AB IQ INSTITUTIONAL INSIGHTS

AUTHOR ’s Leapfroggers Sammy Suzuki John Lin Stuart Rae Shape the Investing Brad Gibson Landscape

In our many travels through China to explore the changing market CONSUMPTION: CHINESE CONSUMERS COME landscape, we’ve discovered countless companies and industries WITHOUT THE BAGGAGE that are jumping ahead of the West. These leapfroggers are creating CLICKS VS. BRICKS exciting opportunities for investors as China’s equity and debt markets Mobile trends are at the heart of China’s technological prowess. open to the world. China’s landline telephony infrastructure never developed as much as that in the US or Europe. Yet mobile phone penetration in China Global investors are starting to gain access to trillions of dollars’ worth has almost caught up with that in the West. Meanwhile, brick-and- of new securities in China. In June, index provider MSCI began to mortar retail is very underdeveloped in China. This difference in include domestic Chinese stocks, known as A-shares, in its emerg- infrastructure is the source of China’s edge. ing-market indices for the first time. Chinese authorities are adding For developed countries, the shift to e-commerce is often painful. capacity to trading programs that allow international investors to buy It requires the retail sector to unwind huge networks of stores and onshore stocks, which have an aggregate market cap of approximately strike the right balance between physical and digital sales. For US$7.0 trillion. And next April, Chinese government bonds will be China, it’s much easier, since companies don’t have to dismantle added to the Bloomberg Barclays Global Aggregate Bond Index, nearly as much physical store space to take the digital leap. For a move that could shift an estimated US$300 billion in allocations example, the Alibaba Group has been building out its Hema to China’s fixed-income markets once other index providers follow supermarket chain, in which the stores are optimized for online Bloomberg Barclays’s lead. Foreign investor inflows into China’s bond delivery. In contrast, Amazon recently purchased Whole Foods market are already exceeding US$7 billion per month this year. Market and will likely need to retrofit the stores meaningfully.

For international investors, the appeal isn’t just about the sheer size of What’s really going on here? Instead of reconfiguring brick-and- China’s market. The Chinese equity and bond markets add significant mortar infrastructures, Chinese companies can spend their time diversification benefits to global funds. And Chinese companies are building efficient e-commerce platforms designed for a digital leading the way for global peers in industries ranging from e-commerce world. As a result, Chinese e-commerce now accounts for about to advertising and electric cars to clean energy. Investors who can 15% of retail sales, nearly as much as in the UK and well ahead find the strongest candidates stand to benefit from powerful return of the US (Display 1, left). Given the vast size of the market, this potential at a time when equity markets in the developed world may translates into massive consumer power. Alibaba reported annual lose steam. gross merchandise value of US$768 billion in its fiscal year ending March 2018—more than three times greater than Amazon’s over

the same period.

AB IQ | INSTITUTIONAL INSIGHTS | JUNE 2018 D 1: C I A D R M P

E- P R S21 C P: B V P 2 1 1 3 1.3 1. 33

1 33 .3 .

4. 3. 34 23 2

UK US China UK US*China

2011 2017 Cash Mobile Card Other

Left display as of December 31, 2017; right display as of December 31, 2016. Historical analysis does not guarantee future results. *US cash value includes checks. Source: British Retail Consortium, iResearch Consulting, National Bureau of Statistics of China, Nilson Report, Office for National Statistics (UK), People’s , US Department of Commerce, Wind Tre and AllianceBernstein (AB)

Alibaba isn’t alone, though. Competitors include companies like measured more directly. And new players, equipped with more JD (Jingdong), with its business-to-consumer platform that has accurate data, are disrupting the way advertisers reach consumers. become the e-commerce partner of , a leading Chinese Through its lead in digital advertising, China is at the forefront of Internet group. JD built up its muscle by acquiring Walmart Stores’ using consumer data as a new currency. online business in China in 2016. The deal allowed JD to leverage Walmart’s supply chains, increase product selection and improve TECHNOLOGY: NEW WAYS TO SOLVE TOMORROW’S logistics efficiency. PROBLEMS EDUCATION Vipshop, China’s leading online discount retailer, has also been Some Chinese companies are testing new technologies in bold growing rapidly. By selling non-standardized clothing lines, ways. TAL Education uses distance learning to teach some of its including off-season and overstocked products of other brands, students and is experimenting with artificial intelligence technology Vipshop has been able to generate higher gross profit margins than in its classrooms as well. Results from early tests suggest that its peers. these programs can keep kids more focused than real teachers. The company is also developing facial-recognition technologies to MOBILE PAYMENTS gauge the level of concentration of the students. If a student isn’t The Chinese e-commerce boom is fueled in part by a payment focused, parents will be automatically notified. revolution. Chinese consumers are far ahead of American and UK consumers in adopting mobile payment (Display 1, right). Here, too, Megvii Technology, a Chinese facial-recognition company, is Chinese consumers and companies have leapfrogged their world applying its technology in areas ranging from retail to security. peers. And again, it’s all about infrastructures. Facial recognition is used to identify a VIP when he or she enters the store. Police applications include security cameras in shopping China has 16.3 bank branches per 100,000 adults, compared with malls to catch criminals on the run. China is quickly turning science more than 32 in the US and almost 24 in Europe. Similarly, credit fiction into reality. cards never made it into as many Chinese wallets. This explains why Chinese consumers have embraced mobile payments for ENVIRONMENTAL CHALLENGES everything from clothing to fast food. At the same time, the day-to-day reality in a country of 1.4 billion people is far from simple. Rapid industrialization has created dire KFC (formerly known as Kentucky Fried Chicken) is a case in point. environmental challenges that, until recently, were not high on the By the end of 2017, 53% of its sales in China were made with country’s agenda. mobile payments. In fact, one premium KFC store in Hangzhou That’s now changing. Since 2016, when the government signed the allows customers to pay using facial recognition. Paris climate accord, China has stepped up its efforts to shift its Mobile payment is even popular among street vendors. For economy onto a more sustainable growth path. Dangerous levels of example, we’ve even seen fruit vendors on city streets with QR pollution in industrialized areas have prompted the government to codes on their carts allowing payment via WeChat Pay, a popular act, and China’s middle class is growing increasingly intolerant. mobile payment system operated by Tencent. Solar and wind power is still a relatively small piece of China’s DIGITAL ADVERTISING IS BOOMING energy market, but growth is rapidly accelerating (Display 2). Similar trends are evolving in media consumption. In China, the Against this backdrop, China has become a world leader in the rapid shift toward mobile devices has powered a digital advertising production of solar panels, led by component makers such as boom. About two-thirds of all advertising spend in China is GCL-Poly and LONGi, which manufacture products that match up dedicated to digital platforms, compared with 40% in the US. favorably with their Canadian and European competitors. Many Chinese companies that have emerged to fulfill the country’s new Televisions are no longer the centerpiece of media consumption. appetite for clean-tech and alternative energy are fast-growing, Today, smartphones provide advertisers with mountains of data well-run operations, amply funded by both government and private about consumers. Returns on advertising investments can be sector investors.

AB IQ | INSTITUTIONAL INSIGHTS | JUNE 2018 D 2: R E I G R C

S W M S P S W G S P

3 45

2 30

1 15

0 0 05 06 07 08 09 10 11 12 13 14 15 16 17 05 06 07 08 09 10 11 12 13 14 15 16 17

Through December 31, 2017 Source: Bernstein Research and BP

TRANSPORTATION HEALTHCARE: GETTING INTO SHAPE Alongside the push for renewable energy, China has embarked China lags the West in some areas. For example, the country’s upon an ambitious plan to promote electric vehicles (EVs). The healthcare system is still far behind the US and Europe. Yet reforms government sees EVs as an important component of combating its are under way that we believe will ultimately lead to major changes— energy security problem by helping to limit oil imports and reduce and investing opportunities. pollution. Market demand for healthcare in China is constantly growing In recent years, the government has spent billions of renminbi (Display 3), owing to its large aging population. The government’s subsidizing EV purchases and chargers, while tightening regulation keynote reform plan—Healthy China 2030—represents a of traditional fossil fuel–powered cars. Companies to watch include commitment to improve healthcare access and quality, raise life BYD, the world’s largest maker of electric cars and EV batteries, expectancy to 79, and support the expansion of the healthcare as well as the Chinese state-owned automaker, SAIC Motor, which industry. launched its first EV in 2015. SAIC is seen as a pioneer in research and development and in production of electric or partially electric vehicles, and the company has a joint venture with Volkswagen and General Motors.

D 3: H D I P B C

C O M C C H P S Millions RMB Billions

4,233 2

3,3 44 2, 1,3 24 1,42 1, 1 11 1 23 32 3 4 3 42 3 14 2 4 14 2 2 E E E E E E E E E E E E E E E E E E E E 2012 2012 2013 2013 2015 2015 2016 2016 2014 2014 2017 2017 2021 2021 2019 2019 2018 2018 2022 2022 2023 2023 2025 2025 2026 2026 2024 2024 2020 2020

As of December 31, 2016 *Includes pharmaceutical products, medical devices, and nutrition and health products in China’s business-to-consumer sales channels Source: Frost & Sullivan

AB IQ | INSTITUTIONAL INSIGHTS | JUNE 2018 Regulatory changes are streamlining approval for new treatments, THINK STRATEGICALLY ABOUT CHINA directly funding research and driving innovations in areas such as: Of course, there are significant risks to investing in China. Rising debt levels have raised alarm bells. Trade tensions with the US are a ++ Cancer treatment. China may potentially leapfrog widely used growing concern. Financial information is often perceived as being chemotherapies to immunotherapies, which offer better chances unreliable. State-owned enterprises don’t always put shareholders’ for cancers to be managed or even cured in the future. Jiangsu interests first. Hengrui Medicine is a biopharmaceutical company with a rich pipeline for cancer immunotherapy treatments and other drugs These concerns should not deflect investors’ attention from thinking for diabetes and cardiovascular diseases. strategically about China, in our view. Yet our survey of institutional investors in the US, Asia and EMEA (Europe, Middle East and Africa) ++ Artificial intelligence. This is also being applied in healthcare to facilitate disease prevention, diagnosis and patient engagement. suggests that more than 80% of investors don’t have a plan for Ping An Healthcare and Technology (also known as Ping An Good investing in China. Doctor) provides online family doctors and health mall services Some of the reluctance has been caused by confusion about how through its mobile platform. The online healthcare platform raised to enter the Chinese market, which has been anything but simple. US$1.1 billion via its Kong IPO in May 2018. That’s why it’s especially important for investors to start by gaining FROM DISCOVERY TO INVESTING an understanding of the different ways to access China’s equity and From mobile technology to healthcare, China is reinventing itself— fixed-income markets as the landscape evolves. and redefining the world we live in. With innovative, technologically Staying on the sidelines can be costly. Investors who move quickly driven services and the largest domestic market in the world, into China’s markets today will find many new ways to profit from the many Chinese companies offer international investors a way to explosive growth and innovation of the leapfroggers that are shaking participate in China’s growth story, especially now that the onshore up a wide range of global industries. market is becoming more accessible. We continue to actively monitor the evolving China investing Headlines about China’s slowing growth miss the point. Even at a landscape to uncover investing opportunities. For more perspectives slower pace, real GDP growth in China is still about 6.8%—more on how investors can benefit from the unfolding changes, please than double the rate of global growth. And China is transitioning explore additional insights from our portfolio management teams. away from heavy industry toward a service-oriented economy while focusing more on sustainability and the environment, backed by supply-side reform. When these trends are supported by a huge population, with a growing middle class and increasing consumer spending power, it’s clear that investors need to develop a greater understanding of how to capture opportunities in the world’s most populous nation.

Are Global Investors Ready For China?

China’s onshore stocks and bonds account for less than 2% of most foreign investors’ portfolios. But this will change soon—with major consequences for investors and markets. We surveyed institutional investors to assess how well they understand the market—and how ready they are for what’s next.

AB IQ | INSTITUTIONAL INSIGHTS | JUNE 2018 AUTHOR Brad Gibson The Road to John Lin Investing in China

Every investor is thinking about China, but most don’t have a specific A-SHARES EXPAND CHINA EQUITY ALPHA POTENTIAL plan for it. The Asian giant is already a dominant power in its region, MSCI has only recently started adding China A-shares, which in emerging markets and in the world. Recent equity weakness currently represent only 0.4% of the MSCI EM. This share should doesn’t change the long-term view: The China opportunity will increase to about 0.8% in September—still a small fraction of what it continue to grow. would be if MSCI included A-shares at their full market weight.

Yet despite China’s potential, more than eight of every 10 The A-share market—“the onshore market”—offers many institutional investors don’t yet have a plan for incorporating China opportunities unavailable through offshore-listed companies. in their portfolios, based on a recent survey we conducted of global For example, the onshore market is full of growing healthcare institutional investors. In fact, one third of institutions plan to leave companies. Many technology firms from the Shenzhen market are the decision to their investment managers. inaccessible offshore. The market also provides access to China’s explosive consumer growth and local brands popular with the One thing that’s clear is that institutions want an active manager growing middle class. in charge of their China investments. Of those we polled, 86% supported active investing. That makes sense to us, because active A-shares also boost diversification. Over the five years ended March management can be especially effective in China. 31, 2018, the correlation between the MSCI China A Index and MSCI World Index was only 0.30. In contrast, the correlation between the But what about the approach to integrating China in a portfolio? S&P 500 Index and MSCI World was 0.95, and between the MSCI There are two basic options: The first is to access China as part of EM and MSCI World, 0.75. a global or emerging-market (EM) strategy. The other is to add a dedicated mandate to China stocks or bonds. Is there one right way As we see it, the market is ripe with alpha potential. It’s relatively to invest in China? Here’s our perspective. inefficient and has many individual retail investors who often lack critical information about company fundamentals, and information MOST INVESTORS ARE UNDERWEIGHT CHINA EQUITY flow is much less than perfect. Over the long run, prices ultimately Based on our experience and conversations with clients, most align with fundamentals, but short-term inefficiencies can decouple institutions aren’t ready to make a China-only equity allocation. the two, creating opportunities. Almost 80% of the institutions we surveyed are accessing China through a global or EM strategy. Unfortunately, this may not be GETTING AHEAD OF THE GROWING CHINA PRESENCE the best approach, because most benchmarks are substantially Investors who want more control over their China allocation and underweight China. more exposure to the opportunity set should consider adding a dedicated strategy. This would align their portfolios more closely For example, China currently represents 34% of the MSCI Emerging with China’s true opportunity set and help get their China equity Markets Index, based on market capitalization—but it would be allocation ahead of the likely growing index weight in EM and global more than half if weighted by gross domestic product (GDP), and benchmarks. even more if weighted by GDP growth. What’s more, China’s index allocation is largely –listed companies (H-shares) and MSCI hasn’t specified a timeline for further increasing the A-share those listed in other markets like the US, as opposed to A-shares, weight, but it’s highly likely to happen in the coming years. At full which offer a much broader opportunity set. inclusion, Chinese stocks—including A-shares and other share classes—would likely comprise more than 40% of the MSCI EM.

AB IQ | INSTITUTIONAL INSIGHTS | JUNE 2018 Given the amount of capital that tracks the index—both actively and greater share of EM and global bond indices. For example, if the J.P. passively—this would unleash significant inflows. In the meantime, Morgan, Citigroup and Bloomberg Barclays indices move to their investors who simply wait for full inclusion would be increasingly potential China weightings, it would represent an inflow of nearly underweight this compelling opportunity, because not all global or $300 billion. That inflow alone represents a tremendous opportunity EM managers have the research scope to cover so many issuers. for investors. There are more stocks listed in the China A-share market than in either the Nasdaq Stock Market or New York Stock Exchange. In many ways, China’s bond markets—rated A+ by Standard & Poor’s—behave more like those of developed markets than those of TWO APPROACHES TO STAND-ALONE EQUITY STRATEGIES emerging markets, with government and policy-bank bonds playing A dedicated China strategy could take one of two forms—either a role as a defensive asset class. Many other EM government bonds, a dedicated A-share strategy or a more comprehensive China in contrast, often play more of a growth role, and they offer little or strategy that combines onshore-listed A-shares with offshore-listed no protection in an equity downturn. H-shares in Hong Kong or other markets. ASSESSING THE RISKS IN CHINA FIXED INCOME Some plans have added, or are considering adding, a stand-alone However, there are potential risks alongside the opportunity. China’s China A-share strategy—although these plans are still a minority. bond market isn’t as deep or liquid as those of the US, Europe and UK. Others are considering a more comprehensive approach that allows The lack of liquidity, continued capital controls and still-developing managers to invest in Chinese companies regardless of where access routes make it hard to argue that China’s government bonds they’re listed. Both approaches have merit. should be considered a true core developed market.

Since most investors already have H-share exposure through their Until China’s capital account is fully open, our view is that some global or EM portfolios, complementing it with a dedicated A-share caution is warranted. From our perspective, most investors should strategy makes sense and helps avoid overlap. But as onshore consider accessing China as part of an active global or EM strategy, and offshore markets converge, there’s a strong case for a single, allowing investment managers with the required China fixed-income comprehensive “All China” strategy that invests across both A- and expertise to manage the investment. Over time, these allocations H-shares. Many companies are listed in both markets, providing will become larger and more permanent as the bonds are included in arbitrage opportunities. And by shedding the A/H-share distinction major indices. and tapping both markets, managers can better focus on the best opportunities. SOME INVESTORS WANT MORE CHINA BOND EXPOSURE Some fixed-income investors, however, may be interested in having Adding an All China portfolio could result in some overlap with more exposure to China than global or EM bond indices currently call existing EM mandates, but we believe that this is more than for. In these cases, we think a dedicated China bond portfolio with a offset by the benefits of an integrated portfolio—and is a better diversified structure is worth considering. representation of China’s real economy. Of course, investors adding a stand-alone China strategy should consider existing managers’ We think adding credit exposure with a barbell structure, including exposures to ensure that they’re complementing—not just doubling interest-rate-sensitive bonds, makes sense. There’s opportunity up. This consideration will undoubtedly become more important as in credit beyond cyclical stress from interest-rate hikes, but credit China’s weight in EM indices and global markets grows. markets are also less transparent than government bond markets— this requires in-depth knowledge of local bond markets and credit Investors may also want to start thinking about their EM portfolio in analysis. two parts: All China and EM ex-China. We believe that the market will likely evolve along these lines in the coming years as China’s On the interest-rate side of that barbell are Chinese government weight in the EM universe continues to grow. bonds and policy-bank bonds. The bonds issued by the largest policy bank, China Development Bank, are more liquid than China’s Regardless of which approach investors choose, we see a government bonds. Policy-bank bonds trade at a higher yield than compelling case for getting ahead of the curve and increasing government bonds, largely because of differences in their tax exposure to Chinese equities today. treatment. Even taking the tax into account, we see good value in China’s policy-bank bonds in the current environment. ENORMOUS POTENTIAL IN CHINA’S ONSHORE BOND MARKET In the years ahead, the share of Chinese bonds in global and EM China’s $11 trillion bond market is the world’s third largest—and indices will continue to grow, and so will the allocations required for it’s only recently starting to open to outside investment. There’s portfolios to keep pace. Currently, we see strong reasons for active no doubt that the onshore China bond market offers tremendous global and EM bond managers to start increasing their allocations to opportunity for global investors. China government bonds.

China sovereign bonds yield more than many developed-market For larger, more permanent allocations to be considered, we still sovereign bonds, with a low correlation to major asset classes. point to the relaxation of capital controls as the biggest piece of And they behave more defensively in market sell-offs: In risk-off the puzzle for fixed-income markets. If this relaxation continues, periods since 2005, the S&P 500 fell by an average of 2.5%. The and if it’s accompanied by continued reforms, it would increase our Bloomberg Barclays Global Treasury Index (USD Hedged) rose conviction in suggesting even higher levels of exposure to China. by 1.8% and the Bloomberg Barclays China Treasury Index (USD Hedged) rose by 3.1%. There’s no doubt that China’s presence in the world’s capital markets will continue to grow, with major implications for portfolio Foreign participation in the market is low right now. At the end construction and available opportunities. Yet more than three of 2017, outside investors owned only 2% of the onshore China quarters of institutional investors don’t have a specific China plan bond market. However, this share is set to rise as China becomes a yet. We think it’s time for those conversations to start.

AB IQ | INSTITUTIONAL INSIGHTS | JUNE 2018 AB On the Ground: In Eastern China with John Lin

There’s no better way to understand a place–especially one changing as fast as China–than to see up close how people there live, work and play.

That’s why the entire AB Asia Value Equity team has taken a team trip to China every year for the past 10 years. While individual members of the team visit China frequently throughout the year, having the entire team together always brings new insights and Paying in cash? Not here. The fresh ideas. See what we learned this year in the eastern cities of Alipay or WeChat Pay apps are Weifang, Jinan and Nanjing. the way to go. DAY 1: LESSONS IN GETTING FROM HERE TO THERE (From Hong Kong to Qingdao to Weifang)

China has built up its infrastructure at a frenetic pace, but our experience tells us there may be more to do. Weifang, for example, is home to 9 million people and has a GDP of US$80 billion, but there aren’t many direct flights from international hubs.

We flew from Hong Kong to Qingdao (home of Tsingtao Brewery) and then took a high-speed train to Weifang. Tickets were surprisingly hard to get: we grabbed the last few and split our team onto two trains to complete our trip. That said, the business-class seats were quite comfortable!

DAY 2: THE TWO SIDES OF CHINESE MANUFACTURING (Weifang)

Today we met with China’s largest heavy-duty diesel engine truck manufacturer, Weichai Power. As more Chinese consumers buy things online, demand for trucks to transport those items has soared, and so have Weichai’s profits.

The engine factory floor was clean, orderly and... lonely. It was hard to spot an actual worker among the rows of machines and robots. Only when we moved to the final assembly area did we see columns of workers putting the final touches on 12- and 13-liter diesel engines. Automation is one reason Weichai is outcompeting some of its foreign rivals.

HIGH-TECH GADGETS We visited Goertek, which makes Apple’s AirPods, Sony PlayStation 4’s virtual reality (VR) headsets and Facebook’s Oculus Rift VR System. The company’s most important products, however, are

AB IQ | INSTITUTIONAL INSIGHTS | JUNE 2018 its acoustic hardware technologies, including speaker boxes SPECIAL DELIVERY and smartphone microphone receivers. Keen to boost domestic Food delivery apps have exploded in Jinan, and delivery bikes take technology companies through the “Made in China 2025” initiative, over the city’s streets at lunchtime. So plentiful are the opportunities the Chinese government is helping Goertek develop autonomous for blue-collar workers that we hear their wages are rising faster than aerial drones. those of white-collar clerical workers.

Trying out fun technology to get a feel for China’s high-tech DAY 4: manufacturing? Sign us up! LAST STOP (Nanjing) DAY 3: MORE BIG TRUCKS AND CONSUMERS, CONSUMERS, We spent the day in Nanjing, a bustling metropolis of 12 million CONSUMERS people in the coastal Yangtze River Delta region. With a GDP per (Jinan) capita of over US$20,000, Nanjing is a very wealthy city.

THE INDUSTRIAL RECOVERY IS FOR REAL At the Bank of Nanjing, one of China’s largest city commercial banks, Continuing our exploration of the industrial recovery, we started and Huatai Securities, one of the country’s largest stock brokerages, the day at Sinotruk, a heavy-duty truck manufacturer owned by we learned about current liquidity conditions and evolving consumer the Chinese government. Here again we heard strong demand preferences. Chinese savers are diversifying away from plain-vanilla predictions, this time thanks to a resurgence in construction projects. bank accounts for storing their wealth.

We also saw evidence that industrial companies are staying Talking government toll road policy, checking out the traffic control disciplined in terms of capital expenditures and capacity expansion. center and eating lunch at Jiangsu Expressway’s headquarters. Sinotruk and other firms have used rising profits over the past two years to repair their balance sheets and, in some cases, to increase As I waited for my flight to Shenzhen at the Nanjing Airport, people dividends rather than overexpand. singing their hearts out in karaoke phone booths next to my gate served as a final reminder that consumers and services are Consumers are increasingly driving the Chinese economy, so we increasingly driving the Chinese economy. poked around stores and consumer businesses to see what’s trending. Turning a delayed flight into a party? That’s an idea we can get behind. ALL ABOUT THE ALMIGHTY CHINESE CONSUMER A visit to one of Xiaomi’s branded stores reminded us that winning the domestic market can turn a startup into a serious global player in just a few years.

Consumers are starting to prioritize experiences and better health over conspicuous consumption, which has boosted sportswear sales across China. We checked out the online ordering system and products at sportswear brand Li-Ning.

Analyst Vivian Chen and Emerging Markets Chief Investment Officer Henry D’Auria try out an instant, self-heating Chinese hot pot while traveling 300 km/h on a bullet train.

Premiumization: Consumers are trading up, buying higher- quality food and household products. Think “gourmet” instant noodles.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. AllianceBernstein Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom.AllianceBernstein® and the AB logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. © 2018 AllianceBernstein L.P., 1345 Avenue of the Americas, New York, NY 10105