Deutsche Bank Markets Research

Asia Periodical Date China 15 August 2016 Strategy Made in China

Michael Tong Luka Zhu Stgy:July data;Banks, Healthcare, Property; Research Analyst Research Associate (+852) 2203 6167 (+852) 2203 6173 Results:China Hongqiao(+),Sun Art(=) [email protected] [email protected]

THEME OF THE DAY Daily Market Statistics 12/08/2016

Data Flash - China: Weak July data raises chance for policy easing (Zhiwei Performance Price 1D% chg 1M% chg Zhang) HSI 22,767 0.8 6.8 Summary: Economic activity indicators weakened in July and cast downside H-share 9,555 1.4 7.3 risk to our Q3 GDP growth forecast of 6.5%. As the baseline, we still expect A300 3,294 1.8 0.6 one more interest rate cut in Q4. But we see rising risk of the rate cut Volume Price 1D% chg 1M% chg happening earlier than we expect. (Zhiwei Zhang – 852 2203 8308) HSI 2,388 -1.8 14.9 http://pull.db-gmresearch.com/p/2127-8B4F/70009100/DB_DataFlash_2016-08- H-share 2,752 -3.5 22.2

12_0900b8c08b9166fe.pdf A300 11,625 13.1 -48.4

Chinese banks - Jul’16 banking volume – Softer credit growth, continued leverage shifting (Hans Fan) DB Economic forecasts New RMB loans and total social financing came in at Rmb464bn and Hong Kong 2014 2015 2016 Rmb488bn in July, both of which were notably below the consensuses. Added GDP (%) 2.6 2.4 1.8 to Rmb396bn of new municipal bond issuance, total new credit in July Merch. Exp. (%) 2.6 -2.2 0.5 amounted to Rmb883bn, down 31% yoy. As such, the growth rate of system CPI (%) 4.4 3.0 3.3 credit balance (TSF and municipal bonds) continued to soften to 16.5% yoy in China 2014 2015 2016 July, vs. 17.0% in June and the recent peak of 17.6% in April (Figure 1). We GDP (%) 7.3 6.9 6.7 expect credit growth to continue to slow down in 2H on tightening shadow Merch. Exp. (%) 6.0 -2.9 4.0 credit, which may cast near-term headwinds on Chinese banks' share prices, CPI (%) 2.0 1.4 1.8 especially smaller banks. We still prefer retail-orientated banks (big-4/CMB). FX rate (eop) CNY/USD 6.2 6.5 7.0 (Hans Fan - 852 2203 6353) http://pull.db-gmresearch.com/p/56-359D/82699980/0900b8c08b9452a1.pdf Source: Deutsche Bank AG estimates

China Healthcare - Significant growth deceleration in July (Jack Hu) Growth of retail drug consumption decelerated to 7.3% in July, which is the lowest monthly YoY growth since 2008, vs. 13.3% in 1H2016 and 15.5% July 2015. On a quarterly basis, the YoY growth in 2Q16 was 11.6%, compared with 15.1%/14.4%/13.2%/13.9%/15.1% in 1Q16, 4Q15, 3Q15, 2Q15, 1Q15 respectively. We remind investors that consumption data have high correlation with hospital drug sales. As such, the data point suggests that hospital prescription data is likely to show significant growth deceleration in recent months. (Jack Hu – 852 2203 6208) http://pull.db-gmresearch.com/p/2469-F00D/1316631/0900b8c08b90805c.pdf HK/China sector analysts' top picks Financials - BOC, CCB, CTIH, CPIC; Telecom - ; Property – CR Land, Longfor, R&F; Auto – Yutong Bus, Dongfeng; Transportation – Sinotrans, CSD, Air China; Industrial/Infrastructure – AviChina, CCC, Hollysys; Consumer – Anta, CITS, Yili, Utilities/Renewables – China Power Int’l, China Gas, Huadian Fuxin, CR Power, Beijing Enterprise Water; Basic Materials – Conch Cement, Fuyao Glass; Internet – Alibaba, Ctrip; Healthcare – CBPO, 3SBio, Hengrui Medicine, Hualan; Leisure/Gaming - China Travel; Tech – Lenovo; Energy – .

______Deutsche Bank AG/Hong Kong Distributed on: 08/15/2016 00:10:44GMT Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.

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DB EQUITY RESEARCH

China Property - 7M16 property sales value up 39.8% YoY, FAI up 5.3% YoY (Foo Leung) 1) Sales value of commodity property +39.8% YoY to RMB5,757bn, among which residential +41.2% YoY, office +65.3% YoY, while retail +17.6% YoY. 2) GFA sold of commodity property +26.4% YoY to 758msqm, among which residential +26.7% YoY, while office +41.3% YoY and retail +15.5% YoY. 3) Commodity property ASP +10.6% YoY to RMB7,599psm, residential property ASP +11.5% YoY to RMB7,337psm, office property ASP +17.0% YoY to RMB14,607psm, while retail property ASP +1.83% YoY to RMB9,931psm. (Foo Leung – 852 2203 6239) http://pull.db-gmresearch.com/p/52-50E1/71846797/0900b8c08b918d1c.pdf China passenger vehicle sector - July auto wholesale momentum surged on low base (Vincent Ha) Earlier today, China Association of Automobile Manufacturers (CAAM) released July China vehicle wholesale data. In summary, July passenger vehicle (PV) sales were 1.6m units, implying a YoY growth rate of 26.3% (-10.1% MoM). By segment, SUV sales stayed strong in July (up by 47.4% YoY and accounting for 36% of China PV sales) and local brands’ performance benefited with their SUV sales making up 56% of total SUV sales. For 7M16, China PV wholesale grew by 11.1% YoY to 12.6m units. Regarding the impact of the sub-1.6L PVs’ 5ppt partial purchase tax cut, the policy led to 38.6% YoY wholesale growth for that segment to 1.1m units in July, reflecting the continuous effectiveness of the policy and possible panic-buying on rumors that the tax stimulus might end early, in our view. In comparison, above-1.6L PV wholesales went up by 3.4% YoY during the same period, on our estimates. In addition, sales of new energy vehicles (NEV) grew 98.1% YoY to 36k units in July, with pure electric cars increasing 1.4x YoY and plug-in hybrid up 33.3%. The slower NEV growth rate vs. 2015 is probably due to uncertainty in local government subsidy, in our view. For 7M16, NEV sales were up 1.2x YoY. (Vincent Ha – 852 2203 6247) http://pull.db-gmresearch.com/p/62-2E1E/72493293/0900b8c08b8ece3a.pdf HK Retail - Mainland tourists return, but spending pattern might have changed (Anne ling) According to HKTB, tourist arrivals climbed for the first time over the past 14 months with 2.6% yoy growth in July, due to the return of mainland tourists (2.2% up in July). Total tourist arrivals declined 6% for the first seven months, with the mainland down 8.9%. HKTB commented that among all the mainland tourists, multi-entry/one-time- one-week visa holders declined 36.7% for 1H16. Excluding this, other IVS and group tour tourist arrivals slightly increased 0.9%. (Anne Ling – 852 2203 6177) http://pull.db-gmresearch.com/p/68-891E/81414714/0900b8c08b90823a.pdf China Hongqiao Group Ltd. - Low cost producer bears fruit; maintaining Buy on competitiveness (1378.HK, Buy, Target Price: HKD 6.20, Closing Price: HKD 6.28, Sharon Ding) China Hongqiao announced 1H16 results with NPAT of RMB3.3bn, representing an increase of 20.7% YoY and achieving c.56%/62% of DBe and consensus respectively, Gross margin was 25.7% in 1H16, which is 3ppt/5ppt higher than FY16 DBe/consensus, respectively, thanks to its well-controlled unit cost and well-supported aluminium price in 2Q16. Its top line grew 13% YoY in 1H16, driven by its robust aluminium capacity growth of 30% YoY. With growing smelting capacity and an integrated business model including bauxite in Guinea and alumina in Indonesia, Hongqiao has been able to further cement its cost competitiveness. We thus maintain our Buy rating. (Sharon Ding) http://pull.db-gmresearch.com/p/58-C08D/82579784/0900b8c08b947ce0.pdf SUN ART RETAIL GROUP - Gaining traffic through direct sourcing and O2O alliances (6808.HK, Buy, Target Price: HKD 5.93, Closing Price: HKD 5.17, Richard Rui-Huang) We hosted a two-day NDR meeting on 11-12 August post 1H16 results. Investors focused on its offline operation and online strategy. 1H16 earnings were in line with our expectation. Staff cost was lower than our expectation on optimization of in-store staff force, which was offset by a higher-than-expected ETR. We believe the offline business has turned around in 1H16, and we fine-tune our forecast earnings by 0-2% for FY16-18. We believe the direct sourcing and O2O alliances would gain traffic and help its gross profit margin backed by its strong execution capability. We expect the

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alliance with O2O players to relieve it from investment in online traffic and logistics. We maintain Buy. (Richard Rui-Huang – 852 2203 6202) http://pull.db-gmresearch.com/p/76-C313/14084059/0900b8c08b921efd.pdf China Gas Holdings - NSRD restructure may create a potential A-share financing platform (0384.HK, Buy, Target Price: HKD 14.00, Closing Price: HKD 12.90, Hanyu Zhang) On 12 Aug 2016, China Gas announced a proposed asset restructuring with Shenzhen Nanshan Power (NSRD, 000037.SZ). The company plans to inject two subsidiaries, Zhejiang Zhongran (2mn tons LPG wholesale volume in 2015) and Nanning project company (170mn cm natural gas volume in 2015) into NSRD in exchange of its newly issued shares. China Gas also plans to acquire some existing shares of NSRD using internal cash and targets a 70-80% shareholding of NSRD after transaction. Pricing has not been determined and the deal needs approvals from NSRD’s shareholders and CSRC. China Gas’ management expects to close the deal in a year’s time. (Hanyu Zhang – 852 2203 6207) http://pull.db-gmresearch.com/p/67-92BA/83818305/0900b8c08b9232c7.pdf FIH Mobile Limited - Better 1H16 operating results on OPPO/Vivo strength (2038.HK, Buy, Target Price: HKD 3.10, Closing Price: HKD 2.69, Birdy Lu) FIH issued a profit warning and triggered Street earnings' cut in April. However, 1H16 operating results turned out better than market fears (as well as our estimates) due to better product mix (less EMS projects from Sony/Motorola/Xiaomi, and more metal casings, in terms of sales contribution). The company is making aggressive inroad on leading Chinese smartphone brands (OPPO, Vivo) orders and is gradually gaining shares in their components or assembly orders. Management expects to see sequential QoQ profit increase from 2Q16 onward driven by Chinese customers’ robust new handset models launch (Huawei Mate 9, Xiaomi Mi6). The company will keep enhancing its cooperation with India smartphone brands which should accordingly boost its top line expansion going forward. We like FIH’s organic EPS growth, solid balance sheet and attractive cash dividend yield. Retain Buy rating. (Birdy Lu - 886 2 2192 2822) http://pull.db-gmresearch.com/p/44-1C0D/70527729/0900b8c08b90cb9d.pdf

. China Financial Daily – CSF Increases Shareholdings in Banks in 2Q16 . Inside the Great Wall – Suzhou launches new tightening measures . Asia Consumer & Media Daily – Giordano – Showing execution capability in key markets

MARKET NEWS

 New development dynamics highlights of China's economy: official – New economic drivers are surfacing in China and its industrial structure is improving, said an official. Despite headwinds in July, there was fast development in new industry, technology, businesses and services, said Sheng Laiyun, spokesperson for the National Bureau of Statistics. (Xinhuanet)

 Economy still faces downward pressure – Growth in fixed-asset investment, especially for the private sector, continued to weaken in July, indicating that the economy still faces heavy downward pressure, a spokesman for the National Bureau of Statistics said at a news briefing. (China Daily)

 World Bank to issue SDR bonds in China – China's central bank said Friday that it had allowed a division of the World Bank to issue bonds denominated in special drawing rights (SDR) in the country's interbank bond market. (Xinhuanet)

 China's FDI dips in July – Foreign direct investment (FDI) in the Chinese mainland fell 1.6 percent year on year in July, compared with a 9.7 percent increase in June, according to official data released. (Xinhuanet)

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 China's government procurement exceeds 2 trillion yuan in 2015 – China's government procurement jumped 21.8 percent year on year to 2.11 trillion yuan (over 300 billion U.S. dollars) last year, official data showed. (Xinhuanet)

 China's fiscal spending records near-zero growth in July – China's fiscal spending decelerated drastically to near-zero growth in July while the country's fiscal revenue rose faster, official data showed. (Xinhuanet)

 China's new yuan loans shrink unexpectedly in July – China's new yuan- denominated loans in July dropped substantially, falling short of market expectations, as loans to businesses shrank unexpectedly, official data showed. (Xinhuanet)

 China to halt licensing of new non-bank payment agencies – China's central bank said it will halt the licensing of new non-bank payment agencies as authorities tried to better regulate the fast-expanding industry. (Xinhuanet)

 China's property investment slows down in July – Investment in China's property sector rose 5.3 percent year on year in the first seven months of 2016, slightly lower than 6.1 percent registered in the first half of the year, official data showed. (Xinhuanet)

 China to use carbon scheme to boost electric car numbers: draft rules – Beijing China, the world's biggest auto producer, plans to include carmakers in its planned national carbon trading scheme to encourage the manufacture of more electric vehicles, according to a draft of rules being circulated in the industry. (Reuters) DB EVENTS

DB COMPANY ROADSHOWS China Resources Cement: Post Results Update – HK 8/15 – 9/5 Giordano: Post Results Update – HK 8/15 Cowell e Holdings Inc: Company Update – HK 8/16 Lifestyle Intl Hldgs Ltd: Post Results Update – HK 8/16-17 West China Cement: Post Results Update – HK 8/16-18, SG 8/19 Tongda Group: Company Update – HK 8/17 SMRT Corporation Ltd.: Company Update – SG 8/17 China Hongqiao Group Ltd: Company Update – HK 8/17 eBay: Company Update – HK 8/16, TKO 8/18 China Travel International Investment HK Ltd: Post Results Update – HK 8/18 Hualan Biological Engineering Inc.: Post Results Update – 8/18 (CC) China NT Pharma Group: Post Results Update – HK 8/19 CITIC Telecom: Post Results Update – HK 8/19 3SBio Inc: Company Update – 8/22 (CC) Co. Ltd: Post Results Update – 8/22 (CC) Huadian Fuxin Energy Corp. Ltd.: Company Update – HK 8/22, SG 8/24 Zhejiang Expressway Co: Company Update – HK 8/22-23 Tonghua Dongbao Pharmaceutical Co Ltd: Post Results Update – HK 8/23 Automobile Holdings Limited: Post Results Update – HK 8/23 3SBio Inc: Company Update – HK 8/23 China Modern Dairy Holdings Ltd.: Company Update – HK 8/23-24 Manulife US REIT: Company Update – SG 8/25 Dah Sing Bank/Dah Sing Financial: Company Update – HK 8/25 : Post Results Update – HK 8/25-26 China BlueChemical Ltd: Company Update – HK 8/26 Universal Medical Financial & Technical Advisory Services: Company Update – HK 8/26 Conch Cement: Post Results Update – SG 8/29-30 China Logistics Property Holdings Co. Ltd.: Company Update – 8/29 (CC) CT Environmental Group Limited: Post Results Update – HK 8/30 Brilliance China: Company Update – HK 8/30 Sinoma (China National Materials Co Ltd): Post Results Update – HK 8/29 & 31 Jiangsu Expressway: Post Results Update – HK 8/31

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City Developments Limited: Post Results Update – SG 8/31 Conch Venture: Company Update – HK 9/1 Sinopec Oilfield Services Corporation: Company Update – SG 9/5 Novozymes: Company Update – HK 9/5, SG 9/9 Symrise: Company Update – HK 9/9 Garanti Bank: Company Update – SG 9/9 Discover Financial Services: Company Update – HK 9/9

Investor Field Trips dbAccess Asia Capital Goods Trip: BEI/SHA/TKY 9/15-16 dbAccess China Metals & Mining Trip: Mongolia/Shanghai/Jiangsu/Zhejiang Provinces 10/17-21

INDUSTRY SPECIALIST ROADSHOWS NA

DB ANALYST ROADSHOWS Deepak Mathivanan: US Internet Sector Updated Thoughts – HK 8/15 & TKO 8/19 Yuliang Chang: China Equity Strategy Update – SG 8/16-17 Shawn Park: Asia Petrochemical and Korea Oil & Gas – HK 8/16-17 Benjamin Fidler: European Aerospace & Defence – TKO 8/16; HK 8/17; SG 8/19 Amyn Pirani: India Auto Sector Update – SG 8/16-17, HK 8/18-19 Samuel Sentana & Joko Sogie: Indo Infra, Indo Healthcare and Retail – HK 8/22-23, SG 8/24-26 Michael Chou: Asia Technology Update – SG 8/22-23, HK 8/24-25 Stephen-A Andrews: Asia Banks: Dealing with Debt – SG 8/23-25 Tallan Zhou: China Movie/Entertainment/Tourism Sector Update – TKY 8/23, SEL 8/29- 30 Aniruddha Bhosale: Indian IT Services and Internet Update – SG 8/29-30, HK 8/31–9/1 Bryan Keane (US): IT Services and Finance Technology Updates – HK 8/30 Kinner Lakhani: European Bank – Value or Value Trap? – SEL 8/31, HK 9/1, SG 9/2 Johnson Wan: China Cement, China Paper and Regional Oil & Gas – SG 9/6 Chockalingam Narayanan: India Cement, Infrastructure and Industrials Outlook – HK 9/12-13, SG 9/14-15

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DB China/Hong Kong research contacts Analyst Coverage Phone Email Michael Tong Head of HK/China Research +852 2203 6167 [email protected]

Zhiwei Zhang Economics & Strategy +852 2203 8308 [email protected] Li Zeng Economics & Strategy +852 2203 6139 [email protected] Nan Liu Economics & Strategy +852 2203 6187 [email protected]

Yuliang Chang China/HK Equity Strategist +852 2203 6195 [email protected] Joseph Huo China/HK Equity Strategist +852 2203 6251 [email protected]

Stephen-A Andrews Regional Financials +852 2203 6191 [email protected] Hans Fan Chinese Banks Brokers +852 2203 6353 [email protected] Sukrit Khatri Hong Kong Banks/Exchange +852 2203 5927 [email protected] Vincent Gu Chinese Banks +852 2203 6185 [email protected] Franco Lam Hong Kong Banks +852 2203 6226 [email protected] Jacky Zuo Chinese Banks +852 2203 6255 [email protected]

Esther Chwei Insurance +852 2203 6200 [email protected] Lexie Zhou Insurance +852 2203 6180 [email protected]

Tony Tsang HK/China Property +852 2203 6256 [email protected] Jason Ching HK/China Property +852 2203 6205 [email protected] Foo Leung HK/China Property +852 2203 6239 [email protected] Iris Poon HK/China Property +852 2203 6182 [email protected]

James Kan Basic Materials +852 2203 6164 [email protected] Sharon Ding Basic Materials +86(21)2080 1666 [email protected] Yuki Lu Basic Materials +852 2203 5925 [email protected]

Johnson Wan Oil/Gas +852 2203 6163 [email protected] Vitus Leung Oil/Gas +852 2203 6158 [email protected]

Anne Ling Consumers +852 2203 6177 [email protected] Winnie Mak Consumers +852 2203 6178 [email protected] Richard Rui-Huang Consumers +852 2203 6202 [email protected] John Chou Consumers +852 2203 6196 [email protected] Mark Yuan Consumers +852 2203 6181 [email protected]

Vincent Ha Airline/Autos +852 2203 6247 [email protected] Fei Sun Airline/Autos +852 2203 6130 [email protected] Sky Hong Industrial - Transportation +852 2203 6131 [email protected] Nick Zheng Industrial - Defense +852 2203 6198 [email protected] Phyllis Wang Industrial - Rail/Construction [email protected]

Alan Hellawell Internet +852 2203 6240 [email protected] Eileen Deng Internet +852 2203 6227 [email protected] Alvin Jiang Internet +852 2203 6241 [email protected] Hanjoon Kim Internet +852 2203 6157 [email protected]

Michael Tong Utilities/ Renewables +852 2203 6167 [email protected] Luka Zhu Utilities/ Renewables +852 2203 6173 [email protected] Hanyu Zhang Utilities/ Renewables +852 2203 6207 [email protected]

Karen Tang Gaming/Lodging +852 2203 6141 [email protected] Tallan Zhou Leisure/Tourism +852 2203 6464 [email protected]

Jack Hu Health Care +852 2203 6208 [email protected] Linc Yiu Health Care +852 2203 6248 [email protected] Bo Yu Health Care +852 2203 5928 [email protected]

Michael Chou Technology +886(2)2192 2836 [email protected] Birdy Lu Technology +886(2)2192 2822 [email protected]

Peter Milliken Telecom +852 2203 6190 [email protected] James-Z Wang Telecom +852 2203 6145 [email protected]

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Appendix 1

Important Disclosures

Additional information available upon request

*Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

Analyst Certification This report covers more than one security and was contributed to by more than one analyst. The views expressed in this report accurately reflect the views of each contributor to this compendium report. In addition, each contributor has not and will not receive any compensation for providing a specific recommendation or view in this compendium report.

Equity rating key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total 500 share-holder return (TSR = percentage change in 450 53 % share price from current price to projected target price 400 350 37 % plus pro-jected dividend yield ) , we recommend that 300 investors buy the stock. 250 200 150 11 % Sell: Based on a current 12-month view of total share- 15 % 100 16 % 18 % holder return, we recommend that investors sell the 50 stock 0 Buy Hold Sell Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not Companies Covered Cos. w/ Banking Relationship recommend either a Buy or Sell. Asia-Pacific Universe Newly issued research recommendations and target

prices supersede previously published research.

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Regulatory Disclosures 1.Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. 2.Short-Term Trade Ideas Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the SOLAR link at http://gm.db.com.

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Additional Information

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loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in assets holding limits for different types of investors), changes in tax policies, currency convertibility (which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and settlement issues related to local clearing houses are also important risk factors to be considered. The sensitivity of fixed income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or to specified interest rates – these are common in emerging markets. It is important to note that the index fixings may -- by construction -- lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. It is also important to acknowledge that funding in a currency that differs from the currency in which coupons are denominated carries FX risk. Naturally, options on swaps (swaptions) also bear the risks typical to options in addition to the risks related to rates movements.

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Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch.

India: Prepared by Deutsche Equities India Pvt Ltd, which is registered by the Securities and Exchange Board of India (SEBI) as a stock broker. Research Analyst SEBI Registration Number is INH000001741. DEIPL may have received

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administrative warnings from the SEBI for breaches of Indian regulations.

Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA, Type II Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. We may also charge commissions and fees for certain categories of investment advice, products and services. Recommended investment strategies, products and services carry the risk of losses to principal and other losses as a result of changes in market and/or economic trends, and/or fluctuations in market value. Before deciding on the purchase of financial products and/or services, customers should carefully read the relevant disclosures, prospectuses and other documentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the name of the entity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank Group's analysts with the coverage companies specified by DSI. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan.

Korea: Distributed by Deutsche Securities Korea Co.

South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register Number in South Africa: 1998/003298/10).

Singapore: by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles Quay #18-00 South Tower Singapore 048583, +65 6423 8001), which may be contacted in respect of any matters arising from, or in connection with, this report. Where this report is issued or promulgated in Singapore to a person who is not an accredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and regulations), they accept legal responsibility to such person for its contents.

Taiwan: Information on securities/investments that trade in Taiwan is for your reference only. Readers should independently evaluate investment risks and are solely responsible for their investment decisions. Deutsche Bank research may not be distributed to the Taiwan public media or quoted or used by the Taiwan public media without written consent. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation to trade in such securities/instruments. Deutsche Securities Asia Limited, Taipei Branch may not execute transactions for clients in these securities/instruments.

Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre Regulatory Authority. Deutsche Bank AG - QFC Branch may only undertake the financial services activities that fall within the scope of its existing QFCRA license. Principal place of business in the QFC: Qatar Financial Centre, Tower, West Bay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related financial products or services are only available to Business Customers, as defined by the Qatar Financial Centre Regulatory Authority.

Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a license in the Russian Federation.

Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company, (registered no. 07073-37) is regulated by the Capital Market Authority. Deutsche Securities Saudi Arabia may only undertake the financial services activities that fall within the scope of its existing CMA license. Principal place of business in Saudi Arabia: King Fahad Road, Al Olaya District, P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia.

United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services activities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been

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distributed by Deutsche Bank AG. Related financial products or services are only available to Professional Clients, as defined by the Dubai Financial Services Authority.

Australia: Retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. Please refer to Australian specific research disclosures and related information at https://australia.db.com/australia/content/research-information.html

Australia and New Zealand: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act and New Zealand Financial Advisors Act respectively. Additional information relative to securities, other financial products or issuers discussed in this report is available upon request. This report may not be reproduced, distributed or published without Deutsche Bank's prior written consent. Copyright © 2016 Deutsche Bank AG

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David Folkerts-Landau Group Chief Economist and Global Head of Research

Raj Hindocha Michael Spencer Steve Pollard Global Chief Operating Officer Head of APAC Research Head of Americas Research Research Global Head of Economics Global Head of Equity Research

Anthony Klarman Paul Reynolds Dave Clark Pam Finelli Global Head of Head of EMEA Head of APAC Global Head of Debt Research Equity Research Equity Research Equity Derivatives Research

Andreas Neubauer Stuart Kirk Head of Research - Germany Head of Thematic Research

International locations

Deutsche Bank AG Deutsche Bank AG Deutsche Bank AG Deutsche Securities Inc. Deutsche Bank Place Große Gallusstraße 10-14 Filiale Hongkong 2-11-1 Nagatacho Level 16 60272 Frankfurt am Main International Commerce Centre, Sanno Park Tower Corner of Hunter & Phillip Streets Germany 1 Austin Road West,Kowloon, Chiyoda-ku, Tokyo 100-6171 Sydney, NSW 2000 Tel: (49) 69 910 00 Hong Kong Japan Australia Tel: (852) 2203 8888 Tel: (81) 3 5156 6770 Tel: (61) 2 8258 1234 Deutsche Bank AG London Deutsche Bank Securities Inc. 1 Great Winchester Street 60 Wall Street London EC2N 2EQ New York, NY 10005 United Kingdom United States of America Tel: (44) 20 7545 8000 Tel: (1) 212 250 2500