 9 +2

BGF Asia Pacific Equity Income USD -

Aberdeen Japan Equity A2 (USD hedged) -

Robeco US Premium Equities D 6 Pioneer Funds US Fundamental Growth 17 +5

Allianz Europe Equity Growth A 6 -3 Fixed Income M&G Optimal Income 16 Robeco High Yield Bonds 0DH USD 1 -4

PIMCO GIS Gl Inv Grd Crdt E Acc 20 Balanced Multi-Asset JPM Global Income A (acc) - USD Hdg 10

Cash 15

17

2016 Key Assets Total Return Ranking

15 July 2016 Page 17 Global Investment Committee

Total Return Performance of Major Global Financial Assets

12%

7% 7% 7% 6% 3% 1%

(1)%(2)%

(6)%

(9)%(11)%(14)%

11% 8% 7% 6% 6% 6% 5% 5%

4% 3%

15%

7% 5% 4% 4% 3% 2%

(2)%(2)%(3)%

(10)%

26%

22%

16% 15% 12%

10% 9% 9%

5%

(6)%

(15)%

(10)%

(5)%

0%

5%

10%

15%

20%

25%

30%

Ru

ssia

MIC

EX

Ind

ia N

ifty

50

Taiw

an T

WSE

UK

FTS

E 1

00

US

S&P

50

0

Au

stra

lia A

SX 2

00

SG S

TI

HK

Han

g Se

ng

Ge

rman

y D

AX

Fran

ce C

AC

40

Euro

Sto

xx 5

0

Jap

an N

ikke

i 2

25

Ch

ina

Shan

ghai

Asi

an H

Y

US

IG

UST

10

Y

US

HY

EU IG

Ge

rman

y 1

0Y

Spai

n 1

0Y

Asi

an I

G

Ital

y 1

0Y

EU H

Y

JPY

CA

D

SGD

NZD

AU

D

TWD

EUR

Do

llar

Ind

ex

CN

H

CN

Y

GB

P

Go

ld

Pla

tin

um

Nic

kel

Pal

lad

ium

Bre

nt

Cru

de

WTI

Cru

de

Nat

ura

l Gas

LME

Alu

min

um

LME

Co

pp

er

Co

rn

YTD MTD (as of 15 July 2016)

Equity Index YTD % MTD % Jun-16 May-16 Apr-16 Mar-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15

US S&P 500 5.8 3.0 0.1 1.5 0.3 6.6 (0.4) (5.1) (1.8) 0.1 8.3 (2.6) (6.3) 2.0 (2.1)

Euro Stoxx 50 (9.5) 3.3 (6.5) 1.2 0.8 2.0 (3.3) (6.8) (6.8) 2.6 10.2 (5.2) (9.2) 5.2 (4.1)

UK FTSE 100 6.8 2.5 4.4 (0.2) 1.1 1.3 0.2 (2.5) (1.8) (0.1) 4.9 (3.0) (6.7) 2.7 (6.6)

France CAC 40 (5.7) 3.2 (6.0) 1.7 1.0 0.7 (1.4) (4.8) (6.5) 1.2 9.9 (4.3) (8.5) 6.1 (4.4)

Germany DAX (2.1) 4.0 (5.7) 2.2 0.7 5.0 (3.1) (8.8) (5.6) 4.9 12.3 (5.8) (9.3) 3.3 (4.1)

Japan Nikkei 225 (10.6) 5.9 (9.6) 3.4 (0.6) 4.6 (8.5) (8.0) (3.6) 3.5 9.8 (8.0) (8.2) 1.7 (1.6)

China Shanghai (13.7) 4.3 0.4 (0.7) (2.2) 11.8 (1.8) (22.6) 2.7 1.9 10.8 (4.8) (12.5) (14.3) (7.3)

HK Hang Seng (1.2) 4.2 (0.1) (1.2) 1.4 8.7 (2.9) (10.2) (0.4) (2.8) 8.6 (3.8) (12.0) (6.2) (4.3)

Taiwan TWSE 7.3 3.3 4.2 1.9 4.2 (2.3) 3.3 (2.3) 0.2 (2.7) (4.6) 0.1 (5.7) (1.2) (3.9)

SG STI 1.5 3.0 1.8 (1.7) (0.1) 6.5 1.4 (8.8) 0.9 (4.8) 7.4 (4.5) (8.8) (3.5) (2.2)

Australia ASX 200 2.5 3.7 (2.7) 2.4 3.3 4.1 (2.5) (5.5) 2.5 (1.4) 4.3 (3.6) (8.6) 4.4 (5.5)

Fixed Income

- Yield Change (bp)YTD MTD Jun-16 May-16 Apr-16 Mar-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15

US Treasury 2Y (37.9) 8.7 (29.5) 9.5 6.1 (5.3) 0.0 (27.4) 11.7 20.6 9.5 (10.9) 7.7 1.8 3.7

US Treasury 10Y (71.9) 8.1 (37.6) 1.3 6.5 3.4 (18.6) (34.9) 6.3 6.4 10.5 (18.1) 3.8 (17.3) 23.2

US Treasury 30Y (75.0) (1.9) (36.3) (3.0) 6.6 (0.4) (12.8) (27.2) 4.4 5.0 6.8 (10.8) 5.6 (21.7) 24.2

Canada 10Y (31.2) 2.0 (25.8) (19.4) 28.7 3.6 (3.4) (16.9) (17.6) 2.9 10.9 (6.1) 5.2 (24.2) 6.0

Italy 10Y (33.9) (0.3) (9.8) (13.3) 26.7 (20.1) 0.7 (17.9) 17.5 (6.2) (24.4) (23.6) 18.9 (56.1) 48.5

UK 10Y (112.6) (3.2) (56.3) (16.7) 18.1 7.8 (22.3) (40.0) 13.5 (9.8) 16.0 (20.0) 8.1 (14.3) 21.1

German 10Y (62.3) 13.6 (26.9) (13.3) 11.9 4.6 (21.8) (30.3) 15.5 (4.4) (7.0) (21.0) 15.3 (12.0) 27.7

France 10Y (75.6) 4.9 (29.5) (15.7) 14.8 1.8 (16.8) (35.1) 19.7 (7.6) (11.9) (16.8) 21.7 (25.8) 39.8

Spain 10Y (54.2) 6.5 (31.0) (12.0) 15.6 (9.4) 1.8 (25.7) 24.8 (15.1) (21.9) (21.7) 26.9 (46.1) 46.4

SWISS 10Y (48.3) 3.9 (26.6) (8.7) 9.9 10.5 (18.4) (18.8) 29.7 (9.4) (15.1) (1.7) (6.3) (15.8) 17.9

Japan 10Y (49.3) (1.1) (10.2) (3.7) (4.8) 3.0 (16.0) (16.5) (4.2) (0.2) (4.7) (2.4) (3.0) (5.4) 7.1

Australia 10Y (87.7) 2.2 (32.2) (21.4) 2.8 9.0 (23.6) (24.5) 2.1 24.8 0.6 (5.8) (9.5) (25.2) 28.0

Commodity YTD % MTD % Jun-16 May-16 Apr-16 Mar-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15

WTI Crude 9.7 (4.9) (2.4) 5.1 14.0 7.4 (3.1) (5.1) (10.7) (7.8) 3.2 (9.7) 2.7 (14.4) (1.1)

Brent Crude 12.0 (4.2) (1.2) 4.6 15.2 6.8 (1.8) (6.4) (14.6) (10.2) 2.4 (10.8) 2.7 (13.6) (2.4)

Natural Gas 9.2 (5.7) 22.7 (1.2) 9.0 8.8 (17.6) (2.1) 1.0 (3.5) (6.9) (4.3) (4.4) (3.4) 3.3

Gold 26.0 1.2 8.8 (6.0) 4.9 (0.5) 10.8 5.4 (0.3) (6.8) 2.4 (1.7) 3.6 (6.5) (1.5)

Platinum 22.5 6.6 4.6 (9.0) 10.3 4.5 7.2 (2.3) 7.2 (15.6) 8.6 (10.1) 2.7 (8.9) (3.0)

LME Copper 4.5 1.5 3.7 (7.5) 4.2 3.2 2.9 (3.1) 2.6 (10.3) (0.9) 0.5 (1.8) (9.3) (4.2)

LME Aluminum 8.8 0.6 6.2 (7.9) 10.5 (3.6) 3.5 0.3 3.9 (2.3) (7.0) (2.2) (1.0) (4.0) (3.7)

Corn (6.5) (3.5) (9.1) 3.4 7.2 (1.9) (4.5) 2.7 (3.0) (3.3) (0.7) 2.9 1.1 (8.2) 9.7

Nickel 15.5 8.8 11.8 (10.9) 11.1 (0.4) (1.4) (2.4) (1.0) (11.4) (3.0) 2.9 (9.2) (8.0) (5.1)

Currency YTD % MTD % Jun-16 May-16 Apr-16 Mar-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15

Dollar Index (2.1) 0.5 0.3 3.0 (1.6) (3.7) (1.4) 1.0 (1.5) 3.3 0.6 0.6 (1.6) 1.9 (1.5)

EURUSD 1.6 (0.6) (0.2) (2.8) 0.6 4.7 0.4 (0.3) 2.8 (4.0) (1.5) (0.3) 2.1 (1.5) 1.5

GBPUSD (10.5) (0.9) (8.1) (0.9) 1.8 3.2 (2.3) (3.3) (2.1) (2.4) 2.0 (1.4) (1.8) (0.6) 2.8

AUDUSD 4.0 1.7 3.0 (4.9) (0.7) 7.2 0.8 (2.8) 0.8 1.2 1.7 (1.3) (2.7) (5.2) 0.8

NZDUSD 4.2 (0.3) 5.5 (3.1) 1.0 4.8 1.6 (5.1) 3.8 (2.9) 5.9 0.9 (3.8) (2.6) (4.8)

USDJPY 13.9 (2.2) (6.8) 4.0 (5.4) (0.1) (7.0) 0.8 (2.3) 2.1 0.6 (1.1) (2.1) 1.1 (1.3)

USDCAD 6.9 (0.2) (1.3) 4.3 (3.4) (4.0) (3.1) 1.0 3.6 2.2 (1.8) 1.3 0.4 4.8 0.3

USDCHF 1.9 (0.7) (1.8) 3.5 (0.2) (3.7) (2.4) 2.1 (2.6) 4.2 1.5 0.6 0.1 3.3 (0.5)

USDCNY (3.0) (0.7) 1.0 1.7 0.4 (1.5) (0.4) 1.3 1.5 1.3 (0.6) (0.4) 2.7 0.1 0.1

USDCNH (2.0) (0.5) 1.3 1.5 0.4 (1.3) (0.6) 0.4 2.2 1.6 (0.7) (1.2) 3.6 0.2 0.1

USDTWD 2.8 0.9 (1.1) 1.1 0.2 (3.3) (0.1) 1.4 0.5 0.3 (1.2) 1.0 3.1 2.6 0.6

USDHKD (0.1) 0.1 (0.2) 0.2 0.0 (0.2) (0.1) 0.5 (0.0) 0.0 0.0 0.0 (0.0) 0.0 (0.0)

USDSGD 5.3 (0.0) (2.2) 2.5 (0.3) (4.1) (1.2) 0.4 0.5 0.7 (1.5) 0.7 2.9 1.8 (0.0)

USDZAR 7.5 2.3 (6.3) 10.4 (3.6) (7.0) (0.1) 2.7 7.1 4.5 (0.2) 4.3 4.7 4.2 0.1

18

The information and materials contained in this document are produced by CTBC Private Banking of CTBC Bank Co., Ltd. (Singapore Branch, hereinafter referred to as “the Bank”) based on diverse sources and are only intended for its clients who are either (i) “professional investors“ as defined under the Securities and Futures Ordinance, Hong Kong; and/or (ii) “accredited in-vestors” as defined under the Securities and Futures Act, Singapore; and/or (iii) such other professional investors located in or reside in jurisdictions that do not restrict the distribution of such information and materials. All interested prospective investors are required to seek appropriate professional advice and observe all relevant restrictions in his/her/their respective jurisdic-tions. This document is strictly for information purposes only and any information or opinion expressed should not be consid-ered as an offer or solicitation to invest or deal in any of the securities mentioned herein. The information and materials whether provided by the Bank or other information provider are not intended to provide professional advice and should not be relied upon in that regard. The Bank accepts no liability or responsibility whatsoever for any damage or loss arising from the use of the information and materials in this document. The Bank shall not be held liable in any way in respect of any such information and/or materials herein under any circumstances. The Bank reserves ALL rights to change the contents of this document at any time without prior notice and liability whatsoever.

CTBC Investment & Product Team


Reference : Data source: Bloomberg, BCA Research , Morningstar


Disclaimer:

Michael Coglin Head of Research [email protected] +65 6922 2405

Research

Sammy Lee Foreign Exchange [email protected] +65 6922 2409

Irene Foo Equity [email protected] +65 6922 2436

Yeo Aik Kiong Fixed Income [email protected] +65 6922 2433

Damien Ng Sales Head of SG & Head of Advisory [email protected] +65 6922 2400

Investment Consultants (IC) & Product Specialists

Ringo Lau Head of IC HK [email protected] +852 2916 1018

Elyn Cao Investment Consultant [email protected] +852 2916 1020

Jerry Chang Investment Consultant [email protected] +852 2916 1032

Nicholas Cheng Investment Consultant [email protected] +852 2916 1059

Po-Kwan Ha Investment Consultant [email protected] +852 2916 1021

Kenny Ip Investment Consultant [email protected] +852 2916 1023

Jenny Chen Funds [email protected] +852 2916 1052

Toyong Halim Equity Portfolio [email protected] +65 6922 2430

Iris Kao Funds [email protected] +65 6922 2427

Low Ping Yee Funds [email protected] +65 6922 2438

Cheong Mun Fai Funds Portfolio [email protected] +65 6922 2445

mailto:[email protected]




facing our demons - ctbc private bank · avoid the game, it often ends in tears. for commodities,...

Documents