• Global, and particularly Australian, shares have seen a bit of a pull back over the last month which could have further to go in the short term.
• However, what we are seeing is likely a correction as opposed to a new bear market. From a fundamental point of view the cycle still looks okay with no sign of the overvaluation, overheating economic conditions, onerous monetary tightening or investor euphoria that normally precedes major bear markets.

Introduction

Share markets have seen a bit of volatility and a pullback over the past month. This has been particularly so for Australian shares. This note looks at the key drivers and whether it’s just a correction or a new bear market.

Drivers of recent volatility

Our view for this year has been that shares would have positive but more constrained returns than seen over 2012 and 2013 and that volatility would increase. Our basic reasoning was that with shares no longer dirt cheap, investors would have to depend more on earnings growth for share market gains and this would be more constrained and uncertain. Until recently it has been relatively calm though despite a range of worries and deep scepticism amongst many commentators. Lately though, it seems the worry list has intensified and this has been reflected in increased volatility. The list of worries includes the following:

• Top of the list has been unease about the gradual shift at the US Fed towards eventual monetary tightening. Ultra easy Fed policy has been a key source of support for the global economy and investment markets. Investors are naturally concerned about what will happen when this ends with the Fed’s third round of QE set to end later this month and the Fed talking about raising rates next year.
• The global economic recovery has proved yet again to be fragile and uneven: with the Eurozone flirting with deflation; Japan struggling after a sales tax hike; the Chinese economy going through another soft patch; and emerging markets generally remaining subdued.
• Meanwhile a range of geopolitical threats are causing nervousness including: the escalating involvement of the US and its allies in the conflict with IS in Iraq and Syria; the conflict in Ukraine; the protests in Hong Kong accentuating concerns regarding China; & the worsening Ebola pandemic in Africa & the arrival of cases in the US.
• A range of “technical” concerns regarding US shares have added to these worries including: the absence of a “decent” correction since 2012 and low levels of volatility (or VIX) leading to fears investors may be complacent and the narrowing breadth of the US share market rally.
• Finally, we have been going through a seasonally weak period of the year for shares. The September quarter is historically the weakest quarter of the year.

While US and global shares have had only modest pullbacks of around 3 to 4%, Australian shares have been particularly hard hit with a fall of 7% reflecting the overlay of global concerns along with:

• A sharp fall in the iron ore price and commodity prices generally on China worries;
• Increasing talk that Australian banks will be forced to increase their capital ratios; and
• Foreign investors retreating to the sidelines as the $A falls. They are 30-40% of the market and it’s quite normal for them to pull back as the $A falls as they fear a double hit to the value of their investments. Indeed $US based investors lost 12% in Australian shares last month.

The correction in shares could go further: US shares, which tend to lead global markets, are only off slightly so far whereas corrections often go to 5 to 10%; nervousness is likely to intensify in the run up to the end of QE3 later this month; nervousness in Europe may well continue until uncertainty is cleared up around banks with the ECB to announce results of stress tests later this month; and finally seasonal weakness often runs into October. However, we view this as a correction, not the start of a new bear market.

A correction, not a new bear

There are several reasons why what we are seeing is likely a correction, rather than a bear market. First, valuations are not extreme.

This is evident in the previous chart which is based on a range of measures including a comparison of the yield on shares with that on bonds. Recent share market weakness has pushed valuations well into cheap territory again.

Second, the global economic cycle is a long way from posing a major threat to shares. The global economy is growing, but it’s uneven and sub-par. This is a blessing in disguise:

• While the US looks to have recovered from a soft patch early this year, growth in Europe, Japan and China is dragging the chain. Europe is unlikely to slide back into recession with the ECB doing just enough to support growth but weak credit demand and a reluctance to ease fiscal policy growth will remain constraints. Meanwhile, China is doing better than most other regions but its stop/go approach to supporting growth in the face of pressure for long term reforms is likely to see growth stuck around 7%.

As a result global spare capacity and excess savings remain intense so inflationary pressures remain tame and bond yields low.

• In many ways the world resembles the 1990s after the early 90s recession with the US being a growth leader, other regions lagging and disinflationary pressure keeping a lid on inflation.
• The overall result is that global growth is strong enough to boost profits but a long way from the boom conditions that cause escalating inflation. In other words, the global growth cycle is still in the “sweet spot”.

As a result, global monetary policy is set to remain easy.

• While the US is edging towards monetary tightening, Europe, Japan and China are a long way from tightening and if anything are likely to see further easing.
• This means the US dollar will likely remain under upwards pressure, which in turn will have the impact of importing low inflation into the US and delaying/limiting the extent of US rate hikes once they do start to get underway (as occurred in the second half of the 1990s).
• Finally, although the Fed will likely end QE3 this month, a 15-20% fall in US shares as we saw in 2010 and 2011 with the ending of QE1 and QE2 is unlikely as the US economy is now on a much sounder footing.

Finally, we are still a long way from the sort of investor exuberance seen at major share market tops. It seems everyone is talking about share market corrections and crashes. In Australia, the amount of cash sitting in the superannuation system is still double average levels seen prior to the GFC and Australians continue to prefer bank deposits and paying down debt to shares and superannuation. There is still a lot of money that can come into equity markets as confidence improves.

So absent a left field shock the most likely outcome is that, while shares could see more downside in the next month, this is likely to be limited with the bull market to continue.

The threat from geopolitics and pandemics

Perhaps the main potential source of left field shocks are the current geopolitical threats, but our reading is that these are unlikely to pose a fundamental threat to global growth:

• The Islamic State seems unlikely to threaten oil supplies and while a terror attack is a risk, it’s worth noting that the progression of such attacks last decade seemed to have less impact on markets as investors got used to them.
• The threat from Ukraine may be receding.
• The protests in Hong Kong are certainly a risk to China, but there is a good chance that they will peter out as the people of Hong Kong grow frustrated at the disruption they pose to their ability to go about their business.
• The “arrival” of Ebola cases in the US and Spain is worth watching, but our base case is that it should be easier to contain in western countries with modern medical facilities and higher standards and ease of hygiene.

What does this mean for Australian shares?

If global shares have more short term downside then so too will Australian shares. However:

• The Australian share market is now quite cheap again with the forward PE now back below 14 times.
• The fall in the $A will further help the economy avoid recession as mining investment slows and provide a boost to corporate earnings as each 10% fall in the $A adds around 3% to earnings.
• Interest rates are set to remain at generational lows with inflation pushing back towards the low end of the RBA’s target range according to the TD Securities Inflation Gauge and the RBA looking at using credit controls to slow investor demand for housing rather than rate hikes.

As such Australian shares are likely to see a strong rally into year end. Just bear in mind though that Australian shares are no longer the relative outperformer they were last decade. This decade is likely to see continued underperformance versus global shares as the commodity price super cycle is now going in reverse resulting in a headwind for the local share market and the falling $A (which we see heading down to $US0.80 or lower) will boost the value of offshore shares.

Concluding comments

The rough patch we have seen in shares lately could go a bit further. However, the bull market will likely remain intact thanks to a lack of overvaluation, the benign economic cycle, easy monetary conditions and a lack of investor euphoria.

Shane Oliver, Head of Investment Strategy & Chief Economist, AMP Capital

—————–

Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

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• Global shares had a poor week with a range of issues reportedly weighing with more sanctions on Russia and worries about the Fed, earnings, Banco Espírito Santo and Argentina’s “default”. This dragged down global shares for July by 1%. While Australian shares got hit on Friday it came after a very strong month with the ASX 200 up 4.4% in July. The “risk off” move by investors weighed on the euro and $A, commodities were mixed with oil down but metals up and bond yields actually rose in the US and Australia.
• Many of the reasons reportedly unnerving investors look to reflect isolated instances rather than systemic problems, ie more like an excuse for a correction: Banco Espirito Santo’s situation is not indicative of other Eurozone banks; Argentina’s problems are well known and its “default” reflects a problem with a hedge fund rather than broader emerging market debt problems; tougher sanctions for Russia will harm it a lot more than the West with Russia unlikely to cut off gas supplies to Europe given the long term damage it will do to what is a key export earner for it; and overall US earnings reports have been very strong.
• That said, having not had a decent pullback since January/February US shares (and hence global shares) have become vulnerable to a correction and this may be it. We are also in the weakest quarter of the year for shares seasonally and worries regarding the Fed may be with us for a while yet. However, the absence of investor euphoria, reasonable valuations, easy global monetary conditions and the improving economic outlook suggest that what we are seeing is just a correction, not the start of a major bear market.
• While the Fed will remain an ongoing source of investor nervousness as the case for a rate hike gradually builds, there were no surprises from the Fed’s latest meeting. As expected the Fed announced another $US10bn cut its in quantitative easing program and it now sees less risk of too low inflation and recognises the stronger labour market. However, it still sees significant labour market slack and has not changed its assessment that the Fed Funds rate will remain in its current range for a considerable period after the end of QE. Expect to see a gradual hawkish shift over time, but no rate hike till around mid-2015.
• The justification for tax concessions in Australia – such as negative gearing, the capital gains tax discount, dividend imputation, superannuation – seems to be a hot topic these days. The often put arguments for their removal/curtailment are that the rich get the greatest advantage from them and it would help balance the Budget. Such views are frequently put by Treasury, which, according to Paul Keating, has long hated them. However, the arguments working the other way are more powerful. First, many of the tax concessions are fundamentally justified: negative gearing just allows for the legitimate costs of investing; dividend imputation removes the double taxation of dividends and puts shares on an equal footing with other Australian assets; and superannuation concessions encourage savings for retirement and helps provide patient capital. Second, that they are used so much by the rich is a reflection of Australia’s very high marginal tax rate and the fact that it cuts in at a relatively low income level. Cut the reliance on income tax for revenue and the top marginal tax rates, and the desire to minimise tax via concessions will fall. Removing or curtailing the concessions without cutting income tax rates will just reduce savings and incentive which will work against Australia’s long term growth potential.

Major global economic events and implications

• US economic data confirmed growth has rebounded. June quarter GDP growth rose at a stronger than expected 4% annualised pace after a 2.1% contraction in the March quarter, consumer confidence rose to its highest since October 2007, the Markit services sector PMI remained very strong and jobs data remains solid. However, the US economy is a long way from booming – inventory accumulation contributed 1.7 percentage points to June quarter GDP growth and housing indicators have been a bit mixed. So the recovery continues but I can understand why the Fed is a bit reticent about getting too hawkish. While employment costs rose more than expected in the June quarter, they are still up just 2% year on year which is stuck in the same range as the last few years. So not a lot of inflation pressure here.
• Meanwhile, US June quarter earnings results remain strong. 75% of the S&P 500 has now reported with 76% beating on earnings (against a norm of 63%), 66% beating on sales and earnings growth for the quarter now running around 10% year on year, which is about 5 percentage points above expectations.
• In the Eurozone, economic confidence drifted slightly higher in July consistent with ongoing economic recovery and the unemployment rate continued to drift down to 11.5%, from a high of 12%. That said inflation has fallen to a new cyclical low of just 0.4% year on year highlighting the need for easy monetary policy.
• Japanese data was mixed. Industrial production fell much more than expected in June and the unemployment rate rose slightly but against this real household spending rose more than expected in June, small business confidence rose and the ratio of job openings to applicants rose to its highest since 2002.
• China’s official manufacturing PMI rose further in July adding to confidence that growth is improving.

Australian economic events and implications

• Australian data provided a mixed but ok picture. On the downside a sharp fall in export prices saw the terms of trade resume its slide in the June quarter, resulting in an ongoing headwind to nominal growth and national income. Against this though, while building approvals fell in June, the level remains strong, new home sales rose in June, house prices continue to rise albeit at a more moderate pace than through the last half of last year, the AIG’s manufacturing PMI rose again in July and a weekly Roy Morgan survey indicated that consumer confidence continues to recover from its Budget related hit. What’s more private credit growth picked up further in June driven by a rebound in personal and business borrowing. So while the resources boom continues to fade, evidence continues to build that the economy is rebalancing towards a greater reliance on other sectors.

What to watch over the next week?

• In the US, the Fed’s loan officers survey (Monday) is expected to confirm that lending conditions are favourable, the ISM services index (Tuesday) is expected to show that services sector conditions remain solid and the trade deficit (Wednesday) is likely to be flat. Productivity growth (Friday) is expected to bounce back.
• Having just eased again two months ago the ECB (Thursday) is unlikely to make any changes, but is likely to restate its easing bias and that it is continuing to look into a quantitative easing program.
• Chinese inflation data for July (Saturday) is expected to be benign. Trade data will be released Friday.
• In Australia, as nothing much has changed over the last month the RBA at its Board meeting on Tuesday is expected to leave rates on hold and repeat that a period of interest rate stability remains prudent. Its quarterly Statement on Monetary Policy (Friday) is also likely to express a neutral inclination on rates.
• On the data front in Australia, expect to see June retail sales (Monday) bounce back 0.3% after their fall in May, the June trade balance to remain in deficit (Tuesday), labour force data to show a 10,000 gain in employment leaving unemployment unchanged at 6% and housing finance data (Friday) to show a slight bounce back.
• The Australian June half profit reporting season will start to get underway in the week ahead with 8 major companies reporting including Downer and Rio. Consensus earnings estimates for 2013-14 are for 12% growth led by resources with +28%, banks at +10% and industrials ex-financials at +3%. The combination of the lower iron ore price, the higher $A and the hit to confidence from the Budget in the June quarter suggest a bit of downside risk to consensus estimates for resource and industrial stocks, although the banks are likely to remain strong. Given relatively elevated PEs compared to a few years ago underperformers are likely to be slammed. Most interest is likely to be on outlook statements with resources companies at risk but a bit of upside potential for companies exposed to housing and non-mining construction and retailing. Consensus 2014-15 earnings growth estimates are relatively modest at +5%, with resources at 2%, banks at 4% and industrials at 10%.

Outlook for markets

• Shares have been vulnerable to a correction for a while and so the weakness seen over the last week may have a bit further go, but we continue to see little evidence suggesting we are at or near a major market top. Valuations remain reasonable, particularly if low interest rates are allowed for, global earnings are continuing to improve on the back of gradually improving economic growth, monetary conditions are set to remain easy for some time and there is no sign of the euphoria that comes with major share market tops. In terms of the latter, if anything there is still a lot of scepticism which is a long way from the sort of confidence normally seen when bull markets end. Given all this, any short term dip in shares should be seen as a buying opportunity as the broad trend is likely to remain up. Our year-end target for the ASX 200 remains 5800.
• Bond yields are likely to resume their gradual rising trend over the next six months led by increasing evidence that US growth is picking up pace. This combined with low yields is likely to mean pretty soft returns from government bonds. Cash and bank deposits continue to offer poor returns.
• While the carry trade from ultra-easy money in the US, Europe and Japan risks pushing the $A higher, the combination of soft commodity prices, an increasing likelihood that the Fed will start raising interest rates ahead of the RBA and relatively high costs in Australia are expected to see the broad trend in the $A remain down.

By Dr Shane Oliver, Head of Investment Strategy & Chief Economist

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Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

The post Weekly market & economic update – week ending 1 August, 2014 appeared first on AdviserVoice.

• Global shares had a mixed week as investors digested the 5% or so rebound since early February amidst weather affected US data, signs the Fed will soon change its forward interest rate guidance with respect to unemployment, another fall in a Chinese manufacturing conditions PMI and as turmoil continued in the Ukraine and Thailand providing a reminder that issues remain in the emerging world. While US and Eurozone shares were basically flat, Japanese and Asian shares nevertheless saw good gains. Bond yields were also little changed, but commodity prices did see some strength with a strong rise in oil prices (partly due to poor US weather) and higher metal prices. The $A fell on the poor news from China, but only marginally.
• Australian shares continue their sprint higher gaining more than 7% from their early February low with mostly good earnings results over the last few weeks providing confidence that the long hoped for rebound in earnings is finally happening and as shareholders like the news of higher dividends.
• The minutes from the Fed’s last meeting point to ongoing tapering. Cleary the Fed viewed the recent run of soft US data as largely due to poor weather, which along with comments by various Fed officials suggest little change in the pace of tapering. Of course this could change in a few months if US data has still not improved. The Fed does appear to likely soon change its forwards guidance on interest rates with the unemployment approaching the Fed’s 6.5% threshold, but at this stage there appears to be little agreement on what form the new guidance will take. Looking further out, while markets may have become a bit concerned about the reference to “a few participants” raising the possibility that it may need to raise interest rates relatively soon, this is likely to refer to the usual hawkish regional presidents of Fisher, Plosser, Lacker and George and is likely to be of little consequence for now given they don’t drive Fed policy. That said, once the US exits its weather related soft patch and as the Fed nears the end of its QE program later this year, talk of sooner than expected interest rate hikes may start intensifying…maybe later this year.

Major global economic events and implications

• US economic data presents a confusing picture at present. Freezenomics clearly played a role in depressing the NAHB home builders’ survey (along with a lack of supply), housing starts and manufacturing conditions in the New York and Philadelphia regions. But against this the broad-based Markit manufacturing conditions PMI rose 3 points to a very solid 56.7 in February with strong gains in new orders and employment suggesting the overall manufacturing sector is in good shape and on top of this jobless claims fell and the leading index rose pointing to solid growth ahead. On top of all this inflation readings remain benign, with core and headline inflation of just 1.6% year on year. So beyond the freeze the US economy still looks ok.
• Eurozone flash PMIs slipped in February but only marginally (from 52.9 to 52.7 for the composite) and do nothing to change the outlook for continued gradual economic recovery. That said growth is still not strong enough to reduce deflation risks, so more ECB easing is still likely.
• Japanese December quarter GDP growth was much weaker than expected at just 0.3%, but this was due to a surge in imports as growth in domestic demand was a solid 0.8% driven by consumption and investment. As expected the Bank of Japan made no changes to its asset purchase program or its money supply targets but it did extent or expand various measures to boost bank lending, which could be interpreted as a baby step towards further easing which we expect to see in the next few months.
• China’s flash HSBC manufacturing PMI fell yet again in February pointing to the possibility of a further slowing in economic growth. That said it could have been distorted by the Lunar New Year holiday and pollution related factory suspensions and it’s still bouncing up and down in the same range it’s been in for the last two years, which period has seen GDP growth stuck in a range around 7.5% to 8%. So at this stage we see no reason to change our 2014 growth forecast of 7.5%.

Australian economic events and implications

• In Australia, a fall in annual wages growth to a record low of 2.6% through 2013 provides further confirmation that the labour market is very weak and means that poor household income growth will remain a constraint on consumer spending. Fortunately it also adds to confidence that inflation will remain low thanks to soft growth in wages costs and so adds to confidence the RBA can keep interest rates down. There is also a bit of light at the end of the tunnel for the labour market with skilled vacancies rising for the fifth month in a row in January
• The minutes from the RBA’s last meeting provided nothing new but by dropping any reference to the possibility of further easing, they confirmed that its bias on interest rates is now neutral. We remain of the view that the RBA will keep interest rates on hold out to around September with gradual rates hikes thereafter.
• The corporate earnings news was a bit more mixed over the last week. As is often the case the companies with great results often go first followed by those not doing so well. That said, with around 70% of companies having reported, overall results remain pretty good and confirm the profit cycle has now turned up. So far 54% of companies have exceeded expectations (compared to a norm of 43%); 67% of companies have seen their profits rise from a year ago (compared to a norm of 66%); 70% of companies have increased their dividends from a year ago (compared to an average of around 62% in the last two years); but only 52% of companies have seen their share price outperform the day they released results. Key themes are a massive turnaround for the resources stocks (notably Rio and BHP) leaving the sector on track for circa 35% earnings growth this financial year, banks doing very well (with good results from CBA, ANZ and NAB), help coming through from the lower $A, ongoing cost control, signs of improvement from some cyclicals (like Boral, JB Hi Fi, Fairfax and Seek) and strong growth in dividends. The surge in dividends – which are up about 15% from a year ago – is a good sign that companies are confident about the outlook. The bottom line is that Australian earnings look to be on track for growth of around 15% this financial year, with a 35% surge in resources’ profits, a 10% rise in financials’ profits and a 6% rise in profits for the rest of the market.

• In the US, house price data (due Tuesday) for December is expected to show continued strength but poor weather is likely to have weighed on January new home sales (Wednesday) and possibly consumer sentiment (Friday). Poor weather could also give a subdued result in durable goods orders (Thursday) and December quarter GDP growth is likely to be revised down to 2.5% annualised from the 3.2% initially reported thanks to softer trade and retail sales data than had originally been allowed for. Fed Chair Yellen’s delayed Senate testimony (Thursday) will be watched closely for any hint of a taper slowing following recent mixed data.

What to watch over the next week?

• In the Eurozone, confidence data (Thursday) is likely to confirm the continuing gradual economic recovery. Unfortunately the recovery to date is unlikely to have been strong enough to have pushed the January unemployment rate (Friday) below the 12% level.
• Japanese January data for household spending, the labour market and industrial production are likely to show continued growth, and a continuing rising trend in inflation (all due Friday).
• The official Chinese manufacturing PMI (Friday) is likely to have followed the HSBC flash PMI slightly weaker.
• In Australia, December quarter construction (Wednesday) and business investment data (Thursday) will provide important building blocks for the December quarter GDP data to be released on March 5. Both are likely to be a bit softer than was the case in the September quarter. The capex data will also provide a guide as to how quickly mining investment is slowing and whether non-mining investment is picking up. Private credit growth (Friday) is likely to have shown a continuing modest pick-up in growth. A speech by RBA Governor Glen Stevens (Wednesday) will likely reiterate the case for interest rates to remain on hold for now.
• This will be the final week of the Australian December half 2013 earnings reporting season with 60 major companies due to report, including Worley Parsons, Harvey Norman and Woolworths.
• Investment markets will also digest the outcome of the G20 finance ministers meeting to be held on February 22-23. G20 meetings are a great opportunity for a talkfest – and this one will see lots of interesting discussion around issues such as the impact of Fed tapering on emerging countries, global growth targets, boosting infrastructure investment, financial regulation and tax base erosion – but in the absence of a global crisis to fix, it’s hard to see it having much impact on financial markets. While ongoing concerns from some emerging markets about the Fed’s tapering of its stimulus program create interest, there’s virtually zero chance that the Fed will do anything differently and nor should it as it has to do the right thing by the US economy and emerging market problems are largely of their own making. And it can hardly be claimed that the Fed failed to communicate its plans to start tapering – in fact then Fed Chair Bernanke started flagging his tapering plans back in May last year, nearly six months before the Fed started doing anything.

Outlook for markets

• While returns will be more constrained and volatile, shares will nevertheless push higher this year helped by reasonable valuations, improving earnings on the back of improved economic growth and easy monetary conditions helping to entice investors to switch out of cash and bonds and into shares. With the current earnings reporting season pointing to solid earnings growth this year, the ASX 200 is on track to meet our year-end target of around 5800 by year end.
• The recent decline in global bond yields should be seen as a correction against the backdrop of a slow rising trend in yields on the back of gradually improving global growth. This will mean subdued returns from government bonds. Cash and bank deposits also continue to offer pretty poor returns given low interest rates/yields.
• The broad trend in the $A remains down on the back of softer commodity prices, a reversion to levels that offset Australia’s relatively high cost base and a decline in Australia’s growth relative to that in the US. However, short positions in the $A still remain excessive and so it could still have a bit more of a bounce before the downtrend resumes.

By Dr Shane Oliver, Head of Investment Strategy & Chief Economist

———-

Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

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