2010427164432_research_monthly_201005_en

Private Banking

In addition to research studies from the Global Research department, this publication also contains information on investments in products. The departments Investment Products & Lending and Global Investment Delivery have generated the product information on the basis of the research analyses drawn up previously by the Global Research department. The product information is highlighted in green.

Important disclosures are found in the Disclosure Appendix

May 2010Zurich

Global ResearchInvestment horizon: 6–12+ months

Overview Switzerland See regional pages after page 17

Swiss equities to participate in global rally, but to under

perform other more cyclical markets.

Within Swiss equity sectors, we upgrade diversified financials

to overweight and retailing to neutral.

CHF to remain strong, as Swiss data improve and SNB

moves away from intervention.

Recent Swiss economic data continue to paint an encouraging picture, confirmed by the latest upbeat PMI. As the danger of de-flation diminishes, we expect the SNB to increasingly move away from actively influencing the CHF and to normalize monetary policy. We remain positive on Swiss equi-ties, but on a relative view, we still prefer more cyclical country indices.

Research Monthly – Swiss editionStill positive on stocks, but now in a more measured way

Fixed Income

uBUY Bank of America 3.00% 06/13 in CHF. u page 8

Equities

uBUY CVS – defensive play, attractive valuation, recent Top 30 addition. u page 10

Alternative investments

uBUY diversified hedge fund investments. u page 12

Overview Global

Global economy continues robust, inflation and interest rates low in developed countries.

Stock markets have risen to reflect much of this. So we change the tone of our positive strategic view, now stressing buying on dips.

Neutral on EUR/USD near term, positive longer term, midMay Greek debt re-financing may be a watershed.

Hedge funds, selected real estate, industrial commodities attractive. Bonds: Avoid long maturities, buy some lowerquality names.

� | Research Monthly | May �010 | Editorial

Editorial

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What are the investment implications of plans to reform and tax the banks? The Bank for International Settlements wants to increase the capital and liquidity that banks must hold and tighten the definition of capital (Basel III). Several countries plan extra measures, with the US proposing, among other things, that many derivatives must be traded via exchanges. In addition, some countries support new bank taxes and the IMF is reported to endorse this idea. We see two types of investment implications: the impact on banks and the effect on wider markets. Our outlook for the banking sector is balanced. Bank stock prices already seem to discount a significant adverse effect, suggesting two-way risk, since what gets implemented may turn out easier or tougher than expected. Moreover, banks tend to see large rises in profits in the economic upswing. For the broader market, we think the key effect is that interest rates will be held lower for longer. Tight regulations on banks will reduce their ability to expand balance sheets and make loans. To offset this, the central banks are likely to go slowly and cautiously in raising interest rates. Some senior central bankers argue that low interest rates should be used to foster economic recovery, with regulation used to dampen the resulting risk of asset bubbles. Our view is that this approach works only for parts of the asset markets, and only for a limited period of time, because financial activity tends to find ways around regulations. So if, as we expect, the Fed, the ECB and others adopt a policy of “tight regulation, easy money,” we think asset bubbles can develop quite quickly in a few areas (such as the Hong Kong property market), and after a much longer period, also over a wider range of assets.

Giles Keating, Head of Research for Private Banking and Asset Management +41 (0)44 33� �� 33, [email protected]

In this issue

Global strategy. Still positive on stocks, but now in a more measured way page 4

Strategic asset allocation page 5

Recent Research Monthly investment ideas page 6

Economics. Global upswing becoming more durable page 7

Fixed income. Focus on short maturity bonds page 8

Equities. Taking less risk page 10

Alternative investments. Alternative assets maintain favorable uptrend in Q� page 12

Foreign exchange. We remain bullish on emerging market currencies as global growth looks set to remain strong page 13

Investment themes

Emerging market equities strongly supported by valuation and investor demand u page 14

Alternative energy: A more constructive H� �010 outlook for solar and biofuels u page 15

Platinum group metals – combining the benefits of precious and industrial metals u page 16

Credit Suisse Megatrends. Multipolar World page 17

Editorial deadline: �7 April �010

Credit Suisse Cycle Clock

Recovery The Cycle Indicator is currently in “Recovery” (since 19 August 2009). During the recovery phase, equities and commodities have historically performed best, while government bonds and cash investments have tended to underperform.

� | Research Monthly | May 2010

Investment summaryMay 2010

Global Research asset category strategy IC5 view

Economics

Global growth remains strong. Recovery now spreading from emerging markets and the USA to Europe and Japan. But the Fed and ECB keep rates low due to tighter financial rules and subdued inflation.

Real GDP growth in % Inflation in % Short interest rates 3M LIBOR Bonds: 10-year government

Spot1 3 M 12 MSpot1 3 M 12 M2009E 2010E 2011E2009E 2010E 2011E

CH –1.5 0.9 2.0

EMU –4.0 1.5 2.1

USA –2.4 �.5 2.8

UK –4.9 1.4 2.7

Japan –5.0 1.9 1.8

CH –0.5 0.8 1.0

EMU 0.4 1.1 1.�

USA –0.7 2.2 1.2

UK 1.8 2.� 1.4

Japan –1.4 –1.2 –0.4

CHF 0.24 0.2–0.4 0.9–1.1

EUR 0.65 0.8–1.0 1.8–2.0

USD 0.�2 0.�–0.5 1.2–1.4

GBP 0.66 0.6–0.8 1.1–1.�

JPY 0.24 0.2–0.4 0.2–0.4

CHF 1.86 1.9–2.1 2.�–2.5

EUR �.06 �.4–�.6 �.7–�.9

USD �.81 �.9–4.1 4.1–4.�

GBP 4.04 �.9–4.1 4.4–4.6

JPY 1.�2 1.2–1.4 1.4–1.6

Bonds: Selected indices Foreign exchange & commodities

Spot1 3 M 12 M

EUR/USD 1.�4 1.41–1.45 1.51–1.55

USD/CHF 1.07 0.97–1.01 0.90–0.94

EUR/CHF 1.44 1.�9–1.4� 1.�8–1.42

USD/JPY 94 88– 92 8�–87

EUR/JPY 126 127–1�1 128–1�2

EUR/GBP 0.87 0.90–0.94 0.9�–0.97

GBP/USD 1.54 1.5�–1.57 1.59–1.6�

EUR/SEK 9.589.25–9.65 9.00–9.40

AUD/USD 0.92 0.95–0.99 0.91–0.95

USD/CNY 6.8� 6.77–6.8� 6.45–6.55

Gold (USD)

1,157.60 1,100–1,200

1,200–1,�00

Oil (USD) 85.12 80–85 95–100

Equities: Selected indices

Snapshot Price3 MTD (%) YTD (%) Tech. support Tech. resistance Fair value 12 M forward4

12 M outlook

S&P 500 1,217.28 4.1 9.2 1,148 1,265 1,17�–1,272 Neutral

SMI 6,767.97 –1.5 �.4 6,500 7,160 7,�50 Underweight

FTSE-100 5,72�.65 0.8 5.7 5,470 6,0�0 5,677– 6,122 Neutral

Euro Stoxx 50 2,918.11 –0.4 –1.6 2,740 �,080 2,897–�,147 Neutral

Nikkei 225 10,914.46 –1.6 �.5 10,560 11,840 11,800–12,500 Overweight

< Capital Goods, Commercial Service & Supplies, Energy, Semiconductors & Equipment, Software & Services, Technology Hardware & Equipment, Food, Tobacco, Transport & Logistics

= Utilities, Food & Staples Retailing, Retailing, Pulp & Paper

Equities: Sectors & stocks, 12 M

Index YTM (%)

Total return YTD (%)

Spread to benchmark

(bp)

Spread change YTD

(bp)

Tech.support

Tech.resistance

12 M spread

outlook

Investment grade

USD (CS LUCI) 4.40 �.�1 108.0 –14.1 100.0 110.0

EUR (CS LEI) 2.86 �.21 94.4 –6.2 90.0 98.0

CHF (CS LSI) 1.68 1.95 57.6 –18.8 55.0 60.0

GBP (CS LEI) 4.49 �.04 100.5 –20.8 98.0 105.0

Emerging markets / below investment grade

EM USD (JPM EMBI+) 6.26 4.89 242.6 –�1.1 220.0 250.0

EM Local Markets (JPM ELMI+)2 2.86 1.88 n.a. n.a. n.a. n.a. Þ

High Yield (CS HY Index) 1�.69 6.49 565.0 –82.0 560.0 620.0

1 London close 2�/04/ 2010 2 Outlook: Absolute total return direction � Prices as of 2�/04/2010 4 Central – optimistic scenario5 Investment Committee Þ = Direction from current levels n.a. = not available

Strategic 6–12+ M

By region/strategy Comments on and comparison of weightings Tactical 1–6 M

Fixed income

Australia outperform; USA, Canada, UK, Switzerland, Japan neutral; Eurozone underperform.

We prefer short to medium maturity bonds as we expect bond yields to grind higher over the coming quarters. Favor credits over government bonds.

Equities

ÞEmerging markets, Japan overweight; USA, Europe, UK neutral; Switzerland underweight.

We remain positive on equities. They should outperform bonds in 2010, supported by the upturn in the business and earnings cycles. We still favor cyclicals, especially those multinationals with EM exposure.

Þ

Commodities

ÞIndustrial metals to outperform, energy and agriculture neutral. Precious metals should underperform the overall index.

Tactical and strategic view are both positive. Market balances are tightening as demand recovers. This is positive for prices. Þ

Real estateÞ

Europe (excl. UK, CH), UK, EM overweight; USA, Asia-Pacific neutral; Japan, Switzerland underweight.

Still neutral tactically but opportunities opening in selected markets. We are positive strategically.

Private equity Focus on secondaries, small/medium LBOs, infra-structure, EM and distressed real estate.

Return prospects for new LBO investments are attractive as deal valuations have come down and bank credit availability should improve during 2010.

Hedge funds We favor equity long/short, emerging markets, convertible arbitrage and distressed debt.

Declining volatility trend in 2010 favors directional and event-driven hedge fund strategies. Convertible arbitrage benefits from mispricing.

Foreign exchange

EUR /USD Þ USD/CHF GBP/USD USD/JPY

Technicals are USD neutral, but medium-term fundamentals, such as lack of interest rate premium and large external deficit, are bearish.


This month we introduce a change of tone in the positive outlook for stock markets that we have recommended since the start of the year. We remain strategically positive on a 12-month view, but would now recommend more focus on buying on dips rather than the previous blanket approach of building exposure. Equally, within equity portfolios we now give less emphasis to the riskier, cyclical sectors than we have been doing. We do not rule out the possibility that markets can surge substantially further upwards in the near term, but if this does happen we think it will probably be something of an overshoot – our sister publication, the In-vestment Committee report, will give shorter-term updates on this for tactical investors who trade in and out of the market relatively frequently.

We are still optimistic about the macroeconomic out-look, indeed we believe that our view on the durability of the recovery and the low risk of a double-dip has been fully vindicated by the data. Moreover, we see clear signs that private spending is starting to take over the lead from government stimulus. More and more commentators and investors have now started to endorse this view, and stock prices have risen to reflect this. Indeed, even the turmoil in Greek asset markets has not been enough to destabilize the broader global stock markets.

We are moderating our positive tone precisely because other investors have become more bullish, and because the economic evidence has become more obvious. This sug-gests to us that a significant part of the good news about the economy has, for now, been discounted into prices. This does not mean that we want to abandon our positive strate-gic view, since we think the combination of robust economy and very low interest rates is still an underlying support for equities. But we do feel that this strategic optimism should now be reflected in a more measured investment approach, using moments of weakness to add to equity exposure.

Other areas of our strategy remain broadly unchanged, although investors may now wish to focus on them more. In alternatives, we would stress that we believe this is an attractive time to be investing in hedge funds, based on our Hedge Fund Barometer, which is showing a low level of herding behavior and a reasonable level of liquidity avail-ability. Within commodities, we still see the industrial metals and platinum as supported by the economic cycle and by low interest rates. Real estate sectors in many locations around the world are also now into or approaching recovery phase, again supported by the economy and low funding costs. In fixed income we retain, with some minor modifications, our approach of avoiding the longer maturities, and of buy-ing carefully selected weaker credits which still have some scope for spreads to narrow.

In foreign exchange, we adjusted our view on the dollar against euro and Swiss franc two months ago to a neu-tral short-term outlook, while still believing the dollar would

Overview

Global economy continues robust, inflation and interest rates low in developed countries.

Stock markets have risen to reflect much of this. So we change the tone of our positive strategic view, now stressing buying on dips.

Neutral on EUR/USD near term, positive longer term, mid-May Greek debt refinancing may be a watershed.

Hedge funds, selected real estate, industrial commodities attractive. Bonds: Avoid long maturities, buy some lower-quality names.

Global strategyStill positive on stocks, but now in a more measured way

The Hedge Fund Barometer

Conditions are improving for hedge funds, according to our barometer, driven by factors like better liquidity and the strong cyclical recovery.

Source: Credit Suisse/ IDC

1.0

1.5

2.0

2.5

3.0

3.5

4.0

01/94 01/97 01/00 01/03 01/06 01/09

Hedge Fund Barometer Smoothed 13 weeks

Dangerous conditions

Favorable conditions

� | Research Monthly | May 2010 | Global strategy

Strategic Asset allocation Time horizon: 6 –12+ months

Source: Credit Suisse

Fixed income Risk profile: Low

Income Risk profile: Moderate

Balanced Risk profile: Medium

Capital gain Risk profile: Enhanced

Equity Risk profile: High

weaken on a 12-month horizon due to lack of interest rate support. Trading here has been dominated by concerns over Greece. While this is likely to continue in the very near term, the mid-May deadline for refinancing large amounts of gov-ernment debt provides a fixed point which requires a resolu-tion, and unless this turns out to be chaotic, we expect a calmer market after that date. Meanwhile we continue to stress as an investment theme the cyclical and structural strength of many emerging market currencies against both the dollar and the European units.

[email protected], +41 (0)44 332 22 33

The neutral allocations serve as a guideline and represent the average weighting over an entire market cycle. As the global strategy is based on a medium-term invest-ment horizon, it deviates from the neutral position. We recommend overweighting equities and commodities. We advise being underweight fixed income and liquidity. In general, investments in USD remain underweight across all strategies.

Recommended Neutral

Cash ¢5% ¢� %

Bonds ¢78% ¢80%

Alternative investments ¢17% ¢1�%

Recommended Neutral

Cash ¢3% ¢� %

Bonds ¢52% ¢��%

Equities ¢23% ¢20%

Alternative investments ¢22% ¢20%

Recommended Neutral

Cash ¢3% ¢� %

Bonds ¢32% ¢35%



Recommended Neutral

Cash ¢3% ¢�%

Bonds ¢12% ¢1�%



Recommended Neutral

Cash ¢2% ¢�%


Alternative investments ¢15% ¢1�%


For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: http://www.credit-suisse.com/research/disclaimer

FI Fixed incomeEQ EquitiesAI Alternative investmentsFX Foreign exchange

Recent Research Monthly investment ideas

Selected recommendations from this month’s issue

Recommendation Action to be taken

BUY Bank of America 3.00% 0�/13 in CHF. FI Target price: 103.5.

BUY CVS – defensive play, attractive valuation, recent Top 30 addition. EQ Target price: USD 39.

BUY diversified hedge fund investments. AI Add exposure in Q2 2010.

BUY MSCI Emerging Market Index to diversify across regions and themes.

EQ Target price: 1,130.

BUY First Solar, Meyer Burger and Suntech, leading companies in the solar sector, and Bunge in the biofuel sector.

EQ Target price First Solar: USD 157, Meyer Burger CHF 32.2, Suntech HKD 1�.7.

BUY Platinum at prices below USD 1,700 with a time horizon of � months or more.

AI Buy platinum once the price drops below the USD 1,700 threshold.

BUY LVMH – unique luxury goods player with attractive exposure to Asia. EQ Target price: EUR 98.

BUY Fedex – one of the world’s largest transport companies. EQ Target price: USD 103.

Selected ideas from previous months

April 2010 (29/03/ 2010)


BUY Citigroup 3% 12/2014 in CHF. FI Target price: 102.5.

BUY RSHB 7.5% 03/2013 in RUB. FI USD/RUB target 3 M: 29.20/12 M: 27.00.

BUY Intel. Low debt, high EM exposure. EQ Target price: USD 29, stop loss USD 21.50.

BUY Siemens – Valuation attractive, strong recent results, infrastructure play. EQ Target price: EUR 80, stop loss EUR 59.

BUY Exposure to the Credit Suisse Commodity Benchmark Industrial Metals. AI Idea is still valid as the economic recovery remains on track.

BUY Equally weighted basket of Asian currencies (SGD, TWD, INR, IDR, KRW) vs. USD; target: 8%, stop loss: 3%.

FX HOLD, target 8%, stop loss 3%.

BUY China Resources Enterprise – a consumer conglomerate with main business in China and Hong Kong.

EQ Target price: HKD 32, stop loss HKD 25.

BUY Nestlé – 3�% sales exposure to emerging markets. EQ Target price: CHF �0, stop loss CHF 50.

March 2010 (23/02/2010)


BUY European Investment Bank 10% 09/2013 in TRY. FI USD/TRY target 3 M: 1.43/12 M: 1.42.

BUY Australia & New Zealand Banking Group �.125% 02/2013 in AUD. FI Target price: 101.5.

BUY Xstrata, a mining stock that should outperform in an equity rally. EQ Target price: GBP 1�.50, stop loss GBP 11.

BUY British American Tobacco, a multinational tobacco company with a strong footprint in emerging markets.

EQ Target price: GBP 2�, stop loss GBP 20.

BUY hedge fund exposure to add a smoother return stream to portfolios. AI Add exposure in Q2 2010.

BUY Increase exposure to event driven hedge fund style. AI Add exposure in Q2 2010.

BUY AUD/USD at 0.8750, target 0.94, stop loss at 0.8530. FX Entered on 15/03/10 at 0.911�. Stop loss raised from 0.900 to 0.9150 on 19/04/10.

BUY Lafarge – one of the world’s largest cement producers with strong exposure to Asia.

EQ Target price: EUR �5, stop loss EUR 45.

BUY Henderson Land Development – with property development, property investment and related businesses in Hong Kong and China.

EQ Target price: HKD �7, stop loss HKD 48.


EconomicsGlobal upswing becoming more durable

Overview

Data continues to point to a stronger-than-expected recovery as businesses and consumers are spending again.

Inflation risks higher in EM where growth is stronger; to lead gradual global tightening.

While non-Japan Asia is stiller smaller in terms of market size than the US or Europe, resilience of domestic demand has been high and imports are already exceeding pre-crisis levels.

Global economic indicators continue to be strong and we believe further upside surprises are possible over the com-ing months, especially in Europe.

Improved order intake, better earnings, high levels of cash and generally improved corporate balance sheets sug-gest that investment spending will pick up more visibly. Improved confidence in the corporate sector also means that companies are more likely to boost their hiring: labor markets should thus continue to improve or at least not deteriorate further. After more than eight million jobs were shed in the US, the first significant increase in employment was recorded in March (+162,000) and higher temporary employment points to a continuation of job growth.

Rising labor income is reflected in better consumer sen-timent and actual spending. US consumer expenditures excluding car and gasoline sales are already back near pre-crisis levels. Overall, non-government demand from both businesses and consumers shows more signs of life globally and supports a broadening of the recovery.

Europe: Recovery not threatened by volcano outburstIn Europe, the recent outburst of an Icelandic volcano tem-porarily affected air travel and logistics. While this could show up in some economic data releases, it should have no lasting effect on the recovery. We continue to look for solid expansion of activity in this and the next quarters. Germany is likely to lead the way, supported by strong external de-mand. The bigger issue in Europe is still fiscal sustainability, but the clearer commitment of EU countries and the IMF to support Greece should be helpful. It still means painful fiscal adjustment in Greece and elsewhere, but paired with institutional changes, this may strengthen the Eurozone go-ing forward.

Commodity exporters and EM strongEconomic data continues to confirm the impressive pick-up in economic activity in commodity exporting economies and emerging markets, especially in Asia. China’s first trade

deficit in more than six years reflects the strength of domes-tic demand, which is also visible in other data.

Moderate tightening with EM leading the wayStronger growth in emerging markets and commodity ex-porting economies also implies greater inflation risks there than elsewhere. Several central banks have begun to hike rates to counter these risks (e.g. Australia, India) and others are likely to follow soon (e.g. Brazil, Korea). In contrast and despite the strong pick-up of demand, economic activity in major economies remains well below pre-crisis levels and inflation pressures are moderate. We continue to expect very gradual tightening by major central banks, with actual rate hikes unlikely to occur before the end of 2010. [email protected], +41 (0)44 333 50 62

Improving global trade reflects recovering demand

Source: CPB, Credit Suisse

90

110

130

150

170

190

210

230

00 01 02 03 04 05 06 07 08 09 10

Non-Japan Asia Eurozone USA

Imports from Rest of the World, Index (2000 =100), 3-month moving average

� | Research Monthly | May 2010 | Asset categories

Recommended yield-curve positioning1

1 Recommendations express the relative attractiveness of particular segments across the sovereign yield curves on a three- to six-month horizon. Investors should be aware that recommendations do not consider exchange rate risks.

Overview

We have reduced our preferred maturities in EUR for AAA/AA bonds to 2 years or shorter.

Consider switching out of high-rated bonds into lower-rated ones.

Fixed incomeFocus on short maturity bonds

Top investment ideas

uBUY Bank of America 3.00% 06/13 in CHF.

uBUY LLOYDS TSB BANK PLC 6½ 03/20 LT2 in EUR.

We prefer a short maturity range for bonds with high ratings (AAA/AA), while for A/BBB, somewhat longer maturities can be also considered.


0 1 2 3 4 5 6 7 8 9 10

CHF AAA/AA

A /BBB

EUR AAA /AA

A /BBB

GBP AAA/AA

A /BBB

USD AAA/AA

A /BBB

Preferred maturities (years)

Strong performance for credits in Q1Following a strong month for risky assets in March, high yield and emerging market bonds outperformed, while gov-ernment bonds underperformed. During the past few weeks the upward pressure on benchmark yields has increased. At the same time, credit spreads have continued to grind tighter. A noteable exception is Greece where bond spreads have continued to rise in spite of the ongoing negotiations over a Eurozone/IMF-led rescue package.

We have reduced our preferred maturities in EURPartly due to the Greek debt crisis, German bond yields are currently trading at historically low levels. As we expect the economic recovery to continue and the ECB to gradually remove its liquidity support measures, we do not regard these low yields as sustainable and see a risk of significant upward corrections in coming quarters. For this reason, we have reduced our preferred maturities for AAA/AA rated bond investments in EUR to 2 years or shorter. In USD, CHF and GBP we keep our preferred maturities unchanged, with a focus on shorter duration segments. In the UK we see a risk of higher long-term govermnent bond yields and pos-sibly even pressure on the sovereign rating in case there is a lack of quick fiscal consolidation after the election.

Considering the tighter credit spreads and rising interest rate risk, we expect credits to generate much more moder-ate returns in the coming quarters than in Q1. Especially high-rated investment-grade corporate bonds are now more

sensitive to upward movements in government yields. We therefore have an overall cautious view on the more de-fensive sectors such as utilities, healthcare and energy. In contrast, we have upgraded our view on the more cyclical and higher yielding auto sector that stands to benefit from the economic recovery.

In order to enhance performance potential, holders of higher-rated bonds that are willing to increase credit expo-sure may instead consider switching into selected lower-rated corporate and emerging market bonds. For investors with higher risk tolerance we continue to see selective op-portunities in corporate hybrid bonds, subordinated bank bonds, emerging market bonds (both in local and hard cur-rency) and high yield bonds.

nannette.hechler-fayd'[email protected], +41 (0)44 333 17 06

[email protected], +41 (0)44 333 54 25

Selected bond recommendations

� | Research Monthly | May 2010 | Fixed income

Sec. no. ISIN No. Curr. Issuer Rating 8 S&P/ Moody’s

Cou-pon

Maturity Min. denomination /

increment

Vol. (m)

Ask price1

YTM/ YTC

Bench spread

Dur.

For the detailed analysis accompanying the recommendations listed, please refer to the latest Global Research Credit Updates and Investment Ideas.

1 Indicative prices as of 23 April 2010 2 Subject to withholding tax 3 Semi-annual coupon 4 Quarterly coupon 5 Subordinated debt, yield to call, duration to call 6 Subordinated debt, Tier-1, yield to call, duration to call 7 Subordinated debt, LT2 8 e = Expected rating, subject to final documentation n.a. = not applicable n.r. = not rated

Currently attractive convertibles

ISIN Issuer (rating) S&P/Moody’s

Underlying Coupon (%)

Maturity Par value Currentprice1

Yield to maturity

(%)

Parity Delta(%)

Conversionratio

Equityprice

CS equity

rec.2

Core ideas

US458140AD22 INTEL CORP (A+/n.a.) INTEL CORP 2.�5 15/12/2035 3 USD 1,000 102.6� 2.80 77.21 75 32.12 24.04 BUY

US03�483AW22 ARCHER DANIELS (A/n.a.)

ARCHER-DANIELS

0.88 15/02/2014 USD 1,000 �7.25 1.63 65.08

13 22.83 28.40 BUY

FR00107513�6 UNIBAIL RODAM SE (A/A3)

UNIBAIL-RODAMCO

3.50 01/01/2015 4 EUR 146.36 124.43 –1.35 103.18

40 1.02 148.05 BUY

CH0027818514 ACTELION FINANCE (n.a/n.a.)

ACTELION LTD-REG

0.00 22/11/2011 CHF 5,000 103.40 –2.27 85.47 43 �2.30 46.23 BUY

1 All prices as of 23 April 2010 c.o.b. 2 Equity rating of underlying 3 Soft call after 15 December 2012 4 Soft call after 1 January 2013 n.a. = not available Source: Bloomberg, Credit Suisse

CHF

11172148 CH0111721483 CHF SOCIETE GENERALE 4 A+/Aa2e 3M LIB +27

1�/10/2012 10,000/10,000 200 100.15 n.a. n.a. 0.22

3102657 CH0031026575 CHF BANK OF AMERICA CORP A/A2 3 14/06/2013 5,000/5,000 250 102.54 2.15 150 2.8�

1814087 CH0018140878 CHF CITIGROUP INC A/A3 3 17/12/2014 5,000/5,000 650 101.7� 2.58 177 4.24

USD

4483317 US2�8785EW25 USD EUROPEAN INVESTMENT BANK 4 AAA/Aaa 3M LIB +30

05/03/2012 1,000/1,000 2,000 100.63 n.a. n.a. 0.11

10��3615 XS048530�156 USD RWE FINANCE BV A/A2 2 11/02/2013 2,000/2,000 250 ��.57 2.16 5� 2.67

11224�08 US87�38WAK�� USD TELEFONICA EMISIONES SAU 3 A–e/Baa1 2.582 26/04/2013 75,000/1,000 1,200 100.42 2.44 75 2.86

1047�510 US78010KCV�8 USD ROYAL BK OF SCOTLAND PLC 3 A+/Aa3 4 7/8 25/08/2014 100,000/1,000 2,000 101.�5 4.37 206 3.84

10133�40 US�12828KM16 USD TSY INFL IX N/B 2, 3 AAA/Aaa 1 1/4 15/04/2014 100/100 15,265 103.70 0.31 –183 1.�2

EUR

10736214 XS046687841� EUR AUST & NZ BANKING GROUP AA/Aa1 2 5/8 16/11/2012 50,000/1,000 1,000 101.73 1.�2 81 2.43

1075�348 XS046�1�2388 EUR LLOYDS TSB BANK PLC A+/Aa3 3 1/4 26/11/2012 50,000/1,000 1,500 101.52 2.63 156 2.42

111475�0 XS04�7185511 EUR MERCK FIN SERVICES GMBH BBB+e/A3 3 3/8 24/03/2015 1,000/1,000 1,350 102.27 2.87 81 4.46

11148435 XS04�7187640 EUR LLOYDS TSB BANK PLC 7 BBB/Baa3 6 1/2 24/03/2020 50,000/1,000 1,500 101.8� 6.24 316 7.13

2225125 XS022536�403 EUR BAYER AG 5 BBB–/Baa2 5 2�/07/2105 1,000/1,000 1,300 ��.60 5.08 2�6 4.35

21�6368 XS022312�445 EUR VATTENFALL TREASURY AB 5 BBB/Baa1 5 1/4 Perpetual 1,000/1,000 1,000 101.37 4.�4 286 4.26

2480346 DE0001030500 EUR DEUTSCHLAND I/L BOND AAA/Aaa 1 1/2 15/04/2016 0.01/0.01 13,000 105.06 0.63 –175 2.83

Other currencies

11137630 XS04�6515�73 GBP NEDER WATERSCHAPSBANK AAA/Aaa 2 3/8 10/12/2013 1,000/1,000 200 ��.53 2.51 23 3.41

11186742 XS05001�3650 GBP DANSKE BANK A/S A/Aa3 4 0�/12/2015 50,000/1,000 300 100.04 3.�� 0 4.�2

11225406 XS0503530874 GBP SOCIETE GENERALE A+/Aa2 3 7/8 17/12/2015 50,000/50,000 350 �8.�3 4.0� �8 4.�5

2700681 XS0266840486 GBP SIEMENS FINANCIERINGSMAT 5 BBB+/A3 6 1/8 14/0�/2066 1,000/1,000 750 102.56 5.63 230 5.01

181�3�4 AU300LNDR026 AUD LANDWIRTSCH. RENTENBANK 3 AAA/Aaa 5 3/4 15/06/2011 1,000/1,000 1,700 100.63 5.16 66 1.06

10�42��3 XS0482454716 AUD AUST & NZ BANKING GROUP AA/Aa1 6 1/8 04/02/2013 1,000/1,000 375 ��.5� 6.28 �8 2.45

10��5332 XS0485316367 AUD BK NEDERLANDSE GEMEENTEN AAA/Aaa 5 1/4 12/02/2013 1,000/1,000 200 �8.1� 5.�6 65 2.4�

101�2857 XS042�483224 NOK RABOBANK NEDERLAND AAA/Aaa 4 2�/05/2013 10,000/10,000 4,150 101.83 3.36 6� 2.77

Emerging markets / Below investment grade

2562347 XS0254887176 USD RSHB CAPITAL SA 3 NR/Baa1 7.175 16/05/2013 100,000/1,000 647 108.�6 4.02 235 2.67

103�4630 XS0442348404 USD GAZ CAPITAL SA (GAZPROM) 3 BBB/Baa1 8 1/8 31/07/2014 100,000/1,000 1,250 111.�1 4.�8 273 3.56

10�66750 XS0482�1112� USD EXPORT-IMPORT BK INDIA 3 BBB–/Baa3 4 3/8 02/02/2015 100,000/1,000 300 ��.�8 4.38 1�1 4.21

2205018 XS0223715�20 USD VTB CAPITAL SA 3 BBB/Baa1 6 1/4 30/06/2035 100,000/1,000 6�3 102.18 6.08 161 12.48

10532836 XS04513�4331 MXN INTL BK RECON & DEVELOP AAA/Aaa 6 1/2 11/0�/2013 1,000/1,000 2,850 101.80 5.88 –18 2.85

230250� XS023232�87� EUR UKRAINE GOVERNMENT B–/B2 4.�5 13/10/2015 50,000/1,000 600 �0.�0 7.00 478 4.44

2285350 US105756BJ84 BRL FED REPUBLIC OF BRAZIL 3 BBB–/Baa3 12 1/2 05/01/2016 250,000/1,000 3,400 113.�7 �.27 –324 4.01

10 | Research Monthly | May 2010 | Asset categories

EquitiesTaking less risk

Overview

Equity rally has driven prices to more elevated levels.

We have reduced risk exposure at the sector level.

The equity rally that begun in mid-February has continued, with key indices like the Dow and S&P 500 pushing through key headline levels (11,000 and 1,200, respectively). While positive price momentum might still continue and overshoot, we believe that sector rotation towards relatively safer sec-tors is becoming increasingly likely in the short term. From a more strategic viewpoint, many of the positive supporting factors for equities, such as the steadily improving business cycle, are still in place. We would hence wait for dips to build further exposure.

In addition, on the strategic front, we continue to high-light the relatively low level of debt in non-financial corporate balance sheets (especially for the cash rich IT, healthcare and energy sectors) as an antidote to the intense focus on indebtedness at the country level. As this equity market rally matures, we expect investors to increasingly gravitate towards the theme of high yielding, low debt multinational companies. We also suspect that ongoing concerns about government balance sheets and low corporate bond spreads could well tilt asset allocators towards equities rather than bonds.

In the shorter term, or from a tactical perspective, the performance of riskier sectors relative to safer ones has become extended. The chart shows the correlation of sector performance and sector riskiness (beta). In the recent past this has proved a useful tactical indicator, and in the past when this correlation reached 80% or higher, the subse-quent performance of equities in the following two months was negative (–2.5% on average). Further we note that very low volatility (the VIX index has recently touched the 15 mark), weaker volumes and corporate net buying all sug-gest that the market could be prone to profit taking.

Another indicator, earnings momentum, is less positive than it had been at the start of the year. In particular at the regional level, earnings momentum in the Europe ex UK region is flat while, in contrast, it remains strong in the UK, Japan, emerging markets and the US.

At the sector level, earnings momentum has been a gen-erally positive factor over the past year and we maintain a bias toward sectors with positive earnings momentum, such as IT and capital goods.

We have recently made a number of changes to our sector strategy in order to reduce market risk exposure, downgrading the metals & mining sector to neutral from overweight and moving healthcare from underweight to neu-tral. We may make further risk reduction driven changes should the equity rally continue in the context of weak tac-tical indicators. This tactical risk reduction strategy is also reflected in recent changes we have made to the CS Top 30 portfolio (Research Flash, 29 March).

michael.o'[email protected], +44 (0)20 7883 8228

[email protected], +41 (0)44 333 23 94

Top investment idea

uBUY CVS – defensive play, attractive valuation, recent Top 30 addition.

Correlation between sector performance and sector riskiness

High risk and positive earnings momentum have been driving factors.

Also see the investment ideason a similar topic on page 14

Source: Datastream, Credit Suisse

–100

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0

20

40

60

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11/09 12/09 01/10 02/10 03/10

Global – rank correlation of 1-month sector return (%) & riskiness of each sector (beta)

11 | Research Monthly | May 2010 | Equities

Equities at a glanceRegional, sector and individual stocks


Global equity sector strategy and focus list (6–12+ months)

Sector Industry

Glo

bal w

eigh

ts

Eur

ope

Sw

itzer

land

US

A

Asia/Pacific

Europe ex UK / UK/EMEA

Regional weight: neutral/neutral/overweight

Switzerland

Country weight:underweight

USA /Latin America/Canada

Regional weight: neutral/neutral/overweight

Asia ex Japan/Japan/Australia

Regional weight: overweight/ overweight/neutral

Energy Energy O O – O O BP, BG Group – Anadarko Petroleum, Petrobras, Hess

CNOOC, PTT

Materials Chemicals N N N N N BASF – – Orica

Construction Materials N N N N N – – – –

Metals & Mining N N – O O Arcelor Mittal – Companhia Vale do Rio Doce

Posco, Jiangxi Copper

Pulp & Paper U U – N N – – – –

Industrials Capital Goods O O O O O Siemens – Honeywell IJM, Mitsui & Co, United Tractors

Commercial Services & Supplies O N N N N – – – –

Transportation, incl. Logistics O N O N N Deutsche Post DHL, British Airways

– – –

Consumer discretionary

Automobiles & Components N N N N N – Rieter – –

Consumer Durables & Apparel, Textiles, Apparel & Luxury

N N N U N LVMH, Philips Richemont – –

Hotels Restaurants & Leisure N N – N N – – Carnival –

Media N O – N U – – – –

Retailing U N N U N – Dufry Best Buy –

Consumer staples Food & Staples Retailing U U – N N Metro – – China Resources Enterprise

Beverages N O – N N – – PepsiCo –

Food Products O N N U N Danone Nestlé Kraft Foods –

Tobacco O N – N N – – Philip Morris International

–

Household & Personal Products N N – N N Henkel Pref – Procter & Gamble Shiseido

Health care Healthcare Equipment & Services N N U N U Fresenius Pref Sonova, Tecan – –

Biotechnology N N N N N – – – –

Pharmaceuticals N N N N U Sanofi-Aventis Roche, Novartis – –

Financials Banks N U N N O BNP Paribas – – United Overseas Bank, China Construction Bank

Diversified Financials N O O N N – – JPMorgan Chase,Bank of America

–

Insurance N N O N N Allianz Swiss Re, Zurich Financial Services

– –

Real Estate N N N N O – – – Henderson Land Development, Capitaland

IT Software & Services O O O O O SAP Temenos Oracle Tencent

Technology Hardware & Equipment

O N N O O – – Hewlett-Packard, Dell

Samsung, Hon Hai Precision

Semiconductors & Semiconductor Equipment

O O – O O Infineon, ASML – Intel –

Telecommuncation services

Diversified Telecoms N N U U U – – – –

Wireless Telecoms N O – U N Vodafone – – –

Utilities Utilities U U – U U E.ON – – –

Source: Credit Suisse Legend to weights: O Overweight N Neutral U Underweight n.a. = not available

This is our sector strategy and focus list as of 26/04/2010 recommended by Credit Suisse, Private Banking division. Our sector strategy shows our sector preferences with recommendations relative to regional benchmarks: Global: (MSCI World in USD), Europe/EMEA (MSCI Europe in EUR), USA/Latin America (S&P 500/MSCI USA in USD), Asia/Pacific (MSCI AC Asia/Pacific in USD). An overweight (underweight) is a recommendation to invest more (less) than in a neutral position indicated by the market-cap weights of the respective benchmarks. The sector weights as well as the neutral positions in figures are available upon request; please contact your relationship manager. The Focus List is a selection of our favorite stocks within our coverage which have a BUY recommendation. The selection was made to reflect the sector and regional preferences. Updates are provided via our Research Monthly and Research Weekly publications as well as in our Equity Research reports. Additionally, we publish our adds and drops in our Research Equity Daily. The changes are highlighted in bold.

Please note that trading facilities in certain securities may be limited.


Alternative investmentsAlternative assets maintain favorable uptrend in Q2

Overview

Real estate equities benefiting from improv-ing fundamentals and investor interest for income yielding assets.

Favorable market liquidity and attractive risk premiums should keep driving hedge fund returns in Q2 2010.

Hedge funds deliver attractive returns in Q1 2010 Hedge funds gained 3.1% in Q1 2010 (CS Tremont index), which compares favorably with 3.7% for global equities on a risk-adjusted basis. Favorable liquidity conditions and a decline in risk premiums were characteristic of the benign investment environment. Gains were broad-based, as all hedge fund strategies with the exception of equity market neutral delivered positive returns. Our preferred styles re-main event driven, convertible arbitrage, emerging markets and equity long/short.

Private equity: Rising IPO activity is a positive signal In light of rising IPO activity, exit conditions should keep improving in 2010 for existing funds. Investment opportu-nities remain attractive for LBO transactions due to lower purchase multiples, in spite of a higher equity contribution. We maintain our emphasis on thematic investments such as small cap LBO funds, secondary market funds, emerging market private equity and energy-related venture capital. [email protected], +41 (0)44 333 96 48

Alternative investment outlook Alternative investments posted solid gains in Q1 2010, es-pecially hedge funds and real estate equities. Selectivity played a more important role for commodities, with industri-al metals outperforming clearly and agricultural commodities ending Q1 in negative territory. Alternative assets should post gains overall in Q2 as investment conditions remain favorable.

Commodities: Drivers of commodity prices keep improving The prospects for commodity investments continue to brighten. Apart from a positive economic backdrop, risk ap-petite for commodities is also improving. In our view, the fact that commodity prices rose despite a strong USD is a confirmation of the strength of the underlying trend. Mo-mentum and trend ratings are consistently pointing toward further strength even after the recent surge in prices.

Real estate equities: More gains expected in Q2 2010Real estate equities continued to outperform global equi-ties from mid-March to mid-April thanks to firming business cycle conditions and rising risk appetite. Listed real estate offers an attractive combination of dividend yield and ex-posure to the economic recovery, which appeals to many investors. A strong decline in commercial mortgage-backed securities (CMBS) spreads triggered further substantial out-performance of US listed real estate versus other regions. We continue to prefer US real estate equities and compa-nies with superior growth potential.

Top investment idea

uBUY diversified hedge fund investments.

CS commodity indices: Performance of commodity groups

Selectivity mattered in Q1 2010 for commodity invest-ments. Industrial metals were the strongest performing group, followed by precious metals and energy, while agricultural commodities lagged.

Source: Bloomberg, Credit Suisse/ IDC

60

80

100

120

140

160

180

200

01/09 04/09 07/09 10/09 01/10 04/10

CSCB Energy Index CSCB Precious Metals Index

CSCB Agriculture Index CSCB Industrial Metals Index

Index, January 2009 = 100


Overview

We expect EUR/USD to appreciate over 12M, but patience is needed due to sovereign credit concerns in the EMU.

Firm Asian growth, inflationary pressure and CNY revaluation are bullish for Asian currencies.

Foreign exchangeWe remain bullish on emerging market currencies as global growth looks set to remain strong

Overall Asia-Pacific and North American currency exposures are slightly reduced, while exposure to European currencies is left unchanged. We continue to favor diversified portfolio funding in sterling, US and New Zealand dollars.

USD-based currency portfolio

EUR/USD range-bound in the near term on concerns over Greece and lack of technical support Market perception of a Greek default is weighing on EUR/USD by increasing the risk premium foreign investors are demanding and reducing ECB tightening expectations. But current rate spreads are far from EUR/USD bearish, indi-cating levels of 1.40 instead of the low 1.30s. The question of a Greek default or bail-out may be resolved ahead of the 19 May redemption and could boost EUR/USD. While the psychological effect on foreign investors’ appetite for EUR securities is hard to judge, balance of payments data do not yet show massive capital outflows. Fundamentals like the yield premium for the EUR, US external deficit, the global recovery and reflationary bias in the USA argue for a higher EUR/USD. The biggest risk to our bearish USD view is a return to global economic contraction, a major credit event or financial regulatory change resulting in losses at financial institutions and leading to cross border flows, i.e. USD buying.

SNB rate hikes to fuel CHF strengthWe see further upside for the CHF vs. EUR through 1.40 as the SNB becomes more flexible concerning currency strength and starts hiking interest rates.

We still like selling GBP on the crossesWe remain neutral GBP/USD due to the lack of interest rate support and the large budget deficit in the UK. Credible fiscal tightening after the election on 6 May could reduce the risk premium on GBP, but it could also delay tighten-ing by the Bank of England. GBP is also very vulnerable to renewed credit and growth concerns. We remain bearish on the GBP vs. the EUR and CHF and prefer GBP in a portfolio context as a funding currency.

Avoid JPY fundingWe still view the combination of Japan’s net creditor status and G10 interest rates close to Japan’s as JPY positive, and recommend avoiding JPY funding.

Commodity currencies to see further strengthWe are bullish on the commodity currencies (AUD, CAD) over a 6-month horizon in the current environment of broad-ening economic recovery, given our expectations of higher commodity prices and wider interest rate spreads against the USD as well as strong technicals (trend, momentum). Our outlook for 12 months is neutral due to large overvalu-ation of these currencies.

Uptrend in emerging market currencies to continueWe remain bullish on emerging market currencies vs. USD as a bloc on the back of strong global growth, rising com-modity prices and more acceptance of currency strength by Asian authorities. [email protected], +41 (0)44 333 13 63


–54

–22 –20

6 6 9 9 11 1320 22

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0

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40

USD GBP NZD EUR NOK CAD SEK JPY CHF AUD SGD

Allocation April 2010 Allocation May 2010

% of net asset value

14 | Research Monthly | May 2010

Investment themeEmerging market equities strongly supported by valuation and investor demand

Overview

Sound economic fundamentals and growth prospects.

Still attractive valuation even after the rally over the past year.

decade, investors remain underinvested in the EM theme. Taking a cue from investor positioning and fund flows, we believe EM equities are showing early signs of becoming a mainstream asset class.

Within the EM universe, Asian equities remain our pre-ferred pick, given supportive valuation/earnings metrics, strong fundamentals and secular growth, particularly China. Eastern Europe faces some macro headwinds but valuation is depressed – especially for Russian equities – also offering interesting return potential, albeit at a higher risk. [email protected], +41 (0)44 332 90 59

While the emerging market (EM) growth story is not new, its growing importance as a central driver of global growth is still often underestimated. Particularly after the financial crisis, EMs are expected to enjoy stronger economic growth than developed markets (DM), as record household debt in the latter will likely dampen private spending, and soaring government debt (see chart) might translate into higher tax rates or reduced spending. The better relative growth in the EM world suggests that investors should build up and overweight emerging market investments, with a particular emphasis on EM equities.

The long-term attractiveness of EM equities is based on risk premium compression potential as well as earnings growth driven by the economic strength and growth pros-pects of EM economies. While the recovery rally since the trough in March 2009 has brought valuation multiples back from very depressed, attractive levels of 6.5x to 11.8x cur-rently, the absolute level remains attractive: EM equities trade on a more than 10% discount to the historical average as well as relative to developed market equities. While such a discount may be warranted in the near term, we expect this discount to fade in the long term. Short term, the upside for EM equities is driven by expected 2010–2012 earnings growth of a very large 80%, which will further improve valu-ation attractiveness. Thus, EM equities stand out as an as-set class offering healthy growth at a reasonable price.

The positive outlook for EM equities and concerns over sovereign debt in DMs is also translating into fund reallo-cation. Although the share of EM equities as a percentge of world market capitalization has quadrupled in the past

Equity mutual fund flows

Emerging market equity mutual funds have enjoyed record inflows over the past 14 months, while US mutual funds have seen sizeable outflows.


uBUY MSCI Emerging Market Index to diversify across regions and themes.

uBUY Multinationals with majority of earnings generated in emerging markets.

Part of the “Multipolar world” Megatrend. See page 17

Source: EPFR Global, Credit Suisse

–80

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0

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60

80

01/09 02/09 04/09 06/09 08/09 10/09 12/09 01/10 03/10

Flows to EM equities Flows to US equities

USD bn

Further important information regarding this product can be found at the end of this brochure under the heading “General Product Disclaimer.”

This document has been produced by the departments Investment Products & Lending and Global Investment Delivery and not by our Global Research Department.

Product proposal – Equity Funds Asia Pacific ex JapanAberdeen Global – Asia Pacific Equity Fund

Adam Mika, Investment Fund Selection, +65 6306 0023, [email protected]

Investors considering taking advantage of this investment proposal should consult their relationship manager.

Product descriptionThe Asia-based investment team invests only in high quality companies, defined by the credibility of the company man-agement, transparency, commitment to shareholder value and financial strength. Only after a company passes the quality screen does it become a candidate for an investment. The sec-ond filter is valuation, with a focus on downside risk. Top-down country analysis is of lesser importance. The portfolio includes 50–60 stocks and exhibits a low turnover.

PerformanceOver 5 years, the fund outperformed the index and the peer-group average with lower volatility. It lagged the index during the momentum-driven rally in 2007, but the investment ap-proach helped in 2008, given the focus on companies with solid balance sheets and high CF generation. The fund did relatively well in 2009; however, the underweight in Australian banks cost performance, especially in the third quarter.

AdvantagesTeam-oriented approach with a culture of sector rotation

among team members ensures continuity in decision making and a high level of challenging investment ideas.

RisksThe fund invests in emerging market equities, which tend to

have higher volatility than developed markets.

Source: Lipper Schweiz, Credit Suisse

Historical performance indications and financial market scenarios are no guarantee for current or future performance. Performance indications do not consider commissions levied at subscription and/or redemption.

Peer Group Aberdeen Global – Asia Pacific Equity

MSCI AC Pacific ex Japan TR

0

50

100

150

200

250

04/06 12/06 08/07 04/08 12/08 08/09 04/10

Aberdeen Global – Asia Pacific Equity Fund (in USD)

The fund invests in high quality compa-nies in Asia (incl. Australia, excl. Japan).

A typical company in the portfolio has higher return on equity and lower debt-to-equity ratio than the market average.

Fund facts

Fund company Aberdeen Asset Managers

Fund domicile Luxembourg

Representative/paying agent in Switzerland

State Street Bank Luxembourg SA

Fund manager Asia Pacific (ex Japan) Equities Team

Fund currency USD

Fund volume (in millions) 5,500 (end of March 2010)

Inception date 26 April 1988

Benchmark MSCI AC Asia Pacific ex Japan

Sales commission 2.00%

Management fee 1.75%

TER 1.90%

Dividend distribution No

NAV (31/03/10) USD 56.53

Registered for sale in CH, DE, IT

Valor 608 236

Performance in USD as of 31/03/2010

Fund1 Index

3 months 2.93% 2.12%

6 months 9.45% 8.35%

1 year 82.07% 77.28%

3 years (ann.) 5.44% 4.34%

5 years (ann.) 13.82% 13.28%

Sharpe ratio (5 yrs) 0.4 0.35

Tracking error (5 yrs) 6.78% –

Max. drawdown (5 yrs) –54.66% –61.80%

1 Aberdeen Global – Asia Pacific Equity Fund (in USD) Source: Lipper Schweiz, Credit Suisse


Since the start of the year, the news flow in the alternative energy universe has been dominated by several announce-ments of different incentive reductions. Particularly in Ger-many, the main solar market, the government plans to cut the feed-in tariff more severely and earlier than expected, e.g. an additional cut of 16%for new rooftop applications. In reaction, the stock prices of the whole solar sector dropped strongly. The wind energy sector underperformed as well, due to weak demand and a declining order backlog. As a result, in 2010 the Credit Suisse Global Alternative Energy Index posted a drop of more than 8%.

In our view, the outlook for the rest of the year is now more constructive for several sectors within alternative en-ergy, supported by different long-term drivers and ongoing economic recovery. For instance, we are specifically posi-tive on solar energy, biofuels and batteries, sustained by superior growth. The biofuels industry is likely to acceler-ate on the back of low corn prices offering higher margins, while the oil price surpassed the USD 80/barrel level with an expected gradual increase going forward. We believe that solar is now rebounding and we forecast strong solar demand in 2010, as module prices declined substantially by up to 40% during 2009. Effectively, solar projects are cur-rently very attractive, which is generating renewed demand for new installations before the German feed-in tariff is cut (most probably in early July), as also shown in the chart. After that, module prices are likely to come under moderate pressure (around –10%). Currently, the wind sector is nega-tively impacted by relatively low gas prices, which decreases the competitiveness of wind projects.

On a valuation perspective, most sectors are trading significantly (by more than 20%) below their historical 12-

month forward price-to-earnings ratio (P/E). However, all sectors’ P/E ratios for 2010 and 2011 (excl. bioenergy) re-main above the MSCI World average P/E ratio, mainly due to their stronger growth potential. Therefore, stock-picking within the different alternative energy sectors is essential. We specifically recommend Meyer Burger, a leading so-lar equipment supplier, mainly due to its high exposure to emerging markets (more than 60%) and a unique technol-ogy which enables their customers to reduce production costs. We also recommend solar module producers with low cost structure, notably Suntech and First Solar, which should prove resilient to the expected feed-in tariff cuts. On the other hand, we recommend avoiding European solar cell and module manufacturers, owing to their uncompeti-tive cost structure and higher vulnerability to feed-in tariffs cuts. Finally, we forecast wind turbine producers to regain momentum during H2 2010 in anticipation of a better orders inflow for 2011 and more attractive valuation. [email protected], +41 (0)44 335 10 66

[email protected], +41 (0)44 334 00 94

Overview

Stock-picking in the alternative energy universe is essential.

Cost leaders in the solar sector have further upside potential, while low corn and high oil prices are more favorable for biofuels companies.

Investment theme Alternative energy: A more constructive H2 2010 outlook for solar and biofuels

Top investment idea

uBUY First Solar, Meyer Burger and Suntech, leading companies in the solar sector, and Bunge in the biofuel sector.

New solar installations expected to post a more than 20% annual rise in 2011

After strong growth rates during the past two years, global demand for new solar installations is projected to increase at more sustainable double-digit growth levels on a 2–3 year view.

Source: EPIA, Credit Suisse

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2004 2005 2006 2007 2008 2009E 2010E 2011E0%

20%

40%

60%

80%

100%

120%

Annual solar gen. capacity: With partial policies (MW)Annual solar gen. capacity: With full policies (MW)CAGR: Partial policy (%, r.h.s.) CAGR: Full policy (%, r.h.s.)



Product proposal – Equity Thematic Renewable EnergyVontobel Fund SICAV – Global Trend New Power B EUR Equity – All Cap BlendMathias Ziegler, Investment Fund Selection, +41 (0)44 333 74 97, [email protected]


Product descriptionThe Vontobel Fund – Global Trend New Power is a global thematic fund, focusing on alternative energy (solar, wind, geo-thermal) and energy efficiency. The fund follows a bottom-up, research-driven approach and encompasses 50–70 holdings, based on the conviction of the management team.

PerformanceIn the first quarter of 2010 the fund lost 1.00%, but outper-formed the peer group of other new energy funds which suf-fered even more (–2.72%). Against the broader equity market, represented by the MSCI World Index, the new energy sector had a very weak start in 2010. (all data in EUR terms). Howev-er, with its approach, the fund outperforms the broader equity market and the peer group on a 5-year basis.

AdvantagesThe fund invests across the entrire value chain of energy

which leads to a broad diversification across themes and sub-

sectors. Therefore, the fund offers an attractive risk-return profile for this emerging sector.

RisksThe fund is subject to global equity market risk. The new

energy sector is heavily impacted by regulation and changing technologies. Only suitable for investors with above-average risk tolearnce.

The fund invests across the entire value chain of the energy market, focusing on alternative energy and energy efficiency providers.

It has one of the longest track records in a growing peer group.

Fund facts

Fund company Vontobel Asset Management

Fund domicile Luxembourg

Representative/paying agent in Switzerland Vontobel Fonds Services AG

Fund manager Youri Vorobiev & Pascal Dudle

Fund currency EUR

Fund volume (in millions) EUR 368

Inception date 12/12/2001

Benchmark MSCI World Index TR

Sales commission 2%

Management fee 1.65%

TER (August 2009) 2.13%

Dividend distribution None

NAV (21/04/10) EUR 103.19

Registered for sale in CH, DE, FR, IT, AT, UK, ES, SG

Valor 1 301 688

Performance in EUR as of 31/03/2010

Fund1 Index

3 months –1.00% 9.6%

6 months 3.91% 16.33%

1 year 30.53% 50.38%

3 years (ann.) –9.36% –5.37%

5 years (ann.) 5.67% 2.63%

Information ratio (5 yrs) 0.31 –

Volatility (5 yrs ann.) 24.61% 15.66%

Max. drawdown (5 yrs) –54.95% –48.51%

1 Vontobel Fund SICAV – Global Trend New Power B – EUR Source: Lipper Schweiz, Credit Suisse

Vontobel Fund SICAV – Global Trend New Power (in EUR)

Source: Lipper Schweiz, Credit Suisse

Historical performance indications and financial market scenarios are no guarantee for current or future performance. Performance indications do not consider commissions levied at subscription and/or redemption.

Peer Group Vontobel Fund Global Trend NewPow B EUR

MSCI World TR

6080

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03/05 01/06 11/06 09/07 07/08 05/09 03/10

Performance in EUR indexed as of 31/03/2010


Overview

Even after the strong rally, platinum has further upside potential, driven by strong fundamental and technical factors.

We prefer platinum over palladium as the platinum market is more transparent.

rand, rising costs, strikes over safety issues and various other problems. In the palladium market the lack of sales from Russia indicates that Russian stockpiles, which were an important source of supply, are depleting.

Our outlook remains positiveIn our view, the combination of strong demand and limited supply justifies the current rally in the PGM markets. Even after the strong rally of the past months, we think the trend should continue to be up. This view is also supported by technical analysis which has very strong momentum and trend ratings for both platinum and palladium. We have a preference for platinum over palladium due to the uncer-tainty about the true size of Russian palladium stockpiles and because platinum prices tend to be less volatile than those of palladium. [email protected], +41 (0)44 333 13 62

Since their lows in October 2008, platinum group metals (PGM, which include platinum, palladium, rhodium, ruthe-nium and iridium) prices have been rising rapidly. Platinum prices have more than doubled and palladium prices have more than tripled. We think this rally is justified by strong fundamentals in the physical market and expect further price gains in the coming months.

PGMs – more industrial than precious metals Unlike gold, PGMs are mainly used for industrial applica-tions. Over the past few years nearly 50% of total demand came from the auto industry where the metals are used in the production of catalytic converters. As a result, PGM prices can be quite cyclical and react strongly to changes in economic growth. And while the auto industry was severely hit during the crisis, car sales have been picking up, pushing the platinum market into a supply deficit.

Investment demand has also been very strong While PGMs have a strong cyclical component, they still belong to the precious metals sector. As a result, invest-ment demand also plays a role in these markets. Platinum in particular has a reputation for being a safe haven – similar to gold. The same factors that supported gold prices over the past months – low real yields and continuing uncertainty regarding the financial system have attracted investment flows into the PGM markets – therefore supporting prices.

Supply is not keeping pace with demandDemand for PGMs, both for industrial applications and in-vestment, has been picking up strongly in recent months. However, prospects from the supply side remain dim. Plati-num producers in South Africa are struggling from a strong

Top investment idea

uBUY Platinum at prices below USD 1,700 with a time horizon of 6 months or more.

Global car sales are recovering

Since demand from the auto-industry accounts for about 50% of total demand for PGMs, the recovery in car sales is positive for the price outlook.

Investment theme Platinum group metals – combining the benefits of precious and industrial metals

Source: Bloomberg, Credit Suisse

–40

–20

0

20

40

60

80

100

01/01 01/02 01/03 01/04 01/05 01/06 01/07 01/08 01/09 01/10

G3 car sales Brazil, India, China car sales

YoY %



Investment proposal foreign exchangeFINER Revexus in USDBullish on Platinum (XPT) against USDJean Thomas Frank, FX Derivative Solution & Products, +41 (0)44 334 70 66, [email protected]


Investment rationaleInvestors having cash in USD can benefit from an appreciation of the XPT and earn a fixed return on their foreign cash hold-ings, higher than on a traditional money market investment. If, against their expectation, the XPT weakens strongly in the short term, the cash positions are converted into XPT at a predefined exchange rate (strike).

Product descriptionThese FINER Revexus are OTC structured deposits. They offer the investor the opportunity to considerably improve the re-turn on a money market investment in the investment currency (USD) while having the view that the investment currency won’t strengthen strongly. The fixed return to be paid is preset at the beginning of the term. By contrast, the currency of redemption (including the currency in which the return is paid) depends on the closing level of the currency pair in question (XPT/USD).

How it worksIf the underlying currency pair (XPT/USD) trades above the strike on the reference date, the investor is repaid in the in-

vestment currency (USD) the initial investment plus the yield of 5.00% p.a. If the underlying currency pair trades at or be-low the strike on the reference date, the investor is repaid in XPT. The sum paid in XPT corresponds to the initial investment amount invested (in USD) plus the yield of 5.00% p.a. over the period converted at the corresponding strike.

AdvantagesAttractive yield pick-up against a comparable money market

investment.The net yield (higher than the money market) is paid in any case.Tailor-made OTC solution – each FINER is structured to

meet the investor’s exact needs and risk profile.

RisksThe potential loss is, in the case of redemption in XPT, lim-

ited to the difference between the initial investment in USD and the amount received at maturity, which converted back into USD at the prevailing spot exchange can be considerably lower than the initial amount.

Even after the strong rally, platinum has further upside potential, driven by strong fundamental and technical factors.

Enhance the return on your cash posi-tions and manage them effectively with a FINER Revexus.

Indicative terms and conditions1

Underlying XPT/USD exchange rate, invested in USD

Maturity 1 month

Trade date Upon request of client

Value date 2 business days after Trade Date

Reference date (expiry) 2 business days before Maturity Date

Maturity date (redemption) 1 month after Value Date

Strike 1,659 USD per 1 XPT

Spot reference 1,740 USD per 1 XPT

Net yield (Comparable money market rate)

5.00% p.a.(0.20%p.a.)

1 Important: All terms and conditions mentioned in this document are indicative only and will be confirmed or adjusted on the trade date.


The Credit Suisse Megatrends are long-term investment themes. The best way to capitalize on these themes is through equity investments. The rating system outlined below and used in the table above reflects the attractive-ness of equity investments within each theme:

Attractive investment opportunities – continue to invest in theme

Keep holdings but do not add to existing positions Reduce/exit existing positions

Over the next five years, four of the ten largest economies will be in the emerging markets. This economic develop-ment is increasingly reflected in the global balance of po-litical power: Since the fall of the Berlin wall, the global political power has moved from being bipolar (US and the Soviet Union) to being concentrated in the large Western developed markets (G7) in the 1990s and, finally, to today’s G20 which includes both developed and emerging coun-tries, thus reflecting a shift towards a multipolar world. As a result of accelerating globalization, more EM countries are participating in the global economy, and their citizens are becoming wealthier, spurring global demand for all kind of goods and resources. Many consumer goods companies, such as Swatch or LVMH are therefore increasingly focus-sing their efforts on EM consumers. But in many cases, the EM industries are starting to re-position themselves from producers of cheap goods to becoming global brands and innovators. Furthermore, global production chains and end-markets are likely to spur demand for logistics solutions. The development towards a multipolar world is hence provid-ing a multitude of investment opportunities in a wide range of sectors and countries. [email protected], +41 (0)44 333 23 94

[email protected], +41 (0)44 335 72 98

Credit Suisse MegatrendsMultipolar World

The Credit Suisse Megatrends are long-term investment themes. The best way to capitalize on them is through equity investments. The rating system outlined below re-flects the attractiveness of the relevant stocks (valuation, momentum, bubble building etc.) within each theme:

Attractive investment opportunities – continue to invest in theme

Keep holdings but do not add to existing positions Reduce/exit existing positions


uBUY LVMH – unique luxury goods player with attractive exposure to Asia.

uBUY Fedex – one of the world’s largest transport companies.

Overview

Multipolar world is one of the three Credit Suisse Megatrends.

Opportunities arising for companies exposed to the effect of shifting global power.

Demographics

Urbanization 21st century lifestyle Education Agriculture

Multipolar world

Emerging markets Frontier markets Emerging producers Emerging consumers Logistics

Sustainability

Innovation Environment Community

isto

ckph

oto.

com

� | Research Monthly | May 2010 | Swiss edition

Economics Switzerland

Economic recovery remains intact

Forward-looking indicators continue to surprise to the upside.

Swiss National Bank remains concerned about CHF strength, but should start to normalize monetary conditions in H2.

Recent data continued to paint an encouraging picture, sug-gesting that the economic recovery remains on track. Con-sumption growth remained robust in the first months of this year and we expect that GDP estimates will show a positive growth contribution of consumer spending in H1 2010. The better-than-expected situation on the Swiss labor market, in particular, also means that consumer spending should remain resilient going forward. The brightening prospects were also confirmed by both the headline and details of the latest Swiss PM�. The headline PM� climbed by a noticeable 8.1 points in March (to 65.5 points), the highest level since November 2006. The order backlog registered its strongest pick-up (+14.5 points) since the inception of the index in 1995.

Meanwhile, headline inflation rose to 1.4% (YoY) in March after 0.9% (YoY) in February. Nevertheless, infla-tion pressure remains low, with core inflation continuing its declining trend (0.5%, YoY in March).

There has been no news from the SNB on its currency strategy. The SNB maintains that it will head off any exces-sive appreciation of the CHF, if such an appreciation were to imply a deflationary risk for Switzerland. However, we believe that the danger of deflation is continuing to diminish given the increasingly solid recovery. We therefore expect the SNB to increasingly move away from actively influencing Swiss franc exchange rate and continue to expect the first rate hike in Q3, possibly complemented by other macropru-dential measures on the regulatory front.

[email protected], +41 (0)44 332 90 61

Employment market: Better starting position

Switzerland’s unemployment rate has stabilized more quickly than it did after the dot-com recession. �t is lower than past experience would suggest, partly due to the widespread use of short-time work, but also for structural reasons.

For half a year now, the employment market in Switzerland has been developing more favorably than past experience would suggest. According to statistical models, unemploy-ment should have climbed much more sharply than it ac-tually has in the wake of such a deep recession. Under the projection method developed by US economist Arthur M. Okun, which utilizes a linear relation between economic growth and unemployment, the number of jobless would be about 15,000 higher than the actual current figure. Com-pared with the dot-com recession at the turn of the mil-lennium, this time the employment market has stabilized sooner. At first, the unemployment rate spiked much more sharply than it did the last time around, with the number of jobless surging by more than 60,000 between August 2008 and September 2009. Since then, though, the seasonally adjusted unemployment rate has been hovering persistently at 4.1% (except in December, when it came in at 4.2%). Hence, the phase of rising joblessness lasted only half as long as it did during the dot-com recession which saw a rising unemployment rate from October 2001 to September 2003. One explanation for the better starting position today is short-time work. �n 2009, an average of 44,000 workers a month were on short-time contracts, four times as many as during the dot-com recession. But structural factors also suggest that the outlook is better. First of all, in contrast to the phase prior to the bursting of the dot-com bubble, this time there was no overheated hiring in sectors like �T or business services that had to be corrected in the recession. Second, the financial sector is shedding jobs mainly outside Switzerland; during the dot-com recession, the job cuts oc-curred right here at home. Third, quasi-public sectors such as healthcare are growing at a faster pace today than dur-ing the dot-com recession. Leading indicators like the PM� employment component are signaling a further improvement in employment in the coming quarters, but we expect the seasonally adjusted unemployment rate to track sideways for somewhat longer.

[email protected], +41 (0)44 333 41 90

II | Research Monthly | May 2010 | Swiss edition

Foreign exchange SwitzerlandSwiss franc strength to persist in 2010 as SNB starts raising interest rates

Overview

Valuation now shows a neutral reading for EUR/CHF after years of Swiss franc undervaluation.

CHFexpectedtostayfirmasSNBstartsraising rates in 2010.

Valuation now shows a neutral reading...The recent Swiss franc strength which brought EUR/CHF to a new record low of 1.4144 on 2 April is not an overshoot-ing of the currency. As we have argued in recent years, our estimatedCSfairvalue,whichisanaugmentedpurchasingpowerparitymodel,showedanongoingundervaluationoftheCHFvs.EURagainstourestimatedlong-termfairvalueof1.40(seechart).Theextremeundervaluationduring2007whenEUR/CHFwastradingabove1.60wasduetoaboomin risky assets and carry trades, historical low volatilities and alargebuild-upofCHFshortpositionsabroad(forexamplemortgages in Eastern Europe denominated in CHF). TheCHF undervaluation vs. EUR has now been reduced and the deviationfromfairvalueisnowsmallandthereforegivesaneutral reading for our currency outlook.

...but fundamentals and technicals remain outright CHF bullish vs. EURFundamentals,however,remainoutrightCHFbullish:First,interest rates between EUR and CHF are very narrow and in our view are unlikely to widen in favor of the EUR over 12M.WeexpecttheECBtoraise interestratesto1.75%and the SNB to1.00% over12M. Second, Switzerland’slargecurrentaccountsurplusiscreatingaconstantincomeflowintoSwitzerlandwhichisnotyetrecycledabroadastheinvestmentcycleinSwitzerlandhasnotyetturnedupwards.Third, the Swiss National Bank (SNB) has accumulatedsubstantial currency reserves in EUR and USD due to FX interventionssinceMarch2009.UndertheassumptionthatthecentralbankmightintendtoreducepartoralloftheFXaccumulationasmonetarypolicy isnormalized,upside forEUR/CHFmightbecappedastherewillbeanaturalsellerof EUR against CHF in the future. Fourth, technical indica-tors like trendandmomentumdonot yet signal abottomin EUR/CHF and suggest further downside. We therefore stick to our forecasts for EUR/CHF to decline to 1.41 in 3monthsand1.40in12months.

Bullish CHF vs. USD and GBP due to narrow rate gapFront-endyieldsareclosetohistoricallowsamongtheG10-currencies.Thuscountries’ external and internal balancesbecomeimportant:Switzerlandhasalargecurrentaccountsurplus, while the USA and the UK have current account deficits.Thefiscalsituation(budgetdeficit,debt/GDP)alsoseemstobemorefavorableinSwitzerlandcomparedtotheUK or USA. We therefore think that current interest rate spreads do not compensate for depreciation risk of GBPandUSDvs.CHF.WestillrecommendthatinvestorswithbasecurrencyCHFhedgetheirexposureinUSD,GBPandEUR. [email protected],+41(0)443331363

Fair value (FV) EUR/CHF

Source: Bloomberg, Credit Suisse

1.20

1.40

1.60

1.80

2.00

2.20

2.40

12/82 12/86 12/90 12/94 12/98 12/02 12/06 12/10

19/04/2010 +1 Stdev –1 Stdev Fair value EUR/CHF

EUR/CHF



Investment proposal3-year 6.75% Coupon CertificatePLUS in CHFNestlé SA, Novartis AG, Zurich Financial Services AGRalph Zweidler, Structured Derivatives, +41 (0)44 332 66 66, [email protected]


Benefits At expiration, 100% participation in the positive performance

of the basket if none of the barriers have been reached or breached.

A coupon of 6.75% is paid annually in any case.If none of the underlyings ever reaches or breaches its in-

dividual barrier during the lifespan of the CertificatePLUS, the repayment at maturity amounts to a minimum of 100% even if the performance of the basket is negative.

If at least one of the underlyings reaches or breaches its barrier during the lifespan of the CertificatePLUS but the worst-performing underlying closes above its start level at maturity, you nevertheless fully participate in the upside performance of the worst-performing underlying.

RisksShould one of the underlyings perform negatively during the

lifespan of the CertificatePLUS, the Certificate may trade consid-erably below its issue price, even if none of the barriers have been reached or breached yet.

If one or more underlyings close below their start levels at the final fixing date and if even one barrier has been reached or breached at any point during the lifespan of the Note, your redemption amount will be reduced by 1% for each percent-age that the worst-performing underlying closes below its start level on the final fixing date. This may result in partial or – un-der exceptional circumstances – even in complete loss of the capital invested.

As a holder of the CertificatePLUS you are not entitled to any dividends distributed.

The investor bears the risk that the Issuer of this investment product may become insolvent (issuer risk), which may lead to a partial or total loss of the invested capital in case of insol-vency of the issuer. The Capital Protection does not protect the investor from such losses.

Indicative terms and conditions1

Product category CertificatePLUS

Issuer HSBC Bank plc, London, UK (Aa2/AA)

Lead manager HSBC Bank plc, London, UK

Co-Structurer Credit Suisse AG, Zurich

Subscription period Until 14 May 2010, noon (CET)

Initial fixing date 14 May 2010

Payment date 28 May 2010

Final fixing date 14 May 2013

Redemption date 28 May 2013

Coupon 6.75% p.a., paid annually

Underlyings Equally-weighted basket (see “Underlying instruments”)

Start levels 100% of each underlying level at initial fixing date

Barrieres 65% of start level of each underlying (continuous observation)

Participation at maturity 100% in the positive basket performance as long as none of the barriers have been reached or breached

(continuous observation); otherwise, 100% in the performance of the worst-performing underlying

Minimum redemption at maturity

100% if none of the barriers have been reached or breached during the lifespan of the Note

(continuous observation); otherwise, if worst-performing underlying closes below its start level,

cash settlement according to the loss of the worst-performing underlying

Denomination 1 Certificate

Issue price CHF 1,000

Issuing premium Sales fee payable to Credit Suisse Group 2.00%

Risk category2 Complex

Suitable for investors with the following expectations:

Market development

Coupon distribution Yes

100% Capital protection Conditional

Sales restrictions USA, US persons, UK, EEA

Valor 11 235 002

1 Important: All terms and conditions mentioned in this document are indicative only and will be confirmed or adjusted on the initial fixing date.

2 Complex products require a specific understanding of the risks and products themselves on the part of the client. We therefore recommend that the clients inform themselves about the risks associated with the product in question.

Underlying instruments

Underlying Currency Start level Barrier

Nestlé SA CHF 52.00 33.80

Novartis AG CHF 56.70 36.86

Zurich Financial Serivces AG CHF 253.20 164.58

Source: Credit Suisse AG

100% participation in the performance of the underlying basket.

6.75% p.a. coupon in any case.

III | Research Monthly | May 2010 | Swiss edition

Equities SwitzerlandUpgrading diversified financials to overweight

Overview

Valuation supports share prices but we continue to prefer more cyclical indices.

The listing of Transocean will improve diversification of the Swiss equity market.

The Swiss equity market continued its uptrend and reached a new 52-week high (as of 15 April, 2010). The year-to-date performance of the MSCI Switzerland of 6.7% was broadly in line with European peers. Over the past month, share prices were manly driven by earnings momentum and improving macro data, which usually results in a relative un-derperformance of Swiss equities, given the high exposure to more defensive sectors (healthcare, food producers). And as expected, Swiss equities underperformed relative to more cyclical country indices.

We maintain our positive strategic view on global equi-ties, but slightly reduce risk on a tactical view (see page 10). Owing to strong earnings momentum, valuation is still supportive. Thus, we remain positive on Swiss equities on an absolute view. On a relative view, however, we still prefer more cyclical country indices in the short term, a view we are likely retain as along as the equity market rally continues.

The listing of Transocean at the SIX Swiss Exchange will increase sector diversification, which is positive. Currently, Petroplus is the only listed energy company in Switzerland. The world’s largest driller with a market capitalization of CHF 28 bn might be included in the Swiss Market Index (SMI). Based on market capitalization, Transocean is actu-ally the tenth biggest company. An inclusion is dependent on average free-float capitalization and order book turnover. In our view, the most obvious candidate to be excluded is Swiss Life.

We made two changes to our sector recommendations. First, we upgraded diversified financials to overweight from neutral, which is mainly driven by our positive assessment of UBS. The bank has reshaped its investment banking divi-sion toward client flow business, and implemented aggres-

sive cost savings measures, and accordingly, has started to gain traction.

Second, we upgraded retailing to neutral. The sector is rather defensive (beta and leading indicator slightly below market average). Furthermore, retailing companies have a relatively high exposure to Switzerland, where consumption should increase against the backdrop of a healthy domes-tic economy and a relatively low unemployment rate (see page I).

We continue to shift exposure to more defensive quality stocks (e.g. high dividend yield) like Nestlé or Zurich Finan-cial Services. However, in the current stage of the cycle, we continue to recommend investments in more cyclical stocks such as Richemont and small caps like Rieter.

[email protected], +41 (0)44 334 56 24

Top investment idea

uBUY Zurich Financial Services, a leading insurance company with a high dividend yield.

The valuation of the SMI is at the lower end of historical average

Source: Credit Suisse/ IDC

5

10

15

20

25

30

04/00 04/02 04/04 04/06 04/08 04/10

P/E current year E Average

Average + 1 Stdev Average –1 Stdev

18 | Research Monthly | May 2010 | Swiss edition

Disclosure appendix

Analyst certificationThe analysts identified in this report hereby certify that views about the compa-nies and their securities discussed in this report accurately reflect their personal views about all of the subject companies and securities. The analysts also certify that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Important disclosuresCredit Suisse policy is to publish research reports, as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse policy is only to publish investment research that is impartial, inde-pendent, clear, fair and not misleading.

The Credit Suisse Code of Conduct to which all employees are obliged to ad-here, is accessible via the website at: https://www.credit-suisse.com/governance/doc/code_of_conduct_en.pdf

For more detail, please refer to the information on independence of financial research, which can be found at: https://www.credit-suisse.com/legal/pb_research/independence_en.pdf

The analyst(s) responsible for preparing this research report received compensa-tion that is based upon various factors including Credit Suisse’s total revenues, a portion of which is generated by Credit Suisse Investment Banking business.

Equity rating history as of 27/04/10

Company Rating Date

(since)

ACTELION

(ATLN VX)

BUY 26/04/10

BUY 22/04/10

BUY 03/03/10

BUY 01/03/10

BUY 18/02/10

BUY 21/12/09

BUY 21/10/09

BUY 20/10/09

BUY 22/07/09

BUY 21/07/09

BUY 21/04/09

ANZ BANK

(ANZ AU)

BUY 01/03/10

HOLD 04/11/09

SELL 30/10/09

SELL 15/10/09

HOLD 04/09/09

HOLD 28/05/09

SELL 30/04/09

HOLD 27/02/09

ARCHER

DANIELS

MIDLAND

(ADM US)

BUY 03/02/10

BUY 14/01/10

HOLD 03/11/09

HOLD 04/08/09

HOLD 06/05/09

HOLD 03/02/09

BANK OF

AMERICA

(BAC US)

BUY 20/04/10

BUY 03/12/09

BUY 16/10/09

BUY 27/08/09

HOLD 17/07/09

HOLD 20/05/09

HOLD 12/05/09

HOLD 21/04/09

BRITISH

AMERICAN

TOBACCO

(BATS LN)

BUY 25/02/10

BUY 28/10/09

BUY 30/07/09

BUY 26/02/09

BUNGE (BG US) BUY 05/02/10

BUY 23/10/09

BUY 11/08/09

BUY 24/07/09

BUY 24/04/09

CHINA

RESOURCES

ENTERPRISE

(291 HK)

BUY 26/03/10

BUY 08/01/10

BUY 18/12/09

BUY 02/11/09

BUY 07/09/09

HOLD 26/05/09

SELL 02/04/09

CIE FINANCIERE

RICHEMONT

(CFR VX)

BUY 29/03/10

BUY 18/01/10

BUY 16/11/09

HOLD 13/11/09

HOLD 10/09/09

HOLD 18/05/09

HOLD 14/05/09

HOLD 20/01/09

CITIGROUP INC

(C US)

HOLD 21/04/10

HOLD 20/01/10

HOLD 17/12/09

HOLD 15/12/09

HOLD 26/10/09

HOLD 15/10/09

HOLD 02/10/09

BUY 22/09/09

BUY 27/08/09

HOLD 21/07/09

HOLD 17/07/09

HOLD 17/04/09

CVS

CAREMARK

(CVS US)

BUY 08/02/10

BUY 06/11/09

BUY 04/08/09

BUY 20/05/09

BUY 20/02/09

FEDEX

(FDX US)

BUY 19/03/10

BUY 21/12/09

BUY 17/12/09

BUY 08/12/09

BUY 22/09/09

HOLD 18/06/09

HOLD 28/05/09

TERMINATED 22/01/09

FIRST SOLAR

INC (FSLR US)

BUY 19/02/10

BUY 29/10/09

BUY 07/10/09

HOLD 31/07/09

HOLD 04/05/09

BUY 25/02/09

HENDERSON

LAND

DEVELOPMENT

(12 HK)

BUY 09/04/10

BUY 12/01/10

BUY 03/09/09

HOLD 30/03/09

INTEL

(INTC US)

BUY 16/04/10

BUY 14/04/10

BUY 11/02/10

BUY 10/02/10

BUY 19/01/10

BUY 15/01/10

BUY 15/10/09

BUY 14/10/09

BUY 18/09/09

BUY 15/09/09

BUY 15/07/09

BUY 21/04/09

LAFARGE S.A.

(LG FP)

BUY 25/02/10

BUY 19/02/10

BUY 06/11/09

BUY 13/10/09

BUY 29/07/09

BUY 07/05/09

HOLD 23/02/09

LLOYDS

BANKING

GROUP

(LLOY LN)

BUY 19/03/10

HOLD 04/12/09

HOLD 10/06/09

SELL 20/05/09

SELL 08/05/09

SELL 07/04/09

LVMH MOET

HENNESSY

LOUIS VUITTON

(MC FP)

BUY 13/04/10

BUY 19/03/10

BUY 16/02/10

BUY 05/02/10

BUY 20/10/09

BUY 19/08/09

BUY 29/07/09

BUY 28/07/09

BUY 28/04/09

HOLD 27/04/09

MEYER BURGER

TECHNOLOGY

AG (MBTN SW)

BUY 22/03/10

BUY 20/01/10

BUY 10/12/09

BUY 14/10/09

BUY 03/09/09

HOLD 24/03/09

NESTLE

(NESN VX)

BUY 23/04/10

BUY 22/04/10

BUY 19/02/10

BUY 05/01/10

BUY 04/01/10

BUY 22/10/09

BUY 12/08/09

BUY 06/08/09

BUY 29/07/09

BUY 30/06/09

BUY 22/04/09

RIETER

(RIEN SW)

BUY 24/03/10

HOLD 23/03/10

HOLD 01/02/10

HOLD 29/01/10

HOLD 13/08/09

HOLD 12/08/09

HOLD 05/06/09

HOLD 07/04/09

SIEMENS

(SIE GY)

BUY 27/01/10

BUY 26/01/10

BUY 04/12/09

BUY 03/12/09

BUY 13/10/09

BUY 30/07/09

BUY 30/04/09

BUY 29/04/09

HOLD 27/01/09

SUNTECH

POWER

HOLDINGS CO

LTD (STP US)

BUY 05/03/10

BUY 20/11/09

BUY 24/08/09

HOLD 25/05/09

HOLD 19/02/09

UBS (UBSN VX) BUY 12/04/10

HOLD 10/02/10

HOLD 09/02/10

HOLD 25/01/10

BUY 17/11/09

BUY 03/11/09

BUY 21/08/09

BUY 13/08/09

BUY 04/08/09

BUY 03/08/09

HOLD 01/07/09

HOLD 30/06/09

HOLD 26/06/09

HOLD 05/05/09

HOLD 21/04/09

UNIBAIL-

RODAMCO

(UL FP)

BUY 10/02/10

BUY 09/09/09

BUY 29/07/09

BUY 07/05/09

BUY 10/02/09

XSTRATA

(XTA LN)

BUY 12/04/10

BUY 08/02/10

BUY 20/10/09

HOLD 04/08/09

HOLD 23/06/09

HOLD 05/05/09

HOLD 18/03/09

ZURICH

FINANCIAL

SERVICES

(ZURN VX)

BUY 05/02/10

BUY 04/02/10

BUY 05/11/09

BUY 04/09/09

BUY 11/08/09

BUY 06/08/09

BUY 07/05/09

BUY 28/04/09

BUY 05/02/09


As at the end of the preceding month, Credit Suisse beneficially owned 1% or more of a class of common equity securities of (ACTELION, ZURICH FINAN-CIAL SERVICES, NESTLE, UBS, XSTRATA).For the following disclosures, references to Credit Suisse include all of the sub-sidiaries and affiliates of Credit Suisse AG, the Swiss bank, operating under its Investment Banking division.The subject issuer (ACTELION, ANZ BANK, ZURICH FINANCIAL SERVICES, ARCHER DANIELS MIDLAND, BANK OF AMERICA, BRITISH AMERICAN TO-BACCO, BUNGE, CHINA RESOURCES ENTERPRISE, CITIGROUP INC, CVS CAREMARK, FEDEX, FIRST SOLAR INC, INTEL, LAFARGE S.A., LLOYDS BANKING GROUP, LVMH MOET HENNESSY LOUIS VUITTON, MEYER BURGER TECHNOLOGY AG, NESTLE, RIETER, SIEMENS, SUNTECH POW-ER HOLDINGS CO LTD, UBS, UNIBAIL-RODAMCO, XSTRATA, HENDERSON LAND DEVELOPMENT) currently is, or was during the 12-month period preced-ing the date of distribution of this report, a client of Credit Suisse.Credit Suisse provided investment banking services to the subject company (AC-TELION, ANZ BANK, ZURICH FINANCIAL SERVICES, BANK OF AMERICA, BRITISH AMERICAN TOBACCO, BUNGE, CHINA RESOURCES ENTERPRISE, CITIGROUP INC, CVS CAREMARK, FIRST SOLAR INC, INTEL, LLOYDS BANKING GROUP, LVMH MOET HENNESSY LOUIS VUITTON, MEYER BURGER TECHNOLOGY AG, NESTLE, SIEMENS, SUNTECH POWER HOLD-INGS CO LTD, UBS, UNIBAIL-RODAMCO, XSTRATA, HENDERSON LAND DEVELOPMENT) within the past 12 months.Credit Suisse provided non-investment banking services, which may include Sales and Trading services, to the subject issuer (ACTELION, ANZ BANK, AR-CHER DANIELS MIDLAND, BANK OF AMERICA, BRITISH AMERICAN TO-BACCO, BUNGE, CITIGROUP INC, CVS CAREMARK, FEDEX, INTEL, LA-FARGE S.A., LLOYDS BANKING GROUP, LVMH MOET HENNESSY LOUIS VUITTON, NESTLE, RIETER, SIEMENS, SUNTECH POWER HOLDINGS CO LTD, UBS) within the past 12 months.Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (ANZ BANK, ZURICH FINANCIAL SERVICES, BANK OF AMER-ICA, BUNGE, CHINA RESOURCES ENTERPRISE, CITIGROUP INC, FIRST SOLAR INC, INTEL, LLOYDS BANKING GROUP, LVMH MOET HENNESSY LOUIS VUITTON, NESTLE, UBS) within the past three years.Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (ANZ BANK, ZURICH FINANCIAL SERVICES, BANK OF AMER-ICA, BUNGE, CHINA RESOURCES ENTERPRISE, CITIGROUP INC, INTEL, LLOYDS BANKING GROUP, NESTLE, UBS) within the past 12 months.Credit Suisse has received investment banking related compensation from the subject issuer (ACTELION, ANZ BANK, ZURICH FINANCIAL SERVICES, BANK OF AMERICA, BRITISH AMERICAN TOBACCO, BUNGE, CHINA RESOURCES ENTERPRISE, CITIGROUP INC, INTEL, LLOYDS BANKING GROUP, MEYER BURGER TECHNOLOGY AG, NESTLE, SIEMENS, UBS, UNIBAIL-RODAMCO) within the past 12 months.Credit Suisse has received compensation for products and services other than investment banking services from the subject issuer (ACTELION, ANZ BANK, ARCHER DANIELS MIDLAND, BANK OF AMERICA, BRITISH AMERICAN TO-BACCO, BUNGE, CITIGROUP INC, CVS CAREMARK, FEDEX, INTEL, LA-FARGE S.A., LLOYDS BANKING GROUP, LVMH MOET HENNESSY LOUIS VUITTON, NESTLE, SIEMENS, SUNTECH POWER HOLDINGS CO LTD, UBS) within the past 12 months.Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject issuer (ACTELION, ANZ BANK, ZURICH FI-NANCIAL SERVICES, BANK OF AMERICA, BRITISH AMERICAN TOBACCO, BUNGE, CHINA RESOURCES ENTERPRISE, CITIGROUP INC, CVS CARE-MARK, FEDEX, FIRST SOLAR INC, INTEL, LAFARGE S.A., LLOYDS BANK-ING GROUP, LVMH MOET HENNESSY LOUIS VUITTON, MEYER BURGER TECHNOLOGY AG, NESTLE, SIEMENS, SUNTECH POWER HOLDINGS CO LTD, UBS, UNIBAIL-RODAMCO, XSTRATA, HENDERSON LAND DEVELOP-MENT) within the next three months.As at the date of this report, Credit Suisse acts as a market maker or liquidity provider in the securities of the subject issuer (FIRST SOLAR INC, INTEL).Credit Suisse holds a trading position in the subject issuer (ACTELION, ANZ BANK, ZURICH FINANCIAL SERVICES, ARCHER DANIELS MIDLAND, BANK OF AMERICA, BRITISH AMERICAN TOBACCO, BUNGE, CHINA RESOURCES ENTERPRISE, CIE FINANCIERE RICHEMONT, CITIGROUP INC, CVS CARE-MARK, FEDEX, FIRST SOLAR INC, INTEL, LAFARGE S.A., LLOYDS BANK-ING GROUP, LVMH MOET HENNESSY LOUIS VUITTON, MEYER BURGER TECHNOLOGY AG, NESTLE, RIETER, SIEMENS, SUNTECH POWER HOLD-INGS CO LTD, UBS, UNIBAIL-RODAMCO, XSTRATA, HENDERSON LAND DEVELOPMENT).

Additional disclosures for the following jurisdictions

Hong Kong: Other than any interests held by the analyst and/or associates as disclosed in this report, Credit Suisse Hong Kong Branch does not hold any disclosable interests. United Kingdom: For fixed income disclosure information

for clients of Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited, please call +41 44 333 33 99.


Guide to analysis

Equity rating allocation as of 27/04/2010

Overall Investment banking interests only

BUY 51.35% 51.59%

HOLD 43.97% 43.57%

SELL 4.11% 4.34%

RESTRICTED 0.57% 0.50%

Relative stock performanceAt the stock level, the selection takes into account the relative attractiveness of individual shares versus the sector, market position, growth prospects, balance-sheet structure and valuation. The sector and country recommendations are “overweight,” “neutral”, and “underweight” and are assigned according to relative performance against the respective regional and global benchmark indices.

Absolute stock performanceThe stock recommendations are BUY, HOLD and SELL and are dependent on the expected absolute performance of the individual stocks, generally on a 6–12 months horizon based on the following criteria:

BUY: 10% or greater increase in absolute share priceHOLD: variation between –10% and +10% in absolute share priceSELL: 10% or more decrease in absolute share priceRESTRICTED: In certain circumstances, internal and external regulations ex-

clude certain types of communications, including e.g. an in-vestment recommendation during the course of Credit Suisse engagement in an investment banking transaction.

TERMINATED: Research coverage has been concluded.

Absolute bond recommendationsThe bond recommendations are based fundamentally on forecasts for total re-turns versus the respective benchmark on a 3–6 month horizon and are defined as follows:

BUY: Expectation that the bond issue will outperform its specified benchmark

HOLD: Expectation that the bond issue will perform in line with the specified benchmark

SELL: Expectation that the bond issue will underperform its speci-fied benchmark

RESTRICTED: In certain circumstances, internal and external regulations ex-clude certain types of communications, including e.g. an in-vestment recommendation during the course of Credit Suisse engagement in an investment banking transaction.

Credit Suisse HOLTWith respect to the analysis in this report based on the HOLT™ methodology, Credit Suisse certifies that (1) the views expressed in this report accurately re-flect the HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be directly related to the specific views disclosed in this report. The Cred-it Suisse HOLT methodology does not assign ratings to a security. It is an ana-lytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valua-tion model, that are consistently applied to all the companies included in its da-tabase. Third-party data (including consensus earnings estimates) are system-atically translated into a number of default variables and incorporated into the algorithms available in the Credit Suisse HOLT valuation model. The source fi-nancial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. These adjustments provide con-sistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to pro-duce alternative scenarios, any of which could occur. The Credit Suisse HOLT methodology does not assign a price target to a security. The default scenario


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CFROI®, CFROE, HOLT, HOLTfolio, HOLTSelect, HS60, HS40, ValueSearch, AggreGator, Signal Flag and “Powered by HOLT” are trademarks or registered trademarks of Credit Suisse or its affiliates in the United States and other coun-tries. HOLT is a corporate performance and valuation advisory service of Credit Suisse.

For technical researchWhere recommendation tables are mentioned in the report, “Close” is the latest closing price quoted on the exchange. “MT” denotes the rating for the medium-term trend (3–6 months outlook). “ST” denotes the short-term trend (3–6 weeks outlook). The ratings are “+” for a positive outlook (price likely to rise), “0” for neutral (no big price changes expected) and “-“ for a negative outlook (price likely to fall). Outperform in the column “Rel perf” denotes the expected perfor-mance of the stocks relative to the benchmark. The “Comment” column includes the latest advice from the analyst. In the column “Recom” the date is listed when the stock was recommended for purchase (opening purchase). “P&L” gives the profit or loss that has accrued since the purchase recommendation was given.

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10C017A

Imprint

PublisherGiles Keating, Managing DirectorHead of Research for Private Banking and Asset ManagementTel. +41 (0)44 332 22 33E-mail: [email protected]

Lars Kalbreier, CFA, Managing DirectorHead of Global Equity and Alternatives ResearchTel. +41 (0)44 333 23 94E-mail: [email protected]

EditorsDr. Oliver Adler, Managing DirectorDr. Nannette Hechler-Fayd’herbe, Managing DirectorLars Kalbreier, CFA, Managing DirectorJoe Prendergast, Managing DirectorEric Güller, Director

Authors

Dr. Oliver Adler, Managing DirectorHead Global Economics & Real Estate Research Tel. +41 (0)44 333 09 61, E-mail: [email protected]

Pierre-Yves BolingerEquity Research; Research AnalystTel. +41 (0)44 334 00 94, E-mail: [email protected]

Dr. Miroslav Durana, DirectorEquity Research; Head Index Development and NanotechnologyTel. +41 (0)44 335 10 66, E-mail: [email protected]

Eric Güller, CEFA, DirectorEquity Research; Head of Emerging Markets ex Asia Equity Research Tel. +41 (0)44 332 90 59, E-mail: [email protected]

Elena Guglielmin, DirectorGlobal Credit Research; Banks, Insurance, Covered BondsTel. +41 (0)44 333 57 67, E-mail: [email protected]

Dr. Nannette Hechler-Fayd’herbe, Managing DirectorHead of Global Fixed Income and Credit ResearchTel. +41 (0)44 333 17 06E-mail: nannette.hechler-fayd'[email protected]

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Thomas Herrmann, Vice PresidentGlobal EconomicsTel. +41 (0)44 333 50 62, E-mail: [email protected]

Reto Hess, CFA, Vice PresidentEquity Research; European Capital Goods, European Automobiles & ComponentsTel. +41 (0)44 334 56 24, E-mail: [email protected]

Marcus Hettinger, DirectorHead of Global Forex ResearchTel. +41 (0)44 333 13 63, E-mail: [email protected]

Lars Kalbreier, CFA, Managing DirectorHead of Global Equity and Alternatives ResearchTel. +41 (0)44 333 23 94, E-mail: [email protected]

Louis Landeman, DirectorHead of Global Credit Research; Telecoms, TechnologyTel. +41 (0)44 333 54 25, E-mail: [email protected]

Claude Maurer, Vice PresidentMacro Analysis and Policy, Region SwitzerlandTel. +41 (0)44 333 41 90, E-mail: [email protected]

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Roger Signer, CFA, Assistant Vice PresidentEquity Research; European and US Construction, Convertibles, Derivatives Tel. +41 (0)44 335 72 98, E-mail: [email protected]

Cédric Spahr, CFA, CAIA, DirectorHead Equity Alternatives & Portfolio Analytics, European Real Estate Tel. +41 (0)44 333 96 48, E-mail: [email protected]

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SourcesRatings: Credit Suisse AGPrices: Telekurs, BloombergCharts: Datastream, BloombergEarnings estimates: Credit Suisse/IBES

RM

E /

153

1364

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Asset Allocation and Global Strategy Publications Guide

14 September 2009Zurich

Global Research

Private Banking

Important disclosures are found in the Disclosure Appendix

Overview

Double-dip unlikely, as low interest rates and buoyant capital markets offset weak banks and future fading of scal /inventory stimulus.

Stay overweight equities. Positive economic surprises, ows out of cash outweigh negatives (but setbacks possible).

Stay underweight xed income. Opportunities mainly in some higher-risk credits. Avoid long maturities given gentle but volatile rates uptrend.

Dollar trend down. Diversify broadly into other currencies including emerging markets.

Foreign exchange

uBUY EUR/USD at spot (currently 1.46) with a target at 1.52 and stop loss at 1.4390. page 8

Fixed Income

uBUY METRO 3 5/8% 06/11 in EUR.

page 10

Equities

uBUY Lafarge, world leader in building materials with an attractive valuation. page 17

Alternative investments

uBUY Platinum at prices below USD 1,300 with a target of USD 1,500. page 21

Research MonthlyEquities stay strong, double-dip unlikely

Research MonthlyMain investment horizon: Strategic 6 –12+ monthsCovers global strategy & investment themesProduced by Credit Suisse Private Banking ResearchAvailable in English, German, French, Italian, Spanish and Chinese

Investment Committee Report (bi-weekly)Main investment horizon: Tactical 1–6 monthsProduced by Credit Suisse Asset Management (MACS) in conjunction with Credit Suisse Private Banking ResearchAvailable in English and German (PDF only)

Zurich, 24 September 2009 Global Research

Stefan Keitel (Chair) CIO, Private Banking & Asset Management (MACS) Giles Keating (Vice-Chair) Head of Research for Private Banking and Asset Management Rolf Bertschi Head of Technical Research, Private Banking Patrick Bucher Deputy CIO, Asset Management (MACS) Michel Degen Co-Head Fixed Income MACS, Asset Management Dr. Nannette Hechler-Fayd'herbe Head of Global Fixed Income and Credit Research, Private Banking Dr. Anja Hochberg Head of Investment Strategy, MACS Lars Kalbreier Head of Global Equity and Alternatives Research, Private Banking Robert Parker Vice Chairman, Asset Management Joe Prendergast Chief Currency Strategist, Private Banking Filippo Rima Head Global Equities MACS, Asset Management

Overview

Global Macro Data still improving, central banks acknowledge this and become more optimistic, but most still signal rates staying low for a long time.

ForexEUR/USD has broken up, may establish 1.44-1.52 range into Q4. Occasional USD rebounds still likely but uptrend to extend again through 2010.

Fixed Income Credit spreads may still narrow, but barely enough to offset rising gov-ernment yields.

EquitiesStill positive given cash overhang, markets breaking long-term moving averages, and valuations on balance neutral. Brief setbacks possible.

CommoditiesBase metals, oil consolidate before resuming uptrend. Gold has at least some further upside.

Fixed Income: / Equities: / Commodities: / Real Estate: Next IC meeting: 2 October 2009

Retail and institutional money market funds as % of market cap Cash levels are falling, although still relatively high.

0

5

10

15

20

25

30

35

Jun 83 Jun 87 Jun 91 Jun 95 Jun 99 Jun 03 Jun 07

Retail Money Market mutual funds/US Eq. Market cap Inst. Money Market mutual funds/US Eq. Market cap

in %

Source: Datastream, Credit Suisse / IDC

Investment Committee view With most central banks signaling their determination to keepinterest rates very low for a prolonged period despite improvingeconomic data, with cash holdings still high and valuations not yet sounding a strong warning, the trend in equity markets still looks up for now. Many investors remain cautious, hoping to buy on dips, and this adds to the upward pressure by tendingto make setbacks short-lived. So does the worsening risk-reward now offered in fixed income: credit spreads still look somewhat wide when compared to likely default rates, so there is still scope to narrow, but much less than before, and probably not enough to properly compensate for the dangerthat government yields look likely to at least edge up.

Guests attending the IC Meeting this week: Guido Bächli, Stefan Braunschweig.

The Investment Committee Meeting of 23 September 2009

Mandates MonthlyMain investment horizon: Tactical 1–6 monthsCovers tactical asset allocation and implementation of investment strategy in discretionary portfoliosProduced by: Credit Suisse Asset Management (MACS)Available in English, German, French, Italian and Spanish

29 September 2009Zurich

Asset Management

Important disclosures are found in the Disclosure appendix

Mandates MonthlyUptrend to continue in the near term, slow down expected

Asset Management

Overview

Asset Allocation: We prefer equities over bonds, therebykeeping our moderate equity overweight.

Fixed Income: We are keeping our moderately shortduration stance. No change in the long EUR/short USDbond position.

Equities: No monthly rebalancing of the total equityoverweight. Further profits taken on Emerging markets. UKequities reduced in favor of EU equities as a more cyclicalregion.

Alternative Investments: We remain overweight.

Commodities: We remain neutral on commodities and aremaintaining our positive view on gold.

Currencies: We are maintaining mostly neutral views. USD:neutral stance. GBP: underweight.

Current NeutralCashBondsEquitiesAlternative investments

Current vs. neutral allocationFixed Income

20

75

5

20

75

5

Income Oriented

20

15

58

7

20

20 55

5

Balanced

20

35

37

8

20

38

35

7

Capital Gains Oriented15

55

21

9

15

57

208

Equities15

75

10

15

78

7

neutralPrinted Matter

No. 01-10-193718 - www.myclimate.org© myclimate - The Climate Protection Partnership

2010427164432_research_monthly_201005_en

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